Curiosity(CURI) - 2025 Q2 - Quarterly Report

Part I. Condensed Consolidated Financial Information Financial Statements (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 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] - Net content assets decreased to $28.6 million from $31.5 million over the six-month period[9] Condensed Consolidated Statements of Operations 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 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] - Stock-based compensation added $2.1 million to additional paid-in capital during the first half of 2025[13] Condensed Consolidated Statements of Cash Flows 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] Notes to Unaudited Consolidated Financial Statements 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][22][23] - 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] - 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][99] Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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 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][125] - 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][122] - Bundled Distribution revenue declined 15% YoY due to revised affiliate agreements and non-renewals[127] Operating Expenses Analysis 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] Liquidity and Capital Resources 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] - 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] - The company has a $4 million share repurchase program, with $0.25 million utilized as of June 30, 2025[148] Quantitative and Qualitative Disclosures Regarding Market Risk 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] Controls and Procedures 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] - No material changes to the internal control over financial reporting were identified during the quarter ended June 30, 2025[164] Part II. Other Information Legal Proceedings 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] Risk Factors 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] - 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][172] Exhibits This section lists exhibits filed, including CEO/CFO certifications and Inline XBRL documents Part III. Signatures