Q1 2025 CuriosityStream Inc Earnings Call
After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again.
Thank you and welcome to curiosity streams discussion of its first quarter 2025 financial results, leading the discussion today are Clint stinchcomb curiosity streams, Chief Executive Officer, and Brady Hayden curiosity streams, Chief Financial Officer.
Following managements prepared remarks, we will be happy to take your questions, but first I'll 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.
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 revise or update these statements or 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.
These 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.
Additional information will also be set forth in our quarterly report on Form 10-Q for the quarter ended March 31, 2025 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 Dot curiosity stream dot com.
Unless otherwise stated all comparisons will be against our results for the comparable 2024 period.
Clint Stinchcomb: Now I will turn the call over to Clint.
Clint Stinchcomb: Thank you Tia.
Clint Stinchcomb: We have a lot of good news to share today, our Q1 revenue of $15 $1 million was up 26% year over year.
Clint Stinchcomb: 7% sequentially.
Clint Stinchcomb: Our net income was positive for the first time in.
Clint Stinchcomb: An improved $5 $4 million year over year.
Clint Stinchcomb: Adjusted EBITDA was positive and improved to $1 1 million.
Clint Stinchcomb: Brady will provide more color about other positive key metrics.
Clint Stinchcomb: Two years ago in March 2023, we explained our determination to achieve positive cash flow in our operations.
Clint Stinchcomb: And to join the ranks of companies that are enduring business metrics.
Clint Stinchcomb: We increased our cash flow and every consecutive quarter from Q4 2022 to Q4 2024.
Clint Stinchcomb: And we've achieved positive cash flow over the past five quarters.
Clint Stinchcomb: In Q1, 2025, our EBITDA performance caught up with our sustained positive cash flow and today. We're gratified to report that we were adjusted EBITDA positive for the first time.
Clint Stinchcomb: As well as net income positive.
Clint Stinchcomb: Landmark achievements for our company.
Clint Stinchcomb: Because we believe that the volume of our cash flow and surplus cash beyond that needed for operations belongs to our shareholders.
Clint Stinchcomb: We implemented a dividend program in Q1 of 2024 and paid our first dividend in April of last year.
Clint Stinchcomb: In March of this year, we announced an increase to our dividend <unk> <unk> per quarter or <unk> 16 cents annualized.
Clint Stinchcomb: Today, our outlook on future performance gives us the confidence to announce another increase to our quarterly dividend.
Clint Stinchcomb: We are doubling at two eight.
Clint Stinchcomb: 32.
Clint Stinchcomb: Annualized.
Clint Stinchcomb: We are delighted to give this extra returned to our loyal shareholders many of whom have been committed to our enterprise.
Clint Stinchcomb: Well over five years.
Clint Stinchcomb: We work for the benefit and interest of our shareholders and we are proud to do so.
Clint Stinchcomb: We mentioned last quarter that 2025 has returned to topline growth and continued bottom line growth.
Clint Stinchcomb: Both the double digit percentages.
Clint Stinchcomb: While we aren't providing specific year end guidance, we remain confident in hitting these marks.
Clint Stinchcomb: Third party licensing and distribution opportunities are accessible to us.
Clint Stinchcomb: Provided we execute optimally.
Clint Stinchcomb: At a scope and scale greater than at any time in company history.
Clint Stinchcomb: As such we remain focused on our five growth pillars, we outlined in March.
Clint Stinchcomb: Which again are one.
Clint Stinchcomb: Increased licensing of high volumes of video audio and other data to traditional media companies and also the tech companies building and fine tuning AI products.
<unk> continued rationalization of our annual expenses.
Clint Stinchcomb: Three leveraging falling translation cost to accelerate global growth.
Clint Stinchcomb: For launching new currencies to reduce subscription friction internationally and five selectively enhancing our talent density.
Clint Stinchcomb: In light of this focus we've entered into several new third party agreements in the U S and internationally.
Clint Stinchcomb: Added extensively to our deep and increasingly wide library of video audio and other data.
Clint Stinchcomb: And we recently rolled out 10, new currencies.
Clint Stinchcomb: On the content front, we continue to seek to entertain an enlightened viewers with original premieres like the second season of deadly science profiling. The many brave men and women, who paid the ultimate price in pursuit of their enormous breakthroughs.
Clint Stinchcomb: Our one hour collaboration with the popular Youtube franchise economics explained exploring how the U S became the largest and most influential economy in human history.
Clint Stinchcomb: And breakthrough asteroid impact.
Clint Stinchcomb: I look at cutting edge efforts to explore one of <unk> greatest threats.
Clint Stinchcomb: We also continued to strengthen our core offerings and science history nature in tact with specials like Cleopatra.
Clint Stinchcomb: The mystery of the <unk> hand.
Clint Stinchcomb: That the celestial lie and mysteries of the bio tapestry.
Speaker Change: Revealing look at the remarkable 224 foot narrative embroidery that has taught us so much about the end of the Vikings and the beginning of the night and the feudal system in Europe.
Clint Stinchcomb: To reinforce what we've said in the past we believe our strong balance sheet 30.
Clint Stinchcomb: $39 million in liquidity and no debt.
Clint Stinchcomb: Our continued double digit growth in both top line revenue and cash flow make us stand out in the current environment.
Clint Stinchcomb: Moreover, we believe our global subscription proposition.
Clint Stinchcomb: A rising roster of technology in traditional media partners.
Clint Stinchcomb: Our public currency and our ongoing rationalization of our cost structure are.
Clint Stinchcomb: Our uniquely favorable attributes that provide us with durable sustainable market advantages.
Clint Stinchcomb: An exceptional flexibility.
Clint Stinchcomb: I'd like to thank my colleagues and our existing shareholders for investing the time energy and resources critical to building cured.
Clint Stinchcomb: I really hope there are many potential future shareholders allocating time today and in the days ahead to better understand our story and trajectory.
Brady Hayden: I will now yield to my <unk> colleagues, our CFO Brady Hayden.
Brady Hayden: Thank you Clint and good afternoon, everyone.
Brady Hayden: Our full financial results will be presented in the 10-Q that we'll file in the next day or two but let me quickly go through some of the first quarter results that we want to highlight.
Speaker Change: As Glenn said, we achieved another significant milestone in the first quarter as we reported earnings of <unk> $3 million or <unk> <unk> per share our first quarter of positive net income in the company's history, and a $5 $4 million improvement from 2024.
Speaker Change: Likewise, we reported our first ever positive adjusted EBITDA, which came in at $1 1 million, an improvement of $3 $9 million from a year ago.
Speaker Change: Adjusted free cash flow came in at $2 million. The high end of our guidance range and an increase of <unk> $8 million compared to last year.
Speaker Change: This also represented the fifth sequential quarter of positive adjusted free cash flow.
Speaker Change: Revenue for the first quarter was $15 1 million compared to $12 million a year ago.
Speaker Change: While our direct subscription revenue at about $9 million was down slightly this was more than offset by our licensing revenue, which grew by about $4 million.
Speaker Change: First quarter gross margin was 53% an improvement from 44% a year ago, driven by continued reductions in content amortization.
Speaker Change: As expected our cash cost of revenue increased slightly from a year ago, our results of acquiring more rights to license content through revenue share arrangements and associated storage costs.
Speaker Change: Operating expenses declined in the first quarter as combined cost for advertising and marketing plus G&A were down $1 million or 11% compared to last year. The continued results of our ongoing cost rationalization and excluding stock based compensation G&A declined 19% from a year ago.
Speaker Change: As I mentioned earlier adjusted EBITDA was $1 1 million in the first quarter compared to a loss of $2 8 million a year ago and.
Speaker Change: And adjusted free cash flow was $2 million in the quarter compared with $1 $2 million a year ago.
Speaker Change: In March we paid our Q1 dividend of $2 3 million, meaning we have now returned $6 $3 million to shareholders since announcing the dividend program just over a year ago.
Speaker Change: We ended the quarter with total cash and securities of $39 $1 million and no outstanding debt.
Speaker Change: We believe our balance sheet remains in great shape, and this provides us with significant operating flexibility.
Speaker Change: For second quarter guidance, we expect revenue in the range of $16 million to $17 million and adjusted free cash flow in the range of $2 million to $3 million.
Speaker Change: With that we can hand, it back to the operator and open the call to questions.
Speaker Change: Thank you and welcome to curiosity streams discussion of it.
Speaker Change: At this time I would like to remind everyone. If you would like to ask a question. Please press Star then the number one on your telephone keypad.
Speaker Change: Okay.
Speaker Change: And once again for any questions or comments. Please press star one at this time.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Your first question will come from Dan.
Speaker Change: Medina from Needham.
Dan Medina: Good afternoon, and congratulations on the great numbers.
Dan Medina: My question is really on the cost side Clinton Brady and.
Dan Medina: Can you talk a little bit about how Jenny I may have contributed to.
Dan Medina: To come in well below what we estimated for costs. Thank you.
Dan Medina: Great question, Dan I really appreciate that.
Dan Medina: I would say the good news is we've been able to reduce our costs largely without <unk>.
Dan Medina: Leveraging and accessing the emerging tools that are available to us.
Dan Medina: Jedi from Gen AI, certainly as we look forward, we believe that.
Dan Medina: The big advantage is available to us through NII or one in translation, we said like as soon as we can get to a point where.
Dan Medina: We can translate our content into 60 languages at minimal cost as compared to the 10 to 12 that we're in today.
Dan Medina: Okay.
Dan Medina: That will have a meaningful impact.
Dan Medina: We do we do use it today a bit on the editing side as it relates to sequencing.
Dan Medina: Organizing content. So there is some help there but for.
Dan Medina: For the most part we brought down our costs by.
Dan Medina: Really just kind of a shoulder to the wheel approach I think.
Dan Medina: We spent a lot of time every week just.
Dan Medina: Grinding on what's essential what's not essential whats revenue generating and what's not so good news is we still have we believe considerable.
Dan Medina: Considerable headroom as it relates to reducing and rationalizing our cost base with tools will become available to us as a result of <unk>.
Dan Medina: <unk>.
Dan Medina: We will only accelerate and enhance that effort.
Dan Medina: Okay.
Dan Medina: Great. Thank you.
Speaker Change: Your next question will come from David Marsh with singular research.
David Marsh: Hey, guys. Thanks for taking my questions and congrats on a great quarter.
Speaker Change: Thanks, Dave.
Speaker Change: So I just wanted to start.
Speaker Change: On the topline I mean could you give us a little bit more granularity in terms of.
Speaker Change: What drove what was it.
Speaker Change: What were the key drivers were for the revenue growth relative to their.
Speaker Change: Licensing versus subscribe subscriptions.
Speaker Change: So I would be happy to.
Speaker Change: So as you saw from our numbers I mean, virtually everything is up.
Speaker Change: In regard to our direct subscription revenue, that's down a little bit year over year.
Speaker Change: In direct subscription revenues is largely a function of our marketing spend today. So we are hyper focused on the efficiency of that spend and so that spend might be a little lumpy at times and that Lumpiness is really tied in small part to seasonality, but in larger part two.
Speaker Change: The various value exchanges that we can secure with various marketing channels and so as we look to optimize our CPA youll.
Speaker Change: Youll see us be really opportunistic at certain times of the year. When we can simply just get much more bang for our Buck in regard to the variety of AD products and elements available to us.
Our churn continues to be low.
Speaker Change: I think what Youll see us do as it relates to the.
Speaker Change: The direct subscriptions is we'll manage that to well manage that to a certain level and again, it's largely tied to our marketing spend obviously, where we had significant growth was on the licensing side. We've done a lot of work to build a really big and broad corpus of content, namely.
Speaker Change: Video audio text images et cetera, and this type of content is appealing to a broad array of companies.
Speaker Change: Technology companies and traditional media companies and.
Speaker Change: In light of that.
Speaker Change: We just have a lot more.
Speaker Change: Opportunity available to us as a company today and frankly in any time in.
Speaker Change: Company history so.
Speaker Change: Yes.
Speaker Change: I would say Dave is kind of abroad.
Speaker Change: Okay.
Speaker Change: Our broad result of many of new licensing partners.
Speaker Change: New advertising partners.
Speaker Change: New subscription partners.
Speaker Change: <unk>.
Speaker Change: Okay.
Speaker Change: Really excited about what's.
Speaker Change: What's potentially available to us over the course of the rest of the year.
Speaker Change: Thanks, That's really helpful. And then just turning to the cost side I mean, great job on SG&A It was down.
Speaker Change: 16% year over year.
Speaker Change: You guys are able to wring out a fair amount of cost.
Speaker Change: Is that is that a sustainable level going forward.
Speaker Change: Or could there be some yes some.
Speaker Change: Some things that kind of creep back in.
Speaker Change: That part of the years as you try to you know.
Speaker Change: The market to different to different channels and different partners.
Dave: Yes, Dave.
Dave: We've talked about this before but our one of our biggest cost which is a noncash cost of course is our content amortization that's continued to decline.
Dave: Every quarter.
Dave: Over the past several quarters, and we've talked about that and.
Dave: I am told our 10-Q is going to be filed in the next few minutes.
Dave: But youll see in there we had a substantial loss in our content and more.
Dave: In Q1.
Dave: And then.
Dave: Our marketing cost.
Dave: Will.
Maybe where are historically a bit low in Q1 compared to where we would be in say at Q4.
Dave: When we when we maybe ramp up our cost towards the holiday season, and when we have a lot of.
Dave: Renewals with our subscription base otherwise, we I think we'll see a continued decline declining trend in our in our G&A throughout the throughout the year as.
Dave: As some of our cost reduction efforts continued to roll off from the last.
Dave: 12 months to 18 months.
Dave: Got you and then if I could just get one more in.
Dave: Just looking at the dividend change.
Dave: I mean, I guess I would say congratulations on the confidence to raise it.
Dave: As much as you have.
Dave: But just doing a little bit of back of the envelope math it looks like that.
Dave: It's probably going to be about four and a half million dollars a quarter.
Dave: At the new rate, if I'm doing my math right.
Dave: And just just looking at the cash flow guidance of two to three.
Dave: I guess the question is yes.
Dave: Given the timing of the raise.
Dave: And.
Dave: Just looking beyond the second quarter do you guys have confidence that youre going to be able to generate.
<unk>.
Dave: Sufficient cash flow to be able to cover that dividend without eating into your reserves.
Speaker Change: Yeah, we have tremendous confidence in the business.
Dave: Throughout the rest of the year, if we didn't.
Dave: We certainly wouldn't have doubled the dividend like we did and.
Dave: Whereas we think it's conceivable that we will be able to pay.
Dave: The dividend from operations at the same time, we have a lot of cash reserve.
Dave: Far more than enough to.
Dave: Absorb a dividend payment.
As it relates to <unk>.
Dave: <unk>, which can be a little bit lumpy in our business. So our intent today is to pay the majority of it.
Dave: Or all of it from operations at the same time.
Dave: We really believe that the volume of our cash in our surplus cash.
Dave: Beyond that needed for operations belongs to our shareholders. That's why we implemented the dividend program.
Dave: Why.
Dave: Increased it.
Dave: And.
Dave: We're just really gratified to give this extra return to <unk>.
Dave: All shareholders, particularly.
Dave: Those who have been with us for a long time some over five years.
Dave: I can just say, David we work for the benefit and interest of our shareholders.
Dave: We're proud to do that and we're a unique company in that despite our size, we have the ability to pay that dividend.
Dave: We will seek to play to kind of all our advantages to drive shareholder value.
Dave: Okay.
Speaker Change: Great Hey, thanks, very much guys I appreciate it.
Dave: Thank you. Thank you.
Speaker Change: Your next question will come from Patrick Schoen from Barrington.
Dave: Hi.
Patrick Schoen: I'm wondering if you could.
Speaker Change: Sorry, if I missed this but if you could talk a little bit on the direct business and any sort of consumer trends that youre seeing there.
Patrick Schoen: Sure.
Patrick Schoen: I think.
Patrick Schoen: The big thing to note there is that.
Patrick Schoen: Our overall, our overall direct subscription revenue again, it's largely a function of our marketing spend.
Patrick Schoen: And as we're hyper focused on the efficiency of that spend on optimizing.
Patrick Schoen: Our CPA Youll see this.
Patrick Schoen: Some lumpiness pretty minimal within a pretty minimal window as it relates to our.
Patrick Schoen: Our direct subscription business, but.
Patrick Schoen: We will be going forward Youll, just see us be a lot more opportunistic at certain times of the year. So we'll have quarters, where there is.
Patrick Schoen: Certainly more growth than others, but as we sit here today.
Patrick Schoen: We're managing our.
Patrick Schoen: Our direct subscription business to something that is.
Flat to little bit up or little bit down and that's in light of the fact that we have.
Patrick Schoen: So many large opportunities in front of us and if we're able to execute on those then.
Patrick Schoen: We will have more money to.
Patrick Schoen: Allocate for marketing and we'll have additional ways to grow our direct business at the same time.
Patrick Schoen: We anticipate many new launches of our subscription services from existing partners like Amazon, Apple Roku, and new less obvious partners across the world the pace and location of these new launches that also has an impact on our direct subscribers and direct subscription revenue hopefully that's helpful. Pat.
Pat: Yes. Thank you.
Speaker Change: And once again, ladies and gentlemen for any questions or comments. Please press star one on your telephone keypad again that it starts and the number one on your telephone keypad.
Speaker Change: Your next question will come from Ed Snyder with Quad technology.
Speaker Change: Yes.
Speaker Change: Have a question on the principally on the size and the sources of the pipeline for your licensing beyond Q2, and just give more color on that that'd be great.
Speaker Change: I appreciate that question Ed so.
Speaker Change: We can offer up specific names per confidentiality requirements, but in light of the quality and the quantity of our corpus again video audio text and images.
Speaker Change: We have appeal to a broad set of licensees and so this includes the most obvious like the <unk>.
Speaker Change: <unk> hyper scaler, who are publicly active in licensing data.
Speaker Change: Cumulatively spending.
Speaker Change: Hundreds of billions in Capex.
Speaker Change: It also includes many other AI companies, who have distinct training needs and.
Speaker Change: Raise meaningful capital to allocate to data licensing.
Speaker Change: And beyond the hyper scalar and the smaller largely private AI companies.
Speaker Change: There is also an emerging public sector marketplace, meaning departments and agencies of the federal government, who have budget to license video and other data. So hopefully our silver spring location gives us a proximity advantage here.
Speaker Change: But these are these are large meaningful deals that will have a significant impact on the company.
In regard to how it impacts our profitability I think you can assume a 40% 50% margin for these types of agreements.
Speaker Change: Does that answer the question gross margin.
Speaker Change: Yes.
Speaker Change: Yes, yes.
Speaker Change: Yes, that's really good. Thanks, Thanks that was very helpful. Thank you.
Speaker Change: Your next question will come from Kris Tuttle with IPO, Ken Candy.
Speaker Change: Yes.
Kris Tuttle: Oh, thanks, very much for taking my question.
Thanks for all your hard work, it's obviously evident in the results.
Speaker Change: The one question I get most often from folks that we.
Kris Tuttle: Got to talk to you about the <unk>.
Kris Tuttle: Name is.
Kris Tuttle: The relationship you have on the AI content side, they wonder about the duration and sustainability like how to think about it.
Kris Tuttle: <unk> content or are these relationships that we're building where do you think in the long term.
Kris Tuttle: These can continue to repeat and grow not the same as.
Kris Tuttle: Strictly speaking recurring revenue, but that's the big question that I get from folks that we have.
Kris Tuttle: Okay.
Kris Tuttle: Yes.
Kris Tuttle: I think it's a very fair question.
Kris Tuttle: Chris I'm really glad that you asked it.
Kris Tuttle: And let me first start by saying if you control a library of.
Hundreds and hundreds of thousands of hours of video and audio and into the million dollars.
Kris Tuttle: Youre always going to be able to monetize that that that is the history of the media.
Kris Tuttle: And technology business as it relates to some of the technology and AI work that we're doing today.
Speaker Change: I've done directly or in parts of hundreds of content licensing agreements most of them are not written as recurring agreements. So typically a company like ours is.
Speaker Change: Delivering content to a licensed partner and then provide the partner accepts the content. We then recognize all of that revenue at the start of the term and so.
Speaker Change: While it might not look like a subscription recurring.
Speaker Change: Agreement in the traditional sense, it really be certainly can become de facto recurring and for us to be Super clear. It has every partner we've worked with today has asked for more.
Speaker Change: Data beyond our initial agreement. So if we continue to build strong relationships by delivering high quality diverse content on time and at the scope and scale, they're looking for.
Speaker Change: We will have effectively a robust recurring business and the other part I might add here is.
Speaker Change: Will we be granting exactly the same scope of Reits today, namely like an AI video training right.
Speaker Change: A year from now two years from now three years from now I can't say for certain I'd say, it's highly likely but what we do know for sure based on decades of.
Speaker Change: Content and data licensing practices as again, if we control high volume.
Speaker Change: There'll be considerable demand for our corpus.
Speaker Change: We also know that the hyperscale or and many others. They don't want to work with hundreds of licenses. They arent today and they want they want to work at scale with a very finite number.
Speaker Change: And lastly, as I alluded to we believe there'll be new grants of rights 12 months from now that the.
Speaker Change: Don't exist today or have not been specifically negotiated.
Speaker Change: So.
Speaker Change: I think our approach is just like we do in other areas of our third party business continued to build.
Great relationships with these companies and continue to look for.
Speaker Change: Many ways to partner with them so that it works for us.
Speaker Change: Our good and I've been ideally for our partners good.
Speaker Change: That's super helpful. Thanks, guys.
Speaker Change: Graduations again Thats a great. Thank.
Speaker Change: Thank you Chris.
Speaker Change: Yes.
Speaker Change: This concludes the Q&A portion of today's conference call.
Speaker Change: Great.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: And this does conclude today's conference you may now disconnect.
Speaker Change: Please wait the conference will begin shortly.
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