Loop Media (LPTV) 7 Aug 24 2024 Q3 Earnings call transcript

Loop Media, a leading digital out-of-home (DOOH) advertising platform, recently held its third-quarter fiscal 2024 earnings call, shedding light on the company's performance and future outlook. In a call led by Interim CEO, Justis Kao, and CFO, Neil Watanabe, Loop Media shared insights into its strategic initiatives, financial results, and operational adjustments. Here's a recap of the key takeaways from the call.

Cost-Cutting Measures and Operational Efficiencies

Loop Media has been actively implementing cost-cutting measures to streamline its operations and improve profitability. In the third quarter of fiscal 2024, the company managed to reduce its total operating expenses by an additional $1.6 million, largely due to restructuring efforts and operational efficiencies. These efforts include reducing labor force, restructuring vendor and partner agreements, and optimizing third-party vendor services. The goal is to maintain SG&A expenses under $4 million per quarter, a significant reduction from previous levels.

Challenging Ad Market Environment

The earnings call highlighted the impact of a challenging ad market environment on Loop Media's performance. A significant decrease in ad demand partner revenue was attributed to one of the largest ad demand participants changing their business terms, which had a material negative impact on Loop Media's ad revenue. However, the company has been working to restore demand and integrate changes, even though the new algorithms do not allow for the same historical frequency of ad demand and fills.

Strategic Distribution Adjustments

Loop Media has been focusing on a more targeted distribution model, pivoting its efforts to specific advertising markets and geographies, as well as desirable out-of-home locations and venues. This strategy has helped the company understand potential revenue opportunities and shift its focus towards smaller markets, which may offer more significant growth opportunities than larger, more competitive markets. The company plans to increase distribution efforts with its affiliate network, aiming for quarter-on-quarter growth and a more robust distribution platform for advertising partners.

Financial Performance and Future Outlook

The financial results for the third quarter of fiscal 2024 showed a revenue decrease of $1.3 million, primarily due to the challenging ad market environment. The company's gross profit margin also saw a significant decrease, largely due to reduced revenue and certain content license agreements that require fees based on non-revenue metrics. Despite these challenges, Loop Media has improved its adjusted EBITDA year-over-year and reduced cash burn from operations, positioning the company for future growth.

Subscription Offerings and Future Growth

Loop Media concluded the call by announcing the launch of a new subscription offering, including 40 live channels, just in time for the 2024-'5 sport season. With the NFL season about to start, this subscription opportunity adds to Loop Media's diverse content offerings, catering to specific themes of venue partners. These distribution initiatives, along with the launch of the new subscription, are expected to contribute to sustainable revenue growth in the coming quarters.

In conclusion, Loop Media's third-quarter fiscal 2024 earnings call provided valuable insights into the company's strategic adjustments, financial performance, and future growth prospects. The company's focus on cost-cutting measures, operational efficiencies, and strategic distribution initiatives underscore its commitment to improving profitability and navigating the challenges of the ad market environment. With the launch of a new subscription offering and continued distribution efforts, Loop Media is positioning itself for sustainable revenue growth in the coming quarters.