CuriosityStream Inc.

Good afternoon, good evening. My name is Devin and I will be your conference operator for today. At this time, I would like to welcome everyone to the CuriosityStream third quarter 2022 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star and then the number one on your telephone keypad. If you would like to withdraw your question, again, press star and then the number one on your telephone keypad. Investors of Relations, Denise Garcia, you may begin your conference.

Thank you, Devin. Welcome to CuriosityStream's discussion of the third quarter 2022 financial results. Leading the discussion today are Clint Stinchcomb, CuriosityStream's Chief Executive Officer, and Peter Wesley, CuriosityStream's Chief Financial Officer. Following management's prepared remarks, we will be happy to take your questions. But first, I'll review the safe harbor statement. During this call, we may make statements related to our business that are forward-looking statements under the federal securities laws. These statements are not guarantees of future performance, but rather are subject to a variety of risks, uncertainties, and assumptions. Our actual results could differ materially from expectations reflected in any forward-looking statements. Please be aware that any forward-looking statements reflect management's current views only, and the company undertakes no obligation to revise or update these statements, nor to make additional forward-looking statements in the future. For a discussion of the material risks and other important factors that could affect our actual results, please refer to our SEC filings available on the SEC website and on our investor relations website, as well as the risks and other important factors discussed in today's press release. Additional information will also be set forth in our quarterly report on Form 10-Q for the quarter ended September 30, 2022, when filed. In addition, reference will be made to non-GAAP financial measures. A reconciliation of these non-GAAP measures to comparable GAAP measures can be found on our website at investors.curiositystream.com. Now I'll turn the call over to Clint.

Thank you, Denise. I would like to thank everyone for joining our third quarter earnings call. I know we are not the only company reporting tonight. Also joining us today is our COO and General Counsel, Tia Cudahy, our CFO, Peter Wesley, and our Heads of Content, Strategy, and Distribution, Rob Burke, Devin Emery, and Bakori Davis. We delivered another strong quarter in Q3 with revenue and EBITDA exceeding the high end of our guidance ranges. We're making great progress toward becoming an enduring, sustainably profitable company. Our CFO, my good friend and colleague, Peter Wesley, is already making a significant impact in his first six months on the job, as evidenced by this quarter's especially strong bottom line performance. As Peter will discuss in his remarks, we beat EBITDA by nearly $6 million relative to our guidance midpoint due to greater operating efficiencies, lower marketing costs, and better gross margins relative to plan. We are leaving no stone unturned as we continue to operate in a manner that drives quality, accountability, and cost efficiencies across the company. Before digging further into the quarter's results, I would like to touch on a few key highlights which demonstrate the value of our evergreen factual content and the benefits of our multifaceted revenue stack. We deliberately position Curiosity to meet consumers virtually wherever they go. across the globe in order to monetize our content and IP in ways that maximize audience and profitability. During the quarter, we signed licensing agreements with a number of media companies, both at home and abroad. We also brought on new blue chip advertising partners in the automotive technology and financial services industries. And within our streaming subscriber base, we are particularly encouraged by the continued uptake of our smart bundle, demonstrating that many subscribers are willing to pay significantly more for the service. Our subscriber retention remained best in class with low single-digit monthly subscriber churn. With more than 85% of our DTC subscribers on annual plans, we have the opportunity to leverage a broad range of data to deliver customized service to our subscribers before they even have to consider whether to renew. And in spite of significantly lower marketing spend last quarter, we continue to grow direct subscribers both on a year-over-year and sequential basis. Turning to our third-party distribution business, we continue to sign up new partners in Q3, including the largest MVPD in the Netherlands. Bundled distribution generates multi-year recurring revenues and is an excellent source of opportunity for our direct and content licensing categories. And with partnerships across the globe, it also provides us with significant geographical diversification.