LiveOne, Inc. (LVO) Earnings Call Transcript & Summary

Everyone, thank you for joining us for today's business briefing and Q&A for LiveOne, trading on the NASDAQ under the symbol LVO. With us today, we have Rob Ellin, Chairman and CEO; Kit Gray, President of PodcastOne; Brad Konkol, Head of Slacker Radio; and Josh Hallbauer, Head of Music and Publishing. Our firm, PCG Advisory, has been very impressed with the growth and momentum of LiveOne that they've been producing. And we took on this account for a very specific reason, management. This is based on their very impressive background and the successes that they've achieved and most importantly, their track record of growing shareholder value. The team will discuss the company's significant achievements during 2023. We'll take a look at the company's forward outlook. We'll start with the key highlights, and then we'll open it up for Q&A. I will keep everyone's line muted throughout the presentation. Attendees can type in questions by using the Q&A tool at the bottom of the Zoom window. During the discussion today, the company will be making forward-looking statements. Please note the safe harbor statement that I will put up on the screen in just a moment. We encourage everyone to view the company's latest SEC filings on their website. And then I will turn it over to Rob Ellin. So I'm just going to share the screen just for a moment here, so we can show the safe harbor statement. Okay, why don't we get started, and I'll pull that up as soon as possible. Rob, go ahead.

Good morning, everyone, and welcome to LiveOne special conference call today, highlighting our guidance for this year. I'll open this up by thanking my team and introducing my team, who's joined me for this call to walk you through each of the different subsidiaries of our company that we've acquired or built, each of them with massive TAMs of $1 billion to $100 billion each. With that, this morning, we announced our guidance of $115 million to $125 million in revenues and EBITDA of $12 million to $15 million. With that, we announced our audio division, which is the biggest part of our operating business at $95 million to $105 million. And for the first time ever, we're talking about our cash flow, which will be over $12 million. As we continue to look at the growth of this business, the numbers are dynamic. We're one of the fastest-growing subscription membership programs in all of music and media. We have just passed 3 million subscribers. We have passed over 2.1 million paying subscribers. And as you see that revenue growth and you see that opportunity, you understand the growth of each one of these subsidiaries. We've just announced recently and will very shortly highlight our IPO, our spin-out of PodcastOne. Any minute now in the next very short window of time, within the next week to a couple of weeks, PodcastOne will start to trade on its own, and I will shortly introduce you to the Founder and President of the company, Kit Gray. We continue to add a staggering amount of new podcasts literally almost on a weekly-by-weekly basis. We've just landed our first ever $10 million deal for the company, which is highlighted in that guidance. We've also talked about spinning out our Slacker business. Slacker Radio grew by 177,000 subscribers this quarter alone. As we look at that growth, we have this very unique partnership with Tesla Radio. We are the default radio inside of every Tesla car and really excitedly continue to grow alongside of them. Our B2B partnerships are growing in a dynamic way. We've announced a B2B partnership with Android Automotive, giving us the ability to white label for every car company around the world. We're the lowest cost provider, we're a white label solution for all of them. Our technology team is world-class. We have over 45 patents and a $200 million NOL from previous to acquiring Slacker Radio and PodcastOne. Our pay-per-view business, which we've effectively put most of it on hold during the last 12 months, stood over $28 million in revenues and $4 million of EBITDA. We have not built into this guidance yet, but I think you will see this year a staggering amount of growth and opportunities that continue to come our way in the pay-per-view business. Our publishing business, I'm going to introduce Josh Hallbauer, who's just done a brilliant job of acquiring multiple companies for us coming out of Roc Nation, he'll walk you through his background. Our merch business has been tricky. It's been a tough period going through COVID and trying to grow that business off the backs of our live business, which we shut down for 3 years. But we've now got it stabilized. We took the cost out of it. And like we did across the entire business, we've taken $31 million of cost. 20 months ago, we recognized that the world was changing. We recognized that Wall Street was changing, and we started taking cost out of the business and consolidating all of those exciting subsidiaries, and that's where you see a $25 million swing in EBITDA year-to-year. Our stock buyback is growing. We've bought over 2.5 million shares. We still have about $1.6 million to go and expect to continue to grow that. This morning, we announced with our buyback with also buying back some of the bridge notes in PodcastOne, our cash is at $9 million and a record short-term assets of $28 million, even with buying back $2.5 million of stock, settling over $27 million of payables, cleaning up the balance sheet and converting all of our debt at $2.10. We are getting closer to a $28 million in short-term assets to being able to lock up a credit line and AR facility to really grow and expand the business and continue to buy back and very likely as that happens, we could expand the buyback and the stock is going to trade at this huge discount. The balance sheet is now cleaned up, payables are settled, cash and short-term assets are growing and insider buying is expanding. We look forward to meeting my team. And with that, I'm going to introduce you to Kit Gray, the President and Founder of PodcastOne. Kit?

Good morning, everyone. Pleasure to be here, and thank you, Rob, for the introduction. Like Rob mentioned, my name is Kit Gray. I'm the Founder -- Co-Founder of PodcastOne and President. I started PodcastOne before it was PodcastOne, working with the likes of Adam Carolla, Marc Maron, Nerdist network with Chris Hardwick, CBS News, 60 minutes and so forth. Just to give you guys a quick background on who I am. My career started with iHeartMedia and the representation of Radio Station Group under Katz Media Group. I worked in New York. I opened an office in Los Angeles, and I was also in Boston for years. I recognized in about 2007, 2008 that the mobile phone world back and we all had Razer phones, if you remember those that, that was going to change the content world and how people were going to access video content and even audio content. So I went and worked for Verizon subsidiary called Amp'd Mobile, where we did our first packages of digital media to advertising agencies and clients. That's -- that I came back to Katz Media Group shortly after that experience and ran their digital group. And at that time, I was living in Los Angeles, and I was a big fan of Adam Carolla who, if you guys remember him from Loveline with Dr. Drew that was on MTV and Westwood One, as well as The Man Show with Jimmy Kimmel. He took over for Howard Stern on the West Coast. In 2009, he was let go by CBS as they were going through a transition, and he started a podcast. I became a huge fan of that podcast and recognized right away that if you had to download a file, drag it on to an iPod and then sync it into your car, if you're driving around the city with a tape player and see your old tape machines, that's how you had the access podcast. But there was a huge audience, and I recognize that what they call on the radio world, they're P1s, right? So these are super P1s that they went through that process. I'll tell you a quick story. In 2009, I met a guy named Marshall Williams', who runs Ad Results, which is a major advertising agency out of Houston, Texas. I asked him to buy some spots on Adam Carolla's broadcast for $1,000 a spot and he told me I was crazy, but he said he'd give me a CPA deal with ProFlowers where he'd pay us $14 per flower ordered under the Adam Carolla tag. They had to write us a check for $38,000 after 2 weeks of run in media, and we were off. I knew that we had a business, I had a lot of direct response, advertising contacts, Stamps.com, SquareSpace, UnTuckIt, Citrix GoToMeeting, GoToMyPC. So that was where the business was built. And I was fortunate enough to meet a guy named Norm Pattiz, who, if you know that name, he started Westwood One, some 35 years ago and still exists today. He and I partnered up and created PodcastOne where we started to acquire talent representation to people like Stone Cold Steve Austin and many, many house lives and more. We started to build the business. We raised some money. There's a radio station group out of Minneapolis called Hubbard Media Group. They put in some money to build a company where we're able to hire a sales force, a production team, a studio in Los Angeles that we still own and operate right out of Beverly Hills and the business was off. We are a very unique podcasting company in the sense that we're the only ones that really are full service. We have our own hosting platform that allows us to do digital ad insertion, as well as host our own programs and control the feeds and distribution channels. So if you've read in the news about Art 19 or MegaFon being bought by the likes of Amazon and Spotify, well, we have that same back-end system. We have a production team of 8 or 9 producers that produce our own -- owned and operated podcast. We represent over 1,000 programs. We do video and audio. We are in the place where we do live reads, we do embedded reeds. We do interviews with CEOs of companies on our podcast. We do pay-per-view events. We do meet and greets, virtual meet and greets. We do merchandise, as Rob mentioned earlier, and we're even launching our own products with talent in hand. Our company also has our own marketing team, where we're able to go and offer shows to come to our network because we have the rights to sell open inventory or promote our shows within open inventory of our programs. So when we have 7 million unique listeners on a monthly basis, a new show comes to us, we can introduce that new show to that 7 million net fan base or if we have a new hit episode with a big star coming on or big guests coming on, we can actually promote that and make it a really big deal. So -- we also have our own talent booking team, and we're now developing our own IP, where we work with people like the Hubbard Broadcasting Group for American Nightmare. We have Barbara Schroeder's, Bad Bad Things. She did a bunch of shows on Netflix. And this fall, we're going to release [ Bordentown ] with Epic movie studio and Patrick Wachsberger, who created Coda, and we'll have IP and rights to take that to movies, books and whatnot. So -- and all in all, just to let you know about the business, it's still strong. The advertising world is having a tough run over the last year. So podcasting is still hot. It's still growing in terms of listener base, as well as advertising revenue. As our company goes, we just resigned some of our core group, which includes Adam Carolla, Dr. Drew, Kaitlyn Bristowe, the LadyGang Girls, Jordan Harbinger, Court Junkies and more. We've recently launched new shows, one that we love is Friday Night Lights, which is a remake or just a rewatch of the hit show. We have Mae Whitman, who was on Arrested Development and Parenthood and others. She's a huge fan. So she's hosting that show with 2 of the actors. It's doing really well. We do that in audio and video. A&E, we have a strong relationship with them, and we launched the second season of I Survived, which is a great program for us, along with others that they do together with us. We just launched I've Had It, which is a Bravo based show, and Brittany and Jax, which is one of the Vanderpump shows, Vanderpump shows, those are each going over 75,000 downloads, an episode right out of the gate. We have a slate of at least 10 to 15 new shows to launch over the next 6 months, and we're really excited about the future. So that's the PodcastOne story and who we are.

Great. Thanks, Kit. And Kit's being very humble about his experience in building this. He's really the pioneer in podcasting, started this industry with Norm Pattiz. So Brad, why don't I hand it off to you and talk about Slacker and the massive growth that we're seeing and the excitement around our B2B deals.

Thanks, Rob. Real quick background about myself for those who haven't met me before, I've spent a 20-year career at the intersection of content and technology, leading product and engineering, both in the B2C and B2B initiatives. I've been with Slacker Radio since 2015 when I was brought on to run the Samsung Milk Music initiative, which was a white label solution powered by Slacker. Short time after that, I began to lead all products and engineering for Slackers, B2C applications as well and additional B2B initiatives with the likes of AOL, U.S. Cellular, Verizon and most famously Tesla. When Live acquired Slacker in 2018, I led the development of all video and live streaming applications, as well as our linear channel initiatives. And now as the Head of the Slacker business unit, I continue to lead product and engineering. At Slacker as a product and engineering organization, we continue to develop and maintain all of the music and audio streaming experiences for the B2B initiatives, as well as consumer-facing applications on mobile, web, OTT, auto and other consumer electronics. The business in terms of where we are for the music marketplace in general, global music streaming revenues are forecasted to be over $90 billion by the year 2030. Currently, they're in the $25 million to $30 million range. In that same span, paid membership is expected to grow to $1.2 billion. Right now, it's just under $600 million. So we're in a space where there's going to be -- continue to be massive growth. There's tons of potential. For Slacker's part, as Rob mentioned, we've now surpassed 2.1 million paid subscribers. That's a 45% increase year-over-year. And we've also grown our free ad-supported members to 850,000. For those less familiar with the Slacker music experience, we really specialize in what I like to call lean-back listening and we also have expertly curated stations that have a human touch to it. A lot of the DSPs in our space, they are purely algorithmic. And we have a team of expert programmers that then we put the algorithmic and personalized touch on top of, and we believe that, that makes us truly unique in our space. We add voice narration on top of that. So there's the storytelling element to a lot of our music programming. In fact, I believe we remain the only interactive radio service with DJ and on-air personalities integrated into our listening experience. Some of the examples if you ever been to the LiveOne website would be our exclusive programming series like Artists DNA or I Am The DJ, where we have talent and storytelling sequence in between the music tracks. As Rob mentioned briefly, the team at Slacker is incredibly lean and agile. We take a lot of pride in that. That's kind of always been our culture. It allows us to do all the things that we've done over the last few years and pivot to new and exciting initiatives on a dime. So we're well positioned for the current economic climate. The tech we've built over the last few years is a major asset for the company. In the last year, we've closed some new key B2B deals in one of those that has recently launched is with TCL. It's a 2-year preload partnership with additional incentives to drive paid membership. But really, what we're most excited about is the long-term potential with a company like TCL because we believe there's a lot of synergy around our value-conscious customer base and our application device overlap. In terms of where we're going, I'd say that in a lot of ways, we've come full circle to where Slacker was focused as a business when I joined for the Samsung Milk Music initiative. We really see business-to-business partnerships as a major driver for growth. Over the last several months, we've invested heavily from a strategic standpoint, a personnel standpoint, as well as a technology standpoint. We've built a more robust pipeline of business opportunities. And we've been developing technical tools and services that will improve our B2B operational efficiency and will allow us to grow both in terms of the regions and locales we can support, as well as the scale at which we can support. Our efforts over the last year proven that there is substantial growth opportunities within the B2B space. And we believe that there is additional product benefit in the form of music in areas of connected health and fitness, automotive initiatives, wireless carriers, BaaS channels, as well as SaaS IP licensing. So to summarize, we really believe that B2B offers the very best growth potential over the upcoming fiscal year for Slacker and beyond. Our pipeline of opportunities is very, very solid, and we're very excited for what's to come in that regard.

Thanks, Brad. And Brad's been very humble about the success and turnaround of Slacker when we acquired it. There were 400,000 subscribers. We were losing 25,000, 30,000 a month, and we were losing a very, very substantial money. Very proudly, Brad, working together with Aaron and the finance team, we have now successfully turned that business into a well over $50 million in revenues. And as you can see in the EBITDA numbers that we announced will be over $15 million in EBITDA. So another just great turnaround in a massive opportunity and the size of the TAM that Brad has articulated. Thank you, Brad. With that, let me hand it off to Josh who has joined us about 2 years ago, has brought some amazing expertise in music. And most important to all of us on this phone are creator first. We're focused on those creators and handling those creators and treating them properly. And I think Josh is a pioneer in the industry and doing that coming with an amazing background of not only -- not only looking like a rock star, but actually is a rock star. So Josh, why don't you give a little bit of your background, a little bit what we're doing in -- across technology and publishing and music.

Yes. Thanks, Rob. Yes, quick background on me. After college, I literally put together a band and spent my life on the road for a lot of years. I had several #1 record site, I toured the world and I loved every minute of it. But I fell in love with the publishing business. And eventually, I went on to launch Roc Nation's most successful publishing venture. I have copyrights from Justin Bieber to Kid Laroi to Selena Gomez, you name it. While I was at Roc is where I met Rob and I saw what he was doing with LiveOne. And separate from just the innovation of the company I really was -- I really bought into the idea that he was building a creative first company. And I knew I had to get involved. I wear a suit most days of the week now, but I'm still a creative at heart, and I still put the creatives first in every aspect of my business. So today, for the sake of moving forward and talking about what we're working on currently, I want to bring up our latest acquisition called Drumify. I've been in the publishing business for 10-plus years, and I literally think it's completely changing the publishing landscape. To sum it up for you, Drumify is a place for producers to go look for sounds. Let's say, a song that's been created has 10 sounds in it, and everybody working on the song feels like they need one more sound. Literally with AI technology, you can type in, I'm looking for a sound that sounds like the Red Hot Chili Peppers first album, the guitar lope on it, and it will pull up those sounds for you. In the last year, we've added 100,000 sounds to this platform, and it's just growing every day. And the most amazing thing that I see about this platform is that it is allowing creators to retain their publishing rights, which means a 17-year-old kid from Omaha, Nebraska, who has no relationships in the music business can be uploading it sound and literally be on a drake song in a week. Our biggest competitor in the business is a company called Splice. If you haven't heard of it, they're doing $300 million a year. There's a couple of really big differences. The biggest one being that they are not -- they are royalty-free, meaning that they are not allowing their creators to retain their publishing ownership for the long term. So I really believe that what they're doing in the business is a negative and what we're doing is a positive. I see us as training people that are creative to understand that it's important to retain their publishing rights. And I think we have a platform inside of a $9 billion a year business that's completely flipping that business upside down. And the reality is, is that all of these creatives on this platform are learning that they should be receiving mailbox money for the rest of their lives from the work that they're doing now when they're young. So thanks. It's my sum up on Drumify.

Great. And Aaron, who is on the phone, our CFO, has led and pioneered a 20-month effort to take $31 million of cost out of the business. Aaron why don't you say a quick hello, just quick background. And then we'll open it up to Q&A.

Thanks, Rob. I'll keep it brief. And I joined LiveOne in 2019 as a Controller, and I've been here kind of watched the company grow from I think revenue at the time was about $35 million. Now we're over the $100 million mark. We had 2 business units at the time. Now we've got 6. So it's been an incredible growth story. And as Rob mentioned, our focus over the past has been on cost containment, production and rationalizing all our acquisitions. The other thing our finance group is focused on is trying to keep up with all these transactions we've got. And as you can see, we've done a number of those, and we're really here to support the business and help the guys that have just kind of presented to be successful.

Great. Thank you, Aaron. So just to wrap up, everyone, we believe our stock and our company is trading at a very low valuation. We are buying back a substantial amount of stock. We will continue to buy back stock. I personally have invested over $18 million in the company. I will continue to buy stock, right? As the buyback ends, I'll continue to buy additional stock, [ both ] stock is high in the 6s. We're a big believer in what we're building here. This is a world-class team with real confidence. And we've just broken that very magical mark of over $100 million. And we're on our way to being exactly what I've told everyone that within 5 years, I expect to own a little small percentage of this TAM. There's going to be over 1.2 billion subscribers to music. We'll get a breakthrough over the next 5 years, over 10 million subscribers like the combination of subscription, sponsorship is going to give us -- it's going to give us a $1 billion-plus business. And so I want to thank everyone for joining and open it up for questions, please.

Great. Thanks so much, Rob and the team here that was really fantastic. We've got many questions that have come in. Again, if you'd like to submit a question, there's a Q&A box at the bottom of the screen, please go ahead and submit your questions through there. So we'll start at the top. The first one is just talking about the expected valuation of PodcastOne, how that was established, whether peer comp multiples involved, that sort of thing?

Yes, sure. So when we made the determination, right, we did a bridge financing of $8 million, at about a $70 million valuation about a year ago. We made that decision. Part of that was that we would take PodcastOne public and Kit the team, Kit did not walk through the rest of the team, but his team is world-class. They have over 50 years of experience in audio. His team from Sue McNamara, literally ran Mel Karmazin's entire sales force, have just done a brilliant job, and we've doubled the size of the business since we acquired it. It's now moving towards a really extreme EBITDA positive, just like Slacker does, right? And with that, we were forced to go out and get a third-party valuation in order to meet our NASDAQ requirements. And the valuation came in at $230 million to $270 million. We will shortly name our banker and be very proud to be able to do that in the next couple of days, and we hope to be trading imminently on that. And when they came up with the valuation, that valuation was come off of all the acquisitions as well as the pricing in this industry from a technology standpoint as well as a revenue standpoint. And the most recent transaction was only 6 months ago, Sirius Radio bought a podcast business doing $10 million in revenues for $150 million in revenues. So for $150 million in cash. So in theory, we're at the low end of the range. Many of these deals have been done from 10 to 30 times revenues. And we've got, with the #11 most [ traffic'd ] podcast network. We're #4 in sales in the world with a great management team, and I can't wait to hand the baton to Kit and his team and to be able to run that company. They'll still be reporting to me, and they'll still be reporting to our board. But they'll have an opportunity to acquire other podcast businesses, continue to acquire many podcasts that are out there. This is the biggest pipeline we've ever seen in history of our business, and I couldn't be more proud of the team.

Great. Another question came in regarding how the dividend will work, the timing of it, the amount and that sort of thing.

Yes. So I want to give you approximates on this. But this is happening imminently, right? If you own 100,000 shares of LiveOne, you're going to get a dividend between 2.5% and 3% of that in shares in PodcastOne, meaning for every 100,000 shares that the owner has, you're going to get between 2,500 and 3,000 shares. We publicly said the deal is coming between $8 and $12. So if you throw it in the middle of the range at 10, right, you're getting close to $30,000 of stock on that. And again, we'll be the only public podcast company in the world. right? And so we'll be in the forefront of that and the leadership of that and just like Kit started and started this industry and learned under a gentleman named Norm Pattiz who, sadly is passed away recently, but trained this entire team and one of the great geniuses in radio and the great genius in podcast built Westwood One to a multibillion-dollar company. I see the same success here and same opportunity and I look forward to having the only public podcast business out there, and I look forward to my shareholders participating in that.

Great. Another question came in regarding the potential to spin-out other pieces of the business? And how would that affect LiveOne? What would LiveOne be left with if that strategy continues?

Yes. And I think that's an important question because in podcast, we're going to continue to maintain a very substantial control position and consolidate those financials, right? This is just going to give our shareholders an opportunity to participate in the second public company. So when we've announced with the success of this, and again, this is imminent that we'll start trading. We believe the same thing is going to occur with Slacker Radio. And with Slackers numbers, right? And as you look at our audio numbers we announced today, you could read between the lines and the podcast IPO that was filed in the S-1, right? You're going to see well over $50 million in revenues with the growth that we had last quarter, there's going to be massive growth. If you take 40% growth, and that could be very, very low at this point, take 40% growth if you take that public with over $15 million in EBITDA and that audio business throwing off over $12 million of cash. This is the first time we've talked about cash flows, right? We used to talk about turning it from losses to gains. Now we're starting to talk about cash flows. And soon we'll in the near future, we'll talk about earnings. And we have a massive NOL over $200 million total, across the company well over $100 million at Slacker and Slacker's valuation has not yet been publicly established, but you can kind of put -- put your own numbers on it on those metrics, and it's pretty staggering. So we see that happening very quickly. And I think you'll see some updates on that. The minute PodcastOne goes public, you'll see that move forward with Slacker. Same thing with our pay-per-view business, that over $28 million in revenues and $4 million of EBITDA, Pay-per-view has a multibillion-dollar upside. When we built this company, we locked up the rights to 2,500 of the biggest music events in the world. We -- unfortunately, as we -- as COVID hit, we were on a massive run with it. We had to pull back because Live Nation and AG and iHeart and all of our partners were shut down, right? As that we shut down. What happened is the live business exploded and the pay-per-view site exploded. Now the audience is clamoring for it and demanding it. I see it just a gigantic opportunity to bring music festivals and music concerts and social media and other forms of pay-per-view across our platform. And Brad and his team literally brilliantly built this technology. We gave him about 10 days, right, to put this up. And just in 1 day, we did 163,000 pay-per-views to give you an idea. And there's a lot of interest around it, a lot of strategic interest around it. We can easily see after Slacker we're doing the same thing in PodcastOne. All of them be owned by the parent company controlled by the parent company that have these world-class management teams and executives on there, and it gives us an opportunity to really expand our tentacles and use some of those board members, some of free agents to be able to expand them into larger roles within the company.

Great. And just so everyone knows, there is record attendance that we're seeing here today, and we have a lot of questions that keep coming through. So we'll try our best to get to all of them. Please continue to submit your questions. We'll do our best to get all of them. Rob, the next one is to walk us through the overall cap structure with all of the recent updates and how you increase cash and assets, while paying down or converting debt and buying back stock. Can you walk us through the full cash structure debt, convertible shares out, warrants, options, insider ownership, that sort of thing?

You made that easy, Kirin. So we just announced our cash has gone up to $9 million from $6 million, right? This is all why we bought back 2.5 million shares of stock. We bought $1 million of the bridge notes back in PodcastOne, which were a convertible at $3 when the deal is coming between [ $8 million and $12 million ]. So really happy to be able to do that. We'll probably buy additional. We talked about $12 million of cash flow this year from the core operating business. We're going to talk a lot more about this as this year goes on. But our balance sheet is stronger than ever. We took out over $27 million of payables, and we've literally just converted all of our debt. My dear friend and partner, Jeff Osher at No Street, Harvest converted his debt at $2.10. I converted all of my debt at $2.10 to give us this very different balance sheet and give us an opportunity to imminently be able to lock in a conventional AR line that we've never had in this company to really grow the business. And as I look at it, Kit, Kit grew this business, almost doubled it since we acquired with no cash, right? Brad, literally, we've squeezed him as hard as we can, and yet we've grown that business from $20 million to well over $50 million and another 40% growth this year. So everybody here has fought hard with very little cash coming in, in a difficult environment and proud to say that we look forward to the next big step in adding a credible bank behind us and an AR line will give us the ability to buy more stock, as well as to be able to expand this business dramatically and look at our next acquisitions. We haven't done an acquisition in 2 years. We're due for one and as you can see, the acquisitions we've done have led to a world-class management team that is really humble and caring about their business, but also that we bought those businesses at the right prices in the right time. And we've helped as activist as a Board and a management team to help them grow and build.

Okay. Great. A question from the audience. The spin-outs will benefit LiveOne in a big way as the company will still own large percentages, I believe. What will those percentages be approximately?

Yes. So we won't give up. We'll control obviously well over 50% in PodcastOne. If you look at the filings, it will be somewhere in the 75% range, 75% to 80% range in that area. And I fully expect that in Slacker, it will be a very similar type situation. We love these businesses. We love the combination of the businesses. I love seeing Brad and Kit and Josh work together because the synergies, the sum of the parts here, right? As you put these together, the TAM is bigger than separately. So they're all going to continue to work together and all of them be controlled positions within the company.

Great. Another question to quantify what the churn in for paid members and how that compares to, say, a year ago, especially as it relates to Tesla?

Yes. I mean, I'll hand this down. I'll just give you 4,000 [ feet ]. We have the lowest churn in the history of the music business. We do have a big advantage and a unique advantage in that Tesla is our partner, and we're growing with them and just to see their numbers today and the staggering growth of the number of cars that hitting the road were built into their connectivity package, right? And I think our technology in our music is really perfectly set up from a standpoint of pricing. With a Walmart of music subscription, we're 1/3 of the price of any of our competitors. And we've proven that relationship with our competitors that we're also a partner with almost every one of them, from iHeart to Spotify to Apple to across the board, we stream our content across them. But Aaron, why don't you talk about the churn for a second.

Sure. I'll just add a little bit to what Rob said. On the Tesla side, it's a very sticky proposition from our perspective. The only note I'll really add is what we're seeing is some of the older cars. So over 8 years old, we're seeing those kind of start to move out now. We're in that phase where I think the relationship is about 9 years. So you're seeing some of those cars turn out. Rather than that, it's very consistent and no real difference to about a year ago.

Great. And then as it relates to the annual revenue and EBITDA guidance, can you provide any seasonal factors we should think about, including known date of tentpole events within that? Or are there any nonmusic events like Social Gloves?

Yes, it's a great question. So in that guidance has no tentpole events, right? That's just our core business. That's the current operations of the business across audio, video, podcast and live streaming. And with that, you could see some very dynamic pay-per-view events coming in the very near future. We chose to do as a team, right? We chose to buy back stock. We chose to consolidate the team, get the balance sheet way stronger and literally sit almost where the catcher's mitt waiting and that we've just proven that the tech team has built all of this great technology all the IP, all of these patents and now we're seeing great partners coming to us that would like to use us like Social Gloves did where there was no risk to the company and it ended up being a $10 million-plus in revenues. They're coming to us now and they're asking for our services, our full 360 services. And the beauty of this flywheel is when we stream somebody's event, we get the beauty of is that all that traffic and audience comes to us and we can convert them into subscribers. So great question and look forward to very shortly talking about that expansion of our tentpole events.

And Rob, just to add on there, if I can very briefly. In terms of seasonality of the overall business, we always expect our Q3, so that's the calendar Q4 to be our strongest, and that's driven by merchandise and then the advertising cycle.

Great. Let's see. So we've got a question. I think you answered this already, Rob, but just in case to repeat, when is the IPO for PodcastOne slated to happen? And have you chosen a banker yet?

Yes. I mean I've got to be a little bit careful in my words on this, right? But if you read the prospectus, we just filed our updated prospectus, right, with very little changes in it. So we're -- our fingers are crossed that we could hear any minute now on that update and the record date is the 20th and we're getting close to that. So we're fingers crossed and excited to launch imminently.

Great. Okay. Another question. You talked about the market for paid subscribers is expected to double by 2030. Outside of Tesla, what is the company doing to capture that growth and educate consumers on your product? And how do you compete the likes of Spotify?

Yes. So -- and I've probably covered this, but here's where we differentiate ourselves. One is from a technology standpoint and not just the technology and all those patents and the team what they do, but also the handholding, right? We truly are a partner with our B2B partners, right? Number two is we're the lowest cost provider. We're the Walmart, right? So at Walmart, we articulate our ARPU at around $3.5, right? Everybody else is raising their prices, right? Spotify, [ Siri ], all raising their prices. And all the studies are showing they can raise those prices substantially. We wanted to keep the momentum going and these B2B deals and partnerships with very robust bottom line to it, right, by keeping that pricing in shape. And number three is we're probably the only ones that are willing to white label our product, meaning that anyone with 10 million to 2.5 billion eyeballs must have live and must have music. You're going to see partnerships like Android Automotive, like Brad articulated before, across many different verticals with big audiences. They're going to want to have music and want to have the flexibility from all licenses, from our technology to be able to capture their audience and deliver the type of music they need and just to play -- to tease this a little bit. If a kids company, Nickelodeon wanted to create a watch for kids, they don't necessarily need 70 million songs. They may only need 3 million or 5 million songs that are just for kids, right? We could tailor those and create those. So you're going to see more and more B2B partnerships. You're going to see more and more distribution deals and really excitingly, the opportunity where podcasting going is now with video right? YouTube is spending a fortune on video. These verticals are growing fast, and it gives us so much tentacles for us to utilize our skills to be able to partner with B2B partners around the world across many verticals.

Great. Okay. So we have another question that asks, to please talk more about expectations for the live events part of the business.

Yes. So we shuttered our live events business, right? You got to live and learn. We bought -- fortunately, we bought out the SFX bankruptcy. We bought a really exciting company called React. We bought it out of bankruptcy. We bought it for $2 million of unsecured debt, brought in a good partner in it. We were really excited about it and this little thing called COVID hit and it hit us hard. It was a month after we acquired it. And then the variant hit, then the second variant hit. And then we woke up and we were really excited. We launched Spring Awakening one of the great festivals in Chicago and EDC of Chicago and a thought leader in the industry, and we got hit -- we had to move it again because of the variant, and we ended up doing it in October, and we got hit with the massive, a huge electrical storm. The mayor called us in the middle of it, and I had to go into a room and literally cancel and get all the people out of the stadium. And we just decided that for us, it was great for our flywheel, it was interesting, but we'd be better off partnering with people who are real expertise in that business. So we shut it that business, we walked away. And it costs us probably $10 million in that -- it won't cost us again. So our Live business is going to be in conjunction with partners in conjunction with the partners. We've been partnering with for the last 5 years to the likes of the AG, the Live Nation, the iHeart's and those independent music and media content partners who are really experts in that space.

Great. We've got a question regarding the economics and what subscription costs are paid for podcast and Slacker?

Yes. So we have a really unique model because this is almost all B2B. We get some customers. We get some consumers who become members and subscribers because of the massive audiences and communities we've built. We've had over 5 billion engagements in our live streaming, right? We had billions of downloads across our podcast. We've had hundreds of thousands of pay-per-views. And across all of those, they're amazing communities, but you're going to get one customer at a time, and we're going to get them because our creators and because we're so close with them. They're going to hit their social media and they're going to tell their fans, they come listen to watch. We have not spent a single dollar trying to buy customers. That $80 a sub for us just doesn't work. And as I articulated with our Live business, you got to learn from your mistakes in life. I owned [ BizOps ] previously, had a great run and turned into a great company because that itself was so expensive that spending $80 a sub with 30% breakage, it's a tough model. We've just added 600,000 subscribers, right, without a dollar of marketing. So I want you to think about this for a second, right? If you listen to Spotify, listening up, they're going to spend to get 600,000 paying subscribers. They're going to spend about $80 a sub. That's $50 million. That -- our flywheel is to go to partner with audio companies, cable companies, satellite companies, social companies. You've seen partnerships with the likes of where the first pay-per-view company ever on Facebook, right? You've seen us display our content across 40 million Samsung TVs. So all of our traffic in our audience is going to grow from our creators and from our B2B partnerships with very little to no spending in marketing.

Great. Next question. Where do you see the biggest growth coming from?

So again, the biggest growth is going to come from those B2B partnerships, right? They're going to come from creators, helping us get there, the more creatives and the more original program we have, the more distribution we're going to have, the more B2B partnerships. But I see a really exciting opportunity with the Android Automotive partnership to white label and to be a partner with other car companies. I see a great opportunity that we launched called Sling TV. There's no reason now that COVID is over that all this live content is coming back that we can't look launch a cable or satellite channel. There's no reason that Kit, I know he's smiling there, right, is humbly looking at the library of content he has over the last 11 years, we have a staggering amount of video. You can see a podcast channel across almost any network, any streaming platform. And I think audio, video, live streaming, I think anyone with 10 million to 2.5 billion eyeballs, must have live and must have music.

Great. A question regarding Tesla. Any chance of getting rights to Tesla cars outside of North America?

Yes. I mean we're going into our 10th year. I couldn't be more excited about it. Amazing partnership, right? The partnership has changed dynamically and that the consumer is now paying for almost every one of those cars and that it's built into their connectivity package, which includes mapping in music and Internet and so on. And I just don't see any cars not having that. And because we're the low-cost provider and again, we've said we're $3.5 or lower, you got to expect we discount for Tesla, right? And I see a big opportunity to expand overseas and a big opportunity. We put our podcast into the cars and maybe there's even a dynamic opportunity in Elon buying Twitter, they're going to need a music service. And I think we're the only ones that are really capable and willing to white label, right? We'd love to be Twitter music, right? We'd love to be the Tesla radio in Europe and around the world. So really exciting opportunities and growth opportunities across that relationship.

Great. And how sensitive is the consumer on prices in this environment?

Without giving you name, you'll read about it soon, my bankers who will be announced on PodcastOne, because of their relationship in music have done a massive study, right, on what the numbers look like, right? If you understand the publishing side, where Josh is running, right, that publishing side is growing so dynamically, and the EBITDA numbers have gone from 6x EBITDA when I bought my first company in music, called 32 Records, 25 years ago, I've grown so dynamically, you can buy publishing at 6x. Now you got to pay 15x, 20x. Bruce Springsteen sold for close to 40x. And the reason is the streaming numbers just keep going up, right? So this dynamic growth there.

Great. This one is, I think, worth repeating. Someone writes, hey guys explain it for the 5-year-old, even after the dividend distribution, LVO will still own a PodcastOne, which will probably be worth more than the current LVO share price?

I've been in this position a few times in my career. It doesn't happen very often. But we've always talked about, and there's some analysts that have written as you know, there are 5 analysts that cover the company, right? Sean McGowan, who has covered me many times, we've had some amazing runs together, just started covering with the $2.80 price. And some of the pieces -- some of it would be broke down as the pieces of the company, right? And in a very difficult, almost the worst microcap market we've ever seen, right? You have to look at different ways to achieve those goals for your shareholders, right? We're all here to make our shareholders money. So as that spin-on happens at $230 million to $270 million, and you'll see that pricing shortly, right? That's dynamically higher than the stock is trading today, right. I hope that, that is going to help to inspire people to buy more LiveOne, it's inspired us, right? We're buying back stock, right? I personally bought back a lot of stock. So I hope it's going to inspire people. And then the luxury is, is that if you buy quickly, you get a piece of PodcastOne. And if you don't buy quickly, you shortly will get a piece of Slacker radio as well. And so I think this is going to help tremendously. If it doesn't, we're going to continue to buy back - back stock. We'll shrink the float, but we'll shrink that outstanding and move closer and closer to where that cash flow, we start to talk about earnings next year.

Great. We've got a question regarding the percent -- the dividend percentage. How was that determined? How does that compare to other spin-out that you've seen?

Yes. So without giving too much away, right, it really comes down to how do you get to trade on a major exchange, right? What are the dynamics that you need to get there? So we've worked through and Aaron has worked sleepless nights working on that algorithm and working together with the exchanges with those major exchanges to understand what their requirements are, what is needed. And we have well over 25,000 shareholders. So the dynamic of that is you need odd lots, you need over 100 shareholders, you need over 250 shareholders. So there's a lot of math that goes into that. And Aaron has done just a brilliant job of putting that together, and I can comfortably say that we're really excited to start trading on a major exchange shortly and very similar to LiveOne. Hopefully, it's a trade right in time for the Russell 2000 as well.

Great. We've got a question regarding the PodcastOne IPO, how much money is expected to be raised?

Yes. So we're not raising any capital in this, right? We took all the capital we needed, right, in doing that bridge financing a year ago. Right now, we're in mode of buying back stock. We just bought back $1 million worth of our bridge notes, and we're looking forward to buying another $1 million in a minute now, right? And we're buying mode, not selling mode, right? Let's get this up in trading, let's get it public, right? Let's utilize that to do the things that we're best at, right? We're a team, right, who has created tens of billions of dollars of media technology companies off the backs of both buy and build, right? I see a great opportunity for Kit and his team to be able to really grow acquisitions, both companies acquisitions and podcasting, but also dynamically be able to what he's doing every day right now, is take that pipeline of podcast and acquire them that already have traffic and revenues.

Great. Just coming through all the questions here, and apologies if I've missed any, feel free to submit them again, if you still have a question, we've got a couple of more minutes here, and then we'll just wrap it up. Let's see -- I think we've gotten to just about all of them here Okay. Follow-up on international for Tesla, what is the challenge? Is it right to the music?

Yes. So there are a lot of challenges, right? Yes, this is -- and Brad, I know Brad's going to smile at this, right? 20 years later, Slacker $180 million spent by our partners [ Columbia Mission Row ] before we acquired it, right? We've spent a bunch of money on it, right? We had to take, the world has changed, right? We had to take and position this as not just audio. We had to position it as audio, video, podcast, pay-per-view in a fully social immersive experience, right? And while we're doing that and building to that unique technology, we also had to clean up $50 million of payables. So we acquired the company with substantial payables owed to mostly to the music industry. And Brad and Aaron and the team have just done an amazing job of working together with them. fighting through some tough battles, even a hard lawsuit, right, with SoundExchange. We've settled all of it. We're now in great shape. We don't have a single payable that is above $1 million and change, right, that's left anymore. And we're really in the best financial shape -- the history of the company and really growing those relationships with our partners. And I think they're excited to grow with us and adding Josh and his relationship to music and some of our Board members and their relationship to music, I really see the opportunity to expand overseas. And for anyone that has a subscription service. Subscription services are typically 50% U.S., 50% overseas. 30% of our traffic is overseas, but about 3% of our revenues comes overseas. So Tesla is #1 in line, obviously, but it really is the overall growing globally and expanding those licenses. And I think you'll see that either via acquisition, merger or just internal growth and expanding our relationships. And you've seen the likes of record labels, taking stock. Universal to $10 million of stock at $4.12. Merlin another record label took stock in our company. So as you get closer to them and you get a better balance sheet, we just look a lot better than we looked before, and we're proud of where we stand right now and look forward to growing those relationships. And the minute we launch overseas could grow this business dynamically overnight.

Great. Here's a good final question to wrap up with. Rob, why does the stock market not get your story? Everything sounds great and you're getting stronger and better. So what is the market not understanding?

I humbly tell you my fault, right? I got big shoulders. I've got 4 children, so I'm used to taking a few punches and I got to do a better job. I've got to get out to -- I got to get a bigger audience. As you know, the stock has had many lives to it, right? I said massive runs to 7 to 10, many different times. So we got to do a better job. We've got to get a broader audience. It's a tough market, but no excuses. I went through the exact same thing in Digital Turbine in 2008. My stock dropped at $0.40 and it took a better part of 7 years to get it up to $100 and change. I think we have the same mousetrap here. But differently, we have 3 legs of the stool in Digital Turbine for any of you are shareholders with me, right, in that amazing run. And this we have all 4 legs of the stool, right? We have world-class technology, world-class distribution, world-class management. And what we have here today is we own a tremendous amount of IP. I don't know how you'd value all of our IP, and Kit and I would spend hours the other day going through how much video content we have for the 11 years that have been collected from Mike Tyson, Shaquille O'Neal to Adam Carolla to staggering amount of content, and it's very rare you have it. And when you build communities like this, right, eventually, that community will come. That community will come and the same thing will come in the stock market. We are stepping up our IR program. You'll very shortly see me back out on the road, stepping up our PR, right? It just wasn't working for the last year, but we'll announce a major PR firm, one of the most powerful in the country coming into the IPO for PodcastOne and coming into the same for Slacker Radio. We now have just a great story to tell. And we moved from a story stock to a growth stock to now a value stock. Our competitors are still trading at 3.3x revenues, right? We have one of the most successful platforms in this space and a little dark secret now, one of the only ones that have thrown off cash, right? So as you start to throw off cash, it gives a lot of opportunities. Again, we'll keep buying stock. We'll keep trying every trick we can to get people back involved and back engaged and get the stock running back to $10.

Great. We've got time for one more final question here. Do you anticipate any more partnerships with unique products?

For sure. I just watched the video. Josh helped put together an amazing partnership with Jeremih, an artist, who literally we're launching the first ever white wine for the black community. He could not be more excited. He got to taste last night, he got the taste the wine. We partnered Jeremih with a gentleman named Russell Bevan. Russell is the #1 winemaker in the history in Napa Valley, more 98 to 100 point wines in anyone history. We put the 2 of these together, and it's just been a great combo. So last night was a game-breaking night for this company, where Jeremih got to taste his wine, and you'll see that launch shortly. You're going to see many different brands launched with our podcasters, with our music stars, with our social media stars. And as you see these brands, it's really while to watch. We have so many social media stars inside of our community now who have 10 million to 100 million followers, right, on their own platforms. And as you watch any one of these stars can take on an entire brand, right? You see what Logan Paul did. We put Jake Paul on stage, the first ever in history to put him on stage and you watch these kids, Logan Pauls, energy drink just got valued at close to $2 billion, right? He used his podcast to drive that, right? We'll be doing the same, you'll see multiple products. And that first one we announced, don't be surprised to see another announced any minute now.

Very good. Well, I'd like to thank everyone again for joining and certainly an exciting time for LiveOne and the PodcastOne team IPO-ing shortly. Rob, any closing remarks?

Yes. Just finale is Kit just brilliantly closed the first $10 million deal in the history of the company. I see more of those coming. Josh disclosed 2 acquisitions, that is a Young Man who's 26 years old that I truly believe he's going to revolutionize publishing and change the entire $9 billion industry overnight. Brad is literally working on multiple different B2B deals like that Android automotive deal, like the Facebook deal we did with platforms that have massive traffic. So couldn't be more excited about the opportunity, and I look forward to the next conference call as we announce our final numbers for this year shortly, as well as updating on the credit facilities we talked about and continuing that buyback and we're buying every day, and we'll continue to buy every day. And I just want to tell you, I appreciate everyone. I know it's a difficult market. I appreciate your support. I appreciate your understanding on the tough time of this, and we're going to continue to work hard. And this is a team that breaks bricks and chops wood every day. I've never had a harder working team, a team that cares more. And we're really a family here, and thank you for spending the time with us today, and I look forward to the next opportunity to speak to you.

Great. Thank you very much, everyone. Appreciate your time today. Feel free to send any follow-up questions. You can send them directly to me at [email protected]. And thank you again, have a great day.

Great. Thank you, Kirin. Thanks for the great efforts.

Excellent. Thanks so much, everyone.

Have a great day one.

Bye-bye.