Thank you for standing by. My name is Carrie, and I will be your conference operator today. At this time, I would like to welcome everyone to the CuriosityStream Q1 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the call over to Tia Cudahy, Chief Operating Officer of CuriosityStream. Please go ahead.

Thank you, and welcome to CuriosityStream’s discussion of its first 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. 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 March 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.

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 $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 to $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 is a return to top-line growth and continued bottom…

Thank you, Clint, and 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.

Thank you. [Operator Instructions] Your first question will come from Dan Medina from Needham.

Good afternoon and congratulations on the great numbers. I have – my question is really on the cost side, Clint and Brady. And can you talk a little bit about how GenAI may have contributed to come in and well below what we estimated for costs? Thank you.

Great question, Dan. I really appreciate that. And 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. We’ve said like, 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 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 kind of 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 kind of available to us as a result of GenAI. We’ll only accelerate and enhance that effort.

Great. Thank you.

Your next question will come from David Marsh with Singular Research.

Hey guys, thanks for taking the questions and congrats on a great quarter. So I just wanted to start on the top line. I mean 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?

Yes, I’d be happy to – so as you saw from our numbers, I mean, 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. And 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 the 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 and frankly, at any time in company history. So it’s – I would say, Dave, kind of a 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.

Thanks. That’s really helpful. And then just turning to the cost side. I mean, 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 kind of creep back in, in the back part of the years as you try to market to different channels and different partners?

Yes, Dave. We’ve talked about this before, but our – one of our biggest cost, which is a non-cash cost, of course, is our content amortization. And that’s continued to decline every quarter over the past several quarters, and we’ve talked about that. And it’s – 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 and more 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, Q4 when we maybe ramp up our costs towards the holiday season and when we have a lot of renewals with our subscription base. Otherwise, we – I think we’ll see a continued decline – declining trend in our G&A throughout the year as some of our cost reduction efforts continued to roll off from the last 12 to 18 months.

Got you. And then if I could just get one more in. Just looking at the dividend change. I mean, I guess, I would say, congratulations on the competence to raise it as much as you have, but just doing a little bit of back on what 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, right? And just looking at the cash flow guidance of $2 million to $3 million. I guess the question is, do you – 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?

Yes. 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 a dividend program. That’s why we’ve increased it. And 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. As I can just say, Dave, like we work for the benefit and interest of our shareholders, and we’re proud to do that, and 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 kind of all our advantages to drive shareholder value.

Great. Hey, thanks very much, guys. Appreciate it.

Thank you, Dave.

Your next question will come Patrick Sholl from Barrington.

Hi, I was wondering if you could – sorry if I missed this, but if you could talk a little bit on the direct business and any sort of consumer trends that you’re seeing there.

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, pretty minimal within a pretty minimal window as it relates to our direct subscription business. But we will be – 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, and 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, in 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.

Yes. Thank you.

[Operator Instructions] Your next question will come from Ed Schneider with Quan Technology.

Yes. I have a question on the – basically on the size and the sources of the pipeline for your AI licensing beyond Q2 and just give more color on that, that degree.

Appreciate that question, Ed. So 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 hypers 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 gives 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?

Gross margin?

Yes.

Yes, yes, gross margin. Yes, that’s really good. Thanks, thanks, that was very helpful.

Thank you.

Your next question will come from Kris Tuttle with IPO Candy.

Thanks very much for taking my question. 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 about this name 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, but that’s the big question that I get from folks that we’ve presented this.

Yes. Look, I think it’s a very fair question. And Kris, I’m really glad that you asked it. And let me first start by saying, like if you control a library of hundreds and hundreds of thousands of hours of video and audio into the millions, 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 provide 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 really – 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 to build 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 I’ve been ideally for our partners goods.

Thanks. Super helpful. Thanks guys, and congratulations again. That’s a great result.

Thank you, Kris.

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

Thank you.

And this does conclude today’s conference. You may now disconnect.