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Edited Transcript of GAIA earnings conference call or presentation 5-Aug-19 8:30pm GMT

Q2 2019 Gaia Inc Earnings Call

LOUISVILLE Aug 12, 2019 (Thomson StreetEvents) -- Edited Transcript of Gaia Inc earnings conference call or presentation Monday, August 5, 2019 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Jirka Rysavy

Gaia, Inc. - Founder, Chairman & CEO

* Paul C. Tarell

Gaia, Inc. - CFO & Secretary

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Conference Call Participants

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* Dillon Griffin Heslin

Roth Capital Partners, LLC, Research Division - Research Associate

* Eric Christian Wold

B. Riley FBR, Inc., Research Division - Senior Equity Analyst

* Mark Nicholas Argento

Lake Street Capital Markets, LLC, Research Division - Senior Research Analyst, Founding Partner & Head of Institutional Equities

* Peter Rabover;Artko Capital LP

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Presentation

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Operator [1]

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Good afternoon, everyone, and thank you for participating in today's conference call to discuss Gaia, Inc. financial results for the second quarter ended June 30, 2019. Joining us today are Gaia's CEO, Jirka Rysavy; and CFO, Paul Tarell. (Operator Instructions)

Before we get started, however, I would like to take a minute to read the safe harbor language. The following constitutes the safe harbor statement under the Private Securities Litigation Reform Act of 1995. The matters discussed today include forward-looking statements that involve numerous assumptions, risks and uncertainties. These include, but are not limited to, general business conditions, historical losses, competition, changing consumer preferences, subscriber costs and retention rates, acquisitions and other risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission, including our reports on Form 10-K and Form 10-Q. Gaia assumes no obligation to publicly update or revise any forward-looking statements.

With that, I would now like to turn the call over to Gaia's CEO, Jirka Rysavy. Please go ahead.

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Jirka Rysavy, Gaia, Inc. - Founder, Chairman & CEO [2]

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Thank you, Karina. Good afternoon, everyone. Revenue in the second quarter increased 32% to $13.2 million from $10.0 million in the year ago on 582,000 subscribers, which is a 26% increase from 463,000 a year ago. We increased the ratio between the subscriber's lifetime value and cost per -- to acquire a subscriber to 3:1 from 2:1 during the last -- the same quarter of last year and 3:1 during the previous quarter.

During the last 6 months, we reduced our negative EBITDA margin from 75% to 12% and expect to reach positive EBITDA as planned by end of the next months on approximately 590,000 to 600,000 subscribers. Reaching positive EBITDA by end of September will allow us to grow in mid-20% range in third and fourth quarter and low 30s next year.

In June, we successfully completed our first live event in the Gaia Sphere on our campus. Our soft launch in June exceeded everyone's expectation. We'll do some final tweaking with our second event in August and also start with the active marketing of our $299 Live Access subscription. While our first full event capacity will be October, the seats are already sold out even though we have increased the ticket price to $700 to $900 range.

In June, we acquired a small video-streaming service focused on alternative healing and healthy eating to boost the content offering for our newest segment, the Alternative Healing. We were in friendly discussion for several years, and the valuation finally came to attractive range. This also helped us balance the impact of total churn from our high percentage of new members we acquired during our 65% growth period rather than spending an additional about $2 million on marketing in the quarter.

As I said, we expect to reach positive EBITDA by end of the next months, and we also expect to get to positive income and free cash flow in July. At the end of June, we have $17.5 million in cash.

And I will let Paul right now to speak more about results.

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Paul C. Tarell, Gaia, Inc. - CFO & Secretary [3]

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Thanks, Jirka. Revenues in the second quarter increased 32% to $13.2 million compared to the year ago quarter due to subscriber growth of 26% over the same period, ending the quarter with 582,200 paying subscribers. The effect of our price increase for new monthly subscribers to $11.99 in January helped lift average revenue per sub to $7.67 in the second quarter compared to the roughly $7.50 range we ran for the prior 3 quarters. As a reminder, existing monthly subscribers prior to the price change are grandfathered in at their current pricing of $9.95 a month until their first renewal in January 2020.

Gross profit in the first quarter increased to $11.4 million from $8.7 million in the year ago quarter, with a slight decrease in gross margins to 86.4% compared to 87.1% in the year ago quarter. The decrease is primarily driven by increased content amortization due to our increase in content spending over the past few quarters. This increase includes content that is being created with the new hosts we have attracted to our platform with our live Gaia Sphere offering. As part of the agreement to host a weekend seminar, each host is also producing an episodic series that will be available to all subscribers. We intend to utilize this new content to attract new and existing subscribers to upgrade to our $299 Live Access annual membership or attend an event in person. With the content slate coming in the second half of the year, we expect gross margins to maintain at this level for the remainder of the year.

With the soft launch of the Gaia Sphere in June, we limited tickets to 125 people to ensure a smooth inaugural event. We received great feedback from attendees both on their experience during the event and Gaia overall. We have incorporated learnings from this event and are preparing for our next event, which will be August 16 through the 18. We are planning on a slightly larger audience for this event as we continue to test seating configurations. Our first full capacity event will be in October and, as Jirka mentioned, is already sold out. The only way for additional people to access this content will be with a Live Access annual subscription.

Operating expenses, excluding marketing and subscriber acquisition costs in the first quarter, were $6.7 million. We've slowed hiring in 2019 given our focus on EBITDA profitability by the end of September.

Our gross profit per employee has maintained at $313,000 for Q2, which is consistent with Q1 of 2019 but is up significantly from the $254,000 level in Q2 2018.

Total subscriber acquisition costs were $7.5 million or 57% of revenues. This is down significantly from 125% and 120% in the third and fourth quarters of 2018, respectively. We have continued our focus on adding higher lifetime-value subscribers, which represented over 80% of the subscriber additions for the fourth quarter in a row. As Jirka mentioned, we have been focusing on increasing our target LTV-to-CPA ratio this year with our target of 3.5:1 being achieved a quarter early, bringing the average CPA down for the quarter to $77.

The impact of losses from our 65%-plus growth periods on 2019 has been slightly larger than we originally projected, but we are starting to see improvements in the monthly retention of these cohorts as they continue to mature in tenure.

As Jirka mentioned, we completed a small acquisition in June. We acquired approximately 40,000 paying subscribers from FMTV. Over 35% of these subscribers have already reached the critical subscriber tenure of 2-plus years. These subscribers will now have access to our significantly more robust content catalog and product experience. By adding these seasoned subscribers in at this time, we are able to reduce the amount of cash spent on marketing to add new subscribers in the second as well as the third quarters, as Jirka mentioned.

We continue to build on our member-driven growth focus and have begun releasing new sharing functionality to our existing members as part of bringing our member referral program up to scale. While this has started from a relatively small number, the impact of these new sharing features has shown meaningful improvements in engagement and conversion. We expect this program to help further reduce CPA and increase engagement going into Q3 and beyond. Combined with the new content lineup from our new talent and our Live Access offering, we expect to be able to bring average revenue per sub up meaningfully over the next 12 to 18 months with modest increases in the absolute dollars we allocate to subscriber acquisition costs. This will allow us to continue to build on the cash flow generation power of this model at lower subscribers than we originally expected.

We have made meaningful progress on our path to becoming EBITDA positive over the past 6 months, reducing our EBITDA margins from negative 75% in the fourth quarter of 2018 to negative 12% in the second quarter of 2019. We are well on our way to crossing over to sustainable positive EBITDA by the end of this September, which is anticipated at a subscriber level of 590,000 to 600,000. With our negative working capital model, once we achieve positive EBITDA, we will be able to start generating cash flows from operations. We will get a further cash flow lift in January when our subscribers grandfathered at the legacy pricing renew at the new rate. We expect cash utilization to significantly reduce in the fourth quarter of 2019 and the first half of 2020 and expect to begin generating free cash flows as we enter the second half of 2020.

With our current cash balance of $17.5 million, continued discipline on expense management, the moderation of losses from our subscriber cohorts acquired during the higher-growth periods and the early traction from Live Access, we are comfortable with our ability to get to sustained free cash flows with 30% revenue growth with our current liquidity.

With that, I would like to open the call up for questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) And we'll take our first question from Mark Argento with Lake Street Capital Markets.

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Mark Nicholas Argento, Lake Street Capital Markets, LLC, Research Division - Senior Research Analyst, Founding Partner & Head of Institutional Equities [2]

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I just wanted to drill down a little bit on EBITDA positive and cash flow positive. So Paul, could you just again just kind of walk us through what are some of the key levers you're pushing and pulling in terms of being able to get to EBITDA positive here by the end of the month? And then from a total free cash flow perspective, maybe talk about what free cash flow positive looks like relative to CapEx or capital spend back in for content or developing into the Live Access programming.

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Paul C. Tarell, Gaia, Inc. - CFO & Secretary [3]

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Cool. Thanks, Mark. Yes, so just to clarify, it's by the end of September that we are shooting to get to EBITDA positive. The biggest lever that we've pulled obviously has been the marketing spend and what we're allocating to drive growth. As Jirka alluded to in his prepared remarks, that the growth rate that we're going to be able to sustain into the second half of the year is a little lower than we originally expected, but that's because we're focusing on the discipline of getting to EBITDA profitability.

The second big lever that isn't really a lever it's more of a natural rate of change has actually slowed the growth rate down, the need for growing our employee base is also reduced, so we're able to contain our salary expenses. And with the 2 of those things, we're able to take 80% to 85% of the route that we need to get there into account.

And then the third piece that's coming into the fall will be us adjusting our platform and streaming costs relative to the new subscriber run rates that we're at. The prior year we locked in rates for the higher-growth periods, and so we've been incurring the expenses at that level. But now as we go into the fall with our new subscriber levels, we're able to take an additional bite out of our technology costs as we look at bridging the EBITDA profitability for Q4.

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Mark Nicholas Argento, Lake Street Capital Markets, LLC, Research Division - Senior Research Analyst, Founding Partner & Head of Institutional Equities [4]

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Yes, that's helpful. And just one final...

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Paul C. Tarell, Gaia, Inc. - CFO & Secretary [5]

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Go ahead.

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Mark Nicholas Argento, Lake Street Capital Markets, LLC, Research Division - Senior Research Analyst, Founding Partner & Head of Institutional Equities [6]

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No, you can say -- yes, I mean obviously you're getting some pretty decent interest in the Live Access programming. Any thought about turning that into more of a subscription or taking some of the content? It seems like your subscribers remain thirsty for what you guys are offering. So any thoughts on even like a kind of super tier $50-a-month offering or something that's subscription but maybe up a notch or 2?

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Paul C. Tarell, Gaia, Inc. - CFO & Secretary [7]

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Well, I mean that's what the intent of the $299 Live Access annual subscription is meant to give people access to that content both during the weekend events on a live basis but also then going forward. And actually on our first event, we mentioned we had 125 people in the audience. I think we had about a 98% or 99% conversion of the people that bought the ticket that actually signed up for the subscription offering during that event. And so that's how I originally expected it to go is people would come to the event and then want to sign up. But now as we're going with the incremental slate, the content's actually starting to stand alone, so we're able to market the $299 subscription independent of individual events.

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Jirka Rysavy, Gaia, Inc. - Founder, Chairman & CEO [8]

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And Mark, if your question is can we start another high-level subscription, we have some discussion, but we don't -- we plan to do anything at that level for next until we get cash flow -- free cash flow and positive P&L. But we expect to reach it in July. So our focus will be on there. And then as I said, we kind of will grow about mid-20% for next 2 quarter and then kind of low 30s next year to be able to achieve the growth to both get EBITDA positive in fourth quarter and then positive P&L and cash flow in third quarter of next year.

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Mark Nicholas Argento, Lake Street Capital Markets, LLC, Research Division - Senior Research Analyst, Founding Partner & Head of Institutional Equities [9]

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And then just one quick follow-up. You guys -- obviously, subscription and streaming has become immensely popular, but it seems like the next leg here is ad supported. Any thoughts on doing some ad-supported programming to leverage the content? That's it for me.

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Jirka Rysavy, Gaia, Inc. - Founder, Chairman & CEO [10]

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We talked about it in the case. It's not something what we kind of would not like to do it today. We do not have to do it to get to positive P&L. So I think as I said, it's our first truly positive P&L. It's obviously an option for the future, but for right for this year, we don't plan to do anything on that.

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Operator [11]

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We'll take our next question from Eric Wold with B. Riley.

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Eric Christian Wold, B. Riley FBR, Inc., Research Division - Senior Equity Analyst [12]

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Paul, maybe spend a couple of minutes on your thoughts on spending on content. As you shift the -- your priority into the type of subscribers and now even you're going more towards Alternative Healing, how does that change your spending needs around content? And then can you remind us what your planned content spend is this year then how much that would need to grow next year to support a 30% revenue growth?

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Paul C. Tarell, Gaia, Inc. - CFO & Secretary [13]

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Yes. So I think over the last trailing 12 months we're roughly at about an $8 million spend level on content. We're looking at over the next 12 months somewhere in the $10 million to $11 million range as we go forward. It's just really about the balance of where we're spending that content. With the hosts that we have with the Live Access show, they've all committed to doing at least a 13-episode series with us. So we have a lot of new content coming from that. It's obviously being subsidized by the live event ticket revenue. So we're getting a lot of bang for our buck with that.

And then it's just about supplementally filling in the catalog to make sure that we have the pieces of content that we need to bridge all of the existing library content. That's one of the values of -- to having the original content the way that we have is it's not going to go away. So we're able to look at viewership and interest in topics and then supplement our content catalog with relatively affordable in-house productions. And we don't have to go out and spend a ton of money per hour to keep -- compete with everyone else.

But that's really where we're at right now. So Mark asked a question, and I didn't get to it, which was what do we need to bridge for the free cash flow? So I think it's really that $10 million to $11 million of content spend that hits the investing side of the P&L is really what we're looking to close the gap on in the first 6 months of next year before we can start generating cash flows.

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Jirka Rysavy, Gaia, Inc. - Founder, Chairman & CEO [14]

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Also, I'd like to say for the -- Paul says $11 million, the way how we look at content is for mostly like the out-of-pocket expense, and we don't charge the studios and the cameras and the people on certain level of their own salary. So you can't compare to a number of things that studios are kind of putting out there. For us, for example, if you did something for PBS in a price that $125 -- $125,000 an hour kind of spend, for us it was like more like 50 because we own the difference. And obviously, there is no upcharge like Netflix would pay to host [have] studios. So I just kind of say that $11 million, actually you have to look at that, that it's probably less than half what would be -- if you kind of go in the market.

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Eric Christian Wold, B. Riley FBR, Inc., Research Division - Senior Equity Analyst [15]

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And the episodic commitments, over what period of time are those produced?

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Paul C. Tarell, Gaia, Inc. - CFO & Secretary [16]

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We've actually been filming that as we speak because the intent is to get those series out so that our existing members can get exposed to the talent and then give us a pool to selectively market the tickets and Live Access subscriptions to. So Gregg was our first one, and we have a lot of content with him. The one that's coming up in August we just launched her show a couple of weeks ago. And then the October host show should be coming in early September, I believe.

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Jirka Rysavy, Gaia, Inc. - Founder, Chairman & CEO [17]

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Everything with -- all the people, they will be live. It's already filmed this year.

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Eric Christian Wold, B. Riley FBR, Inc., Research Division - Senior Equity Analyst [18]

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Okay. And the final question for me. Of the 582,000 subscribers, how many of those are kind of still stay on the lower monthly rate?

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Paul C. Tarell, Gaia, Inc. - CFO & Secretary [19]

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How many are left that at the grandfathered [range]? Yes, I don't have that number off the top of my head, Eric. I'll have to follow up with you on that one.

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Operator [20]

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(Operator Instructions) We'll take our next question from Darren Aftahi with Roth Capital Partners.

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Dillon Griffin Heslin, Roth Capital Partners, LLC, Research Division - Research Associate [21]

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This is Dillon on for Darren. First, on the acquisition, can you sort of differentiate between the acquired subs and how sort of your core Gaia base of subs was doing in the quarter? And then given that you -- I think you mentioned like 35% of those are past the [key] level. What are some of your expectations for the remaining as you go forward?

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Jirka Rysavy, Gaia, Inc. - Founder, Chairman & CEO [22]

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The -- I'm not sure I totally understand the questions. But roughly, as kind of was said, if you want to stay on a course without doing acquisition, we have to spend about additional $2 million in marketing to be in a kind of pace what we -- when we said, so if that's how you want to look at it. Otherwise, if you say would we actually -- if you look at value of those subscribers, so I said today for the new subscribers we pay about 3.5:1 LTV to CPA. For these members, which are like 1/3 of them is more than 2 years, so we obviously have a higher value, we pay almost exactly what we pay a year ago was actually less than 2:1 to our current LTV to CPA. I'm not sure I'm answering your question now. Just...

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Paul C. Tarell, Gaia, Inc. - CFO & Secretary [23]

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Yes. In terms of the retentions on the acquired subs, the fit of their content library into our content library and the access that those subscribers will now have, we expect them to behave better than what we would get if we just went out and acquired new subscribers because we know that they already have an affinity for our space and an interest in our content areas.

I don't want to provide specific guidance on what we expect to get from a retention perspective. But this is one of those build-versus-buy analysis that Jirka and I have run through over the years. And it clearly tapped into the buy side based on the valuation that we're able to do this deal at.

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Jirka Rysavy, Gaia, Inc. - Founder, Chairman & CEO [24]

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Yes. So this is very kind of truly what we call build to buy. Because we buy, let's say, about 2% of assets compare our balance sheet and subscribers, let's call, it 6.5%, so it's very small. So it's clearly -- the acquisition price has to be attractive for us to make sense to do it. We were in discussions which actually for about 3 years over time. And the things have changed and also the attractiveness of the content and where subscribers were because we launched -- when we launched our Alternative Healing about a year ago, we had in mind to make this acquisition at one point to boost our content rather than build all -- we had before already like 900 titles, but now they've definitely helped us to be robust. And so we would like to bring Alternative Healing kind of same level as our channels -- our segments are.

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Dillon Griffin Heslin, Roth Capital Partners, LLC, Research Division - Research Associate [25]

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Got it then. Very helpful. And then sort of are you seeing anything on the subscriber acquisition side at all with some -- any sort of price sensitivity given your price increase? Or you continue -- or they continue to be pretty insensitive and -- I mean given that you've had such strong demand for the live events as well, just wondering sort of what your take is there.

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Paul C. Tarell, Gaia, Inc. - CFO & Secretary [26]

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Yes. I think there's 2 pieces to that question. One is what's the cost of the media that we're advertising against. And we've seen that increase in cost as there's more demand for less impressions. But what we've been able to do by bringing the growth rate down is be very targeted in the audiences that we're going after. So the conversion rate increase that we're able to get because of that target allows us to offset those 2 things. So I would say that we haven't seen any meaningful impact in terms of price sensitivity at the lower volume that we're bringing in with the lower growth rate.

Now if we continue going at the higher growth rate, I don't know that I would have been able to make that same statement. But it has worked out well with a combination of the 2 for us going into 2019.

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Jirka Rysavy, Gaia, Inc. - Founder, Chairman & CEO [27]

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Yes. Actually, the net CPA decreased, and we plan to keep decreasing this going forward as well, same as our LTVs increasing because our focusing on higher-value subscribers.

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Operator [28]

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And we'll take our next question from Peter Rabover with Artko Capital.

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Peter Rabover;Artko Capital LP, [29]

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So Paul, I wanted to ask a question on -- so what percent of your total subscribers right now are in that 3.5:1 LTV? And I guess more of like on the color, I don't know if there's a quantifiable way to do it, but I know you're -- you going from a higher growth, lower LTV to process acquisition subscribers to lower-growth, higher-LTV customers this year. So you're kind of getting a double whammy. So I was -- this year. So I was kind of curious whether you could quantify that and how that shakes out in the next 12 months.

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Paul C. Tarell, Gaia, Inc. - CFO & Secretary [30]

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Yes. So I think the first thing is, is on the basis with which we are doing that calculation. It's actually a blended average of the entire member base based on recent history. So it's effectively a weighted average based on all of the factors, the tenure of the member base as well as the content vertical that they fall into. Jirka and I have obviously been talking about how do we make this calculation more approachable and available to people. So I'd say stay tuned on the mechanics of the calculation. It's a little complex to walk through on the phone.

But in terms of how we expect that to increase over time, we're going to get the benefit of 2 things. One, the size of the mature subscriber base as they continue to age is going to get bigger, and the impact of new subscribers is going to diminish. So in effect, we're increasing the tail part of the retention curve just as a function of time. And so we expect that to naturally improve from there. And as long as we continue to stay disciplined in how we acquire new subscribers and make sure that they season at the same rate, we should expect to see continued improvements from here independent of anything that we do with pricing.

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Peter Rabover;Artko Capital LP, [31]

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What do you think the long-term run rate of that LTV to customer -- what the new strategy is?

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Jirka Rysavy, Gaia, Inc. - Founder, Chairman & CEO [32]

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Well, I mean we -- actually, our discussion here internally how far -- what's really -- we want to kind of get there because we have clearly 2 -- actually 2 things. Like everything what Paul said what's kind of driving the increase, I think the main what you see is the focusing on the higher-value subscribers, which they were like less than half a year ago. It's right now at 2/3 with those subscribers. So we will consider higher value are close to 2/3. We will just call it 60%. Like -- so that's probably the biggest driver there because the LTV is changing.

Also, as we kind of acquire more quality, let's say, yogis, the yoga LTV increases as well as LTV, and that's separate from us. We increased our price because we still have all the people who we had last year. They grandfathers, and they will be till first renewal of 2020, which also will start to increases LTV when they start to pay higher price. Right? So we're pretty bullish on that one. But at the same time, we want to also lower our cost per acquisition. So we get to the 3.1:1 actually a quarter early than we planned. And I would kind of -- we didn't really put any official target to it, but I think we would kind of start in 4:1 range next year because it's doable. And so there's definitely quite room in both of those measures.

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Peter Rabover;Artko Capital LP, [33]

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Okay. And then maybe like another quantifiable sort of question that I'd like to get color. So you've had the Alternative Healing, I guess, channel for about a year. And so maybe if you could -- do you have any idea of how that's contributed to the overall growth? And what's been the uptake I guess or the response to that channel? And yes, any color you can give on that would be great.

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Jirka Rysavy, Gaia, Inc. - Founder, Chairman & CEO [34]

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Well, I can tell you it's -- right now as we stand about 14% of our base. So that probably answers some of your questions. That's -- it will slightly look like half of the titles, even less, and we have another thing. So that's why this low acquisition will help us too kind of because we get more content that [time]. And I think we would like to be -- all the segments to kind of be now different. But it's as we go. But we -- again, we'll see what the LTV is, and it's too early to really calculate LTV with any predictability. So we would still treat LTV in a kind of what we call for the Alternative Healing on the kind of lower side of the spectrum. Transformation on another side as we -- it's kind of matured, LTV kind of increased very nicely. And so we expect to be similar with Alternative Healing.

But again, stuff like that we can -- I can kind of answer a year from now. But it's a channel what I think has a lot of potential, but we didn't have till now quite of content to really push it. Now we do.

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Peter Rabover;Artko Capital LP, [35]

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Okay. And then sorry to take up your time, but I just had like one more question. You've been obviously at this for 3 to 4 years of growing customers. And I'm curious whether you have a kind of a good idea that you could share the metrics of some of your customers, like middle class or average salary or something that kind of you can hang your head on to just to understand what type of customers that you are getting and whether you have a better idea of what they are now.

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Jirka Rysavy, Gaia, Inc. - Founder, Chairman & CEO [36]

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Well, I mean they're so different especially as we kind of really spread geographically. And so we -- generally, the average income is about twice the country average. Those are U.S. statistics. We don't have yet really tried to run something robust worldwide. But generally, they -- I would say they -- it depends the segments, they between 50% and 65% females, so it's definitely female skewed up. But most of the people -- most of the time when you pay by credit cards that way doesn't mean the users are but because all we have access to are who pay, which credit cards pay unless we do a survey.

And we did some statistic, how many own home and stuff. But I'm not frankly see that the data at a $12 price, we find that, that means significant if they owned a home or not. So -- the average income was probably the only one what we kind of get. And we kind of get the range of the age, which is pretty spread from about 27 to about 65. So it's not that much different. This is -- it drops before 27 and drops after 65, but we're planning to actually do a new study for that. But so far when we did, it was pretty consistent.

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Paul C. Tarell, Gaia, Inc. - CFO & Secretary [37]

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I would say on the marketing side we're definitely seeing interest in the younger demographics. They just would rather watch free content and be exposed to ads than pay for the subscription. So -- but that's part of the growth into the futures, getting them aware now so that when they're ready to pay for their time they'll be coming to us.

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Peter Rabover;Artko Capital LP, [38]

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Fair enough. And then what's the split in your growth from international and domestic? Has that been pretty consistent? Or has one been -- there's that one country that's just like been killing it? And something -- any color on that would be great.

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Paul C. Tarell, Gaia, Inc. - CFO & Secretary [39]

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Yes. I'd say obviously our English offering is much more robust. So anything that's English is going to exceed the other ones. From a non-U. S. perspective, that Australia, New Zealand. The United Kingdom is actually quite interesting with one of our new hosts who has a following over there. Canada.

And then in terms of non-English, Spanish is the area that we have the most robust catalog, but there's also a large demographic of Spanish speakers that the price becomes a bit of a blocker for.

German, small library but very passionate people. I mentioned the member referral program. We had one person in Germany that was sharing German content actually drove about 250 people to our site for our very small offering that we had that was German-language only. We obviously have dubbed and subtitled stuff, but this was around an original German piece of content.

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Jirka Rysavy, Gaia, Inc. - Founder, Chairman & CEO [40]

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And per capita, Australia and New Zealand are our best per capita, better than U.S. I think in the future German is probably -- German speaking is probably one of the growth where it'll come after -- together with Spanish. I think that will be the first like non-English drivers. But for today, for 30% growth, the international is kind of there. We want to nurture it, but we don't really need any of that to grow 30%.

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Peter Rabover;Artko Capital LP, [41]

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Got it, got it. And then I guess I'll -- I know you've mentioned it, but between $17 million in cash plus you have some mortgage on the building, you've got 12 months between now and when you said you expect to be free cash flow positive, I assume you're feeling pretty confident that that's enough to get you to that bridge?

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Jirka Rysavy, Gaia, Inc. - Founder, Chairman & CEO [42]

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Yes. We always kind of believe there is [because it will change], and it's kind of actually less than 12 months right now. And because we will make the big jump in the fourth Q, so it's -- we have kind of the 1 quarter of a little higher spend, and after that, it's not -- you would see it from the numbers. So...

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Operator [43]

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And at this time, this concludes our question-and-answer session. I would now like to turn the call back over to Mr. Rysavy for closing remarks.

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Jirka Rysavy, Gaia, Inc. - Founder, Chairman & CEO [44]

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Well, thank you. And thanks, everyone, for joining. And we look forward to speak with you when we will report our third quarter in early November. Thank you very much.

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Operator [45]

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Ladies and gentlemen, this does conclude today's teleconference. You may now disconnect at this time. Thank you for your participation.