CuriosityStream Inc.

first quarter 2024 earnings conference 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'd like to ask a question during that time, simply press star, followed by the number one on your telephone keypad. And if you'd like to withdraw that question, again, press star one. Thank you. I would now like to turn the conference over to Andrew Lotta, Director of FP&A and Director of Investor Relations, you may begin your conference.

Thank you. Welcome to CuriosityStream's discussion of its first quarter 2024 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, you 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 or to make additional forward-looking statements in the future. For 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 March 31, 2024, 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 Glenn.

Thank you very much, Andrew. I appreciate everyone joining us today for this milestone report. For the first quarter in company history, we achieved a positive quarter. We generated over $1 million in adjusted free cash flow in the first quarter, a year-over-year improvement of over $7 million. Our top-line revenue was roughly equivalent to Q1 2023. We believe we are well-positioned to improve upon both of these critical metrics in Q2. Q1, we increased our direct subscription revenue sequentially and year-over-year. In June, we will begin to benefit from the fact that all of our new subscribers in the United States will finally be under the new pricing we introduced last year. In regard to partnerships, in Q1, we rolled out our subscription services with multinational global partners in 25 countries, and we added seven new content licensing partners. With an eye toward greater cash flow, higher margins, and overall revenue, we revised some of our pay TV agreements. While these revisions will result in a near-term revenue decrease in the bundle distribution category, we're confident that the mid-term and long-term upside from these adjustments far outweighs the minor near-term decrease. Moreover, we believe the current chaotic disruption where MVPDs are dropping legacy services and even entire network groups, along with their license fee entitlement demands, creates some meaningful opportunities that we believe we are uniquely suited to help solve and leverage. As a reminder, we have channels operating around the world today. And from our deep and vast library, we are well equipped to create additional factual category channels in areas like science, space, and natural history to meet distributor demand. As an example of this, just last week, Samsung announced that they will launch three of our Hispanic channels in June, Curiosity Español, Curiosity Animal, and Curiosity Motors. In regard to advertising, we now have commercial relationships with over 20 key partners and platforms for our ad-supported content, in Pay TV, Fast, and in Avot. And we anticipate roughly doubling this roster of advertising platform partners in 2024. While the bulk of our advertising-oriented revenue to date has been categorized as licensing revenue in light of the advances in minimum guarantees we negotiated, As our existing ad partners publish our content, and as our new partners publish and promote Curiosity content, we will begin to generate increasing and more predictable revenues from our ad-supported content. Additionally, as we generate more impressions in front of the paywall, we will benefit from the expansion at the top of our marketing funnel, which we believe will be helpful in moderating our paid marketing allocations. We've accomplished these objectives while simultaneously rationalizing our cost base. Including the non-cash expense inherent in content amortization, we cut our cost of revenue in half from Q123 to Q124, and we reduced G&A expense by about 30%. To reiterate, we believe we are now solidly situated to generate increasing positive cash flow and sturdy, sustainable revenues that are increasingly predictable and reliable. In addition to guiding to greater positive cash flow and revenue in the second quarter, we believe our dividend program, which is being paid from surplus cash, further underscores our positive trajectory for 2024 and beyond. At the core of Curiosity is, of course, the creation and distribution of premium factual programming that both inspires and informs. In Q1, we released original series and specials across a range of genres and formats, including Science for Evil Geniuses, in a reverent real-world test of supervillain science starring Game of Thrones actor Paul Kay. Fourth season of Fourth and Forever, following the DeSoto Eagles' quest to recapture another Texas state title. The Invention of Surgery, an unflinching look at the pioneers who transformed medicine from a primitive art into a sophisticated and successful science. The Art of Seduction, an expose of the secret powers of some of history's most influential characters. and believe, a beautiful look at the origins, traditions, and festivals of the world's five biggest religions and the challenges they face today. We celebrated the ancient world with Ancient Egyptian Week, and on May 9th, we kick off Jaws and Claws Week. Animals that can eat us are interesting to nearly all of us and interesting to people everywhere, as are dinosaurs and the compelling creatures that preceded us. In closing, I'm happy to reinforce that we ended the quarter with $39 million in cash and equivalents, $1.2 million in adjusted free cash flow, and zero debt. We believe our strong balance sheet and projected 2024 positive cash flow are major competitive advantages in the current environment. Moreover, we continue to believe that our global appeal, our direct subscriber base and direct platforms, our broad and deep content library of over 17,000 evergreen titles, Our multi-year third-party agreements, our public company currency, and our rationalized cost structure are uniquely favorable attributes that provide us with sustainable long-term strength and exceptional flexibility. I'd now like to pass the baton to my good friend and colleague, Peter, about whom I will have more to say at the conclusion of his remarks.