Curiosity(US:CURI)2023-03-31 03:49Financial Data and Key Metrics Changes - The company reported fourth quarter revenue of $14.5 million, down from $27.3 million in the prior year quarter, primarily due to a $9.5 million reduction in content licensing revenues and a $2.2 million reduction in bundled distribution revenues [73][74][112] - Adjusted EBITDA loss improved year-over-year from a loss of $16.3 million to a loss of $13.6 million [111] - Adjusted free cash flow improved by $22.7 million year-over-year, from negative $31.5 million to negative $8.8 million [80][71] Business Line Data and Key Metrics Changes - Direct-to-consumer SVOD revenues grew 12% in the fourth quarter and 25% for the full year year-over-year [42] - The Smart Bundle achieved 32% subscriber growth this year, with expectations for higher percentages of new subscribers opting for the Smart Bundle in 2023 due to increased standard pricing [75][66] - Content licensing revenue was $3 million in the fourth quarter, down from $12.5 million in the prior year quarter, negatively impacted by Spiegel TV-related charges [107] Market Data and Key Metrics Changes - The company ended the year with over $55 million in cash and short-term investments and zero debt, exceeding its year-end target cash balance of $50 million [61] - The enterprise category grew 18% year-over-year to $1.4 million in the fourth quarter [77] - The company expects content amortization expense to decrease from approximately $39 million in 2022 to $25 million to $30 million in 2023 [113] Company Strategy and Development Direction - The company is focused on improving the economics of partnerships and vendor agreements, aiming for long-term value creation over short-term revenue opportunities [40][62] - A new pricing structure was implemented, increasing the standard service price to $39.99 per year and $4.99 per month for new subscribers, with expectations of a blended price increase of about 83% for new customers [63][134] - The company is transitioning to a performance-based customer acquisition marketing model, significantly reducing marketing commitments for 2023 [74][82] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ability to drive accelerated subscription revenue growth and profitability through the new pricing structure and performance-based marketing [42] - The macro environment, while challenging, has presented new opportunities for partnerships and strategic growth, particularly in international markets [68][98] - The company is confident in its ability to achieve positive adjusted free cash flow in the near term and sustain long-term growth [60][71] Other Important Information - The company has made strategic decisions to exit certain low-margin licensing opportunities to focus on higher-value partnerships [117][121] - The company is actively engaged in discussions with distributors worldwide to sign new contracts for growth [108] - The company has a critical mass content library of over 15,000 programs, which is leveraged for subscriber retention and engagement [95] Q&A Session All Questions and Answers Question: Can you help us understand the impact of the parts of the business that you strategically decided to exit? - Management indicated that they passed on meaningful licensing opportunities to retain certain rights and pursue broader licensing rights, balancing immediate revenue against long-term potential [117] Question: How will the pricing increases play out for consumers? - New customers will see the new pricing immediately, while current monthly customers will transition over the next few months, and annual customers will transition over the next 11 to 12 months [134] Question: What is the outlook for content licensing revenue? - Management noted that content licensing revenue is expected to decline significantly as the company shifts focus to higher-margin opportunities and pulls back on zero-margin presales revenue [147]