Loop Media, Inc. (PNK:LPTV) Q1 2024 Earnings Call Transcript February 6, 2024
Loop Media, Inc. misses on earnings expectations. Reported EPS is $-0.14 EPS, expectations were $-0.11. LPTV isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good afternoon, everyone, and thank you for participating in today's conference call to discuss Loop Media's Financial Results for the 2024 Fiscal First Quarter Ended December 31, 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 2024 fiscal first quarter 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 be available for webcast replay on the company's website. [Operator Instructions] Certain questions 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 could cause actual results to differ materially from those reflected in these forward-looking statements. These forward-looking statements are also subject to 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 of the date of this call, except as required by law. The company undertakes no obligation to revise or publicly release the 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. After three quarters of just over $5 million in revenue, we once again exceeded the $10 million quarterly revenue mark. Unlike Q1 FY '23, our Q1 FY '24 revenue contained little to no political advertising spend and was purely organic revenue off our core business. Quarter-over-quarter growth increased 79% from $5.7 million in Q4 of FY '23 to $10.2 million in Q1 of FY '24. In addition to the strong revenue growth, we saw the impact of our focus on lowering operating costs and network efficiency, which resulted in a significantly reduced quarterly adjusted EBITDA loss by 69% or $1.5 million as compared to $4.8 million in Q4 '23. As of December 31, '23, we had approximately 77,000 active Loop Players and Partner Screens across the Loop Platform which includes 33,783 quarterly active Loop Players or QAUs across our O&O platform, an increase of 26% or 6,880 QAUs over the 26,903 QAUs for Q1 FY '23 and a slight decrease of 3,238 over the 37,021 QAUs for Q4 FY '23.
And approximately 43,000 Partner Screens across our Partner Platforms, an increase of 153% or 26,000 over the 17,000 Partner Screens at the end of Q1 FY '23 and 1,000 Partner Screens over the 42,000 Partner Screens announced for Q4 FY '23. Our QAU footprint for the first quarter of fiscal '24 was reduced as a result of natural attrition of Loop Players that were not immediately replaced as we transition to a more targeted distribution model, pivoting our focus to certain designated advertising markets and geographies as well as more desirable out-of-home locations and venues, including convenience stores, restaurants, bars and other retail establishment. We believe this targeted distribution plan will allow us to grow our active Loop Player numbers quarter-on-quarter and provide a more robust distribution platform for our advertising partners over time.
In addition, a number of our Loop Players experienced downtime in late September and early October '23 as a result of an operating program update and technical issues related to outdated Wi-Fi in those venues. Not all of those Loop Players return to active performance in the first quarter of fiscal '24. We have now entered the notoriously worst advertising quarter of the year, between January and March, where we've learned to be more conservative in our expectations. But I am optimistic about the revenue ramp for the second half of 2024 and beyond. The increased awareness of the Loop TV brand and the expansion of distribution over the past year on our platforms and screens demonstrates that our sales and marketing efforts are giving us new client wins.
A modern TV monitor showcasing a variety of exciting video content for viewers of all ages.
Our approach is to leverage our business model to continue to gain new customers on a consistent basis while focusing on the venues and markets that we know provide the best return on our investment and potential for revenue growth. Moreover, we will look to explore strategic M&A opportunities that can allow us to leverage our platforms and networks further to integrate our company vertically. We will continue to focus on tightening the bottom line to achieve our goal of becoming cash flow positive as soon as possible. So that could mean further cost efficiencies will need to be realized while still being careful not to materially dampen future upside and growth. It's always a tricky balance to accomplish that, but we plan to keep a consistent eye on it.
With that, I will turn the call over to Neil to take you through our financial results. Neil?
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 refer to the prior year's fiscal first quarter, unless otherwise specified. In the 2024 fiscal first quarter, revenue was $10.2 million compared to $14.8 million for the same period in fiscal 2023. The current Q1 revenue does not reflect any benefit from political advertising compared to Q1 last year. Additionally, we have improved productivity in our revenue channels through our various initiatives as our revenue growth in the current Q1 improved significantly over the last 3 quarters. In the 2024 fiscal first quarter, gross profit was $3.6 million compared to $5.7 million for the same period in fiscal 2023.
In the 2024 fiscal first quarter, gross margin rate was 35.6% compared to 38.4% for the same period in fiscal 2023. The decrease was primarily driven by revenue mix as the year ago period included a smaller portion of our partner platform business, which carries lower gross margin but higher operating margin. Total sales, general and administrative expenses, excluding stock-based compensation, depreciation and amortization, impairment of goodwill, and intangible assets and restructuring costs in the 2024 fiscal first quarter were $6.2 million compared to $8.0 million for the same period in fiscal 2023. The improvement was primarily due to a reduction in digital marketing spend, resulting in lower expenditures, and decreased payroll and other compensation-related expenses, partially offset by increased capital raise costs and bad debt reserve from growth in our receivable base on revenue increases.
We continue to focus on gaining efficiencies in SG&A, which we expect to be reflected throughout 2024. Net loss in the 2024 fiscal first quarter was a loss of $5.3 million or a loss of $0.09 per share compared to a net loss of $5.3 million or $0.09 loss per share for the same period in fiscal 2023. Adjusted EBITDA in the 2024 fiscal first quarter was a loss of $1.5 million compared to a loss of $1.6 million for the same period in fiscal 2023, a slight improvement. Turning to our balance sheet. Cash and cash equivalents were $3.8 million on December 31, 2023, compared to $3.1 million on September 30, 2023. As of December 31, 2023, we had a total net debt of $7.1 million compared to $7.5 million as of September 30, 2023. Overall, we continue to focus on increasing our revenues, gross margins and leveraging our expenses in line with revenues as we plan to continue to reduce the adjusted EBITDA loss as we progress through the year.
I'd like to thank everyone for listening today. We look forward to providing further updates on our next conference call. This concludes our prepared remarks. We will now open it up for questions. Operator, back to you.
