LiveOne Inc (LVO) 2021 Q2 法說會逐字稿

Good day, and welcome to the LiveXLive Media Q2 Fiscal 2021 Earnings and Business Update Webcast. (Operator Instructions) Please note, this event is being recorded. I would now like to turn the conference over to [Tamia Mohammed.] Please go ahead.

Thank you. Good afternoon, and welcome to live by LiveXLive Media's business update and financial results conference call for the company's first quarter ended September 30, 2020.

Joining me on today's call are Rob Ellin, CEO and Chairman; Jerry Gold, Interim CFO; Dermot McCormack, President; and Norm Pattiz, Founder and Executive Chairman of LiveXLive's wholly owned subsidiary, PodcastOne.

I would like to remind you that some of the statements made on today's call are forward-looking and are based on current expectations, forecasts and assumptions that involve various risks and uncertainties. These statements include, but are not limited to, statements regarding the future performance of the company, including expected future financial results and future growth in the business. Actual results may differ materially from those discussed on this call for a variety of reasons. Please refer to the company's filings with the SEC for information about factors, which could cause the company's actual results to differ materially from these forward-looking statements, including those described in its annual report on Form 10-K for the year ended March 31, 2020, quarterly report on Form 10-Q and the quarter ended September 30, 2020, and subsequent SEC filings.

You will find reconciliations of non-GAAP financial measures to the most comparable GAAP financial measures discussed today in the company's earnings release, which is posted on its Investor Relations website at ir.livexlive.com. And the company encourages you to periodically visit its IR website for important content.

Following discussions, including responses to your questions, contains time-sensitive information and reflects management's view as of the date of this call, November 16, 2020. And except as required by law, the company does not undertake any obligation to update or revise this information after the date of this call.

I'd like to highlight to investors that the call is being recorded. The company is making it available to investors and the media via webcast, and a replay will be available on its website in the Investor Relations section shortly following the conclusion of the call.

Additionally, it is property of the company and any redistribution, retransmission or rebroadcast of the call or the webcast in any form without the company's expressed written consent is strictly prohibited.

Now let me turn the call over to Rob. Rob?

Thank you, [Tania.] Good afternoon, and thank you for joining us today for our second quarter fiscal 2020 -- 2021 business update. Difficult times bring out the best in people. The foundation of LiveXLive has been built around a world-class management team and a Board to deliver the first talent-centric platform focused on super fans. To LiveXLive, COVID has accelerated our business development, maturation and brand recognition by multiple years as livestreaming festivals and concerts quickly progressed from a complementary offering to the primary means of delivering and watching and listening to live digital festivals and performances.

We have derisked the business by diversifying our revenue streams, with the recent launch of pay-per-view, the additional substantial advertising and sponsorship revenue component as a result of the acquisition of PodcastOne. And we recently announced a letter of intent to acquire e-commerce merch company, Custom Personalization Solutions, which recorded approximately $19 million in revenues in 2019. That acquisition is expected to close in the end of calendar 2020.

I am pleased to report in the second quarter ended September 30, we recorded our tenth consecutive quarter of record revenue along with 148% increase in contribution margin. And given the momentum we see in the nearly all of our business verticals, we're excited to raise our revenue guidance for the current fiscal year ended March 31 to between $63.5 million and $69.5 million. We also had a meaningful improvement in our balance sheet as shareholder equity increased by $20.3 million and working capital by $18.5 million.

The improvement in our balance sheet is a result of a number of transactions, including 2 common stock transactions at $4.14, extended payment terms by over 12 months on $5.9 million of payables and entering into a $15 million senior secured convertible financing agreement at $4.50.

Over the last 6 months, LiveXLive livestreamed 103 events featuring 1,500-plus artists generating content which has been reviewed by over 95 million times as compared to 22 events featuring 224 artists and over 60 million last year. I'm happy to report that one of our trophy live events properties, Spring Awaking has expanded to include a Spring Awakening Festival in Cancun, Mexico. Scheduled in late April 2021, we already have over 1.3 million in ticket sales. Needless say, there is significant pent-up demand for the return of live music events.

Today, LiveXLive has grown and evolved to be the leading talent-first platform focused on connecting artists with their super fans, building long-term sustainable, valuable franchises in audio, music, podcasting, broadcasting, OTT and pay-per-view livestreaming and video-on-demand. And our distribution reach continues to expand.

LiveXLive's 24-hour linear OTT streaming channel now has a reach of over 300 million people on platforms like Amazon Fire and Roku, Apple TV, Sling, Xumo, STIRR, and both Samsung Smart TVs and Samsung TV+.

We provide a platform for artists to simulcast globally across all digital and social platforms with a fully integrated stack of cutting-edge technology, in-house production, distribution, marketing and sponsorship. We have built an unequaled flywheel that has positioned us at the forefront of what we believe is the paradigm shift to livestreaming and one that will continue well after COVID.

New monetization features for artists include pay-per-view virtual ticketing, merchandise, subscription, digital tours, tipping, all of which create numerous revenue share opportunities for both LiveXLive and the artists.

With our recent launch into pay-per-view, we have sold tens of thousands of tickets in over 120 countries and exclusively produced and delivered live stream pay-per-view concerts by Grammy winner Pitbull, Modern Drummer festival, Darius Rucker, K-Pop sensations, Monsta X and Wonho, plus over 100 pay-per-view events with live from out there. Pay-per-view provides an opportunity to introduce millions of new visitors to LiveXLive, allowing us to grow our free registered users and build a robust data relationship with credit-holding customers at the top of our sales funnel.

We are fortunate to have amazing music industry partners, Live Nation, iHeart, numerous record labels and publishers and, of course, the hundreds of talented artists that make LiveXLive special. Other partnerships, including Tiktok, YouTube, Facebook, Twitch, Twitter, Tencent and Dailymotion.

We have an exclusive partnership with Tesla for over 8 years, where LiveXLive subscription is preinstalled in every Tesla car sold in America. The LiveXLive app is preinstalled in 85 other automobiles and growing, as well as across major carriers, Verizon, Sprint and T-Mobile. Through our distribution partners and B2B deals around the globe, we now have 936,000 paying subscribers.

With that, I'm going to hand it off to President of the company and my partner, Dermot McCormack. Dermot?

Thank you, Rob. Thank you, Rob. One of the real bright spots over the last few months is the enormous progress we have made on the sponsorship front. We now have sponsorship deals with Pepsi, McDonald's, KFC, Hyundai, Ovi Fitness, Simple Mobile, Corona, Porsche, Chipotle, State Farm, Kia, White Claw, Mike's Hard Lemonade and Mentos Pure Fresh Gum. Most of these new -- are new deals, and we expect to see strong sponsorship growth continue into the foreseeable future.

We continue to produce a livestream of proprietary weekly concert franchise, music Lives ON. Following the massive success of Music Lives' digital events, which we call our digital Coachella. The original festival broke all our streaming records with an audience larger than any live Coachella or Lalapalooza event, an incredible 50 million views in 179 countries, 5 billion views on TikTok and an average of over 200,000 concurrent users. The Music Lives event truly validated the value of live streaming. Music Lives ON has received over 8 million livestream views, streaming more than 156 artists. And weekly viewership continues to climb, showing a growth in brand awareness and interest in this growing franchise. It is one of the only music franchises that has consistently streamed live music every week during COVID.

In early July, we closed the acquisition of PodcastOne, which complements our music and video content stack, adds vodcast to the offering and diversifies our revenue model by adding a significant advertising and sponsorship component, alongside our existing subscription business. We also added an experienced advertising and sales team, which tripled the headcount of our overall team.

With us today to give a business update on PodcastOne is Norm Pattiz, Founder and Executive Chairman of our wholly owned division. Go ahead, Norm.

Thanks, Dermot. It's great to be here, and it's great to pass along some very positive information.

We had a good quarter with positive EBITDA at PodcastOne and are beginning to see the turnaround economically in the ad market. I think we're poised for a strong Q3. And since the merger with LiveX, we've added 12 new podcasts with a total social reach of over 287 million, expanded our reach and programming with the launch of vodcast, of the VodcastOne network, which, of course, our video podcast. Blue-chip sponsors that committed to our shows and across our audio and video offerings are very, very strong and very well known. The Pitbull vodcast and podcast continue to surpass our expectations. Strong buy-in and support from advertisers like KFC, Pepsi, State Farm, Clorox, Talk Space and NetSuite are, to say the least, encouraging. This was especially important as we build a true 360-degree offering, with Pitbull, including pay-per-view, vodcast, podcast and social elements of the campaign.

Additionally, we had successful launches of the Michael Urban broadcast; a podcast with Dr. Steven Gundry, a leading health and wellness expert; and a podcast featuring massive influencers, Amanda Cherny and Jacqueline Fernandez, with a joint total reach of over 132 million followers across Instagram, TikTok, YouTube, Facebook and Twitter. The past quarter, The LadyGang featuring Keltie Knight, Jac Vanek and Becca Tobin, has achieved a huge milestone with over 100 million downloads. We just extended the deal with The LadyGang for another year, and we could not be more excited for what's in-store for PodcastOne and LadyGang next year.

We also would like to share details of 2 key hires that we recently made, Ilana Susnow, the Head of our Marketing and Audience Development; and Alistair Walford, the new Head of Production. Ilana is a veteran television marketing executive with over a decade at NBC universal, and she'll oversee all marketing initiatives for PodcastOne and our numerous podcast.

Alistair joins us from Warner Bros., where he served as Director of Production. And prior to that led Gifted Youth's Funny or Die's commercial division, which working with some of the top directors and -- in the world and large-scale advertising campaigns. He will oversee all aspects of production at PodcastOne. These 2 key hires, new exciting programs are looking forward to announce shortly. And the overall podcast industry, which this year is projected to gross over $1 billion in 2021. The future looks bright.

Again, I want to mention that we had a good strong quarter with $5.1 million in revenue and $450,000 in positive EBITDA. That's our story, I'm sticking to it.

Excellent. Thanks, Norm. And Jerry -- I'm handing it off to Jerry, our interim CFO. Jerry, you take over, please.

Thank you, Rob. So as the team has been saying, it's been a very exciting year for us, and it's certainly a very exciting quarter. As we've mentioned for the tenth year in a row, we are about to report record revenue of $14.6 million. Adjusted operating loss, basically a breakeven $100,000 loss across our operating division and record KPIs, including 29 live events, over 75 million live views and 21% net subscriber growth year-over-year.

On a consolidated basis, our revenue was $14.6 million, up 52% year-over-year from 9.6 in this -- in Q2 of 2020, due in large part to the growth in our live event sponsorship, pay-per-view services and PodcastOne advertising year-over-year, offset by a small decline in our programmatic advertising and subscription services year-over-year. At September 30, 2020, subscribers grew to 936,000, which includes certain subscribers that are subject to a contractual dispute, still a net increase of 161,000 from the prior quarter. We ended Q2 2021 -- our goal to diversify our revenue, we ended with -- Q2 with 2021, with 53% of our revenue from subscription, 39% from sponsorship, advertising and licensing, and 8% pay-per-view ticket sales, significantly diversifying our revenue streams compared to the prior year, when 94% of our revenue was from subscription and 6% in advertising.

Our contribution margin grew over 148% year-over-year to $4.3 million compared to $1.1 million in the prior year period. Improvement was driven by a growth in sponsorship revenue, the addition of PodcastOne advertising, coupled with overall margin improvements to 29.3% in the second quarter as compared to 11.8% in the prior quarter.

Our adjusting operating loss was $1.4 million in Q2, a 62% improvement from the AOL loss of $3.7 million in the prior period. The loss was driven by our operations -- reduced loss was driven by our operations, which improved $1.9 million year-over-year with adjusted operating loss of basically breakeven.

In our operating division, again, revenue of $14.6 million, up 52.5%. The growth is basically from live event sponsorship, pay-per-view services and the addition of PodcastOne advertising in the quarter, offset by a decline in programmatic advertising and subscription revenue, as I mentioned before. During Q2, our operations generated $5.5 million in sponsorships and advertising as compared to $600,000 in the prior quarter. Our Q2 2021 subscription revenue was $7.7 million as compared to $9 million in the second quarter of 2020. This result is a decrease of the contractual dispute I mentioned before. And as a result of that, we are not recognizing revenue on those subscribers at this point. We are very confident that our conflict will be resolved in our favor, that we will eventually be able to collect that revenue.

Finally, we generated 1.1 million ticket sales from the launch of our pay-per-view platform in May 2020. We expect the number of events and the average revenue per event across this platform to continue to grow throughout the remainder of 2021.

Contribution margin of $4.3 million increased over 148% from Q2, as we discussed in the prior paragraph. In Q2, we spent $800,000 to produce 29 live events at an average cost of $28,000 per event, an improvement of over 90% year-over-year. In the prior year, we spent $2.1 million to produce 8 events at an average cost of $262,500. As you can see, a dramatic decrease in that cost, which was the large contributor to our margin improvement.

Now the adjusted operating loss was, again, approaching breakeven as compared to an adjusted operating loss of $2.1 million in the prior quarter. The improvement of $2 million was largely driven by improved contribution margin, which was offset by increased operating expenses from our acquired podcast business.

Turning to corporate. Our corporate division principally consists of general and administrative functions such as executive, finance, legal and other areas that support the entire company, including any public company-driven initiatives and supporting functions. Again, the loss decreased largely due to lower personnel costs, lower rent costs and driven by onetime COVID cost reduction savings in the prior period.

Excluding noncash stock-based compensation, amortization expense, depreciation in certain nonrecurring operating expenses, Q2 2021 operating expenses increased $900,000 or 17% to $5.7 million compared to $4.8 million in the prior quarter. The increase was largely due to the addition of PodcastOne during the quarter, offset by lower direct marketing cost and product development cost, driven partly by increased organic traffic from digital-only events.

I think as Rob mentioned, we have considerably strengthened our balance sheet. We ended Q2 2021 with $21 million in cash, up $8.5 million from prior and in cash of $12.4 million in the prior year. Increase was largely driven by net cash proceeds from financing of $14.5 million, offset by net cash outflows from operations. Importantly, again, we strengthened the balance sheet, working capital increased by $18 million due to the financing previously mentioned.

The one additional item, I think we talked about the addition of Custom Personalized Solutions, and Rob already mentioned the increase in our guidance.

And that concludes my prepared remarks, and I'll turn it back to Rob.

Yes. So thank you, gentlemen, And as you can see, we've put together a world-class team of experts who have each built, operate and sold multibillion-dollar businesses. We're really excited to continue to grow the team. And you'll see very shortly, we'll be announcing our new CFO of the company, but really excited about the team and really excited about the prospects going forward. And so I'm going to open it up to Q&A and any questions that you have.

(Operator Instructions) Our first question comes from Ron Josey with JMP Securities.

This is David for Ron. First, can you walk us through the components of your full year revenue guidance and what gives you confidence there? Second, on the e-commerce acquisition, for CPS, how do you plan to integrate that with the LiveZone events?

And then on pay-per-view, how did Pitbull's events perform? And what does the pipeline of future events look like for pay-per-view? And then finally, on advertising, can you talk about the progress around the sales force integration with PodcastOne?

Okay. A lot of questions in one, which -- let me try to answer first. So Pitbull, super exciting. We don't break down by revenues, but we did say we broke through $2 million of total pay-per-view revenues previously in a press release. So it's worked out extraordinarily well. But really, what's worked out extraordinarily well is the entire flywheel. Not only is Pitbull in pay-per-view, he's in our podcasting. He's in our ambassador program driving subscribers, right? And he's a long-term partner of the company. And I think you're going to see more and more of that.

In terms of sponsorship, as you can see by the list of sponsors, almost on a weekly basis, we've been announcing another AAA sponsor, from Pepsi to Corona. And you're starting to see some of the, repeating customers or with Corona, multiyear customers. And I couldn't be more excited about the fact that LiveZone, as well as Music Lives ON, literally has a sponsor almost every single event. This is the first time you're seeing that and the acquisition of PodcastOne and the sales team that we got as part of the acquisition has been a tremendous help in that we now have an army of salespeople now selling, which is we've never been able to talk about our team. It's been -- we hired our first sales guy last December and then corona hit, right? And now all of a sudden, you're looking at a sales team that is 15 people. So really, really exciting on that side. Jerry, you want to -- Jerry or Dermot, you want to jump in the others?

I'm not sure which -- the first question was about guidance. And I think the -- what you've heard there is that we have greatly diversified our revenue streams and the fact that our ticket sales for pay-per-view and the increase in our sponsorship and advertising. And with the addition of CTS, we are quite confident that we can achieve the guidance that we just gave you.

Yes. And just to give you a little color, a couple of our major pay-per-views, including Pitbull, were delayed until October and November. So Pitbull, Wiz Khalifa, Nelly, Jeremih, a lot of the ones we've announced are hitting in this quarter. So really exciting, the direction of where that's going and really excited about where we see this quarter. Hopefully that answered anything.

And our next question comes from David Bain with ROTH Capital.

Great. I guess, first to start, pay-per-view revenue, that's trending well ahead of where we had it. And I was hoping you could speak to maybe some of the ancillary revenue, particularly subscriber conversions, how that's maybe trended or trending from the pay-per-view events. And maybe just the overall direct margins from pay-per-view now, and I would think that those would augment more upon the merchandising acquisition. Is that correct?

Yes. So we don't break -- as you know, Dave, we don't break those down. What I can tell you is we've sold over 50,000 tickets. So very different than when you come into (inaudible) , our 95 million viewers, who come in for free, and then you got to convert them, right? So these are coming at the top of the funnel. They're immediately becoming subscribers for free, but they're giving you a credit card. So actually locking and loading them day 1. And then it's going to convert them into paid subscribers.

And I think you're going to see more and more of that kicking in as the merch business kicks in, and we're already doing this, right? We're already giving you a fully immersive experience, while you're watching an artist, no different going to see Bruce Springsteen in concert, you want to buy a hat or the T-shirt, we give you the ability to chat, message and buy merchandise, whether virtual or real merchandise. And now we have the ability to actually own those merch and their own specialty items in conjunction and empowers us, and it gives the artist another revenue stream in partnership with LiveXLive.

Got it. Okay. And then -- and in the past, we've discussed either an acquisition or your own path, maybe organically where you would acquire a European or global license. Is there any update there?

Yes. I would stay tuned. If you read between the lines when our former CFO left, there was a big bonus for him, if an acquisition closed of material size. So yes, we're still in very much in acquisition mode. I'm really proud of my team. We did these acquisitions effectively at $4 or better, just like the financing was done. So we're doing with very little dilution to our shareholders. And I would have fully expected the company is laser-focused on expanding globally. And as you could see by our artists that are performing on our stages and the amount of pay-per-view that we're doing, the audience is everywhere. It's everything from K-Pop, right? We have buyers of our pay-per-view tickets all over the globe. So real exciting. And yes, the answer is, we're laser focused, is expanding the operations overseas.

Great, just a comment. It's great that you had to bifurcate for us, podcast and pay-per-view and everything and podcast was ahead and nice to hear they're EBITDA positive. I'll let others get in on the action.

Our next question comes from Elliot Alper with D.A. Davidson.

Great. Just want to ask about the CPS acquisition. I guess, how is that going to fit into the strategy of the company? And how is this going to affect the margin mix? And any color on the time line of profitability of that business?

And then secondly, just back to the financial guidance. Curious if the change in guidance is including the contribution of your CPS acquisition? I know that hasn't closed yet, and it will be about a quarter of overlap, but just any color there would be helpful.

So the first part of it, again, is in the flywheel, we built this that you can listen, watch, attend, write, engage and transact. And the beauty of this is, is on the merch side of it and starting with the live side, I've already talked about, right, is into the flywheel that you can buy a hat, a t-shirt, write a memorabilia from it. But in podcasting, it gets even bigger because a lot of the revenues, they come from sponsorship, but they also come from direct marketing response marketing. So imagine owning those products and owning into the flywheel, the ability to own our own products in conjunction with the talent.

So really, really energized and gives us an opportunity to really take our margins way higher. Again, continue to dilute as we build from day 1, the commodity side of this business and move towards ownership.

And the other part of your question, it's already profitable. So it will definitely be accretive from an EBITDA AOL standpoint.

Okay. Great. And then, I guess, just following up, is that -- is that integrated into the fiscal 2021 guidance? And then also, is there an organic revenue number you could share for the quarter?

So -- and that, we're not sharing what those numbers are today. What I would say to you is, as Norman articulated, right, the podcast business, sponsorship and advertising, right, clearly, it was at almost a halt. And we have very smartly ran that business to a very successful EBITDA number. So will the acquisition be extremely, even this next acquisition, right? So you're going to have Slacker, very profitable. You're going to have PodcastOne, very profitable. And you're going to have the next acquisition, very profitable.

So we're not breaking down numbers right now, but we're really excited about where the revenue growth is. And as Norm articulated, I think we added something like 250,000 social media views amongst the podcast and vodcast we announced. So we fully expect that each of these -- each of the divisions of the company will be growing this quarter.

I have this strange concept, which probably comes from having funded PodcastOne myself, that being at the black is a good thing, and that really hasn't -- I think that, that's been embraced by everybody at the LiveXLive team, and that's one of the reasons why we like this marriage so much. We're going to grow and we're going to see audience growth, and we're going to invest in that growth, most certainly. But we always have our eye on the bottom line.

Yes, and I think for everyone, just to highlight, because I think we're going to be rushed off, is this company is laser-focused on bottom line. We now can look at this business from a perspective where every quarter up until last quarter, we always talked about what our revenues were per event. The company now can be looked at revenues per hour. And so it's really getting exciting that coming into the flywheel, so many different revenue streams come from the same content, right, and we've added so many franchises as part of the acquisition with PodcastOne and the building of Music Lives and Music Lives ON and you guys, hopefully, you'll have an opportunity to watch our award show, which should be launched December, in the middle of December. We've already had over 1 million, 1.2 million, 1.3 million votes on that already. And if you don't know, Dermot and Garrett English, who is our Head of Production, was the Executive Producer of the VMAs, which is still the most profitable piece of MTV, have now launched the first ever digital award show. Think of it like the ESPYs of award shows, and so we're excited about the sponsorship around it. We're excited about the traffic around it. We're excited about where the rest of this year goes.

Our next question comes from Jon Hickman with Ladenburg.

I don't know who wants to answer this question, but how much did COVID affect your advertising on the Slacker side and on PodcastOne?

Well, I'll jump in on the PodcastOne side. It certainly had an effect. It's interesting, everybody's talking about how podcast and audio listening actually went up during COVID, and that's very, very true. That's a good thing. More audience, more audience to sell. But there were certain categories, particularly sports, which were negatively affected because there weren't any sports -- live sports taking place. And of course, without live sports taking place, sports commentary and talk about what's going on in sports and all of that kind of stuff was very negatively affected. And advertisers held back. But we're seeing them come back.

Nobody is going to stop advertising, but they need to make sure that they get their supply chains back in line and that there are products that are going to deliver advertisers for products that they actually have to sell. We're very encouraged by what we see in terms of returning advertisers. But to say it didn't have an effect on us, when this thing came out of the blue, would be being disingenuous. Of course, it did. But we're pretty good at what we do. And we realize when you're in the digital medium, a keyword is being able to pivot to be able to deal with any kind of a situation that you wind up in. And I think we've done that pretty successfully.

Yes. And I'll just jump in as well. I think on the LiveXLive side, we benefited from COVID. At the beginning of COVID, we had hundreds of physical events canceled, but because we were the premier company that was delivering digital experiences, the pivot for us was pretty straightforward. And like Rob had said earlier, we had built franchises in that period. We broadcast, weekly basis, and we've seen tremendous shot in the arm in advertising that we could -- that we'd expect to see things (inaudible).

So how does that jive with the comment about programmatic advertising?

Programmatic is just a piece. Our direct selling was the business that really took off. So whether we build custom content, custom sponsorship, programmatic is one type of business we excel at all forms, but particularly our direct business really got a shot in the arm, because we're content makers at our heart. And programmatic can be commodity, but what we put out into the world, particularly when all the live music is going to shut down was a very unique offering and will continue to be.

Okay. And then could you elaborate a little bit on this contractual, being a subscriber?

Sure. So in the course of our relationship under this contract, we have had some differences of view on the definition of certain of the terms. In reality, we actually have been -- this is the second time we've been through it, and the first time we were able to resolve it very favorably. We are in the process of not only dealing with the contractual dispute, but we're in the process of trying to negotiate a longer and worldwide version of this contract. And we believe that somewhere in there, we will come to a resolution on that.

We're very confident in our position. We have a great relationship with Tesla. We had hoped to get it done faster, but negotiations take a while, as you know. Unfortunately, there are some accounting rules that my former colleagues in the public accounting world tightened up in terms of revenue recognition. So we are following that very conservative conclusion during this dispute, that we will not recognize those revenues. But as I said, we are 100% confident in our position and our relationship with Tesla, and we're looking for a longer and even more profitable relationship with them and believe it will all get worked out.

Can you quantify how much cost you this quarter? It looks like it was more than $1 million.

Yes. That's accurate. It was more than $1 million. And you can see it in our 10-Q and the press release.

Okay. So if you get it back, do you have to recognize that as a gain or as revenue?

I'm sorry, say it again?

So if this works out favorably for LiveXLive, in the future, do you recognize those lost revenues as a gain? Or how does that accounting work?

You most likely will recognize it as non -- as a special revenue. And you have to disclose it because it will be a number, but it will show up in revenue.

Our next question comes from Barry Sine with Spartan Capital Securities.

Just to clarify on that last point. The dispute is a portion of Tesla revenue, not the full revenue? And then my question -- right. Okay. Then my question is, obviously, advertising is key and PodcastOne brought in a huge increase in the sales force. Question regarding integration, how well are the PodcastOne, the new salespeople you brought in, doing in terms of selling the existing LiveXLive advertising inventory? Are they integrating well?

Let me ask (inaudible) to answer the first -- let me answer the first part, and then I'm going to hand it to you, Dermot. Just to go back to the Tesla number. If you remember the last quarter, right, we took down a $700,000 number for 1 month, right? Because they had paid through May. So you can look at this number, is about $2.1 million, right? So if you -- if you took that over a quarter, okay? So think about that in terms of what that could add in revenues going forward. And Dermot, why don't you jump in on the advertising side?

Yes. It's -- a bunch of us on the call have been involved in many acquisitions and mergers over the years. And this, to me, was amazing because the advertising inventory on each side of the company, is so complemented, the success was almost instantaneous. We were able to kind of partner on Pitbull and do a multiple platform deal out of the gate. Across the board, we have multiple deals going out we're selling together. There are certain relationships with agencies and brands that PodcastOne have, certain relationships that we have, and it's super complementary. Maybe one of the most complementary sales merging that I've seen. And we're seeing results, and we're going to continue to see results.

Look, one of the reasons why I did this deal in the first place was because it created a great opportunity to be in the podcast business and have something that no other podcaster has. It probably comes as a surprise to no one to know that there are bigger companies that are now in the podcasting business, but they're all primarily from the audio business, whether it's iHeart media or in the -- in the platform side of the business, companies like Spotify. What we wanted to do and what I think we're doing successfully and that our sales departments working together are doing successfully, is have something to offer that nobody else has to offer and get in a premium position in that area.

Our salespeople are talking to each other daily. They're passing information back and forth. It's also one of the things that's driving. On the podcasting side, we're going to be doing a lot more things that are music focused. At Westwood One, we were a music-focused company. So it's nice to be back in the music business in a much bigger way. But what you need to keep your sales department excited and on the cutting edge are doing exciting, cutting-edge things. And that's exactly what we're doing, being owned by LiveXLive and having everybody working on all of the assets that we have for the benefit of advertisers and consumers, and of course, for artists first.

And just on that point, the lead time for advertising and subscription sales, I believe, is pretty long. So this quarter, I would believe, does not represent the full potential and kind of the best is yet to come in terms of what the sales force can do, correct?

That's a fair statement.

Our next question comes from Brian Kinstlinger with Alliance Global Partners.

You highlighted the 2019 revenue trends for CPS, that's quite dated, given it predates COVID. Can you give us more recent revenue trends or some kind of information that helps us model revenue contribution going forward?

Yes. The way I would look at this, we publicly stated that they're going to do $20 million-plus this year. And I would think this, very much like PodcastOne, we said it's going to be accretive to the balance sheet. We said it's going to be accretive to EBITDA, and so I'd be thinking it very similarly to the success of the acquisition of PodcastOne and very similar to the success of Slacker and how profitable that is today, that this is going to be accretive in every way for the company immediately.

Great. And then the -- is this a thought to offering paid subscribers discounts to pay-per-view events, thus adding more consumers maybe at higher prices to the recurring model?

Absolutely. And you'll see some of that cross over, and you'll see some of that material relationship, including seeing in podcasting, you may see subscription coming. We're certainly going to use the inventory at podcast to drive subscribers, right? And Adam Corolla has a very unique base, Shaquille O'Neal, T.I., right? Many of our podcasters can bring in subscribers as well. And as you see what's happening in the industry, right, that crossover is coming, which is, we're laser-focused.

This is a big percentage of our business versus Spotify, who's paying $350 million to the same amount of revenues for $40 million companies, right? They're putting it into their flywheel, and they're using it for 2 things. They're using it to keep subscribers from leaving, right, as well as to bring in new subscribers. The beauty for us is, it's very material. And the materiality of turning them to subscribers, right, and them staying long-term on the platform is, is, again, you're diluting the commodity part of the audio business that we all share.

So I think you're going to see our margins continue to get better and better, the best in the industry. And I think you're going to see that flywheel of how these cross over. And seeing Pitbull was just magical, to see that you can drive pay-per-view, right, and immediately, right, because livestreaming is still in the first inning. Podcasting is in the third inning, right, maybe the second inning, right? And what's happening is those advertisers who have that much confidence you can get a quick sale from podcasting are now buying into both because they want a piece of all of it. And as you saw with our Pepsi deal, right, it couldn't be any better than to have them pay -- be a participant in all of it.

Great. Last question I have. Last quarter, you guys talked about $1 million in advertising and sponsorship for the legacy business. Is there a like-for-like number for this quarter?

So, Dermot?

Yes. Well, you have to go back to the first question. I think if you look at the difference between advertising and sponsorship in the first quarter and the second quarter -- I don't have it open in front of me. That difference basically, well, you can't really do it that way.

I mean you've announced a bunch of partnerships. Did you grow from the $1 million? Is it...

Yes. So I would say it this way. There's growth that resulted from the acquisition, and I think there is growth that came from additional advertising and sponsorship that came around our pay-per-view events and all the livestreaming that we've done. I think it is a dramatic increase in those earnings.

Just to add to that, too, many of these relationships are not single-show relationships. There are over a bunch of series of shows, like a season to a certain extent. So the revenue will go over several quarters in many of these relationships.

And just to highlight again, as you look at the next quarter, and obviously, I can't give you too much detail, but we announced Pitbull was going to happen in September. It got pushed to October. We announced Wiz Khalifa and multiple, those other ones. They all got pushed to October, November, December. So I think you're going to see both sponsorship as well as pay-per-view. You're going to see way more events, as this matures. And we're in the infancy stage of pay-per-view, but it couldn't be more exciting. And the most important part of pay-per-view is not only just the pay-per-view event, it's that you're getting a credit card. So the consumer that's coming in, that super-fan that's coming in, which we're focused on, is coming at the top of the funnel. And I think you're going to see more and more, higher and higher percentage of those converted to subscription.

I think we stated in the last call, we had 6% or 8% converted to subscription.

And Rob, just to add to that, one of the -- when the flywheel really works, we get pay per view, we get a sponsor to work with us on the pay-per-view, we get conversion to subscribers and we get merch sales and all sorts of different bundling opportunities. So when our flywheel really worked, like it does with Pitbull and many of the events we're doing, we hit all our revenue goals. So just know that advertising is a big part of the pay-per-view opportunity, too, because we have such a great exclusive relationship with the artist.

This concludes our question-and-answer session. I would like to turn the conference back over to Rob Ellin for any closing remarks.

Yes, just final remarks is, I want to thank my team and thank the shareholders for staying with us during this difficult time. Live music was completely shut down. Our tentpole events of Rock in Rio and EDC did not happen this year. None of our live events happen from React. We're really excited. We mentioned today that we launched Spring Awaken Cancun or a trophy property in the live business, right? So we normally do 30 to 40 live music events a year -- a month and plus spring awakening, which was $15 million, $16 million in revenues. And we're really excited to see the thirst and the energy when COVID is done, and it will be one day, right, live music is going to come back. And my team humbly believes it's going to be like the roaring '20s. We're really going to come back, and we're the only company in the world that is positioned right, today, to not only prove that livestreaming is the next-generation music video and is driving audio sales, right, but it also is going to drive ticket sales. And it's going to be just like sports 30 years ago. There was a fear factor when ESPN came along, that people wouldn't attend live events, right, what happened? More teams, more players, more money in billions and billions and billions of dollars. And I feel the same way about music. I think that it's very sad, what is happening to the community.

My team has thoughtfully partnered with Hyundai and Porsche to put live events inside of theaters that were literally going bankrupt, and the sponsors gave real money to help that. And we put artists to work. So really proud of what we're doing, and we're really proud of what we're building here. And I think when COVID is over, we're the only company in the world that is truly positioned to do both, right? Rock in Rio will sell subscription. We will sell digital tickets. EDC will sell digital tickets. And the world will grow with that. And we're positioned that we have the entire flywheel from production, right, all the way to sales. And everything in between this position with some of the top executives in the world who have built, again, multibillion-dollar businesses and been able to both build and exit them. So a great team we have. Great partnerships we have. We survived this, and we're going to grow bigger and bigger.

So I want to thank everyone for spending the time today. I really appreciate it, and I appreciate your support and look forward to talking to you at the end of the next quarter.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.