Loop Media, Inc. (PNK:LPTV) Q4 2023 Earnings Call Transcript

Loop Media, Inc. (PNK:LPTV) Q4 2023 Earnings Call Transcript December 12, 2023

Loop Media, Inc. misses on earnings expectations. Reported EPS is $-0.14 EPS, expectations were $-0.13.

Operator: Good afternoon, everyone, and thank you for participating in today's conference call to discuss Loop Media’s Financial Results for the Full-Year 2023 and the Fiscal Fourth Quarter ended September 30, 2023. Joining us today are Loop’s CEO, Mr. Jon Niermann, and the company's CFO, Mr. Neil Watanabe. By now, everyone should have access to the full-year and fiscal fourth quarter 2023 earnings press release, which the company issued earlier today at approximately 4:05 p.m. Eastern Time. The release is available in the Investor Relations section of Loop's website at www.loop.tv. In addition, this call will also be available for webcast replay on the company's website. Following management remarks, we'll open the call for your questions.

Please note there are two ways to ask questions during the Q&A. One, for those on the telephone, please press star one on your telephone keypad to raise your hand. And for those on the webcast, please select ask a question in the top right corner of the screen. Enter your question and click submit. Certain comments made on this conference call and webcast are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that would cause actual results to differ materially for those reflected in these forward-looking statements. These forward-looking statements are also subject to other risks and uncertainties that are described from time-to-time in the company's filings with the SEC.

Do not place undue reliance on any forward-looking statements, which are being made only as the date of this call. Accept as required by law, the company undertakes no obligation to revise or publicly release results of any revision to any forward-looking statements. The company's presentation also includes certain non-GAAP financial measures, including adjusted EBITDA as supplemental measures of performance of our business. All non-GAAP measures have been reconciled to the most directly comparable GAAP measures in accordance with SEC rules. You'll find reconciliation charts and other important information in the earnings press release and form 8-K furnished to the SEC. I would now like to turn the call over to Loop’s CEO, Mr. Jon Niermann.

Jon Niermann: Thank you, and good afternoon, everyone. We are pleased that we can announce that we ultimately managed to achieve year-on-year growth, compared to fiscal ‘22, but we're also happy to have fiscal ‘23 in the rearview mirror and a new fiscal year ahead of us. It was a very challenging year on several fronts. A significantly restricted ad market, a very difficult small microcap stock market, and lessons learned from the industry understanding of our revenue model as a CTV digital out-of-home company, which led to lower growth than we were internally anticipating a year ago and thus the subsequent adjustments around necessary cost-cutting measures. However, as a result of these challenges, we discovered very valuable data about where we believe we should invest and focus our time and resources in order to improve performance coming out of this downturn of several quarters of stagnant growth.

We believe we are stronger coming out of fiscal ‘23 and look to capitalize on what we believe to be improved upside and growth potential ahead of us. We see a better path ahead and recovery as we progress through Q1 in our new fiscal year and believe that FY ‘23 represented a low point in our ad demand challenges. In fact, it appears that revenue growth has normalized as we are currently already tracking well ahead of the previous three quarters in terms of top line revenue and reduced overall SG&A expenses. More on those results when we report in February, but we started off this new fiscal year on October 1 optimistic about the year ahead. So I'm pleased to say that we are indeed experiencing positive momentum so far in Q1. Midway through the last fiscal year, we made cuts and adjustments across several aspects of our business, achieving a plan to reduce the second-half of FY ‘23 overall SG&A costs by over 20%.

Part of this reduction included eliminating some non-revenue generating headcounts, while continuing to invest in the expansion of our revenue and ad sales team. Our distribution footprint increased towards the end of FY ‘23 with the addition of 25,000 partner platform screens bringing our total Loop player and partner screens to over 79,000. In addition, our monthly video impressions viewed are estimated to be over 2 billion. We have continued to have Loop players in the top 20 advertising markets, as well as focus on those venues that we have learned to be the best performers, which include bars, restaurants, universities, medical offices, spas, and several other verticals. We believe that the retail media markets are expected to continue to grow an increasing share of advertising spend as several industry forecasts predict.

We're also optimistic about the election year and the projected record advertising spend around that. In addition, we have several revenue supply partners that we look forward to growing within the current fiscal year. With our strong pipeline of partners, our expanding distribution network, and our commitment to efficient new customer acquisition, we are encouraged about the future, and we believe the company is well positioned to deliver revenue growth and a stronger bottom line as the advertising market improves and our distribution footprint grows. With that, I will turn the call over to Neil to take you through our financial results. Neil?

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Neil Watanabe: Thank you, Jon, and good afternoon, everyone. As we review our financial results, I want to remind everyone that all comparisons and variance commentary for either to the prior year's full-year or fiscal fourth quarter, unless otherwise specified. In the 2023 fiscal year, revenue was $31.6 million, compared to $30.8 million in the fiscal 2022. In the fiscal fourth quarter, revenues was $5.7 million, compared to $12.2 million in the year ago period. In the 2023 fiscal year, gross profits was $10.7 million, compared to $11.4 million in fiscal 2022. In the fiscal fourth quarter of 2023, gross profit was $1.6 million, compared to $4.6 million for the same period in fiscal 2022. Gross margin rate was 33.7% in the 2023 fiscal year, compared to 36.9% in fiscal 2022.

The decrease was primarily driven by revenue mix between partner platform and the O&O platform, as well as an increase in some of our fixed costs for licensing. In the fourth quarter, gross margin rate was 27.5%, compared to 38.1% in the prior year quarter. The decrease was primarily driven by revenue mix with the lower gross margin partner platform business being a higher percentage of the revenue during the fourth quarter versus a year ago. The partner platform business carries a lower gross margin, but has lower investment and acquisition and marketing expense attached ultimately resulting in similar overall operating margins to our O&O platform. Total sales, general and administrative expenses, excluding stock-based compensation, depreciation and amortization, impairment of goodwill, and intangible assets and restructuring costs in the 2023 fiscal year were $29.4 million, compared to $24.5 million for the fiscal 2022.

The increase was primarily due to increased marketing spend in the first-half of 2023, professional fees and increased software and IT costs. Total sales, general and administrative expenses excluding stock-based compensation, depreciation and amortization, impairment of goodwill and intangible assets and restriction costs in the fiscal fourth quarter were $7.4 million, compared to $9.5 million for the same period in fiscal 2022. The decrease was primarily due to a decrease in marketing spend, payroll related, and various other operating expenses, which were targeted for efficiency. We continue to focus on gaining efficiencies in SG&A, which we expect to be reflected in the fiscal year 2024. Our net loss in the 2023 fiscal year was $32.1 million loss or $0.56 loss per share, compared to a net loss of $29.5 million or $0.61 loss per share for fiscal 2022.

Net loss in the fiscal fourth quarter of 2023 was $9 million or $0.15 loss per share, compared to a net loss of $14.6 million, or $0.28 per loss per share for the same period in fiscal 2022. Adjusted EBITDA in the 2023 fiscal year was $15.7 million loss, compared to $10.3 million loss for fiscal 2022. Adjusted EBITDA in the fiscal fourth quarter was a loss of $4.8 million compared to a loss of $3.0 million in the same period in fiscal 2022. Turning to our balance sheet and cash equivalents, we're $3.1 million on September 30th, 2023, compared to 14.1 million on September 30th, 2022. As of September 30th, 2023, we had $7.5 million of total debt, compared to $7.1 million as of September 30th, 2022. In summary, we are focused on increasing our revenues, gross margin, and leveraging our expenses in line with revenues as we plan to continue to reduce the adjusted EBITDA loss on a quarterly basis.

I'd like to thank everyone for listening today, and we look forward to providing further updates on our next conference call. This concludes our prepared remarks, and we will now open it up for questions.

Operator: Now we'll open the call for your questions. [Operator Instructions] Our first question comes from a line of Darren Aftahi with ROTH MKM. Please go ahead.

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