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GAIA, INC (GAIA)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered double‑digit top-line growth and margin expansion: revenue $23.84M (+12% YoY) and gross margin 87.8% (+240 bps YoY). Diluted EPS improved to $(0.04) from $(0.05) YoY, with positive operating cash flow ($1.30M) and free cash flow ($0.70M) .
  • Versus consensus, revenue was a slight miss (actual $23.84M vs $24.18M*) while EPS modestly beat (actual $(0.04) vs $(0.0425)*). Marketplace softness tied to Egypt travel advisories drove ~1% revenue shortfall but did not impact EPS/FCF; management expects similar marketplace softness in Q2 before normalizing in H2 .
  • Guidance tone constructive: gross margin targeted at 86–87% for the remainder of 2025; member base grew to 867K with ARPU tailwinds from 2024 price increases. Cash ended at $13.09M (post $7.2M net offering in Feb) and a fully available $10M revolver supports AI and community investments .
  • Strategic catalysts: AI-first product roadmap (Gaia’s “conscious AI companion”), community platform progress, and Igniton brand launch after July 4, 2025; CEO transition to Kiersten Medvedich at end of Q2 to free James Colquhoun to pursue content/technology licensing opportunities .

What Went Well and What Went Wrong

What Went Well

  • Revenue and margin outperformance vs prior year: $23.84M (+12% YoY) and gross margin 87.8% (+240 bps YoY). “We continued to deliver on positive free cash flow and double‑digit growth for the quarter” — Chairman Jirka Rysavy .
  • Member growth and profitability focus: members rose to 867K; “We are now focusing on high lifetime value members.” Gross profit per employee >$800K vs $680K last year — Jirka .
  • Strategic investment momentum: $7.2M net equity raise to accelerate AI and the Gaia Community; management reiterates positive operating and free cash flow generation in Q1 .

What Went Wrong

  • Marketplace revenue below expectations from Egypt-related travel headwinds, causing ~1% revenue miss in Q1 and expected similar softness in Q2; management pivoted to Peru inventory; no EPS/FCF impact .
  • Sequential revenue down modestly vs Q4 ($23.84M vs $24.43M) and gross margin slightly lower (87.8% vs 88.3%) amid marketplace mix and seasonality .
  • Operating cash flow down YoY ($1.30M vs $5.94M) given working capital dynamics; FCF positive ($0.70M) but below Q1 2024 ($0.98M) .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$22.156 $24.433 $23.840
Gross Profit ($USD Millions)$19.055 $21.564 $20.905
Gross Margin (%)86.0% 88.3% 87.8%
Net Loss Attributable to Common ($USD Millions)$(1.192) $(0.803) $(1.014)
Diluted EPS ($USD)$(0.05) $(0.03) $(0.04)
Operating Cash Flow ($USD Millions)$0.409 $2.660 $1.298
Free Cash Flow ($USD Millions)$0.139 $0.605 $0.696
Cash & Equivalents ($USD Millions)$4.365 $5.860 $13.090

KPIs

KPIQ3 2024Q4 2024Q1 2025
Members (000s)846 856 867
Gross Profit per Employee ($000)n/a~730 >800

Consensus vs Actual (Q1 2025)

MetricConsensusActualSurprise
Revenue ($USD Millions)$24.175*$23.840 -$0.335M; -1.4% (bold miss)
Primary EPS ($USD)$(0.0425)*$(0.04) +$0.0025 (bold beat)
# of Estimates (Revenue/EPS)4/4*——

Values marked with an asterisk (*) were retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Gross Margin %FY 2025“Around 86%” (Q4 call) 86%–87% for remainder of year (Q1 call) Raised
Marketplace RevenueQ2 2025Not specifiedSofter; similar ~1% revenue impact as Q1; no EPS/FCF impact Lowered (near-term)
Price IncreaseEnd of Q1 2026Plan to add ~$2 monthly increase (from $13.99 to $15.99) Reaffirmed; roll‑out aligned with AI/community features Maintained
Community PlatformH1 2026Launch end of Q1 2026 target “End of Q1 next year” reaffirmed; alpha/beta in late 2025 Maintained
Igniton LaunchH2 2025Introduce May/June; begin sales in July Launch after July 4; ramp via Gaia Marketplace and distributors Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 / Q4 2024)Current Period (Q1 2025)Trend
AI/Technology InitiativesElevenLabs partnership for dubbing/translation (Q3) ; “world’s first conscious generative AI” plan; multi‑LLM integration (Q4) AI-first strategy; “conscious AI companion” on track; integration for discovery, localization, support Improving
Community PlatformDifferentiator; build network effect (Q3) ; launch targeted end Q1 2026 (Q4) Alpha/beta in late 2025; launch end Q1 2026; chapter-based engagement On track
Pricing/ARPULegacy price increase began, strong early results (Q3) 2026 additional $2 price increase reaffirmed; member churn manageable vs price delta Stable/positive ARPU
Marketplace PerformanceLaunch Aug’24; first full quarter Q4; breakeven mid‑2025 (Q3) Q1 softness due to Egypt; pivot to Peru inventory; similar Q2 softness expected; H2 normalization Softening near‑term
Licensing/PartnershipsElevenLabs signed (Q3) CEO shift to pursue content/technology licensing opportunities (Gaia/Igniton) Expanding focus
Capital/Balance SheetNo immediate capital raise needs (Q3) $7.2M net offering closed; $13.1M cash; $10M undrawn LOC; mortgage refinanced later 2025 Strengthened liquidity

Management Commentary

  • “For the remainder of the year, we expect gross margin to be in the range of 86% to 87%.” — Jirka Rysavy .
  • “We are fully embracing an AI-first strategy… integrating AI into content management, localization and member engagement… to expand gross profit per employee.” — James Colquhoun .
  • “In the first quarter, we delivered 12% revenue growth, up $2.5 million to $23.8 million… EPS improved to $(0.04)… operating cash flow was $1.3 million and free cash flow was $0.7 million.” — CFO Ned Preston .
  • “We closed an underwritten offering… using approximately $7.0 million in net proceeds to build out the company's AI capabilities and development of the Gaia Community project.” — CFO Ned Preston .

Q&A Highlights

  • AI product roadmap: Generative AI integrated within app/web for conversational content discovery; multi‑LLM architecture planned; no hyperscaler content deals yet; licensing opportunities under evaluation .
  • Marketplace and Q2 outlook: Egypt travel advisory led to ~1% Q1 revenue miss and anticipated similar impact in Q2; pivot to Peru tours; no EPS/FCF impact; H2 marketplace expected in line .
  • CEO transition: Kiersten Medvedich to become CEO end of Q2; James to focus on high‑impact licensing and Igniton growth; Board/management otherwise unchanged .
  • Discontinued business: ~$1.2M prior‑year revenue removed; presented as discontinued ops in 10‑Q .
  • Balance sheet: ~$5.9–6.0M mortgage re‑up later 2025; $10M revolver undrawn; real estate collateral valued 3–4x; expect slightly higher interest on mortgage .

Estimates Context

  • Q1 2025: Revenue actual $23.84M vs consensus $24.175M* (−$0.335M, −1.4%) — bold miss; EPS actual $(0.04) vs consensus $(0.0425)* — bold beat. # of estimates: 4 (rev/eps)* .
  • Implications: Marketplace headwinds explain modest revenue shortfall; EPS resilience supported by margin expansion and cost discipline. Near-term sell‑side may trim Q2 revenue for marketplace variance while leaving FY margin assumptions intact (86–87%) .

Values marked with an asterisk (*) were retrieved from S&P Global.

Key Takeaways for Investors

  • Slight revenue miss driven by temporary marketplace headwind; core streaming metrics strong (gross margin 87.8%, member growth to 867K). Near‑term trading: watch Q2 marketplace commentary for H2 re‑acceleration .
  • EPS beat reflects margin discipline; management guiding 86–87% gross margin for 2025 — supportive of earnings trajectory despite mixed near‑term marketplace .
  • Strategic catalysts (AI companion, community platform, Igniton launch) form a multi‑quarter narrative likely to drive ARPU, retention, and potentially licensing revenue — monitor product milestones and pricing levers into 2026 .
  • Liquidity strengthened with $13.1M cash post offering and $10M undrawn LOC; mortgage rollover expected later 2025 but leverage manageable, supporting investment spend without dilution risk near term .
  • Pricing power: 2024 increases performing above expectations; 2026 planned $2 increase aligned with AI/community feature roll‑out — de‑risked ARPU growth path .
  • Membership quality focus (high‑LTV markets, Gaia+ growth) and efficiency gains (GP/employee >$800K) should underpin margin durability through cyclical demand swings .
  • Tactical: Expect modest estimate revisions for Q2 revenue; EPS/margin likely stable. Stock may respond to updates on licensing deals and AI/community timelines; CEO transition at end of Q2 is a watchpoint but appears orderly .