Prepared remarks
Greetings, and welcome to the CuriosityStream Second Quarter 2026 Financial Results. As a reminder, this call is being recorded. It is now my pleasure to introduce Vanessa Gillon, Senior Vice President of Operations. Please go ahead.
Thank you, and welcome to CuriosityStream's discussion of its second quarter 2026 financial results. Leading the discussion today are Clinton Stinchcomb, CuriosityStream's Chief Executive Officer; and Brady Hayden, CuriosityStream's Chief Financial Officer. Following management's prepared remarks, we will take questions from the analyst community. 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 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 June 30, 2026 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. Unless otherwise stated, all comparisons will be against our results for the comparable 2025 period. Now I'll turn the call over to Clint.
Thank you, Vanessa. Second quarter was a defining quarter for CuriosityStream. We delivered the strongest quarterly financial performance in our history, including record operating income, EBITDA, adjusted EBITDA, net income and earnings per share. The results demonstrate what Curiosity can produce when we combine the value of our differentiated content and data assets with our disciplined operating model. In the quarter, high-value licensing revenue, reliable subscription revenue, efficient spending, lower year-over-year operating expenses and a focused cost structure came together to create substantial operating leverage. Revenue was $23.2 million in the second quarter, up 22% year-over-year. Licensing revenue was $14.1 million, up 48% from the prior-year quarter. Licensing represented the largest component of our revenue growth in the quarter and highlights the strategic value of the Curiosity corpus and the multiple ways in which we can monetize it. Today, we're able to engage with leading global media and technology companies through licensing supported by three distinct and durable pillars. First, we license premium factual video to broadcast, Pay TV, streaming, cable, satellite, wireless and other distribution partners. Second, we license highly structured custom and off-the-shelf video and audio data sets to technology companies for AI training. Third, we offer a private code corpus of more than 880 billion tokens for licensing to frontier model developers and coding agent providers for AI training, reinforcement learning and evaluation as well as to enterprises seeking to fine-tune models after pre-training and general training on closed and open source large language models. While we believe our private code database offering is the largest available in the world, simply put, beyond volume, we offer unique software engineering environments containing code, history, decisions, failures and verifiable outcomes that can improve coding agents through training, reinforcement learning and evaluation. We believe these three distinct sources of licensing intellectual property reduce medium-term licensing risk and create significant long-term upside. They allow us to participate in several large expanding markets while serving customers with different use cases, buying cycles and commercial objectives. In response to partner demand, we have also now productized a significant portion of our video library, specifically for AI training. We believe this productization will reduce friction in the licensing process, make it easier for prospective customers to identify and evaluate the data sets they need and ultimately shorten sales cycles. We currently offer 17 off-the-shelf video data set products. These include extensive premium collections covering scripted entertainment, professional and collegiate sports, animation, wildlife, science, automotive and instructional content as well as highly structured data sets and clips built around high dynamic range video, character tracking, synchronized multi-camera footage, emerging objects and raw footage. Importantly, we're not simply offering large quantities of video. We're increasingly organizing, structuring and packaging our IP around the specific requirements of sophisticated AI developers. We believe this substantially increases both utility and the value of the underlying content. Approximately $9 million in subscription revenue was roughly equivalent to the second quarter of 2025. We remain committed to our subscription business and to building the long-term value of the Curiosity brand and customer relationships. At the same time, we continue to manage that business for durable economics rather than pursuing growth at any cost. Our diversified monetization model gives us the ability to be disciplined in customer acquisition spending while we capitalize on high-value licensing and distribution opportunities. We also made meaningful progress in improving the efficiency of the business. By leveraging AI productivity tools and better aligning our talent base with the highest value priorities, we reduced spending across our primary expense categories. Total operating expenses declined 24% year-over-year. We expect to make further progress in the second half of the year. This is not simply a cost reduction story. This quarter showcases a more efficient business model in which Curiosity can convert high-value revenue into meaningful profitability while continuing to invest selectively in the content, technology, distribution and commercial capabilities that support long-term value creation. The resulting profitability was exceptional. Net income was a record $8.9 million, up 1,133% compared with $0.9 million in the prior-year quarter. Second quarter EPS was $0.15. Adjusted EBITDA was a record $11.4 million, up approximately 300%. Margins reflected this operating leverage. Gross margin increased to 73% from 53% in the prior year quarter. Adjusted EBITDA margin was 49% compared with 16% in the prior-year quarter. Our strategy remains clear. We continue to pursue high-value licensing opportunities that recognize the differentiated value of our extensive corpus. We'll maintain our focus on operating discipline, including thoughtful marketing investment and rigorous expense management. We will continue to build the long-term value of the Curiosity ecosystem across established and emerging platforms while simultaneously exploiting existing and new grants of rights that we can monetize. I want to thank the entire Curiosity team for delivering these results. The quarter was a powerful demonstration of the value of our brand, flexibility in our business and the earnings power of the company made possible by the breadth and depth of our IP. We are pleased with the momentum, but our focus remains squarely on execution and on our longer-term objective, building Curiosity into a company that informs, inspires and entertains and in so doing generates $100 million or more reliable, recurring and increasingly predictable annualized revenue. I'll now hand the call over to our CFO, Brady Hayden.
Thank you, Clint, and good afternoon, everyone. Our full Q2 results will be in the 10-Q that we'll file in the next day or two. Let me quickly hit some of our second quarter highlights. As Clint said, in Q2, we reported revenue of $23.2 million compared to $19.0 million a year ago. Likewise, we reported record adjusted EBITDA of $11.4 million. This is also our sixth consecutive quarter of positive adjusted EBITDA. We generated second quarter subscription revenue of $8.9 million, a slight improvement from Q1. Licensing came in at $14.1 million, a 48% increase from last year. Second quarter gross margin was 73%, improving from 53% last year, as we were able to generate significant new revenue in the quarter with only minimal incremental distribution costs. Total operating expenses were down by 24.1% as we continue to see the benefits of our ongoing cost rationalization efforts. We reported record net income in the second quarter of $8.9 million or $0.15 a share. This compares to $0.8 million of net income in the second quarter of 2025. We believe our balance sheet remains in good shape. In June, we paid our regular $5 million dividend, and we repurchased $600,000 of our shares in the quarter. We also prepaid $2 million to fully consolidate the ownership of our German business and buy out our joint venture partners, Spiegel and Authentic, of their stakes. This transaction officially closed on July 1 and will be reflected in our Q3 results. We ended the quarter with total cash and securities of $10.9 million and no outstanding debt. Based on our quarterly dividend of $0.085 per share at yesterday's closing price, CuriosityStream shares provide a dividend yield of about 12%. Looking at our liquidity outlook for the remainder of 2026, we expect to end the year with a cash and investments balance of $17 million to $22 million. We expect revenue for the second half of the year to be $38 million to $41 million and full year 2026 revenue in the range of $77 million to $82 million. Furthermore, we expect adjusted EBITDA for the second half of the year to be $6 million to $10 million and full year 2026 adjusted EBITDA in the range of $18 million to $22 million. With that, I'll turn it back over to the operator to begin our Q&A.
Questions and answers
Now we'll begin the question-and-answer session. Our first question is from Frank DiLorenzo with Singular Research.
It's Frank, but Frankie is fine. Very nice quarter, momentum there for the quarter. You talked about the pipeline. Could you give us a little more detail on the pipeline and how that could potentially drive additional AI training and streaming growth going forward?
Yes. Thanks for the question, Frank. As it relates to our licensing pipeline, it's certainly as robust as it's ever been. And what gives us confidence there, as I mentioned on the call, we have really three distinct and durable licensing pillars that reduce risk and create significant long-term upside. They allow us to participate in large and expanding markets while serving customers with different use cases, buying cycles and commercial objectives. To restate what those are: we license premium factual video to broadcast, Pay TV, streaming, cable, satellite, wireless and other distribution partners—an ongoing licensing business that delivers every quarter. Second, we license highly structured custom and off-the-shelf video and audio data sets to technology companies for AI training. What we like about these productized off-the-shelf offerings is we believe they will accelerate sales cycles. We know it accelerates our operational work. And third, we offer a private code corpus of more than 880 billion tokens for licensing to AI developers and coding agent providers for training, reinforcement learning and evaluation as well as to enterprises seeking to fine-tune models after pre-training and general training on open and closed source LLMs. So the scope sets us up very well; it gives us perhaps the largest pipeline that we've ever had. On the licensing side, it can be a little bit chunky from time to time. But the scope and scale of our offering today, I think, will enable us to minimize any dips and certainly optimize semi-transformational upside.
Okay. Also, could you talk a little more about international? You did an acquisition there recently. Could you just talk about the international landscape, where you see potential, maybe expound upon expansion plans there and the overall potential for the business?
Yes. Thanks for asking. On the subscription side, we participated in a joint venture with Spiegel Corporation and with the German company Authentic for the last few years, and we consolidated our ownership of that in the second quarter. So a meaningful component of our cash went to that. What we operate within the German-speaking territories are two 24/7 Pay TV channels that have real distribution. We have several distribution arrangements with our FAST channels as well over there. If you look across the world, Germany and German-speaking Europe is our largest non-English-speaking market. We like the potential and the firmness of that market for us. The nice thing about our content is it's evergreen; it travels well. A significant portion of our subscribers are international today, and we believe we'll continue to have a substantial international base outside the U.S. as we go forward. As we continue to roll out new currencies, new billing and payment systems, we'll capitalize even more on the opportunity outside the U.S.
Okay. Just one other quick question. I think Disney and a few others have been talking about maybe expanding their streaming offerings, adding streaming from other services, etc. Could you kind of talk about that landscape, if there's potential there and if there's room for that regarding consumer streaming budgets?
I think what they're talking about, and we saw it recently with Peacock and YouTube, is bundling. We're big believers in bundling entertainment services, and that's something you can expect us to continue to pursue aggressively. We've put some nice bundles in place over the last six to eight months. We believe that over time those will provide really sturdy, reliable subscription revenue that helps to maintain our subscription business and also enables us to spend efficiently. So we're big believers in bundles and we'll continue to pursue that aggressively.
Next question is from Laura Martin with Needham & Company. Daniel Medina is stepping in for Laura.
My question is your second half adjusted EBITDA guidance of, what, $6 million to $10 million—does that represent a step down from the $11.4 million that you guys generated? Does the second half moderation reflect higher customer acquisition marketing, cost reinvestment, higher content costs? Or are you guys just being conservative regarding assumptions for closing additional licensing transactions?
Thank you for that question, Dan. I would say the latter. We want to take a conservative approach as it relates to forecasting EBITDA. As you can see, we're sort of on a run rate for the year based on the first two quarters of about $25 million. We've been heavily focused this year on getting our EBITDA up and over $20 million. We'll monitor that as the second half of the year goes on. If it warrants making changes to that guidance, that's something we will do. But what we'd like to do is meet and exceed our guidance.
Great. I had a follow-up question, if it's okay, on the 73% gross margin in the second quarter. I'm wondering, how much of the $38 to $41 million in second half revenue guidance is already contracted for by AI training data? Or how much of that is new deal expectations in Q3 and Q4?
Appreciate that. We have a lot in the pipeline right now. It's hard to project with great precision where our licensing revenue will end up. If you look at the first half numbers—roughly $38.5 million for the first half of the year—and if you take our run-rate subscription revenue and other revenue out, that's another $19 million to $20 million, which gets you into the $58 million to $59 million range. The low end of our guidance of $77 million to $82 million would be another $20 million in licensing revenue for the second half of the year; the high end would be $24 million. We exceeded that this quarter, so we have confidence in getting to those levels. As I mentioned, we've productized 17 distinct video data sets today, which we really believe—and we're already starting to see—will help accelerate our sales cycle. It certainly has helped accelerate our operational cycle, and as we continue to do that, we think our range will become more predictable going forward.
Next question is from Jason Kreyer with Craig-Hallum.
Maybe I'll pick up where we left off, Clint. You were talking about those 17 new off-the-shelf data products. Can you talk a little more about the reception to those products and how that has influenced the pipeline for the second half of the year?
Thank you for asking that, Jason. It's not that we're introducing new content; we productized a significant portion of our library. We control rights to well over 3 million hours of audio and video across finished programming, raw footage and a host of other types of content. When we mention these off-the-shelf productized data sets, we're talking about distinct data sets such as scripted entertainment, where a certain number of hours are packaged and all the metadata is baked into it—significantly more metadata than in any traditional video licensing agreement. We have a video data set of professional and collegiate sports with well over 100,000 hours of content, some of which is heavily annotated; data sets around science and technology; around animation and anime; around automotive; around wildlife. We also have distinct collections built around emerging subjects and objects, clips built around camera reveals and subjects emerging from forests, water or doorways. We have high dynamic range video, which is really interesting for video generation companies because models need to know not just what an object looks like but how it appears in different lighting and occlusion conditions, from different camera positions. We have character tracking and raw footage. If you look at the scope of IP that we licensed in the last quarter, I don't think you can find another company in history that has licensed the scope of content that we have: traditional video to more than 25 platforms and channels, multi-camera synchronized video for AI training, HDR video for model training, and millions of tokens of code from more than 10 sources and languages for training. We have customized data sets and off-the-shelf data sets. That doesn't mean there isn't still evaluation and back and forth as we do these deals, but productizing more of our library and our code definitely helps simplify and accelerate processes that can otherwise take some time.
Maybe a follow-up. Last quarter we talked about engaging more with a new group of LLM developers who consume content differently than existing LLMs you're working with. Are the productized off-the-shelf packages meant for this new group of LLMs? Is this the first step in creating a monetizable solution for these LLMs? I'm looking for an update on how that strategy is progressing.
I don't mean to imply that there's a lot of big new frontier developers coming into the marketplace—there are seven or eight major players and a couple more on the periphery—but beyond those companies, there is an increasing number of companies that need to license either code or video or specific types of video or audio to train their models. The overall number of companies licensing IP is expanding. Productization helps across the spectrum but is especially helpful for smaller companies that might want to take a smaller bite at the beginning than large companies. As a company, we're trying to simplify everything and bring velocity to our processes—product velocity, prospecting velocity, operational velocity, sales and deal velocity, marketing velocity. If you can't bring velocity, you'll have a hard time lasting in this market. I'm amazed every day at the world we're living in and grateful for the extraordinary opportunity in front of us. In our case, we have the opportunity to engage with the world's largest companies and many exciting emerging companies.
One more question. Great gross margin improvement this quarter and solid cost management. Reconciling back to Dan's question, if we continue gross margins where they're at and maintain cost discipline on OpEx, it seems like that would produce a bigger EBITDA number. How should we think about margins and OpEx as we get into the second half?
I think you can definitely think about OpEx as decreasing. A lot of the work we've done over the last year will show in the second half of the year. In the last quarter, overall expenses were down about 24%. If you look at the second half of the year compared to the first half, there will be an additional roughly 18% to 20% reduction in our costs. So there's obvious EBITDA opportunity on the cost side. On the revenue side, there will probably be more revenue share agreements in the second half of the year than in the first half, and we've tried to balance out our EBITDA based on those projections.
Thank you. This concludes today's teleconference. You may disconnect your lines at this time, and we thank you for your participation.