Curiosity(CURI) - 2023 Q4 - Annual Report

Part I Item 1. Business CuriosityStream is a media and entertainment company specializing in premium factual content, monetizing its library through various distribution channels - The company's core business is offering premium factual video and audio programming through various distribution channels, including SVOD, content licensing, and bundled offerings[131][132] - The content library features over 17,000 programs, including a mix of originally produced, owned, and licensed content[134][135][136] FY 2023 Financial Summary | Metric | Value (in millions) | | :--- | :--- | | Revenue | $56.9 | | Net Loss | $48.9 | - In 2023, the company reduced its workforce by 20 positions, representing about 30% of its employee count at the end of 2022, primarily in technology, operations, and programming[176] - The company increased its standard pricing for new direct subscribers from $2.99/month to $4.99/month and from $19.99/year to $39.99/year as of March 27, 2023[143] Item 1A. Risk Factors The company faces substantial risks including significant net losses, intense competition, user churn, content impairment, and potential NASDAQ delisting - The company has a history of significant net losses, with an accumulated deficit of $290.0 million as of December 31, 2023, and anticipates continued net losses for the foreseeable future[520] - A significant risk is user churn, which was exacerbated by the termination of the Nebula SVOD service partnership at the end of 2023, potentially leading to a decline in subscribers[218] - The company recorded a $19.0 million impairment charge on its content assets in the third quarter of 2023 due to revised subscriber growth forecasts and adverse market conditions[291][45] - The company received a notice from NASDAQ on September 19, 2023, for non-compliance with the $1.00 minimum bid price requirement, posing a risk of delisting, with an extension granted until September 16, 2024[379][396] - Competition is intense from larger, well-resourced companies like Netflix, Amazon, and Disney, which could harm business and prospects[222][224][246] Item 1B. Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - There are no unresolved staff comments[465] Item 1C. Cybersecurity The company has implemented a comprehensive, enterprise-wide information security program to manage cybersecurity risks - The company has established an enterprise-wide information security program to identify and manage cybersecurity risks, which is overseen by senior management and the Board's Audit Committee[466][471] - To date, the company has not experienced any cybersecurity incidents that have had a material effect on its business strategy, operational results, or financial condition[470] Item 2. Properties The company's principal operational offices are located in a leased 15,500 square foot facility in Silver Spring, Maryland, with computing infrastructure primarily hosted on Amazon Web Services - The main office is a leased space of approximately 15,500 square feet in Silver Spring, Maryland, under a lease expiring in February 2033[473] - The company's computing needs are primarily serviced by Amazon Web Services (AWS)[475] Item 3. Legal Proceedings The company is not currently a party to any legal proceedings that are expected to have a material adverse effect on its business or financial condition - The company is not presently a party to any material legal proceedings[476] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable[477] Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock and warrants trade on NASDAQ, and the Board of Directors initiated the company's first quarterly cash dividend in March 2024 - The company's common stock and warrants are traded on NASDAQ under the symbols "CURI" and "CURIW"[479] - On March 13, 2024, the Board declared the company's first quarterly cash dividend of $0.025 per share, payable on April 30, 2024[490] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Fiscal year 2023 saw a 27% revenue decrease to $56.9 million, an improved operating loss, and stable net loss, with strategic shifts in content acquisition and liquidity management Results of Operations - The company began using trade and barter transactions in Q2 2023 to exchange content assets, which contributed $9.9 million to Content Licensing revenue and $1.1 million to Other revenue[508][530][555] - Equity interests loss increased significantly to $5.4 million in 2023 from $0.8 million in 2022, primarily due to impairment charges of $2.0 million for the Spiegel Venture and $2.3 million for Nebula[201] Revenue by Segment (2023 vs. 2022) | Revenue Segment | 2023 (in thousands) | 2022 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Direct Business | $34,592 | $34,120 | +1.4% | | Content Licensing | $14,047 | $24,691 | -43% | | Bundled Distribution | $6,316 | $11,726 | -46% | | Enterprise | $141 | $5,520 | -97% | | Total Revenues | $56,889 | $78,043 | -27% | Operating Expenses (2023 vs. 2022) | Expense Category | 2023 (in thousands) | 2022 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Cost of revenues | $35,553 | $51,536 | -31% | | Advertising and marketing | $17,390 | $40,709 | -57% | | General and administrative | $29,447 | $37,479 | -21% | | Impairment of content assets | $18,970 | $0 | N/A | | Impairment of goodwill | $0 | $3,603 | N/A | | Total Operating Expenses | $101,360 | $133,327 | -24% | Liquidity and Capital Resources - As of December 31, 2023, the company held $38.2 million in cash, cash equivalents, and restricted cash[19] Cash Flow Summary (2023 vs. 2022) | Cash Flow Activity | 2023 (in thousands) | 2022 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(16,172) | $(39,523) | | Net cash provided by investing activities | $14,003 | $62,701 | | Net cash used in financing activities | $(123) | $(218) | - Net cash used in operating activities decreased by $23.4 million (59%) in 2023 compared to 2022, driven by lower net loss and reduced additions to content assets[25] - Management believes that current cash levels are adequate to support operations, capital expenditures, and working capital for at least the next twelve months[20] Critical Accounting Policies and Estimates - Content Assets: The company capitalizes costs for licensed and produced content, amortizing on an accelerated basis due to expected upfront viewership, and reviews assets for impairment when indicators are present[36][38][39] - Goodwill and Intangible Assets: Goodwill is tested for impairment at least annually, with a $2.8 million goodwill impairment charge and an $0.8 million intangible asset impairment recorded in 2022[46][50][52] - Revenue Recognition: Revenue is recognized as performance obligations are satisfied, including ratable recognition for subscriptions and point-in-time recognition for content licenses upon availability[53][54][89] Item 7A. Quantitative and Qualitative Disclosures About Market Risk This item is not applicable to the company - Not applicable[100] Item 8. Financial Statements and Supplementary Data This section presents the company's audited consolidated financial statements for fiscal years 2023 and 2022, detailing financial position, operational results, and cash flows with extensive notes Consolidated Statement of Operations Highlights | (in thousands) | Year Ended 2023 | Year Ended 2022 | | :--- | :--- | :--- | | Revenues | $56,889 | $78,043 | | Operating loss | $(44,471) | $(55,284) | | Net loss | $(48,896) | $(50,917) | | Net loss per share | $(0.92) | $(0.96) | Consolidated Balance Sheet Highlights | (in thousands) | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $37,715 | $40,007 | | Content assets, net | $44,943 | $68,502 | | Total assets | $101,022 | $154,113 | | Total liabilities | $28,376 | $36,487 | | Total stockholders' equity | $72,646 | $117,626 | - Note 3 (Equity Investments): The company recorded impairment charges of $2.0 million on its Spiegel Venture investment and $2.3 million on its Nebula investment during 2023[433][434] - Note 4 (Balance Sheet Components): Net content assets decreased from $68.5 million in 2022 to $44.9 million in 2023, reflecting amortization and a $19.0 million impairment charge[513][683] - Note 14 (Commitments): As of Dec 31, 2023, total content obligations were $1.1 million, a significant decrease from $11.5 million at the end of 2022[590][591] Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None reported[621] Item 9A. Controls and Procedures Management concluded that the company's disclosure controls and procedures and internal control over financial reporting were effective as of December 31, 2023 - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2023[623] - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2023[630] Item 9B. Other Information The company reports no other information under this item - None[632] Part III Item 10. Directors, Executive Officers and Corporate Governance Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's 2024 Proxy Statement - Information is incorporated by reference from the definitive proxy statement for the 2024 Annual Meeting[641] Item 11. Executive Compensation Information regarding executive compensation is incorporated by reference from the company's 2024 Proxy Statement - Information is incorporated by reference from the definitive proxy statement for the 2024 Annual Meeting[634] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information regarding security ownership is incorporated by reference from the company's 2024 Proxy Statement - Information is incorporated by reference from the definitive proxy statement for the 2024 Annual Meeting[642] Item 13. Certain Relationships and Related Transactions, and Director Independence Information regarding related party transactions and director independence is incorporated by reference from the company's 2024 Proxy Statement - Information is incorporated by reference from the definitive proxy statement for the 2024 Annual Meeting[643] Item 14. Principal Accountant Fees and Services Information regarding principal accountant fees and services is incorporated by reference from the company's 2024 Proxy Statement - Information is incorporated by reference from the definitive proxy statement for the 2024 Annual Meeting[647] Part IV Item 15. Exhibits, Financial Statement Schedules This section lists all documents filed as part of the Form 10-K, including consolidated financial statements and various exhibits - This section lists all exhibits filed with or incorporated by reference into the Form 10-K[644][649] Item 16. Form 10-K Summary The company has not provided a summary under this item - None[597]