CuriosityStream (CURI) 9 Nov 232023 Q3 Earnings call transcript

Hello, and welcome to the CuriosityStream Q3 2023 Earnings Call. [Operator Instructions]

I will now turn the conference over to Denise Garcia, Investor Relations. Please go ahead.

Thanks, Jill. of quarter discussion financial CuriosityStream's to its XXXX third results. Welcome Stinchcomb, discussion Chief Executive today the CuriosityStream's Financial are Curiosity Leading Westley, Clint Chief Peter Officer; Officer. and

questions. be management's statement. harbor to Following we I'll will remarks, take the prepared your But safe first, review happy

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

actual be forward-looking expectations only, statements. management's in Our statements no differ in reflected these to from views update undertakes nor results materially statements aware the could make obligation future. any forward-looking or forward-looking to and current statements Please the company any revise that reflect additional

risks and important filings the Relations our that press refer For factors affect results, discussed in website of SEC website release. to well other our the our today's a SEC on discussion and the other risks actual and please as important Investor factors as on material available could

on also Additional report our quarterly when quarter XX-Q XX, for forth the in will be ended filed. set September information Form XXXX,

comparable will found these non-GAAP reconciliation to be non-GAAP reference can on measures financial A measures measures. addition, In our made website investors.curiositystream.com. to GAAP be of at

the turn to I'll call Now Clint. over

our this and Westley. afternoon. Peter on COO today. are call I Tia CFO, me good Denise, with our Cudahy; Thanks, General appreciate us you joining Also all and Counsel,

a our quarter This the we new quarter. revenue to our existing XX%. adjusted $X by our us pricing We flow free our second XX% by was sustained to profitability. subscribers. to million, approximately spend fourth we to of marketing burn plans as cohort good another We well quarter and introduced grew new straight sequential our for for We actually customers a as direct increasing cash cut closer improved move cash in

September, channel for up end as as through it partners take began store beginning top now our will with NAVOD [ in we we in broadcast agreements to the not into our renewal the X roll to content, follow-up fully monetize our through marketing seasons and partners America. of Forever X growth as week-over-week expand funnel [ order our As top initiatives further announce AVOD the first for adopt the advertising anticipate of And U.S. rolling with ] with have our [indiscernible] just promotion package [indiscernible]. of most annual out we Fourth with September entered are we subscribers to date. for and Also leaned [indiscernible] and the come of are our long-term XXXX pricing, remarks We launched of price licensing several North in new time we a in into and the increase to in Europe and the increased ]. and the delighted distributors syndication

durability across believe large grow for We that report store partners Bundle and library we increase previous have I'm quarter we environment predictability reliability, channel was enhance helping and are than hours our globally a delighted In that more years. services. evergreen Smart have platforms a regard where now of revenue and that or most services, up real real our in ODU of that in in is our grew a forward. both direct content, work to growth ARPU challenge putting are to will dozens CuriosityStream to going the of revenues revenue, appealing new we us streaming

licensing, content inherently significantly from increased lumpy QX. Traditional area,

cash. advertising we'll vehicles which leverage reliable, suited is no believe move durable require to into As and and we that work is to aggressively uniquely we predictable, add revenue lumpy, we additional less that substantial, are that more

We've initiatives. and categories where channels prepared distribution leadership additional history, AVOD mentioned kids, XX ad and motors, the we also of our the science, genres for as nature, factual I broadcast of and hold syndication free-to-air fast position. X

audience we of grow Additionally, today and we first our A very channels. will terrific team upside. help believe business piece small be working a to YouTube that our offers with significant

The last We TV subset with the several in mention advertising is distributors. our a run currently initiative spot will pay light small up I more linear TV play of pay advertising. XXXX. We

we None initiatives simple ensure we will help these to [ these ]. costs overall are and and company. tied of CPM significant and durability of of the that metrics, improve cumulatively, ratings impressions, believe additional require growth our All they

role reducing these should marketing a paid platforms in on reliance run. Lastly, play the long in our across our presence key heightened

couldn't Well, our march in Peter an cash our financials later quarter the third greater will milestone discuss be in toward I more within call. free about impairments flow, reach. adjusted broader positive certain enthusiastic important in our detail noncash

that profitability. G&A reductions reducing both our cost cost-effective QX that mass titles has And strong targeted [indiscernible] annual critical have additional we variety we acquisition fortified in cost to strategic Through spend, our initiatives. level of over [indiscernible] to further we're our us a lines, XXX adding expense library content within enabled and will significantly drive through revenue of genre while by and a opportunistic a flexibility cost and

survive the which in at different terrific Queens history. series with some light species [indiscernible] that a details X-part series, series, the into partners include of sheds As on the from and mysterious top events; the behind the Ancient Egypt, brand a journey to of women weird, Bits, is definition fast-paced surprising history's most powerful content, of at the Nature's X-part original salacious The wild Interesting Miracles, our ways of our collaborate original highlights and secretly biggest History: and premier new quarter Hidden the NHK; X-part look many

a second cast captures In chimpanzees and season also release effort back Rescued an premiered with Congo to Goodall, Jane Jane of a [indiscernible], orphan amazing wild. August, decade-long Chimpanzees the of in we the final the of steps and which into rehabilitate

producers, of story science the dramatic and and for latest Hunt big Studios factual with to Nazi cutting-edge commissioning First new our and In the breakthrough, to released U.S. of episodes asteroid. an the great its the Jet from from a originals, first the AI strike where of predictions work slate Curiosity when in everything will addition next of to little-known [indiscernible] and cover own mission our including covering the earthquake sample advances collaborative

forward, Amazing X things Burke. by we're and our man Looking of ]. today's by hosted world's the all [ really smartest James [indiscernible] consider modern about Dynaweek Dynasor of of historic by ], the celebration and DinaWorld of [ the ] connections. upcoming all [ The Premier excited anchored premier series Many

business media existing past. and overspent, some have additional workforce We close trying that many of transitioning and In sharing premium next We film Let companies slowdowns we've [indiscernible] environment what by where position. consumers have in content me said course that [indiscernible] our [indiscernible] affected believe and correct. higher [indiscernible] are light in to production factual roster value In the the the place year. will possibly stability brand-safe buyers on of XXXX third-party relationships. like

and foundation our that to direct and our provide strong currency, of subscriber multiyear a us continue that firm public and deep our uniquely position, platform, direct content base our broad and cash favorable We lack our believe our attributes flexibility. debt, partner our with exceptional library, agreements,

room. and Peter. in to my I'd Over like you, baton many friend the smartest Burke, James pass We to consider the like colleague, our to Peter. now man

much, Thanks Clint. very

high progress flow adjusted both of delivering the our good quarter. our our continue end to financial our free commitments positive on third the while Result strong flow on third revenue in and near-term above make path came of adjusted execution, ranges. cash We during guidance to quarter cash

investments. We while customer continue remaining to control tightly in acquisition expenses our disciplined

quarter quarter negative third third bundled straight Revenue was this distribution enterprise free the of compared we our intense million revenue, by the adjusted quarter result cash focus fourth improvement able line. as in from our bottom revenues. results. year free flow negative This $XX.X quarter. prior million sequential to to in in flow. driven content in was decreases in improve Turning year-over-year Despite change our quarter this $XX.X and year our to year's of adjusted were $XX.X $X million cash million a on our in to prior was licensing, The decline primarily

This are year. sequentially $X.X up Direct our relatively place revenue the flat. of in impact our was million, revenue came revenue year-over-year basis, category we put On see X% business. a this earlier to this direct increases quarter as was starting price in at direct

which with category. an and part QX quarter content us compared of licensing, comparison prior quarter. generated We revenue business, Turning our in $XX.X million this second revenue lumpy revenue was licensing as category Content quarter. was the to for the an exceptional a is this XXXX this quarter of inherently million tough faced we of largest year in $X.X

stream licensing on $X.X industry, time of a into us to bring quarter. the to those revenue raise sheet, assets content like based are the that to services delivered with about we to out we recognize this increase curiosity content One cash without these, our that corresponding value noncompetitive thing related deals partners. be content distribution we additional our on our in QX swaps allow to content quarter million content during that of should media the our fresh XXXX barter spending common entered is and Content the which to pointed in we receive awareness In generally revenue balance of channels. transactions, these our content at through the the deliver for partners related

quarter revenue revenue quarter was the grown we renew bundled in of which category related If the in $X.X $X.X bundled did of not we would revenue X% in largest have of quarter. year-over-year. XXXX million third the contract next distribution revenue third distribution, Our a deduct million to the year, quarter third from that last generated

driven content quarter from XX.X% Third year stronger licensing increased prior in quarter gross margins. of the XX.X% margin by

we dollars. million down advertising quarter XXXX rigor or of down customer third discipline million expense in million $X.X third XX% and exercise quarter year-over-year. G&A continue expense year-over-year, deploying of marketing $X to our acquisition X% of and analytical during and was $X.X the was Our

charge Also my later third expenses was noncash our quarter included a discuss our operating will I $XX related content million the to impairment which in of comments. assets, in

otherwise of result which EBITDA to would benefit we will amortization adjusted upcoming a charge, expect this the As case, income lower expense net moving than our be have forward. been

Moving Adjusted adjusted the loss was million of million, million impairment the calculation quarter. to prior charge an EBITDA $XX EBITDA compared excludes loss $X.X which profitability. noncash to of in year $X.X the

which transactions. XX%. or excludes content quarter million million have $X.X million XX% the a spend reduction content, $XX.X spent in content we spent $X.X cash with $XX.X million benefit prior or mass of XXXX, built. library with first we content was million cash $X.X year quarter as added Year-to-date, Third compared on critical cash from of down we the continue through barter X the on quarters all of content compares that to of That on of

flow cash $X.X $X free Adjusted use year-over-year. million of improved million

adjusted improving free underscores sequentially cash of quarter consecutive toward momentum fourth flow continued our positive represents and free cash adjusted this previously, mentioned flow. I As our

to seriousness additional order and In XXXX. of relative million XXXX management our been these has planned than our This spending levels cash in demonstrate will implementing this Directors, by and objective, this reductions of quarter. identified for about for changes approved has our expenses begin spending expected Board we plan to $XX more achieving

Due our which at to third identified us assets, impairments. resulted the and price -- of we accounting less content led $XX market in method impairments our balance a of in That Nebula asset outside indicators equity and our in the investment and investments cash valuation than assets for accountants. to value quarter, experts the led respective decline assess of asset in the to our $X.X assets was million. method consultation each by million share of during with equity content quarter end, including analysis That that by to our our noncash guidance capitalization led under

Curiosity's quarter in our of business we these between to as the nonrenewal of not $XX.X impairment and investment with Nebula, million balance was XX, $X.XX adjustments, impact liabilities sheet the partnership of We or million does Nebula was and Change position due noncash believe relationship in $XXX XX.XXX% which equivalents $XX share. great in approximately no The book and $XX assets, primarily outstanding total marketing of of restricted cash official value September cash, ended CuriosityStream. Nebula our of After in and of XXXX. our cash remained per ownership million million overall debt. the shape with

our a solid prior that I reflect there. a revisit for guidance, trough Before to third XXXX to to quarter execution believe improvements be taking second QX would we thought look flow. build turn as revenue as worth us be our it both delivered and free comment and would from We adjusted sequential significant we I cash in moment results

guidance. quarter fourth our to Moving

million factors. third $XX quarter negative adjusted due $XX fourth and to We range the million cash in the to expect seasonal $X.X cash million to of Relative flow adjusted in to negative quarter, we revenue range free million. of the to slightly expect free flow primarily decrease $X.X

guidelines on compared content will we we items be to for certain the to previously to I'd the range expense $XX that expect laid also now like cash million revisit spend $XX We -- to $XX year. that million for as out the million guidepost previously to in communicated. range the year million our $XX related

expect last content the we we year $XX $XX content third compared million addition, to million to in discussed In for the assets million as range impairment to quarter million to amortization excluding $XX the be $XX we of quarter. took

range tightening million of be provided million in full $XX the $XX expect range, $XX to a which previously. million million and We expenses $XX is the year to marketing advertising to

questions. operator, that, open to With call the let's

Instructions] Davidson. from Tom question comes the first of [Operator line of Your D.A. Forte

one So follow-up. question, one

talked talk the in prepared -- -- what's just, I when then intending of you go-forward remarks, you you sales when when agreements? to margin you into do, want to barter versus, decide to not outside guess, basis? that more agreements? do can end you sorry, of the or a don't Are you not on those enter say to barter in little about I relative decide but bit So a And regular sales whether

me you and Tom, glad speak asked the can question, to Really of Peter and the why specifics. that some let take

extent, to tap opportunities marketing needed as we're answer profitability summary trying to spending new lesser into a and to So much quickly we because that without get to cash as obtain content possible. is

the XXXX. same losses WBD staggering. only think, $X you're billion the this Disney's million are $X I only subs Tom, billion subscription sure they've I'm may in over as counterparts, million Netflix, ballpark X quarter billion in business NBCU from losses they and third. aware, of initiatives. $X spent the become lost over since their happy and but streaming well lose under streaming as As reported lost the in as direct-to-consumer because nearly NBCU's challenging year. has hasn't much second $XX pretty their Paramount more outside the over, just

go maybe are to going or all under trying in other zero bankruptcy together. And of who streaming some probably significant certainly players to will -- and some grow some the space subscale form services

time, it. on tough it's market, So tough but it's a we're of a top

cost key first the so And the Peter as said. is to rationalize base,

doing We So like what know of that. many we're core take and we [indiscernible] out cost and can doing G&A it. programming, and we're

of the variable most and costs, which programming, business. subscription Our both are important in direct of course, marketing

direct-to-consumer acquisition So about business, a is of There's revenues. you our solve to to we in for for today to And the just do you know -- annually overwhelming today direct what majority noncash I maintain need spend real subscription marketing requirement. companies marketing. the have mean paid no scale at we it.

mass hard to cash. content serve However, week need ways to hold a and to provided direct other offer every There in assets. and grow monetize don't areas. library that We mass creative one are content content new has and other revenues critical require

in key within in to provide we So enhance the order and specifically, to direct fast to us case, top our some order needed ability proposition channels. genres free-to-air to off XX up in launch our to factual

of costly to lot wanted want any categories of is were work more cash. and standard XXX mentioned been We over content. by want of these in We crime. It's new all than without much do wanted that to easy, wanted host We able much, auto titles people. I not fare. this try vital but we we hard lot aviation, Specifically, that's which historical, a to spending [indiscernible]. a of proven driven true nonfiction scripted all We to in a secure more

to it's in think to [indiscernible]. of continue I be regard a that. scope opportunities opportunistic unique the quarter But when we'll

as treatment, So the to well Peter? accounting as

Yes.

content about works. -- thing probably me how Let walk do the is hypothetical simplest example of kind the through to

we that's our at would is to content content at each partner of revenue So imagine both valued million million are time in a deliver we a which the the that that content partners, the value is we the of scenario $X When delivery directions. $X recognize direction. basically in -- swapping with in accepted

the publish revenue. our have we time. content. amortize just at What book would sheet we we When that recognized other in addition would would also associated we with We content would So revenue assets for balance that do is that back licensed that's expense with content like our million not on $X to us. we the any content of to content, coming

through life months accelerated then of we amortization line the the of for and first the the an balance kind So straight license. do of of couple

-- of X typical would of this that our most be license years. most roughly for with content, So as content,

so amortization -- the we life of life and over And over would the a effectively. life would the because swap the the it's the over out over the relationship, swap the -- recognize revenue of life of of content the equal

then I ask follow-up of to know raising like right. that want be answer but cost some, price and already solution but to think result know to for the a increase And It I inflation [indiscernible] I assume, on All had others seem the content I might. prices you for don't I'm they one the of to potentially in my going to see result. then place, resolution registry I the the you're a question, as may seems not up cost going be going as a Excellent. but anyway. suspect

the work really thank for in they And to -- we're can that that, all go who involved you Tom. can I happy are If question, back now. obviously, for people that

other of business couple the a to unions strike. of year next risk is could choose there associated that think do production I with However,

enough small point the percentage key base our overall direct is emphasize However, subscriber has a what actually of that to I increase. know that -- we been exposed our don't can rate I would

over So a in we said the when of you XX%, about as -- past. lot customers, well we've have think annual

most announced as them it or not partners, channel of it either have all just store are So -- just rate are to them of And then seen increase. just it. to relates the our beginning adopt a

while. take it for XXXX So growth good will a news It's areas.

to add? thing Peter,

terms there strike, the the the doesn't settlement effectively to impact us. that that related new just are rider of extent No, to

are at concludes time. this conference There This questions call. further no today's

may now You disconnect.