Core Insights - CuriosityStream reported strong Q3 2025 results with revenue growth of 46% year-over-year to $18.4 million, surpassing guidance [1][12] - Adjusted free cash flow increased by 88% to $4.8 million, marking the seventh consecutive quarter of positive adjusted free cash flow [8][15] - The company is focusing on three growth pillars: subscriptions, licensing, and advertising, which are enhancing its market position at the intersection of knowledge, media, and AI [1][10] Financial Performance - Revenue for Q3 2025 was $18.4 million, a 46% increase from $12.6 million in Q3 2024 [12] - Adjusted EBITDA improved by $3.4 million year-over-year, reaching $3 million [12][15] - Licensing revenue surged over 425% year-over-year to $8.7 million, driven by AI training fulfillments [13][15] - Subscription revenue was reported at $9.3 million, showing sequential growth [13] Growth Strategy - The company has engaged with 9 key partners across various media formats, delivering over 1.5 million distinct assets [1] - CuriosityStream aims to double or triple its roster of AI licensing partners by the end of 2026 [9][31] - The company plans to enhance its advertising business and has launched new channels on platforms like Amazon and Roku [8][11] Market Positioning - CuriosityStream is positioning itself as a leading provider of AI training data with a library of nearly 2 million hours of video and audio content [6][10] - The company anticipates that licensing revenue will exceed subscription revenue by 2027 [9][10] - The balance sheet remains strong with over $29 million in liquidity and no debt, providing substantial flexibility for future growth [11][16] Future Outlook - For Q4 2025, the company expects revenue between $18 million and $20 million, projecting full-year revenue of $70 million to $72 million, representing a 38% to 42% increase from 2024 [18][19] - Adjusted free cash flow for the full year is expected to be between $12 million and $13 million, indicating a 27% to 37% increase from 2024 [19] - The company intends to pay dividends from cash generated by operations in 2026, similar to its approach in 2024 [10][19]

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]