CuriosityStream : Prepared Remarks (CuriosityStream FY2025 earnings remarks)

About this update from Curiositystream Inc.

Q4 and FY2025 Earnings Remarks Introduction Tia Cudahy, Chief Operating Officer Thank you, and welcome to CuriosityStream's discussion of its fourth quarter and full-year 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 Annual Report on Form 10-K for the fiscal year ended December 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.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, President and CEO CuriosityStream was built on one timeless idea: that curiosity changes the world-that every breakthrough begins with a question. A thousand years ago, Leif Erikson sailed west into the unknown and discovered a new world. Nearly a millennium later, Neil Armstrong stepped onto the lunar surface, carrying the same enduring message across time: discovery belongs to the bold, and curiosity is our compass. From ocean waves to moon dust, that spirit propels us forward today. In that same spirit of bold exploration, we delivered strong full-year 2025 results: revenue grew 40% to $71.7 million from $51.1 million in 2024, while adjusted free cash flow increased 46% to $13.9 million from $9.5 million. In Q4 revenue rose 36% year over year to $19.2 million from $14.1 million and adjusted free cash flow climbed 33% to $4.3 million. These gains reflect the strength of our complementary revenue pillars-Licensing driven by high volume and heavily structured video fulfillments for AI model training, subscription sturdiness through operational execution and new partnerships, amplified by cost discipline that expanded gross margins to 60% in Q4 from 52% a year ago and reduced nondiscretionary G&A expenses by 33% year over year. In 2026, we believe our annual licensing revenue will exceed our overall subscription revenue. We believe we will grow our subscription revenue by low to mid-single digit percentages because of 3 key drivers: new pricing which we began rolling out March 1, new wholesale and retail partnerships and organic growth from existing partnerships. The recurring, reliable and predictable revenue from our subscription services cements our foundation. Why do we believe we'll see licensing revenue eclipse subscription revenue in 2026? Why do we believe licensing will be robust and durable for the foreseeable future? What is the impact to topline, bottom line and margin expansion? While we've covered some of this before, many investors, analysts and commercial partners tell us it bears repeating. CuriosityStream's licensing business is durable because it is built on assets that are durable, that are scarce, rights-aware, difficult to replicate, and increasingly valuable across multiple end markets. We are not talking about a single opportunistic window. We are talking about a monetization model anchored in premium unscripted and scripted media, enriched structured metadata, flexible rights, and growing demand from AI Developers and traditional media companies. CuriosityStream has built a large, differentiated content library of rights to nearly three million hours of premium factual content plus sports, plus news, plus general entertainment, animation and film, finished and raw, supported by more than 200 content and data partners and flexible licensing rights. This is not commodity inventory. It is a scaled, unscrapeable, curated corpus that took years of capital, relationships, editorial focus and dense work to assemble. Enduring revenue streams are almost always rooted in assets that are hard to replace and expensive to rebuild. Demand is broadening, not narrowing. Beyond repeat business from existing partners, we expect our overall roster to more than double in 2026 and potentially increase 5-6x in 2027, as the fine-tuning of open-source and certain proprietary models opens opportunities for thousands of companies. Historically, licensing meant selling finished programs or packaged rights to broadcasters, streamers, and pay-TV partners. That business remains alive and healthy and in 2025, we announced new licensing agreements with linear broadcasters, educational platforms, digital first outlets, global streaming services, and of course next-generation AI training developers. This diversification makes licensing more durable and cycle resilient. Traditional media licensing is healthy and not going away but AI licensing is accelerating much faster and driving the bulk of our growth here. Over the next five years, AI model development, model refresh cycles, geographic expansion, enterprise fine-tuning, education applications, agentic systems, and multimodal search should all support continued appetite for premium licensed corpora. For our AI licensee partners as their model sophistication grows, so does the need for more video inputs. Developers require large volumes of high-integrity, rights-aware training inputs. Premium broadcast video, clean audio, scripts, captions, study guides, metadata, and derivative assets have utility well beyond entertainment viewing. They help train, tune, evaluate, ground, and improve multimodal systems. The more advanced models become, the more they need high-quality, structured, legally licensable data rather than undifferentiated scraped material. So, key to note that rights-cleared, structured content will become more valuable over time, not less. There is plenty of media on the open web, but much of it is noisy, duplicative, poorly labeled, low quality, or legally ambiguous. By contrast, CuriosityStream's corpus is assembled, curated, and increasingly productized for commercial use cases. The premium quality of our video also helps us stand out as we have video captured with top-tier equipment like RED cameras, HDR formats, and Blackmagic workflows, delivering cinematic excellence with real-world visual depth. This means sharp, high-resolution footage that captures subtle details- from the textures of ancient ruins in history docs to the fluid motions in wildlife sequences. For AI training, this translates to superior data for tasks like object recognition, scene understanding, and generative video. Said plainly, we generate competitive escape velocity through our expanded data structuring and metadata capabilities designed to meet partner volume requirements and bespoke specifications. We are not merely selling files. We are selling usable datasets. That distinction is critical. In AI, a rights-cleared file has value. A rights-cleared file with strong metadata, taxonomy, provenance, segmentation, and packaging has much more value. That creates pricing power and maintenance. Further, our licensing model benefits from operating leverage and the fact that the standard industry licensing practice in the AI space is one of non-exclusivity. I cannot emphasize enough the value of this dynamic. As our critical mass corpus is now assembled and the infrastructure is largely in place, each new partnership carries attractive incremental economics as our hard costs to create or license in content are de minimis We have and will continue to increase our volume through a rev share construct that minimizes costs and risk. We can now monetize the same video multiple times, in multiple forms, across multiple geographies and buyer classes. Of course, durability does not mean inevitability. We have to execute. We have to move the ball forward every day. We need to continue acquiring, negotiating sufficient scopes of rights, enriching metadata, segmenting our corpus intelligently, protecting quality, and packaging assets in ways that map directly to buyer workflows. We need to stay disciplined on pricing and avoid treating the library like an undifferentiated commodity supply. We also need to manage legal and policy developments thoughtfully. But those are execution challenges, not reasons to doubt the model. In fact, a market that increasingly values provenance, trust, and rights discipline should favor CuriosityStream, not hurt it. Our view is informed and straightforward: CuriosityStream's licensing of video, audio, images, scripts, and related data products is durable because it rests on scarce assets, diversified demand, strong reuse economics, and a market shift toward high-quality licensable content. It can continue to grow significantly because we are still early in the monetization curve. It will be lumpy over 3- and 6-month tranches but as Warren Buffet often said - we'd rather have a lumpy 15% than a smooth 12%. Traditional licensing is meaningful. AI licensing is scaling rapidly. And the strategic value of curated, rights-aware, metadata-rich premium media compounds over time. This is why we believe licensing will remain a critical and durable growth engine for the long term foreseeable future. In summary, we believe that we will continue double-digit growth in both revenue and cash flow driven by subscriptions and licensing expansion. We intend to pay 2026 dividends from cash generated by operations, as we did in 2024. Our balance sheet remains strong with over $27 million in liquidity and no debt, which we believe gives us substantial flexibility. I'll now hand the call over to our CFO Brady Hayden who I'm sure will emphasize that among other attributes, at today's share price, we're a growth company that also offers a dividend yield of 10%. Brady Hayden, CFO Thank you, Clint, and good afternoon, everyone. Our full financial results are presented in the back of the press release that we just issued a few minutes ago as well as the 10-K that we'll file in the next few days. But let me quickly go through some of the results that we want to highlight for the fourth quarter as well as full-year 2025. In the fourth quarter, we reported revenue of $19.2 million - at the high end of our guidance - and a 36% increase compared to $14.1 million a year ago. For the full year, revenue was $71.7 million, a 40% increase from last year. Likewise, we reported another quarter of positive adjusted EBITDA, which came in at $1.1 million. This was an improvement of $3.1 million from a year ago, and our fourth sequential quarter of positive adjusted EBITDA. For the full year, adjusted EBITDA was $8.2 million, a $14.3 million improvement from 2024. Adjusted free cash flow exceeded our guidance in the fourth quarter at $4.3 million, which was also our eighth consecutive quarter of positive operating cash. For the full year, adjusted free cash flow was $13.9 million, a 46% increase from $9.5 million in 2024. Licensing revenue was $9.8 million in the fourth quarter, an increase of $6.1 million from last year, while subscription revenue came in at $9.1 million. For the full year, subscriptions were $37 million, while licensing came in at $33.2 million. This was an increase of over $25 million from 2024 and driven by continued growth in AI training fulfillments. Fourth quarter and full-year gross margins were 60% and 57%, respectively, each of these improving from last year. Within costs of revenue, storage and delivery costs increased during the year in light of the high volume of video we put into AI licensing agreements. For the full year, combined costs for advertising and marketing plus G&A were higher by 24% compared to last year, although this increase was the result of non-cash charges for stock-based compensation of $14.4 million, or about $0.24 on a per-share basis. G&A also included an adjustment to payroll costs for incentive compensation as well as a number of one-time expenses associated with our August secondary stock offering. Were it not for the non-cash SBC, the incentive comp adjustment and the common stock sale, G&A would have declined by over $1 million in 2025. For the full year, net loss was $6.4 million, compared to a net loss of $12.9 million in 2024, representing an improvement of over 50% in net loss. While our revenue was up materially from last year, the 2025 net loss was driven by the one-time charges, incentive comp adjustment and non-cash SBC. Were it not for these specific charges, we would have posted positive earnings for the year. And as we said earlier, adjusted EBITDA was $1.1 million in the fourth quarter, compared to a loss of $1.9 million a year ago. And for the full year, Adjusted EBITDA was $8.2 million, compared to an Adjusted EBITDA loss of $6 million in 2024. For the full year, adjusted free cash flow was $13.9 million, a 46% increase from $9.5 million in 2024. This totals well over $20 million in operating cash that we've generated over the last two years. 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. In December we paid $4.7 million for our fourth quarter dividend. Including our 10 cent special dividend paid in July, this brings our total dividends paid to $22 million for all of 2025. We ended the year with total cash and securities of $27.3 million and no outstanding debt, and 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 8% and a current dividend yield over 10%. Given where our shares have recently been trading, we just announced that our board has increased our share repurchase authorization to $6 million, and we plan to selectively resume our repurchase activity in the coming weeks and months. Moving to guidance: For the first half of 2026, we expect revenue in the range of $38 to $42 million and Adjusted Free Cash Flow in the range of $6 to $9 million. For the full year, we continue to believe we'll achieve double-digit growth in both revenue and cash flow which will generate positive full year earnings, and that we will pay our dividend from operations 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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