Gaia, Inc: Form 10-Q for the period ended Jun 30, 2026

Forward-Looking Statements

This report contains forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical fact are forward looking statements that involve risks and uncertainties. When used in this discussion, we intend the words

“anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “future,” “hope,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “strive,” “target,” “will,” “would” and similar expressions as they relate to us to identify such forward-looking statements. Our actual results could differ materially from the results anticipated in these forward-looking statements as a result of certain factors set forth under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Form 10-Q and under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025.

Risks and uncertainties that could cause actual results to differ include, without limitation: our ability to attract new members and retain existing members; our ability to compete effectively, including for customer engagement with different modes of entertainment; maintenance and expansion of device platforms for streaming; fluctuation in customer usage of our service; fluctuations in quarterly operating results; service disruptions; production risks; general economic conditions; future losses; loss of key personnel; price changes; brand reputation; acquisitions; new initiatives we undertake; security and information systems; legal liability for website content; failure of third parties to provide adequate service; future internet-related taxes; our founder’s control of us; litigation; consumer trends; the effect of government regulation and programs; the impact of public health threats; and other risks and uncertainties included in our filings with the SEC. We caution you that no forward-looking statement is a guarantee of future performance, and you should not place undue reliance on these forward-looking statements which reflect our views only as of the date of this report. We undertake no obligation to update any forward-looking information.

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this report. This section is designed to provide information that will assist readers in understanding our unaudited consolidated financial statements, changes in certain items in those statements from year to year, the primary factors that caused those changes and how certain accounting principles, policies and estimates affect the consolidated financial statements.

Overview and Outlook

We operate a global digital video subscription service with a library of over 10,000 titles, with live communications and live events with a growing selection of titles available in Spanish, German and French that caters to a unique, underserved member base. Our digital content is available to our members on most internet-connected devices anytime, anywhere, commercial-free. Through our online Gaia subscription service our members have unlimited access to a library of inspiring films, cutting edge documentaries, interviews, yoga classes, transformation related content, live events, and more – 90% of which is exclusively available to our members for digital streaming on most internet-connected devices.

Gaia subscription service our members have unlimited access to a library of inspiring films, cutting edge documentaries, interviews, yoga classes, transformation related content, live events, and more – 90% of which is exclusively available to our members for digital streaming on most internet-connected devices. Gaia’s position in the streaming video landscape is firmly supported by its wide variety of exclusive and unique content, which provides a complementary offering to other entertainment-based streaming video services. Our original content is developed and produced in-house in our lifestyle campus near Boulder, Colorado. By offering exclusive and unique content through our streaming service, we believe we will be able to significantly expand our target member base.

Our available content is currently focused on yoga, transformation, alternative healing, seeking truth and conscious films. This content is specifically targeted to a unique member base that is interested in alternative content provided by mainstream media. We have grown these content options both organically through our own productions and through strategic acquisitions or licensing. In addition, through our investments in our streaming video technology and our user interface, we have expanded the many ways our subscription member base can access our unique library of media titles.

Our core strategy is to improve our subscription business by expanding our unique and exclusive content library, enhancing our user interface, extending our streaming service to new internet-connected devices as they are developed and creating a conscious community built around our content.

We are a Colorado corporation. Our principal and executive office is located at 833 West South Boulder Road, Louisville, Colorado 80027-2452. Our telephone number at that address is (303) 222-3600.

Results of Operations

The table below summarizes certain detail of our financial results for the periods indicated:

(in thousands, except per share data)

The following table sets forth certain financial data as a percentage of revenues, net for the periods indicated:

Three months ended June 30, 2026 compared to the three months ended June 30, 2025

Revenues, net. Revenues decreased $1.3 million, or 5.29%, to $23.3 million during the three months ended June 30, 2026, compared to $24.6 million during the three months ended June 30, 2025. Revenue in the United States increased $0.2 million and international revenue decreased $1.5 million during the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The decrease primarily reflected the impact of changes in our marketing strategy, continued competition for consumer spending and engagement across the broader SVOD industry, and challenging macroeconomic conditions.

Cost of revenues. Cost of revenues increased $0.1 million or 4.1% to $3.4 million during the three months ended June 30, 2026, compared to $3.3 million during the three months ended June 30, 2025. Gross profit margin declined during the three months ended June 30, 2026 to 85.3% from 86.7% for the three months ended June 30, 2025. The decrease was primarily attributable to lower revenue while content-related costs remained relatively consistent.

Selling and operating expenses. Selling and operating expenses increased to $21.6 million during the three months ended June 30, 2026, compared to $20.6 million for the three months ended June 30, 2025, which is primarily due to change in marketing strategy. As a percentage of net revenues, selling and operating expenses increased to 92.6% for the three months ended June 30, 2026 compared to 83.8% for the three months ended June 30, 2025.

Corporate, general and administration expenses. Corporate, general and administration expenses decreased $1.4 million to $1.5 million for three months ended June 30, 2026 from $2.9 million for three months ended June 30, 2025. As a percentage of net revenues, these expenses decreased to 6.5% for the three months ended June 30, 2026 from 11.8% for the three months ended June 30, 2025. The decrease was primarily due to a decrease in incentive compensation during the three months ended June 30, 2025.

Six months ended June 30, 2026 compared to the six months ended June 30, 2025

Revenues, net. Revenues decreased $0.8 million, or 1.7%, to $47.6 million during the six months ended June 30, 2026, compared to $48.5 million during the six months ended June 30, 2025. The decrease primarily reflected the impact of changes in our marketing strategy, continued competition for consumer spending and engagement across the broader SVOD industry, and challenging macroeconomic conditions.

Cost of revenues. Cost of revenues increased $0.6 million or 9.8% to $6.8 million during the six months ended June 30, 2026, compared to $6.2 million during the six months ended June 30, 2025. Gross profit margin declined during the six months ended June 30, 2026 to 85.7% from 87.2% for the six months ended June 30, 2025. The decrease was primarily attributable to lower revenue while content-related costs remained relatively consistent. The six months ended June 30, 2025 benefited from a one-time adjustment in royalty expense.

Selling and operating expenses. Selling and operating expenses increased to $41.6 million during the six months ended June 30, 2026, compared to $40.7 million for the six months ended June 30, 2025. As a percentage of net revenues, selling and operating expenses increased to 87.3% for the six months ended June 30, 2026 compared to 83.9% for the six months ended June 30, 2025, which primarily related to a change in marketing strategy.

Corporate, general and administration expenses. Corporate, general and administration expenses decreased $0.9 million to $3.9 million for six months ended June 30, 2026 from $4.8 million for six months ended June 30, 2025. As a percentage of net revenues, these expenses decreased to 8.1% for the six months ended June 30, 2026 from 9.9% for the six months ended June 30, 2025. The decrease was primarily due to a decrease in incentive compensation during the six months ended June 30, 2025.

Seasonality

Our revenues and results of operations have fluctuated in the past, and will likely continue to fluctuate, on a quarterly basis. Such fluctuation is the result of a seasonal pattern that reflects variations when consumers are typically spending more time indoors and, as a result, tend to increase their viewing, similar to those of general video streaming services. This drives quarterly variations in our spending on member acquisition efforts and affects the net subscriber change each quarter but does not result in a corresponding seasonality in net revenue. We also expect regional seasonality trends to demonstrate more predictable seasonal patterns as our service offering in each market becomes more established and we have a longer history to assess such patterns.

Liquidity and Capital Resources

Our capital needs arise from working capital required to fund operations, capital expenditures related to acquisition and development of media content, development and marketing of our digital platforms, acquisitions of new businesses and other investments, replacements, expansions and improvements to our infrastructure and future growth. These capital requirements depend on numerous factors, including the rate of market acceptance of our offerings, our ability to expand our customer base, the cost of ongoing upgrades to our offerings, our expenditures for marketing and other factors. Additionally, we will continue to pursue opportunities to expand our media libraries, evaluate possible investments in businesses and technologies and increase our marketing as needed.

On December 19, 2025, Boulder Road and Westside (collectively, the “Borrower”) entered into a business loan agreement with KeyBank National Association (“KeyBank”), as lender, providing for a mortgage loan in the principal amount of $11.4 million (the “2025 Mortgage Loan”). The promissory note evidencing the 2025 Mortgage Loan bears interest at a fixed rate of 5.090% per annum, matures on December 19, 2030, and is secured by a deed of trust on our corporate campus, a portion of which is owned by Boulder Road and Westside as tenants-in-common and the remainder of which is owned by Boulder Road. The loan proceeds from the 2025 Mortgage Loan were used to refinance the 2020 Mortgage Loan. Westside and Boulder Road each received 50% of the proceeds and are each responsible for 50% of the monthly installments. The 2025 Mortgage Loan contains customary affirmative and negative covenants (each with customary exceptions) for loans of this type, including limitations on the Borrower’s ability to incur liens or debt, make investments, or engage in certain fundamental changes, and is fully guaranteed by Gaia. Additionally, the 2025 Mortgage Loan requires Boulder Road, LLC maintain a Net Operating Income to Debt Service Coverage Ratio of not less than 1.25 to 1.00. The 2025 Mortgage Loan has a remaining balance of $11.1 million as of June 30, 2026.

On December 28, 2020, the Borrower entered into a loan agreement with First Interstate Bank (formerly Great Western Bank), as lender, providing for a mortgage loan in the principal amount of $13.0 million (the “2020 Mortgage Loan”). The promissory note evidencing the 2020 Mortgage Loan bore interest at a fixed rate of 3.75% per annum, and was scheduled to mature on December 28, 2025 before being refinanced by the Borrower with the proceeds from the 2025 Mortgage Loan as discussed above.

On July 25, 2025 (the “Closing Date”), the Company, entered into a Second Amendment to the Credit and Security Agreement (the “Amendment”) among the Company, the subsidiary guarantors party thereto, and KeyBank National Association (the “Lender”), which amends that certain Credit and Security Agreement, dated as of August 25, 2022 (as amended prior to the Closing Date, the “Prior Credit Agreement”), among the Company, the subsidiary guarantors from time to time party thereto, and the Lender.

The Amendment amended the Prior Credit Agreement to, among other things, (i) refinance and extend the prior revolving credit facility with a revolving credit facility in an aggregate principal amount of up to $10 million (which may be increased up to $15 million) that matures on August 25, 2028, the loan proceeds of which may be used for working capital, general corporate purposes, and permitted acquisitions, (ii) modify the interest rate applicable to revolving loan advances to 1.75% per annum for advances that are SOFR loans and 0.75% per annum for advances that are base rate loans and eliminate the 0.10% per annum SOFR index adjustment, and (iii) provide for a maximum leverage ratio of 2.00 to 1.00 for each computation period. Borrowings under the Amendment are available for working capital and general corporate purposes and permitted acquisitions. There was no outstanding balance as of June 30, 2026.

On September 30, 2025, Gaia entered into a cost method investment in Orion Architect LLC (“Orion”) for $2 million according to ASC Topic 321. The Company has less than 10% ownership and does not have significant influence over the investee as there is no representation on the investee's board of directors, no participation in policy-making decisions, and no material intercompany transactions. The initial valuation of this investment will be made at historical cost and adjusted only for impairment or observable price changes from comparable transactions. No unrealized gain/loss will be recognized unless an observable transaction occurs. The investment will be subject to impairment testing and any permanent declines in value will be recognized in net income.

We intend to invest approximately 15%-20% of our revenues each year to support continued investment in our content library and technology platform. This spending is entirely discretionary in nature with no contractual commitments and due to our in-house production capabilities, we can scale back our content investment based on the cash flows generated from operations if necessary to ensure we have sufficient liquidity to operate our business into the future.

In the normal course of our business, we investigate, evaluate and discuss acquisition, joint venture, minority investment, strategic relationship and other business combination opportunities in our market. For any future investment, acquisition or joint venture opportunities, we may consider using then-available liquidity, issuing equity securities or incurring indebtedness.

While there can be no assurances, we believe our cash on hand, cash expected to be generated from operations, and potential capital raising capabilities should be sufficient to fund our operations on both a short-term and long-term basis. However, our projected cash needs may change as a result of acquisitions, product development, unforeseen operational difficulties or other factors.

Class A Common Stock Offering

In February 2025, we entered into an underwriting agreement with Roth Capital Partners, LLC and Lake Street Capital Markets, LLC (the “Underwriters”) relating to the offer and sale of 1,600,000 shares of our Class A common stock ($0.0001 par value) (the “Shares”). We sold the Shares to the Underwriters at the public offering price of $5.00 per share, less underwriting discounts and commissions, resulting in net proceeds of $7.0 million. The offering was made pursuant to a registration statement on Form S-3. We provided a 45-day option to the Underwriters to purchase up to an additional 240,000 Shares at $5.00 per share, less underwriting discounts and commissions (the “Over-Allotment Option”). On March 7, 2025, the Underwriters elected to waive the right to exercise the Over-Allotment Option.

Cash Flows

The following table summarizes our sources (uses) of cash during the periods presented:

(in thousands)

The three months ended June 30, 2026 compared to three months ended June 30, 2025

Operating activities. Net cash flows from operating activities decreased approximately $7.7 million during the three months ended June 30, 2026 compared to the same period in 2025. The decrease was driven by the timing of working capital, changes in earnings and deferred revenue.

Investing activities. Cash flows used in investing activities increased approximately $0.9 million during the three months ended June 30, 2026 compared to the same period in 2025. The increase was primarily driven by purchases related to fixed assets due to Igniton-related capital spend during the three months ended June 30, 2026.

Financing activities. Net cash flows from financing activities decreased $0.1 million during the three months ended June 30, 2026 compared to the same period in 2025 due to share repurchases related to Section 16 Officer tax coverage exchange during the three months ended June 30, 2026.

The six months ended June 30, 2026 compared to the six months ended June 30, 2025

Operating activities. Net cash flows from operating activities decreased approximately $7.5 million during the six months ended June 30, 2026 compared to the same period in 2025. The decrease was driven by the timing of working capital, changes in earnings and deferred revenue.

Investing activities. Cash flows used in investing activities increased approximately $1.7 million during the six months ended June 30, 2026 compared to the same period in 2025. The increase was primarily driven by purchases related to fixed assets due to Igniton-related capital spend during the six months ended June 30, 2026.

Financing activities. Net cash flows from financing activities decreased $7.2 million during the six months ended June 30, 2026 compared with the same period in 2025 due to proceeds received from the issuance of common stock during the six months ended June 30, 2025.

We are a smaller reporting company as defined in Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon its evaluation as of June 30, 2026, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q were effective at a reasonable assurance level. Management, including our Chief Executive Officer and Chief Financial Officer, believes the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial condition, results of operations and cash flows at and for the periods presented in accordance with U.S. GAAP.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We incorporate by reference the Risk Factors included as Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025 that we filed with the SEC on March 5, 2026.