Author Topic: GAIA - Gaiam Inc.  (Read 63163 times)

KJP

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Re: GAIA - Gaiam Inc.
« Reply #210 on: March 05, 2019, 08:47:06 AM »
Are they also now playing word games with how much they're spending on subscriber acquisition? 

The company typically discloses marketing costs in a footnote to the financials, and those numbers have been consistent with the customer acquisition spend reported on the conference calls, which also historically has equaled (total expenses) - (non-CAC OpEx) - (Corp. costs).  In footnote two of the just released 10-K, the company reports $46.3 million in annual marketing expenses.  If you subtract the three prior quarters of customer acquisition spend disclosed on the calls, that leaves Q4 customer acquisition spend of $14.2 million.  Customer acquisition spend of $14.2 million is also consistent with $22.1 total expense - $7.8 all other non-CAC expense disclosed on the call.  The numbers in the 10-K are where I got the $14.2 million of spend I used in my prior post.

But during the call, management suggested that they spent only $11.2 million on subscriber acquisition.  Here's the quote:

"Subscriber acquisition costs for direct customers, which includes all expenses incurred in the period to support subscriber and revenue growth were 94% of streaming revenues for the quarter or $11.2 million. Similar to the third quarter, these costs include cost of continuing to translate more of our existing library into French, German and Spanish."

So where is the missing $3 million?  On a quick review, the only thing I see is the following reference to other "marketing activities" during the call:

"In the fourth quarter, we took advantage of matching funds provided by certain of our distribution partners and invested an incremental $3 million in marketing activities to support growth through these channels. While the result of this spend will take some time to be reflected in the revenue and subscriber numbers, it has elevated the awareness of Gaia within the SVOD ecosystem."

If this $3 million isn't for subscriber acquisition, then what is it?  Any why isn't it included in the amount of customer acquisition spend that the company discloses to shareholders during the call?

EDIT:  Also, the $91 cost per gross add presumably was calculated against the $11.2 million, not the $14.2 million I assumed in my prior post.  So, the churn calculation in that post is too high.
« Last Edit: March 05, 2019, 10:24:43 AM by KJP »


BMC34

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Re: GAIA - Gaiam Inc.
« Reply #211 on: March 05, 2019, 09:25:58 AM »
I think  Rysavy could have done a better job of answering Peter's question but I think all he was trying to say is there is no change to their margin guidance other than timing.   He said you have to look  at the revenue and I think the point he was trying to make is that the 40% pre-tax margin (as I recall) that they guided to still stands at $150mm in revenue.  When they were in hyper growth mode they expected to hit $150mm in revenue in 2021.  Now at ~30%+ revenue growth the math would indicate they will hit/exceed that target in 2023.  And the 40% pre-tax margin associated with the $150mm in revenue still stands but they won't achieve that in 2021.  That is how I interpreted his answer.

KJP

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Re: GAIA - Gaiam Inc.
« Reply #212 on: March 05, 2019, 10:25:48 AM »
I think  Rysavy could have done a better job of answering Peter's question but I think all he was trying to say is there is no change to their margin guidance other than timing.   He said you have to look  at the revenue and I think the point he was trying to make is that the 40% pre-tax margin (as I recall) that they guided to still stands at $150mm in revenue.  When they were in hyper growth mode they expected to hit $150mm in revenue in 2021.  Now at ~30%+ revenue growth the math would indicate they will hit/exceed that target in 2023.  And the 40% pre-tax margin associated with the $150mm in revenue still stands but they won't achieve that in 2021.  That is how I interpreted his answer.

I think that's a fair interpretation.