Financial Data and Key Metrics Changes - Revenue grew 46% year over year to $18.4 million, exceeding guidance [6][15] - Adjusted free cash flow rose 88% to $4.8 million, marking the seventh consecutive quarter of positive adjusted free cash flow [11][19] - Adjusted EBITDA improved by $3.4 million year over year, reaching $3 million [15][19] - Gross margin increased to 59%, up from 54% a year ago [17] Business Line Data and Key Metrics Changes - Subscription revenue totaled $9.3 million, showing sequential growth [16] - Content licensing revenue surged over 425% year over year to $8.7 million, driven by AI training fulfillments [16][19] - Advertising business is still developing, with new initiatives launched on various platforms [10] Market Data and Key Metrics Changes - Licensing revenue is expected to exceed subscription revenue by 2027, possibly earlier [12] - The company engaged with nine key partners across various media formats, delivering over 1.5 million distinct assets [7] Company Strategy and Development Direction - The company aims to solidify its position as a leading provider of AI training data, with plans to double its content library in 2026 [12][41] - Focus on cost discipline and rationalizing the cost base to support pricing power and durable growth [11][12] - Plans to install a leader for the advertising business in early 2026 to capture advertising opportunities [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued double-digit growth in both revenue and cash flow driven by subscriptions, licensing, and advertising [13] - The company anticipates that overall subscription revenue will grow faster in 2026 than in 2025, supported by a strong launch pipeline [12][57] - Management acknowledged the need to smooth out revenue fluctuations in licensing through operational and contractual means [31] Other Important Information - The company reported a net loss of $3.7 million for the quarter, attributed to one-time charges and non-cash stock-based compensation [18] - The balance sheet remains strong with over $29 million in liquidity and no debt [13][19] - The expiration of warrants reduces potential dilution and eliminates lingering share overhang [20] Q&A Session Summary Question: Why is the company investing in lower-margin media when licensing returns are higher? - Management clarified that they are promoting an internal candidate to enhance AI relationships and need seasoned sales leaders to drive revenue generation [24][27] Question: How will the company smooth out revenue fluctuations in licensing? - Management indicated that increasing the roster of partners and structuring agreements as Content as a Service (CaaS) will help reduce revenue lumpiness over time [31][32] Question: How has AI licensing evolved over the last year? - Management reported 18 fulfillments across nine partners, with expectations that existing partners will contribute 60% to 80% of AI licensing revenue [35][36] Question: Can you explain the stock-based compensation in the quarter? - Management explained that the high stock-based compensation was due to market-based awards granted during the quarter, which will be expensed over a more aggressive timeline [52][53] Question: What is the outlook for subscription services in new markets? - Management expressed confidence in subscription revenue growth due to new partnerships and distribution agreements, with plans for new pricing and packaging in 2026 [57][58]

Financial Performance - Revenue for Q3 2025 was $18.4 million, representing a 46% year-over-year increase from $12.6 million in Q3 2024[5] - Adjusted EBITDA improved to a positive $3 million, compared to a loss of $0.4 million in Q3 2024, marking the third consecutive quarter of positive EBITDA[6] - Adjusted Free Cash Flow reached a record $4.8 million, up from $2.6 million in Q3 2024[6] - Gross margin improved to 59%, up from 54% in the same quarter last year[5] - Revenues for the three months ended September 30, 2025, increased to $18,359,000, up 46% from $12,604,000 in the same period of 2024[22] - Net loss for the three months ended September 30, 2025, was $3,744,000, compared to a net loss of $3,062,000 in the same period of 2024[22] - Adjusted EBITDA for the nine months ended September 30, 2025, was $7,098,000, an improvement from an adjusted EBITDA loss of $4,105,000 in the same period of 2024[26] - Net cash provided by operating activities for the nine months ended September 30, 2025, was $9,088,000, compared to $5,116,000 for the same period in 2024, representing a 77% increase[24] - Adjusted Free Cash Flow for the nine months ended September 30, 2025, was $9,554,000, up from $6,220,000 in the same period of 2024[27] - The company incurred $10,054,000 in stock-based compensation for the nine months ended September 30, 2025, compared to $4,734,000 in the same period of 2024[26] - The weighted average number of common shares outstanding for the three months ended September 30, 2025, was 57,930,000, compared to 54,850,000 in the same period of 2024[22] - The company reported a net cash increase of $6,217,000 for the nine months ended September 30, 2025, compared to a decrease of $28,502,000 in the same period of 2024[24] Future Outlook - The company expects Q4 2025 revenue to be in the range of $18 million to $20 million, indicating year-over-year growth of 27% to 42%[11] Strategic Initiatives - CuriosityStream launched subscription services with partners in the U.S., Australia, New Zealand, and Germany[11] - The company expanded its data and video licensing partnerships for AI training, accumulating a nearly 2-million-hour library of content[11] - Four new original programs were launched, enhancing the content lineup[11] Cash Position - As of September 30, 2025, the company reported cash and cash equivalents of $14.1 million, with no debt[6] - Cash, cash equivalents, and restricted cash at the end of the period on September 30, 2025, amounted to $14,168,000, compared to $9,713,000 at the end of the same period in 2024[24] Dividend Declaration - The Board of Directors declared a cash dividend of $0.08 per share, payable on December 19, 2025[2] Operating Expenses - Operating expenses for the nine months ended September 30, 2025, totaled $56,393,000, compared to $46,455,000 for the same period in 2024, reflecting a 21% increase[22]

Core Insights - Premarket trading is showing notable activity with significant price movements indicating potential trading opportunities before the market opens [1] Premarket Gainers - Shoulder Innovations, Inc. (SI) is up 14% at $13.01 [3] - BILL Holdings, Inc. (BILL) is up 11% at $52.14 [3] - On Holding AG (ONON) is up 8% at $38.24 [3] - CuriosityStream Inc. (CURI) is up 8% at $4.08 [3] - Clearwater Analytics Holdings, Inc. (CWAN) is up 7% at $19.80 [3] - Valhi, Inc. (VHI) is up 7% at $14.54 [3] - Beam Global (BEEM) is up 7% at $2.29 [3] - FGI Industries Ltd. (FGI) is up 6% at $5.66 [3] - The Honest Company, Inc. (HNST) is up 6% at $2.68 [3] - China Automotive Systems, Inc. (CAAS) is up 5% at $4.40 [3] Premarket Losers - Graphjet Technology (GTI) is down 22% at $3.02 [4] - Black Rock Coffee Bar, Inc. (BRCB) is down 10% at $21.90 [4] - Rain Enhancement Technologies Holdco, Inc. (RAIN) is down 9% at $4.90 [4] - Stereotaxis, Inc. (STXS) is down 9% at $2.59 [4] - Biohaven Ltd. (BHVN) is down 8% at $7.82 [4] - Epsium Enterprise Limited (EPSM) is down 7% at $3.15 [4] - Cycurion, Inc. (CYCU) is down 7% at $3.13 [4] - Galecto, Inc. (GLTO) is down 6% at $22.09 [4] - Anbio Biotechnology (NNNN) is down 6% at $21.68 [4] - Ridgetech, Inc. (RDGT) is down 5% at $3.46 [4]

Core Insights - CuriosityStream has appointed John Higgins as Vice President of Content Partnerships to enhance growth in AI licensing and strategic alliances [2][3] - Higgins will focus on expanding licensing relationships with major technology and AI developers, reporting directly to the CEO [2][3] - The company aims to leverage its extensive video library, which includes nearly two million hours of content, to drive revenue growth through AI licensing [3] Company Overview - CuriosityStream is a global leader in factual entertainment, providing premium nonfiction programming to millions of viewers worldwide [2][5] - The company operates various services, including the flagship Curiosity Stream SVOD service, Curiosity Channel, and Curiosity University, among others [5][6] - CuriosityStream's subscription services and rapidly expanding AI content licensing division are key growth pillars, reinforcing its position in the media and AI sectors [3][5] Leadership and Strategy - John Higgins has been instrumental in advancing CuriosityStream's AI licensing initiatives and building relationships with leading hyperscalers and AI developers [3][4] - Under Higgins' leadership, the company has launched several initiatives, including the Curiosity Audio Network and Curiosity University, to diversify its offerings [4] - The focus on ethically sourced and data-enriched video content positions CuriosityStream as a premier partner in the AI era [3][4]

Core Viewpoint - CuriosityStream (NASDAQ: CURI) is facing negative market sentiment as it is being valued based on an outdated strategy, leading investors to perceive it as a failing, cash-burning streaming service [1] Company Summary - The market is currently punishing CuriosityStream due to its previous strategy, which it has since abandoned [1] - Investors are still viewing the company through the lens of its past performance, which has contributed to its negative valuation [1] Industry Context - The streaming service industry is highly competitive, and companies like CuriosityStream must adapt their strategies to remain relevant and attract investment [1]

Core Insights - CuriosityStream Inc. is experiencing a pivotal moment as its primary streaming business faces a decline, while AI licensing revenue is positively impacting its outlook [1] Company Overview - The main streaming business of CuriosityStream is currently on a downward trend [1] - The AI licensing revenue stream is providing an uplift to the company's overall outlook [1] Investment Perspective - The investment philosophy focuses on identifying mispriced securities by analyzing the underlying drivers of a company's financials, often revealed through a DCF model valuation [1] - This approach allows for a flexible investment strategy that encompasses various aspects of a stock's prospects, assessing the risk-to-reward ratio [1]

Group 1 - CuriosityStream Inc. has launched its flagship FAST channel, Curiosity Now, on Prime Video in the U.S. [1] - The channel provides access to award-winning documentary films and series, integrated seamlessly on Prime Video [1] - This launch presents an opportunity for Curiosity Now to reach millions of U.S. households, enhancing discovery for viewers [1]

Part I. Condensed Consolidated Financial Information [Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) Net income reached $1.1 million in H1 2025, reversing a $7.1 million loss, driven by 40% revenue growth to $34.1 million [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $78.7 million, and stockholders' equity declined to $49.8 million, mainly due to dividend payments Condensed Consolidated Balance Sheets (in thousands) | Balance Sheet Items | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $40,456 | $39,518 | | **Total Assets** | **$78,652** | **$86,182** | | **Total Current Liabilities** | $24,420 | $23,863 | | **Total Liabilities** | **$28,811** | **$28,334** | | **Total Stockholders' Equity** | **$49,841** | **$57,848** | - Cash, cash equivalents, and short-term investments totaled **$28.2 million** as of June 30, 2025, down from **$32.1 million** at the end of 2024[9](index=9&type=chunk) - Net content assets decreased to **$28.6 million** from **$31.5 million** over the six-month period[9](index=9&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net income reached $1.1 million for H1 2025, reversing a $7.1 million loss, driven by a 53% Q2 revenue increase Q2 2025 vs Q2 2024 Performance (in thousands) | Metric | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $19,012 | $12,395 | $6,617 | 53% | | **Operating Income (Loss)** | $480 | $(2,549) | $3,029 | (119%) | | **Net Income (Loss)** | $784 | $(2,031) | $2,815 | (139%) | | **Diluted EPS** | $0.01 | $(0.04) | $0.02 | $(0.13) | [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity decreased to $49.8 million, primarily due to $11.2 million in dividends declared in H1 2025 - Dividends declared in the first six months of 2025 amounted to **$11.2 million** ($10.388 million in Q2 and $0.862 million in Q1), significantly impacting stockholders' equity[13](index=13&type=chunk) - Stock-based compensation added **$2.1 million** to additional paid-in capital during the first half of 2025[13](index=13&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow was $4.7 million, but financing activities used $14.0 million, mainly due to $12.7 million in dividends Cash Flow Activities (in thousands) | Cash Flow Activities | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $4,711 | $2,856 | | **Net cash provided by investing activities** | $8,303 | $0 | | **Net cash used in financing activities** | $(13,962) | $(1,427) | | **Net (decrease) increase in cash** | $(948) | $1,429 | - The company paid **$12.7 million** in dividends during the first half of 2025, compared to **$1.3 million** in the same period of 2024[18](index=18&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) Notes detail business model, revenue shift to Content Licensing (43% of total), and a subsequent $0.08 dividend declaration Disaggregated Revenues (Six Months Ended June 30, in thousands) | Revenue Stream | 2025 | % of Total | 2024 | % of Total | | :--- | :--- | :--- | :--- | :--- | | **Total Direct Business** | $17,092 | 50% | $19,452 | 80% | | **Total Content Licensing** | $14,753 | 43% | $2,481 | 10% | | **Bundled Distribution** | $1,493 | 4% | $2,226 | 9% | | **Other** | $764 | 2% | $237 | 1% | | **Total Revenues** | **$34,102** | **100%** | **$24,396** | **100%** | - The company's business model includes Direct-to-Consumer (DTC), Partner Direct, Bundled Distribution, and Content Licensing arrangements[20](index=20&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk) - As a subsequent event, on August 5, 2025, the Board declared a quarterly cash dividend of **$0.08 per share**, totaling approximately **$4.6 million**, to be paid in September 2025[102](index=102&type=chunk) - As of June 30, 2025, the company had content obligations of **$0.7 million** and advertising commitments of **$1.7 million**, both expected to be paid by year-end 2025[96](index=96&type=chunk)[99](index=99&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Q2 operating income improved to $0.5 million, driven by a 53% revenue surge from AI content licensing, despite direct business decline [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Q2 2025 operating income was $0.5 million, a $3.0 million improvement, driven by 53% revenue growth from content licensing Q2 2025 vs Q2 2024 Performance (in thousands) | Metric | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | $19,012 | $12,395 | $6,617 | 53% | | **Total Operating Expenses** | $18,532 | $14,944 | $3,588 | 24% | | **Operating Income (Loss)** | $480 | $(2,549) | $3,029 | (119%) | | **Net Income (Loss)** | $784 | $(2,031) | $2,815 | (139%) | [Revenue Analysis](index=31&type=section&id=Revenue%20Analysis) Q2 revenue rose 53% to $19.0 million, primarily from a 609% surge in AI content licensing, offsetting direct business decline - Content Licensing revenue surged **609%** YoY in Q2 2025, driven by new licensing agreements for AI model training[124](index=124&type=chunk)[125](index=125&type=chunk) - Direct Business revenue decreased by **15%** YoY in Q2 2025, as a **34%** increase in Partner Direct revenue was not enough to offset a **25%** decline in Direct-to-Consumer (DTC) revenue from a lower subscriber count[121](index=121&type=chunk)[122](index=122&type=chunk) - Bundled Distribution revenue declined **15%** YoY due to revised affiliate agreements and non-renewals[127](index=127&type=chunk) [Operating Expenses Analysis](index=33&type=section&id=Operating%20Expenses%20Analysis) Operating expenses increased 24% to $18.5 million, driven by a 48% rise in Cost of Revenues from licensing deals Cost of Revenues Breakdown (Q2, in thousands) | Component | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Distribution | $4,319 | $631 | $3,688 | 584% | | Content amortization | $3,600 | $4,685 | $(1,085) | (23%) | | Other | $945 | $688 | $257 | 37% | | **Total Cost of Revenues** | **$8,864** | **$6,004** | **$2,860** | **48%** | - General and Administrative expenses increased **7%** in Q2 2025, driven by a **67%** rise in stock-based compensation expense[137](index=137&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity includes $7.0 million cash and $23.7 million investments, sufficient for operations despite $12.7 million in H1 dividends - The company's liquidity position as of June 30, 2025, includes **$7.0 million** in cash and restricted cash, and **$23.7 million** in investments in debt securities[141](index=141&type=chunk) - In H1 2025, the company paid three dividends: a **$0.04** regular dividend, a **$0.08** regular dividend, and a **$0.10** special dividend, totaling approximately **$12.7 million**[147](index=147&type=chunk) - The company has a **$4 million** share repurchase program, with **$0.25 million** utilized as of June 30, 2025[148](index=148&type=chunk) [Quantitative and Qualitative Disclosures Regarding Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20Regarding%20Market%20Risk) The company deems this item not applicable, providing no disclosures on market risk - No quantitative and qualitative disclosures regarding market risk were provided, as the company deemed them not applicable[161](index=161&type=chunk) [Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the quarter[163](index=163&type=chunk) - No material changes to the internal control over financial reporting were identified during the quarter ended June 30, 2025[164](index=164&type=chunk) Part II. Other Information [Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) The company is not involved in any legal proceedings expected to materially impact its business or financials - The company is not presently involved in any material legal proceedings[167](index=167&type=chunk) [Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) A new risk factor addresses the uncertainty of sustaining revenues from AI content licensing due to market evolution and legal issues - A new risk factor was introduced related to the company's business of licensing content for training generative AI models[170](index=170&type=chunk) - The AI content licensing market is new, rapidly evolving, and there is no assurance the company can sustain revenues from it due to potential competition, legal uncertainties regarding intellectual property, and fluctuating demand for AI models[171](index=171&type=chunk)[172](index=172&type=chunk) [Exhibits](index=40&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed, including CEO/CFO certifications and Inline XBRL documents Part III. Signatures

Core Viewpoint - CuriosityStream Inc. reported quarterly earnings of $0.01 per share, matching the Zacks Consensus Estimate, and showing improvement from a loss of $0.04 per share a year ago [1] - The company achieved revenues of $19.01 million for the quarter, exceeding the Zacks Consensus Estimate by 12.50% and up from $12.4 million year-over-year [2] Financial Performance - The earnings surprise of +200% indicates that the company was expected to post a loss of $0.01 per share but instead reported earnings of $0.01 [1] - Over the last four quarters, CuriosityStream has surpassed consensus revenue estimates three times [2] Stock Performance - CuriosityStream shares have increased approximately 222.2% since the beginning of the year, significantly outperforming the S&P 500's gain of 7.6% [3] Future Outlook - The company's earnings outlook will be crucial for determining the sustainability of its stock price movement, with current consensus EPS estimates at -$0.02 for the coming quarter and -$0.01 for the current fiscal year [4][7] - The Zacks Rank for CuriosityStream is currently 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Film and Television Production and Distribution industry, to which CuriosityStream belongs, is currently ranked in the bottom 33% of over 250 Zacks industries, which may impact stock performance [8]

Financial Data and Key Metrics Changes - Quarterly revenue grew by 53% year over year from $12.4 million to $19 million, exceeding guidance [6][27] - Net income improved by nearly $3 million year over year, reaching $800,000 or $0.01 per share [7][28] - Adjusted EBITDA increased by over $4 million year over year from negative $1 million to positive $3 million, marking the highest adjusted EBITDA in company history [7][28] - Adjusted free cash flow was $2.9 million, representing the sixth consecutive quarter of positive adjusted free cash flow [29] Business Line Data and Key Metrics Changes - Subscription revenue was $9.3 million, a decline of $1.7 million from last year but a sequential increase from Q1 [29] - Content licensing revenue was $9.3 million, an increase of over $8 million driven by significant new business from AI licensing [29] - Gross margin improved slightly to 53% from 52% a year ago, with reductions in content amortization [30] Market Data and Key Metrics Changes - The company has entered into new and expanded multiyear wholesale distribution agreements in Asia, Latin America, and the U.S., which are expected to boost subscription revenue [8] - The dataset licensing for AI training has grown substantially for three consecutive quarters, including licensing about 9 million tokens of code for the first time [10][11] Company Strategy and Development Direction - The company aims to have three solid revenue pillars: subscription business, licensing business, and advertising business, with expectations for steady growth in subscriptions and rapid growth in licensing [37] - The company is focused on becoming a dominant AI video licensor, with plans to license more video and data than in 2025 [24][25] - The company emphasizes the importance of its extensive library of over 1 million hours of content and its ability to structure data effectively as competitive advantages [19][21] Management's Comments on Operating Environment and Future Outlook - Management believes the market for high-quality, ethically sourced video and audio content is durable and growing, with estimates of industry-wide needs ranging from billions to tens of billions of hours [14][15] - The company is confident in its ability to navigate the evolving landscape of AI and media, focusing on meaningful information while disregarding distractions [22][23] - The company maintains a strong balance sheet with $31 million in liquidity and no debt, positioning itself as a high-performance outlier amid technological revolution [25][31] Other Important Information - The company paid dividends of $10.4 million in June, including a special dividend of $5.8 million, resulting in a dividend yield of about 6.5% [31] - The company expects third-quarter revenue in the range of $15 million to $18 million and adjusted free cash flow for 2025 in the range of $11 million to $13 million [32] Q&A Session Summary Question: Why is the company in the core media business? - Management stated that the subscription video on demand business is strong and global, representing the core of the company, and that all revenue streams work together synergistically [36][37] Question: What are the expected cost increases as the company pivots towards high-growth licensing? - Management indicated that the primary costs would be related to storage and delivery, but overall costs would remain manageable due to existing revenue-sharing arrangements [40][41] Question: What is the significance of licensing code for AI training? - Management explained that while video is the primary focus, the inclusion of code in licensing is a unique opportunity that reflects the value of owning and controlling intellectual property [49][50] Question: Is the company exploring other types of video content for licensing? - Management confirmed that while the focus remains on building a factual entertainment library, there is potential value in other types of video content, particularly if they are not freely available [53][55]