Loop’s Struggles Continue, With Ad Revenues Off 23% In Most Recent Quarter

August 8, 2024 by Dave Haynes

LA-based Loop Media, which makes ad-supported streaming media channels for place-based venues like bars and salons, continues to struggle in what it calls a challenging ad market environment.

Year to year ad revenue was down 23% for the most recent quarter and Loop had a net loss for the period of $5.5 million.

From the fiscal Q3 financial results summary:

In the 2024 fiscal third quarter, revenue decreased approximately 23% to $4.4 million compared to $5.7 million for the same period in fiscal 2023. This decrease was primarily driven by a challenging ad market environment in the second quarter of fiscal year 2024 due to one of the largest ad demand participants changing their terms of business with ad publishers, including us, which resulted in a material negative impact on the Company’s ad demand partner revenue.

Me: I’m not sure who “one of the largest ad demand participants” might be, and would welcome input from people who spend all day in digital out of home.

As of June 30th, Loop has roughly 51,000 screens running its programming. The company provides free Android streaming digital signage players to venues and a library of different curated content channels that are supported by Digital OOH advertising.

More from the financial results …

During the third quarter of fiscal year 2024, the Company continued the cost-cutting review it began earlier in fiscal year 2024, which it believed would provide the framework for making it more competitive in the CTV for business/DOOH industry and would accelerate its potential path to break even and achieve operating profitability. These measures have included: (1) discussions with certain third-party content providers and other licensors with a view to (i) restructuring existing or new license agreements and (ii) eliminating certain fixed fee content licenses, in each case to more closely align payments to content licensors with revenue associated with such content; (2) the development and promotion of lower cost channels to reduce or eliminate third-party content license fees, where possible; and (3) a continued review of existing third-party vendor products and services with a view to eliminating approximately $750,000 in ongoing yearly costs and expenses beginning in the first quarter of fiscal year 2025.

These efforts are ongoing and as these initiatives and changes continue to take effect, the Company believes it will see improved margins for the business. There can be no assurances, however, that the Company will be able to effect all changes that it has identified or that any such changes will achieve the desired results.

Justis Kao, CEO, stated, “Since my recent appointment as CEO, I have focused my attention on those areas of the business where we can look to increase revenues, leverage the Company’s fixed and variable expenses and improve profitability. As we have already undertaken significant cost-cutting measures, we will continue to streamline our operations and create further cost efficiencies for the remainder of this fiscal year and into the next. We are also continuing to work toward the expansion of our subscription offerings to our out-of-home business clients, including the introduction of a two-tier music video service offering, which will include a “primary tier” consisting of fewer than ten music video channels provided under a free ad-based service, and a “premium tier” of Loop’s full library of curated music video channels provided under a subscription service. We have also recently announced a non-music subscription offering that includes a number of live channels ranging from live sports events (including The NFL Redzone and The NFL Network) to news and lifestyle offerings which we believe will continue to support the growth opportunities of our business while further enhancing the customer experience for our business venue partners.”

I was going to write about the new subscription-based offer, but had questions … and Loop didn’t get back to me. Big “hmmmmm” on the NFL thing, as the provider is a very small, it appears, company called Network Communications of Northwest Florida, Inc. The service – NetCom TV – offers 55+ channels for $7 a month … which seems odd, given the NFL stuff costs $15 a month on the NFL’s own site. Googling the company brings up tings like child support cases and bankruptcy filings, so I left that alone. Not my problem.

Loop’s financials are a good reminder for entrepreneurs who have eyes on digital place-based ad networks that this is a much harder business than it might appear. Where I live is a bit of a black hole for digital signage and DOOH, but even in my local retail and dining travels I see DOOH screens that are dead or running ad loops that mostly plead Advertise Here!

Loop’s main competitor for both ad sales and venues is Austin, TX-based Atmosphere, and it is also laying off people.