Good day, ladies and gentlemen, thank you for standing by. Welcome to The Arena Group Second Quarter 2022 earnings call. At this time all participants are in a listen-only mode. After management’s prepared remarks, there will be a question and answer session. I would now like to turn the call over to Jeff Stanlis. Jeff, please go ahead.

Thank you. Hosting the call today are Ross Levinsohn, Chairman and Chief Executive Officer and Doug Smith, Chief Financial 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, however, 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 would now like to turn the call over to Ross. Ross, the call is yours.

Thank you, Jeff. Thanks, everybody, for joining. This marks two years since I was asked to lead the Arena Group as its CEO. We think of ourselves a bit as a startup. We architected a plan to be focused on growth. We set out to transform the Company so that it was clear who we were, what we were doing and with the goal of building a sustainable, profitable business driven and measured by data. Over the first two years of our journey, the results have been terrific. Revenues have grown nearly 2.5 times from 95 million to 234 million based on the four quarters ended June 30, 2022 versus the same period 2020. Gross profit has expanded by 14 times in the same period from seven million to 99 million. We continue to move towards profitability. In the four quarters ending June 2020, we had an adjusted EBITDA loss of $18 million versus a loss of just 1.9 million during the last four quarters. And this quarter, we generated 5.8 million of positive net cash from operations, an improvement of 14.3 million from the same period last year, when we used 8.4 million in net cash from operations and our audience numbers have grown exponentially. With page use topping 1.5 billion this quarter, which is up over 82% versus the same period last year. We are investing in our Company because we are a growth Company. We up listed in February of this year to the NYSE American and we were added to the Russell 2000 this June. We completed the purchase of Athlon Media Group including Parade this quarter adding a new lifestyle vertical to our company and we have a robust pipeline of potential new acquisitions. We are committed to growing and improving our metrics sequentially each…

Thank you, Ross. Let me turn to the results. In the second quarter, revenue was approximately 65.1 million, up 87% compared to 34.7 million for the second quarter of last year. Breaking down that revenue, total digital revenue of 35.1 million, represented 54% of the total revenue and grew 75% versus the second quarter of last year. Digital advertising revenue of 24.7 million increased 114% versus the second quarter last year, driven by increased traffic across all of our business lines as well as a 41% expansion in our display CPMs. 84% of that digital advertising growth is organic, driven by significantly higher traffic across all of our properties and the growth in the CPMs was attributable both to an improvement in our core CPMs and a greater percentage of higher price digital direct ad impressions. Digital subscription revenue was 5.5 million, down 29% as compared to 7.7 million dollars in the prior year quarter. Other revenue increased by 463% to 4.9 million during the second quarter of 2022, primarily related to the launch of the Sports Illustrated Swim Magazine, which this year occurred in the second quarter versus the launch last year in the third quarter. Additionally, licensing revenue in the rest of the Sports Illustrated Media business saw a significant growth in the quarter. Print revenue increased 105% to 30 million from 14.7 million dollars in the prior year. The $15.3 million increase was primarily in Print advertising, which was up $11.7 million and was due to the addition of the Athlon Media Group, Parade properties. Gross profit increased 94% to 18.3 million compared to gross profit of 9.4 million in the prior year quarter. Cost of revenue increased 85% versus the prior year quarter due to the acquisition of the Athlon Media Group Parade properties and costs…

Thanks, Doug. It has been a robust Q2 and first half of 2022 for the Arena Group all key KPIs have grown. Revenue is outpacing our expectations. Each key business unit has shown double-digit revenue and audience growth year-over-year, and the early signs in Q3 are very positive. Our strategy developed over the past two-years is working. Our playbook has now been implemented across all of our brands and is driving significant audience and revenue growth. Our two acquisitions are performing well. We have a robust pipeline of new deals, and our company has generated positive net cash for the quarter from operations. We are confident that the application of our playbook to Parade will drive transformational growth in that brand, as it has in Sports Illustrated industry. Our e-commerce business continues to pick up steam with strong results during Prime Day in July. We continue to seek acquisition opportunities that are accretive to our vertical model. And we are maintaining a very robust M&A pipeline. Over the past two-years, our primary goal was to build a profitable company with a scalable, replicable model on a strong foundation. We have completed the investments needed to support that goal. The most important most exciting part for us is the future, we have worked through some very difficult business challenges over the past two years, and record a tremendous revenue growth, massive audience expansion, stabilized our balance sheet, begun to generate cash each month and quarter and built a highly skilled cohesive team to run a business that can grow exponentially. We are off and running in Q3 with the start of football, back to school and back to work just around the corner. We couldn’t be more excited about where we stand to capitalize on the opportunities in front of us. And with that, I would love to answer any questions you have. So back to you operator.

Certainly. [Operator Instructions] Your first question is coming from Mark Argento with Lake Street. Please pose your question, your line is live.

Hey Rob, hey Doug, nice quarter, nice revenue growth and KPI growth. Just a couple of quick questions. Ross, can you give us a little better understanding where all this page growth and activity viewership growth coming from? I know you broke it out a little bit by property, but and maybe talk about how new viewers are finding some of your properties?

You bet. Thanks Mark. So we talked a lot last quarter about many of the investments that we were making in things like audience development and analytics and our content teams, particularly in breaking and trending news. We have been applying that across the board. So when you look at some of the details of our KPIs in terms of growth, things like having the number one share of voice on Facebook drives real traffic to us. Optimizing search engine optimization drives real traffic to us. Creating more relevant and timely content creates real traffic to us. Understanding the types of stories that consumers are looking for, in what I would call nongame stories, really helps us. So the money we spent over the past two years, not only making our platform better, meaning let’s make the pages work faster, let’s optimize the ad impressions that we have. Let’s make sure that the content is produced quickly when it needs to be and make sure the content is great. We continue to win awards, all of those things really contribute to the growth of our business across the board. And when we break out, our sports, vertical or finance vertical, now lifestyle, the work we are doing at hub pages, each one of them is growing double-digits. And so it is a testament to what I would say is our playbook, which is all those things, including investing significantly in what we call our audience development team, which has just had a tremendous run for the last, we really just have had it for the last year. So those things combined with great content, which is really at the core of what we deal with the brands that we have, I think all of that matters and it all contributes. And again, we have made a conscious effort mark, to invest. We have been around for a bunch of years, but it is two years since we really reset the company. And I really do make it important that we think like a startup. I know we have to hit earnings. And I know we have to hit our numbers. It starts with growth. And we have got to have that growth and it seems to be working pretty well across the board.

Good color, I appreciate it. One quick one gross margins. Obviously when you love print in there, it gets a little muddied. Especially with some of the recent cost trends, kind of maybe give us a little bit of visibility into how digital gross margins are trending, I’m assuming they are in pretty good shape if incremental $0.50 of the dollar is full on the bottom line?

Yes, we continue to see the incremental gross margins, digital revenue exceeding 50%. And as Ross talked about, as we talked about, the challenges faced with Swim was really a big component of the lower margin that we saw in the quarter. And Swim, this year happened almost all in one quarter. So, we do have revenue continuing from it, but most of its margin impact was in this quarter.

Hey Mark and as I mentioned on - if you really look at the quarter, the impact to swim and some of the print surcharges, accounts for most of the pressure. Everything else is growing really nicely and now swim which really was a once a year thing, moving to a 12-months a year, property we are already seeing the impact in July and a little bit in August. So we are optimistic there. I think when you look across the industry, we have all been following earnings. A lot of pressure at some of the social companies, a lot of pressure at some of the media companies, I was just noticing buzz feeds, numbers were well below ours. So we are not seeing that compression and I think that is, in large part because we are growing so rapidly. So the sales team is doing an amazing job. We are adding new revenue streams in licensing and syndication and commerce that’s meaningful for us. Closing more ad deals, direct ad deals, which have higher CPMs has driven to 41% growth in CPMs. So all of those things heading into the two biggest quarters of our year, with football, really kicking off now, we are pretty excited about what the back half looks like.

Thanks guys. I appreciate the extra color. Good luck.

Thanks.

Your next question is coming from Daniel Wolfe at 180 Degree Capital Corporation. Please pose your question, you line is live.

Hi Ross and a great quarter. Thanks for the update. I noticed that the acquisition of actress Axio Spike Hawks, I was wondering if you’d be able to sort of comment on how you think of that as potential comp for arena group, given the multiple was five times revenue. You know, just interested know how you think about it.

Obviously, we love that comp. Congrats to Jim Vandehei and Mike Allen and the rest of the team, there have been a huge fan of Axio. And I think what it speaks to is quality content, great user engagement under a startup brand. I mean, the folks who ran that business are our longtime veterans, they have had amazing careers. And they really went out and build something very quickly, really over the last five and six years. And they got to about 100 million in revenue. I think the reports I saw said they weren’t making any money this year but to get a five times comp on revenue, I think speaks to audience engagement, it speaks to growth, it speaks to great content. So we will take all - we love those comps as our business and they obviously were a tad bigger and growing pretty fast. So I was thrilled to see that this morning, I saw that another sports content company, private, called Overtime just raised a big round at about $0.5 billion valuation. We like those comps. We would like obviously people to value us similarly with the growth that we are having. So it is just proof is in the pudding as a public company and my feeling is as long as we keep growing and improving on the bottom line. The rest of this stuff will take care of itself.

Sounds good. Thank you very much and keep it up.

Thanks Daniel.

[Operator Instructions] Your next question is coming from Dan Day with B. Riley Securities. Please pose your question. Your line is live.

Yes, good afternoon. Nice taking to you Ross and Doug. So we talked in the past about a potential content syndication strategy between Sports Illustrated and maybe some of the newspapers that you partner with on the Parade side. Just any updates in that regard?

Yes, sure. We do have that syndication business going. We have seen fairly substantial uptake with partners. I think we are up to about two dozen now, two dozen different partners ranging from newspapers to big online distributors like MSN. We are also seeing some very positive growth within Apple news more and more. So I think that that is all tied to having brands that people no care about resonate with them. As part of the Parade acquisition, Parade distributes its property to about 900 plus newspapers. The relationships that exist between the Parade team and those newspapers is really substantial. Obviously, Parade is 80-years old, it has been in business with those partners for a long time. So we are in active discussions with about half a dozen newspaper companies on how we can work more closely with them. Again, I think having I will call them Switzerland, brands like TheStreet and Sports Illustrated in Parade, we are not tied to television networks or competitors, I think bodes well for us to be able to distribute that content and ultimately lower the cost of producing that content by distributing it more places, and generating money from it. So as I think I said, and Doug said, licensing and syndication and e-commerce are becoming certainly a meaningful part to our business, our top-line. The margin on syndication is exceedingly high, you produce it once, distribute it many times. And so we are very, very optimistic that the combination of all those things is going to lead to a much more meaningful business as we move forward. But it’s already grown from roughly 2% of our revenue to 7% in a year. So we are excited about where that takes us.

Great, thanks for that. And then I appreciate the commentary you provided around the cost of the quarter with this SI Swim and some of the current issues. I mean, I look at the first quarter gross margins a little over 40%. Can you just kind of frame up how we should be thinking about gross margins trending over time, as some of those costs subside? Like do we get back to where you were pretty Parade acquisition or you are probably just a lower margin business with Parade in the fold, or just kind of help us frame up has had that same trend over time?

Doug, do you want to take it?

Yes. I think, we, as Ross indicated, we are looking at ways of adjusting the frequency and their distribution on the print side of the business. So we will - the Parade business was a lower margin business than where we had been. But we do feel that as we go into the latter half of the year, we will start to see that move back toward where we have typically been in the past 40 range increasing into the high-40s in the fourth quarter due to seasonality. So we should see that improve. And as I said, in response to Mark’s question, a lot of the softness in the margin in this quarter was related to the swim. Launch in the quarter, and that was, does not repeat for the rest of the year.

Got it and then last one for me, just if you could provide any updates on the M&A environment, just anything you are seeing out there, how aggressively are kind of engaged in talks and any potential new areas that look attractive for verticals would be great.

Yes. It is certainly picked up a bunch. There is a lot of companies that we last year, I think we talked to about 60 different companies we did. We ended up doing the deal with the Spun and ultimately Parade, AMG Parade this year, but we were in full swing last year. I would say our pipeline is very, very strong, there is clearly a lot of distress out in the marketplace. That is good for us, our playbook. In many ways, it doesn’t matter to us whether the company is doing well or not, in fact, if it is not, it is somewhat helpful for us to get a better price. But there are some good brands that we like out there, there are some capabilities that we think would be additive to our playbook and to our platform. So we are engaged in both of those types of discussions. New verticals that could spin up under a household brand name, and also some capabilities that we think will add additional revenue and capabilities to our business. So we are deep into it on a couple and certainly by next earnings call. I hope we have some good news to talk about.

Awesome. well it sounds good guys. I appreciate the color and I will turn it over.

Yes, thanks Dan.

There appear to be no further questions in queue at this time. I would now like to turn the floor back over to Ross Levinsohn for any closing remarks.

Well, thank you all. I appreciate you joining us for our earnings for Q2. We couldn’t be more excited as we are into Q3 and that means football and back to work for us, which is the most fun time of year and we are excited to greet you all again during our Q3 call later this year. So thank you all and have a great rest of the summer.

Thank you. Ladies and gentlemen, that does conclude today’s conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.