Loop Media, Inc. (PNK:LPTV) Q1 2024 Earnings Call Transcript

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David Marsh: Okay. That’s really helpful. And then just transitioning more to the business fundamentals. Last year, first calendar quarter, I mean, we kind of had like advertising nuclear winter, I’ll call it. Can you just talk about how things are pacing this year with 1 month in the books and give us a sense of what it feels like year-over-year.

Jon Niermann: Well, I think as we said, this quarter is always kind of odd as it starts for anyone that deals in advertising. You kind of look at January and then look past it. So for us, we don’t see any kind of, I wouldn’t say the nuclear winter like you said. I think you see all the signs that the advertising industry is rebounding, et cetera. But quite simply, it’s pacing as expected for us.

David Marsh: Okay. That’s fair. And I guess, have you seen anything in terms of political at this point or is it just too early in the markets where you’re concentrated to have seen anything?

Jon Niermann: Just starting to see it. So we think that it definitely could be an interesting election, right? So we’re just kind of starting to see some of that trickle in, which is good. But again, second half of the year when you start to have conventions and everything like that, I think is going to get a majority of it, but it’s certainly starting to come in.

David Marsh: Okay. And then just kind of lastly for me, just wanted to talk about gross margin. I actually thought that the gross margin posted here in the first quarter was really strong given your mix of players that it’s now more on the partner side versus the kind of QAU side. And I just wanted to kind of get some color from you guys on how this gross margin can trend if partner is a bit heavier component to the mix as we go forward.

Neil Watanabe: You know, David, you’re absolutely right. We ended Q4 with 27.5% gross margin on a $5 million revenue number. So I think improving 700 basis points quarter-over-quarter kind of reflects that as we can get the revenue to certain levels, we can certainly leverage that appropriately. And going forward, between the mix and some of the opportunities we’re doing to rationalize relationships and negotiate better margin and do those type of efforts. And looking that we can certainly go north of obviously, the 35% that we came into Q1. So it’s a bit revenue contingent, but I think it proves that as we get to a certain level of revenue, we can leverage the cost of goods very well. And they become portions of it fixed and so we get the benefit of margin rate expansion. So I think we’ve indicated in the past that we certainly think that our opportunity for margin rate is certainly can go north of what we just posted.

David Marsh: Okay. That’s really helpful guys. Again, congrats on the quarter, it’s a really great sequential quarter. So it’s really nice to see.

Operator: That concludes the Q&A session. Back to Jon Niermann for closing remarks.

Jon Niermann: I just want to thank everyone for joining the call today, and we look forward to speaking to you with an update again next quarter. Thank you very much. Goodbye.

Operator: This concludes today’s call. You may now disconnect.

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