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  • Ross Levinsohn

Arena Group Increases Revenue and Widens Gross Margin

The Arena Group, operator of media brands including Sports Illustrated, TheStreet, and Parade, posted 44% higher revenue and a wider gross margin for Q1.


The Arena Group, (AREN) - Get Free Report the tech-powered operator of media brands including Sports Illustrated, TheStreet, Parade, and HubPages, reported 44% higher revenue and a wider gross margin for the first quarter.


The Arena Group’s total revenue reached $48.2 million from $33.6 million in the year-earlier quarter.


The total-revenue increase stemmed largely from an 82% jump in digital revenue, to $31.6 million. In turn, the digital-revenue figure reflected a more than doubling (up 127%) in digital-ad revenue.


Gross profit more than tripled to $19.7 million in the first quarter from $5.4 million. Gross margin widened to 41% from 16% a year earlier.


'Validates Strategy and Platform Advantages'

“In the first quarter, we drove substantial revenue growth and more than tripled our gross profit, all while maintaining a 1% increase in cost of revenue, which enabled us to meaningfully narrow net losses,” Arena Group Chairman and Chief Executive Ross Levinsohn said in a statement.


“This validates both our strategy and platform advantages.”


For the quarter, total monthly average pageviews for the Arena Group were 519 million, according to Google Analytics. That’s a 67% increase from the year-earlier quarter.


The Arena Group's first-quarter results don't reflect those of AMG/Parade, which was acquired after the quarter ended. The acquisition brought pageviews on a pro forma basis to 565 million for the quarter, the Arena Group said.


“We are growing our audience at a rapid pace, and with it our revenue, and increasingly selling direct digital advertising, our highest-value ad units, across our entire portfolio,” Levinsohn said.


“Our ‘Playbook’ is built around premium, proprietary content and enhanced by audience-development initiatives across search, social, and distribution. The audience and data capabilities make us more attractive to brands, creating direct advertising opportunities that accelerate growth and expand margins.


“The results are clear: For the second quarter in a row, our revenue grew 44% compared to the prior-year periods.”


The Arena Group's Q1 net loss and adjusted Ebitda "both improved significantly in what is typically the weakest quarter of the year," Levinsohn said.


The New York company reported a net loss of $18.4 million, or $1.20 a share, for the quarter, compared with $25.5 million, or $2.44 a share, in the year-earlier quarter.

The latest quarter’s result reflected $15 million of noncash charges compared with $12.8 million a year earlier.


The executive said that AMG/Parade would "jump-start our Lifestyle vertical this month, and we expect this to contribute to our growth beginning in the second quarter.


“Our platform is built to scale, as we can support significantly higher revenues, greater traffic, and more platform-wide direct sales, without increasing our operating expenses. The result will be a steadily improving profitability.”


Full story: https://www.thestreet.com/investing/the-arena-group-q1-loss-narrows-gross-margin-widens



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