CuriosityStream : Prepared Remarks (CURI Q3 2025 Earnings Prepared Remarks)

About this update from Curiositystream Inc.

Q3 2025 Earnings Prepared Remarks Tia Cudahy, Chief Operating Officer Introduction Thank you, and welcome to CuriosityStream's discussion of its third quarter 2025 financial results. 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 will be happy to take your questions. But first, I'll review the safe harbor statement. 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 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 September 30, 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.curiositystream.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. Clint Stinchcomb, CEO Thank you, Tia . We delivered strong Q3 results: revenue grew 46% year over year to $18.4 million, exceeding guidance. Adjusted free cash flow rose 88% to $4.8 million, and adjusted EBITDA improved by $3.4 million year over year. Our three complementary growth pillars 1) subscriptions, 2) licensing, and 3) advertising are driving momentum and strengthening CuriosityStream's position at the intersection of knowledge, media, and AI. I'll briefly recap the underpinnings of Q3 and then look ahead to 2026 and beyond. Licensing revenue increased over 400% year over year, reflecting the strength of our team, demand for our corpus, and the trusted relationships we've built with both traditional media partners and hyperscalers. We engaged with nine key partners across video, audio, script, and code and delivered over 1.5 million distinct assets. To achieve dominance as a provider of AI training data, we've assembled a nearly 2-million-hour library of video and audio across multiple genres -- content that largely cannot be scraped from the open Web. We've also expanded our large-scale data structuring and metadata capabilities so we can meet partners' volume requirements and bespoke specifications for high-integrity, enriched datasets. In parallel, we broadened traditional content partnerships with leading global broadcasters, streamers, and pay-TV networks, including AMC, Netflix, Foxtel, and a range of licensees across Asia. Overall subscription revenue, retail and wholesale combined, was down year over year but increased sequentially every quarter in 2025. Importantly, our sequential growth in subscription revenue has been driven by daily operating focus, not simply by implementing price increases like many subscription services. In Q3, all three of our subscription services launched with partners in key English-speaking markets -- the U.S., Australia, and New Zealand -- as well as our top non-English market, Germany. Extensions with partners like Amazon and new, multi-faceted agreements with partners such as TMTG further support this growth trajectory. While not yet a separate revenue pillar at scale, we continued to build on the solid foundation of our advertising business. Our U.S. Hispanic and flagship FAST channels recently launched on Amazon, Roku, LG, and Truth+. We also launched a two-hour branded block on Estrella TV's free-to-air broadcast channel, an initiative we plan to replicate with additional partners. Given the quality and volume of content we control, we see meaningful advertising and sponsorship opportunities across FAST, AVOD, social, pay-TV, and free-to-air. To thoughtfully capture this opportunity, we plan to install a proven leader to run the business in early 2026. We are particularly proud that adjusted free cash flow increased 88% to $4.8 million this quarter. This reflects a focused growth strategy and a sustained commitment to rationalizing our cost base, especially hard, largely non-discretionary costs. Cost discipline is a strategic advantage; one that supports pricing power, resilience, and durable growth. Despite higher storage and delivery expenses from managing a large content library, we more than offset those increases through disciplined expense management. Looking ahead, while we are not yet providing guidance for 2026, we expect overall subscription revenue (retail + wholesale) to grow faster in 2026 than in 2025, supported by a strong launch pipeline and new pricing and packaging across our owned services, including our premium tier. We anticipate high-growth licensing to continue and believe licensing will exceed subscription revenue in 2027, possibly earlier. We expect significant year-over-year growth with existing partners and believe our roster of AI licensing partners could double or even triple in 2026. Beyond training, we see additional monetizable grants of rights becoming part of our agreements. Given the quality and scale of our corpus, which we expect to more than double in 2026, and our ability to structure and deliver data at scale, we believe we will solidify our position as the leader, or among the top two or three, video licensors for AI development. In summary, we believe that we will continue double-digit growth in both revenue and cash flow driven by our three complementary pillars -- subscriptions, licensing, and advertising -- while continuing to improve efficiency. We intend to pay 2026 dividends from cash generated by operations, as we did in 2024. Our balance sheet remains strong with over $29 million in liquidity and no debt, giving us substantial flexibility. At today's share price, we're a growth company that also offers a dividend yield of well over 8%. It's an exciting time to be in the media business. Opportunities abound, and we intend to swarm them... with discipline. Over to you, Brady. Brady Hayden, CFO Thanks, Clint, and good afternoon, everyone. Our full results will be in the 10-Q that we'll file in the next day or two. But let me hit some of our third-quarter highlights. As Clint said, in the third quarter, we reported revenue of $18.4 million, exceeding our guidance, and a 46% increase compared to $12.6 million a year ago. Likewise, we reported another quarter of positive adjusted EBITDA, which came in at $3 million. This was an improvement of $3.4 million from a year ago, and essentially flat from last quarter, which was a record quarter for us. This was also our third sequential quarter of positive adjusted EBITDA. Adjusted Free Cash Flow came in at $4.8 million, an increase of $2.3 million compared to last year. This also represented our seventh quarter in a row of positive adjusted free cash flow. Third quarter revenue was led by our subscription business, which came in at $9.3 million, a sequential increase. Content licensing came in at $8.7 million in the quarter, an increase of over $7 million or 425% from last year, driven by continued growth in AI training fulfillments. Looking at our year-to-date numbers, licensing generated $23.4 million through September, which, in perspective, is already over half of what our subscription business generated for all of 2024. Third quarter gross margin was 59%, improving from 54% last year. We continue to see reductions in non-cash content amortization, although our distribution and storage costs have increased slightly due to licensing and acquisition of content through revenue share arrangements. Combined costs for advertising and marketing plus G&A were higher by 52% compared to last year. This increase was the result of a non-cash charge for stock-based compensation of $7.0 million, or about 12 cents on a per-share basis. G&A also included a number of one-time expenses associated with our August secondary stock offering. Were it not for the non-cash SBC and the common stock sale, G&A would have declined in the quarter. We reported a third quarter net loss of $3.7 million, or 6 cents a share. This compares to a $3.1 million net loss in the third quarter of 2024. While our revenue was up materially from last year, the net loss was driven by the one-time charges and non-cash SBC. Were it not for these specific nonrecurring or noncash charges, we would have posted our third quarterly net income this year. And as we said earlier, adjusted EBITDA was $3 million in the third quarter, compared to a loss of $0.4 million a year ago. Adjusted free cash flow was $4.8 million in the quarter, compared with $2.6 million a year ago. And through the first nine months of 2025, adjusted free cash flow was $9.6 million, which is more than the company generated for all of last year. In September we paid our regular $4.6 million dividend, and we ended the quarter with total cash and securities of $29.3 million and no outstanding debt. We believe our balance sheet remains in great shape. Based on yesterday's share price, CuriosityStream is generating an adjusted free cash flow yield of over 7% and a current dividend yield over 8%. Also, just after quarter end on October 14, 6.7 million of our warrants expired unexercised. While these warrants had been trading well out of the money for some time, this expiration of all the company's outstanding warrants reduces potential dilution and should eliminate any lingering share overhang associated with these instruments. Looking ahead, for the fourth quarter, we expect revenue in the range of $18 to $20 million, which would imply full-year 2025 revenue in the range of $70 to $72 million, or a 38% to 42% revenue increase from 2024. We expect fourth quarter adjusted free cash flow of $2.5 to $3.5 million, which would imply full-year 2025 adjusted free cash flow of $12 to $13 million, or a 27% to 37% free cash flow increase from 2024. We're not yet providing guidance for 2026, but we believe that our top-line and bottom-line growth will continue into next year. And although we're obviously using some of our cash and investment reserves to pay our dividends in 2025, we intend to fully cover our 2026 dividends from operating cash, as we did in 2024. With that, we can hand it back to the operator and open the call to questions.

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