Prepared remarks
Hello, and thank you for joining us. My name is Regina, and I will be your conference operator today. I would like to welcome everyone to PodcastOne's Third Quarter Fiscal 2026 Financial Results and Business Update Conference Call. I will now turn the conference over to Ryan Carhart, Chief Financial Officer. Please proceed.
Good morning, and welcome to PodcastOne's Fiscal Third Quarter 2026 Conference Call. The earnings release, which we issued this morning, is available on our website at ir.podcastone.com under the News and Press Release tab. During today's presentation, all parties will be in a listen-only mode. Following the presentation, we will have a question and answer session. On the call today is Kit Gray, President and Founder of PodcastOne; and myself, Ryan Carhart, Chief Financial Officer. I would like to remind listeners that some of the statements made on today's call are forward-looking and based on current expectations, forecasts and assumptions that involve various risks and uncertainties. Actual results may differ materially. Please refer to PodcastOne's filing with the SEC for information about factors which could cause actual results to differ materially from these forward-looking statements. Reconciliations of non-GAAP financial measures to the most comparable GAAP financial measures discussed today are available in the company's earnings release on the Investor Relations website. This discussion, including responses to questions, contains time-sensitive information and reflects management's view as of February 12, 2026. Except as required by law, the company does not undertake any obligation to update this information after today's call. This call is being recorded and will be available via webcast replay on PodcastOne's Investor Relations website shortly following the conclusion of the call. Redistribution without the company's expressed written consent is strictly prohibited. With that, I would now like to turn the call over to PodcastOne's President, Kit Gray.
Thank you, Ryan, and welcome to our fiscal third quarter 2026 earnings call. As a reminder, our fiscal year begins on April 1. This quarter was defined by strategic partnerships, long-term talent renewals and meaningful expansion of our owned and original content network. PodcastOne continues to distinguish itself as the leading pure-play podcasting platform in the public markets through a vertically integrated model that combines talent development, content creation, distribution, analytics, and monetization and operational efficiencies, all strengthened by our AI-powered infrastructure. Our AI toolkit continues to enhance performance across every aspect of the business. Flightpath drives predictive profitability, Booster scales advertising management and proposal recommendations. Adobe Audition ensures best-in-class audio quality. Pod Engine supports discoverability through SEO and insights. Magellan AI powers advertising attribution. And Opus Pro converts long-form video into short-form content that fuels audience growth across platforms. Our team consistently uses AI-based search components to discover new talent, match trending topics to specific content created on our programs and more. These tools directly support how we grow shows, monetize audiences and operate more efficiently at scale. This quarter, we announced one of the most significant strategic initiatives in PodcastOne's history through our partnership with Dr. Phil's Envoy Media Company. Together, we are launching a new podcast-based original and owned content network anchored by the all-new daily Dr. Phil podcast. This initiative expands PodcastOne beyond traditional podcast distribution into true multi-platform owned media, reinforcing our position as a content network rather than simply a podcast publisher. We also proudly renewed LadyGang in a multiyear agreement. This year marks 10 years of podcasting, 1,000 episodes, and over 300 million downloads. Few podcasts in the industry demonstrate that level of longevity and audience loyalty. In health and wellness, the Dr. Gundry podcast continues to be a standout performer with 18 million all-time downloads across 548 episodes, educating millions globally on gut health, nutrition, and longevity through science-backed insights. This show exemplifies the long-tail value of evergreen expert-driven content. Additionally, we renewed The Adam Carolla Show in a multiyear agreement with the show now joining The Megyn Kelly Channel on SiriusXM, extending its reach into new distribution channels and audiences. Further strengthening our slate, we renewed The Bitch Bible, Some More News, and The Prosecutors and acquired For Your Amusement in a multiyear agreement, expanding both genre diversity and monetization opportunities across the network. We also signed a multiyear partnership with AI-driven Listener.com, further advancing our data and audience intelligence capabilities. Our monetization engine continues to show measurable progress. PodRoll revenue increased more than 5% quarter-over-quarter, reflecting growing adoption of our Dynamic Ad Marketplace by brands and agencies seeking efficient access to premium podcast inventory at scale. This growth, paired with our talent renewals and owned content strategy continues to move PodcastOne into a higher revenue tier and reinforces the scalability of our platform. Lastly, Paramount's recent acquisition of Varnamtown from PodcastOne for development as a streaming project underscores the strength of PodcastOne's original IP and storytelling slate. Ryan, back to you for financial results.
Thank you, Kit. As a reminder, our fiscal year began on April 1. Revenue in the fiscal third quarter of 2026 was a record $15.9 million. Operating loss in the quarter was $153,000 compared to an operating loss of $1.6 million in the same year-ago quarter. This improvement was driven primarily by higher advertising revenue and operational efficiencies across production and distribution. Net loss for the quarter was $154,000 or negative $0.01 per basic and diluted share compared to a net loss of $1.6 million or negative $0.06 per share in the year-ago quarter. Adjusted EBITDA for the quarter was a record $2.8 million compared to a negative $670,000 in the same year-ago quarter, driven by revenue growth and disciplined cost management. We ended the quarter with $3.4 million in cash and cash equivalents and no debt on the balance sheet. With that, I'll turn the call back over to Kit.
Thank you very much, Ryan. This quarter demonstrated PodcastOne's evolution into a true content and monetization network powered by technology, talent relationships, and owned media strategy. From the launch of the Dr. Phil's network initiative to long-term renewals of legacy shows like LadyGang and The Adam Carolla to the growth of PodRoll and expansion of our AI capabilities through Listener.com, we are building durable assets that extend well beyond individual podcast titles. We remain focused on compelling content, strategic monetization and long-term partnerships with creators and advertisers. With our AI-powered infrastructure and growing portfolio of owned and original content, we are exceptionally well-positioned for continued growth throughout fiscal 2026 and beyond. I want to thank our team, our creators, our partners, and our shareholders for their continued dedication and trust. With that, we'll now open the line for questions. Operator?
Questions and answers
Our first question will come from the line of Barry Sine with Litchfield Hills Research.
Two questions, if you don't mind. The first one is around Dr. Phil. Obviously, huge potential. We're, I think, about 1.5 months, maybe 2 months into his podcast on PodcastOne. What are you seeing in terms of streams and downloads from him? And then secondly, what has been the advertiser response as Sue McNamara goes out there to sell advertising on those programs?
Barry, good to talk to you. Thanks for the questions. I appreciate it. Yes, we're all really excited about the Dr. Phil relationship, and he's got a lot of things going on that it's really exciting. You got the Dr. Phil podcast. You've got his Mystery and Murder podcast, which is doing great. And he's really getting his feet wet. We just had him on The Adam Carolla show. We have him scheduled over the next 1.5 months to go on some of the biggest podcasts in the world in talking about his story. So he's well positioned for some great growth in the space. He is a pro, right? I mean there's not a bigger name in television history really than him. And advertisers are definitely listening and excited to hear more about his offerings as we go to market. But yes, his show is great. And I think we have some great projects that we're going to be launching over the next 3 to 6 months within that Envoy Media company. Dr. Phil has a really big Rolodex of great people that we're going to want to pull in to do video/audio content for us. So we're excited about that opportunity. But yes, all things are great so far, and we're really excited about it.
And the advertiser response so far?
Yes, it's been great. They want to know more about what we're going to be offering. So we've just started putting some presentations together and some offerings that not only just the podcast but they've got a ton of distribution through some relationships that they have, too. So we're really working towards bigger deals that will include that as well as the podcast on YouTube and obviously, the RSS feeds that go out through iTunes and iHeartRadio and PodcastOne and all these different places. So it's exciting because we're a different company; as you guys know, we like to look at ourselves as thought leaders and game changers in the sense that no one else is going out doing this. We're going to include social media, video, audio, the podcast is TV distribution deals as well. So that's something that nobody else has done. So we're kind of educating the marketplace on those opportunities, and they're excited to hear from us. 15 years ago, no one even believed in podcasting and here we are. So we got to keep changing things and evolving and leading the way, and that's why advertisers always take your phone calls because of that.
My second question is about B2B deals. Rob discussed what LiveOne is doing with these deals, including the number of active agreements and those in the pipeline. Many of these involve PodcastOne content, though not all. Can you explain how B2B deals are affecting your current results? Additionally, what is the outlook for the impact on results from upcoming B2B deals that will involve podcasts?
We have secured the Amazon ART19 deal, which is one of the largest partnerships in our company and has been instrumental for us. They are excellent partners, assisting us with efficiencies and cost reductions, while also opening up new revenue channels. As I've mentioned before, we have our direct sales and the ART19 ad inventory marketplace, where their sellers include podcasting and a variety of advertising partnerships that are consistently growing. Additionally, we have access to their programmatic desk and relationships, which has greatly diversified our ad sales revenue streams and allowed us to increase our inventory. We have advanced to a second tier in the impressions we can provide, resulting in a solid minimum guarantee from them. Our relationship continues to develop, and it promises to bring in more revenue, which is exciting. We have enjoyed a strong relationship with Pluto TV for years, and it’s evolving further. We’re now in discussions about creating a Pluto TV podcast that will review both new and historic programming on their platform. These partnerships are significant for us. Sue and her team are successfully building new brand and advertising relationships. I recently heard a live show from Adam Carolla, and it was impressive to see the range of brands he was collaborating with, showcasing new companies. This interest in our space is increasing. We also have many other partnerships in the pipeline that will further expand this year and next. Overall, we are in a good position.
So specifically, Rob called out 3 major new ones that are just coming online. Do any of those include podcasts or do all of them or how many of them include podcasts?
Well, we work hand-in-hand with the Lot1 team on a bunch of initiatives. So yes, they're talking about content development for some of those relationships as they create music channels for them. We would create podcast offerings, content offerings. A lot of them are in early discussions, so I can't really talk too much about them, but they're excited about it. I mean this is a new world where we have access to talent and great content and audience that we can now engage with those brands.
Kit, if you don't mind, I'll add something briefly. Barry, as you know, when our app is integrated with any of our partners, including carriers and retailers, podcasting plays a significant role. If we can reach audiences of over 50 million, our podcasts gain access to a whole new audience as part of the agreement. Although we don't currently count that in our revenues, reaching 50 million people means all of our podcasts are also reaching them. Whenever the LiveOne app is available, our podcasts are prominently displayed at the forefront. So we now have a newly expanded audience through those three B2B deals, with more opportunities on the horizon.
Our next question will come from the line of Sean McGowan with ROTH Capital.
A couple of questions for me, too. So on cost of sales, a nice reduction in cost of sales as a percentage of revenue. And I imagine that some of that is revenue from things like selling programs like Varnamtown, where there really isn't a lot of incremental cost, but there's revenue. So can you give us a sense of if you excluded that kind of revenue with really no cost associated with it, has there been another shift in cost of sales as a percentage of revenue? Or is the reduction pretty much due just to that mix issue?
Sure. Go ahead, Ryan.
Sean, so yes, it's a good question. I mean our margin generally has been slightly ticking up all year. So there is a little bit of just improvement based on all the hard work that Kit and his team are doing to improve that. Additionally, you know that there were onetime benefits coming through from certain things that were sold during the quarter. So yes, it was a strong quarter for us. There was one one-off item in there. But otherwise, it's positive and strong quarter-over-quarter.
And kind of related to that, I really love Varnamtown. When do you think that will be available for general consumer viewership with the partner?
I’ll take that question. While we can't predict an exact date, they have invested a significant amount, at least $1.5 million to $2 million, on options to secure the rights. It's now with the streaming partner, and if it gets approved, as you know from your experience with me during projects like 300 and Spiderwick Chronicle, we have generated $1 billion in revenue from similar ventures. If a TV show airs on a major streaming network, it could earn millions, if not tens of millions of dollars, with no additional cost to us. We're really excited about this opportunity, especially since four of these have been sold. There are a total of 15 in the pipeline, and we will soon introduce two more to the market. We've consistently emphasized the potential that original IP has for our business and its ability to dramatically shift industry dynamics. The secondary opportunities for original programming in television and film, especially products developed in collaboration with talent, will be a key focus for Kit in the upcoming quarters. Additionally, live shows are rapidly growing, particularly in the podcast space. Many individuals are entering the live market, exemplified by Ari Emanuel's recent $2 billion investment to expand the market. The live sector is thriving, creating opportunities for additional revenue and higher margins for us moving forward.
And then Ryan, like you talked about that one-off on the cost of sales. How about some of the other cost trends? Would you expect G&A to kind of stay at this level? Or should we be looking for increases?
You can expect G&A to remain at this level. In the short term, there are some awards currently affecting it, along with sales and marketing expenses, but primarily it is due to stock compensation, which will be adjusted. The team has done an excellent job of not only controlling costs but also achieving more with the same resources and cutting costs wherever possible. Therefore, you should anticipate continued similar trends moving forward.
Okay. So then in terms of cost of sales ex this one-off, and I know there'll be other one-offs and probably bigger down the road, but excluding that, would you expect the overall cost of sales as a percentage of revenue to kind of get back to where it was earlier in the fiscal year?
I mean that would be sort of like the normalized one that we're seeing going forward, maybe a blend of that and maybe a little bit better because we continue to improve on our contractual negotiations, but you'll see a creep up as those start flowing through. But yes, to your question, some of these one-offs, they're not exactly easy to predict the timing of, right? But yes, you should expect these coming through occasionally as we do more of these deals and they start coming to fruition.
Okay. And then looking at stock-based comp, it was roughly $2 million year-over-year increase. How does that divide out between G&A and cost of sales? Is some of that taken in cost of sales?
Yes, some of it is included in cost of sales. We have a contribution margin reconciliation in the queue that details this. So if you look at the quarter, it's over $1 million, approximately $1.4 million coming out of cost of sales.
Okay. My final question is about the preannouncement a couple of weeks ago, which was slightly better than expected for the fourth quarter. However, the guidance for the fourth quarter suggests a notable slowdown, with the lower end actually indicating a decline. What is the reason for not increasing the guidance for the March quarter?
I'm happy to take this one. The fourth quarter of the calendar year is typically the largest for ad revenue spend, and that still constitutes a majority of our business. As we enter the new year, advertisers tend to slow down and then gradually ramp back up. They have their ads set and will adjust based on what is effective and what isn't. Historically, the fourth quarter and the beginning of the new year, particularly January and February, are usually our slower months for ad revenue generation. This trend is expected to continue. I believe we are still on track to outperform last year's quarter, but this pattern is common across the media industry.
And our final question comes from the line of Leo Carpio with Joseph Gunnar.
I have a couple of questions. First, regarding the EBITDA, it seems like this quarter on an EBITDA basis, you kind of hit that pivot point, yet it sounds like there's a quarter benefit from a couple of one-offs. So the question is, looking into the fourth quarter and then looking into fiscal 2027, is it possible that the EBITDA is going to be breakeven again? And is it going to be like one-off driven or pure straight efficiency driven?
Leo, no, we expect adjusted EBITDA to continue into future quarters. The one-off this quarter wasn't driving all of the EBITDA by any stretch of the imagination. What you've seen in the first 2 quarters this year is minimally what we expect on top of what we did this quarter. So we expect it to kind of slowly continue and climb, and we put that out as well in this release.
Okay. And then turning to the talent pool. Now that you've been successfully adding new shows and looking at bigger and better contracts and what is the talent environment out there in terms of are you able to find like good mid-tier talent that brings a solid franchise? And all the economics still favor or if is it still a buyer's market for you? Or is it beginning to shift?
It's a good question, Leo. What we're seeing is that in January, there were more new podcasts launched than last January, which indicates a healthy industry as more people are entering the space and creating great content, opening more opportunities for us. It's definitely competitive, with some companies willing to accept lower margins and make deals that we wouldn't consider. We focus on making smart deals that align with our growth strategy. We're engaged in discussions about mergers and acquisitions that involve entire networks of programs, not just individual shows, allowing us to optimize costs and expand. We're fortunate to have strong long-term partnerships, such as with the Chrisley family, who are launching another show with Todd and his two sons. We are also in talks with AME to continue our successful nine-year collaboration, having launched multiple shows together. Additionally, we're excited about expanding existing shows, like LadyGang, which has been with us for ten years, with plans to introduce a parenting segment. While acquiring new podcasts is important, the ones we have are thriving and eager to collaborate further, recognizing the profitability and community-building potential. Although the agents are effectively representing quality podcasts, creating a competitive landscape, we feel well-positioned for success in this environment. We're very excited about our current standing.
Okay. And then in terms of acquisitions, anything on your horizon that seems appealing to you? Or it's more a case of just looking at talent first and then acquisitions if there's an opportunity that comes about?
Yes, there are some excellent opportunities out there. We are deeply engaged in discussions with a few companies, some of which are larger than us and others that are smaller but would complement our business. We are really enthusiastic about these conversations and their current status. Steve Layman and his team are doing a fantastic job in this area. We are all actively having discussions. There are many companies, especially the smaller ones, that are still navigating their way and have significant growth potential. We are in talks with all of them. Meanwhile, our talent acquisition team is reaching out to individual shows every day.
Okay. And then for my last question about the overall industry environment, how do you see advertiser spending? Is it still strong? Is it getting better? And is it focused on any specific demographic groups or types of shows or styles?
Yes. We're really fortunate. The media spending level is increasing. Every report I see, it's continued growth, record growth. When you look at the companies that are out there and tracking who's spending in the space, you're looking at the Amazons of the world, the Progressives of the world, the State Farms of the world, these are big brands with big media budgets that are shifting their spend to this podcasting world. And they continue to believe in it. They continue to dive into it. And I think the medium is just exploding. And the technology, the ROI, the attribution, all of that allows these companies to not just spend blindly like they may have in the past with other mediums, they really have a true tell that this is working.
And this concludes our question-and-answer session. I'll hand the call back over to Kit Gray for any closing comments.
Well, thank you very much, everybody. I really appreciate your time today. We had a really strong quarter and great results. I can't thank my team enough and all the people that believe in us in terms of investors and LiveOne for all their support. Ryan and Rob, I appreciate you guys, and we are excited to develop some great things moving forward and excited to talk to you throughout the year. Thank you very much, everyone. Appreciate it.
Yes. Before we wrap up, I want to express my gratitude to Kit and Ryan for their outstanding efforts. This has been an exceptional quarter, and we expect this momentum to continue. LiveOne is not just a supporter; we are actively buying back a significant amount of stock. Recently, we purchased 657,000 shares and plan to increase that considerably. The success of the company reflects Kit's remarkable performance in driving revenues and EBITDA. I couldn't be prouder of my team, and we will be in the market again soon once we receive approval from our attorneys to repurchase more stock.
Everyone, this will conclude our call today. Thank you all for joining. You may now disconnect.