Subscribers Increase 68% with Streaming Revenues up 65%

BOULDER, Colo., Aug. 06, 2018 (GLOBE NEWSWIRE) -- Gaia, Inc. (NASDAQ: GAIA), a conscious media and community company, reported financial results for the second quarter ended June 30, 2018.

Second Quarter 2018 vs. Same Year-Ago Quarter

# 68% subscriber growth generated 65% increase in streaming revenues # Gross margin up 70 basis points to 86.8%

“The second quarter was highlighted by the continuation of strong subscriber growth,” said Jirka Rysavy, Gaia’s CEO. “We remain ahead of the growth rate needed to achieve our subscriber goal for the end of 2019, while investing approximately $1.0 million less than our targeted rate for customer acquisition even during our seasonally slowest quarter. We also expanded our geographic reach to over 180 countries.”

Gaia’s paying subscriber count increased 68% to 466,000 on June 30, 2018, from 277,800 on June 30, 2017.

Second Quarter 2018 Financial Results

Total revenues in the second quarter increased 59% to $10.5 million from $6.6 million in the year-ago quarter. This was due to 65% growth in streaming revenues, which was driven by the 68% increase in paying subscribers versus June 30, 2017.

Gross profit in the second quarter increased 61% to $9.1 million compared to $5.6 million in the year-ago quarter. Gross margin increased 70 basis points to 86.8% from 86.1% in the second quarter of 2017 due to increased revenues and continued cost efficiency in Gaia’s original content investments. Gaia expects to maintain gross margins at this level through 2018.

Total operating expenses in the second quarter were $15.6 million compared to $12.0 million in the year-ago quarter. The increase was due to the planned marketing expense increases associated with accelerated subscriber growth. Customer acquisition costs as a percentage of streaming revenues declined to 85% in the second quarter of 2018 from 99% in the year-ago quarter, despite increasing the subscriber growth rate to 68% in the current quarter from 64% in the year-ago quarter.

Net loss in the second quarter was $6.3 million, or $(0.35) per share, compared to a net loss of $6.3 million, or $(0.42) per share, in the year-ago quarter.

As of June 30, 2018, Gaia had $41.2 million in cash and no debt.

Conference Call

Gaia is hosting a conference call today, August 6, 2018, beginning at 4:30 p.m. ET (2:30 p.m. MT). The conference call dial-in numbers are (888) 394-8218 (or (323) 701-0225 for international callers), passcode 1819991. Questions will be reserved for analysts and investors. If you have any difficulty connecting with the conference call, please contact Liolios at (949) 574-3860. Following the completion of today’s conference call, a replay will be available until August 20, 2018, by dialing (844) 512-2921 (or (412) 317-6671 for international callers), passcode 1819991.

About Gaia

Gaia is a global video streaming service and community that provides curated conscious media in three primary channels—Seeking Truth, Transformation and Yoga—to its subscribers in 180 countries with over 8,000 titles. Over 90% of its library is exclusive to Gaia, and approximately 80% of the views are generated by content produced or owned by Gaia. For more information about Gaia, visit www.gaia.com.

Forward-Looking Statements

This press release includes forward-looking statements relating to matters that are not historical facts. Forward-looking statements may be identified by the use of words such as “expect,” “believe,” “will,” or comparable terminology or by discussions of strategy. While Gaia believes its assumptions and expectations underlying forward-looking statements are reasonable, there can be no assurance that actual results will not be materially different. Risks and uncertainties that could cause materially different results include, among others, operating losses, general economic conditions, competition, changing consumer preferences, acquisitions, new initiatives undertaken by us, costs of acquiring new subscribers, subscriber retention rates, and other risks and uncertainties included in Gaia’s filings with the Securities and Exchange Commission. Gaia assumes no duty to update any forward-looking statements.

Contacts

Paul TarellGaia, Inc.(303) 222-3330 Paul.Tarell@gaia.com

Cody SlachLiolios Investor Relations(949) 574-3860 GAIA@liolios.com

GAIA, INC.

Condensed consolidated statements of operations

For the Three Months For the Six Months Ended Ended June 30, June 30, -------------------- ---------------------- (in thousands, except per share data) 2018 2017 2018 2017 ------------------------------------- -------- -------- --------- --------- (unaudited) (unaudited) Net revenues Streaming $ 10,000 $ 6,057 $ 19,138 $ 11,266 DVD subscription and other 460 501 937 1,076 - ------ - ------ - ------- - ------- Total net revenues 10,460 6,558 20,075 12,342 Cost of revenues Streaming 1,290 844 2,471 1,585 DVD subscription and other 86 67 177 145 - ------ - ------ - ------- - ------- Total cost of revenues 1,376 911 2,648 1,730 - ------ - ------ - ------- - ------- Gross profit 9,084 5,647 17,427 10,612 - ------ - ------ - ------- - ------- Expenses: Selling and operating 14,253 10,562 29,063 21,028 Corporate, general and administration 1,340 1,439 2,751 2,792 - ------ - ------ - ------- - ------- Total operating expenses 15,593 12,001 31,814 23,820 - ------ - ------ - ------- - ------- Loss from operations (6,509 ) (6,354 ) (14,387 ) (13,208 ) Interest and other income, net 160 44 177 88 - ------ - ------ - ------- - ------- Loss before income taxes (6,349 ) (6,310 ) (14,210 ) (13,120 ) Income tax benefit — — (1,826 ) (629 ) - ------ - ------ - ------- - ------- Net loss $ (6,349 ) $ (6,310 ) $ (12,384 ) $ (12,491 ) - ------ - ------ - ------- - ------- Loss per share Basic and diluted $ (0.35 ) $ (0.42 ) $ (0.74 ) $ (0.82 ) - ------ - ------ - ------- - ------- Weighted-average shares outstanding: Basic and diluted 17,890 15,157 16,627 15,155 - ------ - ------ - ------- - -------

GAIA, INC.

Condensed consolidated balance sheets

June 30, December 31, --------- -------- (in thousands) 2018 2017 ----------------------------------------------- --------- -------- ASSETS (unaudited ) Current assets: Cash $ 41,160 $ 32,778 Accounts receivable 1,322 1,055 Prepaid expenses and other current assets 2,977 3,082 - ------- - ------ Total current assets 45,459 36,915 Building and land, net 19,628 17,028 Media library, software and equipment, net 24,033 20,387 Goodwill 10,609 10,609 Investments and other assets 12,743 12,040 - ------- - ------ Total assets $ 112,472 $ 96,979 - ------- - ------ LIABILITIES AND EQUITY Current liabilities: Accounts payable, accrued and other liabilities $ 5,956 $ 16,848 Deferred revenue 4,424 3,316 - ------- - ------ Total current liabilities 10,380 20,164 Deferred taxes 164 663 Total equity 101,928 76,152 - ------- - ------ Total liabilities and equity $ 112,472 $ 96,979 - ------- - ------