Solid Top-Line Momentum Continues in 1Q24
Gaia reported strong 1Q24 results, with revenue of $21.7 million (up 11%), 33,000 net member additions for a total membership count of 839,000 (all-time high), and strong operating cash flow of $5.9 million. International revenue growth was particularly strong at 20.4%, compared with respectable US growth of 3.7%. Member acquisition costs decreased 10%, partly as a result of a focus on direct-to-paid marketing campaigns, whereby free trial periods are replaced by special incentives to lock in longer-term membership commitments at attractive rates. This also fueled healthy deferred revenue growth of $2.0 million during the quarter. Price increases were implemented in Europe in March, with increases expected in Gaia’s other markets in 2Q24. This, combined with strong growth in the premium membership tier, should continue to generate ARPU growth. AI is helping Gaia’s business in many aspects, such as helping the company in its marketing campaigns, lowering the cost of translating content in other languages, and improving member experience by utilizing viewing history to facilitate the discovery of relevant content. In its just released 10Q, Gaia indicated a majority owned subsidiary of the company raised $10.8 million of equity financing in April 2024, which included $4.0 million from Gaia, and the balance ($6.8 million) from outside minority investors (“Subsequent Events”). We are encouraged by the minority investor participation and expect the company will disclose more information about that investment when it reports its 2Q24 results, given the seemingly positive trajectory of this investment. Gaia’s core business is performing well, with solid member growth, sustained pricing, and free cash flow improvement. While we could see a modest slowdown in membership growth in 2Q24 and 3Q24 due to seasonality, the company is on a good path to deliver on its growth objectives for 2024.Spirit Bear Capital is a capital pool company. The principal business of Co. is the identification and evaluation of assets or a business and, once identified or evaluated, to negotiate an acquisition or participation in a business subject to receipt of shareholder approval, if required, and acceptance by regulatory authorities.
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