The Arena Group Holdings, Inc. (AMEX:AREN) Q4 2022 Earnings Call Transcript

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Daniel Day : Thank you. And then just on the licensing and syndication revenue maybe just a little more detail on what’s in this bucket. You’re at little shy of $6 million of revenue there in the quarter. Is there anything kind of one timey in there or seasonality in there and just how we should be modeling that moving forward? And then the margin, typically associated with that revenue? Is it generally accretive to your overall growth in EBITDA margins?

Ross Levinsohn: Yeah. On the margin side, it’s the beauty of create once, sell many. Similar to a SaaS business on the tech side. We’re producing so much high-end brand safe content with Sports Illustrated and Parade and the Street and now Men’s Journal that third parties ranging from very large newspaper brands and companies to digital outlets like Apple News, MSN, Yahoo and others are very aggressive in wanting to partner with us and redistribute that content. And of course, there’s no real cost to us to do that. So, the margin is pretty tremendous. There’s no real one-timers in here. We’ve grown really substantially. I mean, a year ago we had very few newspaper partners. We were seeing the majority of the revenue we were generating coming from digital outlets.

In large part, thanks to the work that our team has done from the parade acquisition, we’ve managed to sign some really exciting partnerships with local newspaper groups and also local television companies, the biggest in the country. So, we’re starting to see our content show up on sites all across premier media brands. And as I mentioned earlier, that number is north of 500 outlets that are taking one or more pieces of our portfolio. So, we expect that to continue to grow very, very high margin and as we transition more and more away from sort of the traditional print business we’re very excited about this part of this segment of our overall company.

Daniel Day : Great. One more for me, just — and then I’ll turn it over. I have to imagine the downturn in ad spend that he’s experiencing is probably putting a lot of pressure on some of the smaller publishers out there. Maybe that’s accelerating or kind of reinvigorating some conversations you have had in the past. Maybe you were too far apart on valuation. You can just comment on whether you see that happening, how your acquisition pipeline looks today. And then maybe comment on your ability to, to get an acquisition done with, the cash balance and, working capital requirements you have over the next few months.

Ross Levinsohn: Yeah, sure. So, we have spent a lot of time in the last couple of months well two months or so, three months really focused on integrating the assets we had. None of us thought it would be prudent to go out and try to do another big acquisition of any sort till we platformed the ones we did in December. And so now with that checked off and beginning operations there we’re freed up a little bit. We have added a bunch of new titles to the platform this year already. Those are not acquisitions, those are platform partners. So, we’re seeing additional revenue and opportunities there. The pipeline for acquisitions is pretty robust. Probably no surprise to you, as you said in your question, the — there are a lot of companies struggling out there, and I think we’ve proven that we’re successful in acquiring platforming and growing businesses.

So, we’ve gotten a lot of inbounds, more inbounds this year so far than I’ve seen in the time that I’ve been here. That said, we have work to do on the assets that we own and also on our overall balance sheet. So, we’re not really doing anything too aggressively there, although we’re starting to free up a little bit on our time. But that said, we do, as I said in my remarks, we do want to really focus on our capital structure our debt and ensure that we generate real free cash this year. So, we’re taking a cautious approach. Prices are cheaper for sure out there for assets that we consider to be really strong brands.

Operator: Thank you. There were no other questions in queue. I would now like to hand the call back to Ross Levinsohn for some closing remarks.

Ross Levinsohn: Okay. Thanks so much everybody. Appreciate you being on once again, and we’ll talk to you next quarter.

Operator: Thank you. This does conclude today’s conference. You may disconnect your lines at this time. Thank you for your participation.

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