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Gaia Inc (GAIA -1.74%)
Q4Â 2018 Earnings Conference Call
March 04, 2019, 4:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
See all our earnings call transcripts.
Prepared Remarks:
Operator
Please stand by. Good afternoon, everyone, and thank you for participating in today's Conference Call to discuss Gaia Inc.'s Financial Results for the Fourth Quarter and Full Year ended December 31, 2018. Joining us today are Gaia's CEO, Jirka Rysavy; and CFO, Paul Tarell. Following some prepared remarks, we will open the call for your questions.
Before we get started, however, I'd like to take a minute to read the Safe Harbor language. The following constitutes the Safe Harbor statement under the Private Securities Litigation Reform Act of 1995. The matters discussed today include forward-looking statements that involve numerous assumptions, risks and uncertainties. These include but are not limited to, general business conditions, historical losses, competition, changing consumer preferences, subscriber costs and retention rates, acquisitions and other risks and uncertainties detailed from time-to-time in our filings with the Securities and Exchange Commission, including our reports on Form 10-K and Form 10-Q. Gaia assumes no obligation to publicly update or revise any forward-looking statements.
With that, I would now like to turn the call over to Gaia's CEO, Jirka Rysavy. Please go ahead.
Jirka Rysavy -- Founder, Chairman and Chief Executive Officer
Thank you and good afternoon, everyone. We finished 2018 with 550,000 subscribers, 55% growth from 364,500 a year ago. Our revenue increased slightly faster at 55% and our gross margin was up 90 basis point to 87.1%. We expanded our subscriber geographical diversification to about 185 countries.
During the third quarter of 2018, we have surpassed 500,000 subscriber milestone and we began to shift our acquisition focus to primary non-yoga subscribers and we announced that over 50% of our subscribers we acquired during the third quarter were in seeking truth and transformation channels. We have continued this focus through the fourth quarter and into 2019.
In January, we increased our monthly subscription price to $11.99 for new subscribers, while grandfathering our existing subscribers until the first renewals in 2020. And our annual subscriber price remained at $99.
With the general increase in implied cost of growth capital, we decided to increase our target of minimum ratio between our subscriber lifetime value and cost to acquire a subscriber from 2:1, which we targeted for last two years to 3:1. As of February, this goal was accomplished. However, subscriber lifetime value increased to $260 and our CPA cost per acquisition decreased to $82 right now.
We set our 500,000 and million member targets in fall of 2015 as we were contemplating the sale of Gaiam business products business. In term of these targets or to set a goal for subscriber number that would allow us to reach a scale that would minimize our risk of any new entrances into our space, which really didn't happen to-date. As we have successfully executed on the business plan and reached the 500,000 milestone in exact months of September of 2018, as the original plan called for, and we remain confident that we could achieve the next target before slowing the growth rate down and focusing a system of growth and profitably going forward.
By the general shift in the market segments in the fourth quarter that clearly signaled to us a significant increase in implied cost of growth capital allowed us to reevaluate the best timing to move toward profitability. Based on this, we decided to increase our LTV ratio from 2:1 to 3:1, as I mentioned, and decided to raise the price of our monthly subscription.
We now focus to further increase this LTV CPA ratio to 3.5:1. We want to keep growing our gross profit for per employee ratio, which in the fourth quarter was $322,000, up 33% from $242,000 a year ago. And additionally, we want to transition to positive EBITDA by end of this September and maintain revenue around 30% growth for going forward, with keeping gross margin steady in our 87% level.
We also will commence our marketing of our new all access membership at $299 in the second quarter with the announcement of the initial lineup of the lifetime live events from our new campus center. The first event which will feature Gregg Braden will take place in June. This membership will also include our existing online offering.
And now, I will let Paul speak more to results. Paul?
Paul Tarell -- Chief Financial Officer
Thanks, Jirka. Streaming revenues in the fourth quarter increased 50% to $11.9 million compared to the year ago quarter due to continued subscriber growth. For 2018, streaming revenues increased 60% to $42 million versus 2017. Gross profit in the fourth quarter increased to $10.8 million from $7.3 million in the year ago quarter, while gross margin increased 100 basis points to 87.2% from 86.2% in Q4 '17. The increase in gross margin has continued to be driven by increased revenues, continued efficiency in our per subscriber costs of streaming and growing leverage on our historical content investments. For these same reasons, full year 2018 gross profit increased 56% to $38.1 million and gross margin was up 90 basis points at 87%.
Operating expenses excluding marketing and subscriber acquisition costs in the fourth quarter were $7.8 million compared to $6 million in the year ago quarter. And as a percentage of revenue improved to 63% in the fourth quarter of 2018 from 71% in the year ago quarter. On a full year basis, operating expenses excluding marketing and subscriber acquisition costs increased to $27.9 million compared to $23.8 million in 2017. And as a percentage of revenue improved to 63% for 2018 from 85% in 2017. 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.
As Jirka mentioned, we have continued our focus on adding higher lifetime value subscribers, which represented over 80% of subscriber additions for the fourth quarter, which is the second quarter in a row it's been at this level. As Jirka mentioned, we increased our target lifetime value to CPA ratio in early December to 3:1 from the historical 2:1. This helped lower the blended average CPA for the fourth quarter to $91.
Both trends have continued into 2019, with CPA trending down to $82 and yoga subscribers representing roughly 20% of new subscribers in 2019 compared to 32% in 2018. While the first quarter has historically been a period of strong yoga growth, we maintained our spend discipline and did not increase our per subscriber targets for acquisition costs for yoga campaigns.
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. We intend to allocate a portion of our marketing spend in 2019 to continue to grow and nurture these partner relationships to maintain revenue from distribution partners in the range of 18% to 20% of total revenues.
As of December 31, 2018, we had $30 million in cash compared to $32.8 million at December 31, 2017, with $12.5 million drawn down on our current line of credit on both dates. We will be pursuing options to unlock more of the equity value of our corporate campus by replacing the existing line of credit with a mortgage to increase our visible cash reserves, but do not anticipate the need for this additional capital.
During 2019, transitioned our legacy internally developed billing and subscription management platform to an enterprise level solution. This allows us to expand our pricing options and support additional international and other payment methods with minimal incremental development effort. Through this transition, we have gained additional reporting capabilities around our recurring billing processes, allowing us to reevaluate the criteria we use to determine who we consider a paying subscriber, primarily around payment related issues.
Historically, we provided for a 15-day grace period and included all subscribers with card related payment issues in our member count at period end. With the new system, we are better able to determine the rate at which we will resolve these issues at an individual subscriber level and will therefore only include a subset of this group on each balance sheet date going forward. This will have a one-time impact in the first quarter of 2019.
While we expect to add about the same number of net subscribers in the first quarter as we did in the fourth quarter, with the impact of our refined subscriber definitions and the discontinuation of our spiritual cinema DVD club, we expect to report around 560,000 subscribers for Q1. We will provide adjusted historical member count numbers reflecting the disposal of the spiritual cinema club with our Q1 release.
As Jirka mentioned in his remarks, our focus for 2019 will be to continue to increase our target LTV to CPA ratio to 3.5:1, continue to grow average gross profit per employee, transition to positive EBITDA by the end of September 2019 and maintain revenue growth around 30% going forward.
With that, I would like to open up the call for questions. Operator?
Questions and Answers:
Operator
Thank you. (Operator Instructions) And we'll take our first question from Mark Argento with Lake Street Capital Markets. Please proceed.
Mark Argento -- Lake Street Capital Markets -- Analyst
Hey guys, thanks for taking the questions here. Just wanted to drill down a little bit in terms of kind of lifetime value of a -- like a true seeking subscriber versus a yoga subscriber. Maybe you could review that a little bit. Assuming kind of a 3.5 -- the 3.5:1 ratio , I'm assuming you're still pushing about $300 on a lifetime value of a subscriber to sort of make sure that that's accurate math.
Jirka Rysavy -- Founder, Chairman and Chief Executive Officer
The overall subscriber average is right now about $260, which is -- was like to $230 to $235 before we started this process, so kind of increased pretty meaningfully. Keep increasing obviously further as -- because we raised the price, so -- but we grandfather existing people. So as that we go forward, it's -- obviously the lifetime value will keep growing. And if we kind of stay everything else steady, this yoga to life -- to seekers was -- used to be historically about 2:1, seekers being 2 times as yoga. Now, we slowed yoga subscription quite a lot. So the average is up. It impacted a lot how many new subscribers we have. So -- because the yoga new subscribers decreased dramatically, obviously the lifetime value increased were the seekers as we kind of get lot of more of new ones and the balance probably decrease. So they're much more closer to each other, but the overall average increased, let's call it, $25. So it's -- the averages are really important to have in mind because obviously new subscribers we just get has much lower expected retention than people there with us, let's say, more than six months or a year. So there's a lot of factors, but overall, it's about $260 right now. And as I said, the acquisition right now, it's about $80, $82. So we're somewhere within like 3.1 to 3.2 as we're speaking as a ratio.
Mark Argento -- Lake Street Capital Markets -- Analyst
So as you guys focus on a higher ROI subscriber, pull back a little bit on the subscriber growth, it looks like you're going to, like you said, you're going to hit EBITDA profitability in Q3. Are you going to end -- but yeah, you think you can grow at 30% plus. Does the 30% you guys kind of running at breakeven on adjusted EBITDA basis and you're just plowing everything back in kind of breakeven or how should we think about kind of growth rate relative to EBITDA generation?
Paul Tarell -- Chief Financial Officer
Yeah. I think the first thing, this is Paul, the first thing I would clarify is that 30% is on the revenue line, not the subscriber line, because the revenue lags the subscribers. So just to make sure that that's the number that you are keen off of. And then in terms of where we go, we are looking and being able to expect to make that transition, very similar to what we did in 2015 if you remember when we tried to get to profitability by Q3 2015 and we ultimately did. We're looking at it at the same plan this year. So that then as we go into Q4, we can evaluate what do we want to do for '19 into '20 based on where we're running at that time. But our revenues, regardless, we kind of plan to be at least 30%. So that -- the EBITDA when we get to profitability, we might see how much we want to put to bottom line, how much to revenue, but we still want to keep growing revenue 30% into the next year. So --
Mark Argento -- Lake Street Capital Markets -- Analyst
So safe to say, you think you can grow the business 30% plus kind of organic with organically generated cash out of subscriber base, that's the way to think about it?
Paul Tarell -- Chief Financial Officer
And the cash what we currently have, of course.
Mark Argento -- Lake Street Capital Markets -- Analyst
All right. And then last, in terms of stock buyback, I think you guys -- I think you have a stock buyback in place. Any thoughts on if you're not going to be using -- aggressively spending capital to grow the subscriber base, any thoughts in terms of tapping the stock buyback?
Jirka Rysavy -- Founder, Chairman and Chief Executive Officer
We've actually not announced or put one in place at this time.
Mark Argento -- Lake Street Capital Markets -- Analyst
Thank you.
Operator
Next, we'll hear from Darren Aftahi with ROTH Capital Partners.
Darren Aftahi -- ROTH Capital Partners -- Analyst
Hey, guys. So wanted clarification on a couple of questions. So I think I heard you correctly, Paul, you said 560,000 net subs at the end of Q1 and then sort of a similar addition rate at Q4. I'm just kind of curious, what are the other puts to that number? Second question, so you turn EBITDA breakeven or positive by the end of September. What does that sort of imply in terms of cash burn to that point? And then as we get to that implied sort of breakeven run rate of EBITDA or positive number, what does the mix look like in terms of domestic versus international or non-English speaking subs and how does that kind of trend beyond 2019? Thank you.
Paul Tarell -- Chief Financial Officer
Sure. I'll run through those in order that you said it. So yeah, adjusting for this one-time change in the way that we treat those people that are in this payment decline process, we are expecting to report around 560,000 paying subscribers. So that -- if you think about on average with over 0.5 million subscribers, the majority of which are on monthly plans. The industry decline rate is about 3%. So you can kind of do the math on how big of a member base we have to see what the impact of the total population is there, but it's somewhere in the low 10,000 member one-time adjustment there.
And then in terms of the other puts, it's really a function of the number of subscribers that we're adding in the higher value segments, while we're still burning off some of the subscribers that we added that haven't gotten to that maturity point of 12-month plus in terms of their membership. Because if you remember, we didn't really make that transition to the higher lifetime value customer segments until Q3, so we still have a bit to work through from the first half of last year, where we hadn't made that shift.
Jirka Rysavy -- Founder, Chairman and Chief Executive Officer
And we have -- obviously, there is also part and we will kind of publish and restate it, provided we make the decision and discontinue the LTV -- the spiritual club DVD legacy business, which we right now intend to do it, we actually intend to discontinue and then sell it. So we will republish those numbers. And doing this one-time cleanup we talk about a lot, but there's opportunity right now since we're kind of resetting the thing to -- with the new system to really kind of be very conservative what we consider subscribers base, there might be some upside to those. But for right now, we will not just really do this cleanup, as Paul's saying. And it's kind of for the growth numbers. They would mean they're different than the fourth quarter, but we kind of whenever we start with the clean slate.
Paul Tarell -- Chief Financial Officer
And then in terms of your question from a cash perspective, we're really looking at being able to use the cash on the balance sheet and maintain a sufficient reserve going into it from that perspective, but we're not going to provide any specific guidance. But just to reiterate that we are intending to fund from here with the cash that we have available and any refinancing that we might do on the building this just incremental reserves.
Jirka Rysavy -- Founder, Chairman and Chief Executive Officer
Yeah. We will need it, but we kind of felt based on the response of last call, hey, we're going to have more on the balance sheet. In the case, like what Mark mentioned, we will consider buyback stock or something that's additional thing, we don't want to really go to it right now. And the third question was to international. And we have international -- we historically said it's about 30%. That was always commented on what we call direct subscriber because all our third parties are domestic today, even we start to look at Latin America right now for third parties. So the domestic -- so the international numbers we would expect to grow, obviously. So we kind of said that in the five years we expected a half of those people. So we expect to make some dent on that difference this year as well. The probably most -- the best countries per right now are German and Spanish speaking country, where we expect a significant growth over next couple of years.
Darren Aftahi -- ROTH Capital Partners -- Analyst
Thank you.
Operator
Next, we'll hear from Eric Wold with B. Riley FBR.
Eric Wold -- B. Riley FBR -- Analyst
Thank you. Few questions. I guess, one, back kind of I think it was Q3 you talked about organic subscriber contributions around 40% of your additions. I guess, how does that change with this move toward a greater ratio and kind of how does that benefit the growth rate versus kind of where it was before?
Paul Tarell -- Chief Financial Officer
So it's a function of itself, obviously, but in terms of absolute numbers, we don't expect that number to go down. So as we slow down the rate of investment on the paid media side of things, that number should increase. We've also historically talked about the member referral and the ambassador programs and indicated that we were just getting those launched in Q3, Q4. We've had some decent early results on that in terms of our beta testing and so we expect that to continue to grow as we focus on number-driven growth going forward, which is what those two initiatives are part of.
Eric Wold -- B. Riley FBR -- Analyst
Okay.
Jirka Rysavy -- Founder, Chairman and Chief Executive Officer
Also this organic -- obviously, since the organic is growing as a percentage that by slowing the growth, let's say, from 60 to 30 or 35, the difference is the non-organic because the organic, we still push kind of same way and we started some new ones. So obviously, the percentage of organic, it will increase pretty meaningfully. That's kind of a big part of lowering our cost of acquisition because there is more, what we -- kind of organic or what we call non-paid channels. So which drives the acquisition cost averages down.
Eric Wold -- B. Riley FBR -- Analyst
Okay. And then on -- Q4, Q1, I guess, historically been some of your more heavier spend period in terms of customer acquisitions, so you should get a positive EBITDA in Q3. Can positive EBITDA be sustained even during those heavy spend periods or you need to make adjustment to your plan on that?
Paul Tarell -- Chief Financial Officer
Our intent would be to continue once we hit it to stay there. We'll have the benefit of all of the subscribers that we added in the first half of the year at the $11.99 continuing to build as a percentage of the overall number, which will help average revenue per user into Q4, which should mitigate that. But then also by the way that we're building out these organic channels in this member driven growth strategy, it's not going to be spend lumpy as our historical growth has been, where we've effectively fueled it by paid media predominantly.
Jirka Rysavy -- Founder, Chairman and Chief Executive Officer
We have now several trends with this change, like we have probably more organic, like, with the increased price, even we grandfather the people right now for 2020. You're going to see the increase on our ARPU pretty much quarter-by-quarter. So that will definitely help. So it's definitely once we get EBITDA profitable, we intend to stay there.
Eric Wold -- B. Riley FBR -- Analyst
Perfect. And then as we think about the need to spend on growing the media library, obviously, up about 50% last year after almost doubling the year before or kind of including our CapEx and media library spend all that. What do you think about the needs there in 2019 and beyond at a 30% plus revenue growth rate?
Paul Tarell -- Chief Financial Officer
Well, I think one of the things that is one-time for this year that's somewhat masked into that CapEx spending is the improvements that we've made to the campus for our all access theater, that's going to be starting go to market here in Q2. So that won't recur from a cash use perspective, but the intent would be to --
Jirka Rysavy -- Founder, Chairman and Chief Executive Officer
It will be in the first quarter finishing.
Paul Tarell -- Chief Financial Officer
Yeah. But the intent would be to look at tying our media library investments to our revenue growth and continue to focus on building that. Now that we've gotten through the peak growth phase from a marketing dollar perspective, we would intend to invest some of that incremental margin back into the media library to help with retention efforts.
Jirka Rysavy -- Founder, Chairman and Chief Executive Officer
Yeah. I would totally agree with that. (Multiple Speakers) As early in the fast growth period, the marketing was important to us more because we felt like we need to get to some scale. So the new entrants in the market, new entrances wouldn't -- if well funded, they couldn't really take our space. Well, first, we kind of accomplished our growth, at the same time, there were no really new meaningful entrances to our space. So the marketing is not the growth of strategically importance just basically saying on overall shareholder value. So kind of shift that dollars to content you're probably going to see, but we are going to kind of moderate it with their revenue growth. But our goal, as we always said in the future, is to have roughly the amortizations similar to our spend what we spend on the content, but this maybe still couple of years.
Eric Wold -- B. Riley FBR -- Analyst
I apologize. Last question. So what was -- I'm sure, it might be in the 10-K just filed, but what was the incremental spend last year on the campus and what will be the kind of the final piece of that in Q1?
Paul Tarell -- Chief Financial Officer
If we look at all what we spent last year on the campus, it's about $6 million with another maybe $1 million to go in Q1 from the actual building perspective and then we'll have some TI work on the actual stage and studio equipment in probably another $1 million range and then we'll be -- we should be good from there.
Jirka Rysavy -- Founder, Chairman and Chief Executive Officer
And it will launch -- this event would be in June. So obviously, we have to be done before that.
Eric Wold -- B. Riley FBR -- Analyst
Perfect. Thanks guys.
Operator
Next, we'll hear from Steven Frankel with Dougherty.
Steven Frankel -- Dougherty -- Analyst
Good afternoon. I want to go back to this 30% revenue growth goal, does that include taking the entire of the DVD subscription revenue line to zero beginning in Q1?
Paul Tarell -- Chief Financial Officer
If we move forward with our plans to discontinue and sell it, which it is looking like that's the way that we're going to go, that would be the intent. So we provide a restated number for revenue and gross margin representing that as discontinued operations in Q1.
Jirka Rysavy -- Founder, Chairman and Chief Executive Officer
It's (inaudible) New Mexico, the difference is there.
Steven Frankel -- Dougherty -- Analyst
Again, so we should assume that you're going to grow the streaming business by 30% or better in '19, the streaming revenues.
Jirka Rysavy -- Founder, Chairman and Chief Executive Officer
'19 and '20. Yes.
Steven Frankel -- Dougherty -- Analyst
Yeah. And how should we think about ARPU rising through '19?
Paul Tarell -- Chief Financial Officer
We're going to have more and more impact of $11.99 members as they come online, but that started in mid-January. So it will take some time to work through, but we're also going to have healthier lifetime values creating more tailwind there. So it will improve steadily. I don't have any specific guidance to provide for you. But if you think about the 20%-ish increase in revenue that we picked up by changing from $9.95 to $11.99, that will work its way through over the year and probably be fully in Q1 next year.
Jirka Rysavy -- Founder, Chairman and Chief Executive Officer
And you're also going to have two other things. So if you discontinue the DVD subscription, that was $25 a month, but we're putting on this new all access, which is $300, which is also about $25 a month. Right? So there might be a little time lag that's catching up. But overall, you should still have pretty much continuous improvement on the ARPU for this and next year.
Steven Frankel -- Dougherty -- Analyst
Okay. And how much more room is there for gross margin improvement, you've obviously done a good job over the last 12 months?
Paul Tarell -- Chief Financial Officer
Yeah. I think we're at the point now as we're transitioning to the sustainability phase that I wouldn't expect it to climb from here because we'll start to have the impact of our media library investments rolling through that line as amortization. But for '19, we're targeting it to stay in that level and then it shouldn't move meaningfully one way or another, unless we change our content investment strategy from what we've been doing historically.
Jirka Rysavy -- Founder, Chairman and Chief Executive Officer
You're going to have -- we have something internally what we call gross profit contribution -- I mean, cash contribution on that level, which is about 91%, which is like our gross profit minus non-cash from the library, plus the cost of credit card and stuff like that what we can directly contribute there and that's about 91%. I expect the 91% number can increase because our cost of streaming as we have more leverage will decline. So our cash contribution will do, however, as Paul said, our amortization as we kind of start to invest more probably increase to offset that. So we kind of assume that we will stay as reported gross profit on that 87% level, while our cash contribution will increase from 91% where we are right now.
Steven Frankel -- Dougherty -- Analyst
Okay, great. Thank you.
Operator
(Operator Instructions) We'll now hear from Peter Rabover with Artko Capital.
Peter Rabover -- Artko Capital -- Analyst
Hey guys. Could you just -- it hasn't been that long since the last call, you guys were pretty confident in your strategy just three or four months ago. So I'm just kind of curious, if you could take us through what happened to have this big shift from then to now? So -- and I have a couple of more questions after that.
Jirka Rysavy -- Founder, Chairman and Chief Executive Officer
As we kind of said in the remarks, we -- actually when we finished the third quarter, we were still -- and we reported we still intend to grow as we had and we're still confident we could go that way and keep growing another year at 60%. But the response from the overall market when you kind of see that all the high-growth company took a big hit and there is more focus on capital and cash flows and we kind of saw it in our market, we heard it from a lot of our shareholders what we talk all the people who get meaningful what they think and overall conclusion and we discuss in our Board a long time and we decided it's probably since the original $1 million was set up mostly for the immune to kind of new entrant market and we're pretty much there and we have enough cash flow to be profitable now on our existing things, so that we grow more. We're planning to do this in 2020, so it is a question how much cash we want to burn till we get to sustainability. So it was all more decided we're going to our -- keep some of the cash on the balance sheet and get to profitability faster than what we had before because that plan was set in 2015 and we felt that was the condition of the market of our companies and condition of competition that we could keep the cash. And if anything and keep invested more in the retention side, which means be the content than the acquisition early, it's just the efficiency of the capital, so we were evaluating what will bring the shareholder value overall do we go faster or do we keep the cash and be safer and this was what was decided.
Peter Rabover -- Artko Capital -- Analyst
Okay. Well, so you had a 40% pre-tax margin number for 2021. Are the economics still the same for -- should we lower our expectations on those numbers and how do we think about that?
Jirka Rysavy -- Founder, Chairman and Chief Executive Officer
That's related to -- it's not -- we have to look what the revenue is. So it will be roughly in the same revenues. We actually probably get the margin sooner because the increase of the acquisition ratio from -- to 3 -- 3:1 or 3.5:1, but it's -- you have to look at revenue rather than years.
Peter Rabover -- Artko Capital -- Analyst
Well, that I understand. But is that still a long-term feasible goal or is that something that first off for a few more years because you're planning on having less subscribers? And like -- so just a lever as with a higher price, but less subscribers, obviously, I'm trying to figure out whether that's still feasible.
Jirka Rysavy -- Founder, Chairman and Chief Executive Officer
We're not planning to really kind of make some future looking statements here, but roughly the same revenue will make a same margin, that doesn't fundamentally change.
Peter Rabover -- Artko Capital -- Analyst
Okay. And what's the -- I guess, as of 12/31, what's your fixed cost run rate, I guess, outside of acquisitions -- acquisition of customers, what's your kind of cash run rate for, I guess, the G&A aspect of it?
Paul Tarell -- Chief Financial Officer
You mean where we are today?
Peter Rabover -- Artko Capital -- Analyst
Yeah.
Paul Tarell -- Chief Financial Officer
Is that the question? Yeah. We've actually slipped to a place where we can -- where the cash flow is generated each period if we didn't spend a dollar on marketing and growth, we would be able to be self-sustaining, which is obviously not feasible to continue to grow and not spend any marketing dollars, but we've already crossed that threshold today.
Peter Rabover -- Artko Capital -- Analyst
Right. But what's the annual run rate number, do you have that? Just give me an answer to pull it together here roughly.
Paul Tarell -- Chief Financial Officer
So if we look at Q4 as the run -- yeah, go ahead.
Peter Rabover -- Artko Capital -- Analyst
No, no, I'm just trying to ascertain what the margin -- I guess, the marginal contribution of the 30% growth will be? And I don't know if that's the correct way to think about it, but just trying to -- if there is a different way to think about it, I'm more than happy to hear it, but I think that's the best way to think about it.
Paul Tarell -- Chief Financial Officer
So you have to remind me, we're not making any future looking statements. But if I looked at what I provided in my script, you could see that we spent about $8 million on a GAAP basis in Q4 on the expense side of the P&L. And if you look at the D&A that's in that line, it's probably $1 million, so probably in the $7 -- $6.8 million to $7 million rate for Q4. And with the slowdown in the growth rate, we don't expect to significantly change our headcount incrementally the way that we might have, if we continue to grow at that 60% plus rate.
Jirka Rysavy -- Founder, Chairman and Chief Executive Officer
Yeah. We have -- last year, we have a pretty significant increase. I mean, we still grew like half of our revenue, but on the people side. But this year, we pretty much have to staff and by June, we will need many more people. Obviously -- let's say, we would like to be profitable in 90 days, which we can that will take adjusting our expense line. But with the 30% growth and get, as we said, EBITDA positive in September, we don't have to do. We still have actually pretty like maybe 20 open hats. So we have -- I mean, too higher. So we don't have to do that if you would want to conserve more cash, but we really want to keep growing this 30% plus clip going forward. So we want to -- we didn't -- we don't want to go to more. I think what we're doing right now, it's pretty safe and secure. We have a lot of upside here. So we want to kind of stick with this 30% plus growth rate and we would really manage what we call gross profit per employee. As I said, that number increased 33% year-to-year from 243,000 last year to 322,000 gross profit per capita. That number will now significantly start to increase. If you look at compared to other companies, already very healthy numbers and we will want to keep growing consistently like quarter-to-quarter.
Peter Rabover -- Artko Capital -- Analyst
Okay. But I guess I'll ask a tougher question, I mean, now that you're no longer planning on spending the hyper growth mode and you have cash on the balance sheet. Does it -- since you no longer need to access capital markets, does it make sense to stay as a stand-alone public company?
Jirka Rysavy -- Founder, Chairman and Chief Executive Officer
Look, we -- look, that question was more when we were spending -- when we were selling Gaiam and we make -- we bought back -- we offer to buy back 50% of the company. That was the time to really look at this and we did permanently and the decision was -- in today's market, if you make an offer to take some -- the company private, it's you tied in kind of typically so from legal firm specializing in the situation, you have lot of headaches for next two years. It -- to say that you never can say never, but it's nothing what we have in mind right now.
Peter Rabover -- Artko Capital -- Analyst
Okay, thank you.
Operator
At this time, this concludes our question-and-answer session. I would now like to turn the call back over to Mr. Rysavy for closing remarks.
Jirka Rysavy -- Founder, Chairman and Chief Executive Officer
Well, thank you everyone and thanks for joining. And we look forward to speaking with you when we report the first quarter in early May.
Operator
Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Duration: 41 minutes
Call participants:
Jirka Rysavy -- Founder, Chairman and Chief Executive Officer
Paul Tarell -- Chief Financial Officer
Mark Argento -- Lake Street Capital Markets -- Analyst
Darren Aftahi -- ROTH Capital Partners -- Analyst
Eric Wold -- B. Riley FBR -- Analyst
Steven Frankel -- Dougherty -- Analyst
Peter Rabover -- Artko Capital -- Analyst
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