Q2 2024 CuriosityStream Inc Earnings Call

Brianna: Good afternoon. My name is Brianna and I will be your conference operator today. At this time, I'd like to welcome everyone to the CuriosityStream second quarter 2024 earnings conference call.

Operator: At this time, I'd like to welcome everyone to the CuriosityStream 2nd Quarter 2024 Earnings Conference Call. Please note that today's call is being recorded. All lines have been placed on mute to prevent any background noise.

Operator: At this time, I'd like to welcome everyone to the CuriosityStream 2nd quarter 2024 earnings conference call. Please note that today's call is being recorded. All lines have been placed on mute to prevent any background noise.

Speaker Change: Please note that today's call is being recorded. 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 would like to ask a question, simply press star, then the number one on your telephone keypad. To withdraw your question, please press star one again.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question, simply press the star, then the number 1 on your telephone keypad. To withdraw your question, please press star 1 again. I will now turn the call over to Tia Cudahy, Chief Operating Officer and General Counsel. You may begin your conference. Welcome to CuriosityStream's discussion of its second quarter 2024 financial results. Leading the discussion today are Clint Stinchcomb, Curiositystream's Chief Executive Officer, and Brady Hayden, Curiositystream's Chief Financial Officer.

Operator: After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question, simply press star, then the number one on your telephone keypad. To withdraw your question, please press star one again.

Tia Cudahy: I will now turn the call over to Tia Cudahy, Chief Operating Officer and General Counsel. You may begin your conference.

Speaker Change: I will now turn the call over to Tia Cudahy, Chief Operating Officer and General Counsel. You may begin your conference.

Tia Cudahy: Welcome to CuriosityStream's discussion of its 2nd quarter 2024 financial results. Leading the discussion today are Clint Stinchcomb, CuriosityStream's Chief Executive Officer, and Brady Hayden, CuriosityStream's Chief Executive Officer. Following management's prepared remarks, we'll be happy to take your questions.

Tia Cudahy: Welcome to CuriosityStream's discussion of its second quarter 2024 financial results.

Speaker Change: Leading the discussion today are Clint Stinchcomb, CuriosityStream's Chief Executive Officer, and Brady Hayden, CuriosityStream's Chief Financial Officer. Following management's prepared remarks, we'll be happy to take your questions, but first I'll review the Safe Harbor Statement.

Tia Cudahy: But first, I will view the safe harbor statement. During this call, we may make statements related to our business that are forward-looking statements under the federal securities laws. These statements are not guarantees of future performance, but rather a subject to a variety of risks, uncertainties, and assumptions. Our actual results could differ materially from expectations reflected in any forward-looking statements. Please be aware that any forward-looking statements reflect management's current views only, and the company undertakes no obligation to revive their updates to these statements, nor to make additional forward-looking statements in the future.

Operator: Following management's prepared remarks, we'll be happy to take your questions, but first, I will review the Safe Harbor Statement. During this call, we may make statements related to our business that are forward-looking statements under the federal securities laws. These statements are not guarantees of future performance but rather are subject to a variety of risks, uncertainties, and assumptions.

Tia Cudahy: 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 nor to make additional forward-looking statements in the future. 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 our Investor Relations website, as well as the risks and other important factors discussed in today's press release.

Speaker Change: During this call, we may make statements related to our business that are forward-looking statements under the federal securities laws. These statements are not guarantees of future performance, but rather are subject to a variety of risks, uncertainties, and assumptions.

Speaker Change: Our actual results could differ materially from expectations reflected in any forward-looking statements.

Speaker Change: 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, nor to make additional forward-looking statements in the future.

Tia Cudahy: 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 our investor relations website, as well as the risks and other important factors discussed in today's process. Additional information will also be set forth in our quarterly report on Form 10-Q for the end of June 30, 2024, when filed.

Speaker Change: 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 our Investor Relations website, as well as the risks and other important factors discussed in today's press release.

Tia Cudahy: Additional information will also be set forth in our quarterly report on Form 10-Q for the quarter ending June 30, 2024, when 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.

Speaker Change: Additional information will also be set forth in our quarterly report on Form 10-Q for the quarter ended June 30, 2024, when filed.

Tia Cudahy: 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. Unless otherwise stated, all comparisons will be against our results for the comparable 2023 period.

Speaker Change: 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.

Clint Stinchcomb: Unless otherwise stated, all comparisons will be against our results for the comparable 2023 period. Now, I'll turn the call over to Clint. Thank you, Tia. Good afternoon, everyone.

Speaker Change: Unless otherwise stated, all comparisons will be against our results for the comparable 2023 period.

Clint Stinchcomb: Now we'll turn the call over to Clint. Thank you, Tia. Good afternoon, everyone. In addition to Tia, our COO and General Counsel, our CFO, Brady Hayden, is on our call today. I appreciate everyone joining us today for this milestone quarterly report. In light of well-directed hard and efficient work by a tight, talent-dense team of people, we generated our highest-ever quarterly adjusted free cash flow. Specifically, we generated $2.5 million in adjusted free cash flow in the second quarter, a year-over-year improvement of about $7 million, and an over 100% improvement from Q1 2024. This marks our seventh consecutive quarter of adjusted free cash flow improvement.

Clint: Now we'll turn the call over to Clint. Thank you Tia. Good afternoon everyone. In addition to Tia, our COO and General Counsel, our CFO Brady Hayden is on our call today.

Clint Stinchcomb: In addition to Tia, our COO and general counsel, our CFO, Brady Hayden, is on our call today. I appreciate everyone joining us today for this Milestone Quarterly Report in light of well-directed, hard, and efficient work by a tight, talent-dense team of people. We generated our highest ever quarterly adjusted free cash. Specifically, we generated $2.5 million in adjusted free cash flow in the second quarter, a year-over-year improvement of about $7 million, and an over 100% improvement from Q1 2024.

Clint Stinchcomb: This marks our seventh consecutive quarter of adjusted free cash flow improvement. We also increased our top-line revenue sequentially. And I'm happy to say, and I would like to make it abundantly clear, that Curiosity is generating cash. I know that sometimes accounting terms like EBITDA, adjusted EBITDA, can be confusing, which is why I'm using this very concrete language about generating cash.

Brady Hayden: I appreciate everyone joining us today for this milestone quarterly report. In light of well-directed, hard, and efficient work by a tight, talent-dense team of people, we generated our highest-ever quarterly adjusted free cash flow.

Brady Hayden: Specifically, we generated 2.5 million dollars in adjusted free cash flow in the second quarter. A year-over-year improvement of about 7 million dollars and an over 100% improvement from Q1 2024.

Brady Hayden: This marks our seventh consecutive quarter of adjusted free cash flow improvement.

Clint Stinchcomb: We also increased our top-line revenues sequentially, and I'm happy to say, and I would like to make it abundantly clear that curiosity is generating cash. I know that sometimes accounting terms like EBITDA and adjusted EBITDA can be confusing, which is why I'm using this very concrete language about generating cash. Even as we pay the significant dividend, our cash position from Q1 to Q2 increase. We believe we're well positioned to grow top line revenue to generate meaningful adjusted free cash flow and to continue to pay our dividend from surplus cash. In Q2, we increased our direct subscription revenue sequentially and year over year.

Brady Hayden: We also increased our top-line revenue sequentially, and I'm happy to say, and I would like to make it abundantly clear, that Curiosity is generating cash.

Brady Hayden: I know that sometimes accounting terms like EBITDA and adjusted EBITDA can be confusing, which is why I'm using this very concrete language about generating cash. Even as we paid a significant dividend, our cash position from Q1 to Q2 increased.

Clint Stinchcomb: Even as we paid a significant dividend, our cash position from Q1 to Q2 increased. We believe we're well positioned to grow top-line revenue, to generate meaningful adjusted free cash flow, and to continue to pay our dividend from surplus cash. In Q2, we increased our direct subscription revenue sequentially and year over year, at approximately $10 million in direct revenue for the quarter. Our annualized direct revenue alone now exceeds our current annualized operating expenses, including our more variable categories like content and market.

Brady Hayden: We believe we're well positioned to grow top-line revenue, to generate meaningful adjusted free cash flow, and to continue to pay our dividend from surplus cash.

Brady Hayden: In Q2, we increased our direct subscription revenue sequentially and year-over-year.

Clint Stinchcomb: At approximately $10 million in direct revenue for the quarter, our annualized direct revenue alone now exceeds our current annualized operating expenses, including our more variable categories like content and marketing. As we have considerable flexibility around our marketing and content investments, we do have the ability to lever up our marketing and acquisition spend based on seasonality, keep promotables, and other relevant company and industry dynamics. While our overall licensing and bundled revenue was up slightly sequentially, I would like to note that we did expand into some new categories of licensing partners in Q2 and granted some rights that we had never explicitly granted.

Brady Hayden: At approximately $10 million in direct revenue for the quarter, our annualized direct revenue alone now exceeds our current annualized operating expenses.

Clint Stinchcomb: As we have considerable flexibility around our marketing and content investments, we do have the ability to lever up our marketing and acquisitions spend based on seasonality, key promotables, and other relevant company and industry dynamics. While our overall licensing and bundled revenue was up slightly sequentially, I would like to note that we did expand into some new categories of licensing partners in Q2 and granted some rights we had never explicitly granted before. As licensing can be lumpy, these new categories will not necessarily reduce spikes, but they will certainly help to increase our floor.

Brady Hayden: including our more variable categories like content and marketing.

Brady Hayden: As we have considerable flexibility around our marketing and content investments, we do have the ability to lever up our marketing and acquisition spend based on seasonality, key promotables, and other relevant company and industry dynamics.

Brady Hayden: While our overall licensing and bundled revenue was up slightly sequentially, I would like to note that we did expand into some new categories of licensing partners in Q2 and granted some rights that we had never explicitly granted.

Clint Stinchcomb: As licensing can be lumpy, these new categories will not necessarily reduce spikes, but they will certainly help to increase our floor. We are achieving new heights and critical milestones while continuing to thoughtfully rationalize our cost base.

Brady Hayden: As licensing can be lumpy, these new categories will not necessarily reduce spikes, but they will certainly help to increase our floor.

Clint Stinchcomb: We are achieving new heights and critical milestones while continuing to thoughtfully rationalize our cost base. A simple way for companies to cut costs is to just slash marketing. Now that's the easy way out, and that can have a damaging long-term impact on growth.

Brady Hayden: We are achieving new heights and critical milestones while continuing to thoughtfully rationalize our cost base.

Clint Stinchcomb: Simple way for companies to cut costs is to just slash marketing. That's the easy way out, and that can have a damaging long-term impact on growth. We've not done that. We believe our cash marketing spend in 2024 will be roughly equivalent to what it was in 2023. We've done a hard work in reducing annualized overall operational costs by more than 30%. We've renegotiated vendor relationships, consolidated vendors, leveraged certain emerging productivity tools, and, like other profitable companies, properly incentivized cost containment across the organization. On the content front, we launched several new programming initiatives, including Earth Month, anchored by the premier of our landmark original series, The Sun.

Speaker Change: Simple way for companies to cut costs is to just slash marketing. That's the easy way out and that can have a damaging long-term impact on growth.

Clint Stinchcomb: We've not done that. We believe our cash marketing spend in 2024 will be roughly equivalent to what it was in 2023. We've done the hard work of reducing annualized overall operational costs by more than 30%. We've renegotiated vendor relationships, consolidated vendors, leveraged certain emerging productivity tools, and, like other profitable companies, properly incentivized cost containment across the organization. On the content front, we launched several new programming initiatives, including Earth Month, anchored by the premiere of our landmark original series, The Sun.

Speaker Change: We've not done that. We believe our cash marketing spend in 2024 will be roughly equivalent to what it was in 2023.

Speaker Change: We've done the harder work.

Speaker Change: in reducing annualized overall operational costs.

Speaker Change: by more than 30%.

Speaker Change: We've renegotiated vendor relationships, consolidated vendors, leveraged certain emerging productivity tools, and like other profitable companies, properly incentivized cost containment across the organization.

Speaker Change: On the content front, we launched several new programming initiatives including Earth Month, anchored by the premiere of our landmark original series, The Sun.

Clint Stinchcomb: The Jaws & Clause Week, anchored by the premier of our three-part original series, Trackers Diary, Tigers of Nepal, and our extensive new summer dockbusters campaign, with a premiere of groundbreaking original series, Faithful Planet. Throughout the quarter, we continued to premiere many other original series and specials across the full spectrum of factual, including original series like Taste, The Flavor of Life, a great look at the evolutionary role of deliciousness, and Wings World War II in the Skies, the two-part special chronicling the air wars in Europe and the Pacific, released for the 80th anniversary of D-Day. In closing, I'm delighted to again reinforce that for the quarter we generated $2.5 million in adjusted free cash flow, and we ended the period with nearly $40 million in cash and equivalents and zero debt.

Clint Stinchcomb: The Jaws and Claws Week, anchored by the premiere of our three-part original series, Tracker's Diary, and Tigers of Nepal, and our extensive new summer Dockbusters campaign, with a premiere of groundbreaking original series, Faithful Planet. Throughout the quarter, we continued to premiere many other original series and specials across the full spectrum of Factual, including original series like Taste, the Flavor of Life. A great look at the evolutionary role of deliciousness, and Wings, World War II in the Skies, a two-part special chronicling the air wars in Europe and the Pacific, released for the 80th anniversary of D-Day.

Speaker Change: The Jaws and Claws Week, anchored by the premiere of our three-part original series, Tracker's Diary, Tigers of Nepal, and our extensive new summer Dockbusters campaign, with a premiere of groundbreaking original series, Faithful Planet.

Speaker Change: Throughout the quarter, we continued to premiere many other original series and specials across the full spectrum of factual, including original series like Taste, The Flavor of Life, a great look at the evolutionary role of deliciousness,

Speaker Change: In Wings, World War II in the Skies, a two-part special chronicling the air wars in Europe and the Pacific, released for the 80th anniversary of D-Day.

Clint Stinchcomb: In closing, I'm delighted to again reinforce that for the quarter, we generated $2.5 million in adjusted free cash flow, and we ended the period with nearly $40 million in cash and equivalents and zero debt. We believe our strong balance sheet and projected 2024 positive cash flow make us stand out in the current environment. Moreover, we continue to believe that our global appeal, our direct subscriber base, and our direct platforms. Our broad and deep content library of tens of thousands of licensable audio and video programs in raw footage, as well as monetizable data sets like images, transcripts, code, and text, are multi-year third-party agreements.

Speaker Change: In closing, I'm delighted to again reinforce that for the quarter, we generated $2.5 million in adjusted free cash flow, and we ended the period with nearly $40 million in cash equivalents and zero debt.

Clint Stinchcomb: We believe our strong ballot sheet and projected 2024 positive cash flow make us stand out in the current environment.

Speaker Change: We believe our strong balance sheet and projected 2024 positive cash flow make us stand out in the current environment.

Clint Stinchcomb: Moreover, we continue to believe that our global appeal, our direct subscriber base and direct platforms, our broad and deep content library of tens of thousands of licenseable audio and video programs in raw footage, as well as monetizable data sets like images, transcripts, code and text, 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.

Speaker Change: Moreover, we continue to believe that our global appeal, our direct subscriber base and direct platforms.

Speaker Change: Our broad and deep content library of tens of thousands of licensable audio and video programs in raw footage.

Speaker Change: as well as monetizable data sets like images, transcripts, code, and text.

Clint Stinchcomb: 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 friend and colleague, Brady Hayden. Thank you, Clint, and good afternoon, everyone.

Speaker Change: are multi-year third-party agreements.

Speaker Change: Our public company currency and our rationalized cost structure are uniquely favorable attributes that provide us with sustainable long-term strength and exceptional flexibility.

Brady Hayden: and now I'd like to pass the batons to my friend and colleague, Brady Hayden. Thank you, Clint, and good afternoon, everyone. First of all, let me just say that I'm grateful to be taking the reins of the finance organization at such a pivotal time in the company's history. Having successfully reinforced the financial foundation of the company, we are now squarely focused on creating shareholder value through profitable growth and prudent capital allocation. We have already demonstrated clear progress on this journey. In each of the past two quarters, we have increased our cash balances, even after returning cash to shareholders through our dividend and share repurchases.

Speaker Change: I'd now like to pass the baton to my friend and colleague, Brady Hayden.

Brady Hayden: First of all, let me just say that I'm grateful to be taking the reins of the finance organization at such a pivotal time in the company's history. Having successfully reinforced the financial foundation of the company, we are now squarely focused on creating shareholder value through profitable growth and prudent capital allocation. We have already demonstrated clear progress on this journey.

Brady Hayden: Thank you Clint and good afternoon everyone. First of all let me just say that I'm grateful to be taking the reins of the finance organization at such a pivotal time in the company's history.

Brady Hayden: Having successfully reinforced the financial foundation of the company, we are now squarely focused on creating shareholder value through profitable growth and prudent capital allocation.

Brady Hayden: In each of the past two quarters, we have increased our cash balances, even after returning cash to shareholders through our dividend and share repurchase programs. And thanks to our strong balance sheet and positive cash flow profile, we see a wealth of possibilities moving forward. As Clint said, we achieved another milestone in the second quarter as adjusted free cash flow of $2.5 million came in at the high end of our guidance range. This also represented the highest quarterly adjusted free cash flow in the company's history and our seventh straight quarter of sequential improvement in this metric.

Brady Hayden: We have already demonstrated clear progress on this journey. In each of the past two quarters, we have increased our cash balances, even after returning cash to shareholders through our dividend and share repurchases.

Brady Hayden: And thanks to our strong balance sheet and positive cash flow profile, we see a wealth of possibilities moving forward. As Clint said, we achieved another milestone in the second quarter as adjusted free cash flow of $2.5 million came in at the high end of our guidance range. This also represented the highest quarterly adjusted free cash flow in the company's history and our seventh straight quarter sequential improvement in this metric. Revenue for the second quarter was $12.4 million compared to $14.1 million a year ago and near the midpoint of our guidance range. Adjusted EBITDA improved by $5.5 million, and our adjusted free cash flow improved by $6.8 million as we continued our intense focus on the bottom line.

Brady Hayden: And thanks to our strong balance sheet and positive cash flow profile, we see a wealth of possibilities moving forward.

Brady Hayden: As Clint said, we achieved another milestone in the second quarter as adjusted free cash flow of $2.5 million came in at the high end of our guidance range.

Clint: This also represented the highest quarterly adjusted free cash flow in the company's history and our 7th straight quarter sequential improvement in this metric.

Brady Hayden: Revenue for the second quarter was $12.4 million compared to $14.1 million a year ago and near the midpoint of our guidance range. Adjusted EBITDA improved by $5.5 million, and our adjusted free cash flow improved by $6.8 million as we continued our intense focus on the bottom line. Second quarter gross margin of 52% increased from 30% a year ago, driven by lower content amortization, as well as significant reductions in our cash-based cost of revenues. Our gross margin excluding content amortization, which really gets at the cash cost of delivering our services, was 89% in the quarter compared to 75% a year ago.

Speaker Change: Revenue for the second quarter was 12.4 million dollars compared to 14.1 million dollars a year ago and near the midpoint of our guidance range.

Speaker Change: Adjusted EBITDA improved by 5.5 million dollars and our adjusted free cash flow improved by 6.8 million dollars.

Brady Hayden: Second quarter gross margin of 52 percent increased from 30 percent a year ago, driven by lower content amortization as well as significant reductions in our cash-based cost of revenues. Our gross margin excluding content amortization, which really gets at the cash cost of delivering our services, was 89 percent in the quarter compared to 75 percent a year ago. Our largest revenue category in the quarter was our direct business, which generated $9.8 million, up 70 percent from a year ago and 3 percent from the first quarter, as we continued to benefit from the price increases we began rolling out last year.

Speaker Change: as we continued our intense focus on the bottom line. Second quarter gross margin of 52% increased from 30% a year ago, driven by lower content amortization as well as significant reductions in our cash-based cost of revenues.

Speaker Change: Our gross margin excluding content amortization, which really gets at the cash cost of delivering our services, was 89% in the quarter compared to 75% a year ago.

Brady Hayden: Our largest revenue category in the quarter was our direct business, which generated $9.8 million, up 17% from a year ago and 3% from the first quarter, as we continued to benefit from the price increases we began rolling out last year. Our additional revenue categories, content licensing, bundle distribution, and others, generated $2.6 million in the quarter compared to $5.7 million a year ago. This change was driven mostly by the timing of content licensing deals, as this continues to be an inherently lumpy part of the business.

Speaker Change: Our largest revenue category in the quarter was our direct business, which generated $9.8 million, up 17% from a year ago and 3% from the first quarter, as we continued to benefit from the price increases we began rolling out last year.

Brady Hayden: Our additional revenue categories, content licensing, bundle distribution, and other generated $2.6 million in the quarter compared to $5.7 million a year ago. This change was driven mostly by the timing of content licensing deals, as this continues to be an inherently lumpy part of the business. Turning back to second quarter expenses, GNA was $6 million, down 25 percent from a year ago, as we continued to realize the benefits of our plan spending reductions, as well as our finance transformation and workforce optimization efforts. Second quarter advertising and marketing expense of $3 million, declining 29 percent from $4.2 million a year ago, as we increased our efficiency in deploying our customer acquisition dollars.

Speaker Change: Our additional revenue categories, content licensing, bundle distribution, and other generated $2.6 million in the quarter compared to $5.7 million a year ago.

Speaker Change: This change was driven mostly by the timing of content licensing deals as this continues to be an inherently lumpy part of the business.

Brady Hayden: Turning back to second quarter expenses, G&A was $6 million, down 25% from a year ago, as we continue to realize the benefits of our plan spending reductions, as well as our finance transformation and workforce optimization efforts. Second quarter advertising and marketing expenses of $3 million declined 29% from $4.2 million a year ago, as we increased our efficiency in deploying our customer acquisition dollars.

Speaker Change: Turning back to second quarter expenses, G&A was $6 million, down 25% from a year ago, as we continue to realize the benefits of our planned spending reductions, as well as our finance transformation and workforce optimization efforts.

Speaker Change: Second quarter advertising and marketing expense of three million dollars declined 29 percent from 4.2 million dollars a year ago as we increased our efficiency and deploying our customer acquisition dollars.

Brady Hayden: Adjusted EBITDA loss was $1 million in the quarter compared to a loss of $6.5 million a year ago. While we don't provide guidance with regard to this metric, we believe that break even adjusted EBITDA is within our reach as we expect margins to continue to improve in the coming quarters. As we mentioned earlier, adjusted pre cash flow was $2.5 million in the quarter compared with a negative $4.3 million a year ago. We of course paid our first dividend of $1.3 million in April, and we ended June with total cash and equivalent to $39.6 million and no outstanding. We believe our balance sheet remained in great shape with $91 million of assets, $26 million of liabilities, and book value of $65 million for approximately $1.21 per share.

Brady Hayden: I just said the EBITDA loss was $1 million in the quarter compared to a loss of $6.5 million a year ago. While we don't provide guidance with regard to this metric, we believe that breakeven-adjusted EBITDA is within our reach as we expect margins to continue to improve in the coming quarter. And as we mentioned earlier, adjusted free cash flow was $2.5 million in the quarter compared with $4.3 million a year ago.

Speaker Change: Just an EBITDA loss was 1 million dollars in the quarter compared to a loss of 6.5 million dollars a year ago.

Speaker Change: While we don't provide guidance with regard to this metric, we believe that breakeven-adjusted EBITDA is within our reach as we expect margins to continue to improve in the coming quarters.

Speaker Change: And as we mentioned earlier, adjusted pre-cash flow was 2.5 million dollars in the quarter compared with a negative 4.3 million dollars a year ago.

Brady Hayden: We of course paid our first dividend of $1.3 million in April, and we ended June with total cash in equivalents of $39.6 million and no outstanding debt. We believe our balance sheet remained in great shape, with $91 million of assets, $26 million of liabilities, and a book value of $65 million, or approximately $1.21 per share. One final note on the second quarter.

Speaker Change: We of course paid our first dividend of 1.3 million dollars in April and we ended June with total cash in equivalence of 39.6 million dollars and no outstanding debt.

Speaker Change: We believe our balance sheet remained in great shape, with $91 million of assets, $26 million of liabilities, and book value of $65 million, or approximately $1.21 per share.

Brady Hayden: One final note on the second quarter. On June 11th, we announced that our board had approved a share repurchase plan for up to $4 million, and through the end of June, we had repurchased 22,000 shares of our common stock. We will continue to strategically buy back shares going forward.

Operator: On June 11th, we announced that our board had approved a share repurchase plan for up to $4 million. And through the end of June, we had repurchased 22,000 shares of our common stock, and we will continue to strategically buy back shares going forward. Moving to third quarter guidance, we expect revenue in the range of $12 to $14 million and adjusted free cash flow in the range of $1.5 to $3 million. With that, Operator, you can open the call to questions.

Speaker Change: One final note on the second quarter. On June 11th we announced that our board had approved a share repurchase plan for up to four million dollars and through the end of June we had repurchased 22,000 shares of our common stock and we will continue to strategically buy back shares going forward.

Brady Hayden: Moving to third quarter guidance, we expect revenue in a range of $12 to $14 million, and adjusted free cash flow in the range of $1.5 to $3 million.

Speaker Change: Moving to third quarter guidance, we expect revenue in the range of 12 to 14 million dollars and adjusted free cash flow in the range of 1.5 to 3 million dollars. With that, operator, you can open the call to questions.

Operator: With that, operator can open the call to questions. Thank you. We will now open the line for questions. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. To withdraw your question, press star 1 again.

Operator: Thank you. We will now open the line for questions. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. To withdraw your question, press star 1 again. If you are dialed in and listening via the loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.

Speaker Change: Thank you. We will now open the line for questions. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. To withdraw your question, press star 1 again.

Operator: If you are dialed in and listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not unmute when asking your question.

Speaker Change: If you are dialed in and listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.

Laura Martin: Our first question comes from the line of Laura Martin with Needham and Company. Please go ahead. Thanks. Okay, so you gave a long list of the assets you own. Have you thought about doing anything in trying to license the rights that you own to generate an AI large language model by chance?

Laura Martin: Our first question comes from the line of Laura Martin with Needham and Company. Please go ahead. Thanks. Okay, so just, you gave a long list of the assets you own. Have you thought about doing anything about trying to license the rights that you own to generative AI large language models by chance? Thank you for that question, Laura. We have, uh, I think... We started reading about a lot of the publishing agreements that have been entered into, you know, over the last three to five months between companies like Google and Reddit and, you know, Runway and Getty Images.

Speaker Change: Our first question comes from the line of Laura Martin with Needham and Company. Please go ahead.

Laura Martin: Thanks. Okay, so just you gave a long list of the assets you own. Have you thought about doing anything and trying to license the rights that you own to generative AI large language models by chance?

Clint Stinchcomb: Thank you for that question, Laura, and we have. I think we started reading about a lot of the publishing agreements that had been entered into, you know, over the last three to five months between companies like Google and Reddit and, you know, Runway and Getty Images and Microsoft and Informa and OpenAI and Shutterstock. And clearly there is an interest from many of the generated AI companies in licensing various data sets to train their models. And I would say that we feel really good about the position that we're in as it relates to that when you consider the scope of assets that we have.

Speaker Change: Thank you for that question, Laura, and

Speaker Change: We have I think

Speaker Change: You know we started

Speaker Change: reading about a lot of the publishing agreements that had been entered into you know over the last

Speaker Change: 3-5 months with

Speaker Change: between companies like

Speaker Change: Google and Reddit and you know Runway and Getty Images and Microsoft and Informa and you know OpenAI and Shutterstock and

Clint Stinchcomb: Microsoft and Informa and OpenAI and Shutterstock. Clearly, there is an interest from many of the generative AI companies in licensing various data sets to train their models, and I would say that... We feel really good about the position that we're in as it relates to that when you consider the scope of assets that we have. We have well over 100,000 hours of raw footage, we have over 10,000 finished programs, we have 7,000 plus audio programs. We have it.

Speaker Change: Clearly, there is an interest from

Speaker Change: many of the generative AI companies in licensing various data sets to train their models. And I would say that we feel really good about the position that we're in as it relates to that when you consider the scope of assets that we have.

Clint Stinchcomb: We, you know, well over 100,000 hours of raw footage. We have, you know, over 10,000 finished programs. We have 7,000 plus audio programs. We have a lot of code. We have a lot of, you know, hundreds and hundreds of thousands of images, review questions, tests and, you know, a lot of content that I understand is rather appealing. So I think just as we try to negotiate, you know, fair and good value exchange with the traditional licensing partners, and you're well aware of the opportunity that exists in licensing for training purposes, and I think even down the road for derivative exchanges and other exchanges.

Speaker Change: We have well over 100,000 hours of raw footage. We have over 10,000 finished programs. We have 7,000 plus audio programs.

Clint Stinchcomb: A lot of code, we have a lot of, you know, hundreds and hundreds of thousands of images. If you have any questions, please feel free to contact me. Thank you, tech, tests, and a lot of content that, I understand, is rather appealing, so I think..., just as we try to negotiate. Fair and Good Value Exchange with the traditional licensee partners. We're well aware of the opportunity that exists in... licensing for training purposes, and I think even down the road for derivative exchanges and other exchanges.

Speaker Change: We have...

Speaker Change: A lot of code, we have a lot of hundreds and hundreds of thousands of images, review questions.

Speaker Change: and a lot of content that we understand is rather appealing. So I think just as we...

Speaker Change: try to negotiate, you know, fair and good value exchange with the traditional licensing partners. We're well aware of the opportunity that exists in

Clint Stinchcomb: Thank you. Yes, it's certainly something that we're focused on right now, obviously not at the exclusion of, you know, continuing to grow our direct business, but we really do see that as a meaningful opportunity, and we're likely to talk much more about that on our next call.

Speaker Change: derivative exchanges and in other exchanges so

Clint Stinchcomb: So, yes, it's certainly something that we're focused on right now, obviously not at the exclusion of continuing to grow our direct business, but we really do see that as a meaningful opportunity, and we'll likely talk much more about that on our next call. That's super helpful.

Speaker Change: Yes, it's certainly something that we're focused on right now, obviously not at the exclusion of continuing to grow our direct business, but we really do see that as a meaningful opportunity, and we'll likely talk much more about that on our next call.

Laura Martin: Okay, that's super helpful, and then really great cost control.

Clint Stinchcomb: And then really great cost control. Are you offshoring any of your FTEs? Well, we are offshoring some of our engineering activity. They're not FTEs, but yeah, we've had, I think we've done it. Our head of engineering has done a terrific job over the last nine months in really reimagining what that organization should look like and, you know, leveraging, you know, just some really talented people around the world. Okay, so they don't show up on the full-time headcount, they're like contractors, basically. Is that the idea? That's right.

Speaker Change: Okay, that's super helpful. And then really great cost control. Are you offshoring any of your FTEs?

Clint Stinchcomb: Are you offshoring any of your FTEs? Well, we are assuring some of our engineering activity; they're not FTEs, but yeah, we've had, I think we've done our head of engineering has done a terrific job over the last nine months in really reimagining what that organization should look like and, you know, leveraging, you know, some really talented people around the world. Okay, so they don't show up in this full time, head count; they're like contractors basically, is that the idea? That's right. I mean, we did, you know, we obviously, as part of sort of optimizing the workforce, you know, there were certain, there were some people who, you know, were FTEs, whose, you know, functions are now replaced by offshore engineers and the like.

Speaker Change: Well, we are offshoring some of our engineering activity. They're not FTEs, but yeah, we've had...

Speaker Change: I think we've done it, our head of engineering has done a terrific job over the last nine months and really reimagining what that organization should look like and you know leveraging you know just some really talented people around the world.

Speaker Change: Okay, so they don't show up in full-time headcount, they're like contractors basically, is that the idea? That's right, I mean we did, you know, we...

Clint Stinchcomb: I mean, we did, you know, we... Obviously, as part of, sort of optimizing the workforce, there were certain there were some people who, you know, were FTEs whose functions are now replaced by offshore engineers. Super helpful. Thank you very much.

Speaker Change: obviously as part of sort of optimizing the workforce you know there were certain there were some people who you know were FTEs whose you know functions are now replaced by

Laura Martin: Okay, super helpful. Thank you very much.

Speaker Change: offshore engineers and the like.

Clint Stinchcomb: Thank you, Laura.

Speaker Change: Okay, super helpful, thank you very much.

Jim Goss: Our next question comes from the line of Jim Goss with Barrington Research. Please go ahead. All right. Thanks.

Operator: Thank you, Laura. Our next question comes from the line of Jim Goss with Barrington Research. Please go ahead.

Laura Martin: Thank you, Laura.

Speaker Change: Our next question comes from the line of Jim Goss with Barrington Research. Please go ahead.

Jim Goss: All right, thanks. In the first couple of quarters, your revenue comps were down at least a little bit from a year ago, and third quarter guidance looks to be the same. Could you talk a little about what's driving that? Obviously, you've made up for it with cost controls, but what is behind the revenue decline? I think if you actually look, Jim, at our cash revenue for 2024, we think that will actually exceed our cash revenue from 2023 with non-cash revenue in 2023, as, you know, all companies do.

Jim Goss: The first couple of quarters, your revenue comps were down at least a little bit from year ago, and third quarter guidance looks to be the same. Did you talk a little about what's driving that? Obviously, you've made up for it with the cost controls, but what is behind their revenue declines? Well, I think if you, if you look, actually, Jim, it are cash revenue for 2024. We think that will be; we think that will actually exceed our cash revenue from 2023. It's non-cash revenue in 2023 as, you know, do all companies. And I think that, you know, the good news is really, you know, we've put some roots in the ground, we put some real, I think, helpful guardrails around various parts of our spending, and we're confident that we're going to continue to grow our direct revenue and continue to grow our licensing revenue.

Jim Goss: All right, thanks

Jim Goss: The first couple of quarters your revenue comps were down at least a little bit from a year ago and third quarter guidance looks to be the same. Could you talk a little about what's driving that? Obviously you've made up for with the cost controls, but what is behind their revenue declines?

Jim Goss: I think if you if you look actually Jim at our cash revenue for 2024 we think that will be we think that will actually exceed

Speaker Change: are cash revenue from 2023, with non-cash revenue in 2023, as, you know, do all companies.

Jim Goss: And I think that, you know, the good news is that we've put some roots in the ground, put some real, I think, helpful guardrails around various parts of our spending. We're confident that we're going to continue to grow our direct revenue and continue to grow our licensing revenue, trying to be relatively conservative in how we project that. Okay, and I'll say it again:

Speaker Change: And I think that, you know, the good news is really, you know, we put some roots in the ground. We put some real, I think, helpful guardrails around various parts of our spending and

Speaker Change: We're confident that we're going to continue to grow our direct revenue and continue to grow our licensing revenue. We're trying to be relatively conservative in how we project that today.

Clint Stinchcomb: We're trying to be relatively conservative in how we project that today.

Jim Goss: Okay. And, if you look at, well, maybe you might update a little on the Visio Fast Channel, how that is working out. And to the extent that JVs are becoming more commonplace, is that one of the areas you're focusing on, getting other partnerships that you think could work for you? Yeah. Thank you for asking that, Jim. It's a great question. And yes, we launched with Visio in the U.S. in late June. And I will tell you that just in the last, you know, in the last few weeks, we've rolled out our A-Bot content with Tubi in the UK, with Pluto in the U.S., and even with Samsung in several countries in Europe.

Clint Stinchcomb: If you look at, well, maybe you might update a little on the Vizio fast channel, how that is working out. And to the extent that JVs are becoming more commonplace, is that one of the areas you're focusing on, getting other partnerships that you think could work for you? Yeah, thank you for asking that, Jim. It's a great question.

Speaker Change: Okay, and...

Speaker Change: If you look at well, maybe you might update a little on the Vizio fast channel How that is working out and to the extent that JV's are becoming more commonplace Is that that one of the?

Speaker Change: areas you're focusing on, getting other partnerships that you think could work for you.

Clint Stinchcomb: And yes, we launched with Vizio in the US in late June. And I will tell you that just in the last few weeks. In the last few weeks, we've rolled out our APOD content with Tubi in the UK, with Pluto in the US, and even with Samsung in several countries in Europe.

Speaker Change: Thank you for asking that, Jim. It's a great question. Yes, we launched with Vizio in the U.S. in late June, and I will tell you that just in the last

Speaker Change: In the last few weeks, we've rolled out our APOD content with Tubi in the UK, with Pluto in the US, and even with Samsung in several countries in Europe.

Clint Stinchcomb: So...

Clint Stinchcomb: As you know, those deals take a long time to do, and then they can take a long time to get your content or, you know, publish where your channel launched, even after an agreement is in place. So there's a bit of a lag there, but we're excited about what's happening there and what's possible over time. We even turned on pay TV advertising recently with our pay TV channel in Australia with our partner Fetch there. So that advertising revenue will continue to grow, and you know it will be durable and certainly more predictable than it's been in the past.

Clint Stinchcomb: As you know, those deals take a long time to do, and then it can take a long time to get your content published or your channel launched even after an agreement is in place. So there's a bit of a lag there, but we're excited about what's happening there and what's possible over time. We even turned on pay TV advertising recently on our pay TV channel in Australia with our partner Fetch there.

Speaker Change: As you know, those deals take a long time to do, and then it can take a long time to get your content published or your channel launched even after an agreement is in place, so there's a bit of a lag there.

Speaker Change: We're excited about what's happening there and what's possible over time.

Speaker Change: Turned on pay TV advertising recently with our pay TV channel in Australia with our partner

Clint Stinchcomb: So advertising revenue will continue to grow, and it will be durable and certainly more predictable than it has been in the past. There's just a pretty healthy lag from getting a deal done with companies and then, you know, getting all of the content to them and then having them actually publish it on their platforms. In regard to JVs, I mean, well, I wouldn't necessarily characterize it necessarily as a JV.

Speaker Change: Fetch there so that advertising revenue will continue to that will continue to grow and you know, it will be durable and and Certainly, you know more predictable than it's been in the past there's just a pretty healthy lag from getting a deal done with companies and then

Clint Stinchcomb: There's just a pretty healthy lag from getting a deal done with companies and then, you know, getting all of the content to them and then having them actually publish it on their platforms. In regard to JVs, I mean, well, I wouldn't you know, characterize it necessarily as a JV. We did work with and we are working with Estrella Australia, excuse me, you know, the top Hispanic media organizations in the US and the world, quite frankly, and you know, Samsung is launching three of our channels so that we've developed with them: Curiosity and the Spaniol, Curiosity and Forays, and Curiosity on them all.

Speaker Change: getting all of the content to them and then having them actually publish it on their platforms. In regard to JV's

Speaker Change: I mean, well, I wouldn't characterize it necessarily as a JV. We did work with and we are working with Estrella, Estrella, excuse me, you know, the top Hispanic media organizations in the U.S. and the world, quite frankly. And Samsung is...

Clint Stinchcomb: We did work with, and we are working with Estrella. Estrella, excuse me, you know, the top Hispanic media organizations in the U.S. and the world, quite frankly. And Samsung is............... Launching three of our channels that we've developed with Curiosity en Espaol, Curiosity Tours, and Curiosity Animals. So we're excited about that, and we will work with partners where it makes sense. We have various partners that, you know, whose content we incorporate into our broader structure for exploitation on AVOD, for exploitation on FAS, and even in various licensing agreements. So I think we've been quietly doing a lot of work in that area, and we're quite optimistic that that will bear fruit here over time. Okay, one last one.

Speaker Change: launching three of our channels that we've developed with them, Curiosity en Español, Curiosity Torres, and Curiosity Anamals. So we're excited about that and

Clint Stinchcomb: So we're excited about that, and you know we will work with partners where it makes sense. We have various partners that, you know, whose content we incorporate into our broader structure for, you know, exploitation on AVOD, for exploitation on FAST, and even then various licensing agreements. So I think we've been quietly doing a lot of work in that area, and you know we're quite optimistic that that will bear fruit tier over time.

Speaker Change: We will work with partners where it makes sense. We have various partners that...

Speaker Change: whose content we incorporate.

Speaker Change: into our broader structure for exploitation on AVOD, for exploitation on FAS, and even in various licensing agreements. So I think we've been quietly doing a lot of work in that area, and we're quite optimistic that that will bear fruit here over time.

Clint Stinchcomb: Okay one last one. The theatrical exhibitors have focused a bit more on alternative content than has historically been the case, but that might be getting pushed back as fresh content starts to come in to a greater extent. But I was curious if you think any of the content that you have might lend itself to either an alternative content series or edited to fit like one or two theatrical films, and what is the video or audio quality of content you have? Would it be applicable to a theatrical setting? Yeah, I think that you know, as far as the quality of content that we have, I don't think anybody can take issue with that. It's, it's of, I think, by any objective standard of measurement, extremely high quality. And sort of going back to a question that Laura asked, you know, when you talk to the large general VI of companies, what they will tell you what they are looking for is, you know, really kind of three things, and that is quality of the video, meaning is it in a 4K HD, or in our case, like we have, we have content in 5K, we have content that's in 8K. They're also looking for volume, which we have, and they're also looking for diversity of imagery, which is something that obviously we're blessed to have, having built the library that we do.

Jim Goss: The theatrical exhibitors have focused a bit more on alternative content than has historically been the case, but that might be getting pushed back as fresh content starts to come in to a greater extent. But I was curious if any of the content that you have might lend itself to either an alternative content series or edited to fit, like one or two theatrical films. And what is the video or audio quality of the content you have? What would it be?

Speaker Change: One last one. The theatrical exhibitors have

Speaker Change: focused a bit more on alternative content than has historically been the case, so that might be

Speaker Change: getting pushed back as fresh content starts to come in to a greater extent. But I was curious if you think any of the content that you have might lend itself to either

Speaker Change: an alternative content series, or edited to fit.

Speaker Change: like one or two theatrical films. And what is the video or audio quality of the content you have? What would it be?

Clint Stinchcomb: applicable to a theatrical setting. Yeah, I think that, you know, as far as the quality of content that we have, I don't think anybody can take issue with that. It's great. I think, by any objective standard of measurement, it's of extremely high quality.

Speaker Change: applicable to a theatrical setting? Yeah, I think that as far as the quality of content that we have, I don't think anybody can take issue with that.

Speaker Change: I think by any objective standard of measurement, extremely high quality. And sort of going back to a question that Laura asked, you know, when you talk to the large generative AI companies, what they will tell you is what they are looking for is, you know, really kind of three things. And that is,

Clint Stinchcomb: Sort of going back to a question that Laura asked, you know, when you talk to the large Generative AI at companies, what they will tell you is what they are looking for is, you know, really kind of three things, and that is... quality of the video. Meaning, is it, you know, 4K HD, or in our case, like we have content in 5K, we have content that's 8K. They're also looking for volume, which we have, and they're also looking for diversity of imagery, which is, you know, obviously we're blessed to have having built the library that we do. In regard to, you know, uh..., doing some sort of theatrical release. We've looked at a few opportunities to do that, but it's been hard to figure out a way to.

Speaker Change: quality of the video meaning is it in a 4k HD or in our case like we have we have content in 5k we have content that's in 8k they're also looking for volume which we have they're also looking for diversity of imagery which is

Speaker Change: something that obviously we're blessed to have, having built the library that we do.

Clint Stinchcomb: In regard to doing some sort of theatrical release, we've looked at a few opportunities to do that.

Speaker Change: doing some sort of theatrical release. We've looked at a few opportunities to do that. It's been hard to figure out a way to

Clint Stinchcomb: It's been hard to figure out a way to make the money work based on the amount of time that we would have to put in. But what I will say is we're constantly looking at new areas to license our content into. One example from the last quarter is we did two licensing deals within the confinement space, where I think our content is well-suited. We also licensed a new asset class of contents to a partner in Q2, that being raw footage, which was interesting. So, we're looking at all those, and I guess I'll just, the last thing I'll say there, Jim, is that we did licensing deals with six companies with whom we never worked with the last quarter. Confinement, public broadcaster, tech category that we'll talk more about, a couple of partners in Asia.

Jim Goss: Make the money work based on the amount of time that we would have to put in. But what I will say is, we're constantly looking at new opportunities. And you know, one example from the last quarter is we did two, you know, two licensing deals in the confinement space where I think our content is well suited. And, you know, we also licensed a new asset class of content to a partner in Q2, that being raw footage, which was interesting.

Speaker Change: make the money work based on, you know, the amount of time that we would have to put in. But what I will say is, like, we're constantly looking at new...

Speaker Change: areas to license our content into. And one example from the last quarter is we did two licensing deals in the confinement space, where I think our.

Speaker Change: You know our content is it is well suited

Speaker Change: And, you know, we also licensed a new asset class of contents to a partner.

Speaker Change: in Q2, that being raw footage, which was interesting. So, we're looking at all those, and I guess the last thing I'll say there, Jim, is that we did licensing deals with six companies with whom we'd never worked with.

Jim Goss: So we're looking at all those, and I guess the last thing I'll say there, Jim, is that we did licensing deals with six companies with whom we haven't worked with last quarter, you know, confinement, public broadcaster, tech category that we'll talk more about, a couple of partners in Asia. So we're always looking at the best ways to display and license our content, and if we can figure out the right, the right economic exchange there, it's something that we would take a hard look at. All right, thanks very much. Our next question comes from David Marsh with Singular Research. Please go ahead.

Speaker Change: last quarter, you know, confinement, public broadcaster, tech category that we'll talk more about.

Clint Stinchcomb: Always looking at the best ways to display and license our content. And if we can figure out the right economic exchange there, it's something that we would take a hard look at.

Speaker Change: a couple of partners in Asia. So always looking at the best ways to.

Speaker Change: display and license our content and if we can figure out the right

Speaker Change: The right economic exchange there, it's something that we would take a hard look at.

David Marsh: All right, thanks very much. Our next question comes from the line of David Marsh with Singular Research. Please go ahead. You guys, thank you for taking the questions. With regards to your revenue guidance for the next quarter, can you just talk about what the puts and takes are that would allow you to get towards the top end of the range? And can you give us a sense of, you know, your feeling in terms of how much recurring revenue you might help support kind of the bottom end of the range first?

Speaker Change: All right, thanks very much.

Speaker Change: Our next question comes from the line of David Marsh with Cingular Research. Please go ahead.

David Marsh: You guys, thank you for taking the questions. With regard to your revenue guidance for the next quarter, can you just talk about what the puts and takes are that would allow you to get towards the top end of the range, and can you give us a sense of, you know, your feelings in terms of, you know, how much recurring revenue might help support kind of the bottom end of the range. I think that's a great question, thank you, and I'll let Brady fill in here.

David Marsh: You guys, thank you for taking the questions.

David Marsh: With regards to your revenue guidance for the next quarter, can you just talk about what the puts and takes are that

David Marsh: would allow you to get towards the top end of the range.

Speaker Change: And can you give us a sense of, you know, your feeling in terms of, you know, how, you know, how much recurring revenue might help support kind of the bottom end of the range, please?

Clint Stinchcomb: Yeah, I think that's a great question. Thank you, and I'll let Brady fill in here. But, you know, as I mentioned at the beginning of my remarks, our director revenue continues to grow, and we believe that it will, you know, continue to grow next quarter as well. And that in and of itself, today, on an annualized basis, is at a stage where, you know, it covers our, that alone, on an annualized basis covers our annualized operating costs. And so he said, "Okay, everything above that is margin." And in our case, you know, we have a robust content licensing business, as, you know, it's no surprise to anybody.

Speaker Change: Yeah, I think that's a great question. Thank you. And I'll let Brady fill in here.

David Marsh: As I mentioned at the beginning of my remarks, our direct revenue continues to grow, and we believe that it will continue to grow next quarter as well. And that, in and of itself today, on an annualized basis, is at a stage where it covers our operating costs. And so you say, OK, everything above that is Marge.

Brady Hayden: You know as I mentioned at the beginning of my remarks Our direct revenue continues to grow and we believe that it will you know continue to grow next quarter as well And that in and of itself today on an annualized basis is at a stage where you know it covers our

Brady Hayden: that alone on an annualized basis covers our annualized operating costs and so you say okay everything above that is is margin and in our case

Clint Stinchcomb: And in our case... You know, we have a robust content licensing business, as you know, it's no surprise to anybody. We're in a number of conversations with great partners around the world, and there is just a, There are a broad range of outcomes. We're really enthusiastic about the ultimate outcomes of many of these, but what's a little harder to predict is... you know, okay? Like, which of those will close by September 30th? Like, that's the calculus.

Brady Hayden: You know, we have a robust content licensing business as you know, it's no surprise to anybody we're in a number of conversations with

Brady Hayden: We're in a number of conversations with great partners around the world. And there's just a, there's a, a broad range of outcomes there. Like, we're really enthusiastic about, you know, the ultimate outcomes of many of these. But what's a little harder to predict is, you know, okay, are, you know, which of those will close by September 30th; like, that's the, that's the calculus. And so, if some come in a little bit earlier, then, you know, we're at the top end and even potentially above. If they come in later, then we're maybe not at the top end.

Brady Hayden: great partners around the world, and there is just a

Brady Hayden: there's a

Speaker Change: A broad range of outcomes there.

Speaker Change: We're really enthusiastic about, you know, the ultimate outcomes of many of these, but what's a little harder to predict is, you know, okay, are.

Speaker Change: you know, which of those will close by September 30th? Like, that's the that's the calculus. And so if some come in a little bit earlier, then, you know, we're.

Clint Stinchcomb: And so if some come in a little bit earlier, then, you know, we're. We're at the top end and, and even, you know, potentially above. If they come in later than... You know, we're, Maybe not at the top end, I guess is a good way to say it. What would you say, Brady?

Operator: At this time, I'd like to welcome everyone to the Curiositystream 2nd quarter 2024 earnings conference call. Please note that today's call is being recorded. All lines have been placed on mute to prevent any background noise.

Speaker Change: We're at the top end and...

Speaker Change: and even, you know, potentially above. If they come in later, then...

Brady Hayden: I guess it's a good way to say it.

Speaker Change: You know, we're

Brady Hayden: Would you say, Brady? Yeah, no, I think Dave, you're spot on with the question. If you take just our direct business including both DDC and Partner Direct, Bundle Distribution is pretty easy, easier to predict, and even on the other category, some of the advertising revenue I would certainly say has become recurring. That probably gets you near the bottom of the range. It's the content licensing and the timing of those transactions that would push it to the top of the range, to perhaps even above it.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question, simply press star, then the number one on your telephone keypad. To withdraw your question, please press star one again.

Brady Hayden: Yeah, no, I think Dave, you're spot on with the question. It's if you take just our direct business, including both DDC and Partner Direct. Bundled distribution is pretty easy. Easier to predict, and even in the other categories, some of the advertising revenue.

Brady Hayden: Maybe not at the top end, I guess is a good way to say it. What would you say, Brady? Yeah, no, I think, Dave, you're spot-on with the question. It's, if you take just our direct business, including both DDC and Partner Direct,

Tia Cudahy: I will now turn the call over to Tia Cudahy, Chief Operating Officer and General Counsel. You may begin your conference. Welcome to Curiositystream's discussion of its 2nd quarter 2024 financial results.

David Marsh: I would certainly say it has become recurring. That probably gets you near the bottom of the range. It's the content licensing and the timing of those transactions that would push it to the top of the range or perhaps even above it. Okay, that is really super helpful. I appreciate that. And then the other question, I mean, I guess, just to echo Laura's comments, the cost control is amazing. And just looking at gross margin, I mean, this is like a super, super gross margin quarter, relative to the last couple of years. Is this gross margin rate sustainable going forward? And what would be the types of things that might cause it to retrench, you know, kind of back into the mid 40s?

Brady Hayden: Bundle distribution is pretty easy, easier to predict. And even in the other categories, some of the advertising revenue, I would certainly say has become recurring.

Speaker Change: That probably gets you near the bottom of the range. It's the content licensing and the timing of those transactions that would push it to the top of the range or perhaps even above it.

Tia Cudahy: Leading the discussion today are Clint Stinchcomb, Curiositystream's Chief Executive Officer, and Brady Hayden, Curiositystream's Chief Executive Officer. Following management's prepared remarks, we'll be happy to take your questions.

David Marsh: Okay, that is really super helpful. Appreciate that.

David Marsh: And then the other question, I mean, I guess you just echo Laura's comments. The cost control is amazing, and you're just looking at gross margin. I mean, this is like a super, super gross margin quarter relative as we look back, the last couple of years.

Speaker Change: Okay, that is really super helpful. I appreciate that. And then the other question, I mean, I guess, just to echo Laura's comments, the cost control is amazing and

Tia Cudahy: But first, I will view the safe harbor statement. During this call, we may make statements related to our business that are forward-looking statements under the Federal Security's laws. These statements are not guarantees of future performance, but rather a subject to a variety of risks, uncertainties, and assumptions. Our actual results could differ materially from expectations reflected in any forward-looking statements.

Speaker Change: You're just looking at gross margin, I mean, this is...

Speaker Change: Thank you.

Speaker Change: a super, super gross margin quarter relative as we look back, you know, the last couple of years.

Clint Stinchcomb: Is this gross margin rate sustainable going forward? And what would be the types of things that might cause it to retrench back into the mid-40s?

Speaker Change: Is this gross margin rate sustainable going forward, and what would be the types of things that might cause it to retrench back into the mid-40s?

Tia Cudahy: Please be aware that any forward-looking statements reflect management's current views only, and the company undertakes no obligation to revive their updates these statements, nor to make additional forward-looking statements in the future. 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 our investor relations website, as well as the risks and other important factors discussed in today's process. Additional information will also be set forth in our quarterly report on Form 10Q for the end of June 30, 2024 when filed.

Clint Stinchcomb: Yeah, just having been here a little bit longer than Brady, I'll take that, Dave, and then hand it over to Brady for any additional color. But without a doubt, we continue to do work on the cost side. You know, we have a handful of vendor agreements coming up over the next six months that could help us improve there relatively significantly. You know, just as we see really interesting revenue opportunities as it relates to the emergence of AI.

Clint Stinchcomb: I'll just having been here a little bit longer than Brady. I'll take that day and then hand over to Brady for any additional color. But without a doubt we continue to do work on the cause side. And we have a handful of vendor agreements coming up over the next six months that could help us improve there, relatively significantly. And just as we see a really interesting revenue opportunity as it relates to the emergence of AI, we're already seeing efficiency tools that are available there in editing, in marketing, in some other areas that can help enhance our margin as well.

Brady Hayden: Just having been here a little bit longer than Brady, I'll take that day and then hand over to Brady for for any additional color. But without a doubt, you know, we continue to do work on the on the cost side.

Brady Hayden: You know we have You know a handful of vendor agreements coming up over the next six months that Could help us improve there relatively significantly and

Brady Hayden: You know just as we see a

Tia Cudahy: In addition, reference will be made to non-gap financial measures. A reconciliation of these non-gap measures to comparable gap measures can be found on our website at investors.curiositystream.com. Unless otherwise stated, all comparisons will be against our results for the comparable 2023 period.

Brady Hayden: really interesting revenue opportunities as it relates to the emergence of AI. We're already seeing

Clint Stinchcomb: We're already seeing efficiency tools, Thank you, that are available there, in editing, you know, in marketing, in some other areas that can help to enhance our margin as well. And, you know, and whereas we tend to focus really hard on cash accounting internally.

Brady Hayden: efficiency tools that are available there in editing, you know, in marketing, in some other areas that can help to, that can help

Tia Cudahy: Now we'll turn the call over to Clint. Thank you, Tia.

Brady Hayden: Whereas we tend to focus really hard on cash accounting internally. I think that yields ultimately the best results. I think that you'll see, based on our content amortization levels, you'll see our profile, even from an even dust standpoint, just continue to improve over the next many quarters. Yeah, I'll just say we would anticipate that our content amortization would continue to decline over the next few months. Obviously, we will acquire and publish new content, which essentially would keep that number flat at some level. There's a floor there at some point. But yeah, both on the content amort side and on our cash-based cost of sales, we've seen some improvements there.

Brady Hayden: enhance our margin as well and you know

Clint Stinchcomb: Good afternoon, everyone. In addition to Tia, our COO and General Counsel, our CFO Brady Hayden is on our call today. I appreciate everyone joining us today for this milestone quarterly report. In light of well-directed hard and efficient work by a tight talent-dense team of people, we generated our highest-ever quarterly adjusted free cash flow. Specifically, we generated $2.5 million in adjusted free cash flow in the second quarter, a year-over-year improvement of about $7 million, and an over 100% improvement from Q1 2024.

Brady Hayden: and whereas we tend to look focus

Brady Hayden: really hard on cash accounting internally, because we think that yields ultimately the best results. I think that you'll see...

Clint Stinchcomb: I think that yields the best results. Based on our content amortization levels, you'll see our profile, even from an EBITDA standpoint, just continue to improve over time for the next many quarters. Yeah, I'll just say we would we would anticipate that our content amortization would continue to decline over the next few months. Obviously, we will acquire and publish new content, which essentially would keep that number flat at some level. There's a floor there at some point.

Brady Hayden: you know based on our content amortization levels like you'll see our profile even from an EBITDA standpoint you know just continue to improve you know over

Brady Hayden: But yeah, certainly, both on the content amortization side and on our cash-based cost of sales, we've seen some, some improvements there. Great job there, guys, keep up that good work, and we'll talk to you again. Thank you, Dan. Thanks, Dave. This will conclude our question and answer session, and with that, we will conclude today's conference call. Thank you all for your participation. You may now disconnect. Please wait; the conference will begin shortly.

Brady Hayden: The next many quarters

Speaker Change: Yeah, I'll just say we would anticipate that our content amortization would continue to decline over the next few months.

Clint Stinchcomb: This marks our seventh consecutive quarter of adjusted free cash flow improvement. We also increased our top-line revenues sequentially, and I'm happy to say, and I would like to make it abundantly clear, that curiosity is generating cash. I know that sometimes accounting terms like EBITDA, and adjusted EBITDA can be confusing, which is why I'm using this very concrete language about generating cash. Even as we pay the significant dividend, our cash position from Q1 to Q2 increase.

Speaker Change: We will acquire and publish new content, which essentially would keep that number flat at some point. There's a floor there at some point.

Speaker Change: but yeah certainly both on the content amort side and on our cash based cost of sales we we've seen some some improvements there.

David Marsh: Great job there, guys. Keep up that work.

Operator: Good work, and we'll talk to you again.

Speaker Change: Great job there guys keep up that good work and we'll talk to you again. Thank you, Dave.

Clint Stinchcomb: We believe we're well positioned to grow top line revenue to generate meaningful adjusted free cash flow and to continue to pay our dividend from surplus cash. In Q2, we increased our direct subscription revenue sequentially and year over year. At approximately $10 million in direct revenue for the quarter, our annualized direct revenue alone now exceeds our current annualized operating expenses, including our more variable categories like content and marketing. As we have considerable flexibility around our marketing and content investments, we do have the ability to lever up our marketing and acquisition spend based on seasonality, keep promotables and other relevant company and industry dynamics.

Operator: This will conclude our question and answer session, and with that, we will conclude today's conference call. Thank you all for your participation.

Speaker Change: This will conclude our question and answer session. And with that, we will conclude today's conference call. Thank you all for your participation. You may now disconnect.

Operator: You may now disconnect.

Operator: Please wait; the conference will begin shortly.

Clint Stinchcomb: While our overall licensing and bundled revenue was up slightly sequentially, I would like to note that we did expand into some new categories of licensing partners in Q2 and granted some rights that we had never explicitly granted. As licensing can be lumpy, these new categories will not necessarily reduce spikes, but they will certainly help to increase our floor. We are achieving new heights and critical milestones while continuing to thoughtfully rationalize our cost base.

Clint Stinchcomb: Simple way for companies to cut costs is to just slash marketing. That's the easy way out and that can have a damaging long-term impact on growth. We've not done that. We believe our cash marketing spend in 2024 will be roughly equivalent to what it was in 2023. We've done a hard work in reducing annualized overall operational costs by more than 30%. We've renegotiated vendor relationships, consolidated vendors, leveraged certain emerging productivity tools, and like other profitable companies, properly incentivized cost containment across the organization.

Clint Stinchcomb: On the content front, we launched several new programming initiatives, including Earth Month, anchored by the premier of our landmark original series, The Sun. The Jaws & Clause Week, anchored by the premier of our three-part original series, Trackers Diary, Tigers of Nepal, and our extensive new summer dockbusters campaign, with a premiere of groundbreaking original series Faithful Planet. Throughout the quarter, we continued to premiere many other original series and specials across the full spectrum of factual, including original series like Taste, The Flavor of Life, a great look at the evolutionary role of deliciousness, and wings World War II in the skies, the two-part special chronicling the air wars in Europe and the Pacific, released for the 80th anniversary of D-Day.

Clint Stinchcomb: In closing, I'm delighted to again reinforce that for the quarter we generated $2.5 million in adjusted free cash flow, and we ended the period with nearly $40 million in cash and equivalence and zero debt. We believe our strong ballot sheet and projected 2024 positive cash flow make us stand out 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 tens of thousands of licenseable audio and video programs in raw footage, as well as monetizable data sets like images, transcripts, code and text, 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.

Brady Hayden: and now I'd like to pass the batons to my friend and colleague, Brady Hayden. Thank you, Clint, and good afternoon everyone. First of all, let me just say that I'm grateful to be taking the reins of the finance organization at such a pivotal time in the company's history. Having successfully reinforced the financial foundation of the company, we are now squarely focused on creating shareholder value through profitable growth and prudent capital allocation.

Brady Hayden: We have already demonstrated clear progress on this journey. In each of the past two quarters, we have increased our cash balances, even after returning cash to shareholders through our dividend and share repurchases. And thanks to our strong balance sheet and positive cash flow profile, we see a wealth of possibilities moving forward. As Clint said, we achieved another milestone in the second quarter as adjusted free cash flow of $2.5 million came in at the high end of our guidance range.

Brady Hayden: This also represented the highest quarterly adjusted free cash flow in the company's history and our seventh straight quarter sequential improvement in this metric. Revenue for the second quarter was $12.4 million compared to $14.1 million a year ago and near the midpoint of our guidance range. Adjusted EBITDA improved by $5.5 million and our adjusted free cash flow improved by $6.8 million as we continued our intense focus on the bottom line. Second quarter gross margin of 52 percent increased from 30 percent a year ago driven by lower content amortization as well as significant reductions in our cash-based cost of revenues.

Brady Hayden: Our gross margin excluding content amortization which really gets at the cash cost of delivering our services was 89 percent in the quarter compared to 75 percent a year ago. Our largest revenue category in the quarter was our direct business which generated $9.8 million up 70 percent from a year ago and 3 percent from the first quarter as we continued to benefit from the price increases we began rolling out last year. Our additional revenue categories, content licensing, bundle distribution and other generated $2.6 million in the quarter compared to $5.7 million a year ago.

Brady Hayden: This change was driven mostly by the timing of content licensing deals as this continues to be an inherently lumpy part of the business. Turning back to second quarter expenses GNA was $6 million down 25 percent from a year ago as we continued to realize the benefits of our plan spending reductions as well as our finance transformation and workforce optimization efforts. Second quarter advertising and marketing expense of $3 million declining 29 percent from $4.2 million a year ago as we increased our efficiency in deploying our customer acquisition dollars.

Brady Hayden: Adjusted EBITDA loss was $1 million in the quarter compared to a loss of $6.5 million a year ago. While we don't provide guidance with regard to this metric we believe that break even adjusted EBITDA is within our reach as we expect margins to continue to improve in the coming quarters and as we mentioned earlier adjusted pre cash flow was $2.5 million in the quarter compared with a negative $4.3 million a year ago.

Brady Hayden: We of course paid our first dividend of $1.3 million in April and we ended June with total cash and equivalent to $39.6 million and no outstanding We believe our balance sheet remained in great shape with $91 million of assets, $26 million of liabilities, and book value of $65 million for approximately $1.21 per share. One final note on the second quarter, on June 11th, we announced that our board had approved a share repurchased plan for up to $4 million, and through the end of June, we had repurchased 22,000 shares of our common stock, and we will continue to strategically buy back shares going forward.

Brady Hayden: Moving to third quarter guidance, we expect revenue in a range of $12 to $14 million, and adjusted free cash flow in the range of $1.5 to $3 million.

Operator: With that, operator can open the call to questions.

Operator: Thank you, we will now open the line for questions. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. To withdraw your question, press star 1 again. If you are dialed in and listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not unmute when asking your question.

Laura Martin: Our first question comes from the line of Laura Martin with Needham and Company. Please go ahead. Thanks. Okay, so you gave a long list of the assets you own. Have you thought about doing anything in trying to license the rights that you own to generate a AI large language model by chance? Thank you for that question, Laura, and we have. I think we started reading about a lot of the publishing agreements that had been entered into, you know, over the last three to five months between companies like Google and Reddit and, you know, Runway and Getty Images and Microsoft and Informa and OpenAI and Shutterstock.

Laura Martin: And clearly there is an interest from many of the generated AI companies in licensing various data sets to train their models. And I would say that we feel really good about the position that we're in as it relates to that when you consider the scope of assets that we have. We, you know, well over 100,000 hours of raw footage. We have, you know, over 10,000 finished programs. We have 7,000 plus audio programs.

Laura Martin: We have a lot of code. We have a lot of, you know, hundreds and hundreds of thousands of images, review questions, test and, you know, a lot of content that I understand is rather appealing. So I think just as we try to negotiate, you know, fair and good value exchange with the traditional licensing partners and you're well aware of the opportunity that exists in licensing for training purposes and I think even down the road for derivative exchanges and other exchanges. Thank you.

Clint Stinchcomb: Yes, it's certainly something that we're focused on right now, obviously not at the exclusion of, you know, continuing to grow our direct business, but we really do see that as a meaningful opportunity and we're likely to talk much more about that on our next call. Okay, that's super helpful, and then really great cost control.

Clint Stinchcomb: Are you offshoring any of your FTEs? Well, we are assuring some of our engineering activity, they're not FTEs, but yeah, we've had, I think we've done our head of engineering has done a terrific job over the last nine months in really reimagining what that organization should look like and, you know, leveraging, you know, some really talented people around the world. Okay, so they don't show up in this full time, head count, they're like contractors basically, is that the idea?

Clint Stinchcomb: That's right. I mean, we did, you know, we obviously as part of sort of optimizing the workforce, you know, there were certain, there were some people who, you know, were FTEs, whose, you know, functions are now replaced by offshore engineers and the like. Okay, super helpful.

Clint Stinchcomb: Thank you very much.

Laura Martin: Thank you, Laura.

Jim Goss: Our next question comes from the line of Jim Goss with Barrington Research, please go ahead. All right. Thanks.

Clint Stinchcomb: The first couple of quarters, your revenue comps were down at least a little bit from year ago and third quarter guidance looks to be the same, did you talk a little about what's driving that, obviously, you've made up for it with the cost controls, but what is behind their revenue declines? Well, I think if you, if you look, actually, Jim, it are cash revenue for 2024. We think that will be, we think that will actually exceed our cash revenue from 2023.

Clint Stinchcomb: It's non cash revenue in 2023 as, you know, do all companies. And I think that, you know, the good news is really, you know, we've put some roots in the ground, we put some real, I think, helpful guardrails around various parts of our spending and we're confident that we're going to continue to grow our direct revenue and continue to grow our licensing revenue. We're trying to be relatively conservative in how we project that today. Okay.

Jim Goss: And, if you look at, well, maybe you might update a little on the Visio Fast Channel, how that is working out. And to the extent that JVs are becoming more commonplace, is that that one of the areas you're focusing on, getting other partnerships that you think could work for you? Yeah.

Clint Stinchcomb: Thank you for asking that, Jim. It's a great question.

Clint Stinchcomb: And yes, we launched with Visio in the U.S, in late June. And I will tell you that just in the last, you know, in the last few weeks, we've rolled out our A-Bot content with Tubi in the UK, with Pluto in the U.S., and even with Samsung in several countries in Europe. So.., as you know those deals take a long time to do and then they can take a long time to get your content or you know publish where your channel launched even after an agreement is in place. So there's a bit of a lag there but we're excited about what's happening there and what's possible over time.

Clint Stinchcomb: We even turned on pay TV advertising recently with our pay TV channel in Australia with our partner Fetch there. So that advertising revenue will continue to grow and you know it will be durable and and certainly more predictable than it's been in the past. There's just a pretty healthy lag from getting a deal done with companies and then you know getting all of the content to them and then having them actually publish it on their platforms.

Clint Stinchcomb: In regard to JVs I mean well I wouldn't you know characterize it necessarily as a JV we did work with and we are working with Estrella Australia excuse me you know the top Hispanic media organizations in the US and the world quite frankly and you know Samsung is launching three of our channels so that we've developed with them curiosity and the Spaniol curiosity and forays and curiosity on them all. So we're excited about that and you know we we will we'll work with partners where it makes sense we have various partners that you know whose content we incorporate into our broader structure for you know exploitation on avod for exploitation on fast and even then various licensing agreements.

Clint Stinchcomb: So I think we've been quietly doing a lot of work in that area and you know we're quite optimistic that that will bear fruit tier over time.

Clint Stinchcomb: Okay one last one. The theatrical exhibitors have focused a bit more on alternative content than has historically been the case but that might be getting pushed back as fresh content starts to come in to a greater extent but I was curious if you think any of the content that you have might lend itself to either an alternative content series or edited to fit like one or two theatrical films and what is the video or audio quality of content you have would would it be applicable to a theatrical setting?

Clint Stinchcomb: Yeah I think that you know as far as the quality of content that we have I don't think anybody can take issue with that it's it's of I think by any objective standard of measurement extremely high quality and can sort of going back to a question that Laura asked you know when you talk to the large general VI of companies what they will tell you what they are looking for is you know really kind of three things and that is quality of the video meaning is it in a 4K HD or in our case like we have we have content in 5K we have content that's in 8K they're also looking for volume which we have and they're also looking for diversity of imagery which is something that obviously we're blessed to have, having built the library that we do.

Clint Stinchcomb: In regard to doing some sort of theatrical release, we've looked at a few opportunities to do that. It's been hard to figure out a way to make the money work based on the amount of time that we would have to put in. But what I will say is we're constantly looking at new areas to license our content into. One example from the last quarter is we did two licensing deals within the confinement space, where I think our content is well-suited.

Clint Stinchcomb: We also licensed a new asset class of contents to a partner in Q2, that being raw footage, which was interesting. So, we're looking at all those, and I guess I'll just, the last thing I'll say there, Jim, is that we did licensing deals with six companies with whom we never worked with the last quarter confinement, public broadcaster, tech category that we'll talk more about, a couple of partners in Asia. Always looking at the best ways to display and license our content. And if we can figure out the right economic exchange there, it's something that we would take a hard look at.

Jim Goss: All right, thanks very much.

David Marsh: Our next question comes from the line of David Marsh with singular research. Please go ahead. You guys, thank you for taking the questions. With regards to your revenue guidance for the next quarter, can you just talk about what the puts and takes are that would allow you to get towards the top end of the range? And can you give us a sense of, you know, your feeling in terms of how much recurring revenue you might help support kind of the bottom end of the range first?

Clint Stinchcomb: Yeah, I think that's a great question, thank you, and I'll let Brady fill in here. But, you know, as I mentioned at the beginning of my remarks, our director revenue continues to grow, and we believe that it will, you know, continue to grow next quarter as well. And that in and of itself, today, on an annualized basis, is at a stage where, you know, it covers our, that alone, on an annualized basis covers our annualized operating costs.

Clint Stinchcomb: And so he said, okay, everything above that is is margin. And in our case, you know, we have a robust content licensing business as, you know, it's no surprise to anybody. We're in a number of conversations with great partners around the world. And there's just a, there's a, a broad range of outcomes there. Like, we're really enthusiastic about, you know, the ultimate outcomes of many of these. But what's a little harder to predict is, you know, okay, are, you know, which of those will close by September 30th, like, that's the, that's the calculus.

Clint Stinchcomb: And so, if some come in a little bit earlier, then, you know, we're, and we're at the top end and even potentially above. If they come in later, then we're maybe not at the top end. I guess it's a good way to say it. Would you say, Brady? Yeah, no, I think Dave, you're spot on with the question. If you take just our direct business including both DDC and Partner Direct, Bundle Distribution is pretty easy, easier to predict and even on the other category some of the advertising revenue I would certainly say has become recurring. That probably gets you near the bottom of the range. It's the content licensing and the timing of those transactions that would push it to the top of the range to perhaps even above it.

Brady Hayden: Okay, that is really super helpful. Appreciate that.

Clint Stinchcomb: And then the other question, I mean, I guess you just echo Laura's comments. The cost control is amazing and you're just looking at gross margin. I mean, this is like a super, super gross margin quarter relative as we look back, the last couple of years. Is this gross margin rate sustainable going forward? And what would be the types of things that might cause it to retrench back into the mid-40s? I'll just having been here a little bit longer than Brady.

Clint Stinchcomb: I'll take that day and then hand over to Brady for any additional color. But without a doubt we continue to do work on the on the cause side. And we have a handful of vendor agreements coming up over the next six months that could help us improve there, relatively significantly. And just as we see a really interesting revenue opportunity as it relates to the emergence of AI, we're already seeing efficiency tools that are available there in editing, in marketing, in some other areas that can help enhance our margin as well.

Clint Stinchcomb: Whereas we tend to focus really hard on cash accounting internally. I think that yields ultimately the best results. I think that you'll see based on our content amortization levels, you'll see our profile even from an even dust standpoint just continue to improve over the next many quarters. Yeah, I'll just say we would anticipate that our content amortization would continue to decline over the next few months. Obviously, we will acquire and publish new content, which essentially would keep that number flat at some level. There's a floor there at some point. But yeah, both on the content amort side and on our cash-based cost of sales, we've seen some improvements there.

David Marsh: Great job there guys. Keep up that work.

Operator: Good work and we'll talk to you again.

Operator: This will conclude our question and answer session and with that we will conclude today's conference call. Thank you all for your participation.

Operator: You may now disconnect.

Operator: Please wait, the conference will begin shortly.