Loop Media, Inc. (NYSE: LPTV) has announced its financial results for the fiscal second quarter ended March 31, 2024, revealing a decrease in revenue and gross profit margin compared to the previous year. The company, which specializes in streaming for businesses and digital out-of-home venues, is undergoing significant organizational changes, including the stepping down of co-founder Jon Niermann as CEO and the departure of both the Chief Revenue Officer and Chief Operating Officer. Interim CEO Justis Kao and CFO Neil Watanabe discussed the company's efforts to increase revenue and improve profitability, despite facing challenges in the advertising market. The call did not include a Q&A session and was webcasted for replay on Loop Media's website.
Key Takeaways
- Loop Media's revenue for the fiscal second quarter of 2024 was $4 million, a 26% decrease from the previous year.
- The company's gross profit margin dropped significantly to 10.4% from 29.4% in the prior year.
- Net loss improved slightly to $7.6 million, or $0.11 loss per share, compared to a net loss of $9.8 million, or $0.17 loss per share, in fiscal 2023.
- Adjusted EBITDA loss was $4.5 million, an improvement from a loss of $5.6 million in the same period last year.
- Active Loop Players and partner screens increased to approximately 83,000, with Partner Screens growing by 108% year-over-year.
- Loop Media is transitioning to a more targeted distribution model to enhance advertising market attractiveness.
- Cash and cash equivalents stood at $2.2 million as of March 31, 2024, with a total net debt of $6 million.
Company Outlook
- Loop Media is focusing on a targeted distribution model to improve the quality and reach of its advertising platform.
- The company expects growth in QAUs and higher CPMs to drive revenue growth in the future.
- Organizational changes are aimed at accelerating Loop Media's path to breakeven and operating profitability.
Bearish Highlights
- A challenging advertising market and changes in ad demand partners' views of Loop's platform as a CTV platform led to revenue declines.
- The decrease in revenue was also attributed to a reduction in ad demand partners and the impact of one of the largest ad demand participants changing their terms of business.
Bullish Highlights
- Despite revenue challenges, the company managed to restore ad demand from a key participant and is working to increase its distribution footprint.
- The increase in Partner Screens suggests a growing interest and expansion in Loop Media's partner platform.
Misses
- The company missed the previous year's revenue and gross profit margin figures.
- There was a slight decrease in QAUs compared to the prior year quarter and the last quarter ended December 31, 2023.
Q&A Highlights
- There was no Q&A session following the management remarks on this earnings call.
Loop Media's recent financial performance reflects the company's strategic shift and the challenges it faces in the competitive CTV and digital out-of-home industry. The leadership changes and focus on revenue generation and distribution footprint expansion indicate a commitment to improving the company's financial health and market position. With a clear plan to target more desirable advertising markets and geographies, Loop Media aims to enhance its platform's attractiveness to advertisers and drive future revenue growth.
InvestingPro Insights
Loop Media's recent earnings report paints a picture of a company in the midst of a significant transition. The financial challenges are underscored by real-time data and insights from InvestingPro.
InvestingPro Data reveals a market capitalization of $22.54 million USD, reflecting the company's current valuation in the market. Despite the challenges, there has been a significant return over the last week, with a 1-week price total return of 10.34%. This suggests that investors may be responding positively to the company's recent strategic moves or market conditions may be playing a favorable role. However, the 1-year price total return is at -93.13%, indicating a steep decline over the past year.
An InvestingPro Tip highlights that Loop Media is quickly burning through cash, which aligns with the company's reported cash and cash equivalents of $2.2 million as of March 31, 2024. This could raise concerns about the company's ability to sustain operations without additional financing or a significant turnaround in performance.
Another InvestingPro Tip points out that the stock generally trades with high price volatility. This could be a consideration for investors who prefer stability, especially in the context of the company's recent leadership changes and strategic shifts.
For those interested in a deeper dive into Loop Media's financial health and future prospects, InvestingPro offers additional InvestingPro Tips. There are a total of 11 tips available, providing a comprehensive analysis of the company's financial metrics and market performance. To access these insights and more, visit https://www.investing.com/pro/LPTV and remember to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
Full transcript - Loop Media (LPTV) Q2 2024:
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 Second Quarter Ended March 31, 2024. Joining us today are Loop's Interim CEO, Justis Kao; Former CEO and Co-Founder, Mr. Jon Niermann; and the company's CFO, Mr. Neil Watanabe. By now, everyone should have access to the 2024 fiscal second 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 also be available for webcast replay on the company's website. Following management remarks, there will not be a Q&A session. Certain comments 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 other 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 this 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 Mr. Jon Niermann.
Jon Niermann: Thank you, and good afternoon, everyone. On March 18th, we announced significant changes to our organization that we believe will provide the framework to making the company more competitive in the CTV for business, digital out-of-home industry. The Chairman of the Board and members of the management team determined that executing operational changes is prudent to accelerate the company's potential path to breakeven and operating profitability. As part of those changes, after co-founding the company and serving as its CEO for the first 10 years, I have stepped down as CEO to focus my time and attention on revenue generation and other outward-facing areas. I'm excited to hand the CEO reins over to the next generation of leadership for Loop, Justis Kao. Justis has been an invaluable and well-respected member of our team from the beginning. Along with other organizational changes affecting several parts of our company, we also announced the departure of our Chief Revenue Officer and our Chief Operating Officer, both of whom have since exited the company. The timing is right for changes at this level. We are very fortunate to have a team of talented and experienced executives who helped us grow from a couple of million dollars in revenue to over $30 million in a fairly short period of time. Different people are often required for different phases of a company's evolution. As we move into the next phase of our evolution, we believe it is time for the leadership and operation change as mentioned above and in our public filings. I believe we have great potential and that executing these changes is prudent to accelerate the company's potential path to breakeven and operating profitability. We continue to believe that we are still at the beginning of the growth curve in the streaming for business, CTV, for out-of-home venues market, and Loop Media is helping to lead the way. Pioneering requires patients and the ability to navigate inevitable obstacles like we have had to endure over the past year or more. I have and will stay engaged in the company as part of the leadership team and a member of the Board of Directors. However, my responsibility will change to a focus on driving the revenue of our company, as well as the expansion of our distribution footprint. These are the most critical areas to address and stay focused on where the Board believes I can be the most value to the company. And I'm pleased with the initial progress we've made trying to address certain immediate needs over the past month. I'm also pleased to have a trusted copy now at the helm of the company, along with an incredible team that makes up the Loop Media family. With that said, I would like to publicly hand over the earnings call to our new CEO, Justis Kao. Take it away, Justis.
Justis Kao: Thank you, Jon. I'm very excited to have the opportunity to work with the entire Loop team in our ongoing efforts to try and create shareholder value. Since my appointment, I focus my attention on those areas of the business where we can look to increase revenues, leverage our fixed and variable expenses and improve profitability. Certain of the changes that Jon referred to a short while ago and that are outlined in our 10-Q periodic report for the period ended March 31, 2024, should move us further along that path. I'm looking forward to sharing with you in the future more of the actions that will be taken to try and achieve our objectives. With that, I will turn the call over to Neil to take you through our financial results. Neil?
Neil Watanabe: Thank you, Justis, and good afternoon, everyone. As we review our financial results, I want to remind everyone that all comparisons and variances, commentary refer to the prior year's fiscal second quarter, unless otherwise specified. As of March 31, 2024, we had approximately 83,000 active Loop Players and partner screens across the Loop, which included 32,658 QAUs across our O&O platform, versus 32,734 QAUs for the prior year quarter and 33,783 QAUs at the end of our last quarter ended in December 31, 2023. This represented a decrease of 0.23% to the prior year quarter and a decrease of 3% to our prior quarter. Our Partner Screens count represented at the end of the second quarter was approximately 50,000 across our partner platform, an increase of approximately 26,000 Partner Screens or 108% increase over the year ago second quarter and an increase of approximately 7,000 Partner Screens or a 16% increase over our last quarter ending December 31, 2023. Our QAU footprint for the second quarter of fiscal 2024 was reduced from the prior period, as a result of natural attrition of Loop Players that were not immediately replaced, as we continue to transition to a more targeted distribution model, to win 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 establishments. We believe this targeted distribution plan will, over time, allow us to grow our QAUs quarter-on-quarter and provide a more robust distribution platform for our advertising partners. Many of the more desirable markets and geographies generally experience greater competition, resulting in slower distribution growth in those markets as compared to the less desirable markets. As such, we expect the primary drivers of revenue growth going forward, to be a combination of increased QAUs as well as higher CPMs and advertising impression fill rates associated with more desirable advertising markets and geographies. Shifting to revenue. Our revenue for the three months ending March 31, 2024, was $4 million, a decrease of $1.4 million or approximately 26% and from $5.4 million for the three months ended March 31, 2023. This decrease was primarily driven by a challenging ad market environment in the second quarter of fiscal year 2024, due to one of the largest ad demand participants changing their terms of business with ad publishers, which resulted in a material negative impact on our ad demand partner revenue. During the latter part of the second quarter of fiscal year 2024, we worked with our demand partners and successfully integrated those changes and restored demand from this advent participant, although their new algorithms do not allow the same historical frequency of ad calls and ad fills. As a result, we do not expect to experience the same levels of absolute revenue previously recognized by this ad demand participants unless and until we significantly increased our distribution footprint. Finally, our decrease in revenue for the three months ended March 31, 2024, from the three months ending March 31, 2023. It was also a result of the reduction in ad demand partners in the second quarter of fiscal year 2024 that view our Loop Platform as a CTV platform on which CTV ad budgets can be sent as compared to the number of ad partners that viewed us as a CTV platform in the second quarter of fiscal year 2023. CTV advertising budgets are generally significantly higher and thus, CTV ad demand is generally associated with higher fill rates and CPMs as compared to DOOH ad budgets and demand. Our gross profit margin for the three months ending March 31, 2024, was $400,000, a decrease of $1.2 million or 78% from $1.6 million for the three months ended March 31, 2023, and our gross profit margin as a percentage of total revenues for the three months ended March 31, 2024, was approximately 10.4% compared to 29.4% for the three months ended March 31, 2023. The percentage decrease was primarily driven by decreased revenue. Based on our decrease in revenues, certain of our content license agreements provide from minimum license fees to be incurred. These minimum fees become an added component of cost of goods sold and reduced gross profit margins, which negatively affect our gross margin percentages. Our sales, general and administrative expenses for the three months ended March 31, 2024, were $5.7 million, a decrease of $2.1 million or 27% from $7.8 million for the three months ended March 31, 2023. The decrease in sales, general and administrative expenses was primarily due to reduction in marketing, costs, professional administrative fees, headcount sales commissions and stock compensation. Our net loss in the 2024 fiscal second quarter was a loss of $7.6 million or $0.11 loss per share compared to a net loss of $9.8 million or a loss of $0.17 per share for the same period in fiscal 2023. Adjusted EBITDA in the 2024 fiscal second quarter was a loss of $4.5 million compared to a loss of $5.6 million for the same period in fiscal 2023. Turning to our balance sheet. Cash and cash equivalents was $2.2 million on March 31st, 2024 compared to $3.8 million on December 31st, 2023. As of March 31st, 2024, we had a total net debt of $6 million compared to $7.1 million as of December 31st, 2023. I'd like to thank everybody for listening today. We look forward to providing further updates on our next conference call. This concludes our prepared remarks. Operator, back to you.
Operator:
Justis Kao: I would like to thank everyone for joining the call today and look forward to providing further updates on our next call.
Operator: This concludes today's conference call. Thank you for joining. You may now disconnect.
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