Q1 2025 CuriosityStream Inc Earnings Call

Clint Stinchcomb

Thank you, Tia. We have a lot of good news to share today.
Our Q1 revenue of $15.1 million was up 26% year over year and 7% sequentially. Our net income was positive for the first time and improved $5.4 million year over year. Adjusted EBITDA was positive and improved to $1.1 million. Brady will provide more color about other positive key metrics.
Two years ago, in March 2023, we explained our determination to achieve positive cash flow in our operations and to join the ranks of companies that have enduring business metrics. We increased our cash flow in every consecutive quarter from Q4 2022 to Q4 2024. And we’ve achieved positive cash flow over the past five quarters.
In Q1 2025, our EBITDA performance caught up with our sustained positive cash flow. And today, we are gratified to report that we were adjusted EBITDA-positive for the first time, as well as net income positive — landmark achievements for our company.
Because we believe that the volume of our cash flow and surplus cash, beyond that needed for operations, belongs to our shareholders, we implemented a dividend program in Q1 of 2024 and paid our first dividend in April of last year.
In March of this year, we announced an increase to our dividend of $0.04 per quarter or $0.16 annualized.
Today, our outlook on future performance gives us the confidence to announce another increase to our quarterly dividend. We are doubling it to $0.08 or $0.32 annualized.
We are delighted to give this extra return to our loyal shareholders, many of whom have been committed to our enterprise for well over five years. We work for the benefit and interest of our shareholders. And we are proud to do so.
I mentioned last quarter that 2025 has returned to top-line growth and continued bottom-line growth, both at double-digit percentages. While we aren’t providing specific year-end guidance, we remain confident in hitting these marks.
Third-party licensing and distribution opportunities are accessible to us, provided we execute, optimally, at a scope and scale greater than at any time in company history.
As such, we remain focused on the five growth pillars we outlined in March, which, again, are: one, 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; two, continued rationalization of our annual expenses; three, leveraging falling translation costs to accelerate global growth; four, launching new currencies to reduce subscription friction, internationally; and five, selectively enhancing our talent density.
In light of this focus, we’ve entered into several new third-party agreements in the US and internationally. We’ve added extensively to our deep and increasingly wide library of video, audio, and other data. And we recently rolled out 10 new currencies.
On the content front, we continue to seek to entertain and enlighten 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; our one-hour collaboration with the popular YouTube franchise, Economics Explained, exploring how the US became the largest and most influential economy in human history; and Breakthrough: Asteroid Impact, a look at cutting-edge efforts to explore one of the Earth’s greatest threats.
We also continue to strengthen our core offerings in science, history, nature, and tech, with specials like Cleopatra: The Mystery of the Mummified Hand; FAST: The Celestial Eye; and Mysteries of the Bayeux Tapestry, revealing a 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 Knights and the fuel system in Europe.
To reinforce what we’ve said in the past, we believe our strong balance sheet, $39 million in liquidity and no debt, and our continued double-digit growth in both top-line revenue and cash flow make us stand out in the current environment.
Moreover, we believe our global subscription proposition, our rising roster of technology and traditional media partners, our public currency, and our ongoing rationalization of our cost structure are uniquely favorable attributes that provide us with durable, sustainable market advantages and exceptional flexibility.
I’d like to thank my colleagues and our existing shareholders for investing the time, energy, and resources critical to building [Cuream]. And I really hope there are many potential future shareholders allocating time today and in the days ahead to better understand our story and trajectory.
I’ll now yield to my [kind] colleague: our CFO, Brady Hayden.

Phillip Brady Hayden

Thank you, Clint. Good afternoon, everyone.
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.
As Clint said, we achieved another significant milestone in the first quarter, as we reported earnings of $0.3 million or $0.01 per share, our first quarter of positive net income in the company’s history; and a $5.4 million improvement from 2024. 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.
Adjusted free cash flow came in at $2 million, at the high end of our guidance range and an increase of $0.8 million compared to last year. This also represented the fifth sequential quarter of positive adjusted free cash flow.
Revenue for the first quarter was $15.1 million, compared to $12 million a year ago. 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.
First-quarter gross margin was 53%, an improvement from 44% a year ago, driven by continued reductions in content amortization. As expected, our cash cost of revenue increased slightly from a year ago, a result of acquiring more rights to license content through revenue share arrangements and associated storage costs.
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 result of our ongoing cost rationalization. And excluding stock-based compensation, G&A declined 19% from a year ago.
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. Adjusted free cash flow was $2 million in the quarter, compared with $1.2 million a year ago.
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.
We ended the quarter with total cash and securities of $39.1 million and no outstanding debt. We believe our balance sheet remains in great shape and that this provides us with significant operating flexibility.
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.
With that, we can hand it back to the operator and open the call to questions.

Operator

(Operator Instructions)
Dan Medina, Needham & Company.

Daniel Medina

Congratulations on the great numbers. My question is really on the cost side, Clint and Brady.
Can you talk a little bit about how GenAI may have contributed to come in well below what we estimated for costs?

Clint Stinchcomb

Great question, Dan. I really appreciate that.
I would say the good news is we’ve been able to reduce our costs largely, without leveraging and accessing the emerging tools that are available to us from GenAI. Certainly, as we look forward, we believe that the big advantage is available to us through GenAI or [one in translation] (inaudible).
As soon as we can get to a point where we can translate our content into 60 languages at minimal cost — as compared to the 10 to 12 that we’re in, today — that will have a meaningful impact.
We do use it today, a bit, on the editing side, as it relates to sequencing and organizing content. So there’s some help there.
But for the most part, we brought down our costs by, really, just the shoulder-to-the-wheel approach. And I think we spend a lot of time every week just grinding on what’s essential, what’s not essential, what’s revenue-generating, and what’s not.
So good news is we still have, we believe, considerable headroom, as it relates to reducing and rationalizing our cost base. And the tool is available to us as a result of GenAI. We’ll only accelerate and enhance that effort.

Operator

David Marsh, Singular Research.

David Marsh

Congrats on a great quarter. I just wanted to start on the top line.
Could you give us a little bit more granularity, in terms of what the key drivers were for the revenue growth, relative to licensing versus subscriptions?

Clint Stinchcomb

Yes, I’d be happy to. As you saw from our numbers, virtually everything is up.
In regard to our direct subscription revenue: that’s down, a little bit, year over year. In direct subscription revenues: it’s largely a function of our marketing spend, today.
So we’re hyper-focused on the efficiency of that spend. And so, that spend might be a little lumpy at times.
That lumpiness is really tied, in small part, to seasonality; but, in larger part, to the various value exchanges that we can secure with various marketing channels.
And so, as we look to optimize our CPA, I think you’ll 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. But I think what you’ll see us do, as it relates to direct subscriptions, is we’ll 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. And we’ve done a lot of work to build a really big and broad corpus of content, namely video, audio, text, images, et cetera. And this type of content is appealing to a broad array of companies, technology companies, traditional media companies.
And in light of that, we just have a lot more opportunity, I think, available to us, as a company today than, frankly, at any time in company history.
I would say, Dave, broad results of many new licensing partners, new advertising partners, new subscription partners. And we’re really excited about what’s potentially available to us, over the course of the rest of the year.

David Marsh

That’s really helpful. And then, just turning to the cost side.
Great job on SG&A. It was down 16% year over year. You, guys, were able to wring out a fair amount of cost.
Is that a sustainable level, going forward? Or could there be some things that creep back in, in the back part of the year, as you try to market to different channels and different partners?

Clint Stinchcomb

Yeah, Dave. We’ve talked about this before. One of our biggest costs — which is a non-cash cost — of course, is our content amortization. That’s continued to decline every quarter, over the past several quarters. And we’ve talked about that.
I am told our 10-Q is going to be filed in the next few minutes. But you’ll see in there, we had a substantial loss in our content amort in Q1.
And then, our marketing costs will — maybe, we are historically a bit low in Q1, compared to where we would be in, say, in Q4, when we ramp up our costs towards the holiday season and when we have a lot of renewals with our subscription base.
Otherwise I think we’ll see a continued declining trend in our G&A throughout the year, as some of our cost reduction efforts continued (inaudible) to roll off from the last 12 to 18 months.

David Marsh

Got you. And then, if I could just get one more in?
Just looking at the dividend change, I would say, congratulations on the competence to raise it as much as you have. But just doing a little bit of back (inaudible) math, it looks like it’s probably going to be about $4.5 million a quarter, at the new rate, if I’m doing my math right.

Clint Stinchcomb

Right.

David Marsh

And just looking at the cash flow guidance of [$2 to $3], the question is: Given the timing of the raise and just looking beyond the second quarter, do you, guys, have confidence that you’re going to be able to generate sufficient cash flow to be able to cover that dividend, without eating into your reserves?

Clint Stinchcomb

Yeah. We have tremendous confidence in the business throughout the rest of the year. If we didn’t, we certainly wouldn’t have doubled the dividend like we did.
And whereas we think it’s conceivable that we’ll be able to pay the dividend from operations; at the same time, we have a lot of cash reserve, far more than enough to absorb a dividend payment, as it relates to quarters, which can be a little bit lumpy in our business.
So our intent today is to pay the majority of it or all of it from operations. At the same time, we really believe that the volume of our cash and our surplus cash, beyond that needed for operations, belongs to our shareholders.
That’s why we implemented the dividend program. That’s why we’ve increased it.
We’re just really gratified to give this extra return to loyal shareholders, particularly those who have been with us for a long time. Some, over five years.
I can just say, Dave, we work for the benefit and interest of our shareholders. And we’re proud to do that.
We’re a unique company in that despite our size, we have the ability to pay that dividend. And we’ll seek to play to all our advantages to drive shareholder value.

Operator

Patrick Sholl, Barrington.

Patrick Sholl

I was wondering if you could — sorry if I missed this — talk a little bit on the direct business and any consumer trends that you’re seeing there.

Clint Stinchcomb

Sure. I think the big thing to note there is that our overall direct subscription revenue, again, is largely a function of our marketing spend. And as we’re hyper-focused on the efficiency of that spend on optimizing our CPA, you’ll see some lumpiness within a pretty minimal window, as it relates to our direct subscription business.
But, going forward, you’ll just see us be a lot more opportunistic at certain times of the year. So we’ll have quarters where there’s certainly more growth than others.
But as we sit here today, we’re managing our direct subscription business to something that is flat to a little bit up or a little bit down. And that’s in light of the fact that we have so many large opportunities in front of us. And if we’re able to execute on those, then we’ll have more money to allocate for marketing. We’ll have additional ways to grow our direct business.
At the same time, 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.

Operator

(Operator Instructions)
Ed Schneider, Quan Technology.

Edward Schneider

Yes. I have a question, basically, on the size and the sources of the pipeline for your AI licensing beyond Q2, if you could just give more color on that [pedigree].

Clint Stinchcomb

Appreciate that question, Ed.
We can’t 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 — we have appealed to a broad set of licensees.
And so, this includes the most obvious, like the tech hyperscalers who are publicly active in licensing data and cumulatively spending hundreds of billions in CapEx. It also includes many other AI companies who have distinct training needs and who raised meaningful capital to allocate to data licensing.
And beyond the hyperscalers and the smaller, largely private AI companies, there’s 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 gets us a proximity advantage here.
But these are large meaningful deals that will have a significant impact on the company.
And in regard to how it impacts our profitability, I think you can assume a 40% to 50% margin for these types of agreements.
Does that answer the question?

Edward Schneider

Gross margin?

Clint Stinchcomb

Yes.

Operator

Kris Tuttle, IPO Candy.

Kris Tuttle

Thanks for all your hard work. It’s obviously evident in the results.
The one question I get most often from folks that we talked to you (inaudible) is the relationship you have on the AI content side. They wonder about the duration and sustainability; like, how to think about it, as you add content.
Are these relationships that you’re building, where you think, in the long term, these can continue to repeat and grow; not the same as, strictly speaking, recurring revenue. That’s the big question that I get from folks that we’ve (inaudible).

Clint Stinchcomb

Look, I think it’s a very fair question. And, Chris, I’m really glad that you asked it.
Let me first start by saying: if you control a library of hundreds and hundreds of thousands of hours of video and audio into the million, you’re always going to be able to monetize that. That is the history of the media and technology business.
As it relates to some of the technology and AI work that we’re doing today, 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 delivering content to a license partner. And then, provided the partner accepts the content, we then recognize all of that revenue at the start of the term.
And so — well, it might not look like a subscription recurring agreement in the traditional sense, it 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 data, beyond our initial agreement.
So if we continue the strong relationships by delivering high-quality, diverse content on time and at the scope and scale they’re looking for, we will have, effectively, a robust recurring business.
And the other part I might add here is: Will we be granting exactly the same scope of rights today? Namely, like an AI video training right? 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 content and data licensing practices is, again, if we control high volume, there will be considerable demand for our corpus.
We also know that the hyperscalers and many others, they don’t want to work with hundreds of licensors. They aren’t today and they won’t. They want to work at scale, with a very finite number.
And lastly, as I alluded to, we believe there’ll be new grants of rights, 12 months from now, that don’t exist today or have not been specifically negotiated.
So I think our approach is just like we do in other areas of our third-party business: continue to build great relationships with these companies and continue to look for many ways to partner with them so that it works for our good; and have been, ideally, for our partners good.

Kris Tuttle

Congratulations, again. That’s a great result.

Operator

This concludes the Q&A portion of today’s call.

Clint Stinchcomb

Thank you.