Good day and thank you for standing by. Welcome to the CuriosityStream Q2 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Denise Garcia, Investor Relations. Please go ahead.

Thank you, Mattie. Hello. Welcome to CuriosityStream’s discussion of its second quarter 2021 financial results. Leading the discussion today are Clint Stinchcomb, CuriosityStream’s Chief Executive Officer; and Jason Eustace, 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 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 three months ended June 30, 2021 when filed. In addition, reference will be made to non-GAAP financial measures. Now, I’ll turn the call over to Clint.

Thank you, Denise. I’d like to thank everyone for joining our second quarter 2021 earnings call. I’m delighted to have with us today, our COO and General Counsel, Tia Cudahy; our CFO, Jason Eustace; and our Chief Product Officer and EVP of Content Strategy, Devin Emery. After my comments, I will turn the call over to our CFO, Jason Eustace, to review the financials. Curiosity is the global factual entertainment brand for people who want to know more. We are deeply rooted in our passion for enchanting and informative storytelling, and our strong direct subscription service with approximately 20 million paying subscribers across our platforms and distributors. We are committed to producing, acquiring and distributing the best content across every genre in the factual category and our original programming this year is resonating more than ever. Unlike many streaming services that rely on one line of revenue, we are delivering strong topline growth on a multifaceted revenue stack, anchored by recurring subscription revenues and industry-leading retention. Let me talk about the second quarter. I’m pleased to report another quarter of robust growth in our direct subscription business, where we grew subscribers 56% year-over-year. New subscribers are joining our service at a rapid pace, particularly as the annual anniversaries of subscribers who signed up during the most significant periods of the COVID lockdowns approach. We have successfully navigated retaining those users better than anyone else in the industry. There were some concerns about an uptick in churn affecting our business when COVID lockdowns in the U.S. were lifted. But in fact, we retained in Q2 2021 a higher percentage of users who signed up in Q2 2020 than any other streaming service, including Netflix. Our monthly churn remained in the low-single digits during the quarter, as we continued to lead the streaming industry in subscriber retention. We’re also pleased to announce a partnership with SPIEGEL TV, the iconic media brand and leading producer and distributor of high-quality factual content for German-speaking audiences. This distribution partnership bolsters our global reach by adding millions of subscribers in Europe. It accelerates our growth through the addition of hundreds of hours of German-dubbed programming to our subscription video-on-demand service and extends our brand through the introduction of a Curiosity channel in German-speaking Europe. This deal demonstrates our commitment to prioritizing strong-performing international markets and expanding globally through strategic distribution partnerships. It substantially increases our profile in Europe, which we believe sets the stage for accelerated subscriber growth in the region. Revenue in the second quarter grew 55% compared to Q1 of 2021 to $15.3 million, driven by continued strength in direct subscription revenue, with content licensing also contributing to our success in the quarter. Paid subscribers increased 40% year-over-year to approximately 20 million, up from 16 million at the end of the first quarter, with strong double-digit growth across our streaming businesses. We continue to expect a robust second half of 2021 and are confirming our full-year revenue guidance of $71 million for 2021. The fundamentals of our streaming businesses were exceptionally strong during the second quarter, led by low direct consumer subscriber churn, which was relatively flat on both a year-over-year and quarter-over-quarter basis. According to ANTENNA, a media analytics provider, CuriosityStream led the streaming industry in subscriber retention for the 13 months ended in May of this year. As of the end of May, we had retained 72% of subscribers who joined our service during the height of the pandemic in April 2020, compared to Netflix at 71%, Disney at 55%, Hulu at 52%, HBO Max at 41%, and Apple TV+ at 17%. We believe our industry-low churn demonstrates the high value of our service, as well as the success of our annual subscription strategy. While our competitors typically have one month to prove the value of their service, we have an entire year to train our algorithms and learn to serve our subscribers the content that best suits their preferences. We believe our industry-leading subscriber retention was especially impressive in the context of the second quarter of 2021, as annual subscribers who took advantage of promotional pricing last year renewed their subscriptions at this year’s higher prices. Higher renewal pricing, combined with a higher proportion of premium subscriptions, as we enhanced the value of our premium tier offering, drove a quarter-over-quarter increase in direct consumer average revenue per user, which we expect to continue. We are encouraged by these favorable trends and are as excited as ever about the long-term growth prospects of our subscription business. We believe the long-term growth prospects of our subscription business will be further enhanced by our recently announced partnership with SPIEGEL TV. International expansion has always been a key pillar of our growth strategy, with our success to date largely driven by distribution deals with pay TV operators worldwide. Our partnership with SPIEGEL TV extends well beyond the typical distribution deal, as it includes the introduction of a Curiosity branded linear channel in German-speaking Europe, which will help raise our brand awareness to millions of people. In addition, it adds hundreds of hours of German-dubbed programming to our subscription video-on-demand service. This channel will continue to be operated by the current management team led by our good friend, business associate, and talented leader, Patrick Hörl from Autentic and Michael Kloft from SPIEGEL TV. Germany is currently one of CuriosityStream’s top three non-English speaking markets. We expect this partnership to accelerate our direct consumer subscriber growth in German-speaking countries and beyond. The partnership with SPIEGEL TV more firmly establishes CuriosityStream in Europe. Over the longer term, as we expand our language customization, we believe Europe represents a vast direct-to-consumer opportunity with hundreds of millions of affluent broadband subscribers. Unlike many traditional media companies, our international expansion opportunity is less hampered by fractured rights issues and is greatly enhanced by how well our content travels. We continue to deliver unique, relevant insights on our world through groundbreaking new content. During the quarter, we premiered the six-part docuseries DOUG TO THE RESCUE, featuring aerial cinematographer and drone pilot Doug Thron. This series gives viewers an inside look at what happens to animals, both wild and domestic, on the ground in the aftermath of a natural disaster. From hurricanes to wildfires, Doug traveled to the hardest hit areas, using next-gen drone technology to find animals who are stranded or left behind, and he gets them back safely to their owners or to their natural habitat. Doug was profiled on Good Morning America, Access Hollywood, and Rachael Ray in a beautiful way, and he appeared in People Magazine last week. Throughout the quarter, we also premiered three new episodes of our landmark original series, ENGINEERING THE FUTURE, which explores the spectacular next-generation eco-machines that could revolutionize life as we know it. Now, on the opposite end of the spectrum, five new episodes of our tentpole original ANCIENT ENGINEERING, which reveals how key technological innovations from our distant past continue to give rise to some of our greatest engineering achievements today. Both series delivered some of our strongest premieres to date and have already been greenlit for second seasons in 2022, as part of our strategy to better engage viewers with popular, brand-defining, returnable series. Another returnable series we premiered was the most recent season of 4TH AND FOREVER, which profiles iconic high school football programs in the U.S., where football serves merely as a prism to tell the stories of the people in their community. This season, we embedded with Alcoa High in East Tennessee, an extraordinary school that not only embraced diversity integration but became a much stronger community football powerhouse because of it. We also premiered the first four episodes of our landmark series FASTER: HUMANITY’S QUEST TO SAVE TIME, a quirky, smart, and engaging series. I encourage you to watch along with all the other premieres I mentioned. We continue to invest in the distinct content that we believe defines us: nature, history, science, travel, and every category in the factual genre. We will offer more new originals this year than any time in our history. We are exploring all options to expand a library that is already unrivaled and goes deeper than anyone else into the topics our viewers care about. We're excited to announce that we were recently nominated for an Emmy Award in the category of Outstanding Science and Technology Documentary for the Mars episode of our epic eight-part series SECRETS OF THE SOLAR SYSTEM. It’s an honor to be among the nominees and to be recognized for creating such high-quality science programs. With our strong balance sheet, robust subscriber momentum, a sturdy beachhead in German-speaking Europe, a strong team, and the leading factual content library in streaming, we are executing in a manner that makes us enthusiastic about the remainder of 2021 and beyond. I’d now like to turn the presentation over to our CFO, Jason Eustace, for some financial highlights.

Thanks, Clint. I’m also excited about the strong momentum in our subscription businesses and the landmark business development activities we announced this quarter. As the world reopens and entertainment options increase, our subscriber growth continues unabated. We look forward to building our record 20 million subscribers and remain on track to achieve our $71 million revenue goal for the year. Now let’s review second quarter financials. CuriosityStream’s Q2 2021 revenues grew 27% to $15.3 million, up from $12 million in Q2 2020. The revenue increase was led by direct-to-consumer subscription sales and program sales. Cost of revenue was $5.7 million or 37% of revenue, compared to 39% of revenue in Q2 of 2020, a decrease of 2 percentage points on a year-over-year basis. As a result, Q2 gross margin was 63%, compared to 61% in Q2 of 2020. Advertising and marketing expenses were $11.5 million, compared to $8.3 million in Q2 2020, as we continue to be opportunistic with our marketing spend and invest when the right market conditions exist. CuriosityStream’s overall operating expenses were $26.4 million, compared to $16.4 million in Q2 of 2022. The second-quarter EBITDA loss was $10.9 million, compared to an EBITDA loss of $4.3 million last year, due to higher general and administrative costs associated with being a public company, higher personnel costs, and increased marketing investment. We are on track with our plans for 2021 to deliver $71 million in revenue. We expect our revenue mix to shift in the third and fourth quarters as presale agreements comprise a higher percentage of revenues than in prior quarters. Again, accounting for presales under GAAP requires us to amortize content costs through cost of revenue on an accelerated basis upon revenue recognition, instead of on a straight-line basis over the estimated period of use, as we would with other original content. As a result, presale revenues are pass-through on a GAAP basis for the quarter when they’re booked and do not contribute to the GAAP gross profit. Due to significant lengths in presale deals, we anticipate in the third quarter and fourth quarter, we expect GAAP gross margins to be in the low-to-mid 40s in the second half of the year. Gross margins in our core subscription business are expected to remain strong on our lower cost per hour of programming relative to the broader streaming industry. While we expect GAAP gross margins to remain volatile over the next several quarters based on the size and timing of presales, we anticipate that the growth in our subscription business will mute the negative impact of presale deals on GAAP gross margins over the longer term. And now, I’ll turn it back over to Clint and open the line up for questions.

Thank you, Jason. Let’s please open up for questions.

And your first question comes from Devin Brisco with Bank of America.

Thank you for the question. You mentioned that some subscribers missed out on promotional pricing this quarter, yet you still managed to retain them better than the industry average. Do you have any further insights into which content is particularly effective in retaining subscribers? Additionally, as you address this issue, how is it possible to maintain such low churn? Will acquisition content become a higher priority moving forward? It seems like you might be increasing your content spending in the second half. Is $50 million in cash spending an appropriate target for the entire year?

So I can answer the second part of that question.

Thank you, Devin.

Yeah. Sorry. Go ahead, Clint.

Go ahead. Go ahead and take the second part and then I will take the first part.

Yeah. So the second part there, Devin, program investments are still on track. As we mentioned earlier this year, we’re still on track for high 40s, low 50s as far as our content spend. So that’s in line with everything as we expected earlier this year. We’re still going to be over 4000 titles by the end of the year.

Thank you, Jason. And Devin, if I may add, yeah, the reason for the high retention is due to many factors, certainly programming. And yes, we do have an idea as to what people like, but I will tell you that it is quality, but it is also quantity. It is also a particular cadence of providing new content to the platform, and certainly, we have a greater cadence there than we’ve had in years past just because we’re deeper into the cycle of adding significant programming. We’ve also done a lot to minimize the friction associated with subscribing to CuriosityStream and we’ve significantly enhanced the user experience and continue to do that. Devin, would you like to add anything?

Yeah. I would just reiterate that the velocity of new content coming to the platform across our tentpole originals, exclusive acquisitions, and even our curation of content available elsewhere is higher than it ever has been, and all of those are incredibly important. So all of those contribute different values to the platform and they’re all critical for making the best user experience. You’ll see that continue across all the different types of content that we have. There’ll be more of it, and it’ll be coming to our platform more quickly than it ever has before. And also, as Clint was saying, on the product and technology side, we’ve been investing in data engineering, CRM, engagement, UX, and UI. All of these have been things we’ve been working on for quite a while, but as Clint was saying, are critical so that people, when they’re coming into the platform, have the best possible experience finding whichever pieces of content they really want to watch and engage with. So all of that combined with our continued strength, enabling us to activate our audience, is what we have seen leading to that retention. There’s no silver bullet. It’s obsession over all the right details.

Thanks. That’s helpful. And you just announced the deal with SPIEGEL TV in the quarter. In the past, we’ve talked about there being sort of an outside opportunity internationally for growth. Are you starting to see a revenue mix shift yet in that direction? And I’m curious how you plan to prioritize bundle distribution versus more pure play DTC product internationally, and what that mix will look like going forward?

Excellent question. Devin, I would say that we have more bundled subscribers outside of the U.S. today. We have more direct subscribers in the U.S. today. That said, we do have direct subscribers in 176 countries today, which underscores the attraction of factual content and illustrates the fact that, with factual content, it’s a bit easier to control the distribution of broader rights than in scripted content, for example. We will continue to prioritize the international markets where we are performing. As I said, Germany is a top-three market for us. We think that Germany and German-speaking Europe represent a lot of opportunity. I also believe that almost every third-party agreement that we enter into, provided it’s a proper value exchange, is added to CuriosityStream, because at this stage, we still have a lot of headroom regarding general awareness. So, SPIEGEL, for example, we think there will be a lot of value in having a linear network that is able to promote our subscription service in a meaningful way, which we don’t really have in Europe today. Is that helpful?

Your next question comes from the line of Darren Aftahi with ROTH.

Hi, guys. Thanks for taking my questions. First, on the renewals, kind of on the, let’s call it, the COVID quarter, obviously, with a high number of you guys kind of mentioned for that setup. I’m curious, did all those subscribers on an annual plan renew at a higher rate card or whether any kind of discounts were offered?

All of the renewals came at the higher rack rate.

Okay. So I guess it kind of begs the question, in terms of pricing power, like, what are your general thoughts about pricing power on annual plans and month-to-month as you kind of go as we still aren’t going to have a sub aggregation story at this point?

Yeah. We think we have considerable pricing power. We think that last year has demonstrated that. We are committed to growing subscribers in the aggregate, certainly. At the same time, we continue to do a lot of engineering work, a lot of foundational work, and a lot of technical work so that when we do take advantage of that pricing power, we can maximize the transition from existing to whatever higher price we implement.

Got it. Great. And then on the 4 million sequential subscribers added, can you just kind of talk about the mix of direct to consumer and partner direct versus bundle, and maybe with bundled any kind of geographies that are over-indexing?

The majority of our new subscribers came from bundled subscriptions. We experienced a 56% year-over-year growth in direct subscribers, which is significant. Although we didn’t provide specific breakdowns, a large portion of the growth can be attributed to the SPIEGEL agreement we established. We are consistently adding direct subscribers in nearly all regions. Notably, more new direct subscribers this quarter came from outside the U.S. compared to the same period last year.

It’s good to hear. Last one for me, I think last quarter, you gave the visibility on that $71 million for guidance, 90%, like, any kind of update there, you kind of have said cross the 0.5 point?

Yeah. We’re definitely still guiding to the whole $71 million for the year, and we’re definitely less than 10% left to go at this point. So we still feel fairly confident with that $71 million in the next three quarters.

I’d like to say, I only add, Darren. It’s the first full year as a public company, and we want to demonstrate that we can hit our annual targets and not be superheroes.

Fair enough. Thanks guys.

Got it.

Your next question comes from the line of Dan Kurnos with Benchmark.

Great. Thanks. Maybe a couple, I thought the key retention COVID number was very interesting and you just talked about, obviously, with the Delta variant had, what you’re seeing in terms of trends as we head into the back half of the year, if there’s any play there? And maybe if you want to also tangentially speak about the development of One Day U and whether or not that may play a role in how you develop that asset? And then just on the international side, just following up on an earlier question, I just thought that was interesting, that you went to sort of non, I mean, obviously, Germany, Western Europe speaks a lot of English, but it was in German, doing a lot of localized language stuff. You help us think about how we think about kind of next geography or whether we expect you to get, say, India on the table versus maybe more like in Australia, just how do we think about kind of that balance on the international forum because there’s still a ton large MVPDs and partners out there that you guys can kind of go after with your sort of unique products?

Yeah. I think that’s a great question and something we’re thinking a lot about. What I will say today is we are prioritizing additional international markets. We’re not going to announce those today. But it is something that we’re thinking about, obviously, on a daily basis and there are lots of conversations around. As it relates to One Day University, I think that’s a good question. Tuck-in acquisitions like that have always been an element of our growth strategy. The talks and lectures that they offer up on One Day University right now are awesome. That’s professors in the world’s most engaging, most entertaining. Right now, we’re focused in the near term on technical work and integration work. They only recently launched the digital subscription platform since we acquired it, and it needs some work. But we will improve it. As far as the live events are concerned, we do plan to launch live events in the fourth quarter. Obviously, there’s seemingly a new concern every day, whether it’s the Delta variant or some other form of the virus. But all I can say there is, we will see.

Got it. That’s it for now. Thank you.

Got it.

Your next question comes from the line of Alexia Tsimikas with D.A. Davidson.

Thanks so much for taking my questions. I have two. The first is, have you experienced or noticed any impacts from pandemic-related restrictions being lifted? And the second is, in the past you discussed advancing your sponsorship efforts when restrictions ease and you’re able to meet with companies again. So how are you thinking about your sponsorship efforts today?

Right. So, yes, in certain parts of the U.S. we’ve been able to finally get back out and have more in-person meetings. Internationally, as you’re probably aware, it’s really not opened up like we had hoped it would, like we think it will in the future. As it relates to our sponsorship business, we have strong interest and some strong commitments for the back half of the year and we’re working on pulling many of those as possible across the finish line and fulfilling those commitments where they exist. So, yeah, as the world opens up and we can meet with more people, that is a tailwind for us. And we are doing that wherever we can. Obviously, it’s not quite as easy as we’d hoped it would be at this point in time.

Your next question comes from the line of Dan Medina with Needham & Company.

Thank you for the question. Jason, I was wondering if you could help us think a little bit about second half advertising and marketing spend for the rest of the year? Thank you.

Sure. So the second half of the year, we expect to be very similar to the first half, right around high $11 million, kind of low $12 million as far as our marketing investment for Q3 and Q4. Again, we like to be opportunistic given the market conditions. So, Devin has the opportunity to take advantage of that. The fourth quarter might always be a little bit higher because we take advantage of some of the stuff during the holidays. But generally, the takeaway should be high $11 million, low $12 million, as far as Q3 and Q4 marketing investment.

Great. Thank you.

There are no more questions at this time. This concludes today’s conference call. Thank you for participating. You may now disconnect.