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Issuer Direct (ISDR) - 2024 Q3 - Quarterly Report
ISDRIssuer Direct (ISDR)2024-11-07 22:15
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Financial Performance - Total revenue decreased by 616,000,or8616,000, or 8%, to 6,953,000 for the three months ended September 30, 2024, compared to 7,569,000forthesameperiodin2023[109]−Communicationsrevenuedecreasedby7,569,000 for the same period in 2023[109] - Communications revenue decreased by 597,000, or 10%, to 5,481,000forthethreemonthsendedSeptember30,2024,comparedto5,481,000 for the three months ended September 30, 2024, compared to 6,078,000 for the same period in 2023[110] - Compliance revenue decreased by 19,000,or119,000, or 1%, and 2,541,000, or 35%, during the three and nine months ended September 30, 2024, respectively[111] - Operating income was 156,000forthethreemonthsendedSeptember30,2024,comparedto156,000 for the three months ended September 30, 2024, compared to 593,000 for the same period in 2023[105] - Net income (loss) was (466,000)forthethreemonthsendedSeptember30,2024,comparedto(466,000) for the three months ended September 30, 2024, compared to 273,000 for the same period in 2023[105] - For the three months ended September 30, 2024, the company reported a net loss of 466,000,or466,000, or (0.12) per diluted share, compared to a net income of 273,000,or273,000, or 0.07 per diluted share for the same period in 2023[136] - For the nine months ended September 30, 2024, the company reported a net loss of 598,000,or598,000, or (0.16) per diluted share, compared to a net income of 1,492,000,or1,492,000, or 0.39 per diluted share for the same period in 2023[136] - Non-GAAP net income for the nine months ended September 30, 2024, was 1,809,000,or1,809,000, or 0.47 per diluted share, compared to 4,314,000,or4,314,000, or 1.13 per diluted share for the same period in 2023[136] Expenses and Margins - Gross margin percentage decreased to 74% and 75% for the three and nine months ended September 30, 2024, respectively, compared to 76% and 77% during the same periods in 2023[113] - General and administrative expenses were 2,008,000duringthethreemonthsendedSeptember30,2024,adecreaseof2,008,000 during the three months ended September 30, 2024, a decrease of 25,000, or 1%, compared to the same period in 2023[116] - Sales and marketing expenses were 1,618,000forthethreemonthsendedSeptember30,2024,adecreaseof1,618,000 for the three months ended September 30, 2024, a decrease of 220,000, or 12%, compared to the same period in 2023[118] - Total cost of revenue decreased by 16,000,or116,000, or 1%, and 496,000, or 8%, during the three and nine months ended September 30, 2024, respectively[113] - Product development expenses increased by 90,000(1590,000 (15%) to 671,000 for the three months ended September 30, 2024, and by 157,000(8157,000 (8%) to 2,044,000 for the nine months ended September 30, 2024, compared to the same periods in 2023[120] - As a percentage of revenue, product development expenses were 10% and 9% for the three and nine months ended September 30, 2024, respectively, up from 8% in the same periods of 2023[121] - Interest expense decreased to 280,000forthethreemonthsand280,000 for the three months and 903,000 for the nine months ended September 30, 2024, compared to 368,000and368,000 and 1,080,000 in the same periods of 2023[122] Cash Flow and Financial Position - As of September 30, 2024, the company had 4,086,000incashandcashequivalents,withcurrentliabilitiestotaling4,086,000 in cash and cash equivalents, with current liabilities totaling 12,593,000, resulting in a current liabilities exceeding current assets by 2,560,000[125]−FreecashflowforthethreemonthsendedSeptember30,2024,was2,560,000[125] - Free cash flow for the three months ended September 30, 2024, was 1,358,000, compared to 110,000inthesameperiodof2023[132]−AdjustedfreecashflowfortheninemonthsendedSeptember30,2024,was110,000 in the same period of 2023[132] - Adjusted free cash flow for the nine months ended September 30, 2024, was 1,860,000, down from 2,638,000inthesameperiodof2023[132]−AdjustedEBITDAforthethreemonthsendedSeptember30,2024,was2,638,000 in the same period of 2023[132] - Adjusted EBITDA for the three months ended September 30, 2024, was 1,369,000, compared to 1,756,000inthesameperiodof2023[134]−AdjustedEBITDAfortheninemonthsendedSeptember30,2024,was1,756,000 in the same period of 2023[134] - Adjusted EBITDA for the nine months ended September 30, 2024, was 3,585,000, down from 6,663,000inthesameperiodof2023[135]StrategicInitiatives−ThecompanyaimstoincreasetheCommunicationsportionofitsbusinessrelativetoCompliance,indicatingastrategicshiftinfocus[79]−ThecompanyplanstocontinuefocusingonexpandingitsCommunicationsproductsandaligningsalesandmarketingteamstoenhanceitsofferings[141]−Thecompanyaimstoinvestintechnologyadvancementsandevaluateacquisitionsaspartofitsstrategicinitiativesforsustainablegrowth[141]−Thecompanybelievesthatthetransitiontoaplatformsubscriptionmodeliskeyforlong−termsustainablegrowth[141]MarketandEconomicFactors−Marketfactorssuchasglobalinflationandgeopoliticalconflictshavecontributedtoeconomicuncertainty,butthecompanybelievesdemandforitsplatformsremainsstable[139]−Thecompanyacknowledgespotentialrisksrelatedtogoodwillandintangibleassetwrite−downsifstockpricesdeclineordemandforitsservicesdoesnotstabilize[140]ProductandServiceDevelopments−IssuerDirectCorporationreportedsignificantgrowthinitsCommunicationssegment,withrevenuesincreasingyear−over−year,drivenbyenhancementsintheACCESSWIREplatform[82]−ThecompanyacquiredNewswireonNovember1,2022,andfullyintegrateditsdistributionnetworkintoACCESSWIREbyearly2023,expandingitsserviceofferings[83]−TheMediaSuitesubscriptionadd−onwaslaunched,providingcommunicationprofessionalswithtoolsformediapitching,monitoring,anddatabaseaccess,enhancingcustomerengagement[86]−Thewebcastingplatformallowsforliveandon−demandstreamingofevents,withanestimated5,000companiesinNorthAmericaconductingearningseventseachquarter[94]−Significantupgradestotheinvestorrelationswebsitewerereleasedin2023,includingADAandAODAcompliance,whichrequirearecurringannualsubscription[97]−TheCompliancesegmentincludesadisclosuresoftwaremoduledesignedforcompaniestomanageSECfilings,generatingrevenuefrombothsoftwareandservices[99]−Thewhistleblowerhotline,asupportedproductofNYSEofferings,isbeingupgradedtoenhanceincidentresponseandmanagementprocesses[100]−Thestocktransfermoduleprovidesreal−timeinformationaboutshareholdersandstockledgers,focusingonsubscriptionsalestoimproveefficiency[101]−Partnershipswithstockexchangesareexpectedtoenhancebrandexposureandrevenuepotentialintargetedcustomersegments[81]OtherFinancialInformation−AsofSeptember30,2024,thedeferredrevenuebalancewas6,663,000 in the same period of 2023[135] Strategic Initiatives - The company aims to increase the Communications portion of its business relative to Compliance, indicating a strategic shift in focus[79] - The company plans to continue focusing on expanding its Communications products and aligning sales and marketing teams to enhance its offerings[141] - The company aims to invest in technology advancements and evaluate acquisitions as part of its strategic initiatives for sustainable growth[141] - The company believes that the transition to a platform subscription model is key for long-term sustainable growth[141] Market and Economic Factors - Market factors such as global inflation and geopolitical conflicts have contributed to economic uncertainty, but the company believes demand for its platforms remains stable[139] - The company acknowledges potential risks related to goodwill and intangible asset write-downs if stock prices decline or demand for its services does not stabilize[140] Product and Service Developments - Issuer Direct Corporation reported significant growth in its Communications segment, with revenues increasing year-over-year, driven by enhancements in the ACCESSWIRE platform[82] - The company acquired Newswire on November 1, 2022, and fully integrated its distribution network into ACCESSWIRE by early 2023, expanding its service offerings[83] - The Media Suite subscription add-on was launched, providing communication professionals with tools for media pitching, monitoring, and database access, enhancing customer engagement[86] - The webcasting platform allows for live and on-demand streaming of events, with an estimated 5,000 companies in North America conducting earnings events each quarter[94] - Significant upgrades to the investor relations website were released in 2023, including ADA and AODA compliance, which require a recurring annual subscription[97] - The Compliance segment includes a disclosure software module designed for companies to manage SEC filings, generating revenue from both software and services[99] - The whistleblower hotline, a supported product of NYSE offerings, is being upgraded to enhance incident response and management processes[100] - The stock transfer module provides real-time information about shareholders and stock ledgers, focusing on subscription sales to improve efficiency[101] - Partnerships with stock exchanges are expected to enhance brand exposure and revenue potential in targeted customer segments[81] Other Financial Information - As of September 30, 2024, the deferred revenue balance was 5,308,000, a decrease of 2% from 5,412,000asofDecember31,2023[112]−Thecompanyexperiencedalossof5,412,000 as of December 31, 2023[112] - The company experienced a loss of 343,000 related to the change in fair value of its interest rate swap for the three months ended September 30, 2024[137] - The company has no off-balance sheet arrangements that could materially affect its financial condition[143]