LiveOne (Nasdaq: LVO) Announces Renewed Partnership with Tesla Through May 2026

Rhea-AI Summary

LiveOne (NASDAQ: LVO) has announced an amended partnership with Tesla, effective October 1, 2024. Key highlights include:

• Tesla replacing its streaming button with LiveOne's in perpetuity
• Launch of LiveOne 2.0, providing subscribers access to music on all devices
• 1.9 million subscribers can convert to Premium/Plus services
• Potential 3x increase in Average Revenue Per User (ARPU)
• Tesla to stop subsidizing LiveOne products for some customers from December 1, 2024
• LiveOne to offer discounted music packages to all Tesla customers
• Tesla to continue paying LiveOne monthly for grandfathered users in perpetuity

LiveOne has adjusted its FY2025 financial guidance to $120M-$135M in consolidated revenue and $8M-$15M in consolidated adjusted EBITDA. The company reaffirms its $12M buyback program and has officially retired 4.2M shares, reducing outstanding shares to ~94M.

Positive

• Renewed partnership with Tesla through May 2026
• Tesla replacing streaming button with LiveOne's in perpetuity
• Launch of LiveOne 2.0 with cross-device music access
• Potential 3x increase in Average Revenue Per User (ARPU)
• Tesla to continue paying for grandfathered users in perpetuity
• Adjusted FY2025 revenue guidance of $120M-$135M
• Adjusted FY2025 EBITDA guidance of $8M-$15M
• Reaffirmation of $12M share buyback program
• Retirement of 4.2M shares, reducing outstanding shares to ~94M

Negative

• Tesla to stop subsidizing LiveOne products for some customers from December 1, 2024
• Downward adjustment of FY2025 revenue guidance due to timing of conversion rate

Insights

Financial Analyst

This partnership renewal with Tesla is a significant development for LiveOne. The perpetual streaming button placement and potential for subscriber conversion present substantial growth opportunities. The projected 3x increase in ARPU is particularly noteworthy, indicating a strong potential for revenue expansion.

However, the adjusted FY2025 guidance shows a more conservative outlook. The $120M-$135M revenue projection and $8M-$15M adjusted EBITDA suggest cautious optimism. The removal of Tesla's subsidy for some customers from Dec 1, 2024, may impact subscriber retention, but discounted packages could mitigate this risk.

The $12M buyback program and retirement of 4.2M shares demonstrate confidence in the company's value and could potentially boost earnings per share. Overall, while the partnership renewal is positive, the financial impact will depend on successful subscriber conversion and retention strategies.

Tech Expert

LiveOne's integration into Tesla's ecosystem represents a strategic move in the competitive streaming landscape. The "in perpetuity" placement of LiveOne's button in Tesla vehicles secures a long-term, high-visibility position in a premium automotive brand, potentially reaching millions of affluent consumers.

The launch of LiveOne 2.0 with cross-device accessibility aligns with modern consumer expectations for seamless content experiences. This could be a key differentiator in user acquisition and retention. The potential for data ownership is also crucial, as it can drive personalization and inform content strategies.

However, the success of this partnership will largely depend on LiveOne's ability to deliver a compelling user experience and content offering that can compete with established players in the streaming market. The transition from a subsidized model to a direct-to-consumer approach will be a critical phase to monitor.

Market Research Analyst

The renewed Tesla partnership positions LiveOne strategically in the rapidly evolving in-car entertainment market. With the global connected car market expected to grow significantly, this deal could provide LiveOne with a competitive edge and access to a premium customer base.

The potential to convert 1.9 million subscribers to premium services is a substantial opportunity. However, the success rate of this conversion will be important to watch, as it will directly impact the projected ARPU increase and overall revenue growth. The shift from a subsidized model to direct consumer payments may face some resistance, but it also allows LiveOne to build direct relationships with users.

The adjusted financial guidance suggests a cautious approach, likely accounting for potential challenges in the conversion process. Investors should monitor key performance indicators such as conversion rates, churn and ARPU in the coming quarters to assess the partnership's true impact on LiveOne's growth trajectory.

LOS ANGELES, Oct. 01, 2024 (GLOBE NEWSWIRE) -- LiveOne (NASDAQ: LVO), a leading digital media company, today announced an amended partnership with Tesla.

Key Highlights:

1. Effective Oct 1, 2024: Tesla replaces streaming button with LiveOne's in perpetuity
2. LiveOne 2.0 launches, providing subscribers access to music on all devices
3. 1.9 million subscribers can convert to Premium/Plus services
4. Potential 3x increase in Average Revenue Per User (ARPU)
5. As of Dec 1, 2024, Tesla will no longer subsidize LiveOne products to some of its customers, however, LiveOne will offer all Tesla customers discounted LiveOne music packages
6. Tesla will continue to pay LiveOne monthly for grandfathered users in perpetuity

"The conversion opportunity has enormous upside by offering Tesla owners an opportunity to upgrade and have access on all devices at discounted priority pricing” said Robert Ellin, CEO of LiveOne. "We'll drive growth, unlock new revenue streams, own our data, and increase ARPU. To be conservative, due to the timing of our conversion rate, we are adjusting FY2025 revenue guidance to $120M - $135M and $8-15M adjusted EBITDA."

Financial Guidance (FY2025):

- Consolidated Revenue: $120M-$135M
- Consolidated Adjusted EBITDA: $8M-$15M
- Reaffirms $12M buyback program
- Officially retires 4.2M shares, reducing outstanding shares to ~94M

About LiveOne
Headquartered in Los Angeles, CA, LiveOne (Nasdaq: LVO) is an award-winning, creator-first, music, entertainment, and technology platform focused on delivering premium experiences and content worldwide through memberships and live and virtual events. LiveOne's subsidiaries include Slacker Radio, PodcastOne (Nasdaq: PODC), PPVOne, CPS, LiveXLive, DayOne Music Publishing, Drumify and Splitmind. LiveOne is available on iOS, Android, Roku, Apple TV, Spotify, Samsung, Amazon Fire, Android TV, and through STIRR’s OTT applications. For more information, visit liveone.com and follow us on Facebook, Instagram, TikTok, YouTube and Twitter at @liveone. For more investor information, please visit ir.liveone.com.

Forward-Looking Statements

All statements other than statements of historical facts contained in this press release are “forward-looking statements,” which may often, but not always, be identified by the use of such words as “may,” “might,” “will,” “will likely result,” “would,” “should,” “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “continue,” “target” or the negative of such terms or other similar expressions. These statements involve known and unknown risks, uncertainties and other factors, which may cause actual results, performance or achievements to differ materially from those expressed or implied by such statements, including: LiveOne’s reliance on one key customer for a substantial percentage of its revenue; LiveOne’s ability to consummate any proposed financing, acquisition, spin-out, special dividend, merger, distribution or transaction, the timing of the consummation of any such proposed event, including the risks that a condition to the consummation of any such event would not be satisfied within the expected timeframe or at all, or that the consummation of any proposed financing, acquisition, spin-out, merger, special dividend, distribution or transaction will not occur or whether any such event will enhance shareholder value; LiveOne’s ability to continue as a going concern; LiveOne’s ability to attract, maintain and increase the number of its users and paid members; LiveOne identifying, acquiring, securing and developing content; LiveOne’s intent to repurchase shares of its and/or PodcastOne’s common stock from time to time under LiveOne’s announced stock repurchase program and the timing, price, and quantity of repurchases, if any, under the program; LiveOne’s ability to maintain compliance with certain financial and other covenants; LiveOne successfully implementing its growth strategy, including relating to its technology platforms and applications; management’s relationships with industry stakeholders; uncertain and unfavorable outcomes in legal proceedings; changes in economic conditions; competition; risks and uncertainties applicable to the businesses of LiveOne’s subsidiaries; and other risks, uncertainties and factors including, but not limited to, those described in LiveOne’s Annual Report on Form 10-K for the fiscal year ended March 31, 2024, filed with the U.S. Securities and Exchange Commission (the “SEC”) on July 1, 2024, and in LiveOne’s other filings and submissions with the SEC. These forward-looking statements speak only as of the date hereof, and LiveOne disclaims any obligation to update these statements, except as may be required by law. LiveOne intends that all forward-looking statements be subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995.

About Non-GAAP Financial Measures to supplement our consolidated financial statements, which are prepared and presented in accordance with the accounting principles generally accepted in the United States of America ("GAAP"), we present Contribution Margin (Loss) and Adjusted Earnings Before Interest Tax Depreciation and Amortization ("Adjusted EBITDA"), which are non-GAAP financial measures, as measures of our performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, or as a substitute for, or superior to, operating loss and or net income (loss) or any other performance measures derived in accordance with GAAP or as an alternative to net cash provided by operating activities or any other measures of our cash flows or liquidity.
We use Contribution Margin (Loss) and Adjusted EBITDA to evaluate the performance of our operating segment. We believe that information about these non-GAAP financial measures assists investors by allowing them to evaluate changes in the operating results of our business separate from non-operational factors that affect operating income (loss) and net income (loss), thus providing insights into both operations and the other factors that affect reported results. Adjusted EBITDA is not calculated or presented in accordance with GAAP. A limitation of the use of Adjusted EBITDA as a performance measure is that it does not reflect the periodic costs of certain amortizing assets used in generating revenue in our business. Accordingly, Adjusted EBITDA should be considered in addition to, and not as a substitute for operating income (loss), net income (loss), and other measures of financial performance reported in accordance with GAAP. Furthermore, this measure may vary among other companies; thus, Adjusted EBITDA as presented herein may not be comparable to similarly titled measures of other companies.
 
Contribution Margin (Loss) is defined as Revenue less Cost of Sales. Adjusted EBITDA is defined as earnings before interest, other (income) expense, income tax expense, depreciation and amortization and before (a) non-cash GAAP purchase accounting adjustments for certain deferred revenue and costs, (b) legal, accounting and other professional fees directly attributable to acquisition activity, (c) employee severance payments and third party professional fees directly attributable to acquisition or corporate realignment activities, (d) certain non-recurring expenses associated with legal settlements or reserves for legal settlements in the period that pertain to historical matters that existed at acquired companies prior to their purchase date and a one-time minimum guarantee to effectively terminate a live events distribution agreement post COVID-19, (e) depreciation and amortization (including goodwill impairment, if any), and (f) certain stock-based compensation expense. Management does not consider these costs to be indicative of our core operating results.

With respect to projected full year 2025 Adjusted EBITDA, a quantitative reconciliation is not available without unreasonable efforts due to the high variability, complexity and low visibility with respect to purchase accounting adjustments, acquisition-related charges and legal settlement reserves excluded from Adjusted EBITDA. We expect that the variability of these items to have a potentially unpredictable, and potentially significant, impact on our future GAAP financial results.

LiveOne IR Contact:
Liviakis Financial Communications, Inc.
(415) 389-4670
john@liviakis.com

LiveOne Press Contact:
LiveOne
press@liveone.com

Follow LiveOne on social media: Facebook, Instagram, TikTok, YouTube, and Twitter at @liveone.

FAQ

What are the key terms of LiveOne's renewed partnership with Tesla?

LiveOne's renewed partnership with Tesla, effective October 1, 2024, includes Tesla replacing its streaming button with LiveOne's in perpetuity, the launch of LiveOne 2.0 with cross-device access, and Tesla continuing to pay for grandfathered users. However, Tesla will stop subsidizing LiveOne products for some customers from December 1, 2024.

How will the Tesla partnership affect LiveOne's (LVO) revenue?

The partnership has the potential to increase LiveOne's Average Revenue Per User (ARPU) by 3x. However, due to the timing of the conversion rate, LiveOne has adjusted its FY2025 revenue guidance to $120M-$135M, with an adjusted EBITDA of $8M-$15M.

What changes are coming for Tesla owners using LiveOne (LVO) services?

From December 1, 2024, Tesla will no longer subsidize LiveOne products for some customers. However, LiveOne will offer all Tesla customers discounted music packages, and 1.9 million subscribers will have the opportunity to convert to Premium/Plus services.

How has LiveOne (LVO) adjusted its share structure following the Tesla partnership announcement?

LiveOne has officially retired 4.2 million shares, reducing its outstanding shares to approximately 94 million. The company has also reaffirmed its $12 million share buyback program.