Q1 2024 CuriosityStream Inc Earnings Call

Operator: Thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to CuriosityStream's first quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during that time, simply press star followed by the number one on your telephone keypad, and if you'd like to withdraw that question, again, press star one. Thank you. I would now like to turn the conference over to Andrew Lata, Director of FP&A and Director of Investor Relations. You may begin your conference.

Thank you for standing by my name is Christa and I will be your conference operator today at this time I would like to welcome everyone to the curiosity streams first quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there.

Operator: There will be a question and answer session if you'd like to ask a question during that time simply press star followed by the number one on your telephone keypad and if you'd like to withdraw that question again press star one.

Andrew Lata: Thank you I would now like to turn the conference over to Andrew Lauder Director of F. P. N E and director of Investor Relations you May begin your conference.

Andrew Lata: Thank you.

Andrew Lata: Welcome to CuriosityStream's discussion of its first quarter 2024 financial results. Leading the discussion today are Clint Stinchcomb, CuriosityStream's chief executive officer, and Peter Westley, CuriosityStream's chief financial officer.

Andrew Lata: Welcome to cure curiosity streams discussion of its first quarter of 2024 financial results, leading the discussion today, our Clinton Stinchcomb curiosity streams, Chief Executive Officer, and Peter Wesley curiosity streams, Chief Financial Officer.

Andrew Lata: Following management's prepared remarks, we will be happy to take your questions, but first, I'll review the Safe Harbor statement. During this call, you may make statements related to our business that are forward-looking statements under the federal securities law. These statements are not guarantees of future performance but rather are subject to a variety of risks, uncertainties, and assumptions. Our actual results could differ materially from expectations reflected in any forward-looking statement. Please be aware that any forward-looking statements reflect management's current views only, and the company undertakes no obligation to revise or update these statements or to make additional forward-looking statements in the future.

Speaker Change: Following managements prepared remarks, we will be happy to take your questions, but first I'll review the safe Harbor statement.

Andrew Lata: During this call it may make statements related to our business that are forward looking statements under the federal Securities laws. These.

Andrew Lata: These statements are not guarantees of future performance, but rather are subject to a variety of risks uncertainties and assumptions our actual results could differ materially from expectations reflected in any forward looking statements.

Andrew Lata: Please be aware that any forward looking statements reflect management's current views only and the company undertakes no obligation to revise or update these statements or to make additional forward looking statements in the future.

Andrew Lata: For a discussion of the material risks and other important factors that could affect our actual results, please refer to our SEC filings available on the SEC's website and on our Investor Relations website, as well as the risks and other important factors discussed in today's press release. Additional information will also be set forth in our quarterly report on Form 10-Q for the quarter ended March 31, 2024, when it is filed. In addition, reference will be made to non-GAAP financial measures. A reconciliation of these non-GAAP measures to comparable GAAP measures can be found on our website at investors.curiositystream.com.

Andrew Lata: For a discussion of the material risks and other important factors that could affect our actual results. Please refer to our SEC filings available on the SEC website and on and on our Investor Relations website as well as the risks and other important factors discussed in today's press release.

Andrew Lata: Additional information will also be set forth in our quarterly.

Andrew Lata: <unk> on Form 10-Q for the quarter ended March 31, 2024 when filed.

Andrew Lata: In addition, <unk>.

Andrew Lata: <unk> will be made to non-GAAP financial measures measures.

Andrew Lata: A reconciliation of these non-GAAP measures to comparable GAAP measures can be found on our website at investors that curiosity stream dot com now I will turn the call over to Glenn.

Andrew Lata: Now, I'll turn the call over to Clint.

Clint Stinchcomb: Thank you very much, Andrew. I appreciate everyone joining us today for this milestone report. For the first quarter in company history, we achieved a positive quarter. We generated over $1 million in adjusted free cash flow in the first quarter, a year-over-year improvement of over $7 million. Our top line revenue was roughly equivalent to Q1 2023. We believe we are well positioned to improve upon both of these critical metrics in Q2. In Q1, we increased our direct subscription revenue sequentially and year over year.

Clint: Thank you very much Andrew I appreciate everyone joining us today for this milestone report.

Clint Stinchcomb: For the first quarter in company history, we achieved a positive quarter, we generated over $1 million and adjusted free cash flow in the first quarter a year over year improvement of over $7 million. Our topline revenue was roughly equivalent to Q1 2023.

Clint Stinchcomb: We believe we are well positioned to improve upon both of these critical metrics in Q2.

Clint Stinchcomb: Q1, we increased our direct subscription revenue sequentially and year over year.

Clint Stinchcomb: In June, we will begin to benefit from the fact that all of our new subscribers in the United States will finally be under the new pricing we introduced last year. In regard to partnerships, in Q1, we rolled out our subscription services with multinational global partners in 25 countries, and we added 7 new content licensing partners. With an eye toward greater cash flow, higher margins, and overall revenue, we revised some of our pay TV agreements. While these revisions will result in a near-term revenue decrease in the bundled distribution category, we are confident that the mid-term and long-term upside from these adjustments far outweighs the minor near-term decrease.

Clint Stinchcomb: In June we will begin to benefit from the fact that all of our new subscribers in the United States will finally be under the new pricing, we introduced last year and.

Clint Stinchcomb: In regard to partnerships in Q1, we rolled out our subscription services with multinational global partners in 25 countries and we added seven new content licensing partners.

Clint Stinchcomb: With an eye toward greater cash flow higher margins and overall revenue, we revised some of our pay TV agreements.

Clint Stinchcomb: While these revisions will result in a near term revenue decrease in the bundled distribution category, we're confident that the midterm and long term upside from these adjustments.

Clint Stinchcomb: Far outweighs the minor near term decrease more.

Clint Stinchcomb: Moreover, we believe the current chaotic disruption where MVPDs are dropping legacy services and even entire network groups, along with their license fee entitlement demands, create some meaningful opportunities that we believe we are uniquely suited to help solve and leverage. As a reminder, we have channels operating around the world today, and from our deep and vast library, we are well equipped to create additional factual category channels in areas like science, space, and Natural History to meet distributor demand. As an example of this, just last week, Samsung announced that it will launch three of our Hispanic channels in June. Curiosity Espaol, Curiosity Animals, and CuriosityMotor.

Clint Stinchcomb: We believe the current chaotic disruption, where mvpds are dropping legacy services and even entire network groups along with their license fee entitlement demands create some meaningful opportunities that we believe we are uniquely suited to help solve and leverage.

Clint Stinchcomb: As a reminder, we have channels operating around the world today.

Clint Stinchcomb: From our deep and vast library, we are well equipped to create additional factual category channels in areas like science space.

Clint Stinchcomb: The natural history.

Clint Stinchcomb: To meet distributor demand.

Clint Stinchcomb: As an example of this just last week, Samsung announced that they will launch three of our Hispanic channels in June.

Clint Stinchcomb: <unk> sure.

Clint Stinchcomb: <unk> animal and curiosity motors.

Clint Stinchcomb: In regard to advertising, we now have commercial relationships with over 20 key partners and platforms for our ad-supported content and Pay TV, Fast, and the Navy, and we anticipate roughly doubling this roster of advertising platform partners in 2024. However, the bulk of our advertising-oriented revenue to date has been categorized as licensing revenue in light of the advances in minimum guarantees we negotiated. As our existing ad partners publish our content and as our new partners publish and promote Curiosity content, we will begin to generate increasing and more predictable revenues from our ad-supported content.

Clint Stinchcomb: In regard to advertising, we now have commercial relationships with over 20 key partners and platforms for AD supported content and pay TV fast in the neighborhood and.

Clint Stinchcomb: We anticipate roughly doubling this roster of advertising platform partners in 2024.

Clint Stinchcomb: Well the bulk of our advertising oriented revenue to date has been categorized as licensing revenue in light of the advances and minimum guarantees we negotiated.

Clint Stinchcomb: As our existing AD partners publish our content and as our new partners publishing promote curiosity content, we will begin to generate increasing and more predictable revenues from our AD supported content.

Clint Stinchcomb: Additionally, as we generate more impressions in front of the paywall, we will benefit from the expansion at the top of our marketing funnel, which we believe will be helpful in moderating our paid marketing allocation. We've accomplished these objectives while simultaneously rationalizing our cost base. Excluding the non-cash expense inherent in content amortization, we cut our cost of revenue in half from Q1'23 to Q1'24, and we reduced G&A expense by about 30%.

Clint Stinchcomb: Additionally, as we generate more impressions in front of the paywall, we will benefit from the expansion at the top of our marketing funnel, which we believe will be helpful and moderating our paid marketing allocations.

Clint Stinchcomb: We accomplished these objectives, while simultaneously rationalizing our cost base, excluding the noncash expense inherent in content amortization, we cut our cost of revenue and half from Q1 'twenty three to Q1 'twenty four.

Clint Stinchcomb: We reduced G&A expense by about 30%.

Clint Stinchcomb: To reiterate, we believe we are now solidly situated to generate increasing positive cash flow and sturdy, sustainable revenues that are increasingly predictable and reliable. In addition to guiding to greater positive cash flow and revenue in the second quarter, we believe our dividend program, which is being paid from surplus cash, further underscores our positive trajectory for 2024 and beyond. At the core of Curiosity is, of course, the creation and distribution of premium factual programming that both inspires and informs.

Clint Stinchcomb: To reiterate we believe we are now solidly situated to generate increasing positive cash flow and sturdy sustainable revenues that are increasingly predictable and reliable.

Clint Stinchcomb: In addition to guiding to greater positive cash flow and revenue in the second quarter. We believe our dividend program, which is being paid from surplus cash further underscores our positive trajectory for 2024 and beyond.

Clint Stinchcomb: At the core of curiosity is of course, the creation and distribution of premium factual programming that both inspires ended forms.

Clint Stinchcomb: In Q1, we released original series and specials across a range of genres and formats, including Science for Evil Geniuses in a Reverent, Real-World Test of Super-Villain Science, starring Game of Thrones actor Paul Kay; and the fourth season of Forth and Forever, following the DeSoto Eagles' quest to recapture another Texas state title. The invention of surgery is an unflinching look at the pioneers who transformed medicine from a primitive art into a sophisticated and successful science.

Clint Stinchcomb: In Q1, we released original series and specials across a range of genres and formats, including.

Clint Stinchcomb: Science for evil Geniuses, and irreverent real World Test a supervillain science starring game of Thrones actor Paul K.

Clint Stinchcomb: Fourth season of fourth and forever following the Desoto Eagle's quest to recapture another Texas state title.

Clint Stinchcomb: The invention of surgery, and unflinching look at the pioneers, who transform medicine from a permit of art into a sophisticated and successful science.

Clint Stinchcomb: The Art of Seduction, an exploration of the secret powers of some of history's most influential characters, and Believe, a beautiful look at the origins, traditions, and festivals of the world's five biggest religions and the challenges they face today. We celebrated the ancient world with Ancient Egyptian Week. And on May 9th, we kick off Jaws and Claws. Animals that can eat us are interesting to nearly all of us, and interesting people everywhere, just like our dinosaurs and the compelling creatures that preceded them.

Clint Stinchcomb: The artist deduction and expose of the secret powers of some of history's most influential characters.

Clint Stinchcomb: And believe our beautiful look at the origins traditions and festivals of the world's five biggest religions and the challenges they face today.

Clint Stinchcomb: We celebrated the ancient world with ancient Egyptian week.

Clint Stinchcomb: And on May 9th we kickoff jaws in clause week.

Clint Stinchcomb: Animals that could eat us are interesting to nearly all of us.

Clint Stinchcomb: And interesting that people everywhere.

Clint Stinchcomb: As our dinosaurs and the compelling creatures that preceded us.

Clint Stinchcomb: In closing, I'm happy to reiterate that we ended the quarter with $39 million in cash and equivalents, $1.2 million in adjusted free cash flow, and zero debt. We believe our strong balance sheet and projected 2024 positive cash flow are major competitive advantages in the current environment. Moreover, we continue to believe that our global appeal, our direct subscriber base and direct platforms, our broad and deep content library of over 17,000 evergreen titles, our multi-year third-party agreements, our public company currency, and our rationalized cost structure are uniquely favorable attributes that provide us with sustainable long-term strength and exceptional flexibility. I'd now like to pass the baton to my good friend and colleague, Peter, about whom I will have more to say at the conclusion of his remarks.

Clint Stinchcomb: In closing I'm happy to reinforce that we ended the quarter with $39 million in cash and equivalents.

Peter: $1 $2 million and adjusted free cash flow and zero debt.

Peter: We believe our strong balance sheet and projected 2020 for positive cash flow our major competitive advantages in the current environment.

Peter: Moreover, we continue to believe that our global appeal, our direct subscriber base and direct platforms are broad and deep content library of over 17000 evergreen titles.

Peter: Multi year third party agreements are public company currency and a rationalized cost structure are uniquely favorable attributes that provide us with sustainable long term strength and exceptional flexibility.

Clint Stinchcomb: I'd now like to pass the Baton to my good friend and colleague Peter about whom I will have more to say at the conclusion of his remarks.

Peter: Thanks Glenn.

Peter M. Westley: As Clint said, our Q1 performance was a true milestone event for the company. Driven by strong execution, our first quarter revenue came in within our guidance range, and our adjusted free cash flow came in above the high end of our guidance range. Our adjusted free cash flow of positive $1.2 million, which represented our sixth straight quarter of sequential improvement in this metric, was the first positive quarterly adjusted cash flow in the company's history. This accomplishment is particularly noteworthy given the cash flow losses experienced by so many other companies in the video streaming sector.

Peter: As Clint said, our Q1 performance was a true milestone event for the company.

Peter M. Westley: Driven by strong execution, our first quarter revenue came in within our guidance range and our adjusted free cash flow came in above the high end of our guidance range, our adjusted free cash flow of positive $1 $2 million, which represented our sixth straight quarter of sequential improvement in this metric.

Peter M. Westley: Was the first positive quarterly adjusted free cash flow in the company's history. This accomplishment is particularly noteworthy given the cash flow losses experienced by so many other companies in the video streaming sector.

Peter M. Westley: First quarter adjusted EBITDA improved by $3.5 million compared with the prior year quarter, while adjusted free cash flow improved by $7.5 million year over year. Getting into the details, revenue for the first quarter of 2024 was $12 million, compared to $12.4 million in the prior year quarter. The year-over-year change was primarily driven by decreases in content licensing and bundle distribution.

Peter M. Westley: First quarter, adjusted EBITDA improved by $3 $5 million compared with the prior year quarter, while adjusted free cash flow improved by $7 $5 million year over year.

Peter M. Westley: Getting into the details revenue for the first quarter of 2024 was $12 million compared to $12 4 million in the prior year quarter. The year over year change was primarily driven by decreases in content licensing and bundled distribution.

Peter M. Westley: Despite this decline in revenue, we were able to improve our adjusted free cash flow from negative $6.3 million in the prior year quarter to positive $1.2 million in this year's first quarter as a result of our intense focus on the bottom line. Turning to the breakdown of revenues, our largest revenue category this quarter was our direct business. Direct revenue came in at $9.5 million, up 11% year-over-year and 4% sequentially as we continue to see the benefits of the price increases we put in place last year. Content licensing, which was our second largest revenue category this quarter, generated $1.2 million of revenue, compared with $2 million in the prior year quarter. I'd like to make a couple of comments about this comparison.

Peter M. Westley: Despite this decline in revenue, we were able to improve our adjusted free cash flow from negative $6 $3 million in the prior year quarter to positive $1 $2 million in this year's first quarter as a result of our intense focus on the bottom line.

Peter M. Westley: Turning to the breakout of revenues our largest revenue category. This quarter was our direct business direct revenue came in at $9 $5 million up 11% year over year and 4% sequentially as we continue to see the benefits of the price increases we put in place last year.

Peter M. Westley: Content licensing, which was our second largest revenue category this quarter generate generated $1 $2 million of revenue compared with $2 million in the prior year quarter I.

Peter M. Westley: I'd like to make a couple of comments about this comparison first it's worth noting that last year's content licensing figure included $1 $2 million of pre sales transactions.

Peter M. Westley: First, it's worth noting that last year's content licensing figure included $1.2 million of pre-sales transactions, compared with $0.3 million of pre-sales in this year's first quarter. As I mentioned in prior calls, pre-sales are 0% gross margin transactions for us, so this decline in revenue does not reduce our profitability. Second, our main focus in content licensing is on our positive gross margin, library-related transactions. In Q1 of 2024, we had approximately $900,000 in these transactions, an increase of 6% compared with the first quarter of 2023.

Peter M. Westley: Compared with zero point $3 million of pre sales in this year's first quarter.

Peter M. Westley: As I've mentioned in prior calls pre sales are zero percent gross margin transactions for us. So this decline in revenue does not reduce our profitability.

Peter M. Westley: Second our main focus in content licensing is on our positive gross margin library related transactions in.

Peter M. Westley: In Q1 of 2024, we had approximately $900000 of these transactions an increase of 6% compared with the first quarter of 2023.

Peter M. Westley: Our next largest revenue category in Q1 of 2024 was bundled distribution, which generated $1.1 million of revenue, down from $1.5 million in the prior year's first quarter. Funded distribution is a challenging revenue stream for us right now, which is reflective of the pressures being felt in the linear pay television business worldwide. While we do continue to add new partners, we also occasionally have situations where we do not renew agreements or where our affiliate fees are revised as contracts come up for renewal in response to the financial pressures that our distribution partners face.

Peter M. Westley: Our next largest revenue category in Q1 of 2024 was bundled distribution, which generated $1 $1 million of revenue down from $1 $5 million in the prior year's first quarter.

Peter M. Westley: On the distribution is a challenging revenue stream for US right now, which is reflective of the pressures being felt in the linear pay TV business worldwide while.

Peter M. Westley: While we do continue to add new partners. We also occasionally have situations, where we would do not renew agreements or where affiliate fees are revised as contracts come up for renewal in response to the financial pressures that our distribution partner space.

Peter M. Westley: Our total barter revenue in each of the first quarter of 2023 and the first quarter of 2024 was approximately $200,000. Turning to our expenses, content amortization in the first quarter was $5.2 million, an 11% decline from the $5.9 million we recorded in the prior year quarter. We expect content amortization expense, the largest component of our cost of revenues, to continue to decline going forward and ultimately converge with the lower level of new content investment that we require now that we've achieved critical mass in our content library.

Peter M. Westley: Our total BARDA revenue in each of the first quarter of 2023 in the first quarter of 2024 was approximately $200000.

Peter M. Westley: Turning to our expenses content amortization in the first quarter was $5 $2 million, an 11% decline from the $5 $9 million, we recorded in the prior year quarter.

Peter M. Westley: We expect content amortization expense the largest component of our cost of revenues.

Peter M. Westley: To continue to decline going forward and ultimately converge with the lower level of new content investment that we require now that we've achieved critical mass in our content library.

Peter M. Westley: First quarter gross margin of 43.8% increased from 27.3% in the prior year quarter, driven by significant reductions in our cash-based cost of revenues, which are a result of our ongoing cost reduction efforts. One other metric that we find useful in assessing our profitability is our gross margin excluding content amortization. This metric really gets at the cash cost of delivering our services across all of our revenues. That figure was 87.2% in Q1 2024, which compares very favorably with 74.6% in the prior year quarter and 80.2% in the most recent quarter, Q4 of 2023.

Peter M. Westley: First quarter gross margin of 43, 8% increased from 27, 3% in the prior year quarter.

Peter M. Westley: Driven by significant reductions in our cash base cost of revenues, which are a result of our ongoing cost reduction efforts.

Peter M. Westley: One other metric that we find useful in assessing our profitability is our gross margin excluding content amortization.

Peter M. Westley: This metric really gets at the cash cost of delivering our services across all of our revenue streams.

Peter M. Westley: That figure was 87, 2% in Q1, 2024, which compares very favorably with 74, 6% in the prior year quarter and 82% in the most recent quarter Q4 of 2023.

Peter M. Westley: Our first quarter advertising and marketing expense of $3.1 million was essentially flat year-over-year, and we continue to exercise discipline and analytical rigor in deploying our customer acquisition dollars. G&A expense during the first quarter of 2024 of $5.8 million was down $2.3 million or 28% year-over-year as we're seeing the benefits of our planned spending reductions and workforce optimization efforts. Moving back to profitability, the adjusted EBITDA loss was $2.8 million compared to an adjusted EBITDA loss of $6.4 million in the prior year quarter.

Peter M. Westley: Our first quarter advertising and marketing expense of $3 $1 million was essentially flat year over year, and we continue to exercise discipline and analytical rigor and deploying our customer acquisition dollars.

Peter M. Westley: G&A expense during the first quarter of 2024 was $5 $8 million up $5 $8 million was down $2.3 million or 28% year over year as we're seeing the benefits of our planned spending reductions and workforce optimization efforts.

Peter M. Westley: Moving back to profitability adjusted EBITDA loss was $2 $8 million compared to an adjusted EBITDA loss of $6 $4 million in the prior year quarter adjusted.

Peter M. Westley: Adjusted free cash flow in the quarter was positive $1.2 million, compared with negative $6.3 million in the prior year quarter. We believe our overall balance sheet remained in great shape with $95 million of assets, $28 million of liabilities, and a book value of $67 million, or approximately $1.26 per share. We end the quarter with total cash, cash equivalents, and restricted cash of $38.9 million and no outstanding debt. Moving to our second quarter guidance, we expect revenue in the range of $12 to $13 million and adjusted free cash flow in the range of $1.5 to $2.5 million.

Peter M. Westley: Adjusted free cash flow in the quarter was positive $1 $2 million compared with negative $6 3 million in the prior year quarter.

Peter M. Westley: We believe our overall balance sheet remained in great shape with $95 million of assets $28 million of liabilities and book value was $67 million or approximately $1 26 per share.

Peter M. Westley: We ended the quarter with total cash cash equivalents and restricted cash of $38 $9 million and no outstanding debt.

Peter M. Westley: Moving to our second quarter guidance, we expect revenue in the range of $12 million to $13 million and adjusted free cash flow in the range of one five to $2 $5 million.

Peter M. Westley: Finally, as you may have seen in our press release, I would note that this is my last earnings call as CFO. The board has named Brady Hayden as CEO effective May 31st. Brady's been with us since last June in the role of controller, and I'm confident in his abilities to step up into the CFO position. We will work together to ensure a smooth transition, and I'll return to my prior role as a senior advisor to the management team of CuriosityStream beginning in June.

Speaker Change: Finally, as you may have seen in our press release I would note that this is my last earnings call as CFO.

Peter M. Westley: Third is named Brady Hayden CFO effective may 31.

Peter M. Westley: Brady has been with us since last June and the role of controller and I'm confident in his abilities to step up into the CFO position, we will work together to ensure a smooth transition and I'll return to my prior role as a senior adviser to the management team of curiosity stream beginning in June.

Peter M. Westley: As I look back, I'm tremendously proud of all that we've achieved over the last two years. It's been a real pleasure to work with my good friends, Clint, Tia, Rob, and the rest of the team at the company. With that, I'll turn the call over to Clint for some closing comments.

Speaker Change: As I look back I'm tremendously proud of all that we've achieved a lot over the last two years, it's been a real pleasure to work with my good friends, Clint Tia, Rob and the rest of the team at the company.

Peter M. Westley: With that I'll turn the call over to Clint for some closing comments.

Clint Stinchcomb: I appreciate that, Peter. I first met Peter in 1986 when he was an undergraduate advisor to one of my closest friends in a freshman dorm at our alma mater. The maturity and leadership qualities that were requisite for Peter Westley, the UGA, are the same that we have called upon and appreciated here at Curiositystream.

Clint Stinchcomb: I appreciate that Peter.

Clint Stinchcomb: I first met Pieter and 1986, when he was an undergraduate advisor to one of my closest friends and a freshman dorm at our alma mater.

Clint Stinchcomb: The maturity and leadership qualities that were requisite for Peter wisely. The UGA are the same that we have called upon and appreciated here at curiosity stream.

Clint Stinchcomb: Most everyone else here met Peter in 2018 when he invested alongside our former board member, the late and great Dick Bloom, and became a board observer in his capacity as an advisor to Dick. Peter's deep, innate curiosity, as well as his affection for our business, naturally led us to engage him more formally as a consultant, and then to enlist him as our CFO about two years ago. During these two years, Peter loaned the steadiness and cogency I've always enjoyed to our finance function and to our leadership. I want to thank him for both his service and that capacity.

Clint Stinchcomb: Most everyone else here about Peter in 2018, when he invested alongside our former board member late in Great <expletive> Bloom.

Clint Stinchcomb: And became a board observer in his capacity as an advisor to <expletive>.

Clint Stinchcomb: Peter's deep innate curiosity as well as his affection for our business naturally led us to engage him more formally as a consultant.

Clint Stinchcomb: And then to enlist him as our CFO about two years ago.

Clint Stinchcomb: During these two years Peter loan the steadiness and cogency I've always enjoyed to our finance function and to our leadership team I.

Clint Stinchcomb: I want to thank him for both the service and that capacity.

Clint Stinchcomb: It's been a privilege working shoulder-to-shoulder with Peter on the day-to-day work of our getting to cash flow positive, and on behalf of our board and the entire team, I thank him for the maturity, the leadership, and the dedication he has offered us. And to say we look forward to more of the same as Peter returns to consulting status with the company, offering us continued access to his mighty brain and collegial demeanor It's Peter's arrival in May of 2024, comparing the 12 months we just completed in March with the comparable period two years ago.

Clint Stinchcomb: It's been a privilege working shoulder to shoulder with Peter on the day to day work of our getting to cash flow positive.

Clint Stinchcomb: And on behalf of our board and the entire team. Thank him for the maturity of the leadership and the dedication. He has offered us and to say we look forward to more of the same as Peter returns to consulting status with the company offering US continued access to as Marty brain and collegial demeanor.

Clint Stinchcomb: Since Peter's arrival in May of 2024, comparing the 12 months, we just completed in March with the comparable period two years ago, we've grown our direct revenue by 17%, while moderating our overall marketing spend.

Clint Stinchcomb: We've grown our direct revenue by 17% while moderating our overall marketing spend, cut our annual G&A expenses by more than 25%, improved our cash flow from operations by more than 85%, enjoyed six straight quarters of sequentially improving adjusted free cash flow, and we have begun paying a dividend.

Clint Stinchcomb: Cut our annual G&A expenses by more than 25%.

Clint Stinchcomb: Moved our cash flow from operations by more than 85%.

Clint Stinchcomb: Enjoyed six straight quarters of sequentially, improving adjusted free cash flow and we began paying a dividend.

Speaker Change: In closing, let me not forget to thank Peter for bringing US Brady Haden, who currently serves as controller.

Clint Stinchcomb: In closing, let me not forget to thank Peter for bringing us Brady Hayden, who currently serves as controller and whom the board has named CFO upon Peter's departure on May 31st. It's been such a pleasure for me getting to know and work with Brady over the past year, and I know you'll feel the same. Brady's experience in the day-to-day operational and other requirements of a public company finance function. He's also a roll-up-the-sleeves, hard-working, get-it-done-right professional with a collaborative style that we, his colleagues, have already come to respect, appreciate, and rely on. So thank you, Peter, and thank you, Brady. I'm really excited for the chapter ahead.

Clint Stinchcomb: And whom the board has named CFO upon Peter's departure May 31.

Clint Stinchcomb: So it's been such a pleasure for me getting to know and work with Brady over the past year and I know you'll feel the same.

Clint Stinchcomb: <unk> experienced in the day to day operational and other requirements of a public company finance function. He is also roll up the sleeves hardworking get it done right professional with a collaborative style that we his colleagues have already come to respect appreciate and rely on.

Clint Stinchcomb: So thank you Peter and thank you Brady I'm really excited for the chapter ahead.

Operator: With that, Operator, let's open the call to questions.

Clint Stinchcomb: With that operator, let's open the call to questions.

Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. And your first question comes from the line of Jim Goss with Barrington Research. Please go ahead.

Speaker Change: Thank you we will now begin the question and answer session. If you would like to ask a question. Please press star one to raise your hand and joined the queue. If you would like to withdraw your question simply press Star one again.

Operator: And your first question comes from the line of Jim Goss with Barrington Research. Please go ahead.

Operator: Thanks.

James Charles Goss: Thanks. I was wondering if Programmatic gives you the opportunity to consider an AdLight option on the core subscription services, where you might not be able to have an ad sales staff to do it on your own.

James Charles Goss: I was wondering if.

James Charles Goss: Programmatic gives you the opportunity to consider an Arab light option on the core subscription services, where he might not be able to have an AD sales staff to be able to do it on your own.

James Charles Goss: Okay.

Clint Stinchcomb: I think it's a great question, Jim, and I really appreciate it. We've certainly looked at that, and it's something that is always under consideration.

Speaker Change: I think it's a great question Jim.

Speaker Change: I really appreciate it.

Clint Stinchcomb: Okay.

Clint Stinchcomb: We've certainly looked at that and.

Clint Stinchcomb: It's something that.

Clint Stinchcomb: It is always under consideration, but we've made that we've made the calculation today that.

Clint Stinchcomb: But we've made the calculation today that, without that, by putting our content to work and unlocking advertising with our pay TV channels, we think that, in the aggregate, That would be a better and higher revenue and higher margin approach without disrupting, you know, our continued subscription growth. But you make a great point about programmatic.

Clint Stinchcomb: We believe.

Clint Stinchcomb: Without that buy.

Clint Stinchcomb: Putting our content to work on the larger Avon platforms, putting our content to work on the larger SaaS platforms and.

Clint Stinchcomb: Putting our content to work.

Clint Stinchcomb: Unlocking advertising with our pay TV channels, we think that in the aggregate.

Clint Stinchcomb: That will be a better and higher revenue and higher margin approach.

Clint Stinchcomb: Without without disrupting.

Clint Stinchcomb: Our continued subscription growth, but you make a great point about about about programmatic. It is a it's a way to get into the advertising business without having a massive staff same time in other way to get into it is through working with <unk>.

Clint Stinchcomb: It's a way to get into the advertising business without having a massive staff. At the same time, another way to get into it is through working with good partners. And so, in regard to advertising, earlier this year, we began working on a commercial partnership with Estrella Media, one of the largest Hispanic U.S. media companies. Estrella owns and operates TV stations, radio stations, TV broadcast networks, four fast channels, and local and syndicated radio shows.

Clint Stinchcomb: Good partners and so in regard to advertising earlier. This year, we began working on a commercial partnership with Australia media.

Clint Stinchcomb: Largest Hispanic U S media companies stray owns and operates television stations radio stations television broadcast networks.

Clint Stinchcomb: For fast channels, and local and syndicated radio shows.

Clint Stinchcomb: Last week, Samsung, one of the largest fast platforms in the world, announced that they're going to launch three of our Hispanic U.S. fast channels, Curiosity Espaol, Curiosity Animals, and Curiosity Motor. And the beauty of this relationship is that Estrella, as an expert in the Hispanic ecosystem,

Clint Stinchcomb: Samsung announced last week, Samsung one of the largest.

Clint Stinchcomb: SaaS platforms in the world that Theyre going to launch three of our Hispanic U S fast channels curiosity, Espanyol curiosity animals, and curiosity motors and the beauty of this relationship is that the Australia as an expert in this.

Clint Stinchcomb: Hispanic ecosystem they'll manage the AD sales they've got a robust AD sales organization tightly and meshed in the U S. Hispanic brand and agency World. We've got a track record of selling the channel inventory that they have Jim at <unk> that are three to four times greater than the Cpm's faconne broad platforms.

Clint Stinchcomb: They'll manage the ad sales. They've got a robust ad sales organization, you know, tightly enmeshed in the U.S. Hispanic brand and agency world. They've got a track record of selling the channel inventory that they have, Jim, at CPMs that are three to four times greater than the CPMs FAS and AVOD platforms generally generate from programmatic sales. So this type of relationship is an absolute no-brainer, makes sense for all the parties, and I think it's just another really good example of the broad appeal of our content and the opportunities for brand extension, promotion, and content monetization that aren't always obvious.

Clint Stinchcomb: Generally generate from programmatic sales.

Clint Stinchcomb: This type of relationships is an absolute no brainer makes sense for all the parties and I think its just another really good example of the broad appeal of our content and the opportunities for brand extension promotion and content monetization that aren't always obvious.

Speaker Change: Thank you Jim.

James Charles Goss: Okay, and one other question: with Warner Brothers Discovery blending the Discovery Networks increasingly into Max, does that open up any further opportunity for you competitively?

Clint Stinchcomb: Okay.

Clint Stinchcomb: And one other about with Warner Brothers discovery blending the discovery networks increasingly in the Max does that open up any further opportunity for you competitively.

Clint Stinchcomb: Another great question, Jim. Thank you for asking that. I think so.

Speaker Change: Another great question, Jim Thank you for asking that.

Clint Stinchcomb: You know, you probably saw just last week some of the big announcements. Comcast dropped all of the Valley Sports, RSN, and Fubo dropped all of the Discovery and Turner networks. So yes, these do create opportunities for us. They create opportunities for us because... One, we have factual channels that are operating around the world today, and through our 17,000 plus titles that we have in our library, we're able to put channels together pretty quickly to meet distributor needs.

Speaker Change: I think so.

Clint Stinchcomb: You probably saw just last week some of the big announcements.

Clint Stinchcomb: Comcast launched all dropped all of the Valley sports.

Clint Stinchcomb: RSA and <unk>.

Clint Stinchcomb: <unk> dropped all of the discovery and Turner networks.

Clint Stinchcomb: So yes, these do create opportunities for us they create opportunities for us because.

Clint Stinchcomb: One we have factual channels that are operating.

Clint Stinchcomb: Around the world today and through our.

Clint Stinchcomb: 17000, plus titles that we have in our library, we're able to put channels together pretty quickly to meet.

Clint Stinchcomb: To meet distributor needs so.

Clint Stinchcomb: So as you look out over the rest of this year, you'll see channels emerge from us like Curiosity Science Channel, and like Curiosity, History Channel. And again, we announced last week with Samsung, three U.S. Hispanic channels that obviously we have the same content on the English language side, animals, natural history, and then motor, which is largely automotive cars, boats, and bikes.

Clint Stinchcomb: As you look out over the rest of the rest of this year, you'll see channels.

Clint Stinchcomb: <unk> from us like.

Clint Stinchcomb: Curiosity.

Clint Stinchcomb: <unk> channel.

Clint Stinchcomb: Like curiosity history channel and again we.

Clint Stinchcomb: We announced.

Clint Stinchcomb: Last week with Samsung.

Clint Stinchcomb: <unk> U S. Hispanic channels that obviously, we have the same content in on the English language side.

Clint Stinchcomb: Animals, natural history, and motor which largely automd.

Clint Stinchcomb: Automotive cars boats bikes and planes.

Clint Stinchcomb: Okay.

Clint Stinchcomb: Okay.

James Charles Goss: Okay, and one final one with... With the pricing change that you made that seemed to go over well enough and so allowed you to increase the revenue base, do you think you might now be in a position to raise prices higher over time and the subscription service, on a more gradual basis, maybe less aggressively than the first one was, but maybe set a pattern that might give you that upward bias?

Speaker Change: Okay, and one final one.

James Charles Goss: With the pricing changes that you made that seem to go over well enough and so allowed you to increase the revenue base do you think you might.

James Charles Goss: Now be in a position to edge.

James Charles Goss: Prices higher over time and the subscription service.

James Charles Goss: On a more granular basis, maybe less aggressively than the first one was that.

James Charles Goss: Maybe set of patterns that might give you that upward bias.

Clint Stinchcomb: I'll take an initial shot at that, and then I'd like to try for the second part, too. My good friend, Peter.

James Charles Goss: Take an initial shot at that and then I would like to.

Clint Stinchcomb: To further second part too.

Clint Stinchcomb: <unk>.

Peter: My good friend Peter.

Clint Stinchcomb: I think, you know, we continue to believe, Jim, that we have an incredible value exchange. You know, Curiositystream, the flagship channel, subscribe to it for $4.99 a month or $39.99 a year. That's a heck of a value. At the same time, we're learning more because we also have what we call a smart bundle, which includes some additional factual-type networks, including One Day University, which we own, of course, includes Psalm TV, which, Wine includes KidStream, which is an incredible kids' channel that features some of the best and most well-known kids' educational heroes. That's priced at $9.99 a month or $69.99 a year.

Speaker Change: We continue to believe Jim.

Clint Stinchcomb: That we have.

Clint Stinchcomb: That we're in a incredible value exchange curiosity stream flagship channel can subscribe to it for 499, a month or 39 99 a year.

Clint Stinchcomb: That's a heck of a value.

Clint Stinchcomb: At the same time, we're learning more because we also have a.

Clint Stinchcomb: What we call smart bundle, which includes some additional.

Clint Stinchcomb: Factual type networks includes one day University, which we own of course includes some TV which is.

Clint Stinchcomb: Wine includes kids stream, which is incredible kit.

Clint Stinchcomb: Kids channel that features some of the best and most well known kids.

Clint Stinchcomb: Kids educational heroes.

Clint Stinchcomb: And.

Clint Stinchcomb: You know that.

Clint Stinchcomb: That's priced at.

Clint Stinchcomb: Dollars 99, a month or 69 99, a year so through that.

Clint Stinchcomb: So through that, we're definitely learning a lot, and we do think that while we're at an incredible value exchange today, that in time, if indeed we need to raise our rates, we have a lot of value to give in exchange for that. But if I could, Peter spent a lot of time on this, and I'd love to give Peter a chance to talk about it as well.

Peter: We're definitely learning a lot and.

Peter: We do think that we have.

Peter: We do think that while were incredible value exchange today that overtime.

Clint Stinchcomb: If indeed, we need to to raise our rates, we have a lot of value to give in exchange for that but if I could Peter spent a lot of time on this and I'd love to get Peter chance to talk about it as well, yes, no I think it's something that we'll continue to look at is as the competitors continue to kind of raise the pricing ceiling I think that does.

Peter M. Westley: Yeah, no, I think it's something that, you know, we'll continue to look at as the competitors continue to kind of raise the pricing ceiling. You know, I think that does open up opportunities for us to think about it. To Clint's point, you know, we did not raise the price on the Smart Bundle at the time we raised it on the core service. So I would think that the most likely next price increase, to the extent that there was one, would probably be for that Smart Bundle package, kind of depending on what's going on, and what's included in the mix there.

Peter M. Westley: Open up opportunities for us to think about it.

Peter M. Westley: To <unk> point.

Peter M. Westley: We did not raise the pricing on the smart bundle at the time, we raise it on the core service. So I would think that the most likely next price increase to the extent that there was one would probably be on that smart bundle package kind of depending on on what's going on and what's included in the mix there, but we.

Peter M. Westley: But we think both the core service and the Smart Bundle package remain tremendous values in the marketplace, given what you get for the low price that you're currently paying. So we do think there is a long-term opportunity.

Peter M. Westley: Both the core service and the smart bundle package remained just tremendous values in the marketplace given what you get for.

Peter M. Westley: The low price that Youre currently paying so we do think there is long term opportunity there.

James Charles Goss: All right. Thank you very much. I appreciate it.

Speaker Change: Alright, Thank you very much I appreciate it.

Clint Stinchcomb: Thanks, Jim.

Operator: That concludes our question and answer session, and I will now turn the call back over to Clint Stinchcomb for closing remarks.

James Charles Goss: That concludes our question and answer session and I will now turn the call back over to Clint.

Clint Stinchcomb: For closing remarks.

Clint Stinchcomb: Thank you, everybody, for attending. And this concludes today's conference call. Thank you for your participation, and you may now disconnect.

Clint Stinchcomb: Thank you everybody for attending.

Clint Stinchcomb: And this concludes today's conference call. Thank you for your participation and you may now disconnect.

Operator: Please wait; the conference will begin shortly.

Speaker Change: Please wait the conference will begin shortly.

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