Greetings and welcome to the Arena Group Fourth Quarter and Full Year 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode, a questions-and-answer session will follow the formal presentation. [Operator Instructions]. Please note that, this conference is being recorder. I will now turn the conference over to your host, Rob Fink, Investor Relations at Arena Group. You may begin.

Thank you, Operator, and thank you everyone for joining us today. 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'd like to note that some of the comments made during this presentation may include forward-looking statements. All statements other than statements of historical facts 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 and expansion plans and the additive suite of the company's funding. Other statements contained in the presentation that are not historical facts are also forward-looking statement. The company cautions investors that any forward-looking statements presented in this presentation where the company may take orally or in writing from time to time are based on the beliefs, assumptions made by, and information currently available to the company. Such statements are based on assumptions and the actual outcomes 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 guarantee of future performance and some will inevitably prove to be incorrect. As a result, the company's actual future results can be expected to differ from its expectations and those differences may be material. Accordingly, investors should use cautious in relying on forward-looking statements, which are based only on known results and trends at the time they are made to anticipate future results or trends. Certain risks are discussed in the company's filings with the SEC. In addition, there will be references made to non-GAAP financial measures, adjusted EBITDA. Information regarding the reconciliation of this non-GAAP to GAAP measure can be found in the press release that was issued this afternoon on Arena Group's Investor Relations website at investors.arenagroup.net. With all that said, I'd like to turn the call over to Ross. Ross, the call is yours.

Thank you, Rob, and thanks to everyone for joining us here today. 2022 was a milestone year for the Arena Group. We have become a highly efficient company with top line and bottom line growth, successful acquisitions and partnerships, and a diversified business model. At our core, our technology platform can support rapid expansion without growing expenses significantly, which has led to our first full year adjusted EBITDA profits with record revenues and lower operating expenses. Some highlights I'd like to share with you before I hand the call over to Doug Smith, our CFO, to take you deeper into the numbers. For the full year, we generated nearly $221 million in revenue, an all-time high for our company, driven by a 74% year over year increase in digital advertising. For the first time, we generated a profit for the full year delivering $3.1 million of adjusted EBITDA in 2022. That's a $15 million improvement from 2021. For context, this represents a positive swing of more than $26 million from 2020. We cut operating expenses by nearly $19 million year over year, which helped us improve operating income by $28 million in 2022, we acquired Parade, a morning read, which has become SI Golf, Men's Journal, Men's Fitness, Surfer, Powder, Bike, Skateboarder, and more than 70 additional domains last year, while also adding over 100 new digital sites to our platform, significantly increasing the breadth and depth of brands utilizing our technology. We have built a dynamic media and tech leader. We grew pageviews by nearly 50% last year to over 6 billion. Our organic pageviews growth was 32%. We improved advertising yield, direct sales revenue, and licensing and syndication revenue, while launching an e-commerce business across our brands and expanding our online betting efforts. Since 2019, we've grown our…

Thank you, Ross. Let me turn to the results in the fourth quarter. Revenue from continuing operations is approximately $61.7 million, up only slightly from $61.2 million for the fourth quarter of last year, reflecting great growth in our digital business and a planned reduction in print. Total digital revenue of $45.2 million represented over two thirds of our total revenue and grew 36% versus the fourth quarter of last year. This was largely driven by a 47% increase in digital advertising revenue to $34.5 million versus the fourth quarter of last year. The growth was due to a 22% increase in pageviews and a 14% rise in revenue per pageviews, and 80% of the increase was organic. Digital revenue was -- digital subscription revenue was 4.6 million, down 36% as compared to 7.2 million in the prior year quarter. Other digital revenue, which was principally licensing and syndication increased by 129% year-over-year to $6.1 million during the fourth quarter. We expect continued robust growth in this area as we drove existing partners and expand to new ones as Ross referred to earlier. Print revenue decreased to $16.5 million from $27.9 million in the prior quarter, which reflects the plan reduction in the rate base we implemented in December of 2021. This decrease in revenue was accompanied by an $8.8 million decrease in subscription acquisition costs, reflecting the elimination of the less profitable subscribers in our rate-based reduction. Gross profit decreased to $27.5 million compared to a gross profit of $33.9 million and the prior year quarter. This decrease reflects the previously mentioned reduction in print subscription revenue. However, the offsetting cost reduction at $8.8 million appears in operating expenses not in cost of residence. Total operating expenses were $35.6 million, down 30% as compared to $50.8 million in the…

Thanks, Doug. This was truly a milestone year for the Arena Group with tremendous growth creation of our third and fourth major verticals through the acquisitions of Parade and Men's Journal, and continued success of our proprietary playbook. Perhaps more importantly, this growth is translating into expanded operating margins, leading to positive adjusted EBITDA and cash generation for the first time in our history. We have built a strategy and platform for profitable growth and incremental organic and inorganic growth we'll only add to this. Upon reaching scale and critical mass with our infrastructure a year ago, we have also focused on driving efficiencies. As you've seen in our earnings announcement, we have reduced operating expenses throughout 2022 and will continue to focus on efficiencies in 2023, including tuning our staff, partnerships, vendors, and overall expenses to maximize profits and free cash flow. Adding partners and advertising inventory is one way we do this, giving us incremental traffic and additional advertising inventory with no added fixed costs. Continued improvements to our ad tech stack, continue to drive yield across our inventory, outpacing the benchmarks industry wide, and eliminating unprofitable print operations and doubling down on our digital revenue as another tactic. In the last few weeks, we announced two partnerships with innovative AI firms. We are now using AI and solutions like Jasper and ChatGPT to give our reporters and editors the ability to quickly and efficiently search and pull content from our rich archives for news stories. Keep in mind, we have nearly seven decades of content from Sports Illustrated and Parade Magazine dating back to 1941. Searching these records can be time consuming, but there is immense value in our history and using AI to tap into that content and accelerate workflows makes great sense. We've already seen…

[Operator Instructions] And the first question today is coming from Mark Argento from Lake Street. Mark your line is live.

Congrats on a strong year. Just have kind of one larger macro question and maybe one more specific to some of the numbers. Looks like, Ross and Doug, some of the numbers, Andrew, that you guys talked to in the press release on the script was -- looks like you're kind of bucketing some kind of broader market trends, at least in the online ad market. Could you talk a little bit about where you're seeing strength, how you're kind of differentiating yourself -- CPMs, RPMs, anything kind of at a macro level that you could kind of help us understand how you guys are navigating would be helpful.

Hi, Mark. So, some of the things we mentioned in the call, and certainly in our release, we've seen expansion on the yield side of things that comes from better sales apparatus, better technology, more partnerships in the programmatic landscape and also growth in our direct sales year-over-year. So, we achieved significant upticks in the number of direct campaigns. And obviously when you sell direct advertising to sponsors and advertisers, you generally have a higher CPM. So, the more direct deals that we can layer in, the higher our yield is on the pages we have. That's part one. Part two is growing our overall inventory. As you know, we added 113 new sites in 2022. That trend continues in 2023. So those things combined obviously lent to a pretty significant growth in advertising. And then, as we also mentioned, by distributing the content that we have to hundreds of new outlets, we're seeing increased revenue there. As we've sort of entered 2023, there's no question that the markets as a whole, both the stock markets and the ad markets are seeing a little bit more stress this year than in years past. But we started to see that in Q4 last year. And I think the combination, as we've talked about in the past of growing our overall inventory pie through better content that we're doing on our sites, more engagement from consumers, and then driving yield has really enabled us to see the type of growth that we've seen. Doug chime in if he has anything, or obviously have you follow-up if you want to follow-up?

Yeah, no, I would just add to that. In addition to the growth in our direct advertising side of the business, even with our programmatic side, we've continued to push on premium programmatic products such as private marketplace and programmatic guaranteed as well as other products like that have considerably higher CPM. So even within the programmatic inventory, we've managed to upscale to more premium product.

Its, helpful. And then we can only think about how that manifests itself into the numbers, obviously, hopefully higher revenues, higher margin revenues, but pretty decent move from last year to this year in terms of the adjusted EBITDA loss, the positive, but obviously, you guys are looking for a nice step up from low single digits to, I think it was 30 to 35 or whatever you guys ended up guiding to. Could you just kind of walk us through some of the key drivers? We're going to see it mostly in gross margins. I know the incremental margins you just mentioned on some of this additional content is obviously pretty decent, but maybe at a high level you could kind of just walk us through where you're going to see a couple see some leverage in the model as you go from No, modest profitability to obviously hopefully much more profitable.

Sure. Doug, you can chime in whenever. Go ahead Doug. Didn't need to step on you.

That's all right. No, I was going to say, first of all, we acquired the men's journal and active network properties in latter December of last year, which will have a positive impact on our business, both in that it's in addition to our business, but we see a lot of growth opportunity that we can generate in those properties as well. We continue to see strong growth in digital advertising and in our licensing and syndication business. And the margins on digital advertising are north of 70% and licensing and syndication really has almost no cost associated with it. So that drops to the gross profit margin as well as the bottom line. And we saw significant cost reductions in our operating expenses year-over-year. We're anticipating a continued focus on our operating expenses to keep those in line, and that'll help us generate that rather significant growth in our EBITDA.

[Operator Instructions] And the next question is coming from Daniel Day from B. Riley Securities. Daniel your line is live.

Maybe this first one for me, an update on Men's Journal, you started acquiring the integrating those assets. Just first question are they fully integrated at this point? Still more work to do there. And then second, curious whether anything surprised you so far, either positive or negative as you've Doug, a bit more into that post-acquisition. Anything you think worth mentioning? Thanks.

Yes. Hey Daniel. So, we have successfully completed the integration onto our platform. The last of the sites came on last week. We have started to hire staff -- new staff to expand those brands. We are incredibly excited about some of the enthusiast titles that we acquired particularly in bike and surf and skiing. Those have been a real pleasant surprise in terms of the engagement from the audience, the social reach that they have -- for the most part they have been somewhat dormant over the last couple of years. So that was a nice find for us in picking up those great brands. On the men's journal side, it really opens up for us as we've dug in, it's opening up all kinds of new categories because when you have a lifestyle title like men's journal, you can run the gamut of health and wellness and fitness to sports to travel to food. And that's opening some new categories for us focused on kind of the male category, which male audience, which we already have a pretty big footprint in. So, there's some nice crossover there. No real surprises for us the transition onto our platform was pretty seamless and quick for brands this who've been around this long, and with this amount of content. So, as I said, we added 113 sites last year, so you can sort of do the math too, two plus every week on average. So, we're getting pretty good at acquiring or partnering with brands and moving them onto our content management system and ad stack. And that obviously leads to new revenue. So as Doug mentioned earlier, we're going to see planned pretty significant addition to our bottom line here with these titles. And we're finding a lot of interest both from consumers and also from advertisers.

Thank you. And then just on the licensing and syndication revenue maybe just a little more detail on what's in this bucket. You're at little shy of $6 million of revenue there in the quarter. Is there anything kind of one timey in there or seasonality in there and just how we should be modeling that moving forward? And then the margin, typically associated with that revenue? Is it generally accretive to your overall growth in EBITDA margins?

Yeah. On the margin side, it's the beauty of create once, sell many. Similar to a SaaS business on the tech side. We're producing so much high-end brand safe content with Sports Illustrated and Parade and the Street and now Men's Journal that third parties ranging from very large newspaper brands and companies to digital outlets like Apple News, MSN, Yahoo and others are very aggressive in wanting to partner with us and redistribute that content. And of course, there's no real cost to us to do that. So, the margin is pretty tremendous. There's no real one-timers in here. We've grown really substantially. I mean, a year ago we had very few newspaper partners. We were seeing the majority of the revenue we were generating coming from digital outlets. In large part, thanks to the work that our team has done from the parade acquisition, we've managed to sign some really exciting partnerships with local newspaper groups and also local television companies, the biggest in the country. So, we're starting to see our content show up on sites all across premier media brands. And as I mentioned earlier, that number is north of 500 outlets that are taking one or more pieces of our portfolio. So, we expect that to continue to grow very, very high margin and as we transition more and more away from sort of the traditional print business we're very excited about this part of this segment of our overall company.

Great. One more for me, just -- and then I'll turn it over. I have to imagine the downturn in ad spend that he's experiencing is probably putting a lot of pressure on some of the smaller publishers out there. Maybe that's accelerating or kind of reinvigorating some conversations you have had in the past. Maybe you were too far apart on valuation. You can just comment on whether you see that happening, how your acquisition pipeline looks today. And then maybe comment on your ability to, to get an acquisition done with, the cash balance and, working capital requirements you have over the next few months.

Yeah, sure. So, we have spent a lot of time in the last couple of months well two months or so, three months really focused on integrating the assets we had. None of us thought it would be prudent to go out and try to do another big acquisition of any sort till we platformed the ones we did in December. And so now with that checked off and beginning operations there we're freed up a little bit. We have added a bunch of new titles to the platform this year already. Those are not acquisitions, those are platform partners. So, we're seeing additional revenue and opportunities there. The pipeline for acquisitions is pretty robust. Probably no surprise to you, as you said in your question, the -- there are a lot of companies struggling out there, and I think we've proven that we're successful in acquiring platforming and growing businesses. So, we've gotten a lot of inbounds, more inbounds this year so far than I've seen in the time that I've been here. That said, we have work to do on the assets that we own and also on our overall balance sheet. So, we're not really doing anything too aggressively there, although we're starting to free up a little bit on our time. But that said, we do, as I said in my remarks, we do want to really focus on our capital structure our debt and ensure that we generate real free cash this year. So, we're taking a cautious approach. Prices are cheaper for sure out there for assets that we consider to be really strong brands.

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

Okay. Thanks so much everybody. Appreciate you being on once again, and we'll talk to you next quarter.

Thank you. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.