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Ross, the call is yours.

Ross Levinsohn: 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 revenue from $53 million to more than $220 million, and believe we will generate between $255 million and $270 million this year without any further acquisitions, all while reducing certain operating expenses. We now own nearly 50 properties and power another 225 brands who utilize our technology and sales apparatus with a combined audience of more than 109 monthly users according to comScore. We're now the 32nd largest publisher in the United States, according to comScore in January, and that's up from number 47 a year ago.

Let me speak to the progress at specific properties. Our sports vertical continues to see robust growth with total pageviews up 76% to 3.6 billion during the year. The Sports Illustrated Media Group was number four in the comScore sports rankings in January of 2023. As compared to full year €˜21, the spun delivered 70% growth in pageviews, and Fan Nation grew by 66%. The Street had a particularly strong year with pageviews up 139% to 326 million. In October, the street opened its news desk and studio on the floor of the New York Stock Exchange, enhancing our ability to bring dynamic real-time video content to our investor audience. Our lifestyle vertical continues to grow nicely. During the year, Parade and PetHelpful both delivered strong growth in pageviews with Parade growing by 44%, and PetHelpful growing by over 360%.

We have expanded into a fourth vertical men's lifestyle through the -- through our acquisition of Men's Journal in December, and we are very optimistic that it will see strong growth in the coming months as we apply our proprietary playbook, and technology. Across our platform, we continue to focus on expanding our distribution and reducing our overall cost of content. We now have recirculation in place across our entire ecosystem, as well as third party distribution to over 600 outlets, which help generate 127% growth in our licensing and syndication revenue in 2022. We enter 2023 poised for accelerating full year adjusted EBITDA and robust cash generation, all while continuing to deliver outstanding revenue growth. I also want to be transparent about our challenges.

First and foremost, we continue to aggressively manage a shrinking print subscription and print ad business. But once again, in 2022, our Sports Illustrated Magazine business generated strong cash contribution and we expect it will again in 2023 with 1.2 million paying and profitable subscribers. Doug will get into the details in a minute. We have aggressively managed this business deliver premium journalism, a beautiful product, and profits. We also managed a rapid shutdown of the Parade print operations the minute we saw it turn negative, and quickly and successfully transitioned our partnerships and audience to digital only content. Since then, we've seen strong adoption of our Parade e-edition with more than 500 newspapers offering the digital magazine to their subscribers.

Parade's digital presence continues to grow with parade.com users nearly doubling since we added it to our platform in June, 2022, reaching 21 million unique users in January of 2023, according to comScore. At TheStreet, while digital subscriptions have decreased by 39%, since Jim Cramer left in October of 2021, engagement growth at thestreet.com has driven monthly pages up 261% from 8.8 million in December of €˜21 to 31.6 million in December of €˜22. Clearly, there are also some inefficiencies in our capital structure. Some investors have noted that we have a significant debt expiration in December of this year. For the past several months, we have been working with our board and external advisors to either replace or extend our current facilities, and I expect we will have an announcement to make in the near term.

This is one of my top priorities as CEO, and I'm confident that we will secure a positive result shortly. The results we are sharing today, especially given the backdrop of a challenging economic time, demonstrate the strength of our business plan, and the differentiated foundation we've created over the past two years. The strategic investments that we made in late 2020 and 2021 to transform our business have clearly worked, while others in the industry are struggling our growth continues to accelerate both on the top and bottom lines. I'm extremely proud of the growth that we've achieved across all of our verticals this quarter. I'd like to share more about our outlook for 2023, but first, I'd like to let Doug Smith, our Chief Financial Officer, take you through the numbers.

Doug?

Photo by Memento Media on Unsplash

Douglas Smith: 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 prior year quarter, and reflected an $8.3 million reduction in selling and marketing costs to $19.4 million, and a $6.4 million decrease in general in administrative expenses to $11.7 million. The decrease in selling and marketing expenses was primarily due to the previously mentioned $8.8 million or 49% decrease in subscription acquisition costs to $9 million. The decrease in G&A expense is primarily related to the reduction in payroll and other related expense offset a little bit by the acquisition of the parade properties, which we acquired April one in 2022.

As a result of these significant cost reductions, the net loss was $13.7 million as compared to $19.9 million in the prior year fourth quarter, an improvement of $5.4 million or 28%. Over a 100% of 2022's fourth quarter loss were non-cash charges, including stock-based compensation, depreciation, amortization, and other non-cash charges. 2022 fourth quarter adjusted EBITDA was $5.4 million and improvement of $4.3 million from the $1.1 million reported in the fourth quarter of the prior year. Turning now to the results for the full year, revenue from continuing operations was approximately $221 million, up 17% as compared to $189 million last year. Again, for the full year, a substantial growth in digital revenue more than offset a planned reduction in print revenues.

Total digital revenue was $150 million up 48% from $101 million last year. Digital advertising represented $109 million of that and was up 74% versus last year, reflecting a 47% increase in paid views, and a 13% increase in revenue. And the organic growth in digital advertising for the year was also 80% of the total growth. Digital subscription revenue was $21 million, down 29% as compared to $30 million last year. And then other digital revenue principally, as I said, licensing and syndication increased by 127% or $11 million year-over-year to $19 million. Print revenue decreased by 19% to $71 million from $88 million last year. Again, this is related to the plan reduction in our print subscriber rate phase. But I want to take a moment just to discuss how we focus on print.

We compared the $71 million revenue to the two main print expenses, printing distribution, fulfillment cost, which was $15 million, and subscription acquisition cost of $37 million. The net difference of $19 million was a positive contribution that helps offset our shared content and editorial expenses as well as our overhead. And while print is generally a declining business, as Ross referenced, we've been focused on reducing the less profitable portion of our subscribers and thereby maximizing its contribution, and we'll continue to do that going forward. Gross profit increased 12% to $88 million in 2022 compared to gross profit of $79 million last year. However, our margin narrowed by 2 points to 40%. Again, this reflects the reduction in print revenues where the largest expense is actually shown below the gross profit line.

And of course, we had significant savings in that large subscription acquisition cost line. However, going forward is digital revenue is now two-thirds of our total revenue. We anticipate expansion of our gross profit margin going forward. Total operating expenses we're $144 million as compared to $163 million last year, a decrease of 12% or -- against our 17% revenue growth. Net loss of $71 million as compared to $90 million in the prior year showed an improvement of $19 million or 21%, and 2022 adjusted EBITDA was a positive $3.1 million, a positive swing of $15.2 million from the loss of $12.1 million last year. Looking at our balance sheet and liquidity, we ended the year with $13.9 million in cash and cash equivalent compared to $9.3 million at December 31, 2021.

Of course, in today's environment, I should point out that essentially all of our cash is held at tier one financial institutions. In the quarter, net cash generated by operating activities was $3.4 million and we had $14 million borrowed under our $40 million working capital line of credit. As Ross discussed, our senior notes come due at the end of the year and therefore they are showing as a hundred million 0.5 in current deck. And as Ross mentioned, we have had ongoing discussions regarding the refinancing and extension options and expect to make an announcement in the near future about this. Before I wrap up, I wanted to mention that we filled an extension today for the filing of our annual 10-K for the year ended 12 31 2022. As you may know, this is the first annual report for the company, we're required to include the Section 404 B of the Sarbanes Oxley auditor attestation on the company's assessment of its internal control over financial reporting.

We needed additional time to complete the 10-K in our independent accounting firm has not yet completed its audits procedures. We do expect that the financial statements in the 10-K will be substantially consistent with the numbers that we released in today's earnings, and we also expect that the 10-K will be filed within the 15-calendar day extension period provided by Rule 12 B €˜25. With that, I'll turn the call back to Ross for closing comments.

Ross Levinsohn: 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 productivity improvements in just the last few weeks on a pilot basis. We do not intend for this to replace our talented writers and editors, but we do believe this initiative will make our great teams even more productive. These are just a few of the examples of how we are proactively adjusting our cost structure to ensure that we hit our 2023 adjusted EBITDA target. Profitability in operating cash flow are our focus. I want to take a moment to summarize our journey and thank those investors who've supported us and the employees of the Arena Group for their tireless work and efforts to drive this brand.

I was asked to lead this business in the fall of 2020. For context, that year we generated $128 million in revenue, three quarters of which was derived from TheStreet and Sports Illustrated two recently acquired businesses, and we lost $23 million of adjusted EBITDA. We reset that business in the spring of €˜21, so about two years ago to the day of this earnings call, armed with a new strategy, a refocused team, and support from our largest investors, 21 months later, we have nearly doubled revenue and added $26 million to the adjusted EBITDA line to show our first full year profit. This progress comes even as print revenue significantly decreased as we refocused the company on our growing digital lines, while managing print for profitability.

And this year with a projected $30 million to $35 million of adjusted EBITDA, we will have achieved a significant transformation for some of the most iconic brands in publishing, while firmly establishing our efficient business model that has unlimited potential to drive profitable growth. And with that, I'd like to turn it over to you all for questions. Operator?

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