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DATE

Monday, Aug. 10, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer - Kiersten Medvedich
• Chief Operating Officer - Yonathan Nuta
• Chief Financial Officer - Ned Preston

TAKEAWAYS

• Revenue -- $23.3 million, a 5% decrease compared to $24.6 million in the prior-year period, reflecting a shift away from discounted members and third-party partners.
• Net Loss -- $3.0 million, or ($0.12) per share, compared to a net loss of $1.8 million, or ($0.07) per share, in the second quarter of 2025.
• International Revenue -- Decreased $1.6 million, accounting for the total top-line decline as the company pulled back from lower-value regions like Latin America.
• Gross Margin -- 85.3%, down from 86.7% due to lower revenue totals against a relatively fixed content cost base.
• Direct Member LTV -- Over $500, maintaining a roughly 6-to-1 relationship against average customer acquisition costs.
• Customer Acquisition Cost -- $85 on average for direct members, though the company experienced a temporary spike in April and May caused by an algorithm change at a major advertising partner.
• Annualized Gross Profit Per Employee -- $819,000, representing an increase both year over year and sequentially.
• Corporate, General and Administrative Expenses -- $1.5 million, down from $2.9 million in the prior year reflecting ongoing cost reductions.
• Annualized Savings -- Over $3 million in executed or identified savings since the launch of a systematic organizational review in late February.
• Cash Balance -- $5.3 million as of June 30, 2026, supported by a fully available $10 million line of credit.
• Operating Cash Flow -- Negative $5.4 million for the quarter, compared to positive $2.3 million in the prior-year period.
• Renewal Seasonality Impact -- $2.4 million negative impact on cash inflows compared to the first quarter due to the timing of annual member renewals.
• Selling and Operating Expenses -- $21.6 million, compared to $20.6 million in the prior year, driven by marketing headwinds and investment in the Igniton line.
• Churn and Growth Targets -- 20% improvement target for both metrics by the fourth quarter of 2026.
• Pricing Strategy -- Management confirmed no further price increases are planned until 2028 following the adjustment on March 1, 2026.
• Q3 2026 Guidance -- Management expects results similar to the second quarter and anticipates the third quarter will serve as the revenue bottom.
• Q4 2026 Guidance -- Target to return to positive free cash flow, although the company abandoned its previous goal of reaching breakeven net income by year-end.
• Alpha Circle Engagement -- Over 70% opt-in rate among test groups for the new member-to-member direct communication feature.
• Content Library -- Approximately 10,000 titles, with 90% of the catalog exclusive to the platform and 75% of viewership generated by owned content.
• Capital Structure -- The company reported no debt outside of a small campus mortgage and maintains full access to its $10 million credit facility.

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RISKS

• Preston stated, "we are no longer targeting breakeven net income for the Q4 of this year," attributing the change to advertising cost spikes in April and May and the seasonality of annual renewals.
• Medvedich noted the company "experienced a temporary spike in customer acquisition costs in April and May driven by an algorithm change at a major advertising partner," which pressured top-line expectations.
• Preston warned that he expects "the third quarter to remain challenging with results similar to what we are reporting today," indicating near-term performance will likely mirror the second quarter's softness.

SUMMARY

Management at Gaia, Inc. (GAIA +3.42%) reported a strategic transition prioritizing the long-term value of direct members over near-term growth, which contributed to a 5% revenue decline and a net loss of $3.0 million. This shift involved pulling back from lower-value international regions and third-party acquisition channels to focus on high-LTV direct subscribers. While advertising cost spikes and renewal seasonality pressured the cash position to $5.3 million, the company identified over $3 million in annualized cost savings through a systematic organizational review. Management targetted a return to positive free cash flow by the fourth quarter of 2026 and continues to utilize AI and community features to improve retention and content discovery.

• COO Nuta reported that members spend more time per session with the AI Tarot Oracle than with any previous AI feature launched by the company.
• CEO Medvedich announced the signing of Jim Curtis to host a new series launching in October, featuring guests such as Judd Apatow and Jack Osborne.
• The company launched vertical short-form "Moments" using AI to highlight key library segments, which management reported is driving incremental long-form viewership.
• Nuta noted that 70% of members in alpha test groups opted into the new Circle feature, stating, "Connection is the most durable retention mechanic in any subscription business."
• The company expanded its Igniton supplement line in May with the introduction of Igni-REM for sleep support and Igni-Peptide Eye Serum at the Biohacking Conference.
• CEO Medvedich attributed the focus on direct members to their $500 lifetime value, stating the company is "willing to give up lower quality revenue to protect" that 6-to-1 LTV-to-CAC relationship.
• Management confirmed that the March 1 price increase remains the only planned hike for the foreseeable future, with no additional increases expected until 2028.

INDUSTRY GLOSSARY

• ARPU: Average Revenue Per User, a metric measuring the amount of money a company generates from an individual subscriber.
• CAC: Customer Acquisition Cost, the total expense required to gain a new customer.
• Igniton: Gaia's proprietary line of supplements and products utilizing quantum technology applications.
• LTV: Lifetime Value, an estimate of the total revenue a customer will generate for a business during their entire relationship.
• SVOD: Subscription Video on Demand, a service that provides users with unlimited access to a library of content for a recurring fee.

Full Conference Call Transcript

Operator: Good afternoon. Welcome to Gaia's Second Quarter 26 Earnings Conference Call. At this time, all participants are in a listen-only mode. Joining us today from Gaia are Kiersten Medvedich, CEO Yonathan Nuta, COO and Ned Preston, CFO. After the speakers' presentation, there will be a Q&A session. Before we begin, Gaia's management team would like to remind everyone that management's prepared remarks contain forward looking statements. And management may make additional forward-looking statements in response to your including, but not limited to, statements of expectations, future events, or future financial performance. These statements do not guarantee future performance, and therefore, undue reliance should not be placed upon them.

Although we believe these expectations are reasonable, guide and management undertakes no obligation to revise any statements to reflect changes that occur after this call. Actual events or results could differ materially. These statements are based on current expectations of the company's management, and involve inherent risks and uncertainties. Including those identified in the Risk Factors section of Gaia's latest annual report on Form 10-K filed with the SEC. All non-GAAP financial measures referenced in today's call are reconciled in the company's earnings press release to the most directly comparable GAAP measure. This call also contains time sensitive information that is accurate only as of the time and date of this broadcast. August 10, 2026.

Finally, I would like to remind everyone that this conference call is being webcast and a recording will be made available for replay on Gaia's Investor Relations website at ir.gaia.com. At this time, I would like to turn the call over to Gaia's CEO, Kiersten Medvedich. Please go ahead.

Kiersten Medvedich: Good afternoon, everyone. As we discussed, on our last call, our business today reflects a deliberate trade off we said we were prioritizing the long term quality of our member base over near term growth. That transition, combined with higher industry marketing costs, in April and May, weighed on our results this quarter. As we told you, we were making a deliberate shift toward our direct member base. And that this transition would put near term pressure on revenue growth as we partially pulled back from lower value regions like Latin America, and from third party acquisition channels. In fact, the revenue decline in the second quarter came from our international business.

That is exactly what you are seeing in our results. And it is consistent with the plan we laid out. We still remain focused on 2 metrics, reducing churn and growing, targeting a 20% improvement each by the Q4 of this year. We are on track against this framework. I want to be direct that we are not taking the softness in our top line lightly, and we have taken swift action across the organization in response. On the marketing side, we experienced a temporary spike in customer acquisition costs in April and May driven by an algorithm change at a major advertising partner. We identified the issue and have since brought it back in line with our expectations.

For context on why we manage acquisition costs this closely, on average, a direct member today has a lifetime value of over $500 against a customer acquisition cost of $85. That roughly 6-to-1 relationship is why we are willing to give up lower quality revenue to protect it and an increase in CPA is something we move quickly to correct. We view this as a reminder of the importance of diversifying our acquisition channels as we build out our direct marketing capabilities, and it is an area we have actively been addressing.

More broadly, since late February, we have undertaken a systematic review of spend across the organization, in marketing, technology, and overhead, and we have made targeted reductions to our vendor costs. We expect to benefit from all the costs reductions by the end of the year. These are not onetime cuts. We believe they reflect a more disciplined, sustainable cost structure going forward. As an example, our annualized gross profit per employee increased both annually and sequentially to $819 thousand demonstrating our continued efforts to increase efficiency. Now turning to content. We continue to invest in expanding and strengthening Gaia's programming slate.

This quarter, we signed a best selling author, transformational coach, and hypnotherapist, Jim Curtis, to host a new series launching in October. The series will feature conversations with leading voices across wellness, spirituality, and culture, including guests such as Judd Apatow and Jack Osborne. We believe Jim's strong public profile, engaged following, and notable guest lineup will help us reach a broader audience. This combined with a much larger slate of new and trending content launched during the quarter, including the 4th season of Greg Braden's Missing Link, Astrology 101, reflecting the continued popularity of astrology, and The Pulse, a new podcast hosted by Ben Stewart.

We are also introduced Gaia Shorts, the best of our long form content, as a new way to help members discover more of our vast library. These 5-minute clips highlight key moments and ideas from our deeper long form programming, making it easier for members to explore more of what Gaia has to offer. Gaia Shorts consistently rank as the most popular content when released, and we believe they can become an important tool for increasing content discovery and engagement across the platform. Lastly, an update on Igniton. In May, we introduced 2 new products at the Biohacking Conference. First was Igni-REM sleep.

It supports longer REM sleep, fewer sleep interruptions, and an easier return to sleep after waking helping deliver a better quality sleep overall. And then second was Igni-Peptide Eye Serum, which is designed to support more hydrated, youthful looking eyes while reducing the appearance of wrinkles, puffiness, and dark spots. In Igniton's first year of supplement sales, we have been encouraged by the results which serve as a strong proof of concept for the Igniton Quantum technology. And while we do not comment on future products, we believe we are only beginning to scratch the surface of the Igniton technology's potential applications.

With that, I would like to turn the call over to Yonathan Nuta, our chief operating officer, to talk more about how we are evolving the Gaia product experience and using AI to support that work. Yonathan rejoined Gaia last October after previously spending several years with the company as an executive between 2016 and 2021. Yonathan?

Yonathan Nuta: Thank you, Kiersten. it is great to speak with you today. Before I get into product, I want to talk about AI. Because at Gaia, it is both how we operate and what we build. Internally, we use it across content production, product development, and marketing operations. It is a productivity accelerator that lets a lean team scale their impact and respond to market dynamics faster than we otherwise could. And it is a direct contributor to the cost savings Ned will walk you through in a moment. Externally, it is increasingly how members find and experience our content. And those experiences are available only to our direct members.

Our AI guide has proven to be a leading driver, and that is what informed our decision to build the AI powered Tarot Oracle, and Horoscope experiences we launched this quarter. The early data is strong. Members spend more time per session with the AI Tarot experience than with any previous AI feature we have launched. More importantly, it drives incremental return visits, and incremental content viewership. This is not engagement sitting beside the library. It is engagement that pulls members back into it. That is how a daily habit becomes retention. On discovery, we are testing moments.

Our vertical short form experience, generated with AI, which brings the best moments in our library into the format people are already used to on their phone. Early signals are encouraging on 2 dimensions. Engagement with the feature itself and incremental long form viewership. We will size that for you as the rollout broadens. Turning to community. We have launched the ability for members to build and share rich profiles, and to find and share playlists and individual titles. With both members and nonmembers. And we opened an early alpha circle, which lets members chat directly with 1 another. In our test groups, more than 70% of members have opted in. Here's why that matters. Gaia's content is about transformation.

Members come to us while they are questioning something, healing something, or changing the way they see the world. And that is usually a solitary experience. The people closest to them are often not on the same path. Members tell us this directly. The communities they already have do not understand the transformation they are going through. So they have been doing the meaningful work of their lives alone. Circle is built to change that. And the commercial logic follows. A member can cancel a content library, It is much harder to leave people who understand you. Connection is the most durable retention mechanic in any subscription business. And it is the 1 thing we have never offered.

Every 1 of these experiences—the AI feature, moments, circles, is only available to a direct member. That is the mechanism behind the churn improvement we are targeting for the Q4. And it is why we are willing to trade near term revenue to get there. Now over to Ned for the financial details.

Ned Preston: Thank you, Yonathan. Revenues for the second quarter of 2026 were $23.3 million, a decrease of 5% from the year ago quarter. This primarily reflects the impact of our shift in marketing away from discounted members with a lower dependency on third party partners, toward direct member acquisition. It also reflects continued competition for consumer spending and engagement across the broader SVOD industry. Which we anticipated at the beginning of this year. Gross profit was $19.9 million down from the prior year with gross margin of 85.3%, compared to 86.7% in the second quarter of 2025. The decline in margin was primarily attributable to lower revenue against a relatively fixed content cost base.

Selling and operating expenses were $21.6 million compared to $20.6 million in the prior year period. Reflecting our change in our marketing headwinds and continued investment in Igniton. Corporate, general and administrative expenses decreased to $1.5 million from $2.9 million reflecting our ongoing concentration on cost reductions. Net loss for the quarter was $3 million or ($0.12) per share, as planned, compared to a net loss of $1.8 million or ($0.07) per share in the second quarter of 2025. Our cash balance was $5.3 million as of June 30, 2026 with a fully available $10 million line of credit. The seasonality of annual member renewals impacted our cash inflows by $2.4 million versus the first quarter.

This, together with lower revenue and higher marketing costs, were the primary drivers of our cash position this quarter. Since the start of our cost review, we have executed or identified over $3 million in annualized savings. Given the transition we are managing through, we expect the third quarter to remain challenging with results similar to what we are reporting today. With the added pressure of the advertising cost spike that impacted our business in April and May, we are no longer targeting breakeven net income for the Q4 of this year. Instead, our focus is on returning to positive free cash flow in Q4.

We continue to operate with a solid balance sheet and no debt outside our small campus mortgage, and we have full access to our $10 million line of credit if needed. That completes my summary. And that concludes our remarks, so I would like to open the call for questions. Operator?

Operator: Thank you. At this time, we will open the line for questions from the company's publishing analysts. We ask that you limit yourself to 2 questions. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. Now we will take our first question from Ryan Myers with Lake Street Capital. Excuse me, Lake Street Capital. Please proceed.

Ryan Meyers: Hey, guys. Thanks for taking my questions. First 1 for me, Ned, appreciate the commentary that you gave us on the third quarter revenue. But as we think about the Q4, I think if I remember back to last earnings call, you guys talked about maybe a return to double digit growth in Q4. So based on the commentary and what you guys have seen thus far, I mean, should we be thinking about the Q4 from a revenue perspective?

Ned Preston: Yes. Ryan, thanks for the question. So we, as I mentioned, expect Q3 to be similar to Q2. But we look to that to be the bottom of the revenue. We will grow from Q3 to Q4 sequentially. But Q4, as I said, will not drive us to profitability. We are really looking for Q4 to get us back on the free cash flow. front at this time.

And then, you know, with that, not driving in the Q4 to profitability, And, you know, you covered a couple things on the call, but just so we are aware, can you just walk us through what those couple of things were just so it is at, you know, top of mind and we can fully understand sort of the change there from the commentary last quarter. Yeah. Absolutely. It was really the seasonality of our annual member renewals impacted our cash inflows. And really from a revenue standpoint, it had to do with the higher marketing costs that we that Kiersten commented on. In April and May time frame.

Those headwinds really have kind of proven to push back our expectations for the year, but we are getting that back on track, as Kiersten had said. But that is really the main difference. Okay. Got it. Well, thank you for taking my questions. Yep. Thanks Ryan.

Operator: Our next question is from Jim Sidoti with Sidoti and Company. Please proceed.

James Sidoti: Hi, good afternoon. Thanks for taking the questions. So Ned, how do you get those mortgage costs back on track?

Ned Preston: I will comment, and I will look for Yonathan and Kirsten to give a little bit of color. But yes, we saw these headwinds in kind of the April and May time frame, and it caused a higher CPA than we have been accustomed to or had been planning. We have been working very closely with our marketing team to go out and while we are going through this change, to the direct customers, we really were not anticipating kind of, again, some of these headwinds, we had a algorithm with 1 of our major, advertising partners. And so, we have that back on a better track. And maybe, Yonathan, you could elaborate a little bit.

Yonathan Nuta: Yeah. Hey, James. Just 1 thing to clarify. We already have done this. There were 3 things that happened at once during the early Q2 time period. 1, rebuilding our direct acquisition without discounting. is a huge piece. 2, our price increase. And third, the algorithm changes at a major advertising partner. You know, we have taken deliberate steps since then to kind of reduce our dependency on said advertising partner. So this does not happen again.

James Sidoti: Okay. Alright. And, you know, you continue to invest in the AI and its use to build the community. You know, what is your sense and timing for those investments to pay off?

Yonathan Nuta: Yeah. that is a great question, James. As we said previously, our plan is still to continue working on community and launching it through the end of Q4. As we launch it, we are measuring very closely its impact on retention. We can get a sense of timing and payoffs.

James Sidoti: And do you still think that, you know, annual price increases or, you know, something you can count on? Or you starting to back off from that strategy?

Ned Preston: So we actually as you know, we increased our pricing as of March 1. We do not anticipate raising our pricing again until 2028. I think that answers your question, James. Right. Okay. Alright. Thank you.

Operator: At this time, this concludes our Q&A session. I would now like to turn the call back over to Ms. Medvedich for her closing remarks.

Kiersten Medvedich: Thank you, everyone, for joining, and we look forward to speaking with you when we report our third quarter results in early November.

Operator: Thank you for joining us today for Gaia's Second Quarter 26 Earnings Conference Call. You may now disconnect.