Gaia Inc (NASDAQ: GAIA)
2025 Q3 Operating Updates
Revenue expanded 13% year-over-year to $25 million, reaching a $100 million annualized run-rate, with gross margin of 86%. Ignition, the recently launched wellness supplement subsidiary, contributed $700K in revenue (3% of total) at 82% gross margin.
Gaia remains GAAP unprofitable with a net loss of $1.2 million ($0.05 per share), unchanged year-over-year despite revenue growth, highlighting the absence of operating leverage with selling and operating expenses consuming 82% of revenue at $21 million.
2025 YTD FCFF (operating + investing cashflow, excluding one-off investment of $2m in 3Q25) remains at -453k despite the price increase of 18% and management has guided toward $15 million in annual content spending for 2026 (versus $8 million for 2025 YTD).
View remains unchanged - Gaia lacks durable competitive moats and faces structural pricing power constraints.
3Q25 ARPU declined 4% vs. Q424 despite over half of the subscriber base having already cycled through the $13.99 October 2024 price increase—suggesting that promotional activity is mechanically masking true churn dynamics. The company's ability to sustain price increases will be definitively tested with the scheduled April 2026 pricing action.
Most concerning, 3Q25 US revenue contracted 6% quarter-over-quarter, indicating potential saturation in the domestic market or low pricing power.
Conclusion
The market seems to be validating my investment thesis. Gaia has declined 30% from the ~$6.00 initial coverage level to $4.22 as of 9 November 2025, compressing the stock to close to the estimated liquidation value of $4.4.
Despite the potential "margin of safety," I remain neutral rather than bullish given Ignition is an early venture and could collapse to zero value, which would lower the liquidation value to $2.4.