The Arena Group Holdings Inc.

08/14/2025 | Press release | Distributed by Public on 08/14/2025 06:16

Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (dollar in thousands, other than RPM)
The following discussion and analysis of our financial condition and results of operations for the three and sixmonths ended June 30, 2025 and 2024 should be read together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report and in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2024 included in the Annual Report on Form 10-K filed with the SEC on April 15, 2025. The following discussion contains "forward-looking statements" that reflect our future plans, estimates, beliefs and expected performance. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors. We caution that assumptions, expectations, projections, intentions or beliefs about future events may, and often do, vary from actual results and the differences can be material. Please see "Forward-Looking Statements."
Overview
The Arena Group Holdings, Inc. (the "Company," "Arena Group," "we," "our," or "us"), is a media company that leverages technology to build deep content verticals powered by anchor brands and a digital media platform (the "Platform") empowering publishers who impact, inform, educate, and entertain. Our strategy is to focus on key subject matter verticals where audiences are passionate about a topic category (e.g., sports & leisure, lifestyle, and finance) where we can leverage our core brands to grow our audience and increase monetization both within our core brands as well as for our media publisher partners (each, a "Publisher Partner"). Our focus is on leveraging our Platform and brands in targeted verticals to maximize audience reach, enhance engagement, and optimize monetization of digital publishing assets for the benefit of our users, our advertiser clients, and our greater than 20 owned and operated properties as well as properties we run on behalf of independent Publisher Partners. We own and operate Athlon Sports, TheStreet, The Spun, Parade, Men's Journal, HubPages, Men's Fitness, Autoblog, and Adventure Network, and also power more than 150 independent Publisher Partners.
Each Publisher Partner joins the Platform by invitation only with the objective of improving our position in key verticals while optimizing the performance of the Publisher Partner. Publisher Partners incur the costs in content creation on their respective channels and receive a share of the revenue associated with their content. Because of the scale of the Platform and our expertise in search engine optimization, social media, ad monetization and subscription marketing, Publisher Partners continually benefit from our ongoing technological advances and audience development expertise. While the Publisher Partners benefit from these critical performance improvements, they may also save substantial technology, infrastructure, advertising sales, member marketing and management costs. Additionally, we believe the lead brands within our verticals create a halo benefit for all Publisher Partners while each of them adds to the breadth and quality of content.
Of the more than 150 Publisher Partners, a majority of them publish content which aligns with one of our four verticals (sports & leisure, finance, lifestyle and platform), and oversee an online community for their respective sites, leveraging our Platform, monetization operation, distribution channels and data and analytics offerings, and benefiting from our ability to engage the collective audiences within a single network. Generally, Publisher Partners are independently owned, strategic partners who receive a share of revenue from the interaction with their content. Audiences expand and advertising revenue may improve due to the scale we have achieved by combining all Publisher Partners into a single platform and a large and experienced sales organization. They also benefit from our membership marketing and management systems, which we believe will enhance their revenue.
Recent Developments
On May 12, 2025, we entered into a Membership Purchase Agreement to purchase 100% of membership interests of TravelHost LLC from Simplify, a related party, for a purchase price of $1.0 million. In addition to the acquisition of the membership interests, the acquisition also included an assignment of certain contracts from Bridge Media Networks, LLC, an affiliate of Simplify. The transaction was approved by the Audit Committee of the Board of Directors of the Company consisting solely of independent directors.
Impact of Macroeconomic Conditions
Uncertainty in the global economy presents significant risks to our business. Increases in inflation, instability in the global banking system, geopolitical factors, including the ongoing conflicts in Ukraine and Israel and the responses thereto, and the impact of tariffs on print production costs and the overall market for advertising may have an adverse effect on our business. While we are closely monitoring the impact of the current macroeconomic conditions on all aspects of our business, the ultimate extent of the impact on our business remains highly uncertain and will depend on future
developments and factors that continue to evolve. Most of these developments and factors are outside of our control and could exist for an extended period of time. As a result, we are subject to continuing risks and uncertainties. For additional information, see the sections titled "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on April 15, 2025 and in this Quarterly Report.
Key Operating Metrics
Our key operating metrics are:
•Revenue per page view ("RPM") - represents the advertising revenue earned per 1,000 page views. It is calculated as our advertising revenue during a period divided by our total page views during that period and multiplied by $1,000; and
•Monthly average page views - represents the total number of page views in a given month or the average of each month's page views in a fiscal quarter or year, which is calculated as the total number of page views recorded in a quarter or year divided by three months or 12 months, respectively.
We monitor and review our key operating metrics as we believe that these metrics are relevant for our industry and specifically to us and to understanding our business. Moreover, they form the basis for trends informing certain predictions related to our financial condition. Our key operating metrics focus primarily on our digital advertising revenue, which is our most significant revenue stream. Management monitors and reviews these metrics because such metrics are readily measurable in real time and can provide valuable insight into the performance of and trends related to our digital advertising revenue and our overall business. We consider only those key operating metrics described here to be material to our financial condition, results of operations and future prospects.
For pricing indicators, we focus on RPM as it is the pricing metric most closely aligned with monthly average page views. RPM is an indicator of yield and pricing driven by both advertising density and demand from our advertisers.
Monthly average page views are measured across all properties hosted on the Platform and provide us with insight into volume, engagement and effective page management and are therefore our primary measure of traffic. We utilize a third-party source, Google Analytics, to confirm this traffic data.
As described above, these key operating metrics are critical for management as they provide insights into our digital advertising revenue generation and overall business performance. This information also provides feedback on the content on our website and its ability to attract and engage users, which allows us to make strategic business decisions designed to drive more users to read or view more of our content and generate higher advertising revenue across all properties hosted on the Platform.
For the three and sixmonths ended June 30, 2025, our RPM was $25.12 and $23.85, respectively. For the three and six months ended June 30, 2024, our RPM was $22.90 and $21.22, respectively. The 10% and 12% increases in RPM for the three and six months ended June 30, 2025, respectively, reflect our strong foundation in traffic with premium content coupled with competitive publishing to expand our reach. For the three and six months ended June 30, 2025, our monthly average page views were 423,358,110 and 375,434,097, respectively, as compared to 295,011,396 and 347,347,690 for the three and six months ended June 30, 2024. The 44% and 8% increases in monthly average page views for the three and six months ended June 30, 2025, respectively, reflect growth in traffic, demand and audience.
All dollar figures presented below are in thousands unless otherwise stated.
Liquidity and Capital Resources
Going Concern Assessment
Our condensed consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. Our condensed consolidated financial statements do not include any adjustments that might be necessary if it is unable to continue as a going concern.
For the three and sixmonths ended June 30, 2025, we had net income from continuing operations of $12,412 and $16,409, respectively, and as of June 30, 2025, had cash on hand of $6,771 and working capital of $23,202.
In prior periods, we disclosed that substantial doubt existed regarding our ability to continue as a going concern due to recurring losses, a working capital deficit, and limited liquidity. We continue to improve our financial performance through revenue growth and reduction of costs and monthly cash requirements, and to maintain compliance with the terms of all outstanding debt agreements, and have taken actions to resolve current and potential future liabilities, such as resolving pending litigation. We posted consecutive profitable quarters in the third and fourth quarters of 2024 and the first quarter of 2025. The previously disclosed working capital deficit existed due to the classification of our outstanding debt as a current liability and the accrual of several liabilities from discontinued operations. These conditions no longer exist.
As a result of these developments, management has concluded that the conditions that previously raised substantial doubt about our ability to continue as a going concern no longer exist. Accordingly, management has determined that there is no longer substantial doubt about our ability to continue as a going concern for at least one year from the date the financial statements are issued.
We are currently in the process of commercially refinancing all outstanding credit facilities that are due in December 2026. If we are unable to refinance, our current lender is a related party who has in the past demonstrated a willingness to work with us by amending the agreement due to our operational or financial needs. Although we believe that the lender would be willing to extend the maturity of the credit facility if external financing is not secured more than 12 months in advance of the current maturity dates, we have no assurances that the lender will accommodate our request or provide terms which are acceptable to us. If we cannot generate or obtain needed funds, we might be forced to make substantial reductions in our operating and capital expenses or pursue restructuring plans, which could adversely affect our business operations and ability to execute our current business strategy.
Cash and Working Capital Facility
As of June 30, 2025, our principal sources of liquidity consisted of cash of $6,771and accounts receivable, net of allowance for credit losses, of $40,077. In addition, as of June 30, 2025, we had $47,349available for additional use under our working capital loan with Simplify. As of June 30, 2025, the outstanding balance of the Simplify working capital loan was $2,651. Our cash balance as of the issuance date of our accompanying condensed consolidated financial statements is $6,780.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Material Contractual Obligations
We have material contractual obligations that arise in the normal course of business primarily consisting of employment contracts, consulting agreements, leases, liquidated damages, debt and related interest payments. Purchase obligations consist of contracts primarily related to merchandise, equipment, and third party services, the majority of which are due in the next 12 months. See Note 5, Leases, Note 7, Liquidated Damages Payable, and Note 9, Simplify Loanand Note 10, Term Debt, in our accompanying condensed consolidated financial statements for amounts outstanding as of June 30, 2025, related to other material contractual obligations.
Discontinued Operations
In connection with our discontinued operations from the discontinuance of the Sports Illustrated media business, we recorded the termination fee liability of $45,000 and recognized a loss on impairment of assets of $39,391 for the six months ended June 30, 2024. On April 29, 2025, the Company entered into a confidential settlement agreement resolving this matter with outstanding liabilities being released by all sides, including forfeiture of warrants held by ABG.
Income (loss) from our discontinued operations, net of tax, was $96,250and $(91,887)for the sixmonths ended June 30, 2025and 2024, respectively.
Further details are provided in our accompanying condensed consolidated financial statements in Note 2, Discontinued Operations, related to our discontinued operations and Note 18, Commitments and Contingencies, regarding the settlement of an action filed by ABG Group against the Company and Manoj Bhargava on April 1, 2024.
Working Capital
We have financed our working capital requirements since inception through issuances of equity securities and various debt financings. Our working capital surplus (deficit) as of June 30, 2025 and December 31, 2024 is as follows:
As of
June 30, 2025 December 31, 2024
Current assets $ 51,413 $ 40,234
Current liabilities (28,211) (122,256)
Working capital $ 23,202 $ (82,022)
As of June 30, 2025, we had working capital of $23,202, consisting of $51,413 in total current assets and $28,211 in total current liabilities as compared to a working capital deficit of $82,022 as of December 31, 2024. As of December 31, 2024, our working capital deficit consisted of $40,234 in total current assets and $122,256 in total current liabilities. The change in working capital is the result of the reversal of several accruals related to discontinued operations.
Our cash flows for the six months ended June 30, 2025 and 2024 consisted of the following:
Six Months Ended June 30,
2025 2024
Net cash provided by (used in) operating activities $ 13,970 $ (5,161)
Net cash used in investing activities (3,545) (1,512)
Net cash (used in) provided by financing activities (8,016) 3,474
Net increase (decrease) in cash, cash equivalents, and restricted cash $ 2,409 $ (3,199)
Cash, cash equivalents, and restricted cash, end of period $ 6,771 $ 6,085
For the sixmonths ended June 30, 2025, net cash provided by operating activities was $13,970, consisting primarily of $21,501 of cash received from customers, offset by, $1,645 of cash paid to employees, Publisher Partners, expert contributors, suppliers, and vendors, and for revenue share arrangements, professional services, and $5,886 of cash paid for interest. For the sixmonths ended June 30, 2024, net cash used in operating activities was $5,161, consisting primarily of $90,094 of cash received from customers, offset by (i) $52,633 of cash paid to employees, Publisher Partners, expert contributors, suppliers, and vendors, and for revenue share arrangements, and professional services, (ii) an asset impairment of $40,589 and (iii) $2,033 of cash paid for interest.
For the six months ended June 30, 2025, net cash used in investing activities consisted of $3,545 for capitalized costs for our Platform. For the six months ended June 30, 2024, net cash used in investing activities was $1,512 consisting of (i) $27 for purchase of property and equipment and (ii) $1,485 for capitalized costs for our Platform.
For the six months ended June 30, 2025, net cash used in financing activities was $8,016, consisting of (i) $16 for tax payments relating to the withholding of shares of common stock for certain employees, and (ii) $8,000 for repayments of the Simplify Loan. For the sixmonths ended June 30, 2024, net cash provided by financing activities was $3,474, consisting of (i) $561 for the payment of the contingent consideration, (ii) $20,027 from repayment of our line of credit with SLR Digital Finance LLC ("SLR"), (iii) $200 from payments of deferred cash payment and (iv) $486 for tax payments relating to the withholding of shares of common stock for certain employees, less (v) $12,000 in net proceeds from the common stock private placement, and (vi) $12,748 in net proceeds from our working capital loan with Simplify.
Share Repurchase Program
On July 31, 2025, we announced a share repurchase program under which we may repurchase up to 3 millionshares of our common stock through July 31, 2026, from time to time through open-market transactions, privately negotiated transactions, or otherwise, including under Rule 10b5-1 trading plans, subject to market conditions, share price, and other factors. The program may be suspended, modified, or terminated at any time. The share repurchase program will be funded through operating cash flow.
Results of Operations
Three Months Ended June 30, 2025 and 2024
The following table sets forth revenue, cost of revenue, gross profit, income (loss) from operations, and net income (loss):
Three Months Ended June 30, 2025 versus 2024
2025 2024 $ Change % Change
Revenue $ 45,012 $ 27,183 $ 17,829 65.6 %
Cost of revenue 19,577 16,465 3,112 18.9 %
Gross profit 25,435 10,718 14,717 137.3 %
Operating expenses
Sales and marketing 1,942 3,751 (1,809) -48.2 %
General and administrative 6,200 8,632 (2,432) -28.2 %
Depreciation and amortization 881 913 (32) -3.5 %
Total operating expenses 9,023 13,296 (4,273) -32.1 %
Income (loss) from operations 16,412 (2,578) 18,990 -736.6 %
Total other expenses (3,021) (4,325) 1,304 -30.2 %
Income (loss) before income taxes 13,391 (6,903) 20,294 -294.0 %
Income taxes (979) (35) (944) 2697.1 %
Income (loss) from continuing operations 12,412 (6,938) 19,350 -278.9 %
Income (loss) from discontinued operations, net of tax 96,227 (1,249) 97,476 -7804.3 %
Net income (loss) $ 108,639 $ (8,187) $ 116,826 -1427.0 %
For the three months ended June 30, 2025, income from continuing operations improved $17,829 to $12,412, as compared to our prior period loss from continuing operations of $6,938. This improvement was primarily due to a $17,829 increase in revenues and a $4,273 decrease in operating expenses as a result of headcount and consulting spend reductions.
Revenue
The following table sets forth revenue, cost of revenue, and gross profit:
Three Months Ended June 30, 2025 versus 2024
2025 2024 $ Change % Change
Revenue $ 45,012 $ 27,183 $ 17,829 65.6 %
Cost of revenue 19,577 16,465 3,112 18.9 %
Gross profit $ 25,435 $ 10,718 $ 14,717 137.3 %
For the three months ended June 30, 2025, we had gross profit of $25,435, as compared to $10,718 for the three months ended June 30, 2024, an increase of $14,717. Gross profit percentage for the three months ended June 30, 2025 was 56.5%, as compared to 39.4% for the three months ended June 30, 2024.
The increase in gross profit percentage was driven by an increase in digital advertising and publisher revenues where we implemented our competitive publishing model as well as an increase in performance marketing due to brand expansion and improved affiliate network.
The following table sets forth revenue by category:
Three Months Ended June 30, 2025 versus 2024
2025 2024 $ Change % Change
Digital revenue:
Digital advertising $ 31,693 $ 20,719 $ 10,974 53.0 %
Digital subscriptions 1,479 1,370 109 8.0 %
Publisher Revenue 5,621 2,282 3,339 146.3 %
Performance Marketing 5,730 1,537 4,193 272.8 %
Other digital revenue 244 522 (278) -53.3 %
Total digital revenue 44,767 26,430 18,337 69.4 %
Print revenue 245 753 (508) -67.5 %
Total revenue $ 45,012 $ 27,183 $ 17,829 65.6 %
For the three months ended June 30, 2025, total revenue increased $17,829, or a 65.6% increase, to $45,012 from $27,183 for the three months ended June 30, 2024.
There was a 69.4% increase in total digital revenue from $26,430 for the three months ended June 30, 2024 to $44,767 for the three months ended June 30, 2025. The primary drivers of the increase include an increase of $10,974 in our digital advertising revenue driven primarily by implementing the new competitive publishing model and growth in traffic with premium content to expand our reach, an increase in performance marketing revenue of $4,193 due to growth of our affiliate partner network and expansion of the performance marketing model across our portfolio and an increase in publisher revenue of $3,339, driven by the expansion of our publisher revenue network and an increase in brands distributing content to these partners. These increases were partially offset by a $278 decrease in other digital revenue and a $508 decrease in print revenue.
Cost of Revenue
The following table sets forth cost of revenue by category:
Three Months Ended June 30, 2025 versus 2024
2025 2024 $ Change % Change
External cost of content $ 8,627 $ 4,112 $ 4,515 109.8 %
Internal cost of content 6,273 6,294 (21) -0.3 %
Technology costs 3,776 4,131 (355) -8.6 %
Printing, distribution and fulfillment costs (213) 353 (566) -160.3 %
Amortization of developed technology and platform development 1,108 1,507 (399) -26.5 %
Other 4 68 (64) -94.1 %
Total cost of revenue $ 19,575 $ 16,465 $ 3,110 18.9 %
For the three months ended June 30, 2025, we recognized cost of revenue of $19,575 as compared to $16,465 for the three months ended June 30, 2024, representing an increase of $3,110. Cost of revenue for the three months ended June 30, 2025 was impacted by an increase in external cost of content of $4,515, which is directly correlated with digital advertising and publisher revenues as we implemented our competitive publishing model across the portfolio, partially offset by decreases in printing, distribution and fulfillment costs of $566due to the shutdown of Athlon Outdoor print operations, amortization of developed technology and platform development costs of $399, technology costs of $355, internal cost of content of $21, and other costs of revenue of $64.
Operating Expenses
Selling and Marketing
The following table sets forth selling and marketing expenses from continuing operations by category:
Three Months Ended June 30,
2025 2024
Selling and marketing $ 1,942 $ 3,751
Selling and marketing as a percentage of revenues 4 % 14 %
For the three months ended June 30, 2025, we incurred selling and marketing expenses of $1,942 as compared to $3,751 for the three months ended June 30, 2024. The decrease in selling and marketing expenses of $1,809 is primarily related to decreases in payroll and employee benefits costs of $1,160 due to a reduction in direct sales workforce. In addition, there were decreases in advertising costs of $390, circulation costs of $111, professional marketing services of $26, stock-based compensation of $15, and other selling and marketing expenses of $107.
General and Administrative
The following table sets forth general and administrative expenses by category:
Three Months Ended June 30,
2025 2024
General and administrative $ 6,200 $ 8,632
General and administrative as a percentage of revenues 14 % 32 %
For the three months ended June 30, 2025, we incurred general and administrative expenses of $6,200 as compared to $8,632 for the three months ended June 30, 2024. The $2,432 decrease in general and administrative expenses is primarily due to decreases in stock-based compensation of $94, payroll and related expenses of $1,036 as a result of headcount and consulting spend reductions, professional services, including accounting, legal and insurance of $1,276, and other general and administrative expenses of $26.
Segment Revenue
We report our segment results as Sports & Leisure, Finance, Lifestyle, and Platform. Additionally, certain expenses are not allocated to our segments because they represent centralized activities which cannot be accurately allocated.
The following table sets forth revenue by segment:
Three Months Ended June 30,
2025 2024
Segment revenue:
Sports and leisure $ 16,723 $ 9,784
Finance 13,097 5,690
Lifestyle 12,275 8,347
Platform 2,917 3,362
Total Revenue $ 45,012 $ 27,183
Sports & Leisure- increase of $6,939 is primarily driven by an increase in digital advertising revenues due to audience and traffic growth as a result of the transition of Men's Journal to our competitive publishing model as well as growth from our publisher and performance revenues due to expansion of each network.
Finance- increase of $7,407 is primarily driven by an increase in performance marketing revenue due to the expansion of our affiliate partner network and an increase in digital advertising revenues due to audience and traffic growth driven by the transition of TheStreet to our competitive publishing model.
Lifestyle- increase of $3,928is primarily due to an increase in digital advertising revenue driven by traffic and audience growth as a result of the transition of Parade to our competitive publishing model, an increase in publisher revenue due to the expansion of our publisher network, and an increase in performance marketing revenue due to the expansion of our affiliate commerce network.
Platform- decrease of $445 is driven by a decrease in digital advertising as a result of the reduction in underperforming partner sites.
Segment Gross Profit
The following table sets forth segment gross profit:
Three Months Ended June 30,
2025 2024
Gross profit:
Sports and leisure $ 10,890 $ 4,746
Finance 9,068 3,394
Lifestyle 7,518 5,418
Platform 1,290 922
Segment gross profit $ 28,766 $ 14,480
Sports & Leisure- increase of $6,144 is due to an increase in digital advertising revenues across our Athlon Sports and Men's Journal brands as well as growth in publisher and performance marketing revenues partially offset by an increase in external cost of content due to the implementation of our competitive publishing model at Men's Journal.
Finance- increase of $5,674 is driven by an increase in digital advertising revenues as well as growth in our publisher and performance marketing revenues partially offset by an increase in external cost of content due to the implementation of our competitive publishing model at TheStreet.
Lifestyle- increase of $2,100 is driven by an increase in digital advertising revenues as well as growth in our publisher and performance marketing revenues partially offset by an increase in external cost of content due to the implementation of our competitive publishing model at Parade.
Platform- increase of $368is driven by a decrease in digital advertising as a result of the reduction in underperforming partner sites.
The following table reconciles segment gross profit to gross profit:
Three Months Ended June 30,
2025 2024
Segment gross profit $ 28,766 $ 14,480
Arena level activities - -
Internal cost of content (825) (882)
Technology costs (1,398) (1,373)
Amortization of developed technology and platform development (1,108) (1,507)
Gross profit $ 25,435 $ 10,718
Other Expenses
The following table sets forth other expenses:
Three Months Ended June 30, 2025 versus 2024
2025 2024 $ Change % Change
Change in fair value of contingent consideration $ - $ - $ - 100.0 %
Interest expense (2,945) (4,249) 1,304 -30.7 %
Liquidated damages (76) (76) - - %
Total other expense $ (3,021) $ (4,325) $ 1,304 -30.2 %
Interest Expense- We incurred interest expense, net of $2,945 for the three months ended June 30, 2025, as compared to $4,249 for three months ended June 30, 2024. The decrease in interest expense of $1,304 was primarily from lower amortization of debt costs and lower interest charges on the new Simplify loan compared to the SLR line of credit in 2024.
Liquidated Damages- We recorded liquidated damages of $76 for the three months ended June 30, 2025, as compared to $76 for the three months ended June 30, 2024.
Income Taxes- We recorded a provision for income taxes of $979 for the three months ended June 30, 2025, as compared to $35 for the three months ended June 30, 2024. The increase in our provision for income tax of $944 was primarily related to our expected annual effective tax rate increase as a result of improved operating results.
Six Months Ended June 30, 2025 and 2024
Six Months Ended June 30, 2025 versus 2024
2025 2024 $ Change % Change
Revenue $ 76,827 $ 56,124 $ 20,703 36.9 %
Cost of revenue 35,723 36,473 (750) -2.1 %
Gross profit 41,104 19,651 21,453 109.2 %
Operating expenses
Sales and marketing 4,076 8,315 (4,239) -51.0 %
General and administrative 11,483 18,767 (7,284) -38.8 %
Depreciation and amortization 1,771 1,900 (129) -6.8 %
Income (loss) on impairment of assets - 1,198 (1,198) -100.0 %
Total operating expenses 17,330 30,180 (12,850) -42.6 %
Income (loss) from operations 23,774 (10,529) 34,303 -325.8 %
Total other expenses (6,100) (9,053) 2,953 -32.6 %
Income (loss) before income taxes 17,674 (19,582) 37,256 -190.3 %
Income taxes (1,265) (76) (1,189) 1564.5 %
Income (loss) from continuing operations 16,409 (19,658) 36,067 -183.5 %
Income (loss) from discontinued operations, net of tax 96,250 (91,887) 188,137 -204.7 %
Net income (loss) $ 112,659 $ (111,545) $ 224,204 -201.0 %
For the six months ended June 30, 2025, income from continuing operations improved $36,067 to $16,409, as compared to our prior period net loss of $19,658 from continuing operations. This improvement was primarily due to an increase of $20,703 in revenue and a $12,850 decrease in operating expenses as a result of headcount and consulting spend reductions.
Revenue
Six Months Ended June 30, 2025 versus 2024
2025 2024 $ Change % Change
Revenue $ 76,827 $ 56,124 $ 20,703 36.9 %
Cost of revenue 35,723 36,473 (750) -2.1 %
Gross profit $ 41,104 $ 19,651 $ 21,453 109.2 %
For the six months ended June 30, 2025, we had gross profit of $41,104, as compared to $19,651 for the six months ended June 30, 2024, an increase of $21,453. Gross profit percentage for the six months ended June 30, 2025 was 53.5%, as compared to 35.0% for the six months ended June 30, 2024.
The increase in gross profit percentage was driven by an increase in digital advertising revenue due to the implementation of our competitive publishing model across the platform, an increase in publisher revenue due to expansion of our publisher revenue network and an increase in brand participation in our publisher revenue model, and an increase in performance marketing revenue due to growth of our affiliate partner network and expansion of the performance marketing model across our portfolio.
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The following table sets forth revenue from continuing operations by category:
Six Months Ended June 30, 2025 versus 2024
2025 2024 $ Change % Change
Digital revenue:
Digital advertising $ 53,510 $ 43,467 $ 10,043 23.1 %
Digital subscriptions 3,150 3,704 (554) -15.0 %
Publisher Revenue 8,725 4,385 4,340 99.0 %
Performance Marketing 10,520 2,209 8,311 376.2 %
Other digital revenue 470 1,333 (863) -64.7 %
Total digital revenue 76,375 55,098 21,277 38.6 %
Print revenue 452 1,026 (574) -55.9 %
Total revenue $ 76,827 $ 56,124 $ 20,703 36.9 %
For the six months ended June 30, 2025, total revenue increased $20,703, or a 36.9% increase, to $76,827 from $56,124 for six months ended June 30, 2024. There was a 38.6% increase in total digital revenue from $55,098 for the six months ended June 30, 2024 to $76,375 for the six months ended June 30, 2025.
The primary drivers of the increase include a $10,043 increase in our digital advertising revenue due to expansion of our competitive publishing model across the portfolio, an increase in performance marketing revenue of $8,311due to growth of our affiliate partner network and expansion of the performance marketing model across our portfolio andan increase in publisher revenue of $4,340 due to growth of our publisher revenue network and an increase in brand participation in our publisher revenue model across the portfolio. These increases were partially offset by a decrease in our digital subscriptions of $554 due to a decline in subscribers, and a decrease in other digital revenue of $863. The decrease in print revenue of $574 is due primarily to the shutdown of the Athlon Outdoor print operations.
The following table sets forth cost of revenue by category:
Six Months Ended June 30, 2025 versus 2024
2025 2024 $ Change % Change
External cost of content $ 12,722 $ 10,469 $ 2,253 21.5 %
Internal cost of content 13,270 13,470 (200) -1.5 %
Technology costs 7,377 8,785 (1,408) -16.0 %
Printing, distribution and fulfillment costs (36) 597 (633) -106.0 %
Amortization of developed technology and platform development 2,384 3,056 (672) -22.0 %
Other 6 96 (90) -93.8 %
Total cost of revenue $ 35,723 $ 36,473 $ (750) -2.1 %
For the six months ended June 30, 2025, we recognized cost of revenue of $35,723 as compared to $36,473 for the six months ended June 30, 2024, representing a decrease of $750. Cost of revenue for the six months ended June 30, 2025 was impacted by an increase in external cost of content of $2,253, which is directly correlated with the expansion of our competitive publishing model across the portfolio, partially offset by decreases in printing, distribution and fulfillment costs of $633 due to the shutdown of Athlon Outdoor print operations, amortization of developed technology and platform development costs of $672, technology costs of $1,408, internal cost of content of $200, and other costs of revenue of $90.
Operating Expenses
Selling and Marketing
The following table sets forth selling and marketing expenses from continuing operations by category:
Six Months Ended June 30,
2025 2024
Selling and marketing $ 4,076 $ 8,315
Selling and marketing as a percentage of revenues 5 % 15 %
For the six months ended June 30, 2025, we incurred selling and marketing expenses of $4,076 as compared to $8,315 for the six months ended June 30, 2024. The decreasein selling and marketing expenses of $4,239 is primarily related to decreases in payroll and employee benefits costs of $3,151 due to a reduction in direct sales workforce. In addition, there were decreases in advertising costs of $673, circulation costs of $158, stock-based compensation of $98, and other selling and marketing expenses of $341; partially offset by an increase in professional marketing services of $182.
General and Administrative
The following table sets forth general and administrative expenses by category:
Six Months Ended June 30,
2025 2024
General and administrative $ 11,483 $ 18,767
General and administrative as a percentage of revenues 15 % 33 %
For the six months ended June 30, 2025, we incurred general and administrative expenses of $11,483 as compared to $18,767 for the six months ended June 30, 2024. The $7,284 decrease in general and administrative expenses is primarily due to decreases in stock-based compensation of $426, payroll and related expenses of $3,986 as a result of headcount and consulting spend reductions, professional services, including accounting, legal and insurance of $2,116, and other general and administrative expenses of $756.
Segment Revenue
We report our segment results as Sports & Leisure, Finance, Lifestyle, and Platform. Additionally, certain expenses are not allocated to our segments because they represent centralized activities which cannot be accurately allocated.
The following table sets forth revenue by segment:
Six Months Ended June 30,
2025 2024
Segment revenue:
Sports and leisure $ 29,186 $ 23,012
Finance 21,195 11,959
Lifestyle 20,154 14,742
Platform 6,292 6,411
Total Revenue $ 76,827 $ 56,124
Sports & Leisure- increase of $6,174primarily driven by an increase in digital advertising revenues due to audience and traffic growth as a result of the transition of Men's Journal to our competitive publishing model as well as growth from our publisher and performance revenues due to expansion of each network.
Finance- increase of $9,236 primarily driven by an increase in performance marketing revenue due to the expansion of our affiliate partner network and an increase in digital advertising revenues due to audience and traffic growth driven by the transition of TheStreet to our competitive publishing model.
Lifestyle- increase of $5,412primarily due to an increase in digital advertising revenue driven by traffic and audience growth as a result of the transition of Parade to our competitive publishing model, an increase in publisher revenue due to the expansion of our publisher network, and an increase in performance marketing revenue due to the expansion of our affiliate commerce network.
Platform- decrease of $119 driven by a decrease in digital advertising as a result of the reduction in underperforming partner sites.
Segment Gross Profit
The following table sets forth segment gross profit:
Six Months Ended June 30,
2025 2024
Gross profit:
Sports and leisure $ 18,426 $ 10,801
Finance 14,292 7,286
Lifestyle 12,205 9,519
Platform 2,395 1,765
Segment gross profit $ 47,318 $ 29,371
Sports & Leisure- increase of $7,625 due to an increase in digital advertising revenues across our Athlon Sports and Men's Journal brands as well as growth in publisher and performance marketing revenues partially offset by an increase in external cost of content due to the implementation of our competitive publishing model at Men's Journal.
Finance- increase of $7,006 is driven by an increase in digital advertising revenues as well as growth in our publisher and performance marketing revenues partially offset by an increase in external cost of content due to the implementation of our competitive publishing model at TheStreet.
Lifestyle-increase of $2,686 driven by an increase in digital advertising revenues as well as growth in our publisher and performance marketing revenues partially offset by an increase in external cost of content due to the implementation of our competitive publishing model at Parade.
Platform- increase of $630 is driven by the reduction in underperforming partner sites.
The following table reconciles segment gross profit to gross profit:
Six Months Ended June 30,
2025 2024
Segment gross profit $ 47,318 29,371
Arena level activities
Internal cost of content (1,185) (2,140)
Technology costs (2,645) (4,524)
Amortization of developed technology and platform development (2,384) (3,056)
Gross profit $ 41,104 $ 19,651
Other Expenses
The following table sets forth other expenses:
Six Months Ended June 30, 2025 versus 2024
2025 2024 $ Change % Change
Change in fair value of contingent consideration $ - $ (313) $ 313 -100.0 %
Interest expense (5,949) (8,588) 2,639 -30.7 %
Liquidated damages (151) (152) 1 -0.7 %
Total other expense $ (6,100) $ (9,053) $ 2,953 -32.6 %
Change in Fair Value of Contingent Consideration- The change in fair value of contingent consideration for the six months ended June 30, 2025 of $313, represents the change in fair value of the put option on our common stock in connection with the acquisition of Fexy Studios, where in connection with the acquisition we issued 274,692 shares of our common stock that was subject to a put option under certain conditions (as further described in Note 8, Fair Value, in our accompanying condensed consolidated financial statements).
Interest Expense- We incurred interest expense, net of $5,949 or the six months ended June 30, 2025, as compared to $8,588 for six months ended June 30, 2024. The decrease in interest expense of $2,639 was primarily from lower amortization of debt costs and lower interest charges on the line of credit.
Liquidated Damages- We recorded liquidated damages of $151 for the six months ended June 30, 2025, as compared to $152 for the six months ended June 30, 2024, representing a decrease in accrued interest.
Income Taxes- We recorded a provision for income taxes of $1,265 for the six months ended June 30, 2025, as compared to $76 for the six months ended June 30, 2024. The increase in our provision for income tax of $1,189 was primarily related to our expected annual effective tax rate increase as a result of improved operating results.
Use of Non-GAAP Financial Measures
We report our financial results in accordance with generally accepted accounting principles in the United States of America ("GAAP"); however, management believes that certain non-GAAP financial measures provide users of our financial information with useful supplemental information that enables a better comparison of our performance across periods. We believe Adjusted EBITDA provides visibility to the underlying continuing operating performance by excluding the impact of certain items that are noncash in nature or not related to our core business operations. We calculate Adjusted EBITDA as net loss as adjusted for loss from discontinued operations, with additional adjustments for (i) interest expense (net), (ii)
income taxes, (iii) depreciation and amortization, (iv) stock-based compensation, (v) change in valuation of contingent consideration, (vi) liquidated damages, (vii) loss on impairment of assets, (viii) loss on sale of assets; (ix) employee retention credit, (x) employee restructuring payments; and (xi) professional and vendor fees. Our non-GAAP measure may not be comparable to similarly titled measures used by other companies, have limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Additionally, we do not consider our non-GAAP measure as superior to, or a substitute for, the equivalent measure calculated and presented in accordance with GAAP. Some of the limitations are that our non-GAAP measure:
●
does not reflect interest expense and financing fees, or the cash required to service our debt, which reduces cash available to us;
●
does not reflect income tax provision or benefit, which is a noncash income or expense;
●
does not reflect depreciation and amortization expense and, although this is a noncash expense, the assets being depreciated may have to be replaced in the future, increasing our cash requirements;
●
does not reflect stock-based compensation and, therefore, does not include all of our compensation costs;
●
does not reflect the change in valuation of contingent consideration, and, although this is a noncash income or expense, the change in the valuations each reporting period are not impacted by our actual business operations but is instead strongly tied to the change in the market value of our common stock;
●
does not reflect liquidated damages and, therefore, does not include future cash requirements if we repay the liquidated damages in cash instead of shares of our common stock (which the investor would need to agree to);
●
does not reflect any losses from the impairment of assets, which is a noncash operating expense;
●
does not reflect any losses from the sale of assets, which is a noncash operating expense
●
does not reflect the employee retention credits recorded by us for payroll related tax credits under the CARES Act;
●
does not reflect payments related to employee severance and employee restructuring changes for our former executives;
●
does not reflect the professional and vendor fees incurred by us for services provided by consultants, accountants, lawyers, and other vendors, which services were related to certain types of events that are not reflective of our business operations; and
●
may not reflect proper non direct cost allocations.
The following table presents a reconciliation of Adjusted EBITDA to net income (loss), which is the most directly comparable GAAP measure, for the periods indicated:
Three Months Ended June 30, Six Months Ended June 30,
2025 2024 2025 2024
Net income (loss) $ 108,639 $ (8,187) $ 112,659 $ (111,545)
(Income) loss from discontinued operations (96,227) 1,249 (96,250) 91,887
Income (loss) from continuing operations 12,412 (6,938) 16,409 (19,658)
Add:
Interest expense (net) (1) 2,945 4,249 5,949 8,588
Income taxes 979 35 1,265 76
Depreciation and amortization (2) 1,989 2,420 4,155 4,956
Stock-based compensation (3) 151 499 333 1,412
Change in valuation of contingent consideration (4) - - - 313
Liquidated damages (5) 76 76 151 152
Loss on impairment of assets (6) - - - 1,198
Employee restructuring payments (7) - 3,328 - 5,784
Adjusted EBITDA $ 18,552 $ 3,669 $ 28,262 $ 2,821
(1)
Interest expense is related to our capital structure and varies over time due to a variety of financing transactions. Interest expense includes $31 and $60 for amortization of debt discounts for the three months ended June 30, 2025 and 2024 respectively, as presented in our condensed consolidated statements of cash flows, which are noncash items. Interest expense includes $63 and $596 for amortization of debt discounts for the six months ended June 30, 2025 and 2024 respectively.
(2)
Depreciation and amortization related to our developed technology and our Platform is included within cost of revenues of $1,108 and $1,507 for the three months ended June 30, 2025 and 2024, respectively, and depreciation and amortization is included within operating expenses of $881 and $913 for the three months ended June 30, 2025 and 2024, respectively. Depreciation and amortization related to our developed technology and our Platform is included within cost of revenues of $2,384 and $3,056 for the six months ended June 30, 2025 and 2024, respectively, and depreciation and amortization is included within operating expenses of $1,771 and $1,900 for the six months ended months ended June 30, 2025 and 2024, respectively. We believe (i) the amount of depreciation and amortization expense in any specific period may not directly correlate to the underlying performance of our business operations and (ii) such expenses can vary significantly between periods as a result of new acquisitions and full amortization of previously acquired tangible and intangible assets. Investors should note that the use of tangible and intangible assets contributed to revenue in the periods presented and will contribute to future revenue generation and should also note that such expense will recur in future periods.
(3)
Stock-based compensation represents noncash costs arise from the grant of stock-based awards to employees, consultants and directors. We believe that excluding the effect of stock-based compensation from Adjusted EBITDA assists management and investors in making period-to-period comparisons in our operating performance because (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations, and (ii) such expenses can vary significantly between periods as a result of the timing of grants of new stock-based awards, including grants in connection with acquisitions. Additionally, we believe that excluding stock-based compensation from Adjusted EBITDA assists management and investors in making meaningful comparisons between our operating performance and the operating performance of other companies that may use different forms of employee compensation or different valuation methodologies for their stock-based compensation. Investors should note that stock-based compensation is a key incentive offered to employees whose efforts contributed to the operating results in the periods presented and are expected to contribute to operating results in future periods. Investors should also note that such expenses will recur in the future.
(4)
Change in fair value of contingent consideration represents the change in the put option on our common stock in connection with the Fexy Studios acquisition.
(5)
Liquidated damages (or interest expense related to accrued liquidated damages) represents amounts we owe to certain of our investors in private placements offerings conducted in fiscal years 2018 through 2020, pursuant to which we agreed to certain covenants in the respective securities purchase agreements and registration rights agreements, including the filing of resale registration statements and becoming current in our reporting obligations, which we were not able to timely meet.
(6)
Loss on impairment of assets represents certain assets that are no longer useful.
(7)
Employee restructuring payments represents severance payments to employees under employer restructuring arrangements and payments for the three and six months ended June 30, 2025 and 2024, respectively.
Critical Accounting Estimates
Our management's discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with GAAP. In preparing the condensed consolidated financial statements, we make estimates and judgments that affect the reported amounts of assets, liabilities, stockholders' equity, revenue, expenses, and related disclosures. We re-evaluate our estimates on an on-going basis. Our estimates are based on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Because of the uncertainty inherent in these matters, actual results may differ from these estimates and could differ based upon other assumptions or conditions.
Except as described in Note 1, Summary of Significant Accounting Policies, of the notes to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, there have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024 that was filed with the SEC on April 15, 2025.
Recently Issued Accounting Standards Updates
Note 1, Summary of Significant Accounting Policies,in our accompanying condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q includes Recently Issued Accounting Standards updates.
The Arena Group Holdings Inc. published this content on August 14, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on August 14, 2025 at 12:17 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]