Issuer Direct (ISDR) - 2025 Q2 - Quarterly Results

Executive Summary and Business Update CEO Commentary ACCESS Newswire achieved sequential Q2 2025 growth, strong gross margins, and increased subscription customers, driven by its subscription model transition - The company is transitioning to a subscription-based model, aiming for a sustainable and predictable business[2] - Key areas of focus include increasing revenue, maintaining strong gross margins, growing subscription customers, and improving adjusted EBITDA[2] - Operational efficiencies and upcoming product enhancements are expected to drive improved performance in the near and long term[2] Financial Highlights Second Quarter 2025 Highlights ACCESS Newswire reported mixed results for Q2 2025, with sequential revenue growth but a year-over-year decrease, while significantly improving adjusted EBITDA and achieving positive cash flow from operations | Metric | Q2 2025 | Q1 2025 | Q2 2024 | YoY Change (Q2 25 vs Q2 24) | QoQ Change (Q2 25 vs Q1 25) | | :-------------------------------- | :------ | :------ | :------ | :-------------------------- | :-------------------------- | | Revenue | $5.6M | $5.5M | $6.0M | -7% | +3% | | Adjusted EBITDA | $836,000 | N/A | $528,000 | +$308,000 | N/A | | Cash flow from operations | Positive | N/A | Negative | +$325,000 | N/A | | Subscriptions (end of period) | 971 | 955 | 867 | +104 | +16 | | Metric (in thousands) | Q2 2025 | Q2 2024 | Q1 2025 | YoY Change (Q2 25 vs Q2 24) | QoQ Change (Q2 25 vs Q1 25) | | :-------------------------------- | :------ | :------ | :------ | :-------------------------- | :-------------------------- | | Total Revenue | $5,621 | $6,020 | $5,476 | -7% | +3% | | Gross Margin | $4,285 | $4,647 | $4,273 | -8% | +0.3% | | Gross Margin (% of revenue) | 76% | 77% | 78% | -1 pp | -2 pp | | Operating Loss | $(249) | $(531) | N/A | -53% | N/A | | Net Loss from continuing operations (GAAP) | $(239) | $(683) | N/A | -65% | N/A | | Net Loss from discontinued operations (GAAP) | $(236) | $690 | N/A | N/A | N/A | | Operating Cash Flows | $135 | $(190) | N/A | N/A | N/A | | Adjusted EBITDA | $836 | $528 | N/A | +58% | N/A | | Adjusted EBITDA (% of revenue) | 15% | 9% | N/A | +6 pp | N/A | | Non-GAAP Net Income | $556 | $101 | N/A | +450% | N/A | | Adjusted Free-Cash Flow | $250 | $(292) | N/A | N/A | N/A | - The year-over-year revenue decrease was due to slight declines across all product lines, including a 4% decrease in core press release business revenue per release, despite increased volume[6] - Operating expenses decreased by 12% due to headcount reduction and other operational efficiency initiatives, contributing to a reduced operating loss[6] First Half 2025 Highlights For the first half of 2025, ACCESS Newswire experienced a slight revenue decrease year-over-year but significantly improved its operating loss, net loss from continuing operations, and all non-GAAP financial measures | Metric (in thousands) | H1 2025 | H1 2024 | YoY Change (H1 25 vs H1 24) | | :-------------------------------- | :------ | :------ | :-------------------------- | | Total Revenue | $11,097 | $11,592 | -4% | | Gross Margin | $8,557 | $8,831 | -3% | | Gross Margin (% of revenue) | 77% | 76% | +1 pp | | Operating Loss | $(926) | $(1,393) | -34% | | Net Loss from continuing operations (GAAP) | $(1,004) | $(1,466) | -32% | | Net Income from discontinued operations (GAAP) | $5,916 | $1,334 | +343% | | Operating Cash Flows | $882 | $796 | +11% | | Adjusted EBITDA | $1,400 | $415 | +237% | | Adjusted EBITDA (% of revenue) | 13% | 4% | +9 pp | | Non-GAAP Net Income | $762 | $(265) | N/A (shifted from loss to income) | | Adjusted Free-Cash Flow | $1,217 | $491 | +148% | - The increase in net income from discontinued operations was primarily due to a $6.0 million gain recorded on the sale of the compliance business[10] - Improvements in non-GAAP measures are largely attributed to cost improvements and operational efficiencies[10] Key Performance Indicators The company reported a slight decrease in total active contracts but a notable increase in subscription customers and average annual recurring revenue (ARR) per subscription customer year-over-year | Metric | As of June 30, 2025 | As of June 30, 2024 | YoY Change | | :-------------------------------- | :------------------ | :------------------ | :--------- | | Total active contracts (past 12 months) | 11,770 | 12,112 | -342 | | Subscription customers | 971 | 867 | +104 | | Average ARR for subscriptions per customer | $11,039 | $10,068 | +$971 | Non-GAAP Financial Measures Explanation of Non-GAAP Measures Management uses non-GAAP financial measures to aid in financial and operational decision-making and to evaluate operating results over time, excluding certain non-recurring items for a more meaningful comparison of ongoing operations - Non-GAAP measures are used by management for financial and operational decision-making and evaluating operating results over time[9] - EBITDA excludes depreciation, amortization, interest, and income taxes from continuing operations[11] - Adjusted EBITDA further excludes certain non-recurring expenses and gain/loss on interest rate swaps[11] - Non-GAAP net income (loss) excludes stock-based compensation and amortization of acquisition-related intangible assets[11] - Free cash flow represents cash flow from operating activities less capital expenditures, while adjusted free cash flow also deducts certain non-recurring cash payments[12] - The company cautions that non-GAAP measures are not prepared in accordance with GAAP, may differ from those used by other companies, and exclude expenses that could materially impact reported financial results[13][14] Reconciliation of EBITDA & Adjusted EBITDA The reconciliation tables show a significant improvement in both EBITDA and Adjusted EBITDA for Q2 and the first half of 2025 compared to the prior year periods, reflecting the impact of operational efficiencies and adjustments for non-recurring items EBITDA & Adjusted EBITDA Reconciliation (in thousands): | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | | Net loss from continuing operations | $(239) | $(683) | | EBITDA from continuing operations | $480 | $211 | | Adjusted EBITDA from continuing operations | $836 | $528 | | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net loss from continuing operations | $(1,004) | $(1,466) | | EBITDA from continuing operations | $476 | $282 | | Adjusted EBITDA from continuing operations | $1,400 | $415 | - Adjustments for acquisition/integration costs, other non-recurring expenses, and stock-based compensation significantly contributed to the difference between EBITDA and Adjusted EBITDA[15][16] Reconciliation of Non-GAAP Net Income (Loss) The company reported a positive non-GAAP net income for both Q2 and the first half of 2025, a substantial improvement from net losses in the prior year periods, achieved by adjusting for amortization of intangible assets, stock-based compensation, and other unusual items Non-GAAP Net Income (Loss) Reconciliation (in thousands, except per share): | Metric | Three Months Ended June 30, 2025 | Per diluted share | Three Months Ended June 30, 2024 | Per diluted share | | :-------------------------------- | :------------------------------- | :---------------- | :------------------------------- | :---------------- | | Net loss from continuing operations | $(239) | $(0.06) | $(683) | $(0.18) | | Non-GAAP net income (loss) from continuing operations | $556 | $0.14 | $10