Business Wire | Nov 12, 2020 04:05PM EST

CuriosityStream Announces Third Quarter 2020 Financial Results

Nov. 12, 2020

SILVER SPRING, Md.--(BUSINESS WIRE)--Nov. 12, 2020--CuriosityStream Inc. (NASDAQ: CURI), a global factual entertainment company, today announced its financial results for the third quarter ending September 30, 2020.

"We had a strong third quarter, with an 83% year-over-year increase in revenue and growth across all lines of business. Our subscribers more than doubled year over year, with notable increases in annual plans and international subscriptions, as we continued to offer fresh and unique original content every week," said Clint Stinchcomb, President & CEO. "We continue to be on a three-year trajectory of doubling annual revenue with large recurring revenues and high gross margins as we drive growth across the entire business."

Third Quarter 2020 Financial Results

* Revenue of $8.7 million, up from $4.8 million in the third quarter of 2019; * Total paying subscribers of approximately 13 million, up 108% year-over-year; * Gross margin increased 200 basis points year-over-year to 61%; * Operating loss was $(6.8) million compared to operating loss of $(10.1) million in the third quarter of 2019; * EBITDA was $(6.7) million compared to EBITDA of $(10.0) million in the third quarter of 2019; * GAAP net loss was $(6.7) million and GAAP basic and diluted net loss per share was $(0.56); * Sources of cash totaled $23.3 million as of September 30, 2020.

Business Highlights

* Closed business combination with Software Acquisition Group, Inc. (NASDAQ: SAQN) and began trading on the NASDAQ exchange under ticker symbol "CURI" on October 15, 2020, becoming the first streaming media company devoted to factual entertainment to go public; * Named international media executive Bakori Davis to the newly created position of Managing Director and Head of International Distribution; * Named industry veteran Nate Stamos VP of Brand Partnerships; * Appointed entertainment and cable industry pioneer Matthew Blank, former Chairman and CEO of Showtime Networks, Inc., to CuriosityStream's Board of Directors; * Announced several brand-defining original series including MY WILD BACKYARD, the third season of 4th AND FOREVER, DOUG TO THE RESCUE and NATURE THROUGH HER EYES; * In a separate release today, CuriosityStream announced the November 19th, 2020 world premiere of the original new series BEYOND THE SPOTLIGHT from Executive Producer Leonardo DiCaprio and Appian Way Productions and Stephen David Entertainment. First episodes feature Shaquille O'Neal, Kristen Bell and Samuel L. Jackson and LaTanya Richardson Jackson.

Financial Outlook

For the fourth quarter of 2020, CuriosityStream currently expects the following:

* Revenue of at least $11.3 million, or 69% year-over-year growth

For the full year 2020 & 2021, CuriosityStream currently expects the following:

* 2020 revenue of at least $39.5 million, or 119% year-over-year growth * 2021 revenue of at least $71 million, or 80% year-over-year growth

Conference Call Information

CuriosityStream will host a Q&A conference call today to discuss the Company's Q3 2020 results at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). A live audio webcast of the call will be available on the CuriosityStream Investor Relations website at https://investors.curiositystream.com. A live dial-in is available domestically at (800) 585-8367 or internationally at (416) 621-4642, with passcode 9085595.

An audio replay of the conference call will be available for two weeks following the call and available on the CuriosityStream Investor Relations website at https://investors.curiositystream.com.

Forward-Looking Statements

Certain statements in this press release may be considered "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not limited to, CuriosityStream's expectations or predictions of future financial or business performance or conditions and the information under the heading "Financial Outlook" in this press release. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events or results of operations, are forward-looking statements. These statements may be preceded by, followed by or include the words "believes," "estimates," "expects," "projects," "forecasts," "may," "will," "should," "seeks," "plans," "scheduled," "anticipates," "predicts" or "intends" or similar expressions. Such forward-looking statements involve risks and uncertainties that may cause actual events, results or performance to differ materially from those indicated by such statements. Certain of these risks are identified and discussed under "Risk Factors" in the Definitive Proxy Statement on Schedule 14A filed on September 22, 2020, and in CuriosityStream's other SEC filings. These risk factors will be important to consider in determining future results and should be reviewed in their entirety. Forward-looking statements are based on the current belief of the management of CuriosityStream, based on currently available information, as to the outcome and timing of future events, and involve factors, risks, and uncertainties that may cause actual results in future periods to differ materially from such statements. However, there can be no assurance that the events, results or trends identified in these forward-looking statements will occur or be achieved. Forward-looking statements speak only as of the date they are made, and CuriosityStream is not under any obligation, and expressly disclaims any obligation to update, alter or otherwise revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. Readers should carefully review the statements set forth in the reports that CuriosityStream has filed or will file from time to time with the SEC.

In addition to factors previously disclosed in CuriosityStream's reports filed with the SEC and those identified elsewhere in this communication, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: (i) the effect of the merger on CuriosityStream's business relationships, operating results, and business generally; (ii) failure to realize the benefits expected from the merger; (iii) risks that the merger disrupts CuriosityStream's current plans and operations and potential difficulties in CuriosityStream's employee retention as a result of the merger; (iv) the effects of pending and future legislation; (viii) risks related to CuriosityStream's limited operating history; (ix) the amount of the costs, fees, expenses and other charges related to the merger; (x) risks of the internet, online commerce and media industry; (xi) the highly competitive nature of the internet, online commerce and media industry and CuriosityStream's ability to compete therein; (xii) litigation, complaints, and/or adverse publicity; (xiii) the ability to meet Nasdaq's listing standards and (ix) privacy and data protection laws, privacy or data breaches, or the loss of data.

Non-GAAP Financial Measures

To supplement our condensed consolidated financial statements, which are prepared in accordance with GAAP, we present EBITDA in this press release. Our use of non-GAAP financial measures has limitations as an analytical tool, and these measures should not be considered in isolation or as a substitute for analysis of financial results as reported under GAAP.

We use this non-GAAP financial measure in conjunction with financial measures prepared in accordance with GAAP for planning purposes, including in the preparation of our annual operating budget, as a measure of our core operating results and the effectiveness of our business strategy, and in evaluating our financial performance. This measure provides consistency and comparability with past financial performance, facilitates period-to-period comparisons of core operating results, and also facilitates comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results. In addition, EBITDA is widely used by investors and securities analysts to measure a company's operating performance. We exclude the following items from one or more of our non-GAAP financial measures: other income, income taxes, and depreciation and amortization.

Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. In particular, (1) stock-based compensation expense has recently been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy, (2) although depreciation and amortization expense are non-cash charges, the assets subject to depreciation and amortization may have to be replaced in the future, and EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements, and (3) EBITDA does not reflect: (a) changes in, or cash requirements for, our working capital needs; (b) or tax payments that may represent a reduction in cash available to us. The non-GAAP measure we use may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes. We compensate for these limitations by providing specific information regarding the GAAP items excluded from these non-GAAP financial measures. A reconciliation of these non-GAAP measures has been provided in the financial statement tables included in this press release and investors are encouraged to review the reconciliation.

About CuriosityStream

Launched by media visionary John Hendricks, CuriosityStream is one of the world's leading global factual streaming services and media companies. Our documentary series and features cover every topic from space exploration to adventure to the secret life of pets, empowering viewers of all ages to fuel their passions and explore new ones. With thousands of titles, many in Ultra HD 4K, including exclusive originals, CuriosityStream features stunning visuals and unrivaled storytelling to demystify science, nature, history, technology, society, and lifestyle. CuriosityStream programming is available worldwide to watch on TV, desktop, mobile and tablets. Find us on Roku, Apple TV Channels and Apple TV, Xbox One, Amazon Fire TV, Google Chromecast, iOS and Android, as well as Amazon Prime Video Channels, YouTube TV, Sling TV, DISH, Comcast Xfinity on Demand, Cox Communications, Altice USA, Suddenlink, T- Mobile, Frndly TV, Vidgo, Sony, LG, Samsung and VIZIO smart TVs, Liberty Global, Com Hem, MultiChoice, StarHub TV, Totalplay, Millicom, Okko, Gazprom and other global distribution partners and platforms. For more information, visit CuriosityStream.com.

CuriosityStream Inc.

Unaudited Statements of Operations

(in thousands, except for per share data)

For the three months For the nine months ended ended September 30, September 30,

2020 2019 2020 2019



Revenues $ 8,744 $ 4,791 $ 28,260 $ 11,336



Operating expenses

Cost of revenues 3,411 1,946 10,748 4,384

Advertising and 7,800 9,410 28,673 26,124 marketing

General and 4,286 3,539 12,191 10,388 administrative

15,497 14,895 51,612 40,896

Operating loss (6,753 ) (10,104 ) (23,352 ) (29,560 )



Other income (expense)

Interest and other 101 475 519 1,719 income (expense)

Loss before income (6,652 ) (9,629 ) (22,833 ) (27,841 )taxes

Provision for income 41 30 118 103 taxes

Net loss $ (6,693 ) $ (9,659 ) $ (22,951 ) $ (27,944 )



Less preferreddividends and accretion (4,523 ) (4,059 ) (13,114 ) (11,725 )of issuance costs (Note6)

Net loss attributable $ (11,216 ) $ (13,718 ) $ (36,065 ) $ (39,669 )to common stockholders



Net loss per shareattributable to common stockholders

Basic and diluted (0.56 ) (0.69 ) (1.80 ) (1.98 )



Weighted average numberof common shares outstanding

CuriosityStream Inc.

Balance Sheets

(in thousands, except par value)

September 30,

December 31,

2020

2019

(unaudited)

Assets

Current assets

Cash and cash equivalents

$

3,374

$

8,819

Restricted cash

5,000

-

Short-term investments

12,114

35,525

Accounts receivable

5,800

1,777

Other current assets

2,951

2,460

Total current assets

29,239

48,581

Investments

2,770

15,654

Property and equipment, net

1,358

1,451

Content assets, net

23,826

16,627

Other assets

2,790

151

Total assets

$

59,983

$

82,464

Liabilities, redeemable convertible preferred stock, and stockholders' equity (deficit)

Current liabilities

Current content liabilities

$

2,165

$

3,306

Accounts payable

2,323

5,245

Accrued expenses and other liabilities

2,542

2,266

Deferred revenue

8,885

7,101

Line of credit

950

-

Total current liabilities

16,865

17,918

Non-current deferred rent liability

905

824

Total liabilities

17,770

18,742

Commitments and contingencies

Redeemable convertible preferred stock, $0.01 par value, 30,000 shares authorized at September 30, 2020 and December 31, 2019; aggregate liquidation preference of $175,104 and $162,514 as of September 30, 2020 and December 31, 2019, respectively; 14,557 shares issued and outstanding at September 30, 2020 and December 31, 2019

168,288

155,174

Stockholders' equity (deficit)

Class A Common stock, $0.01 par value - 50,000 shares authorized at September 30, 2020 and December 31, 2019, respectively; 14 and nil shares issued and outstanding at September 30, 2020 and December 31, 2019 respectively

-

-

Class B Common stock, $0.01 par value - 25,000 shares authorized at September 30, 2020 and December 31, 2019; 20,000 shares issued and outstanding at September 30, 2020 and December 31, 2019

200

200

Additional paid-in capital

-

-

Accumulated other comprehensive income

55

189

Accumulated deficit

(126,330

)

(91,841

)

Total stockholders' equity (deficit)

(126,075

)

(91,452

)

Total liabilities, redeemable convertible preferred stock, and stockholders' equity (deficit)

$

59,983

$

82,464

CuriosityStream Inc.

Balance Sheets

(in thousands, except par value)

September December 30, 31,

2020 2019

(unaudited)

Assets



Current assets

Cash and cash equivalents $ 3,374 $ 8,819

Restricted cash 5,000 -

Short-term investments 12,114 35,525

Accounts receivable 5,800 1,777

Other current assets 2,951 2,460

Total current assets 29,239 48,581



Investments 2,770 15,654

Property and equipment, net 1,358 1,451

Content assets, net 23,826 16,627

Other assets 2,790 151

Total assets $ 59,983 $ 82,464



Liabilities, redeemable convertible preferred stock, and stockholders' equity (deficit)



Current liabilities

Current content liabilities $ 2,165 $ 3,306

Accounts payable 2,323 5,245

Accrued expenses and other liabilities 2,542 2,266

Deferred revenue 8,885 7,101

Line of credit 950 -

Total current liabilities 16,865 17,918



Non-current deferred rent liability 905 824



Total liabilities 17,770 18,742



Commitments and contingencies



Redeemable convertible preferred stock, $0.01 parvalue, 30,000 shares authorized at September 30,2020 and December 31, 2019; aggregate liquidationpreference of $175,104 and $162,514 as of 168,288 155,174 September 30, 2020 and December 31, 2019,respectively; 14,557 shares issued and outstandingat September 30, 2020 and December 31, 2019



Stockholders' equity (deficit)

Class A Common stock, $0.01 par value - 50,000shares authorized at September 30, 2020 andDecember 31, 2019, respectively; 14 and nil shares - - issued and outstanding at September 30, 2020 andDecember 31, 2019 respectively

Class B Common stock, $0.01 par value - 25,000shares authorized at September 30, 2020 andDecember 31, 2019; 20,000 shares issued and 200 200 outstanding at September 30, 2020 and December 31,2019

Additional paid-in capital - -

Accumulated other comprehensive income 55 189

Accumulated deficit (126,330 ) (91,841 )

Total stockholders' equity (deficit) (126,075 ) (91,452 )



Total liabilities, redeemable convertiblepreferred stock, and stockholders' equity $ 59,983 $ 82,464 (deficit)

CuriosityStream Inc.

Unaudited Statements of Cash Flows

(in thousands)

For the nine months ended September 30,

2020

2019

Cash flows from operating activities

Net loss

$

(22,951

)

$

(27,944

)

Adjustments to reconcile net loss to net cash used in operating activities

Additions to content assets

(14,004

)

(12,029

)

Change in content liabilities

(1,141

)

1,241

Amortization of content assets

6,805

2,441

Amortization, depreciation and accretion

399

64

Stock-based compensation

1,540

671

Changes in operating assets and liabilities

Accounts receivable

(4,023

)

(244

)

Other assets

(773

)

945

Accounts payable

(3,263

)

1,460

Accrued expenses and other liabilities

124

407

Deferred revenue

1,784

1,253

Net cash used in operating activities

(35,503

)

(31,735

)

Cash flows from investing activities

Purchases of property and equipment

(299

)

(590

)

Sales of investments

39,744

30,309

Maturities of investments

8,500

7,947

Purchase of investments

(12,227

)

(48,243

)

Net cash provided by (used in) investing activities

35,718

(10,577

)

Cash flows from financing activities

Exercise of stock options

36

-

Borrowings on line of credit

8,250

-

Repayments on line of credit

(7,300

)

-

Payment of offering costs

(1,646

)

-

Net cash used in financing activities

(660

)

-

Net decrease in cash, cash equivalents and restricted cash

(445

)

(42,312

)

Cash, cash equivalents and restricted cash, beginning of period

8,819

62,516

Cash, cash equivalents and restricted cash, end of period

$

8,374

$

20,204

Supplemental schedule of non-cash financing activities:

Preferred dividends and accretion of issuance costs

$

13,114

$

11,725

CuriosityStream Inc.

Unaudited Statements of Cash Flows

(in thousands)

For the nine months ended September 30,

2020 2019

Cash flows from operating activities

Net loss $ (22,951 ) $ (27,944 )

Adjustments to reconcile net loss to net cash used in operating activities

Additions to content assets (14,004 ) (12,029 )

Change in content liabilities (1,141 ) 1,241

Amortization of content assets 6,805 2,441

Amortization, depreciation and accretion 399 64

Stock-based compensation 1,540 671

Changes in operating assets and liabilities

Accounts receivable (4,023 ) (244 )

Other assets (773 ) 945

Accounts payable (3,263 ) 1,460

Accrued expenses and other liabilities 124 407

Deferred revenue 1,784 1,253

Net cash used in operating activities (35,503 ) (31,735 )



Cash flows from investing activities

Purchases of property and equipment (299 ) (590 )

Sales of investments 39,744 30,309

Maturities of investments 8,500 7,947

Purchase of investments (12,227 ) (48,243 )

Net cash provided by (used in) investing activities 35,718 (10,577 )



Cash flows from financing activities

Exercise of stock options 36 -

Borrowings on line of credit 8,250 -

Repayments on line of credit (7,300 ) -

Payment of offering costs (1,646 ) -

Net cash used in financing activities (660 ) -



Net decrease in cash, cash equivalents and restricted (445 ) (42,312 )cash

Cash, cash equivalents and restricted cash, beginning 8,819 62,516 of period

Cash, cash equivalents and restricted cash, end of $ 8,374 $ 20,204 period



Supplemental schedule of non-cash financing activities:

Preferred dividends and accretion of issuance costs $ 13,114 $ 11,725

Reconciliation of GAAP Financial Metrics to Non-GAAP(in thousands)(unaudited)Reconciliation of Net Loss to EBITDAFor the three months ended September 30,

For the nine months ended September 30,

2020

2019

2020

2019

Net loss$

(6,693

)

$

(9,659

)

$

(22,951

)

$

(27,944

)

Other income(101

)

(475

)

(519

)

(1,719

)

Income taxes41

30

118

103

Depreciation and amortization83

63

256

170

EBITDA$

(6,670

)

$

(10,041

)

$

(23,096

)

$

(29,390

)

View source version on businesswire.com: https://www.businesswire.com/news/home/20201112006054/en/

CONTACT: CuriosityStream Public Relations: Vanessa Gillon Vanessa.Gillon@CuriosityStream.com

CONTACT: CuriosityStream Investor Relations: Denise Garcia IR@CuriosityStream.com