Thread by @StockMarketNerd

$CURI/@CuriosityStream -- A platform "founded to satisfy humanity's enduring curiosity with premium content to inform, enchant & inspire.”

$CURI:
-benefits from the cord-cutting revolution
-claims a "factual streaming" niche

A @JoeySolitro pick & a post-merger SPAC

Thread 👇

The $CURI angle -- Subscription Video on Demand (SVoD) for solely non-fiction

$NFLX is to "movies & scripted drama"

as

@hulu is to "general entertainment"

as

$CURI is to "factual" -- delivering content covering:
-- science
-- history
-- tech
-- nature
-- lifestyle

& more

5 $CURI revenue streams (1/3)

a) Direct Subs
-- monthly & annual fees
-- accessible in 170 nations for anyone w/broadband
-- est. 25-35% of revs

b) Multichannel Video Programming Distribution (MVPD)
-- collects fixed fee
-- offered in pay TV packages
-- est. 25-35% of revs

5 $CURI revenue streams (2/3)

c) Program sales
-- compensated upon content delivery
-- pre-sells big originals to global media companies
-- est. 10-20% of revs

d) Ads
-- commercials on linear networks
-- sponsorships
-- multi-platform digital partnerships
-- est. 10-20% of revs

5 $CURI revenue streams (3/3)

e) Corporate Partnerships
-- multi-year agreements w/institutions for bulk subs
-- $CURI provides & operates a co-branded streaming service
-- 40 corporate clients to date
-- est. 10-20% of revs

Notes on Ad revenue:

a) $CURI launched ads last month
-- just starting to generate revenue from linear & multi-platform ads

b) Company's perceived ad TAM
-- 53M+ households globally
-- 5.6M+ USA subs

c) Integrates w/Apple, Roku, Xfinity etc.

Summary of flexible content delivery:

a) Acquires & produces content

b) Distribution via:
-- partner bundles w/ $CMCSA & more
-- Indirectly on platforms like $AMZN Prime
-- directly through @CuriosityStream

Management (1/3)

a. John Hendricks -- Founder & Chairman
-- founder of Discovery Communications 👀
-- American Film Institute Trustee
-- pumped $140M into starting $CURI

b. Clint Stinchcomb -- President & CEO
-- "founder/CEO for successful launch of networks/franchises/brands"

Management (2/3)

c. Jason Eustace -- CFO
-- former head of finance for Bluemercury, Pet360 & Discovery

Management (3/3)

Hendricks has purchased roughly $1.5M in shares this month... boosting his common equity stake by roughly 21.5%.

This may explain why 👇

Financials (1/3) -- $CURI's last Q:

a) Revs up 83% YOY to $8.7M
b) Gross margin (GM) up 200 bps YOY to 61%
c) -77.2% op margin vs. -210.9% YOY
e) 13M total paid subs (❗️total includes bundled subs❗️) up 108% YOY
-- on track to hit 2020 sub goals

FAR from free $. Getting there.

Financials (2/3) -- $CURI's 2020 forecasts:

a) Revs up 119% YOY to $39.5M
b) GM of 65% up 300 bps YOY
c) 32M total subs up 184% YOY
-- Aided by sub deal in India (covered later)
-- Direct subs up 68% to 895K
-- Corporate subs up 500% to 628K

50% CAGR through 2023 -- to get to👇

Financials (3/3) -- $CURI's 2023 forecasts:

a) $202M in revs
-- 79.9% growth in '21
-- 91% growth in '22
-- 49% growth in '23
b) 15% profit margin
-- roughly $30M in 2023 profit
c) 79M total subs
-- 2.1M direct subs via 27% 2022 growth
-- 2.6M corporate subs via 174% 2022 growth

Note on company Philosophy:

The management team views bundled distribution as vital to driving early subscription scale due to its newness in the market
-- comes w/less ARPU vs. direct to consumer
-- enables $CURI to reach the masses today

Market:

a) 🌎 Streaming -- Grand View
-- Sales $42.6B in 2019
-- 20.4% CAGR

b) 🌎 Streaming -- BusinessWire
-- Sales ~$45.6B in 2019
-- 18.3% CAGR

c) 🌎 SVoD -- Statista
-- Sales ~$46B in 2019
-- 10.7% CAGR
-- 11.9% user penetration in 2020 to 17.2% in 2025

The SPAC Deal:

50.9M pro-forma shares outstanding
-- excludes 23.3M shares in warrants & sponsor shares

= Fully diluted share count of ~74.2M

Absolute Valuation:

a) ~$760M market cap based on fully diluted count

b) ~$580M enterprise value when deducting $ balance (no debt)

So❗️IF❗️it hits its forecasts -- by 2023:

c) 19X EV/Profit

d) 2.8x EV/Sales

Relative Valuation:

a) $CURI
-- 8.1x 2021 EV/S
-- 79.9% growth
-- 64% GM

b) $NFLX
-- 8.1x 2021 EV/S
-- 40.3% growth
-- 40% GM

c) $ROKU
-- 9.5x 2021 EV/S
-- 32.7% growth
-- 44.5% GM

NOT 🍎 to 🍎 -- $CURI is MUCH smaller & further from free $ vs. others.

Still informative.

Notes from $CURI's Bernstein presentation (1/4)

**All Info from founder John Hendricks**

1) In November $CURI partnered w/Tata Sky (Indian streaming platform) w/~19M users
-- Tata is creating its own SVOD platform "Tata Sky Binge"
-- $CURI will be 1 of 25 services on it

Notes from $CURI's Bernstein presentation (2/4)

$CURI will grow from 3100 factual titles today to 12k in 2025
-- $NFLX has ~500
-- aims to be to factual entertainment as ESPN is to sports media (the main brand... not the only)
-- a laser-focus on factual will drive success

Notes from $CURI's Bernstein presentation (3/4)

$CURI average production cost vs. scripted alternative
-- $CURI: $500-600k for top end factual entertainment
-- scripted shows: $5-6M
-- GOThrones: $15M

Proceeds from public offering to cover production & promotion costs.

Notes from $CURI's Bernstein presentation (4/4)

Affordable content creation enables
-- scalable production despite having limited resources
-- subs for $2.99/month & $19.99/year

New subs are going w/annual option 4/5 times... creates industry-low churn according to Hendricks.

MGMT notes from last Q:

a) "Paid subs doubled while CAC dropped 18% & LTV grew 53%"
-- I want more commentary here

b) As a biz built to stream:
-- sells streaming ads w/out cannibalizing linear ad demand
-- networks need linear ad buyer demand; makes streaming shift challenging

Risks:

1) Streaming is crowded
-- rapid sub growth vital for $CURI
-- LOT of forecasting, need to execute

2) Sports halted in 2020
-- $CURI had no sports to compete with

3) Majority of subs via bundles
-- competition could decide they don't need $CURI
-- lower ARPU vs. direct

Plan:

This has started at 1% of my total holdings.

It will not exceed 2% cost basis.

If the company hits its long term forecasts, this should succeed.

I think it can do just that... BUT it's still a big if.

Long $CURI.