Q2 2025 CuriosityStream Inc Earnings Call
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Good afternoon. My name is Bella and I'll be your conference operator today.
I'd like to welcome everyone to the CuriosityStream Q2 2025 earnings conference call.
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 1 in your telephone keypad to draw your question. Please press star 1 again.
I will now turn the call over to Tia kahi with curiosity stream. You may begin your conference.
Thank you and welcome to Curiosity Stream's discussion of its second quarter 2025 financial results. Leading the discussion today are Clint Stinchcomb, Curiosity Stream's Chief Executive Officer, and Brady Hayden, Curiosity Stream's Chief Financial Officer.
Following Management's prepared remarks, we will be happy to take your questions. But first, I'll review The Safe Harbor statement.
During this call, 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 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 FCC 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 10q for the quarter ended.
June 30th 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.com.
Unless otherwise stated all comparisons will be against our results for the comparable 2024 period.
Now, I'll turn the call over to Clint.
Thank you, Tia.
The obvious: we are living and operating today in an extraordinary and transformational time in media and technology.
I will talk later about what this revolution means for CuriosityStream. I'd first like to share our Q2 highlights.
Quarterly Revenue grew by 53% year-over-year from 12.4 million to 19 million.
Far exceeding, the high end of our guidance.
Revenue. Also, grew sequentially from q1 by 26%.
Net income was again positive and improved by nearly $3 million year-over-year.
By over 4 million dollars year-over-year from negative 1 million to positive 3.1 million.
Also, exceeding, the high end of our guidance.
More granularly. Our subscription Revenue increase sequentially in our licensing Revenue powered by video and audio for AI training, grew considerably.
In short, our business is strong and strengthening across the board.
Brady will provide more color around these and other key metrics in his part.
Regard to our subscription Revenue trajectory we recently entered into new and expanded multi-year, wholesale distribution, agreements in Asia.
Latin America and the U.S., which we believe will ensure our overall subscription revenue is up and to the right for the foreseeable future.
Further underscoring, our confidence, we recently launched curiosity stream and curiosity University in new international markets, with retail Channel store Partners, like Prime video channels.
We license the Slate of traditional individual titles and series to both new and returning partners.
Pay TV channels and academic Distributors across the US, Europe, Asia, and Latin America.
Today, August 5th.
We Premiere a major series on the world's most influential streaming platform Netflix.
Titans. The rise of Hollywood is a 6 episode premium drama that Chronicles, the extraordinary rise of Hollywood studio system.
driven by the ambition, Envision, the first generation immigrant pioneers
This world-class series Blends power, Scandal, greed, and profound insight into The Human Condition. We're eager to see how it resonates with Netflix's broad audience.
Data set licensing, for AI training in the form of Premium video, audio scripts and study Guides Through substantially. For the third quarter in a row.
In addition to these Premiere, ethically sourced corpuses, we also licensed about 9 million tokens of code.
Code for the first time ever.
While video sits firmly at the top of the data set leaderboard in value and demand, licensing of content is a testament to the value of controlling rights to all manner of IP for licensing. It is also an illustration of the principle "land and expand," which we are doing and will continue to do by over-delivering and delighting our partners.
We were asked frequently by investors and content partners to help them better understand the lifespan and durability of data licensing for AI training and other initiatives.
Is this recurring? They asked.
Is this 1 and done?
Do you know how many millions or billions of Video hours are needed?
What is your mode?
What happens if you run out of video? Aren't you concerned about legal and regulatory issues?
What will be the impact when the biggest Studios move into this area?
Will synthetic training data replace data?
Is a good and important question and will know 1 can perfectly predict the future.
We have a tight team who has spent the last 16 months working on, making cury. The dominance AI video. Licensure
This work has been done.
Hands-On day by day partnered by partner shoulder to the wheel.
Well, we have many unique advantages for critical ones are 1.
Our deep and curated Global premium video and audio library 2, long standing relationships with rights holding premium content, producers around the world. 3 programming Services worldwide. That we are simultaneously feeding and number 4.
something that really sets us apart the technical capability to, now structure, our data, in a superior manner to our peers,
We believe we've had more conversations across the licensing and models training, ecosystem than our competitors.
And we've translated these conversations into executed Partnerships.
Our perspective isn't theoretical. It hasn't come from commissioning and overpriced, McKenzie study.
Or from spending time in the El faculty launched. Our point of view is rooted in Real World experience in deed.
Every new type of business model tends to go through a period of early, chaos and uncertainty. But eventually the Cloud's clear, the Blue Sky presents itself.
In regard to the questions I cited earlier.
We know that large-scale AI models, require enormous volumes of video data for training.
simply put as they become more advanced, they need to be fed more
Scaling laws and AI, show that additional video, improves accuracy, and generative capabilities, even with diminishing marginal returns.
AI companies not generating. Continuous performance gains. They are losing.
Further freshness and recency are critical because cultural trends. Products and virtual references are constantly evolving
In other words, models need ongoing updates to stay relevant and avoid obsolescence.
As to synthetic data, it is incomplete.
Simulated video can augment real data.
But doesn't fully replicate real world physics actions for the diversity and context of authentic video and data.
We believe the market for high-quality ethically. Sourced rights, cleared video and audio content is incredibly durable.
And only growing for the foreseeable future.
We are reviewing real video and audio rfps.
So we do have some insight into the quantity requirements, millions of hours.
And category and structural imperatives.
Everyone should do their own research, but there are estimates that the industry-wide need for video could range from billions to tens of billions of hours.
Some of what I just shared, may sound a bit like Consultants speak.
I'll speak more plainly to the recurring nature of this business.
Everyone wants seconds.
And thirds.
And some already force and fits.
From working to treat our partners on all sides of the equation, like gold.
Will you run out of content to license?
No chance.
Just as painters are always painting the Golden Gate Bridge, always it, never stops.
We are similarly continuously creating and acquiring content for our streaming services and channels around the world.
Further the hyperscalers and the many other AI companies who are and who we believe will license video for training.
Want to work with Partners who control a highly reputable, critical mass of content.
They tell us that this typically means a minimum of several hundred thousand hours.
A long-term durability and recurring nature of this revenue, is further sustained by the additional monetizable grants of Rights.
That are emerging and will be required to be clear. We are granting today only a training, right?
In the future. We will negotiate and license additional monetizable writes. A few examples include display rights.
Certain derivative rights transformative rights.
Certain reproduction rights and adaptation rights. Another near certainty is that we will be asked to license rights in the future that we haven't even contemplated today.
Another common question.
What is your MO?
Most obvious tangible moat is our Superior volume of Premium rights. Cleared content available for license.
The largest studios have libraries of 100,000 to 225,000 hours.
We have control of and access to exponentially more hours than that, and our volume is growing every day.
In addition, our ability to structure, our data, gives us a real competitive advantage.
I'm referring to our ability to clip index label and annotate it scale.
Hundreds of thousands of hours into any segment length in a very short time.
To index to annotate and again, to label it scale.
Think traditional metadata on steroids, but steroids wildly more powerful than the ones, given to the best Eastern European jablin throwers.
This structured metadata makes the content we Supply, that much more valuable to our licensee partners.
In tangibly, it's also simply action, action, action.
Enhancing our existing relationships and building new ones.
as we have done, and as we continue to do the hard foundational work,
We're well-armed to execute at a scale. We think Beyond potentially anyone in the space.
Again, I'm referring to our ability to structure our data clip index label annotate.
we are now able ourselves to create this type of metadata for our content that we would not have thought possible, even 3 or 4 months ago,
This metadata makes the content we Supply. That much more valuable to the AI licenses.
Lastly, on this topic, it's critical to be able to distinguish between signal and Noise.
All of us. A deluge every day with viewpoints around AI, from seemingly every information source,
Like legal and Regulatory concerns.
What did the president just announced?
What did the ai's are David sacks say on the all-in podcast?
Well, your job be replaced.
What are the threats to humanity and our personal security that we need to address?
How do we keep the god in the box is China, beating us in the race?
For our purposes. 99% of this is noise. Meaning irrelevant or distracting data.
Now more than ever, we will be successful by simply focusing on the signal.
The meaningful information, we need to detect and understand and act on in the direct service of our business objectives. Namely meeting the licensing needs of our AI partners,
We see in here, the signal we will not be distracted by the noise.
Over the past Century value, creation media has consistently migrated to those able to capitalize on Paradigm shifting innovation.
The first TV broadcast in 1928, the global satellite link of 1967 that brought billions together to watch The Beatles.
And the cable and dth in the late 20th century to the rise of YouTube in 2005. And Netflix is streaming model in 2007.
Every new wave, Crown new leaders and less slow. Movers behind.
Today, as we enter the mid 2020s, we are standing at the threshold of the most profound disruption and advancement yet.
It's not an iteration it's a redefinition and 1 that will surely bring about a reordering process many if not all Industries.
Looking ahead to 2026. We have Curie our confident. In 2 Dynamic 1,
We will license more video and data than we did in 2025 and 2, we will be the or among the dominant licenses of video for AA model training.
In closing, we believe our strong balance sheet.
And no debt.
And our continued double-digit growth in both Topline revenue and cash flow.
Our leadership and AI video and data licensing. Our library of over 1 million hours of video
In our 32 Cent, annual dividend position us as a high performance outlier amid a historical technological Revolution.
The rapid acceleration of AI is not just reshaping Industries. It is redrawing. The competitive landscape.
We Believe curious uniquely positioned to capitalize on this shift.
Our Diversified revenues from subscriptions licensing. And advertising are expanding ecosystem of technology and Media Partners.
And public market currency, create powerful, operating leverage and optionality.
Simultaneously, our disciplined cost rationalization efforts ensure efficiency without compromising growth.
Over to you, Brad.
Thank you, Clint and good afternoon, everyone.
Our full results will be presented in the tin cue that will file in the next day or 2. But let me quickly go through some of the second quarter results that we want to highlight.
Clint said, "In the second quarter, we reported revenue of $19 million, exceeding our guidance and representing a 53% increase compared to Q2 2024."
Continue to generate net income in the second quarter with earnings coming in at 0.8 million.
Or 1 cent per share.
And a 2.8 million improvement from 2024.
Likewise we reported another quarter of positive adjusted EBA which came in at $0 million and Improvement of 4. . M, i l l, i o n
Adjusted free cash flow came in at 2.9 Million near the high end of our guidance range and an increase of 0.4 million compared to last year.
This also represented our 64th consecutive quarter of positive adjusted free cash flow.
Revenue for the second quarter was led by content licensing which came in at 9.3 million and increase from last year of over 8 million dollars, driven by significant new business from AI licensing.
Our subscription Revenue which we consider our D Toc partner direct and bundle distribution revenues was also 9.3 million in the second quarter.
This was a 1.7 million decline from last year but a sequential increase from q1. A trend that we believe will continue.
Second quarter, gross margin was 53%, a slight improvement from 52%, a year ago.
While we're seeing continued reductions in content amortization, our cash costs of Revenue. Increased slightly
A result of growth, we're seeing in the licensing of content that we have acquired through Revenue, share arrangements and Associated Storage costs.
Regarding other operating expenses, combined costs for advertising and marketing, plus G&A were down 8% compared to last year.
as we continue to benefit from our ongoing costs, rationalization
And excluding stock-based compensation GNA, decline 10% from a year ago.
As I mentioned earlier, adjusted ebit da was $3 million in the second quarter compared to a loss of $1 million. A year ago.
And adjusted free. Cash flow was 2.9 Million in the quarter compared with 2.5 million a year ago.
In June, we paid dividends of 10.4 million, including our ordinary Q2 dividend of 4.6 million.
As well as a 5.8 million special dividend.
And at yesterday's closing price our shares currently provide for about a 6 and a half percent dividend yield.
We ended the quarter with total cash and securities of 30.7 million and no outstanding debt.
We believe our balance sheet remains in great shape. And that this provides a significant operating flexibility.
Looking forward for the third quarter, we expect Revenue in the range of 15 to 18 million and for 2025 we expect adjusted free cash flow in the range of 11 to 13 million for the full year.
With that, we can hand it back to Bella and open the call to questions.
Number 1 in your childhood keypad, we will pause for just a moment to compile the Q&A roster.
Your first question comes from the line of Laura Martin with Needham. Please go ahead, your line is now open.
Okay, great results. Congratulations you guys.
Thanks Laura. Thank you, Laura.
North lakash. So my question close is, why are you in the media business?
The core media business, which is why we inform you that.
It's a great question. Laura, and I appreciate
um,
I think we're in the core media business because we have a
subscription video on demand business, that is strong. You know, that that is global. Uh, that is durable and I think represents the core of who we are as a company. Uh, and so
I think you may be asking, like, okay, if you're doing this type of, you know, technology licensing, you know, why are you know, why do you continue to do this? And our answer is all of this Works hand in glove, all of this works closely together. I mean, the the vision that we have for curiosity over
the near Mid and long term, Laura is that we will have 3 solid Revenue pillars.
Subscription business.
A licensing business.
And an advertising business. We believe our subscription business will grow steadily. We've done a lot of work to enter into certain wholesale agreements. And other agreements that we believe really firm up the foundation, and put us in a position to grow steadily. So we believe subscription will grow steadily licensed thing. We believe will you know, grow rapidly and it's certainly a high growth area and then advertising which for us is still nent. I think holds significant steady and high growth opportunity over time and I say everything works together.
Because the reason that we're able, the reason that we've been able to build such a large library for AI licensing is because of all the existing relationships that we have around the world with producers and Distributors. We're constantly acquiring content, you know, for you know, 3 subscriptions services for our linear pay TV channels for avod for fast and so
because we're doing this because we have you know the people in place, the process is in place to do this. It's not a huge extra lift to add on, you know, the ability to um to license AI writes or you know other rights as well. So we're in it because it all works, it all works hand in glove, it all works together, and I think it'd be very difficult to be in just 1 of these today.
Okay. And then what are the extra costs? So they sent you start aggregating, more and more content and Licensing. To a broader slot of people, they all have different needs, they all have different Tech Stacks. What are what are we should? We expect to see the cost increases happen as you pivot more towards this type of Licensing? For Implement 1 of the things we're very proud of is we've amassed a library of over a million hours of content, uh, primarily on a REV share basis. So what that means is, uh, as we license our content, you know, obviously, if it's our content, there's 100% margin. If it's our partners' content, we're paying out a piece to them. And so, you know, it's
Maybe 40 to 50% margin, something in that in that frame. So our approach, you know, because
Because as we got into this, you know, we knew a couple things, we knew that we were going to have to amass a lot of content in order to make it a a meaningful uh business. And, you know, we knew that we need to work with a lot of Partners, but at the same time, like,
You know we also have told you and many other people that we're going to run a profitable business. So we need to do all of that in a way that didn't layer on cost to our business today, so we can continue to amass content like this over time. What would it make sense for us to, you know, pay outright for certain, you know, large libraries that are available. We'll look at that, you know, as a, as an ongoing basis, but essentially, right now, you know, the only cost that we see going up would be, you know, storage and delivery costs to some extent. But you know, the grand scheme of things, those are relatively diminished.
so, like hosting costs and R&D costs and
Things that doesn't add a lot to the concept, but it does not. It does not Laura. We're, you know, we're pride ourselves on, you know, being a, a tight company of, you know, 42 full-time people. And you know, I think, you know, over the course of this year, we'll be at, you know, Millions 5 to 2 million dollars per employee in Revenue.
Excellent, thank you.
Thank you Laura, much appreciated.
again, if you would like to ask a question press star 1 on your telephone keypad,
Your next question comes from the line of Chris total with IPO. Your line is now open. Please go ahead.
Um, 1 thing you did say that surprised me. Uh, Clint is you said something about uh code and I guess I wanted to understand a little bit more about, you know, what that is and and how that, you know, if that's something that we should be looking for more of in the future and um, you know, that that's pretty interesting comment.
Yeah, thank you for asking Chris. Uh,
you know, as we began licensing data for AI training. You know, we took a look at what we had and we took a look at the industry and obviously like video. As I said that sits you know, that's at the top of the leaderboard in terms of value. Uh, in terms of demand, You Know, audio is kind of underneath that. Um, images, you know, study guides scripts, those are valuable as well. But we did also have code and in the early in the earliest days of uh AI training licensing, there was a lot of code that was straight that was scraped from the internet sites like GitHub. There was also some
Uh, sort of, you know, proprietary code. That wasn't there that people licensed out. I never thought in a million years to be honest with you that we would be able to license our code. But you know, we've included it in our sales materials with, you know, a number of different partners. And so you know as as we build relationships with these companies and you know, as their needs evolve and change, it is something that we have, I don't, you know, I can't really speak to the the long term value of it, but the long term nature,
I just think it goes to the value in owning and controlling. Uh, good IP. That's I think the, the big Point here and you know, that's why I think if you control, you know, millions of hours of video and other data, um, there will always be ways to monetize that. And I just point this out as something that is, it's just kind of unique, you know, unsuspected and representative of something else that I said, like, you know, I've talked about these additional rights that were monetized. I think it's in addition to potentially data that, you know, we're not aware is valuable. I think there will be, you know, additional like licensing rights that we haven't even contemplated today. So hopefully that's helpful.
Yeah, I mean, 1 slightly expanded follow-on question there, which I guess, gets a little bit into what Laura was bringing up. Um, you know, there's entertainment content and then, you know, there are
I can't even tell you how many millions of hours of
training video content has been built at very high levels of quality, for instance, in the hospitality industry and um, you know, things like that. Are those areas that you're currently
Involved in how, how significant, I mean, is that on the road map, I'm just trying to gauge, um, you know, where that is on the, the timeline I think that's a, it's a really good question. Chris. And, um,
We're not actively looking at that right now. What what we're primarily focused on amassing in the video? Space is obviously you know, continuing to
Build out or a massive factual entertainment library, but you know, it's part of this, we've definitely increased our scripted content, meaning, you know, General entertainment, movies series, animation kids, we've increased significantly our, our Sports content. Uh,
And you know, we we've increased significantly, some of our audio content as well. So as it relates to those those types of videos whether they're promotional or instructional, I think I think they could absolutely have value. Particularly if they've the, the challenge comes have, they been in front of the pay wall or behind the pay wall. So a lot of that content if it's, you know, free running around on the internet, you know there's a good chance that it's already been trained on at the same time, there is a whole lot of video to your point outside of what traditional media companies own that uh that has value in the licensing space. And if you believe that, you know that these models will need billions or tens of billions of hours of video and you know, it certainly can all be
Uh synthetic and they can't, you know, all be stuff that's uh, been freely available in the internet. It could definitely have value.
Yeah. All that stuff is is, you know, 4 Seasons, doesn't put that stuff, you know, outside of the pay wall, right? Um yeah, so so it becomes it, it does become a value, you just need a lot of it.
Right. All right. Well, listen. Thanks a lot. I will uh, stay tuned for the queue and after I go through that, I'll I'll Circle back with you guys. Uh, in a few. Thank you for the question. Chris.
that concludes our Q&A session, ladies and gentlemen,
Okay.
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