Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CuriosityStream Inc (CURI, Financial) generated its highest ever quarterly adjusted free cash flow of $2.5 million, marking the seventh consecutive quarter of improvement.
- The company increased its top line revenue sequentially and achieved a significant year-over-year improvement in adjusted free cash flow.
- CuriosityStream Inc (CURI) ended the quarter with nearly $40 million in cash and equivalents and zero debt, showcasing a strong balance sheet.
- The company successfully reduced annualized overall operational costs by more than 30% through vendor renegotiations and leveraging productivity tools.
- CuriosityStream Inc (CURI) launched several new programming initiatives and expanded into new categories of licensing partners, enhancing its content portfolio and revenue streams.
Negative Points
- Revenue for the second quarter was $12.4 million, down from $14.1 million a year ago, indicating a decline in overall revenue.
- The company experienced a decline in content licensing, bundled distribution, and other revenue categories, generating $2.6 million compared to $5.7 million a year ago.
- Despite improvements, CuriosityStream Inc (CURI) still reported an adjusted EBITDA loss of $1 million for the quarter.
- The company’s revenue guidance for the third quarter indicates potential challenges in achieving higher revenue targets, with a range of $12 million to $14 million.
- CuriosityStream Inc (CURI) faces inherent lumpiness in its content licensing deals, making revenue projections less predictable.
Q & A Highlights
Q: Have you thought about licensing your content to generative AI companies?
A: Yes, we are aware of the interest from generative AI companies in licensing various data sets to train their models. We have a significant amount of high-quality content, including over 100,000 hours of raw footage and 10,000 finished programs, which we believe is appealing for such purposes. We are exploring this opportunity and will likely discuss it more in future calls. - Clinton Stinchcomb, CEO
Q: Are you offshoring any of your full-time employees (FTEs)?
A: We are offshoring some of our engineering activities, but these are not FTEs. Our Head of Engineering has optimized the workforce by leveraging talented individuals globally, replacing some FTE functions with offshore engineers. - Clinton Stinchcomb, CEO
Q: What is driving the revenue declines in the first couple of quarters, and what is the outlook?
A: Our cash revenue for 2024 is expected to exceed that of 2023. We have put helpful guardrails around our spending and are confident in growing our direct and licensing revenues. The declines are partly due to the timing of content licensing deals, which can be lumpy. - Clinton Stinchcomb, CEO
Q: Can you update us on the VIZIO FAST channel and other partnerships?
A: We launched with VIZIO in late June and have also rolled out AVOD content with Tubi in the UK, Pluto in the US, and Samsung in Europe. These deals take time to materialize, but we are optimistic about their potential. We are also working with Estrella to launch three new channels. - Clinton Stinchcomb, CEO
Q: Is your content suitable for theatrical releases or alternative content series?
A: Our content is of high quality, including 4K, 5K, and 8K video. While we have explored theatrical releases, the economics have not worked out so far. However, we are constantly looking for new licensing opportunities, including in the confinement space and with new partners. - Clinton Stinchcomb, CEO
Q: What are the factors that could push your revenue to the top end of the guidance range for the next quarter?
A: Our direct revenue continues to grow and covers our annualized operating costs. The variability comes from the timing of content licensing deals. If these deals close earlier, we could reach the top end of the range or even exceed it. - Clinton Stinchcomb, CEO and P. Brady Hayden, CFO
Q: Is the current gross margin rate sustainable, and what could cause it to decline?
A: We expect our content amortization to continue declining, and we are seeing improvements in our cash-based cost of sales. We are also leveraging emerging efficiency tools in various areas, which should help maintain or improve our margins. - Clinton Stinchcomb, CEO and P. Brady Hayden, CFO
Q: What is the outlook for recurring revenue and its impact on your financials?
A: Our direct business, including DTC and partner direct, along with bundled distribution and recurring advertising revenue, provides a stable base. The variability comes from content licensing deals, which can push our revenue to the higher end of the guidance range. - P. Brady Hayden, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
