Good day, ladies and gentlemen, and welcome to The Arena Group first-quarter 2022 earnings call. [Operator Instructions]. It is now my pleasure to turn the floor over to your host, Rob Fink of FNK IR. Sir, the floor is yours.

Thanks, operator, and thank you all. Hosting the call today are Ross Levinsohn, Chairman and Chief Executive Officer; Doug Smith, Chief Financial Officer; and Andrew Kraft, Chief Operating Officer. Before we begin, I would like to note that some of the comments made during this presentation may include forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking. Forward-looking statements relate to future events or future performance and include, without limitation, statements concerning the company's business strategy, future revenues, market growth, capital requirements, product introduction, expansion plans, and the adequacy of the company's funding. Other statements contained in this presentation that are not historical facts are also forward-looking. The company cautions investors that any forward-looking statements presented in this presentation or that the company may make orally or in writing from time to time are based on beliefs, assumptions made by information currently available to the company. Such statements are based on assumptions and the actual outcome will be affected by known and unknown risks, trends, uncertainties, and factors that are beyond the company's control or ability to predict. Although the company believes that its assumptions are reasonable, these assumptions are not guarantees of future performance and some will inevitably be proved to be incorrect. As a result, the company's actual results can be expected to be different from its expectations and those difference may be material. Accordingly, investors should use cautious in relying on forward-looking statements, which are based only on known results and trends at that time they are made to anticipate future results or trends. Certain risks are discussed in the company's filings with the SEC. With that, I'd now like to turn the call over to Ross. Ross, the call is yours.

Thank you, Rob. As some of you know, we pre-released some numbers last week to highlight the continued rapid growth and expansion of our business. Today we'll be sharing a more in-depth look at our financial and operational performance. This was an excellent quarter for The Arena Group. As we highlighted during our Q4 and full-year results at the end of 2021, we were starting to see the benefits of significant investments we made in their technology, our platform, our social media and audience development initiatives, our business intelligence efforts, and our people last year. Our first-quarter performance again validated those investments as we saw strong growth in revenue and audience as well as a substantial gain in gross profit, despite Q1 typically being our slowest quarter. To highlight a few key results, first-quarter total revenue grew to $48.2 million versus $33.6 million in the previous year, a 44% increase. Importantly, first-quarter digital revenue grew by 82% to $31.6 million and now accounts for more than 65% of total revenues. First-quarter gross profit more than tripled to $19.7 million or 41% gross profit percentage compared to $5.4 million or 16% gross profit percentage in the first quarter of 2021. This was our second consecutive quarter with gross margins exceeding 40% and we continue to believe that will expand. Q1 cost of revenue increased by only 1%, reflecting the high gross profit from our growing digital revenues. I will note that Q1 is generally the softest quarter in our business, so to deliver these improvements is significant and we are seeing that momentum accelerate in Q2 through 34 days of the quarter. We are well on our way to profitability. In the quarter, our adjusted EBITDA loss was $1.1 million as compared to a loss of $8.7 million in the first…

Thank you, Ross. Let me turn to the results. In the first quarter, revenue was approximately $48.2 million, up 44% compared to $33.6 million for the first quarter of last year. Breaking that revenue down, total digital revenue of $31.6 million represented 65% of our total revenue and it grew 82% versus the first quarter of last year. Digital advertising revenue of $21.6 million increased 127% versus the first quarter of last year, which was driven by higher traffic across our owned and operated properties in FanNation as well as an increase in the average page view. Digital subscription revenue was $6.5 million for the first quarter of 2022, down 9% as compared to the $7.1 million for the first quarter of 2021. Other revenue, which is primarily licensing and e-commerce revenue, increased by 364% to $3.5 million during the first quarter of 2022 due to additional revenue for certain licensing agreements related to SI Swim and other Sports Illustrated media businesses. Print revenue increased 3% to $16.7 million for the first quarter of 2022, driven by growth in print subscriptions and newsstand, but partially offset by lower print advertising revenue. Gross profit percentage for the quarter was 41% as compared to 16% in the first quarter of last year. Q1 cost of revenue increased by only 1% despite the 44% growth in revenue, which reflected the high gross profit from our growing digital revenues and a substantial reduction in the rev share at TheStreet. This drove a more than tripling of gross profit, increasing $14.3 million from $5.4 million in the first quarter of 2021 to $19.7 million in the first quarter of this year. Total operating expenses were $35.2 million in the first quarter of 2022 compared to $27 million in the first quarter of 2021. The increase…

Thanks, Doug. 2022 is off to a robust start: rapid growth in our finance vertical, continued expansion in our sports vertical, our uplist to the NYSE American, closing and beginning to integrate AMG/Parade, and so much more. All the groundwork we laid in late 2020 and throughout 2021 is paying off. Our first-quarter gross profit more than tripled year over year, and we are now dropping more than 50% of every incremental digital dollar to the gross profit line. We are well positioned for profitable growth. Q2 is already off to a terrific start thanks to big sporting events like the Masters, the start of baseball, the NBA and NHL playoffs, and of course, the NFL draft -- go Giants. The Spun, which we are acquired last June, continues to drive significant audience and revenue numbers far above our expectations. The volatility in the stock market and the need for sound investment advice has propelled TheStreet to record audience and ad revenue numbers. And later this month, we will unveil the 2022 edition of SI Swimsuit, which this year is taking a powerful position and mandate called Pay With Change, a new gender equity initiative that will turn the SI Swimsuit franchise into a platform for change for women globally. Lastly, while our organic growth continues, our M&A pipeline is extremely active and you should expect further inorganic growth from us now that our platform and technology has been built out. Again, I have to emphasize that any expansion will not come with any significant CapEx or people cost thanks to the work we've done over the last 18 months. This means margin expansion and profitability for our business. And with that, I'm happy to answer any questions any of you have.

[Operator Instructions]. Your first question is coming Dan Day from B. Riley Securities. Dan, your line is live.

Afternoon, guys. Appreciate you taking my questions. First one just on the other revenue line. You talked about some interesting initiatives at Sports Illustrated on e-commerce. Correct me if I'm wrong, but I think AMG/Parade comes with a little bit of like e-commerce affiliate revenue. So just how should we be thinking about modeling that line moving forward. $3.5 million in the quarter -- is that expected to grow significantly from there?

Yes. I think -- obviously, we are not forecasting numbers, but with AMG/Parade, in initiating our lifestyle vertical, that comes with I'd say significant commerce initiatives that we are looking for. On the SI side, we have the benefit of working with the owner of the brand, ABG, who's one of the biggest licensing and commerce companies in the country and really in the world at this point. And have been working closely with them to showcase and distribute all kinds of e-commerce efforts. And we are also launching two-sided marketplaces, both around branded content, content recommendations, and other commerce initiatives. So we expect commerce to be really a growing line for us this year and in the years to come. And we are also starting to see some uptick in licensing and syndication, which has multiple positive effects for us. Aside from getting our content out beyond our four walls and exhibiting that content on other sites, it also lowers the overall cost of our content because we are able to monetize it significantly throughout the Internet. So we think licensing and syndication is an area of growth for us. We also believe commerce is. We didn't touch significantly at all on our gambling initiatives with 888 and the SI Sportsbook, but we expect that to grow also this year and beyond with some new states coming online.

Awesome. Thank you. And then if I could turn to TheStreet for a minute. You started to touch on this in the prepared remarks. Just maybe a little more detail on subscriber recovery following the churn in fourth quarter. And then obviously you've done an incredible job driving traffic and ad revenue. Just curious what's that asset is balanced between subscription revenue versus advertising at this point, and how that's different from maybe it was a year ago.

Sure. I'll let Doug obviously jump in as well. And he highlighted some of the -- both improvements at TheStreet from an audience and advertising perspective. And also, we were down 9% quarter over quarter -- I'm sorry, year over year in Q1, but that is fairly de minimis, frankly, compared to what I think some of the folks were forecasting for our company. So we've launched a new product in TheStreet Smarts. We're leaning in on the digital subscriber side once again and finding our footing. And with such a big audience coming in now, both on the unique user side and the page view side, we are seeing more and more people that we can market those products to. So I think we've seen the bottom in this business from the subscriber side with Jim Cramer leaving. And we're starting to see improvement certainly in our audience, our advertising monetization. That said, subscription revenue is still significantly higher than ad revenue at TheStreet, but TheStreet ad revenue is growing pretty substantially. And Doug, you can chime in if you'd like.

Historically, TheStreet had sort of midteens percentage of its revenues in advertising. We saw that number actually decline a bit in 2020 and the beginning of 2021 as we saw a very dramatic ramp-up in the subscriber base. And as we've discussed, we've seen some softening in the subscription level, but now we're seeing the huge growth in the advertising side. So we're anticipating advertising to exceed historical levels into the 20s and perhaps beyond that. Not because we expect advertising subscriptions to climb any further; just because we are experiencing such strong growth in the advertising side.

Awesome. Well, I appreciate you guys taking my questions. I will turn it over and continued best of luck.

Thanks so much.

[Operator Instructions]. Your next question is coming Mark Argento from Lake Street.

Congrats on a really strong quarter. Just wanted to drill down a little bit on the significant uptick in page views. I think you mentioned -- I believe it was up 67%. Want to just talk a little bit -- as you continue to grow in terms of viewership, the opportunity to do more direct advertising deals versus traditional programmatic, maybe talk a little bit about where you are right now, where you could see that going.

Yes. One of the benefits -- thanks, Mark. One of the benefits of having premium brands is that advertisers trust them and they are safe and they are known quantities. And when we were fortunate enough to take over the Sports Illustrated franchise, it certainly had a brand halo in terms of trust and respect, but it didn't have the audience that some of the competitors have had. And as we've highlighted in the past, we've been able to grow our audience very, very significant. So now when you match trusted brands, a brand like Sports Illustrated or TheStreet and now Parade, with technology, with know-how, with great journalism, with distribution and marketing, with a focus on social platforms and a focus on search, we are creating this flywheel of sorts for audiences to continue to grow. And the content we're doing is bespoke, it's unique, it's in real time. And so obviously, the more audience we have, the more page views we have, the more impressions we have. And as we see throughout every year, CPMs and RPMs tend to go up throughout the year; Q1 being the softest quarter, Q4 being the strongest. So that gives us a really strong hope for this year with our continued growth. And your point is important because direct advertising deals with big Fortune 500 companies always come with higher CPMs. And in some cases, sponsorship deals, which are less based on actual clicks or CPMs and more based on brand halo and brand expansion. So we are seeing more and more deals. In the beginning of this year, we've I think 2.5xed the number of direct deals we had a year ago with advertisers. So that's really good place for us to be and that continues to expand during this quarter. I mentioned Swim earlier. We've managed to sign some very, very high-profile Fortune 500 and very exciting new brands for the swimsuit edition this year. We are seeing it in our sports category. We are seeing it in finance. Parade comes to us with a much greater percentage of direct advertising than programmatic, which is unusual, obviously, in today's day and age. So we are excited about bringing them onto the platform, expanding their audience, and having already a bucket of very strong direct advertising. So the more we can grow and the better position we have in the marketplace, I think the more direct deals we're going to have, which obviously contributes more to our EBITDA and bottom line.

That's super helpful. Just one quick housekeeping. Doug, you had mentioned there was some one-time listing costs and other stuff in the quarter. I don't know if you quantified that or not, but do you have a ballpark number on that?

Yes. I mean, if that had been excluded, we would have had a positive EBITDA for the quarter.

Okay. All right, that's great. And then just lastly on the cash, so I think you said you had, what was it, $22 million? And then you had paid out the $10 million for AMG/Parade, or was it the $30 million, you paid out $10 million?

We had $22 million of cash at the end of the quarter at March 31, and then the payment for AMG/Parade was the next day April 1.

Got it. All right. Awesome. All right, guys. Appreciate it. Nice work. Keep it up.

Thanks, Mark.

Thank you. There were no other questions in queue at this time. I would now like to hand the call back to Ross Levinsohn for closing remarks.

Yes, thank you all. We appreciate you dialing in and listening and following us. We are super excited for this year. The momentum we have has really been strong really since middle of last year and is accelerating. So we're well on our way to a path to profitability and excited to visit with you again at the end of next quarter.

Thank you, ladies and gentlemen. This does conclude today's conference. You may disconnect at this time and have a wonderful day. Thank you for your participation.