Gaia, the  lifestyle media company, widened its loss in the fourth quarter despite a 47 percent hike in revenues.

2018 vs. 2017

  • 55 percent growth in revenues
  • Gross margin up 90 basis points to 87.0 percent
  • 51 percent growth in subscriber base to 550,000 from 364,500

Fourth Quarter 2018 vs. Same Year-Ago Quarter

• 47 percent growth in revenue (50 percent in streaming revenues)
• Gross margin up 100 basis points to 87.2 percent

“During the third quarter of 2018 when we surpassed the 500,000 paid subscriber milestone, we began to shift our customer acquisition focus primarily towards non-yoga subscribers and announced that over 80 percent of the subscribers acquired in the third quarter were in the Seeking Truth and Transformation channels,” said Jirka Rysavy, Gaia’s chairman and CEO. “We have continued this focus in the fourth quarter and into 2019. In January we increased the monthly subscription price for new subscribers to $11.99, while grandfathering our existing subscribers until their first renewal in 2020.”

“With the general increase in the implied cost of growth capital, we decided to increase the target minimum ratio between a subscriber’s lifetime value and the cost to acquire them from our original target of 2:1, which we used for the past two years, to 3:1. As of February, this goal has been accomplished. We plan to further increase this ratio to 3.5:1, transition to positive EBITDA by the end of September 2019 and maintain revenue growth of around 30 percent going forward.”

Gaia plans on commencing the marketing of its new $299 all access annual subscription in the second quarter with the announcement of the initial line-up of live events that will take place on its campus. This initial line-up of industry leaders includes Gregg Braden, Joe Dispenza, Caroline Myss and Graham Hancock. The first event will take place in June 2019.

2018 Financial Results

Total revenues in 2018 increased 55 percent to $43.9 million from $28.3 million in 2017. This was due to 60 percent growth in streaming revenues, which was driven by the 51 percent increase in paying subscribers at year end 2018 versus December 31, 2017.

Gross profit in 2018 increased 56 percent to $38.1 million compared to $24.4 million in 2017. Gross margin increased 90 basis points to 87.0 percent from 86.1 percent in 2017 due to increased revenues and the related leverage on streaming costs and continued disciplined spending on Gaia’s content investments.

Total operating expenses in 2018 were $74.2 million compared to $49.5 million in 2017. The increase was due to continued investment in marketing activities associated with driving targeted subscriber growth throughout 2018, expansion of content available in French, German and Spanish, and the launch of the Alternative Healing channel. As a percentage of revenue, operating expenses declined from 175 percent in 2017 to 169 percent in 2018.

Net loss in 2018 was $33.8 million or $1.96 per share, compared to net loss of $23.3 million or $1.54 per share in 2017.
As of December 31, 2018, Gaia had $30.0 million in cash compared to $32.8 million in cash at December 31, 2017, with $12.5 million outstanding on its line of credit on both dates.

Fourth Quarter 2018 Financial Results

Total revenues in the fourth quarter increased 47 percent to $12.4 million from $8.4 million in the year-ago quarter. This was due to 50 percent growth in streaming revenues, which was driven by the 51 percent increase in paying subscribers at year end 2018 versus 2017.

Gross profit in the fourth quarter increased 49 percent to $10.8 million compared to $7.3 million in the year-ago quarter. Gross margin increased 100 basis points to 87.2 percent from 86.2 percent in the fourth quarter of 2017 due to increased revenues and continued disciplined spending on Gaia’s content investments.

Total operating expenses in the fourth quarter were $22.1 million compared to $13.4 million in the year-ago quarter. The increase was due to the planned increase in marketing expenses associated with Gaia’s subscriber growth, continued expansion of content available in French, German and Spanish, and marketing initiatives to support growth in Gaia’s partner distribution channels.

Net loss in the fourth quarter was $11.1 million, or $0.62 per share, compared to a net loss of $5.6 million, or $0.37 per share, in the year-ago quarter.