[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Information](index=3&type=section&id=Item%201.%20Financial%20Information) The company's Q2 2025 results show a net loss due to a pension charge, partially offset by an asset sale gain [Consolidated Statements of Operations](index=3&type=section&id=Consolidated%20Statements%20of%20Operations) A significant pension settlement charge drove a Q2 net loss despite an asset sale gain boosting operating income Consolidated Statements of Operations Highlights (In thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total net operating revenue** | $29,766 | $32,061 | $58,891 | $63,163 | | **Operating income (loss)** | $1,263 | $568 | $35,471 | $(1,188) | | **Other income (loss), net** | $(34,979) | $641 | $(34,914) | $1,252 | | **Net Income (Loss)** | **$(33,492)** | **$1,450** | **$(5,207)** | **$87** | | **Diluted EPS** | **$(6.26)** | **$0.27** | **$(0.97)** | **$0.02** | - The significant net loss in Q2 2025 was primarily driven by a **one-time non-cash pre-tax pension settlement charge of $35.3 million**, which was recorded under 'Other income (loss), net'[71](index=71&type=chunk)[75](index=75&type=chunk) - For the first six months of 2025, operating income was substantially boosted by a **$36.3 million net gain on the sale/disposal of assets**, specifically the North Plant Property[8](index=8&type=chunk)[90](index=90&type=chunk) [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) The balance sheet strengthened with increased cash from an asset sale and eliminated long-term pension liabilities Consolidated Balance Sheet Highlights (In thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $33,700 | $9,594 | | Property, plant and equipment, net | $10,057 | $12,633 | | **Total assets** | $76,235 | $61,843 | | **Long-term pension liabilities** | $— | $11,764 | | **Total liabilities** | $37,751 | $55,030 | | **Total shareholders' equity** | $38,484 | $6,813 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash from investing surged due to an asset sale, while operating cash flow was used for a pension contribution Consolidated Cash Flow Summary (In thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used for operating activities | $(13,770) | $(1,660) | | Net cash provided by investing activities | $37,876 | $7,420 | | Net cash used for financing activities | $— | $(856) | | **Net increase in cash** | **$24,106** | **$4,904** | | **Cash at end of period** | **$33,700** | **$16,601** | - The increase in cash used for operations was mainly due to a **voluntary cash contribution of approximately $10.0 million** to fully fund its pension plan liabilities[70](index=70&type=chunk)[196](index=196&type=chunk) - Cash from investing activities was primarily generated by **$40.8 million in proceeds from the sale of the North Plant Property**[16](index=16&type=chunk)[90](index=90&type=chunk) [Notes to the Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) Notes detail a major asset sale, pension plan annuitization, and a definitive merger agreement with Hearst - On March 11, 2025, the company completed the sale of its North Plant Property, receiving **net cash proceeds of $40,773** and generating a **net gain of $36,310**[89](index=89&type=chunk)[90](index=90&type=chunk) - On April 17, 2025, the company settled all its defined benefit pension obligations by purchasing a group annuity contract, funded by plan assets and a **~$10 million cash contribution**, resulting in a **one-time, non-cash pre-tax pension settlement charge of $35,266**[70](index=70&type=chunk)[71](index=71&type=chunk) - On July 9, 2025, the company entered into a merger agreement with Hearst Media West, LLC, which was later amended to increase the per-share consideration to **$15.00 in cash**[103](index=103&type=chunk)[104](index=104&type=chunk) - The company received an unsolicited, non-binding proposal from an affiliate of Alden Global Capital to be acquired for **$16.50 per share**, which the Board of Directors rejected on July 28, 2025[109](index=109&type=chunk) - On July 27, 2025, the company adopted a Rights Agreement (a 'poison pill') to protect shareholder interests, which will expire on July 26, 2026, or upon completion of the merger[110](index=110&type=chunk)[114](index=114&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses transformative events including a merger agreement, asset sale, and pension settlement [Recent Developments](index=20&type=section&id=Recent%20Developments) The company entered a merger agreement with Hearst, sold a major property, and annuitized its pension plans - Entered into a merger agreement with Hearst Media West, LLC, amended to a price of **$15.00 per share in cash**[122](index=122&type=chunk)[123](index=123&type=chunk) - Received and rejected an unsolicited, non-binding acquisition proposal from an affiliate of Alden Global Capital for **$16.50 per share**[129](index=129&type=chunk) - Adopted a Rights Agreement (poison pill) on July 27, 2025, to protect against hostile takeovers, set to expire on July 26, 2026[130](index=130&type=chunk)[135](index=135&type=chunk) - Completed the sale of the North Plant Property, receiving **net cash proceeds of $40,773** and generating a **net gain of $36,310**[137](index=137&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Total revenue declined across all segments, while a pension charge created a net loss despite lower operating costs Revenue by Source - Q2 2025 vs Q2 2024 (In thousands) | Revenue Source | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Advertising and marketing services | $12,302 | $12,784 | (3.8)% | | Circulation | $15,263 | $16,181 | (5.7)% | | Printing, distribution and other | $2,201 | $3,096 | (28.9)% | | **Total Net Operating Revenue** | **$29,766** | **$32,061** | **(7.2)%** | Segment Profit (Loss) - Six Months Ended June 30 (In thousands) | Segment | 2025 | 2024 | | :--- | :--- | :--- | | TDMN Segment Profit | $10,141 | $11,565 | | Agency Segment Profit (Loss) | $473 | $(371) | | **Total Segment Profit** | **$10,614** | **$11,194** | - The TDMN segment's profit **declined by $1.4 million** in the first six months of 2025 due to revenue declines in print advertising and circulation, despite expense savings from transitioning to a more efficient printing facility[188](index=188&type=chunk) - The Agency segment's profitability **improved by $0.8 million** in the first six months of 2025, primarily due to strategic expense savings initiatives[189](index=189&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity improved significantly due to a $40.8 million asset sale, which funded a $10 million pension contribution - **Cash and cash equivalents increased to $33,700 thousand** as of June 30, 2025, from $9,594 thousand at December 31, 2024[191](index=191&type=chunk) - The company received **net cash proceeds of $40,773 thousand** from the sale of its North Plant Property[193](index=193&type=chunk) - Net cash used for operating activities **increased by $12,110 thousand** year-over-year, primarily due to a voluntary cash contribution of approximately **$10,000 thousand** to fund pension liabilities[196](index=196&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes in the quarter - Management concluded that the Company's **disclosure controls and procedures were effective** as of June 30, 2025[208](index=208&type=chunk) - **No material changes** to the Company's internal control over financial reporting occurred during the second fiscal quarter of 2025[209](index=209&type=chunk) [PART II - OTHER INFORMATION](index=33&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) Existing legal claims are not expected to have a material adverse effect on the company's financial condition - In the opinion of management, liabilities from currently existing legal claims **would not have a material adverse effect** on DallasNews' results of operations, liquidity or financial condition[211](index=211&type=chunk) [Item 1A. Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) Primary risks relate to the pending merger with Hearst, including potential disruptions and failure to complete the deal - The announcement and pendency of the merger may **adversely affect business operations**, employee retention, and relationships with customers and partners[213](index=213&type=chunk) - **Failure to consummate the merger could materially harm the business and stock price**, as closing is subject to conditions including shareholder approval and the company maintaining at least **$20 million in Net Cash**[216](index=216&type=chunk) - The company may be required to pay a **$3,000,000 termination fee** to the acquirer, Parent, if the Merger Agreement is terminated under specific circumstances[218](index=218&type=chunk)[222](index=222&type=chunk) - While the merger is pending, the company is **subject to restrictions on its business**, limiting its ability to issue securities, acquire businesses, dispose of assets, or incur significant capital expenditures without consent[221](index=221&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered equity securities were sold in Q2 2025, and the stock repurchase program remains terminated - **No unregistered sales of equity securities** occurred during the reporting period[223](index=223&type=chunk) - The company's board of directors **terminated its stock repurchase authority** in the third quarter of 2024[224](index=224&type=chunk) [Item 5. Other Information](index=34&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the second quarter - No director or officer adopted or terminated any **Rule 10b5-1 trading arrangements** during the second quarter of 2025[227](index=227&type=chunk) [Item 6. Exhibits](index=35&type=section&id=Item%206.%20Exhibits) This section lists key filed exhibits, including the merger agreement, its amendment, and the Rights Agreement - Key exhibits filed include the **Merger Agreement (2.1)**, the **amendment to the Merger Agreement (2.2)**, and the **Rights Agreement (4.1)**[229](index=229&type=chunk)

Core Insights - DallasNews Corporation reported a net loss of $33.5 million, or $(6.26) per share, for Q2 2025, compared to a net income of $1.5 million, or $0.27 per share, in Q2 2024 [2][4] - The company experienced a total revenue decline of $2.3 million, or 7.2%, year-over-year, with total revenue at $29.8 million for Q2 2025 [4][6] - A merger agreement with Hearst Media West, LLC was announced, offering DallasNews shareholders $15.00 in cash per share, representing a 242% premium based on the stock price prior to the announcement [10][12] Financial Performance - The operating income for Q2 2025 was reported at $1.3 million, an increase from $0.6 million in Q2 2024 [2][3] - Adjusted operating income for Q2 2025 was $1.6 million, a 36.7% increase from $1.2 million in Q2 2024, primarily due to expense savings [3][8] - Total consolidated operating expenses decreased by $3.0 million, or 9.5%, to $28.5 million in Q2 2025 [7][8] Revenue Breakdown - Advertising and marketing services revenue was $12.3 million, down $0.5 million, or 3.8%, from $12.8 million in Q2 2024 [5][21] - Circulation revenue decreased by $0.9 million, or 5.7%, to $15.3 million, primarily due to a decline in print circulation [6][25] - Printing, distribution, and other revenue fell by $0.9 million, or 28.9%, to $2.2 million, attributed to the cancellation of a mailed advertisements partnership [6][21] Employee and Cash Position - As of June 30, 2025, the company had 451 employees, a decrease of 82, or 15.4%, from the previous year [9] - Cash and cash equivalents stood at $33.7 million, with no debt reported [9][23] Merger Details - The merger with Hearst is subject to customary closing conditions, including a shareholder vote, and is expected to close in Q3 or early Q4 2025 [10][12] - If completed, DallasNews' Series A Common Stock will be delisted from Nasdaq [12]

Core Viewpoint - DallasNews Corporation has rejected an unsolicited acquisition proposal from MNG Enterprises, Inc. and reaffirmed its commitment to a merger agreement with Hearst, which has been amended to increase the purchase price from $14.00 to $15.00 per share in cash [2][5]. Summary by Sections Acquisition Proposals - DallasNews received a non-binding proposal from MNG Enterprises to acquire its shares at $16.50 per share, which was reviewed and rejected by the Board [2][4]. - The Board concluded that the Alden Proposal does not qualify as a "Superior Proposal" under the existing Hearst Merger Agreement [4]. Hearst Merger Agreement - On July 9, 2025, DallasNews entered into a definitive agreement with Hearst to acquire all outstanding shares at $14.00 per share, which was later amended to $15.00 per share at the Board's request [3][5]. - Robert W. Decherd, who controls a significant portion of the voting power, has committed to vote in favor of the Hearst merger and against alternative proposals [3][4]. Shareholder Rights Plan - The Board adopted a shareholder rights plan to protect against potential hostile takeovers, particularly in response to the Alden Proposal [6][7]. - The rights plan allows shareholders to purchase additional shares at a discounted price if a person or group acquires 10% or more of the Company's Series A common stock without Board approval [8][9]. - The rights plan is effective immediately and will expire on July 26, 2026, unless terminated earlier [10]. Financial Advisory - J.P. Morgan Securities LLC is serving as the exclusive financial advisor to DallasNews, while Haynes Boone is providing legal advice [11].

Core Viewpoint - DallasNews Corporation has received an unsolicited proposal from MNG Enterprises to acquire its shares at $16.50 per share, while it is already under a merger agreement with Hearst at $14.00 per share [1][2][3] Group 1: Acquisition Proposals - MNG Enterprises has proposed to acquire all outstanding shares of DallasNews at a price of $16.50 per share in cash [1] - DallasNews is currently bound by a merger agreement with Hearst, which offers $14.00 per share in cash for the acquisition [2] - The Board of Directors is reviewing the MNG Proposal while maintaining its support for the existing merger agreement with Hearst [3] Group 2: Company Background - DallasNews Corporation is the holding company for The Dallas Morning News and Medium Giant, known for its strong journalistic reputation and community ties [4] - The Dallas Morning News has won nine Pulitzer Prizes, highlighting its commitment to quality journalism [4] - Medium Giant, a creative marketing agency under DallasNews, has received multiple industry awards, including the AAF Addy and AMA DFW Annual Marketer of the Year Award [4]

Core Viewpoint - Monteverde & Associates PC is investigating DallasNews Corporation regarding its sale to Hearst Communications for $14.00 per share, questioning the fairness of the deal [1]. Group 1: Company Overview - Monteverde & Associates PC is recognized as a Top 50 Firm in the 2024 ISS Securities Class Action Services Report and has recovered millions for shareholders [1]. - The firm is located in the Empire State Building, New York City, and specializes in class action securities litigation [2]. Group 2: Legal Investigation - The investigation focuses on the sale of DallasNews Corporation to Hearst Communications, which offers $14.00 in cash per share to shareholders [1]. - The firm encourages shareholders with concerns to reach out for additional information [3].

Core Viewpoint - The Ademi Firm is investigating DallasNews for potential breaches of fiduciary duty and other legal violations related to its transaction with Hearst [1][2]. Group 1: Transaction Details - Shareholders of DallasNews will receive $14.00 per share in cash as part of the transaction [2]. - DallasNews insiders are set to receive substantial benefits under change of control arrangements [2]. Group 2: Board Conduct - The transaction agreement imposes significant penalties on DallasNews if it accepts competing bids, which may limit competing transactions unreasonably [2]. - The investigation focuses on whether the DallasNews board of directors is fulfilling their fiduciary duties to all shareholders [2].

Core Viewpoint - DallasNews Corporation is set to be acquired by Hearst, enhancing its legacy of independent journalism with Hearst's resources and industry reputation [1][3]. Company Overview - DallasNews Corporation is the holding company for The Dallas Morning News and Medium Giant, known for its strong journalistic reputation and community ties [7]. - The Dallas Morning News has won nine Pulitzer Prizes, highlighting its commitment to quality journalism [7]. - Medium Giant is an integrated creative marketing agency that has received multiple industry awards, including the AAF Addy and the AMA DFW Annual Marketer of the Year [8]. Acquisition Details - Shareholders of DallasNews will receive $14.00 in cash per share, representing a 219% premium over the closing price of $4.39 on July 9, 2025 [3]. - The acquisition has been unanimously approved by the Boards of Directors of both companies and is expected to close in the third or early fourth quarter of 2025 [3][4]. Strategic Implications - Upon completion, The Dallas Morning News will join Hearst Newspapers, which publishes 28 dailies and 50 weeklies across the U.S. [4]. - Hearst plans to invest in The Dallas Morning News' digital strategy and journalism, aiming to expand its audience reach [5]. - The acquisition aligns with Hearst's strategy of supporting trusted local media brands in growth markets [5]. Leadership Statements - Hearst Newspapers' president emphasized the commitment to support The Dallas Morning News through investments in digital strategy and journalism [5]. - The CEO of DallasNews highlighted the shared values with Hearst and the importance of their resources for the future of The Dallas Morning News [5]. Transition to Private Company - Following the acquisition, DallasNews Corporation will become a private entity, and its shares will no longer be traded on Nasdaq [5].

Core Viewpoint - DallasNews Corporation has appointed Colleen McCain Nelson as the Executive Editor of The Dallas Morning News, effective August 11, 2025, marking her return to the newsroom after nearly 12 years as a writer [1][4]. Company Overview - DallasNews Corporation is the holding company for The Dallas Morning News and Medium Giant, with The Dallas Morning News being Texas' leading daily newspaper, recognized for its strong journalistic reputation and community ties [9]. - Medium Giant is an integrated creative marketing agency that has received multiple industry awards, including the AAF Addy and the AMA DFW Annual Marketer of the Year Award for Campaign of the Year in 2024 [10]. Leadership Appointment - Colleen McCain Nelson, a Pulitzer Prize-winning journalist, previously served as the Executive Editor of The Sacramento Bee and has led journalists across five California newsrooms [2][3]. - Grant Moise, Publisher of The Dallas Morning News, expressed confidence in Nelson's leadership, highlighting her commitment to journalistic excellence and digital transformation [3][4]. Career Background of Colleen McCain Nelson - Nelson has a rich background in journalism, having worked as a White House correspondent for The Wall Street Journal and covering two presidential campaigns [7]. - She has held various editorial roles, including national opinion editor for McClatchy and vice president/editorial page editor of the Kansas City Star, which produced three Pulitzer finalists [6][8]. - Nelson's previous work at The Dallas Morning News included reporting on local, state, and national politics, contributing to the newspaper's 2010 Pulitzer Prize for editorial writing [4][5]. Awards and Recognition - Under Nelson's leadership, the Sacramento Bee received several national and state journalism awards, including a Sigma Delta Chi Award and six first-place awards at the California Journalism Awards in 2024 [3].

Core Insights - DallasNews Corporation (DALN) shares have declined 12.4% since the earnings report for Q1 2025, underperforming the S&P 500 index which grew by 1.6% during the same period [1] - The company reported a net income of $5.28 per share for Q1 2025, a significant improvement from a net loss of $0.25 per share in the prior year, primarily due to a $36.2 million gain from the sale of its Plano printing facility [2] - Total revenue decreased by 6.4% year-over-year to $29.1 million, with declines across advertising, circulation, and other revenue lines [2] Financial Performance - Net income for the quarter was $28.3 million, compared to a net loss of $1.4 million in the prior-year period [3] - Advertising and marketing services revenue fell by 7.2% to $10.8 million, driven by a 12.2% drop in print advertising, while digital advertising slightly decreased to $1.9 million [4] - Circulation revenue declined by 5.2% to $15.4 million, largely due to a 6% drop in print circulation [4] Segment Analysis - The core TDMN segment experienced a 28.3% year-over-year decline in profit to $3.8 million, while the Agency segment improved from a $0.4 million loss to a $0.2 million profit [5] - The adjusted operating loss widened to $1.2 million from $0.8 million in the previous year, indicating ongoing revenue pressures despite cost containment efforts [2][8] Management Strategy - CEO Grant Moise described the quarter as a milestone in the "Return to Growth Plan," emphasizing the strategic sale of the Plano printing facility which unlocked capital for reinvestment and fully funded pension obligations [6] - The company completed its transition in printing operations and expects to realize cost savings starting in May [7] - Management highlighted that the sale of the Plano property significantly boosted GAAP profitability, although underlying operations continued to face challenges [8] Cost Management - Total adjusted operating expenses decreased by 4.9% year-over-year to $30.3 million, primarily due to headcount rationalization and lower severance and depreciation costs [9] - A 13.2% reduction in workforce year-over-year contributed to employee compensation and benefit savings of $1.2 million [8] Pension Obligations - In April, DallasNews used proceeds from the Plano property sale to fully fund its pension liabilities through an annuity purchase agreement, relieving the company of long-term pension obligations [11] - This move simplified the balance sheet and aligned with broader efforts to streamline operations and reduce financial risk [11]

Financial Data and Key Metrics Changes - For Q1 2025, Dallas News Corporation reported a net income of $28.3 million or $5.28 per share, compared to a net loss of $1.4 million in Q1 2024 [5] - Operating income for the quarter was $34.2 million, which includes a net gain of $36.2 million from the sale of the Plano printing facility [5] - Total revenue decreased to $29.1 million from $31.1 million year-over-year, a decline of $2 million [5] - On a non-GAAP basis, the adjusted operating loss was $1.2 million, an improvement of $400,000 compared to the adjusted operating loss of $800,000 in the same period last year [5][6] Business Line Data and Key Metrics Changes - Advertising and marketing services revenue was $800,000, a decrease of $800,000 or 7.2% compared to $11.6 million reported last year, primarily due to a print advertising revenue decline of $700,000 or 12.2% [6] - Circulation revenue was $15.4 million, down $900,000 or 5.2% from $16.3 million last year, mainly due to a print circulation revenue decrease of $700,000 or 6% [6] - Total membership, including both print and digital, was 125,972 as of March 31, down from 126,973 as of December 31 [6] Market Data and Key Metrics Changes - Digital-only subscriptions increased to 65,028, reflecting a 1.1% increase from December 31 and a 4.2% increase compared to March of last year [7] - The company noted softness in print advertising, particularly in real estate and retail sectors, while financial services advertising remained robust [32][33] Company Strategy and Development Direction - The company is focused on transitioning print operations to a smaller, more efficient facility, with expected expense savings starting in May [10][11] - The board is discussing capital allocation strategies, including investing in digital revenue growth and returning capital to shareholders [11] - The company aims to improve margins at Medium Giant by focusing on larger, more profitable accounts and discontinuing relationships with smaller clients [43] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the return to growth plan, highlighting the successful funding of pension obligations and the transition to a new printing facility [9][10] - The management acknowledged the slower-than-expected growth in digital subscriptions but is implementing more aggressive offers to stimulate growth [25][26] - Economic uncertainties, including tariffs and consumer demand, are being closely monitored as they may impact advertising budgets [11][32] Other Important Information - The company recorded $6 million in tax expense for the quarter, but cash taxes are expected to be approximately $700,000 due to the utilization of net operating loss carryforwards [8] - As of April 25, the company had approximately $36 million in cash and cash equivalents following the sale of the Plano property [11] Q&A Session Summary Question: Is the company still on track for the $5 million profit improvement expected for 2025? - Management confirmed that they expect to realize the $5 million in savings starting in May, with a partial realization in Q2 and full realization in Q3 and Q4 [21][22] Question: Can you explain the 16% lift in starts from the new dynamic paywall? - The 16% lift refers to the increase in new subscriptions generated by the dynamic paywall compared to the previous meter strategy, which was based on fixed business rules [24] Question: How are subscribers trending in Q2? - Subscriber growth is still occurring, but at a slower pace than desired. The company is testing a more aggressive offer to boost subscription volume [25][26] Question: What areas of advertising showed weakness in Q1? - The company noted softness in real estate and retail advertising, while financial services remained strong. The agency side is steadier compared to print [32][33] Question: Will the increase in newsprint usage normalize in Q2? - Yes, the newsprint usage will return to 2024 levels, although pricing may fluctuate due to market conditions [38][39] Question: What is the status of pension obligations? - The company spent $10 million to fully fund the pension, which was less than the initially expected $14 to $16 million [41] Question: What is the expected profitability level for Medium Giant going forward? - Management aims to improve Medium Giant's margins into the double digits, focusing on larger clients to enhance profitability [44]