LiveOne, Inc. — FY2024 Form 10-K
Reporting period: Fiscal year ended March 31, 2024, compared with fiscal 2023. Although the request metadata references 2023 Q4, this filing is an annual report for FY2024. The filing was signed July 1, 2024.
Business context
LiveOne operates music and live-event streaming, Slacker-powered audio memberships, PodcastOne, and personalized merchandise business CPS. It reports three operating segments: PodcastOne, Slacker, and Media Group. PodcastOne completed a direct listing and spin-out in September 2023 but remained a majority-owned subsidiary at year-end.
Financial results and liquidity
| Metric | FY2024 | FY2023 |
|---|---|---|
| Revenue | $118.4 million | $99.6 million |
| Gross profit, as presented in filing | $29.0 million | $29.5 million |
| Operating loss | $4.7 million | $2.2 million |
| Net loss | $13.3 million | $10.0 million |
| Net loss attributable to LiveOne | $12.0 million | $10.0 million |
| Net cash from (used in) operating activities | $6.8 million | ($3.8 million) |
| Cash, cash equivalents and restricted cash, year-end | $7.1 million | $8.6 million |
Revenue grew 19%, but operating and net losses widened. Gross margin based on the reported gross-profit figures was approximately 24.5%, down from 29.6%. Contribution margin, a non-GAAP measure excluding developed-technology amortization, was $32.0 million versus $32.8 million.
Membership revenue rose 26% to $66.2 million; advertising rose 24% to $43.7 million; merchandising fell 24% to $8.3 million; sponsorship and licensing fell to $0.1 million; and ticket/event revenue fell to $0.1 million. The company attributed membership growth primarily to its largest OEM customer and advertising growth primarily to PodcastOne.
FY2024 segment revenue and operating results included Slacker revenue of $66.0 million and operating income of $14.3 million; PodcastOne revenue of $43.3 million and operating loss of $4.4 million; and Media Group revenue of $9.2 million and operating loss of $6.3 million. Corporate operating loss was $8.3 million.
Year-end current assets were $24.3 million and current liabilities $46.8 million, producing a $22.5 million working-capital deficit. Total liabilities were $57.3 million. Debt was approximately $8.5 million net of fees and discounts, including a $7.0 million ABL facility and $1.5 million of notes payable. The ABL facility was extended after year-end to September 2, 2024; the filing reports $7.7 million of debt maturities in FY2025. The facility is secured by substantially all company and subsidiary assets and includes minimum-liquidity and other covenants. Accrued royalties totaled approximately $18.4 million across current and long-term classifications.
Material changes and unusual items
- One customer, identified in the risk disclosures as Tesla, generated 51% of FY2024 revenue, up from 44%; OEM revenue was $59.9 million. That customer also represented 42% of year-end receivables.
- Paid memberships exceeded 2.75 million and audio-service MAUs were approximately 0.9 million. The filing says some reported members are subject to a contractual dispute and no revenue is being recognized for them.
- PodcastOne’s September 2023 spin-out converted approximately $7.02 million of remaining notes into PodcastOne shares. LiveOne retained majority ownership; outside holders’ interest was 26.5% at year-end.
- Advertising and barter transactions warrant attention: the filing reports barter revenue of $16.7 million in FY2024, versus $8.4 million in FY2023.
- General and administrative expense rose 40% to $22.3 million, including increased share-based compensation, a $1.0 million increase in bad-debt expense related to a merchandise retail partner’s bankruptcy, and higher professional fees associated mainly with the PodcastOne spin-out. Total stock-based compensation was $8.0 million versus $4.0 million.
- FY2024 included a $4.5 million change in fair value of embedded derivatives recorded in other expense. The company also repurchased $2.6 million of its shares during the year.
- Series A preferred stock carries a 12% annual dividend and is convertible at $2.10 per common share. In April 2024, holders converted approximately $11.4 million of preferred stock into common shares and received three-year warrants; the agreements also removed a prior mandatory $5 million redemption requirement.
Outlook, risks and controls
The filing provides no specific numerical revenue or earnings guidance. Management expects to continue investing in product and engineering during FY2025 and over the following 12–24 months, while pursuing membership growth, content, distribution, advertising and international opportunities. It says future operating funding depends on improved operating results, cost rationalization and access to capital; none is assured.
The auditor’s report includes a going-concern explanatory paragraph, citing recurring losses, negative operating cash flows and limited capital resources. Management also disclosed a $22.5 million working-capital deficit and substantial doubt about the company’s ability to continue as a going concern within one year after the financial statements were issued. The May 2024 at-the-market agreement permits up to $25 million of common-stock sales; no shares had been sold under it by the filing date.
Key risks include customer concentration and possible loss or renegotiation of the OEM relationship; ongoing losses and financing needs; near-term debt maturities and covenant/default exposure; royalties and content-rights obligations; competition; and dependence on advertising, podcast talent and changing listener demand. The company reported ineffective disclosure controls and internal control over financial reporting due to material weaknesses, including inadequate entity-level controls and insufficient technical resources for accounting for complex debt and equity instruments. Management planned remediation through additional training and hiring, a faster close process and stronger financial review controls. The auditor did not attest to internal-control effectiveness because the company is a smaller reporting company and non-accelerated filer.
Legal proceedings described include a concluded Wantickets dispute with immaterial damages to each side. The filing also identifies ongoing royalty obligations and potential audit or licensing disputes; management did not expect routine claims to have a material adverse effect. The company’s content-provider agreements include future guaranteed payments of $6.6 million in FY2025 and additional commitments thereafter.
Investor verification priorities
- Confirm the largest-customer relationship, its renewal and termination terms, and the status of the disputed member count and related revenue recognition.
- Review cash availability, working-capital needs, ABL maturity and extension terms, covenant compliance, and the company’s ability to obtain financing or use the ATM facility.
- Reconcile royalty balances and payment schedules, including the approximately $18.4 million accrued royalty balance and SoundExchange settlement disclosures.
- Assess the quality and cash-conversion of reported operating cash flow, including working-capital movements, and the scale of barter revenue relative to cash revenue.
- Track remediation of material weaknesses and verify future reporting of derivative valuations, revenue, receivables and segment results.
- Check the preferred-stock conversion, warrants, dividend burden, share repurchases and potential dilution against post-year-end filings.
- Reconcile the filing’s per-share disclosures: the statements report basic and diluted loss per share of $0.14, while a note’s two-class-method calculation shows $0.17 after preferred dividends.