CuriosityStream Inc.

free cash flow, and our third consecutive quarter of positive free cash. Specifically, our $2.6 million in adjusted free cash flow represents a year-over-year improvement of nearly $6 million. We also increased our top-line revenue and EBITDA sequentially. And even as we paid a significant dividend, our liquidity from Q2 to Q3 increased. We believe we are well-positioned to continue to deliver sequential top-line revenue growth to generate meaningful adjusted free cash flow, and to continue to pay our dividend from surplus cash. We grew our direct subscription revenue 13% year over year, and while our sequential growth was flat, our margin here was up. As I mentioned last quarter, our annualized direct revenues now exceed our annualized operating expenses on a cash basis. We executed many new partnership agreements in Q3 that offer long-term reliable and durable recurring revenue. We launched pay TV channels with MVPD partners in Europe and Latin America. Amazon made Curiosity University one of the small group of curated services available in the Prime Video channel store. In regard to our advertising and sponsorship initiatives, we achieved some major milestones as we launched four fast channels with Samsung TV Plus domestically and internationally. We rolled out new AVOD packages with the largest global third-party partners, Pluto in the US, Tubi in the UK, and Canada, and Roku in Latin America, among others. We executed nine content licensing agreements with partners in the U.S., Europe, the Middle East, and Latin America. On the content front, we continue to expand our summer DocBusters programming and marketing campaign to increase viewer engagement across some of our biggest and best-performing original series, including The Real Wild West, Asteroid Rush, Planet Insect, Giants, and Connections with James Burke. We also released three new specials from our acclaimed original series, Ancient Engineering, highlighting some of humanity's greatest achievements throughout Egypt, China, and the Middle East. And we premiered multiple groundbreaking science, history, and nature specials, including Spider Vision Decoding Color, The Science of Movement, Cute Little Killers, Mystery of the Celtic Tomb, and Little Penguin Love Island. We're achieving new heights and critical milestones while continuing to keep our shoulders to the wheel and thoughtfully rationalize our cost base. In light of the increasing availability of AI-infused productivity tools, significantly reduced vendor costs, and strong organizational incentives around cost containment, we believe that we have additional room to reduce our overall expenses, both fixed and variable. In closing, I'm really proud that the well-directed work of our talent-dense team enabled us to generate $2.6 million in adjusted free cash flow and end the quarter with approximately $40 million in liquidity and no debt. Looking forward, we anticipate executing meaningful licensing agreements over the next several quarters with 20 to 30 new partners through both new grants of rights and traditional grants of rights for the premium content and assets we own and have under license. These monetizable data sets today include over 300,000 hours of video and audio, in hundreds of thousands of unique images, audiobooks, scripts, text, and code. We believe our strong balance sheet and significant and growing positive cash flow make us stand out in the current environment. Moreover, we continue to believe that our global appeal, our direct subscriber base and direct platforms, 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 friend and colleague, Brady Hayden.

Thank you, Clint, and good afternoon, everyone. As Clint said, we achieved another milestone in the third quarter as adjusted free cash flow came in at $2.6 million, near the high end of our guidance range. This also represented the highest quarterly adjusted free cash flow in the company's history and two years of sequential quarterly improvement in this metric. Revenue for the third quarter was $12.6 million compared to $12.4 million in the second quarter and $15.6 million a year ago. Adjusted EBITDA improved by $3.5 million from last year, and our adjusted free cash flow improved by $5.6 million as we continued our intense focus on the bottom line. Our largest revenue category in the quarter was our direct business, which generated $9.8 million, up 13% from a year ago. as we continue to benefit from the price increases we began rolling out last year. Our additional revenue categories, content licensing, bundled distribution, and other generated $2.8 million in the quarter compared to $7 million a year ago. This change was driven mostly by the timing of content licensing transactions and a number of non-cash barter deals that we closed a year ago, while content licensing remains an inherently lumpy part of the business. Third quarter gross margin of 54% increased from 46% a year ago, driven by continued reductions in content amortization and cash-based cost of revenues. Our gross margin excluding content amortization, which focuses on the cash cost of delivering our services, was 90% in the third quarter, compared to 80% a year ago. Looking ahead, we expect gross margin to continue to improve. Turning to third quarter operating expenses, G&A was $6.4 million, down from $7 million, or 8% from Q3 of last year, as we realized the ongoing benefits of our planned spending reductions. And excluding stock-based compensation, G&A declined 39% from a year ago. Finally, advertising and marketing expense was $3.6 million, a decline of 30% from $5.1 million a year ago. as we have continued to reduce partner marketing obligations. Adjusted EBITDA loss was $0.4 million in the third quarter compared to a loss of $3.9 million a year ago. While we don't provide guidance with regard to this metric, we expect that as gross margin continues to improve, breakeven adjusted EBITDA is within our reach. And as we mentioned earlier, adjusted free cash flow was $2.6 million in the quarter compared with negative $3 million a year ago. Turning to return of capital. During the third quarter, we repurchased 173,000 shares of our common stock, bringing the total to 195,000 shares bought back under the repurchase program that we announced in June. We paid our July dividend of $1.3 million, and we ended September with total cash and securities of $39.8 million and no outstanding debt. We believe our balance sheet remains in great shape and that this provides us with significant operating flexibility. Moving to fourth quarter guidance, we expect revenue in the range of $12 to $14 million and adjusted free cash flow in the range of $2 to $3 million. With that, we can hand it back to JL and open the call to questions.

Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Your first question comes from the line of Patrick Scholl of Barrington Research. Your line is open.