It’s the one area that we’re adding people. We’re now at the 4 people in B2B. We’ll continue to add to that group. And you’ll probably see some announcements around that and expanding that B2B as we announce the next deal.
Sean McGowan: And when you talk about those 35 to 42 partners, is that all within Slacker or does that include partnerships that would be in podcast?
Rob Ellin: Auto partnerships, right? So even though this first deal is a podcast, that doesn’t mean it can’t expand to radio, right? So it doesn’t mean it can’t expand to our live streaming all of our paper view. We have these mass libraries of video. So don’t be surprised if you start to see an asset cross over both of them.
Sean McGowan: And then last thing, Rob, could you give us a little bit more color on what we should expect to see in other products coming soon in celebrity? Is there any — can you give us a little peak there? I mean the –its off to a great site, but what other things should we expect to see in the coming quarters?
Rob Ellin: I mean, be patient because it’s coming any minute now, right? What I said is you’re going to see another 2 or 3 products launched. So we have 2 lines already that are being launched — you’re going to see us across big spaces, things like coffee, right, cosmetics. So when you think about what’s happened in the industry, the social media stars, which we live with every day, when they’re podcasts with the musicians with social media so, we work with all of them, right? You think of Logan Paul and Prime and how it’s now doing $1.5 billion in revenues, right? And think you think of Kim Kardashian and $700 million of revenues in 2 years and what she’s done for the cosmetic industry and think of go back to Avion right inside of being created inside of it.
We see this great opportunity with very little to no cost to us to be able to partner with our creators with already having the rev shares built and be able to launch products and find out if the social media drives it. If their social media drives it, you’re going to have a great brand if it doesn’t drive it. There’s a pretty good chance that’s going to be one you’re going to pass on. So we expect to launch 10 to 12 — I’m sorry, 12 this year, and we’ll expand it 10 to 12 a year after and further the year after it. These will all be with very little cost to us. It’s really just an extension of our content and new revenue streams that come out of it. And I can’t wait to do the ones with podcasters because with podcasters, just think about it, right?
50% of the business is direct response. So they have proven records that you’re selling products, right, directly off that podcast because these podcasts have super fans. So they don’t have to be massive businesses, but they could be hugely accretive and usually grow our business overnight.
Operator: Our next question is a follow-up from Brian Kinstlinger. Brian, please go ahead. Your line is open.
Brian Kinstlinger: I have two. The first one, I just want — I’m sure lots of people are thinking this about this $20 million deal. So I’m going to ask it to make sure we’re all thinking about it the right way. If I look at PodcastOne’s revenues, you’ve been at about $10.5 million for each of the 3 quarters plus or minus. Is the way to think about it that you could do $42 million-ish this year, whatever it is, plus or minus? And next year is you’re already off the $20 million higher, so 50% growth based on that $20 million deal? Or is there something I’m not thinking about the right way there?
Rob Ellin: Yes. We’ll come out, Brian. We can’t go any deeper than we publicly announced. What we said is we expect to be on a run rate of $45 million to $50 million. We’re going to have to update that shortly and give us a minute to do that, but we haven’t publicly announced anything deeper there, but you’re certainly thinking the right way, right? And one of the exciting things here is you have — you now have your advertising business growing almost as fast as your Audio business is, right? So this is the first time we have 2 moonshots happening at the same time.
Brian Kinstlinger: The second one, I just — maybe for Aaron on the cost side. The pros and cons, if you could just walk me through what the first. On the OpEx side, it’s substantially down in the December quarter to September quarter. I assume that’s your cost-cutting efforts. I want to make sure there’s nothing onetime and this is kind of indicative of the near term or lower as you’ve talked about in the past. And on the gross margin side, I’m not sure what impacted the mix. It was a little bit lower than it’s been for the last many quarters. So just if you could just take me through the dynamics on the cost side and how we should think about them going forward?
Aaron Sullivan: Yes. Thanks, Brian. So the OpEx question, I think we’re — this does not — overall, there’s not any onetime — significant onetime matters in here. It came down a little bit from last quarter, simply because we had substantial costs related to spinning off PodcastOne. So you had accounting and legal costs, et cetera, public filing costs in previous quarters. So you don’t have that noise kind of going forward. So that’s — that’s that. And then on the margin side, there’s about 3 percentage points of additional spend in the current quarter where we’re out acquiring content. We expect that to kind of normalize in the coming quarters. So you should see an increase of about 2%, 3% there. And I think that’s kind of the runway we’ve been on previously. So should drop. Sorry, it dropped down this quarter should pick back up in coming quarters.
