Executive Summary

Q2 FY2024 revenue fell 26% YoY to $4.00M and declined sharply QoQ from $10.17M, as one of the largest ad demand partners changed its algorithms/terms, reducing ad call frequency and fill rates; gross margin compressed to 10.4% and net loss was $(7.6)M ($(0.11) per share) .
Cost actions accelerated: SG&A (ex-SBC/D&A) was $5.74M in Q2, with additional initiatives announced (headcount reductions, salary cuts, Loop Rewards elimination, vendor/contract restructuring) expected to reduce payroll by ~$2M annually and ~$750k in vendor costs beginning FY2025 .
Distribution KPIs were mixed: O&O QAUs decreased to 32,658 (down 3% QoQ; flat YoY), while Partner Screens doubled YoY to ~50,000, reflecting a shift toward partner distribution despite lower gross margin mix .
Management is repositioning growth: restoring demand partner integrations under new rules, focusing on targeted distribution and higher-CPM geographies/venues, and evaluating new subscription tiers to diversify revenue; no explicit numerical guidance issued .
Estimates context: S&P Global Wall Street consensus for EPS/revenue was unavailable at time of analysis; as such, no beat/miss versus consensus is presented (S&P Global data unavailable).

What Went Well and What Went Wrong

What Went Well
- SG&A progress and broader cost program: Q2 SG&A (ex-SBC/D&A) decreased to $5.7M YoY; post-quarter measures (headcount/salary cuts, Loop Rewards elimination) are expected to materially reduce cost run-rate and improve margins over time .
- Adjusted EBITDA improved YoY to $(4.5)M from $(5.6)M, reflecting cost discipline despite revenue pressure .
- Partner Screens scaled to ~50,000 (up ~108% YoY), broadening reach and diversifying distribution beyond the O&O footprint .
- Management tone and focus: New CEO emphasized revenue growth levers, expense leverage, and profitability, signaling sharper execution priorities. “I have focused my attention on those areas of the business where we can look to increase revenues, leverage the Company’s fixed and variable expenses and improve profitability” – CEO Justis Kao .
What Went Wrong
- Revenue and gross margin pressure: Q2 revenue fell 26% YoY to $4.00M as a top demand partner reduced ad call frequency/fill, and fewer partners viewed Loop as CTV (higher CPM) versus DOOH; gross margin fell to 10.4% (vs 29.4% YoY) on lower revenue and fixed/minimum content costs .
- Sequential step-down: From Q1’s $10.17M and 35.6% gross margin to Q2’s $4.00M and 10.4%, underscoring seasonal ad softness (Jan–Mar) compounded by demand partner changes .
- O&O QAUs attrition: QAUs decreased to 32,658 (down 1,125 QoQ), reflecting targeted distribution shift and natural attrition, which may delay near-term ad revenue scale until footprint rebuilds in higher-value venues/geographies .

Financial Results

Quarterly trend and YoY comparisons

Metric	Q2 2023	Q4 2023	Q1 2024	Q2 2024
Revenue ($USD Millions)	$5.39	$5.69	$10.17	$4.00
Net Loss ($USD Millions)	$(9.82)	$(9.01)	$(5.29)	$(7.57)
Diluted EPS ($)	$(0.17)	$(0.15)	$(0.09)	$(0.11)
Gross Profit ($USD Millions)	$1.59	$1.57	$3.62	$0.42
Gross Margin (%)	29.4%	27.5%	35.6%	10.4%
SG&A ex-SBC/D&A ($USD Millions)	$7.77	$7.42	$6.17	$5.74
Adjusted EBITDA ($USD Millions)	$(5.55)	$(4.85)	$(1.48)	$(4.55)
Cash and Equivalents ($USD Millions)	N/A	$3.07	$3.81	$2.20
Net Debt ($USD Millions)	N/A	$7.5 (as of 9/30/23)	$7.1	$6.0

KPIs

KPI	Q2 2023	Q1 2024	Q2 2024
QAUs (O&O)	32,734	33,783	32,658
Partner Screens	~24,000	~43,000	~50,000
Total Active Players + Partner Screens	N/A	~77,000	~83,000

Notes:

Q2 revenue decline was driven by a “challenging ad market” and a major demand partner’s algorithm/terms change which lowered ad call frequency/fill; fewer partners treated Loop as CTV vs DOOH, impacting CPMs/fill .
Gross margin compressed on lower revenue and fixed/minimum content fees flowing through cost of revenue .

Segment breakdown: The company does not report formal operating segments; revenue is predominantly advertising with some subscriptions (no numerical split disclosed) .

Guidance Changes

Loop did not issue formal numerical revenue/EPS guidance. Management provided qualitative initiatives and cost targets.

Metric	Period	Previous Guidance	Current Guidance/Actions	Change
Payroll run-rate	FY2024 onward	None	Annual aggregate cash payroll reduction of ~$2M via layoffs/furloughs/salary cuts	Introduced
Vendor/services costs	FY2025 start	None	Eliminate ~$750k in ongoing yearly vendor costs beginning Q1 FY2025	Introduced
Loop Rewards program	Immediate	Program active	Eliminated; program cost $3.0M in FY2023 and $0.41M in Q1 FY2024	Eliminated
Content licenses	Ongoing	Fixed-fee mix	Restructure to reduce fixed fees and better align with content revenue; promote lower cost channels	Restructuring
Distribution incentives	Ongoing	Prior economics	Renegotiate affiliate terms to accelerate O&O Loop Player activations	Adjusting
Subscription strategy	Planned	Single-tier music video	Plan two-tier music video service: Basic (free ad-supported, <10 channels) and Premium (subscription)	Expanded

No explicit revenue, margin, OpEx, tax rate, or segment guidance ranges were provided in Q2 materials -.

Earnings Call Themes & Trends

Topic	Q4 2023 (Q-2)	Q1 2024 (Q-1)	Q2 2024 (Current)	Trend
Ad market + demand partners	Macro ad slowdown; building direct/local sales; diversifying beyond open exchange	Organic recovery; minimal political in Q1; ramp in H2 2024 expected	Major partner algorithm/terms change reduced ad calls/fill; integration restored but revenue likely lower unless footprint expands; fewer partners treating Loop as CTV vs DOOH	Near-term headwind; diversifying partners and channels
Distribution strategy/QAUs	Added 25k partner screens; targeting top DMAs/venues	Targeted distribution; QAUs pruned via attrition/quality focus	QAUs down to 32,658; Partner Screens up to ~50k; targeted geographies/venues to lift CPMs	Mix shift to partner screens; O&O rebuilt selectively
Cost structure/SG&A	22% YoY SG&A cut in Q4; aiming further leverage	SG&A ex-SBC/D&A $6.2M; continued efficiency focus	SG&A ex-SBC/D&A $5.7M; broader cost program incl. payroll cuts, Loop Rewards elimination, vendor/content renegotiations	Sustained cost-down; margin improvement targeted
Content/licensing	Fixed fee licenses pressured margins; mix shifts impacted margin	Mix effects; margin improved to 35.6% on higher revenue	Fixed/minimum content fees weighed on margin at low revenue; moving to variable-aligned licenses	Restructuring underway
Subscriptions/new products	Early-stage; planning AVOD/SVOD enterprise	Local ads manager in beta; more H2 impact	Two-tier music video subscription plan articulated	Monetization diversification
Strategic alternatives/financing	N/A	N/A	Exploring strategic alternatives and financing opportunities	Optionality introduced

Management Commentary

Strategic focus: “Since my recent appointment as CEO, I have focused my attention on those areas of the business where we can look to increase revenues, leverage the Company’s fixed and variable expenses and improve profitability.” – CEO Justis Kao .
Demand partner dynamics: “We worked with our demand partners and successfully integrated those changes… although their new algorithms do not allow the same historical frequency of ad calls and ad fills… we do not expect to experience the same levels of absolute revenue… unless and until we significantly increased our distribution footprint.” – CFO Neil Watanabe .
Margin drivers: “Based on our decrease in revenues, certain of our content license agreements provide for minimum license fees… [which] become an added component of cost of goods sold and reduced gross profit margins” – CFO Neil Watanabe .
Cost program and leadership changes: The company implemented leadership changes (new CEO), layoffs/furloughs, additional senior executive salary reductions, vendor eliminations (~$750k/yr from FY2025), ended Loop Rewards, and is restructuring content licenses to align payments with revenue .

Q&A Highlights

The Q2 FY2024 transcript furnished consisted of prepared remarks without a published Q&A section; key clarifications included: restoration of a major demand partner integration under new algorithms (lower ad call/fill), expectation to rebuild absolute revenue via footprint growth, and margin headwinds from minimum content fees at reduced revenue levels .

Estimates Context

Consensus estimates for Q2 FY2024 (EPS and revenue) via S&P Global were unavailable at time of analysis due to access limits; therefore, no beat/miss versus consensus is presented (S&P Global data unavailable).

Key Takeaways for Investors

Revenue pressure is tied to external ad tech changes more than demand destruction; Loop restored partner integrations but must scale footprint/CTV recognition to recapture absolute revenue levels .
Structural cost actions (payroll cuts, Loop Rewards elimination, vendor/content renegotiations) should lower the break-even threshold and support margin recovery as revenue normalizes; watch for SG&A ex-SBC/D&A trajectory in coming quarters .
Mix shift continues: Partner Screens are scaling quickly (50k), broadening reach but pressuring gross margin; targeted O&O rebuild aims to lift CPMs and fill in higher-value venues/DMAs .
Near-term gross margin is sensitive to revenue volume given minimum content fees; improving revenue density (and CTV classification by demand partners) is key to re-expanding gross margin .
Monetization diversification (two-tier music video subscription, local ads manager) offers incremental levers beyond programmatic; timing/traction will be important into FY2025 .
Liquidity and net debt improved QoQ ($6.0M vs $7.1M) with cash at $2.2M; ongoing financing exploration and strategic alternatives introduce optionality but also execution scrutiny .
Trading setup: Stock moves will likely hinge on evidence of (1) ad yield recovery via more CTV demand partners, (2) sequential revenue stabilization, and (3) visible OpEx and content cost savings flowing to EBITDA.

Appendix: Primary Sources

Q2 FY2024 8-K (Item 2.02) and press release: revenue, margins, SG&A, cash, net debt, QAUs/Partner Screens, cost actions .
Q2 FY2024 earnings call transcript: demand partner changes, margin dynamics, distribution strategy .
Q1 FY2024 8-K and call for sequential/YoY context -.
Q4 FY2023 8-K and call for prior-period baselines - -.

Loop Media, Inc. (LPTV)·Q2 2024 Earnings Summary