GAIA, INC (GAIA)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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

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“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.

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Results of Operations

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

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.

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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,

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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” and elsewhere in this Annual Report on Form 10-K. 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 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 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’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 grow our subscription business domestically and internationally 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.

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Results of Operations

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

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

Year Ended December 31, 2025 Compared to Year Ended December 31, 2024

Revenues, net increased $9.7 million, or 10.9%, to $99.0 million during 2025, compared to $89.3 million during 2024. This was primarily driven by an increase in member count as well as an increase in Average Revenue Per User (“ARPU”).

Cost of revenues increased $0.4 million, or 3.2%, to $12.8 million during 2025 from $12.4 million during 2024, with gross profit margin of 87.1% in the current year compared to 86.1% in 2024. The increase in the cost of revenues is primarily related to timing of media library amortization. Gross profit margin increased during 2025 from 2024 primarily due to improvements in ARPU.

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Selling and operating expenses increased $7.1 million, or 9.5%, to $81.9 million during 2025 from $74.8 million during 2024 and, as a percentage of revenues, decreased to 82.7% during 2025 from 83.8% during 2024. The increase was driven primarily by an increase in marketing expense.

Corporate, general and administration expenses increased by $1.6 million, or 20.5%, to $9.4 million during 2025 up from $7.8 million during 2024 and, as a percentage of net revenue, increased to 9.5% during 2025 from 8.7% during 2024. The increase was primarily driven by legal fees, customer acquisition costs and higher compensation costs during 2025.

Income tax expense (benefit) reflects a current year provision of $0.2 million compared to the prior year provision of $(0.0) million from income taxes due to an increase in the current and deferred tax liability.

Quarterly and Seasonal Fluctuations

The following tables set forth our unaudited results of operations for each of the quarters in 2025 and 2024. The unaudited financial information includes all adjustments, consisting solely of normal recurring accruals and adjustments, necessary for a fair presentation of the results of operations for the quarters presented. You should read this financial information in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. The results of operations for any quarter are not necessarily indicative of future results of operations.

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