PART I. FINANCIAL INFORMATION This section provides the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) This section presents the unaudited condensed consolidated financial statements, including the balance sheets, statements of operations, comprehensive income, stockholders' equity, and cash flows, along with detailed notes explaining the company's accounting policies, financial instruments, debt, equity compensation, income taxes, segment information, and legal proceedings [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202025%20and%20December%2031%2C%202024) The balance sheets provide a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity at specific points in time Condensed Consolidated Balance Sheets (in millions) | Metric | June 30, 2025 | December 31, 2024 | Change | | :------------------------------------------------------- | :------------ | :---------------- | :----- | | **Assets** | | | | | Cash and cash equivalents | $110.275 | $121.173 | $(10.898) | | Accounts receivable – net | $162.659 | $151.130 | $11.529 | | Total current assets | $348.809 | $358.815 | $(10.006) | | Property and equipment, net | $187.178 | $177.292 | $9.886 | | Goodwill | $1,516.960 | $1,510.477 | $6.483 | | Intangible assets, net | $416.030 | $389.906 | $26.124 | | Total assets | $2,595.961 | $2,563.708 | $32.253 | | **Liabilities** | | | | | Short-term debt, net | $21.101 | $— | $21.101 | | Deferred revenue | $184.934 | $172.090 | $12.844 | | Total current liabilities | $499.682 | $453.255 | $46.427 | | Long-term debt, net | $1,341.305 | $1,314.424 | $26.881 | | Total liabilities | $1,935.949 | $1,845.368 | $90.581 | | **Stockholders' Equity** | | | | | Accumulated deficit | $(1,361.123) | $(1,223.482) | $(137.641) | | Total stockholders' equity | $660.012 | $718.340 | $(58.328) | - Total assets increased by **$32.253 million** from December 31, 2024, to June 30, 2025, while total liabilities increased by **$90.581 million**, leading to a **$58.328 million** decrease in total stockholders' equity[8](index=8&type=chunk) - Cash and cash equivalents decreased by **$10.898 million**, and short-term debt increased from zero to **$21.101 million**, indicating changes in liquidity and debt structure[8](index=8&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This statement details the company's revenues, expenses, and net income or loss over specific periods, reflecting operational performance Condensed Consolidated Statements of Operations (in millions, except per share amounts) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Revenue | $234.882 | $229.140 | $458.959 | $451.418 | | Total operating expenses | $199.322 | $182.682 | $396.057 | $363.926 | | Income from operations | $35.560 | $46.458 | $62.902 | $87.492 | | Interest expense | $(36.556) | $(33.890) | $(69.231) | $(66.614) | | Foreign exchange (loss) gain – net | $(54.771) | $2.439 | $(79.849) | $18.861 | | Loss on extinguishment of debt | $— | $— | $(5.474) | $— | | Net (loss) income | $(34.359) | $3.689 | $(136.931) | $17.276 | | Basic EPS | $(0.08) | $0.01 | $(0.33) | $0.04 | | Diluted EPS | $(0.08) | $0.01 | $(0.33) | $0.04 | - The company reported a net loss of **$(34.359) million** for Q2 2025 and **$(136.931) million** for H1 2025, a significant decline from net income of **$3.689 million** and **$17.276 million** in the respective prior-year periods[10](index=10&type=chunk) - Revenue increased slightly by **2.5%** for Q2 2025 and **1.7%** for H1 2025, but operating expenses rose by **9.1%** and **8.8%** respectively, contributing to the operational income decline[10](index=10&type=chunk) [Condensed Consolidated Statements of Comprehensive (Loss) Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20%28Loss%29%20Income%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This statement presents net income alongside other comprehensive income items, such as foreign currency translation adjustments, to show total comprehensive earnings Condensed Consolidated Statements of Comprehensive (Loss) Income (in millions) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net (loss) income | $(34.359) | $3.689 | $(136.931) | $17.276 | | Net foreign currency translation adjustment gains (losses) | $47.719 | $(2.796) | $68.069 | $(18.402) | | Comprehensive (loss) income | $13.360 | $0.893 | $(68.862) | $(1.126) | - Comprehensive income for Q2 2025 was **$13.360 million**, an increase from **$0.893 million** in Q2 2024, primarily due to significant net foreign currency translation adjustment gains of **$47.719 million**[12](index=12&type=chunk) - For H1 2025, the company reported a comprehensive loss of **$(68.862) million**, a substantial decline from a loss of **$(1.126) million** in H1 2024, despite **$68.069 million** in foreign currency translation gains[12](index=12&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This statement tracks changes in equity over time, including net income, share issuances, and other comprehensive income, reflecting ownership value Condensed Consolidated Statements of Stockholders' Equity (in millions) | Metric | Balance at Dec 31, 2024 | Balance at Mar 31, 2025 | Balance at Jun 30, 2025 | | :------------------------------------------------------- | :---------------------- | :---------------------- | :---------------------- | | Total Getty Images Holdings, Inc. Stockholders' Equity | $670.196 | $592.952 | $611.158 | | Non-controlling interest | $48.144 | $48.144 | $48.854 | | Total Stockholders' Equity | $718.340 | $641.096 | $660.012 | | Net loss (Q1 2025) | | $(102.572) | | | Net (loss) income (Q2 2025) | | | $(35.069) | | Net foreign currency translation adjustment gains | | $20.350 | $47.719 | | Equity-based compensation activity | | $4.978 | $4.253 | - Total stockholders' equity decreased from **$718.340 million** at December 31, 2024, to **$660.012 million** at June 30, 2025, primarily due to net losses incurred during the period[15](index=15&type=chunk) - The accumulated deficit increased by **$137.641 million** for the six months ended June 30, 2025, reflecting the company's net losses, while accumulated other comprehensive loss improved due to foreign currency translation gains[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This statement tracks cash inflows and outflows from operating, investing, and financing activities, providing insight into liquidity and solvency Condensed Consolidated Statements of Cash Flows (in millions) | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $21.930 | $67.971 | | Net cash used in investing activities | $(31.817) | $(44.739) | | Net cash used in financing activities | $(21.299) | $(34.774) | | Effects of exchange rates fluctuations | $20.262 | $(3.076) | | NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | $(10.924) | $(14.618) | | CASH, CASH EQUIVALENTS AND RESTRICTED CASH – End of period | $114.380 | $126.232 | - Net cash provided by operating activities decreased significantly to **$21.930 million** in H1 2025 from **$67.971 million** in H1 2024, primarily due to merger-related costs[20](index=20&type=chunk)[221](index=221&type=chunk) - Net cash used in investing activities decreased to **$31.817 million** in H1 2025 from **$44.739 million** in H1 2024, mainly due to the absence of a business acquisition in 2025 compared to the prior year[20](index=20&type=chunk)[223](index=223&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and additional information about the figures presented in the financial statements, clarifying accounting policies and significant events [Note 1 - Description of the Company and Basis of Presentation](index=12&type=section&id=Note%201%20-%20Description%20of%20the%20Company%20and%20Basis%20of%20Presentation) This note outlines the company's business operations, its global visual content marketplace, and the basis for preparing the financial statements - Getty Images Holdings, Inc. is a global visual content creator and marketplace, operating through its Getty Images, iStock, and Unsplash brands, serving customers worldwide[23](index=23&type=chunk) - On January 6, 2025, Getty Images entered into a merger agreement with Shutterstock, Inc. for a merger-of-equals transaction, with Getty Images stockholders expected to own approximately **53.0%** of the combined company[24](index=24&type=chunk)[25](index=25&type=chunk) - The company expensed **$14.4 million** and **$32.4 million** in legal, accounting, and other direct costs related to the proposed merger for the three and six months ended June 30, 2025, respectively[26](index=26&type=chunk) [Note 2 - Summary of Significant Accounting Policies](index=14&type=section&id=Note%202%20-%20Summary%20of%20Significant%20Accounting%20Policies) This note details the key accounting principles and methods used in preparing the financial statements, ensuring transparency and comparability - There have been no material changes to the significant accounting policies described in the 2024 Form 10-K[35](index=35&type=chunk) - Accounts receivable – net, are reported net of allowances for doubtful accounts of **$6.1 million** as of June 30, 2025, and **$6.2 million** as of December 31, 2024[36](index=36&type=chunk) - The company recognized foreign exchange loss, net, of **$54.8 million** for Q2 2025 and **$79.8 million** for H1 2025, compared to net gains of **$2.4 million** and **$18.9 million** for the respective 2024 periods, primarily due to EUR fluctuations[39](index=39&type=chunk) [Note 3 - Revenue](index=16&type=section&id=Note%203%20-%20Revenue) This note provides a breakdown of revenue sources, including licensing models and geographical segments, and the policies for revenue recognition - Revenue is primarily derived from licensing digital content (images, video, music) through subscription and transactional models, with recognition occurring when content is downloaded or access is provided[43](index=43&type=chunk)[45](index=45&type=chunk) Revenue by Major Product (in millions) | Product Line | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Creative | $130.824 | $137.897 | $262.998 | $276.739 | | Editorial | $88.342 | $83.619 | $170.959 | $163.048 | | Other | $15.716 | $7.624 | $25.002 | $11.631 | | **Total Revenue** | **$234.882** | **$229.140** | **$458.959** | **$451.418** | Revenue by Region (in millions) | Region | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Americas | $136.509 | $127.957 | $268.033 | $252.366 | | Europe, the Middle East, and Africa | $73.202 | $75.686 | $141.929 | $148.601 | | Asia-Pacific | $25.171 | $25.497 | $48.997 | $50.451 | | **Total Revenue** | **$234.882** | **$229.140** | **$458.959** | **$451.418** | [Note 4 - Derivative Instruments](index=17&type=section&id=Note%204%20-%20Derivative%20Instruments) This note describes the company's use of derivative financial instruments, such as interest rate swaps, and their impact on financial results - The company's interest rate swap agreement, used to reduce interest rate fluctuations on debt, matured in February 2024[52](index=52&type=chunk) - No income or expense was recognized from derivative instruments for the three and six months ended June 30, 2025, compared to a net loss of **$1.5 million** for the six months ended June 30, 2024[53](index=53&type=chunk) [Note 5 - Fair Value of Financial Instruments](index=17&type=section&id=Note%205%20-%20Fair%20Value%20of%20Financial%20Instruments) This note provides information on the fair value measurements of financial instruments, categorized by valuation input levels, to assess their market value Fair Value Measurements at June 30, 2025 (in millions) | (In millions) | Level 1 | Level 2 | Level 3 | Total | | :------------- | :------ | :------ | :------ | :---- | | **Assets:** | | | | | | Money market funds (cash equivalents) | $51.637 | $— | $— | $51.637 | | **Liabilities:** | | | | | | New Term Loans | $— | $525.473 | $— | $525.473 | | Senior Secured Notes | $— | $535.895 | $— | $535.895 | | Senior Unsecured Notes | $— | $295.125 | $— | $295.125 | Fair Value Measurements at December 31, 2024 (in millions) | (In millions) | Level 1 | Level 2 | Level 3 | Total | | :------------- | :------ | :------ | :------ | :---- | | **Assets:** | | | | | | Money market funds (cash equivalents) | $75.431 | $— | $— | $75.431 | | **Liabilities:** | | | | | | Old Term Loans | $— | $1,013.231 | $— | $1,013.231 | | Senior Unsecured Notes | $— | $298.965 | $— | $298.965 | - Money market funds are classified as Level 1, while New Term Loans, Senior Secured Notes, and Senior Unsecured Notes are classified as Level 2, with fair values based on market quotes from third-party sources[58](index=58&type=chunk)[57](index=57&type=chunk) [Note 6 - Other Assets and Liabilities](index=19&type=section&id=Note%206%20-%20Other%20Assets%20and%20Liabilities) This note details the composition of other long-term assets and accrued expenses, providing a more granular view of specific balance sheet items Other Long-Term Assets (in millions) | (In millions) | As of June 30, 2025 | As of December 31, 2024 | | :------------- | :------------------ | :---------------------- | | Long term note receivable from a related party | $24.000 | $24.000 | | Minority and other investments | $4.631 | $4.385 | | Equity method investment | $1.500 | $1.077 | | Other | $1.257 | $1.338 | | **Total** | **$31.388** | **$30.800** | Accrued Expenses (in millions) | (In millions) | As of June 30, 2025 | As of December 31, 2024 | | :------------- | :------------------ | :---------------------- | | Accrued compensation and related costs | $20.237 | $26.419 | | Lease liabilities | $10.392 | $11.252 | | Interest payable | $19.519 | $9.903 | | Accrued professional fees | $15.549 | $10.809 | | Other | $0.989 | $1.555 | | **Total** | **$66.686** | **$59.938** | - Interest payable significantly increased from **$9.903 million** at December 31, 2024, to **$19.519 million** at June 30, 2025, while accrued compensation and related costs decreased[60](index=60&type=chunk) [Note 7 - Debt](index=21&type=section&id=Note%207%20-%20Debt) This note provides a detailed breakdown of the company's debt structure, including refinancing activities, new issuances, and their terms Debt (in millions) | (In millions) | As of June 30, 2025 | As of December 31, 2024 | | :------------- | :------------------ | :---------------------- | | Senior Secured Notes | $539.944 | $— | | Senior Unsecured Notes | $300.000 | $300.000 | | Old USD Term Loans | $— | $579.200 | | Old EUR Term Loans | $— | $435.190 | | New USD Term Loans | $40.056 | $— | | New EUR Term Loans | $510.190 | $— | | Adjusted for: issuance costs, premiums and discounts | $(27.784) | $0.034 | | Less short-term debt – net | $(21.101) | $— | | **Long-term debt – net** | **$1,341.305** | **$1,314.424** | - On February 21, 2025, the company refinanced its Old USD Term Loans (**$579.2 million**) and Old EUR Term Loans (**€419.0 million**) with new **$580.0 million** New USD Term Loans and **€440.0 million** New EUR Term Loans, maturing on February 21, 2030[63](index=63&type=chunk)[64](index=64&type=chunk)[66](index=66&type=chunk) - On May 5, 2025, the company exchanged **$539.9 million** of its New USD Term Loans for **11.250%** Senior Secured Notes due 2030, which are secured by a first priority lien on substantially all loan parties' assets[68](index=68&type=chunk)[77](index=77&type=chunk)[79](index=79&type=chunk) [Note 8 - Equity-based Compensation](index=27&type=section&id=Note%208%20-%20Equity-based%20Compensation) This note details the company's equity incentive plan, shares reserved for issuance, and the expense recognized for equity-based compensation - The 2022 Equity Incentive Plan has **51,104,577** shares of Class A common stock reserved for issuance, with **1,831,547** shares available as of June 30, 2025[89](index=89&type=chunk) - Equity-based compensation expense, net of estimated forfeitures, was **$4.3 million** for Q2 2025 and **$9.2 million** for H1 2025, a decrease from **$4.4 million** and **$14.4 million** in the respective 2024 periods[91](index=91&type=chunk) - The company capitalized **$0.5 million** (Q2 2025) and **$0.9 million** (H1 2025) of equity-based compensation expense related to internal-use software development[91](index=91&type=chunk) [Note 9 - Net (Loss) Income per Share Attributable to Common Stockholders](index=28&type=section&id=Note%209%20-%20Net%20%28Loss%29%20Income%20per%20Share%20Attributable%20to%20Common%20Stockholders) This note calculates basic and diluted net income or loss per share, reflecting the earnings available to each common stockholder Net (Loss) Income per Share (in millions, except per share amounts) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net (loss) income attributable to Getty Images Holdings, Inc. - Basic | $(35.069) | $3.847 | $(137.641) | $17.302 | | Basic EPS | $(0.08) | $0.01 | $(0.33) | $0.04 | | Diluted EPS | $(0.08) | $0.01 | $(0.33) | $0.04 | | Weighted-average Class A common shares outstanding (Basic) | 413,741,878 | 408,989,273 | 413,110,883 | 407,312,262 | | Weighted-average Class A common shares outstanding (Diluted) | 413,741,878 | 414,439,239 | 413,110,883 | 414,666,363 | - Basic and diluted net loss per share were **$(0.08)** for Q2 2025 and **$(0.33)** for H1 2025, reflecting the net losses incurred[95](index=95&type=chunk) - In periods of net loss, diluted net loss per share is the same as basic net loss per share because potentially dilutive securities are anti-dilutive; for H1 2025, **31.9 million** shares were excluded for this reason[93](index=93&type=chunk)[95](index=95&type=chunk) [Note 10 - Income Taxes](index=28&type=section&id=Note%2010%20-%20Income%20Taxes) This note explains the company's income tax provisions, including benefits, expenses, and the effective tax rate, and factors influencing tax liabilities - The company recorded an income tax benefit of **$23.3 million** for Q2 2025, contrasting with an expense of **$12.5 million** for Q2 2024[98](index=98&type=chunk) - For H1 2025, income tax expense was **$41.3 million**, compared to **$23.7 million** for H1 2024[99](index=99&type=chunk) - The effective tax rate for 2025 is expected to be a large negative percentage due to the company's pre-tax loss and non-analogous income tax expense items like foreign withholding taxes and non-deductible interest[99](index=99&type=chunk) [Note 11 - Segment Information](index=30&type=section&id=Note%2011%20-%20Segment%20Information) This note provides financial data for the company's operating segments, detailing revenue and income from operations to assess performance by business unit Segment Information (in millions) | (In millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Revenue | $234.882 | $229.140 | $458.959 | $451.418 | | Segment income from operations | $35.560 | $46.458 | $62.902 | $87.492 | | Other non-operating income (expense) | $(56.706) | $3.619 | $(89.352) | $20.097 | | Segment net (loss) income | $(34.359) | $3.689 | $(136.931) | $17.276 | - The company operates as a single segment, reporting a segment net loss of **$(34.359) million** for Q2 2025 and **$(136.931) million** for H1 2025, compared to net income in the prior year periods[101](index=101&type=chunk) - Segment income from operations decreased by **23.5%** for Q2 2025 and **28.1%** for H1 2025, while other non-operating income shifted to a significant expense in 2025[101](index=101&type=chunk) [Note 12 - Legal Proceedings and Contingencies](index=30&type=section&id=Note%2012%20-%20Legal%20Proceedings%20and%20Contingencies) This note outlines ongoing legal disputes, including warrant litigation and copyright infringement lawsuits, and their potential financial implications for the company - The company is appealing a judgment in the Initial Warrant Litigation, where damages of **$36.9 million** and **$51.0 million** were awarded to plaintiffs, plus **9%** pre-judgment interest[104](index=104&type=chunk) - In the Follow-On Warrant Litigation, summary judgment was granted to plaintiffs Berner and Lapp, with damages including pre-judgment interest calculated at **$7.8 million**, which the company has also appealed[105](index=105&type=chunk) - As of June 30, 2025, the company had **$114.0 million** in litigation reserves for warrant litigation, with a remaining insurance recovery receivable of approximately **$37.6 million**[107](index=107&type=chunk)[215](index=215&type=chunk) - Getty Images is a plaintiff in copyright and trademark infringement lawsuits against Stability AI, Inc. in the U.S. and Stability AI Limited in the UK, alleging unauthorized use of **12.0 million** images for AI model training[108](index=108&type=chunk)[109](index=109&type=chunk) - The company is vigorously contesting Canadian tax assessments for 2015, with a potential payment of up to **$19.1 million** during the appeal process and a maximum potential outcome of **$27.7 million** if the CRA prevails[113](index=113&type=chunk)[114](index=114&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, and future outlook, including recent developments, a business overview, detailed analysis of operating results, liquidity and capital resources, and key performance indicators, along with non-GAAP financial measures [Cautionary Note Regarding Forward-Looking Statements](index=35&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This note advises that the report contains forward-looking statements subject to risks and uncertainties, and actual results may differ materially from projections - The report contains forward-looking statements identified by words such as 'believe,' 'may,' 'will,' and 'expect,' which are subject to various risks and uncertainties[119](index=119&type=chunk) - Key risks include the inability to license third-party content, attract/retain customers, grow subscriptions, manage competition, execute business strategy, adapt to AI technologies, and navigate international market risks[120](index=120&type=chunk)[124](index=124&type=chunk) - Actual events and circumstances may differ materially from assumptions due to factors beyond the company's control, including risks related to the proposed merger with Shutterstock[119](index=119&type=chunk)[124](index=124&type=chunk) [Recent Developments](index=37&type=section&id=Recent%20Developments) This section highlights significant recent events, including a major merger agreement and debt refinancing activities, impacting the company's strategic and financial landscape [Merger Agreement with Shutterstock](index=37&type=section&id=Merger%20Agreement%20with%20Shutterstock) This section details the merger-of-equals transaction with Shutterstock, outlining ownership stakes and the consideration offered to stockholders - Getty Images entered into a merger agreement with Shutterstock on January 6, 2025, for a merger-of-equals transaction, with Getty Images stockholders expected to own approximately **53.0%** of the combined company[125](index=125&type=chunk)[126](index=126&type=chunk) - Shutterstock stockholders can elect to receive cash and/or Getty Images common stock, subject to proration, with options including **$9.50** cash and **9.17** shares, **$28.8487** cash, or **13.67237** shares of Getty Images common stock per share[126](index=126&type=chunk)[130](index=130&type=chunk) - The company expensed **$14.4 million** and **$32.4 million** in merger-related costs for the three and six months ended June 30, 2025, respectively, and the transaction is subject to ongoing regulatory approvals[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk) [Refinancing Amendment](index=37&type=section&id=Refinancing%20Amendment) This section describes the company's debt refinancing, including the issuance of new term loans to replace existing debt, impacting its capital structure - On February 21, 2025, the company entered a Refinancing Amendment, issuing new **$580.0 million** New USD Term Loans and **€440.0 million** New EUR Term Loans[130](index=130&type=chunk)[132](index=132&type=chunk) - The proceeds from the New Term Loans were used to fully refinance the outstanding Old USD Term Loans (**$579.2 million**) and Old EUR Term Loans (**€419.0 million**)[133](index=133&type=chunk)[140](index=140&type=chunk) [Permitted Debt Exchange Offering](index=39&type=section&id=Permitted%20Debt%20Exchange%20Offering) This section details the company's debt exchange, converting a portion of its term loans into new senior secured notes, altering its debt profile - On May 5, 2025, the company exercised its option to exchange **$539.9 million** of its New USD Term Loans for newly issued **11.250%** Senior Secured Notes due 2030[133](index=133&type=chunk) [Business Overview](index=39&type=section&id=Business%20Overview) This section provides an overview of the company's core business as a global visual content creator and marketplace, its product lines, brands, and value propositions - Getty Images is a preeminent global visual content creator and marketplace, offering a diverse collection of high-quality photos, illustrations, videos, and music licensing[134](index=134&type=chunk) - The company provides comprehensive content solutions, including a la carte and subscription access, generative AI services, custom content, and digital asset management tools, through its Getty Images, iStock, and Unsplash brands[136](index=136&type=chunk)[138](index=138&type=chunk) - Getty Images employs over **115** staff photographers and videographers, distributes content from almost **600,000** contributors, and maintains one of the largest privately-owned photographic archives globally[139](index=139&type=chunk) [Product Lines](index=39&type=section&id=Product%20Lines) This section categorizes the company's revenue by content type, including creative, editorial, and other services, highlighting their contribution to total revenue - Creative content, including generative AI services, represents **57.3%** of H1 2025 revenue, with **59.2%** generated through annual subscription products[140](index=140&type=chunk)[141](index=141&type=chunk) - Editorial content (news, sports, entertainment) accounts for **37.2%** of H1 2025 revenue, with **54.7%** from annual subscription products[142](index=142&type=chunk) - The 'Other' category, including data access, music licensing, and digital asset management, significantly increased its revenue contribution to **5.4%** for H1 2025[143](index=143&type=chunk) [Brands](index=41&type=section&id=Brands) This section describes the company's key brands, Gettyimages.com, iStock.com, and Unsplash.com, and their respective target markets and offerings - Gettyimages.com serves enterprise agency, media, and corporate customers with premium creative and editorial content, offering exclusive content and customizable rights[144](index=144&type=chunk) - iStock.com targets small and medium-sized businesses and freelancers with budget-conscious e-commerce offerings of creative stills and video[145](index=145&type=chunk) - Unsplash.com is a platform for free stock photo downloads and paid subscriptions, catering to prosumer and semi-professional creators, with over **85 million** image downloads monthly[146](index=146&type=chunk) [Customer and Contributor Value Proposition](index=42&type=section&id=Customer%20and%20Contributor%20Value%20Proposition) This section outlines the benefits provided to both customers and content contributors, emphasizing content quality, licensing options, and compensation models - For customers, Getty Images offers a comprehensive suite of high-quality content, diverse licensing options, commercially-safe generative AI, cost savings on content production, and trusted copyright protection[151](index=151&type=chunk) - For content contributors, the company provides access to a global marketplace, creative insights, premium royalty rates, and compensation for content used in AI models[151](index=151&type=chunk) [Macroeconomic Conditions](index=42&type=section&id=Macroeconomic%20Conditions) This section addresses the potential impact of global economic uncertainties, such as inflation, interest rates, and geopolitical events, on the company's financial performance - The company acknowledges ongoing macroeconomic uncertainties, including international armed conflicts, geopolitical tensions, supply chain shortages, inflation, and interest rate pressures[148](index=148&type=chunk) - A deterioration in macroeconomic conditions could increase the risk of lower consumer spending, foreign currency exchange fluctuations, or other business interruptions, adversely impacting financial results[148](index=148&type=chunk) [Components of Operating Results](index=42&type=section&id=Components%20of%20Operating%20Results) This section breaks down the key elements contributing to the company's operating results, including revenue, cost of revenue, and various expense categories [Revenue](index=42&type=section&id=Revenue) This section explains how revenue is generated through content licensing and related services, highlighting the growing contribution of annual subscriptions - Revenue is generated by licensing content through various models (Royalty-Free, Rights-Ready) and providing related services, including Generative AI by Getty Images and iStock[149](index=149&type=chunk)[150](index=150&type=chunk) - Annual subscriptions now comprise approximately **55%** of total revenue for the six months ended June 30, 2025, reflecting a strategic focus on growing subscription revenue[152](index=152&type=chunk) [Cost of revenue (exclusive of depreciation and amortization)](index=43&type=section&id=Cost%20of%20revenue%20%28exclusive%20of%20depreciation%20and%20amortization%29) This section details the primary components of cost of revenue, mainly royalties paid to contributors, and how it correlates with revenue growth and product mix - Cost of revenue primarily consists of royalties paid to content contributors, ranging from **20%** to **50%** of the license fee, depending on the license model and content use[154](index=154&type=chunk) - Contributors are compensated for the inclusion of their content in AI data training sets and may share in the revenue generated by AI tools[154](index=154&type=chunk) - The cost of revenue is expected to trend higher in absolute dollars with revenue growth, with its percentage of revenue varying modestly based on changes in product mix[155](index=155&type=chunk) [Selling, general, and administrative expenses](index=43&type=section&id=Selling%2C%20general%2C%20and%20administrative%20expenses) This section outlines the composition of SG&A expenses, including staff costs, marketing, and professional fees, and their expected trends relative to revenue - Selling, general, and administrative expenses (SG&A) primarily include staff costs, marketing expenses, occupancy costs, and professional fees[156](index=156&type=chunk) - SG&A expenses are expected to increase in absolute dollars but remain relatively constant as a percentage of revenue in the near term, as the company expands operations and invests in growth[157](index=157&type=chunk) [Depreciation](index=43&type=section&id=Depreciation) This section describes depreciation expense related to internally developed software, content, and equipment, and its expected stability due to ongoing investments - Depreciation expense includes internally developed software, content, and equipment depreciation, recorded on a straight-line basis[158](index=158&type=chunk) - Depreciation expense is expected to remain stable as the company continues to innovate and invest in its websites' design, user experience, and performance[158](index=158&type=chunk) [Amortization](index=43&type=section&id=Amortization) This section explains amortization expense for intangible assets like customer relationships and trademarks, noting its expected insignificance in future years - Amortization expense relates to intangible assets such as acquired customer relationships and trademarks[159](index=159&type=chunk) - Amortization expense is expected to be insignificant in the coming years as the majority of intangible assets have been fully amortized[159](index=159&type=chunk) [Impact of Currency Fluctuations](index=45&type=section&id=Impact%20of%20Currency%20Fluctuations) This section differentiates between foreign currency translation adjustments affecting comprehensive income and transaction gains/losses impacting net income - Foreign currency translation adjustments are charged or credited to 'Other comprehensive income (loss)'; net gains of **$68.1 million** were recognized for H1 2025, compared to losses of **$18.4 million** for H1 2024[163](index=163&type=chunk) - Transaction gains and losses are included in 'Foreign exchange (loss) gain – net' in the Statements of Operations; net losses of **$79.8 million** were recognized for H1 2025, compared to gains of **$18.9 million** for H1 2024[164](index=164&type=chunk) [Results of Operations](index=46&type=section&id=Results%20of%20Operations) This section provides a detailed comparative analysis of the company's financial performance for the three and six months ended June 30, 2025, versus 2024 Operating Results (in millions, except percentages) | Metric | 2025 | 2024 | $ change | % change | | :------------------------------------------------------- | :--- | :--- | :------- | :------- | | Revenue | $234.882 | $229.140 | $5.742 | 2.5 % | | Total operating expenses | $199.322 | $182.682 | $16.640 | 9.1 % | | Income from operations | $35.560 | $46.458 | $(10.898) | (23.5)% | | Foreign exchange (loss) gain – net | $(54.771) | $2.439 | $(57.210) | (2345.6)% | | Net (loss) income | $(34.359) | $3.689 | $(38.048) | (1031.4)% | - Total revenue increased by **2.5%** (**1.8%** currency neutral) to **$234.9 million**, while total operating expenses increased by **9.1%** to **$199.3 million**[167](index=167&type=chunk)[168](index=168&type=chunk) - The company reported a net loss of **$(34.4) million** for Q2 2025, a significant decline from net income of **$3.7 million** in Q2 2024, largely due to a **$(54.8) million** foreign exchange loss[167](index=167&type=chunk)[183](index=183&type=chunk) [Comparison of the Three Months Ended June 30, 2025 and 2024](index=46&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section provides a detailed comparative analysis of the company's financial performance for the three months ended June 30, 2025, versus 2024 [Revenue by product](index=46&type=section&id=Revenue%20by%20product) This section analyzes revenue changes by product line for the quarter, highlighting shifts in creative, editorial, and other content contributions Revenue by Product (in millions, except percentages) | (In millions, except percentages) | 2025 | % of revenue | 2024 | % of revenue | $ change | % change | CN % change | | :--------------------------------------- | :--- | :----------- | :--- | :----------- | :------- | :------- | :---------- | | Creative | $130.824 | 55.7 % | $137.897 | 60.2 % | $(7.073) | (5.1)% | (5.7)% | | Editorial | $88.342 | 37.6 % | $83.619 | 36.5 % | $4.723 | 5.6 % | 4.6 % | | Other | $15.716 | 6.7 % | $7.624 | 3.3 % | $8.092 | 106.1 % | 105.5 % | | **Total revenue** | **$234.882** | **100.0 %** | **$229.140** | **100.0 %** | **$5.742** | **2.5 %** | **1.8 %** | - Creative revenue decreased by **5.1%** (**5.7%** CN) to **$130.8 million**, primarily due to declines in ALC credit sales, ultra packs, and iStock monthly subscriptions, particularly from Agency customers[169](index=169&type=chunk) - Editorial revenue increased by **5.6%** (**4.6%** CN) to **$88.3 million**, driven by growth in Editorial subscriptions and assignments, particularly in Sport and News[170](index=170&type=chunk)[171](index=171&type=chunk) - Other revenue significantly increased by **106.1%** (**105.5%** CN) to **$15.7 million**, primarily due to new data access and licensing agreements[172](index=172&type=chunk) [Cost of revenue (exclusive of depreciation and amortization)](index=48&type=section&id=Cost%20of%20revenue%20%28exclusive%20of%20depreciation%20and%20amortization%29) This section examines the quarterly changes in cost of revenue, primarily royalties, and its percentage of total revenue - Cost of revenue increased to **$65.6 million** in Q2 2025 from **$63.1 million** in Q2 2024, representing **27.9%** of total revenue (up from **27.5%**)[174](index=174&type=chunk) [Selling, general, and administrative expense](index=48&type=section&id=Selling%2C%20general%2C%20and%20administrative%20expense) This section analyzes the quarterly fluctuations in SG&A expenses, driven by professional fees and staff costs - SG&A expenses increased by **$3.8 million** (**3.8%**, **3.2%** CN) to **$105.1 million**, driven by a **$6.5 million** increase in professional fees (AI litigation, audit fees)[175](index=175&type=chunk)[179](index=179&type=chunk) - This increase was partially offset by a **$2.5 million** decrease in staff costs, primarily due to lower accrued bonus, healthcare, severance, and commission expenses[179](index=179&type=chunk) [Depreciation expense](index=48&type=section&id=Depreciation%20expense) This section reports the quarterly change in depreciation expense, reflecting asset usage and capital investments - Depreciation expense increased by **$0.8 million** (**5.8%**) to **$15.5 million** in Q2 2025[175](index=175&type=chunk) [Amortization expense](index=48&type=section&id=Amortization%20expense) This section details the quarterly amortization expense for intangible assets, noting its stability over the period - Amortization expense remained flat at **$0.6 million** for Q2 2025 compared to Q2 2024[176](index=176&type=chunk) [Loss on litigation](index=48&type=section&id=Loss%20on%20litigation) This section discusses the quarterly loss on litigation, including interest on judgments and legal fees, and its expected continuation - Loss on litigation decreased to **$2.0 million** in Q2 2025 from **$2.8 million** in Q2 2024, consisting of interest on summary judgment, legal fees, and appeal bond amortization[177](index=177&type=chunk) - These expenses are expected to continue as the company navigates appeals and additional warrant cases[177](index=177&type=chunk) [Other operating expenses – net](index=48&type=section&id=Other%20operating%20expenses%20%E2%80%93%20net) This section highlights the significant increase in other operating expenses, primarily due to costs associated with the proposed merger - Other operating expenses – net significantly increased to **$10.5 million** in Q2 2025 from **$0.3 million** in Q2 2024, primarily driven by costs related to the proposed merger with Shutterstock[180](index=180&type=chunk)[181](index=181&type=chunk) [Interest expense](index=50&type=section&id=Interest%20expense) This section analyzes the quarterly increase in interest expense, attributed to new term loans and senior notes - Interest expense increased to **$36.6 million** in Q2 2025 from **$33.9 million** in Q2 2024, primarily due to interest charges on New Term Loans, Senior Secured Notes, and Senior Unsecured Notes[182](index=182&type=chunk) [Foreign exchange (loss) gain – net](index=50&type=section&id=Foreign%20exchange%20%28loss%29%20gain%20%E2%80%93%20net) This section details the significant shift to a net foreign exchange loss for the quarter, mainly due to EUR fluctuations impacting New EUR Term Loans - The company recognized a net foreign exchange loss of **$(54.8) million** in Q2 2025, a significant shift from a net gain of **$2.4 million** in Q2 2024, primarily driven by fluctuations in the EUR related to New EUR Term Loans[183](index=183&type=chunk) [Other non-operating (expense) income – net](index=50&type=section&id=Other%20non-operating%20%28expense%29%20income%20%E2%80%93%20net) This section explains the shift to a net non-operating expense for the quarter, primarily due to costs from debt exchange and lower interest income - Other non-operating items shifted to a net expense of **$(1.9) million** in Q2 2025 from income of **$1.2 million** in Q2 2024, primarily due to **$2.8 million** in costs related to the Permitted Debt Exchange and lower interest income[184](index=184&type=chunk) [Income taxes](index=50&type=section&id=Income%20taxes) This section reports the income tax benefit for the quarter and explains the expected negative effective tax rate due to pre-tax losses and non-analogous expenses - The company recorded an income tax benefit of **$23.3 million** for Q2 2025, compared to an income tax expense of **$12.5 million** for Q2 2024[186](index=186&type=chunk) - The effective tax rate for 2025 is expected to be a large negative percentage due to the company's pre-tax loss and income tax expense items not analogous to pre-tax loss[186](index=186&type=chunk) [Comparison of the Six Months Ended June 30, 2025 and 2024](index=50&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section provides a detailed comparative analysis of the company's financial performance for the six months ended June 30, 2025, versus 2024 Operating Results (in millions, except percentages) | Metric | 2025 | 2024 | $ change | % change | | :------------------------------------------------------- | :--- | :--- | :------- | :------- | | Revenue | $458.959 | $451.418 | $7.541 | 1.7 % | | Total operating expenses | $396.057 | $363.926 | $32.131 | 8.8 % | | Income from operations | $62.902 | $87.492 | $(24.590) | (28.1)% | | Foreign exchange (loss) gain – net | $(79.849) | $18.861 | $(98.710) | (523.4)% | | Loss on extinguishment of debt | $(5.474) | $— | $(5.474) | NM | | Net (loss) income | $(136.931) | $17.276 | $(154.207) | (892.6)% | - Total revenue increased by **1.7%** (**2.1%** currency neutral) to **$459.0 million**, while total operating expenses increased by **8.8%** to **$396.1 million**[167](index=167&type=chunk)[188](index=188&type=chunk) - The company reported a net loss of **$(136.9) million** for H1 2025, a significant decline from net income of **$17.3 million** in H1 2024, driven by a **$(79.8) million** foreign exchange loss and a **$(5.5) million** loss on debt extinguishment[167](index=167&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk) [Revenue by product](index=50&type=section&id=Revenue%20by%20product) This section analyzes revenue changes by product line for the six-month period, detailing performance across creative, editorial, and other content categories Revenue by Product (in millions, except percentages) | (In millions, except percentages) | 2025 | % of revenue | 2024 | % of revenue | $ change | % change | CN % change | | :--------------------------------------- | :--- | :----------- | :--- | :----------- | :------- | :------- | :---------- | | Creative | $262.998 | 57.3 % | $276.739 | 61.3 % | $(13.741) | (5.0)% | (4.3)% | | Editorial | $170.959 | 37.2 % | $163.048 | 36.1 % | $7.911 | 4.9 % | 5.1 % | | Other | $25.002 | 5.4 % | $11.631 | 2.6 % | $13.371 | 115.0 % | 114.6 % | | **Total revenue** | **$458.959** | **100.0 %** | **$451.418** | **100.0 %** | **$7.541** | **1.7 %** | **2.1 %** | - Creative revenue decreased by **5.0%** (**4.3%** CN) to **$263.0 million**, primarily due to declines in ALC credit sales, ultra packs, Premium RF, and iStock monthly subscriptions, particularly from Agency customers[190](index=190&type=chunk) - Editorial revenue increased by **4.9%** (**5.1%** CN) to **$171.0 million**, driven by growth in Editorial subscriptions and assignments, with double-digit growth in Sport and News[191](index=191&type=chunk) - Other revenue significantly increased by **115.0%** (**114.6%** CN) to **$25.0 million**, primarily due to new data access and licensing agreements[192](index=192&type=chunk) [Cost of revenue (exclusive of depreciation and amortization)](index=52&type=section&id=Cost%20of%20revenue%20%28exclusive%20of%20depreciation%20and%20amortization%29) This section examines the six-month changes in cost of revenue, primarily royalties, and its percentage of total revenue - Cost of revenue increased to **$125.8 million** in H1 2025 from **$123.4 million** in H1 2024, representing **27.4%** of total revenue (up from **27.3%**)[194](index=194&type=chunk) [Selling, general, and administrative expense](index=52&type=section&id=Selling%2C%20general%2C%20and%20administrative%20expense) This section analyzes the six-month fluctuations in SG&A expenses, driven by professional fees and staff costs - SG&A expenses increased by **$1.2 million** (**0.6%**, **1.0%** CN) to **$203.3 million**, driven by a **$7.9 million** increase in professional fees (AI litigation, audit fees)[195](index=195&type=chunk)[197](index=197&type=chunk) - This increase was partially offset by a **$7.0 million** decrease in staff costs, primarily due to lower equity-based compensation, healthcare, commission, payroll taxes, and severance expenses[197](index=197&type=chunk) [Depreciation expense](index=52&type=section&id=Depreciation%20expense) This section reports the six-month change in depreciation expense, reflecting asset usage and capital investments - Depreciation expense increased by **$1.4 million** (**4.9%**) to **$30.5 million** in H1 2025[195](index=195&type=chunk) [Amortization expense](index=52&type=section&id=Amortization%20expense) This section details the six-month amortization expense for intangible assets, noting its stability over the period - Amortization expense remained flat at **$1.1 million** for H1 2025 compared to H1 2024[196](index=196&type=chunk) [Loss on litigation](index=54&type=section&id=Loss%20on%20litigation) This section discusses the six-month loss on litigation, including interest on judgments and legal fees, and its expected continuation - Loss on litigation increased to **$6.4 million** in H1 2025 from **$4.8 million** in H1 2024, consisting of interest on summary judgment, legal fees, and appeal bond amortization[198](index=198&type=chunk) - These expenses are expected to continue due to ongoing appeals and additional warrant cases[198](index=198&type=chunk) [Other operating expenses – net](index=54&type=section&id=Other%20operating%20expenses%20%E2%80%93%20net) This section highlights the significant increase in other operating expenses for the six-month period, primarily due to costs associated with the proposed merger - Other operating expenses – net significantly increased to **$28.9 million** in H1 2025 from **$3.4 million** in H1 2024, primarily driven by costs related to the proposed merger with Shutterstock[199](index=199&type=chunk) [Interest expense](index=54&type=section&id=Interest%20expense) This section analyzes the six-month increase in interest expense, attributed to new term loans, senior secured notes, and senior unsecured notes - Interest expense increased to **$69.2 million** in H1 2025 from **$66.6 million** in H1 2024, primarily due to interest charges on Old Term Loans, New Term Loans, Senior Secured Notes, and Senior Unsecured Notes[200](index=200&type=chunk) [(Loss) on fair value adjustment for swaps – net](index=54&type=section&id=%28Loss%29%20on%20fair%20value%20adjustment%20for%20swaps%20%E2%80%93%20net) This section reports no loss on fair value adjustment for swaps in H1 2025, as the company's interest rate swaps expired in February 2024 - No loss on fair value adjustment for swaps was recognized in H1 2025, as the company's interest rate swaps expired in February 2024, compared to a net loss of **$1.5 million** in H1 2024[201](index=201&type=chunk) [Foreign exchange (loss) gain – net](index=54&type=section&id=Foreign%20exchange%20%28loss%29%20gain%20%E2%80%93%20net) This section details the significant shift to a net foreign exchange loss for the six-month period, mainly due to EUR fluctuations impacting term loans - The company recognized a net foreign exchange loss of **$(79.8) million** in H1 2025, a significant shift from a net gain of **$18.9 million** in H1 2024, primarily driven by fluctuations in the EUR related to Old and New EUR Term Loans[203](index=203&type=chunk) [Loss on extinguishment of debt](index=54&type=section&id=Loss%20on%20extinguishment%20of%20debt) This section reports the loss incurred from the extinguishment of debt during the six-month period, resulting from the refinancing of old term loans - A loss on extinguishment of debt of **$5.5 million** was recognized for H1 2025, resulting from the refinancing of the Old Term Loans[204](index=204&type=chunk) [Other non-operating (expense) income – net](index=55&type=section&id=Other%20non-operating%20%28expense%29%20income%20%E2%80%93%20net) This section explains the shift to a net non-operating expense for the six-month period, primarily due to costs from debt refinance and exchange, and lower interest income - Other non-operating items shifted to a net expense of **$(4.0) million** in H1 2025 from income of **$2.7 million** in H1 2024, primarily due to costs related to debt refinance, debt exchange, and lower interest income[205](index=205&type=chunk) [Income taxes](index=56&type=section&id=Income%20taxes) This section reports the income tax expense for the six-month period and explains the expected negative effective tax rate due to pre-tax losses and non-analogous expenses - The company recorded an income tax expense of **$41.3 million** for H1 2025, compared to **$23.7 million** for H1 2024[208](index=208&type=chunk) - The effective tax rate for 2025 is expected to be a large negative percentage due to the company's pre-tax loss and income tax expense items not analogous to pre-tax loss[208](index=208&type=chunk) [Liquidity and Capital Resources](index=57&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's sources and uses of cash, including operating, investing, and financing activities, and its ability to meet future obligations - The company's primary liquidity sources are existing cash and cash equivalents (**$110.3 million** as of June 30, 2025), cash provided by operations, and amounts available under its revolving credit facility[210](index=210&type=chunk) - Principal liquidity needs include debt service, capital expenditures, working capital, internal growth, and strategic acquisitions and investments[211](index=211&type=chunk) - Existing liquidity sources are expected to be adequate to fund operating, investing, and financing activities for at least the next **12 months** and the foreseeable future[212](index=212&type=chunk) - The company has litigation reserves of **$114.0 million** for warrant litigation, with a remaining insurance recovery receivable of **$37.6 million**, and is contesting Canadian tax assessments with a potential maximum outcome of **$27.7 million**[215](index=215&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk) [Operating Activities](index=58&type=section&id=Operating%20Activities) This section analyzes the cash generated or used by the company's core business operations, highlighting factors like merger-related costs - Cash provided by operating activities decreased significantly to **$21.9 million** for H1 2025, down from **$68.0 million** for H1 2024, primarily driven by merger-related costs[221](index=221&type=chunk) [Investing Activities](index=58&type=section&id=Investing%20Activities) This section examines cash flows related to the acquisition and disposal of long-term assets and business acquisitions, impacting future growth - Cash used in investing activities decreased to **$31.8 million** for H1 2025 from **$44.7 million** for H1 2024, primarily due to the absence of a business acquisition in the current period[223](index=223&type=chunk) [Financing Activities](index=58&type=section&id=Financing%20Activities) This section details cash flows from debt and equity transactions, including refinancing, principal payments, and issuance costs, affecting capital structure - Cash used in financing activities decreased to **$21.3 million** for H1 2025 from **$34.8 million** for H1 2024, reflecting debt refinancing activities including principal payments, proceeds from new debt, and debt issuance costs[224](index=224&type=chunk) [Key Performance Indicators and Non-GAAP Financial Measures](index=58&type=section&id=Key%20Performance%20Indicators%20and%20Non-GAAP%20Financial%20Measures) This section presents key operational metrics and non-GAAP financial measures, such as Adjusted EBITDA, to provide additional insights into business performance [Key Performance Indicators](index=60&type=section&id=Key%20Performance%20Indicators) This section tracks operational metrics like purchasing customers, annual subscribers, and content collection growth, reflecting business health and strategic focus Key Performance Indicators (LTM Ended June 30) | Metric | 2025 | 2024 | Increase / (Decrease) | | :-------------------------------- | :--- | :--- | :-------------------- | | LTM total purchasing customers (thousands) | 707 | 740 | (4.4)% | | LTM total active annual subscribers (thousands) | 321 | 282 | 13.8% | | LTM paid download volume (millions) | 93 | 95 | (1.7)% | | LTM annual subscriber revenue retention rate | 93.4% | 89.4% | 400 bps | | Image collection (millions) | 591 | 553 | 7.0% | | Video collection (millions) | 34 | 30 | 14.7% | | LTM video attachment rate | 16.7% | 15.6% | 110 bps | - LTM total purchasing customers decreased by **4.4%** to **707,000**, attributed to a shift towards more committed annual subscription products, which positively impacted annual revenue per purchasing customer (up **9.2%**)[232](index=232&type=chunk) - LTM total active annual subscribers increased by **13.8%** to **321,000**, driven by expanded e-commerce subscriptions, reflecting a strategic focus on subscription offerings[234](index=234&type=chunk) - The LTM annual subscriber revenue retention rate increased by **400 basis points** to **93.4%**, reflecting stabilization and the fading impact of last year's Hollywood strikes[239](index=239&type=chunk) [Non-GAAP Financial Measures](index=62&type=section&id=Non-GAAP%20Financial%20Measures) This section provides reconciliations and explanations for non-GAAP financial measures, offering alternative views of the company's financial performance [Currency Neutral Revenue](index=62&type=section&id=Currency%20Neutral%20Revenue) This section defines currency neutral revenue as a non-GAAP measure that adjusts for foreign currency fluctuations, providing insight into underlying business growth - Currency Neutral revenue growth or decline excludes the impact of fluctuating foreign currency values by translating all local currencies using current period exchange rates[243](index=243&type=chunk) - This measure provides useful supplemental information regarding changes in revenue not driven by foreign currency fluctuations[244](index=244&type=chunk) [Reconciliation of Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted EBITDA less Capex](index=63&type=section&id=Reconciliation%20of%20Adjusted%20EBITDA%2C%20Adjusted%20EBITDA%20Margin%2C%20and%20Adjusted%20EBITDA%20less%20Capex) This section reconciles Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted EBITDA less Capex to net income, providing a clearer view of operational profitability Adjusted EBITDA Reconciliation (in millions) | (In millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net (loss) income | $(34.359) | $3.689 | $(136.931) | $17.276 | | Adjusted EBITDA | $67.974 | $68.824 | $138.098 | $139.037 | | Capex | $16.114 | $15.380 | $31.817 | $29.833 | | Adjusted EBITDA less capex | $51.860 | $53.444 | $106.281 | $109.204 | | Adjusted EBITDA margin | 28.9 % | 30.0 % | 30.1 % | 30.8 % | - Adjusted EBITDA for Q2 2025 was **$68.0 million** (**28.9%** margin) and for H1 2025 was **$138.1 million** (**30.1%** margin), showing slight decreases compared to the prior year periods[246](index=246&type=chunk) - Adjusted EBITDA less capex was **$51.9 million** for Q2 2025 and **$106.3 million** for H1 2025, also reflecting a modest decline year-over-year[246](index=246&type=chunk) [Reconciliation of Adjusted Net Income and Adjusted Earnings Per Share](index=63&type=section&id=Reconciliation%20of%20Adjusted%20Net%20Income%20and%20Adjusted%20Earnings%20Per%20Share) This section reconciles Adjusted Net Income and Adjusted Earnings Per Share to GAAP net income and EPS, providing a normalized view of profitability Adjusted Net Income and Adjusted EPS Reconciliation (in millions) | (In millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net (loss) income | $(34.359) | $3.689 | $(136.931) | $17.276 | | Adjusted net income (loss) | $22.193 | $7.062 | $(36.087) | $17.718 | | Diluted earnings per share | $(0.08) | $0.01 | $(0.33) | $0.04 | | Adjusted diluted earnings per share | $0.05 | $0.02 | $(0.09) | $0.04 | - Adjusted net income for Q2 2025 was **$22.193 million**, up from **$7.062 million** in Q2 2024, while adjusted diluted EPS increased to **$0.05** from **$0.02**[249](index=249&type=chunk) - For H1 2025, adjusted net loss was **$(36.087) million**, compared to adjusted net income of **$17.718 million** in H1 2024, resulting in an adjusted diluted EPS of **$(0.09)**[249](index=249&type=chunk) [Critical Accounting Policies](index=64&type=section&id=Critical%20Accounting%20Policies) This section refers to the company's critical accounting policies, including revenue recognition and income taxes, as detailed in previous filings and notes - The company's critical accounting policies, including revenue recognition, accrued litigation reserves, and accounting for income taxes, are described in detail in the 2024 Form 10-K and Note 2 of the interim financial statements[250](index=250&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=64&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section confirms no material changes to market risk exposures since the last annual report, noting the maturity of a significant interest rate swap - There have been no material changes to market risk exposures for the quarters ended June 30, 2025, and June 30, 2024, compared to those discussed in the 2024 Form 10-K[252](index=252&type=chunk) - The company's **5-year** interest rate swap with a notional amount of **$355.0 million** matured in February 2024, and no new interest rate hedging arrangements have been entered into since[251](index=251&type=chunk) [Item 4. Controls and Procedures](index=65&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures and reports no material changes in internal controls over financial reporting - Management, with the participation of the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[253](index=253&type=chunk) - There have been no changes in the company's internal controls over financial reporting that materially affected, or are reasonably likely to materially affect, internal control over financial reporting during Q2 2025[254](index=254&type=chunk) PART II. OTHER INFORMATION This section covers additional information not included in the financial statements, such as legal proceedings, risk factors, and other disclosures [Item 1. Legal Proceedings](index=65&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 12 for detailed information on legal proceedings and claims, stating that the company does not currently anticipate a material adverse impact on its financial results from these matters - The company is subject to certain legal proceedings and claims incidental to its business operations[256](index=256&type=chunk) - The company does not currently anticipate that these matters will have a material adverse impact on its financial results[256](index=256&type=chunk) - Further information regarding legal proceedings and claims is provided in Note 12 - Legal Proceedings and Contingencies[257](index=257&type=chunk) [Item 1A. Risk Factors](index=65&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the risk factors previously disclosed in the company's 2024 Form 10-K - There have been no material changes to the risk factors disclosed in Part 1, Item 1A. of the company's 2024 Form 10-K[258](index=258&type=chunk) [Item 5. Other Information](index=65&type=section&id=Item%205.%20Other%20Information) This sect

PART I. - FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) Unaudited consolidated financial statements and notes detail balance sheets, operations, equity, cash flows, organization, and accounting policies [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202025%20and%20December%2031%2C%202024) Assets and liabilities slightly increased, equity decreased, cash significantly reduced, and receivables/inventories rose from December 2024 to June 2025 Condensed Consolidated Balance Sheets Data | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | **ASSETS** | | | | Cash | $6,957 | $13,516 | | Receivables, net | $15,547 | $14,876 | | Inventories, net | $20,778 | $19,314 | | Total current assets | $50,664 | $52,356 | | Total Assets | $284,541 | $284,368 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Total current liabilities | $46,168 | $44,653 | | Total Liabilities | $67,773 | $67,092 | | Total Stockholders' Equity | $216,768 | $217,276 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%20June%2030%2C%202024) The company reported improved net losses for both three and six months ended June 30, 2025, driven by increased revenue despite rising operating expenses Condensed Consolidated Statements of Operations Data | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Revenue | $28,584 | $25,405 | $55,831 | $47,145 | | Cost of revenue, exclusive of depreciation and amortization | $19,066 | $17,227 | $36,398 | $30,940 | | Selling, general and administrative | $5,918 | $7,011 | $11,971 | $14,677 | | Research and development | $2,697 | $929 | $3,571 | $2,554 | | Depreciation, amortization, depletion and accretion | $2,485 | $1,658 | $4,666 | $3,374 | | Operating loss | $(1,555) | $(1,420) | $(893) | $(4,400) | | Net loss | $(2,133) | $(1,968) | $(1,930) | $(5,387) | | Loss per common share (Basic) | $(0.05) | $(0.06) | $(0.05) | $(0.16) | | Loss per common share (Diluted) | $(0.05) | $(0.06) | $(0.05) | $(0.16) | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%20June%2030%2C%202024) Total stockholders' equity slightly decreased from January 1, 2025, to June 30, 2025, due to net loss, partially offset by stock-based compensation Condensed Consolidated Statements of Changes in Stockholders' Equity Data | Metric | Balances, January 1, 2025 (in thousands) | Balances, June 30, 2025 (in thousands) | Balances, January 1, 2024 (in thousands) | Balances, June 30, 2024 (in thousands) | | :------------------------ | :--------------------------------------- | :------------------------------------- | :--------------------------------------- | :------------------------------------- | | Total Stockholders' Equity | $217,276 | $216,768 | $178,400 | $189,600 | | Stock-based compensation (6 months) | N/A | $1,470 | N/A | $1,435 | | Net loss (6 months) | N/A | $(1,930) | N/A | $(5,387) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%20June%2030%2C%202024) Cash and restricted cash decreased due to increased operating cash outflow and reduced financing cash inflow, despite lower investing cash outflow Condensed Consolidated Statements of Cash Flows Data | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Net cash used in operating activities | $(5,276) | $(2,424) | | Net cash used in investing activities | $(5,530) | $(28,851) | | Net cash provided by financing activities | $3,995 | $14,319 | | Decrease in Cash and Restricted Cash | $(6,811) | $(16,956) | | Cash and Restricted Cash, end of period | $15,424 | $37,197 | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and disclosures for the condensed consolidated financial statements, covering business, accounting policies, and specific financial line items [Note 1 - Organization and Basis of Presentation](index=7&type=section&id=Note%201%20-%20Organization%20and%20Basis%20of%20Presentation) Arq, Inc. is an environmental technology company focused on activated carbon products for air, water, and soil treatment, operating in the APT market - Arq, Inc. is an environmental technology company principally engaged in the sale of consumable air, water, and soil treatment solutions, primarily based on activated carbon (AC)[22](index=22&type=chunk) - The company's primary products are powdered activated carbon (PAC) and granular activated carbon (GAC), and it owns the Five Forks Mine (lignite coal) and a manufacturing facility in Corbin, Kentucky[23](index=23&type=chunk) Note 1 - Organization and Basis of Presentation Data | 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 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Loss per share - basic | $(0.05) | $(0.06) | $(0.05) | $(0.16) | | Loss per share - diluted | $(0.05) | $(0.06) | $(0.05) | $(0.16) | - Revenue is generally higher in the first and third fiscal quarters due to weather-dependent power generation and increased demand for water purification products during summer/rainy seasons[35](index=35&type=chunk)[37](index=37&type=chunk) [Note 2 - Inventories, net](index=9&type=section&id=Note%202%20-%20Inventories%2C%20net) Total inventories, net, increased from $19,314 thousand at December 31, 2024, to $20,778 thousand at June 30, 2025, due to increases in product and raw material inventory Note 2 - Inventories, net Data | Inventory Type | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------- | :----------------------------- | :------------------------------- | | Product inventory, net | $11,813 | $11,166 | | Raw material inventory | $8,965 | $8,148 | | Total inventories, net | $20,778 | $19,314 | [Note 3 - Revenue](index=9&type=section&id=Note%203%20-%20Revenue) All material revenue performance obligations were satisfied at a point in time, with trade receivables increasing and no material contract assets or liabilities outstanding - All material performance obligations related to revenue recognized were satisfied at a point in time[43](index=43&type=chunk) Note 3 - Revenue Data | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------- | :----------------------------- | :------------------------------- | | Trade receivables, net | $1

PART I. - FINANCIAL INFORMATION This section presents the company's unaudited financial statements and management's analysis of financial condition and operations [Item 1. Financial Statements (unaudited)](index=3&type=section&id=Item%201%2E%20Financial%20Statements%20%28unaudited%29) This section presents the unaudited condensed consolidated financial statements, covering balance sheets, operations, equity, cash flows, and detailed notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and stockholders' equity at specific dates | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------- | :----------------------------- | :------------------------------- | | Total Assets | $284,541 | $284,368 | | Cash | $6,957 | $13,516 | | Total Current Assets | $50,664 | $52,356 | | Total Liabilities | $67,773 | $67,092 | | Total Stockholders' Equity | $216,768 | $217,276 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines the company's financial performance over specific periods, detailing revenue, expenses, and net loss Three Months Ended June 30 | Metric | 2025 (in thousands) | 2024 (in thousands) | Change ($) | Change (%) | | :----------------------------------- | :------------------ | :------------------ | :--------- | :--------- | | Revenue | $28,584 | $25,405 | $3,179 | 13% | | Net loss | $(2,133) | $(1,968) | $(165) | 8% | | Basic Loss per common share | $(0.05) | $(0.06) | $0.01 | -17% | Six Months Ended June 30 | Metric | 2025 (in thousands) | 2024 (in thousands) | Change ($) | Change (%) | | :----------------------------------- | :------------------ | :------------------ | :--------- | :--------- | | Revenue | $55,831 | $47,145 | $8,686 | 18% | | Net loss | $(1,930) | $(5,387) | $3,457 | -64% | | Basic Loss per common share | $(0.05) | $(0.16) | $0.11 | -69% | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) This section details changes in stockholders' equity over specific periods, reflecting net loss and stock-based compensation Total Stockholders' Equity | Date | Amount (in thousands) | | :------------------- | :-------------------- | | Balances, January 1, 2025 | $217,276 | | Balances, June 30, 2025 | $216,768 | | Balances, January 1, 2024 | $178,400 | | Balances, June 30, 2024 | $189,600 | - Net loss for the three months ended June 30, 2025, was **$(2,133) thousand**, impacting stockholders' equity[17](index=17&type=chunk) - Stock-based compensation for the three months ended June 30, 2025, was **$734 thousand**, increasing stockholders' equity[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the company's cash inflows and outflows from operating, investing, and financing activities Six Months Ended June 30 | Cash Flow Activity | 2025 (in thousands) | 2024 (in thousands) | Change ($) | | :----------------------------------- | :------------------ | :------------------ | :--------- | | Operating activities | $(5,276) | $(2,424) | $(2,852) | | Investing activities | $(5,530) | $(28,851) | $23,321 | | Financing activities | $3,995 | $14,319 | $(10,324) | | Net change in cash and restricted cash | $(6,811) | $(16,956) | $10,145 | - Cash and Restricted Cash at the end of the period decreased to **$15,424 thousand** as of June 30, 2025, from **$37,197 thousand** as of June 30, 2024[20](index=20&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed disclosures on accounting policies, financial components, debt, leases, commitments, equity, stock-based compensation, income taxes, and segment reporting [Note 1 - Organization and Basis of Presentation](index=7&type=section&id=Note%201%20-%20Organization%20and%20Basis%20of%20Presentation) This note describes the company's business, products, revenue seasonality, and the impact of new accounting standards - Arq, Inc. is an environmental technology company focused on selling consumable air, water, and soil treatment solutions primarily based on activated carbon (AC)[22](index=22&type=chunk)[116](index=116&type=chunk) - The company's primary products include powdered activated carbon (PAC) and granular activated carbon (GAC)[23](index=23&type=chunk)[117](index=117&type=chunk) - Revenue is generally higher in the first and third fiscal quarters due to weather-dependent power generation and increased demand for water treatment products during warmer/rainy months[35](index=35&type=chunk)[37](index=37&type=chunk) - The company is currently evaluating the impact of new accounting standards: ASU 2023-09 (Income Taxes), ASU 2024-03 (Income Statement Expenses), and ASU 2025-05 (Credit Losses for Accounts Receivable and Contract Assets)[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) [Note 2 - Inventories, net](index=9&type=section&id=Note%202%20-%20Inventories%2C%20net) This note provides a breakdown of the company's inventory balances, distinguishing between product and raw material inventories Inventories, net | Inventory Type | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------- | :----------------------------- | :------------------------------- | | Product inventory, net | $11,813 | $11,166 | | Raw material inventory | $8,965 | $8,148 | | **Total inventories, net** | **$20,778** | **$19,314** | [Note 3 - Revenue](index=9&type=section&id=Note%203%20-%20Revenue) This note details the company's revenue recognition policies and provides a breakdown of receivables Receivables, net | Receivable Type | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------- | :----------------------------- | :------------------------------- | | Trade receivables, net | $15,547 | $13,265 | | Other | — | $1,611 | | **Receivables, net** | **$15,547** | **$14,876** | - All material performance obligations related to revenue recognized were satisfied at a point in time[43](index=43&type=chunk) - The Company did not have material unbilled receivables (contract assets) or contract liabilities outstanding as of June 30, 2025, and December 31, 2024[45](index=45&type=chunk)[48](index=48&type=chunk) [Note 4 - Debt Obligations](index=10&type=section&id=Note%204%20-%20Debt%20Obligations) This note outlines the company's various debt instruments, including revolving credit facilities and long-term loans Debt Obligations | Debt Type | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------------ | :----------------------------- | :------------------------------- | | Revolving credit agreement | $18,528 | $13,828 | | CTB Loan due January 2036 | $8,697 | $8,983 | | Finance lease obligations | $826 | $1,269 | | Other | $897 | $1,004 | | **Total long-term debt obligations** | **$8,741** | **$9,370** | - The Company entered into a five-year **$30.0 million** secured revolving credit facility on December 27, 2024, with **$18.5 million** net borrowings as of June 30, 2025[50](index=50&type=chunk)[54](index=54&type=chunk) - The CTB Loan, assumed on February 1, 2023, has a principal amount of **$10.0 million**, matures on January 27, 2036, and bears interest at **6.0%** per annum through January 2026[55](index=55&type=chunk)[56](index=56&type=chunk) [Note 5 - Leases](index=12&type=section&id=Note%205%20-%20Leases)

Part I: Financial Information This section presents the unaudited consolidated financial statements and management's discussion and analysis for the period ended June 30, 2025 [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited financial statements for Q3 2025 show increased assets and revenue, but a net loss of $3.9 million due to lower margins and no prior-year lawsuit judgment [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets grew to $189.1 million, driven by an acquisition, while liabilities increased to $134.6 million and equity decreased to $54.5 million Consolidated Balance Sheet Highlights (Unaudited) | Balance Sheet Item | June 30, 2025 ($) | September 30, 2024 ($) | | :--- | :--- | :--- | | **Total Current Assets** | $121,617,498 | $110,426,929 | | **Total Fixed Assets** | $54,090,651 | $38,135,714 | | **Goodwill** | $7,428,761 | $4,087,554 | | **Total Assets** | **$189,121,088** | **$158,247,000** | | **Total Current Liabilities** | $91,001,964 | $74,248,552 | | **Long-Term Debt** | $37,600,186 | $17,187,992 | | **Total Liabilities** | **$134,579,565** | **$99,552,856** | | **Total Shareholders' Equity** | **$54,541,523** | **$58,694,144** | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Nine-month revenue rose to $280.9 million, but gross profit declined, resulting in a net loss of $3.9 million compared to prior year's $18.4 million net income Consolidated Income Statement Summary (Unaudited) | Metric | Nine Months Ended June 30, 2025 ($) | Nine Months Ended June 30, 2024 ($) | | :--- | :--- | :--- | | **Revenue** | $280,926,850 | $247,214,602 | | **Gross Profit** | $22,324,040 | $32,386,339 | | **Income (Loss) from Operations** | ($3,278,213) | $11,050,477 | | **Proceeds from Lawsuit Judgement** | $0 | $15,634,499 | | **Net Income (Loss)** | **($3,863,056)** | **$18,446,994** | | **Diluted EPS** | **($0.23)** | **$1.11** | [Consolidated Statements of Cash Flows](index=5&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow was $13.4 million, investing activities used $29.2 million for an acquisition, and financing provided $18.2 million, increasing cash by $2.4 million Consolidated Cash Flow Summary (Unaudited) | Cash Flow Activity | Nine Months Ended June 30, 2025 ($) | Nine Months Ended June 30, 2024 ($) | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | $13,421,957 | $19,524,533 | | **Net Cash from Investing Activities** | ($29,159,985) | ($5,670,815) | | **Net Cash from Financing Activities** | $18,150,226 | ($15,747,423) | | **Increase (Decrease) in Cash** | $2,412,198 | ($1,893,705) | | **Cash at End of Period** | $15,338,234 | $14,537,867 | [Consolidated Statements of Changes in Shareholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) Shareholders' equity decreased to $54.5 million due to net loss, dividends, and treasury stock purchases, partially offset by stock issuance for an acquisition - Key changes in shareholders' equity for the nine months ended June 30, 2025 include a net loss, payment of dividends, issuance of **$2.0 million** in common stock for the Tribute acquisition, and purchase of treasury stock[15](index=15&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) Notes detail business, accounting policies, the $24 million Tribute acquisition, PPP loan uncertainty, revenue breakdown, and debt covenant non-compliance with waiver - The company provides construction and repair services for the natural gas, petroleum, water distribution, automotive, chemical, and power industries, primarily in the mid-Atlantic and central U.S.[19](index=19&type=chunk) - On December 2, 2024, the company acquired Tribute Contracting & Consultants, LLC for **$22.0 million in cash** and **$2.0 million in stock**, adding water distribution and wastewater system construction capabilities[27](index=27&type=chunk)[77](index=77&type=chunk) - The company restated prior financial statements due to an ongoing SBA review of its **$9.8 million** in previously forgiven PPP loans, recording a short-term borrowing liability for the full amount plus interest due to outcome uncertainty[33](index=33&type=chunk)[34](index=34&type=chunk)[71](index=71&type=chunk) - At June 30, 2025, the company had **$258.2 million** in remaining unsatisfied performance obligations (backlog), expected to be recognized as revenue over the next twelve months[48](index=48&type=chunk) - The company was not in compliance with all financial covenants at June 30, 2025, but received a waiver from its lender, who agreed to omit the effect of the PPP loan restatement from covenant calculations[69](index=69&type=chunk)[163](index=163&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses 13.6% revenue growth to $280.9 million, a $3.9 million net loss due to lower gross profit, balance sheet expansion from acquisition, and a $304.4 million backlog [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Revenue increased 13.6% to $280.9 million, but gross profit declined 31.1% to $22.3 million, leading to a $3.9 million net loss due to weather and project mix Revenue by Segment (Nine Months Ended June 30) | Segment | 2025 Revenue ($) | 2024 Revenue ($) | % Change | | :--- | :--- | :--- | :--- | | Gas & Water Distribution | $96,967,546 | $53,892,952 | 79.9% | | Gas & Petroleum Transmission | $37,177,225 | $55,465,127 | -33.0% | | Electrical, Mechanical, & General | $146,782,079 | $137,856,523 | 6.5% | | **Total** | **$280,926,850** | **$247,214,602** | **13.6%** | Gross Profit Analysis (Nine Months Ended June 30) | Metric | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | **Gross Profit** | $22,324,040 | $32,386,339 | -31.1% | | **Gross Margin** | 7.9% | 13.1% | -5.2 p.p. | - The decrease in gross profit was primarily due to less efficient performance, significant impacts from inclement weather in Q2, and a later start for Gas & Petroleum Transmission work compared to the prior year[130](index=130&type=chunk) - Selling and administrative expenses increased by **$4.3 million**, driven by additional personnel, increased consulting and audit fees from becoming an accelerated filer, and costs from the newly acquired Tribute subsidiary[136](index=136&type=chunk) [Comparison of Financial Condition](index=28&type=section&id=Comparison%20of%20Financial%20Condition) Total assets grew to $189.1 million and liabilities to $134.6 million, primarily due to the Tribute acquisition, while shareholders' equity decreased to $54.5 million - Net property, plant and equipment increased by **$16.0 million**, primarily due to **$14.9 million** in assets from the Tribute acquisition[145](index=145&type=chunk) - Goodwill increased by **$3.3 million** to **$7.4 million** due to the Tribute acquisition[148](index=148&type=chunk) - Total debt (current and long-term) increased by **$25.2 million**, mainly due to **$16.0 million** in financing for the Tribute acquisition and the assumption of **$3.8 million** of its debt[153](index=153&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) The company has a $30.0 million credit line, received a waiver for debt covenant non-compliance, faces uncertainty regarding $9.8 million in PPP loans, and has $86.9 million in performance bonds - The company renewed its **$30.0 million** line of credit in July 2025, with an outstanding balance of **$11.6 million** at June 30, 2025[161](index=161&type=chunk)[162](index=162&type=chunk) - The company was not in compliance with all debt covenants at June 30, 2025, and received a waiver, with the lender agreeing to exclude the impact of the PPP loan restatement from covenant calculations[163](index=163&type=chunk) - The SBA is reviewing the forgiveness of **$9.8 million** in PPP loans, creating uncertainty and a potential repayment liability that could negatively impact financial condition[166](index=166&type=chunk)[168](index=168&type=chunk) - As of June 30, 2025, the company had **$86.9 million** in performance bonds outstanding to guarantee project performance and payments to subcontractors[188](index=188&type=chunk) [Outlook](index=39&type=section&id=Outlook) Management reports a strong backlog of $304.4 million, with significant bid opportunities in water, wastewater, electrical, and mechanical projects Backlog Comparison | Date | Unaudited Backlog ($) | | :--- | :--- | | June 30, 2025 | $304.4 million | | June 30, 2024 | $250.9 million | | September 30, 2024 | $243.2 million | - The company is seeing significant bid opportunities for water, wastewater, electrical, and mechanical projects, with backlogs of **$125.0 million** and **$133.0 million** in these areas, respectively[233](index=233&type=chunk) - Bidding and awards for natural gas projects are occurring later than in previous years, but bid opportunities increased in the third fiscal quarter, with the backlog for transmission projects at **$30.0 million**[234](index=234&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Disclosure about market risk is not required as the company qualifies as a smaller reporting company - Disclosure about market risk is not required as the company qualifies as a smaller reporting company[236](index=236&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective, with no material changes to internal controls, and the Tribute subsidiary is within its SOX compliance grace period - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[237](index=237&type=chunk) - The recently acquired Tribute subsidiary has a one-year grace period before needing to fully comply with Sarbanes-Oxley (SOX) regulations[239](index=239&type=chunk) Part II: Other Information This section provides information on legal proceedings, risk factors, equity security sales, other disclosures, and exhibits [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) The company is negotiating a disputed pension withdrawal liability claim, with no future liability expected, and other legal proceedings are not material - The company is negotiating a disputed pension withdrawal liability claim for work that ended in 2011, with payments suspended and no future liability expected[242](index=242&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors have occurred since the filing of the Annual Report on Form 10-K - No material changes to risk factors have occurred since the filing of the Annual Report on Form 10-K[244](index=244&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company reported no unregistered equity sales and repurchased 106,392 shares of common stock for $844,230 during Q3 FY2025 Issuer Purchases of Equity Securities (Q3 FY2025) | Period | Total Shares Purchased | Average Price Paid Per Share ($) | Total Value of Shares Purchased ($) | | :--- | :--- | :--- | :--- | | April 2025 | — | — | — | | May 2025 | 106,392 | $7.94 | $844,230 | | June 2025 | — | — | — | | **Total** | **106,392** | **$7.94** | **$844,230** | [Item 5. Other Information](index=41&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated any Rule 10b5-1 trading plans during the third fiscal quarter of 2025 - No directors or officers adopted or terminated any Rule 10b5-1 trading plans during the third fiscal quarter of 2025[246](index=246&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including SOX certifications and XBRL data files - Exhibits filed include Sarbanes-Oxley certifications (302 and 906) and XBRL interactive data files[250](index=250&type=chunk) [Signatures](index=43&type=section&id=Signatures) The report is duly signed by the Chief Executive Officer and Chief Financial Officer on August 11, 2025

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements, including the statements of operations, balance sheets, cash flows, and stockholders' equity, along with detailed notes explaining the basis of presentation, significant accounting policies, and specific financial line items [Condensed Consolidated Statement of Operations and Comprehensive Income (Loss) (Unaudited)](index=3&type=section&id=Condensed%20Consolidated%20Statement%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)%20(Unaudited)) | Metric (in millions) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Revenue | $585.2 | $576.2 | $1,165.0 | $1,140.7 | | Operating costs | $572.4 | $539.1 | $1,116.9 | $1,087.0 | | Operating income (loss) | $12.8 | $37.1 | $48.1 | $53.7 | | Net income (loss) attributable to Dun & Bradstreet Holdings, Inc. | $(33.7) | $(16.4) | $(49.5) | $(39.6) | | Basic earnings (loss) per share | $(0.08) | $(0.04) | $(0.11) | $(0.09) | | Diluted earnings (loss) per share | $(0.08) | $(0.04) | $(0.11) | $(0.09) | [Condensed Consolidated Balance Sheets (Unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) | Metric (in millions) | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Total current assets | $668.8 | $650.4 | | Total non-current assets | $8,071.1 | $8,105.3 | | Total assets | $8,739.9 | $8,755.7 | | Total current liabilities | $1,090.5 | $1,007.2 | | Total liabilities | $5,413.7 | $5,441.3 | | Total equity | $3,326.2 | $3,314.4 | [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) | Metric (in millions) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $213.2 | $195.6 | | Net cash provided by (used in) investing activities | $(80.5) | $(112.1) | | Net cash provided by (used in) financing activities | $(72.7) | $(6.5) | | Increase (decrease) in cash and cash equivalents | $72.8 | $75.6 | | Cash and Cash Equivalents, End of Period | $278.7 | $263.7 | [Condensed Consolidated Statements of Stockholders' Equity (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20(Unaudited)) - Total equity increased from **$3,314.4 million** at January 1, 2025, to **$3,326.2 million** at June 30, 2025, despite a net loss, primarily due to positive foreign currency translation adjustments and equity-based compensation, partially offset by dividends declared and hedging derivative losses[19](index=19&type=chunk) - For the six months ended June 30, 2025, the company reported a net loss of **$49.5 million** attributable to Dun & Bradstreet Holdings, Inc., compared to a net loss of **$39.6 million** for the same period in 2024[19](index=19&type=chunk)[18](index=18&type=chunk) [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) [Note 1 -- Basis of Presentation and Organization](index=8&type=section&id=Note%201%20--%20Basis%20of%20Presentation%20and%20Organization) The financial statements are prepared in conformity with GAAP, reflecting management's latest estimates. The company manages its business through two segments: North America and International. A definitive agreement for acquisition by Clearlake Capital Group, L.P. for approximately **$7.7 billion** (**$9.15 per share**) was entered into on March 23, 2025, and is expected to close in Q3 2025, after which Dun & Bradstreet will become a privately held company - Dun & Bradstreet Holdings, Inc. entered into a definitive agreement to be acquired by Clearlake Capital Group, L.P. on March 23, 2025[24](index=24&type=chunk) - The acquisition values the company at approximately **$7.7 billion**, including outstanding debt, with an equity value of **$4.1 billion**, translating to **$9.15 per share** in cash for common stock[25](index=25&type=chunk) - The transaction was approved by shareholders and is expected to close in the **third quarter of 2025**, after which Dun & Bradstreet will become a privately held company[25](index=25&type=chunk) [Note 2 -- Recent Accounting Pronouncements](index=8&type=section&id=Note%202%20--%20Recent%20Accounting%20Pronouncements) The company adopted ASU No. 2023-07, 'Segment Reporting (Topic 280),' in Q4 2024 with no material impact. It also assessed recently issued ASUs, including ASU No. 2024-03 on expense disaggregation and ASU No. 2023-09 on income taxes, neither of which are expected to have a material impact on its financial statements upon adoption - ASU No. 2023-07, 'Segment Reporting (Topic 280),' was adopted in **Q4 2024** and did not have a material impact on consolidated financial statements[29](index=29&type=chunk) - ASU No. 2024-03, 'Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures,' effective for fiscal years beginning after **December 15, 2026**, is not expected to have a material impact[30](index=30&type=chunk) - ASU No. 2023-09, 'Income Taxes (Topic 740),' effective for fiscal years beginning after **December 15, 2024**, is not expected to have a material impact[31](index=31&type=chunk) [Note 3 -- Revenue](index=9&type=section&id=Note%203%20--%20Revenue) The company's future revenue from unsatisfied performance obligations totals **$2,998.0 million**. Revenue is recognized both at a point in time and over time, with the latter accounting for a larger portion. Deferred revenue increased by **$98.7 million** from December 31, 2024, to June 30, 2025, primarily due to advance cash payments | Future Revenue (in millions) | Remainder of 2025 | 2026 | 2027 | 2028 | 2029 | Thereafter | Total | | :------------------- | :---------------- | :--- | :--- | :--- | :--- | :--------- | :------ | | Future revenue | $814.5 | $872.1 | $536.3 | $298.4 | $148.4 | $328.3 | $2,998.0 | | Revenue Recognition (in millions) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Revenue recognized at a point in time | $229.5 | $226.1 | $461.3 | $440.6 | | Revenue recognized over time | $355.7 | $350.1 | $703.7 | $700.1 | | Total revenue recognized | $585.2 | $576.2 | $1,165.0 | $1,140.7 | - Deferred revenue increased by **$98.7 million** from December 31, 2024, to June 30, 2025, primarily due to cash payments received in advance of satisfying performance obligations[37](index=37&type=chunk) [Note 4 -- Restructuring Charges](index=10&type=section&id=Note%204%20--%20Restructuring%20Charges) Restructuring charges, primarily severance costs and contract terminations, decreased for both the three and six months ended June 30, 2025, compared to the prior year periods. The charges for **Q2 2025** were **$2.0 million**, impacting approximately **30 employees**, and for **H1 2025** were **$4.9 million**, impacting approximately **80 employees** | Restructuring Charges (in millions) | 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 restructuring charges | $2.0 | $3.3 | $4.9 | $6.7 | | Severance costs | $1.6 | $3.0 | $4.3 | $5.9 | | Contract termination and other exit costs | $0.4 | $0.3 | $0.6 | $0.8 | - Restructuring charges decreased by **$1.3 million (38.9%)** for the three months ended June 30, 2025, and by **$1.8 million (27.0%)** for the six months ended June 30, 2025, primarily due to lower severance costs[211](index=211&type=chunk)[212](index=212&type=chunk) [Note 5 -- Stock Based Compensation](index=11&type=section&id=Note%205%20--%20Stock%20Based%20Compensation) Total stock-based compensation expense decreased for both the three and six months ended June 30, 2025, compared to the prior year. The Employee Stock Purchase Plan (ESPP) was terminated in **Q2 2025** following shareholder approval of the Clearlake transaction | Stock-based Compensation Expense (in millions) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Restricted stock and restricted stock units | $15.1 | $16.4 | $29.1 | $32.5 | | Stock options | $0.7 | $1.8 | $1.4 | $3.6 | | Total compensation expense | $15.8 | $18.2 | $30.5 | $36.1 | - The Employee Stock Purchase Plan (ESPP) program was terminated during the **second quarter of 2025**[53](index=53&type=chunk) - As of June 30, 2025, total unrecognized compensation cost related to non-vested restricted stock and restricted stock units was **$68.2 million**, expected to be recognized over a weighted average period of **2.0 years**[52](index=52&type=chunk) [Note 6 -- Pension and Postretirement Benefits](index=13&type=section&id=Note%206%20--%20Pension%20and%20Postretirement%20Benefits) The company reported net periodic pension income for both pension plans and postretirement benefit obligations for the three and six months ended June 30, 2025 and 2024, primarily driven by expected return on plan assets | Net Periodic Cost (Income) (in millions) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Pension plans | $(5.3) | $(4.5) | $(10.4) | $(8.9) | | Postretirement benefit obligations | $(0.1) | $(0.1) | $(0.2) | $(0.2) | | Total Net periodic cost (income) | $(5.4) | $(4.6) | $(10.6) | $(9.1) | [Note 7 -- Income Taxes](index=13&type=section&id=Note%207%20--%20Income%20Taxes) The effective tax rate for **Q2 2025** was **3.4%** (tax benefit of **$1.2 million**) and for **H1 2025** was **1.6%** (tax benefit of **$0.8 million**), significantly lower than prior year periods. This change was primarily due to increased tax rates in certain U.S. states and higher earnings in non-U.S. jurisdictions. The company is currently assessing the impact of the recently enacted One Big Beautiful Bill Act (OBBBA) on its financial statements - The effective tax rate for the three months ended June 30, 2025, was **3.4%** (tax benefit of **$1.2 million**), down from **15.0%** in the prior year, primarily due to an increase in tax rates enacted in certain U.S. states[56](index=56&type=chunk) - The effective tax rate for the six months ended June 30, 2025, was **1.6%** (tax benefit of **$0.8 million**), down from **54.6%** in the prior year, due to increased U.S. state tax rates and higher earnings in non-U.S. jurisdictions[57](index=57&type=chunk) - The One Big Beautiful Bill Act (OBBBA) was enacted on **July 4, 2025**, introducing significant changes to U.S. federal income tax law, and the company is currently assessing its impact[58](index=58&type=chunk) [Note 8 -- Earnings (Loss) Per Share](index=13&type=section&id=Note%208%20--%20Earnings%20(Loss)%20Per%20Share) Basic and diluted earnings per share are computed based on net income (loss) attributable to Dun & Bradstreet Holdings, Inc. For periods with a net loss, diluted EPS equals basic EPS as stock incentive awards are anti-dilutive | Earnings (Loss) Per Share | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------------------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net income (loss) attributable to Dun & Bradstreet Holdings, Inc. | $(33.7) | $(16.4) | $(49.5) | $(39.6) | | Basic earnings (loss) per share | $(0.08) | $(0.04) | $(0.11) | $(0.09) | | Diluted earnings (loss) per share | $(0.08) | $(0.04) | $(0.11) | $(0.09) | | Weighted average number of shares outstanding-basic (millions) | 435.4 | 432.7 | 434.3 | 432.2 | | Weighted average number of shares outstanding-diluted (millions) | 435.4 | 432.7 | 434.3 | 432.2 | [Note 9 -- Financial Instruments](index=14&type=section&id=Note%209%20--%20Financial%20Instruments) The company uses derivative instruments, including interest rate swaps, foreign exchange forward contracts, and cross-currency interest rate swaps, to manage exposure to interest rate and foreign currency risks. Fair values of these derivatives are recognized on the balance sheet, with changes impacting OCI or earnings depending on designation | Interest Rate Swaps (in millions) | June 30, 2025 Notional Amount | December 31, 2024 Notional Amount | | :-------------------------------- | :------------------------------ | :------------------------------ | | Total interest rate swaps | $2,100.0 | $2,750.0 | - Notional amounts of foreign exchange forward contracts were **$720.6 million** at June 30, 2025, up from **$583.5 million** at December 31, 2024[71](index=71&type=chunk) | Cross-Currency Swaps (in millions) | June 30, 2025 Notional Amount (Pay) | June 30, 2025 Notional Amount (Receive) | December 31, 2024 Notional Amount (Pay) | December 31, 2024 Notional Amount (Receive) | | :--------------------------------- | :------------------------------------ | :-------------------------------------- | :------------------------------------ | :-------------------------------------- | | Total cross-currency swaps | €609.8 | $625.0 | €602.6 | $625.0 | | Fair Value of Derivatives (in millions) | June 30, 2025 Assets | June 30, 2025 Liabilities | December 31, 2024 Assets | December 31, 2024 Liabilities | | :-------------------------------------- | :------------------- | :---------------------- | :----------------------- | :------------------------ | | Interest rate swaps | $7.4 | $0.0 | $42.6 | $0.0 | | Cross-currency swaps | $0.0 | $91.0 | $3.7 | $13.2 | | Foreign exchange forward contracts | $5.5 | $1.9 | $1.3 | $3.4 | | Total derivatives | $12.9 | $92.9 | $47.6 | $16.6 | [Note 10 -- Goodwill and Intangible Assets](index=19&type=section&id=Note%2010%20--%20Goodwill%20and%20Intangible%20Assets) The company's computer software, goodwill, and other intangibles balances changed due to additions, amortization, and foreign currency fluctuations. Goodwill increased to **$3,477.8 million** at June 30, 2025, from **$3,409.8 million** at January 1, 2025, primarily due to foreign currency impacts. Other intangibles decreased to **$3,372.5 million** from **$3,506.8 million** over the same period, mainly due to amortization | Asset Category (in millions) | January 1, 2025 | June 30, 2025 | | :--------------------------- | :-------------- | :------------ | | Computer software | $676.3 | $704.4 | | Goodwill | $3,409.8 | $3,477.8 | | Other intangibles | $3,506.8 | $3,372.5 | - Goodwill increased by **$68.0 million** from January 1, 2025, to June 30, 2025, primarily due to the impact of foreign currency fluctuations[87](index=87&type=chunk)[92](index=92&type=chunk) - Other intangibles decreased by **$134.3 million** from January 1, 2025, to June 30, 2025, primarily due to amortization of **$179.7 million**, partially offset by foreign currency impacts and additions[88](index=88&type=chunk)[92](index=92&type=chunk) [Note 11 -- Other Assets and Liabilities](index=21&type=section&id=Note%2011%20--%20Other%20Assets%20and%20Liabilities) This note details the composition of other non-current assets, other accrued and current liabilities, and other non-current liabilities. Significant changes include an increase in accrued operating costs and swap liabilities, and a decrease in accrued income tax. The company also entered into new data contracts with aggregate commitments of **$59 million** for **Q2 2025** and **$141 million** for **H1 2025** over the next five years | Other Non-Current Assets (in millions) | June 30, 2025 | December 31, 2024 | | :------------------------------------- | :------------ | :---------------- | | Right of use assets | $39.7 | $42.6 | | Investments | $33.8 | $32.4 | | Long-term contract assets | $33.2 | $32.8 | | Long-term technology vendor contracts | $72.0 | $79.3 | | Total | $263.7 | $252.0 | | Other Accrued and Current Liabilities (in millions) | June 30, 2025 | December 31, 2024 | | :-------------------------------------------------- | :------------ | :---------------- | | Accrued operating costs | $112.8 | $100.3 | | Accrued income tax | $17.0 | $50.5 | | Swap liabilities | $91.0 | $13.2 | | Total | $259.2 | $208.0 | - During the three and six months ended June 30, 2025, the company entered into data contracts with an aggregate commitment of approximately **$59 million** and **$141 million**, respectively, over the next five years[91](index=91&type=chunk) [Note 12 -- Notes Payable and Indebtedness](index=22&type=section&id=Note%2012%20--%20Notes%20Payable%20and%20Indebtedness) The company's total debt decreased slightly to **$3,505.7 million** at June 30, 2025, from **$3,528.7 million** at December 31, 2024. This includes the 2029 Term Loan B and 5.000% Senior Unsecured Notes. The Revolving Facility had **$850.0 million** available borrowings at June 30, 2025. Debt refinancing activities in January and November 2024 reduced interest rates and extended maturities | Debt (in millions) | June 30, 2025 Carrying Value | December 31, 2024 Carrying Value | | :--------------------------------- | :----------------------------- | :----------------------------- | | Total short-term debt | $31.0 | $31.0 | | 2029 Term loan B (long-term portion) | $3,018.5 | $3,032.0 | | Revolving facility (long-term portion) | $0.0 | $10.0 | | 5.000% Senior unsecured notes | $456.2 | $455.7 | | Total debt | $3,505.7 | $3,528.7 | - The 2029 Term Loan B interest rate was reduced to **SOFR plus 2.25% per annum** on November 19, 2024[99](index=99&type=chunk)[101](index=101&type=chunk) - Available borrowings under the Revolving Facility were **$850.0 million** at June 30, 2025, and **$840.0 million** at December 31, 2024[102](index=102&type=chunk) [Note 13 -- Accounts Receivable Securitization Facility](index=23&type=section&id=Note%2013%20--%20Accounts%20Receivable%20Securitization%20Facility) The company's three-year revolving securitization facility was amended in **November 2024**, extending its term to **November 18, 2027**. Under this facility, the company derecognized **$203.4 million** and **$411.7 million** of accounts receivable for the three and six months ended June 30, 2025, respectively. Fees incurred for the facility were **$3.0 million** and **$6.1 million** for the respective periods - The accounts receivable securitization facility agreement was amended in **November 2024**, extending the term date from September 9, 2025, to **November 18, 2027**[105](index=105&type=chunk) | Accounts Receivable Derecognized (in millions) | Three months ended June 30, 2025 | Six months ended June 30, 2025 | | :--------------------------------------------- | :------------------------------- | :----------------------------- | | Accounts receivable derecognized | $203.4 | $411.7 | | Facility Fees Incurred (in millions) | Three months ended June 30, 2025 | Six months ended June 30, 2025 | | :----------------------------------- | :------------------------------- | :----------------------------- | | Fees incurred | $3.0 | $6.1 | [Note 14 -- Stockholders' Equity](index=24&type=section&id=Note%2014%20--%20Stockholders'%20Equity) As of **June 30, 2025**, there were **446,323,238 common shares** outstanding. The 2024 Stock Repurchase Program, authorized for up to **10.0 million shares**, was suspended subsequent to the definitive agreement with Clearlake on **March 23, 2025**, with no share repurchase activity in **Q2 2025**. A dividend of **$0.05 per share** was declared and paid in **Q1 2025**, but no further dividends will be declared due to the Clearlake agreement | Common Shares Activity | December 31, 2024 | June 30, 2025 | | :--------------------- | :---------------- | :------------ | | Common Shares Issued | 443,399,772 | 448,171,624 | | Treasury Shares | (1,848,280) | (1,848,386) | | Shares Outstanding | 441,551,492 | 446,323,238 | - The 2024 Stock Repurchase Program, authorizing up to **10.0 million shares**, was suspended subsequent to entering into the definitive agreement with Clearlake on **March 23, 2025**, with no share repurchase activity during the three months ended June 30, 2025[112](index=112&type=chunk)[259](index=259&type=chunk) - A dividend of **$0.05 per share** was declared on **February 6, 2025**, and paid on **March 20, 2025**. However, the company has agreed not to declare or pay any further dividends due to the Clearlake acquisition agreement[113](index=113&type=chunk)[114](index=114&type=chunk) [Note 15 -- Accumulated Other Comprehensive Income (Loss)](index=24&type=section&id=Note%2015%20--%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) Accumulated Other Comprehensive Income (Loss) (AOCI) improved from **$(246.1) million** at January 1, 2025, to **$(183.4) million** at June 30, 2025. This change was primarily driven by positive foreign currency translation adjustments, partially offset by net investment hedge derivative losses and reclassifications out of AOCI related to pension plans and cash flow hedges | AOCI Component (in millions) | January 1, 2025 Balance | June 30, 2025 Balance | | :----------------------------- | :---------------------- | :-------------------- | | Foreign currency translation adjustments | $(218.7) | $(71.9) | | Net investment hedge derivative | $7.3 | $(53.5) | | Defined benefit pension plans | $(62.6) | $(63.4) | | Cash flow hedge derivative | $27.9 | $5.4 | | Total AOCI | $(246.1) | $(183.4) | - Total AOCI improved by **$62.7 million** from January 1, 2025, to June 30, 2025, primarily due to **$146.8 million** in foreign currency translation adjustments, partially offset by a **$(60.8) million** loss from net investment hedge derivatives[116](index=116&type=chunk) [Note 16 -- Segment Information](index=25&type=section&id=Note%2016%20--%20Segment%20Information) The company operates in two segments: North America (U.S. and Canada) and International (U.K., Europe, Greater China, India, and WWN alliances), providing Finance & Risk and Sales & Marketing solutions. Adjusted EBITDA is the primary profitability measure for decision-making. North America's revenue decreased in **Q2 2025** but increased in **H1 2025**, while International revenue grew significantly in both periods. Total assets and goodwill are predominantly in North America - The company manages its business and reports financial results through two segments: North America (United States and Canada) and International (U.K., Europe, Greater China, India, and Worldwide Network alliances)[117](index=117&type=chunk) | Segment Revenue (in millions) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | North America | $397.9 | $404.6 | $795.9 | $791.2 | | International | $187.3 | $171.6 | $369.1 | $349.5 | | Consolidated total | $585.2 | $576.2 | $1,165.0 | $1,140.7 | | Segment Adjusted EBITDA (in millions) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | North America | $157.3 | $178.2 | $323.5 | $330.3 | | International | $59.0 | $53.8 | $119.5 | $118.1 | | Consolidated total | $216.3 | $232.0 | $443.0 | $448.4 | | Segment Assets (in millions) | June 30, 2025 | December 31, 2024 | | :--------------------------- | :------------ | :---------------- | | North America | $7,104.0 | $7,315.9 | | International | $1,635.9 | $1,439.8 | | Consolidated total | $8,739.9 | $8,755.7 | [Note 17 -- Contingencies](index=28&type=section&id=Note%2017%20--%20Contingencies) The company is involved in various legal and regulatory matters. The DeBose right of publicity class action was terminated. The Batis class action has a finalized settlement contingent on court approval, with a non-material reserve accrued. The FTC issued a notice regarding alleged Consent Order violations, for which a non-material reserve has also been accrued. The company does not believe the ultimate resolution of currently pending legal proceedings will have a material adverse effect on its financial condition - The DeBose v. Dun & Bradstreet Holdings, Inc. class action lawsuit was dismissed with prejudice on **March 7, 2025**, and the time to appeal has expired, terminating the case[131](index=131&type=chunk) - For the Batis v. Dun & Bradstreet Holdings, Inc. class action, parties finalized settlement terms on **August 1, 2025**, contingent on court approval, and a non-material reserve has been accrued[134](index=134&type=chunk)[135](index=135&type=chunk) - The FTC sent the company notice in **November 2024** regarding alleged violations of the Consent Order, and a non-material reserve has been accrued for this matter[137](index=137&type=chunk)[138](index=138&type=chunk) [Note 18 -- Related Parties](index=30&type=section&id=Note%2018%20--%20Related%20Parties) The company has transactions with Paysafe Limited, an investment held by Cannae Holdings, Inc., whose board members include Dun & Bradstreet's CEO and Executive Chairman. These transactions include a **63-month lease agreement** for office space and a **10-year agreement** for data license and risk management solutions, as well as an additional **three-year marketing solutions agreement**. Revenue recognized from Paysafe increased for both the three and six months ended June 30, 2025 - Paysafe Limited, an investment held by Cannae Holdings, Inc., has a **63-month lease agreement** with D&B for office space, with total rental payments aggregating to **$4.2 million** over the term[141](index=141&type=chunk) - D&B provides data license and risk management solution services to Paysafe under a **10-year agreement**, and entered into an additional **three-year agreement** in **March 2024** for marketing solutions[142](index=142&type=chunk) | Revenue from Paysafe (in millions) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Revenue recognized | $2.1 | $1.5 | $4.7 | $3.6 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Unaudited)](index=32&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%20(Unaudited)) This section provides management's perspective on the company's financial condition and results of operations, including an overview of its business, segment performance, recent developments, key financial metrics, and liquidity. It highlights the company's mission as a global provider of business decisioning data and analytics, its two operating segments (North America and International), and the impact of macroeconomic conditions [Business Overview](index=32&type=section&id=Business%20Overview) Dun & Bradstreet is a leading global provider of business decisioning data and analytics, offering Finance & Risk and Sales & Marketing solutions. Its mission is to deliver a global network of trust, enabling clients to make informed decisions. The company serves approximately **215,000 global clients** across various industries and geographies, leveraging a business model characterized by highly recurring revenue, operating leverage, low capital requirements, and strong free cash flow - Dun & Bradstreet is a leading global provider of business decisioning data and analytics, focused on delivering a global network of trust[147](index=147&type=chunk) - The company offers Finance & Risk solutions for commercial credit decisioning, supply chain risk management, and compliance, and Sales & Marketing solutions for optimizing sales strategies and lead generation[148](index=148&type=chunk)[150](index=150&type=chunk) - As of **December 31, 2024**, the company had a global client base of approximately **215,000**, with a strong presence in North America, the U.K., Europe, Greater China, and India[151](index=151&type=chunk) [Segments](index=33&type=section&id=Segments) The company manages its business and reports financial results through two primary segments: North America, which covers the United States and Canada, and International, which includes direct operations in the U.K., Europe, Greater China, India, and indirect operations through Worldwide Network alliances - The company operates through two segments: North America (United States and Canada) and International (U.K., Europe, Greater China, India, and Worldwide Network alliances)[156](index=156&type=chunk) [Recent Developments](index=33&type=section&id=Recent%20Developments) Recent developments include the definitive agreement for acquisition by Clearlake Capital Group, L.P. for **$7.7 billion**, debt refinancing activities in **2024** to reduce interest rates and extend maturities, and the suspension of the stock repurchase program due to the Clearlake transaction. The company also acknowledges ongoing impacts from macroeconomic conditions, including foreign currency fluctuations, interest rate changes, inflation, and geopolitical conflicts, though no material financial effect has been observed to date [Clearlake transaction](index=33&type=section&id=Clearlake%20transaction) - On **March 23, 2025**, the company entered into a definitive agreement to be acquired by Clearlake Capital Group, L.P. for **$9.15 per share** in cash, valuing the transaction at approximately **$7.7 billion**[154](index=154&type=chunk)[155](index=155&type=chunk) - The transaction was approved by shareholders and is expected to close in the **third quarter of 2025**, after which Dun & Bradstreet will become a privately held company[155](index=155&type=chunk) [Debt Refinancing](index=34&type=section&id=Debt%20Refinancing) - In **January 2024**, the company amended its credit agreement to reduce the interest rate on the 2029 Term Loan and establish a new **$3,103.6 million** 2029 Term Loan B, while also extending the Revolving Facility maturity to **February 15, 2029**, and reducing its applicable margin[157](index=157&type=chunk) - In **November 2024**, the credit agreement for the 2029 Term Loan B was further amended to reduce its interest rate by **0.50%**, resulting in a margin spread of **SOFR plus 2.25% per annum**[158](index=158&type=chunk) [Stock Repurchase Program](index=34&type=section&id=Stock%20Repurchase%20Program) - The 2024 Stock Repurchase Program, authorized for up to **10.0 million shares**, was suspended subsequent to the definitive agreement with Clearlake on **March 23, 2025**[160](index=160&type=chunk) - There was no share repurchase activity during the **six months ended June 30, 2025**[160](index=160&type=chunk) [Impacts from Macroeconomic Conditions](index=34&type=section&id=Impacts%20from%20Macroeconomic%20Conditions) - Approximately **30%** of the company's revenues are generated from non-U.S. markets, exposing it to foreign currency exchange rate fluctuations, particularly the Euro, British Pound, and Swedish Krona[161](index=161&type=chunk) - The business is impacted by general economic conditions, global market volatility, and uncertainties from macroeconomic environment and geopolitical conflicts, including interest rates, inflation, and potential economic slowdowns[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk) - While financial performance has not been materially affected to date, the broader implications of these developments remain difficult to predict[164](index=164&type=chunk) [Recent Accounting Pronouncements](index=34&type=section&id=Recent%20Accounting%20Pronouncements) - Refer to Note 2 for disclosure of the impact that recent accounting pronouncements may have on the unaudited condensed consolidated financial statements[165](index=165&type=chunk) [Key Components of Results of Operations](index=34&type=section&id=Key%20Components%20of%20Results%20of%20Operations) This section outlines the key components of the company's financial results, including revenue generation primarily through subscription-based contracts for Finance & Risk and Sales & Marketing solutions. It also defines various expense categories such as Cost of Services, Selling and Administrative expenses, Depreciation and Amortization, Non-Operating Income and (Expense) - Net, and Provision for Income Tax Expense (Benefit) [Revenue](index=34&type=section&id=Revenue) - Revenue is primarily generated through subscription-based contractual arrangements for data, analytics, and analytics-related services[167](index=167&type=chunk) - Finance & Risk solutions provide global information, monitoring, portfolio analysis, and support for supply chain risk management and compliance[168](index=168&type=chunk) - Sales & Marketing solutions offer sophisticated analytics to help clients increase revenue, optimize sales pipelines, and improve efficiency in advertising campaigns[169](index=169&type=chunk) [Expenses](index=35&type=section&id=Expenses) - Cost of services includes data fees, database costs, service fulfillment, call center and technology support, hardware/software maintenance, telecommunication, and personnel-related costs[170](index=170&type=chunk) - Selling and administrative expenses primarily cover personnel costs for sales, administrative, and corporate management, professional/consulting services, advertising, and occupancy costs[171](index=171&type=chunk) - Depreciation and amortization expenses relate to property, plant and equipment, and amortization of purchased/developed software and other intangible assets (database and client relationships from M&A)[172](index=172&type=chunk) [Non-Operating Income and (Expense) - Net](index=35&type=section&id=Non-Operating%20Income%20and%20(Expense)%20-%20Net) - Non-operating income and (expense) - net includes interest expense/income, non-service pension income/costs, early debt repayment costs, fees for accounts receivable securitization and credit facilities, mark-to-market expense for derivatives, and other non-operating items[173](index=173&type=chunk) [Provision for Income Tax Expense (Benefit)](index=35&type=section&id=Provision%20for%20Income%20Tax%20Expense%20(Benefit)) - Provision for income tax expense (benefit) represents international, U.S. federal, state, and local income taxes, and includes interest and penalties related to unrecognized tax benefits[174](index=174&type=chunk) [Key Metrics](index=35&type=section&id=Key%20Metrics) The company evaluates performance using non-GAAP financial measures such as organic revenue, adjusted EBITDA, adjusted EBITDA margin, adjusted net income, and adjusted net earnings per diluted share. These measures adjust for certain acquisition/divestiture-related items, restructuring, equity-based compensation, transition costs, and other non-core gains/charges to provide a clearer view of underlying operating performance [Organic Revenue](index=36&type=section&id=Organic%20Revenue) - Organic revenue is defined as reported revenue before the effect of foreign exchange, excluding revenue from acquired businesses for the first twelve months and current/prior year revenue from divested businesses[178](index=178&type=chunk) [Adjusted EBITDA and Adjusted EBITDA Margin](index=36&type=section&id=Adjusted%20EBITDA%20and%20Adjusted%20EBITDA%20Margin) - Adjusted EBITDA excludes depreciation and amortization, interest, income tax, other non-operating items, equity in net income of affiliates, non-controlling interests, equity-based compensation, restructuring charges, M&A-related operating costs, transition costs, and other non-recurring adjustments[179](index=179&type=chunk) - Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by revenue[180](index=180&type=chunk) [Adjusted Net Income](index=37&type=section&id=Adjusted%20Net%20Income) - Adjusted Net Income adjusts for incremental amortization from purchase accounting, equity-based compensation, restructuring charges, M&A-related operating and non-operating costs, transition costs, debt refinancing/extinguishment costs, non-operating pension-related income/expenses, non-cash gain/loss from interest rate swap amendments, other adjustments, and related tax impacts[182](index=182&type=chunk) [Adjusted Net Earnings Per Diluted Share](index=37&type=section&id=Adjusted%20Net%20Earnings%20Per%20Diluted%20Share) - Adjusted net earnings per diluted share is calculated by dividing adjusted net income (loss) by the weighted average number of common shares outstanding plus the dilutive effect of stock incentive awards[181](index=181&type=chunk) [Results of Operations](index=38&type=section&id=Results%20of%20Operations) This section details the company's financial performance for the three and six months ended June 30, 2025, compared to the prior year. It covers GAAP results, revenue by segment, operating costs, operating income, Adjusted EBITDA, interest income/expense, other income/expense, income taxes, and net income (loss) on both GAAP and adjusted bases [GAAP Results](index=38&type=section&id=GAAP%20Results) | Metric (in millions, except per share data) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Revenue | $585.2 | $576.2 | $1,165.0 | $1,140.7 | | Operating income (loss) | $12.8 | $37.1 | $48.1 | $53.7 | | Net income (loss) attributable to Dun & Bradstreet Holdings, Inc. | $(33.7) | $(16.4) | $(49.5) | $(39.6) | | Basic earnings (loss) per share | $(0.08) | $(0.04) | $(0.11) | $(0.09) | | Diluted earnings (loss) per share | $(0.08) | $(0.04) | $(0.11) | $(0.09) | | Net income (loss) margin | (5.8)% | (2.8)% | (4.2)% | (3.5)% | [Revenue](index=40&type=section&id=Revenue) - Total revenue increased by **$9.0 million (1.6%)** for the three months ended June 30, 2025, and by **$24.3 million (2.1%)** for the six months ended June 30, 2025, compared to the prior year periods[187](index=187&type=chunk)[189](index=189&type=chunk) - Organic revenue increased by **0.2%** for **Q2 2025** and **1.9%** for **H1 2025**, excluding the positive impact of foreign exchange[188](index=188&type=chunk)[190](index=190&type=chunk) | Revenue by Segment (in millions) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | North America | $397.9 | $404.6 | $795.9 | $791.2 | | International | $187.3 | $171.6 | $369.1 | $349.5 | | Total Revenue | $585.2 | $576.2 | $1,165.0 | $1,140.7 | [North America Segment](index=40&type=section&id=North%20America%20Segment) - North America revenue decreased by **$6.7 million (1.6%)** for **Q2 2025**, primarily due to decreased revenue in Third Party Risk, Supply Chain Management, and lower data sales[191](index=191&type=chunk)[193](index=193&type=chunk)[195](index=195&type=chunk) - North America revenue increased by **$4.7 million (0.6%)** for **H1 2025**, driven by increased revenue from Finance solutions, partially offset by decreased revenue from Credibility solutions[192](index=192&type=chunk)[194](index=194&type=chunk) [International Segment](index=41&type=section&id=International%20Segment) - International revenue increased by **$15.7 million (9.1%)** for **Q2 2025** (**4.5% organic growth**) and by **$19.6 million (5.6%)** for **H1 2025** (**4.6% organic growth**)[197](index=197&type=chunk)[198](index=198&type=chunk) - International Finance & Risk revenue growth was driven by the U.K., Europe (Third Party Risk and Compliance solutions), WWN alliances (global customer product usage, cross-border data sales), and Asia markets (local market solutions)[199](index=199&type=chunk)[200](index=200&type=chunk) - International Sales & Marketing revenue growth was primarily from the U.K. and WWN alliances, driven by higher product royalties and global data sales[201](index=201&type=chunk)[202](index=202&type=chunk) [Operating Costs](index=41&type=section&id=Operating%20Costs) | Operating Costs (in millions) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Cost of services (exclusive of D&A) | $242.4 | $220.1 | $470.2 | $444.2 | | Selling and administrative expenses | $181.5 | $174.4 | $350.6 | $350.8 | | Depreciation and amortization | $146.5 | $141.3 | $291.2 | $285.3 | | Restructuring charges | $2.0 | $3.3 | $4.9 | $6.7 | | Total Operating costs | $572.4 | $539.1 | $1,116.9 | $1,087.0 | - Cost of services increased by **$22.3 million (10.1%)** for **Q2 2025** and **$26.0 million (5.8%)** for **H1 2025**, primarily due to higher data acquisition costs and net personnel costs[205](index=205&type=chunk)[206](index=206&type=chunk) - Selling and administrative expenses increased by **$7.1 million (4.1%)** for **Q2 2025** due to higher professional fees (mainly legal), partially offset by lower net personnel costs. For **H1 2025**, it decreased by **$0.2 million**[207](index=207&type=chunk)[208](index=208&type=chunk) - Depreciation and amortization expenses increased by **$5.2 million (3.6%)** for **Q2 2025** and **$5.9 million (2.1%)** for **H1 2025**, mainly due to higher amortization from increased internally developed software[209](index=209&type=chunk)[210](index=210&type=chunk) [Operating Income (Loss)](index=43&type=section&id=Operating%20Income%20(Loss)) - Consolidated operating income decreased by **$24.3 million (65.6%)** to **$12.8 million** for **Q2 2025**, primarily due to higher data acquisition costs, professional fees, depreciation and amortization, and personnel costs, partially offset by revenue growth[213](index=213&type=chunk) - Consolidated operating income decreased by **$5.6 million (10.5%)** to **$48.1 million** for **H1 2025**, driven by higher data acquisition costs, professional fees, and depreciation and amortization, partially offset by revenue growth and lower cloud infrastructure, personnel, and restructuring costs[214](index=214&type=chunk) [Adjusted EBITDA and Adjusted EBITDA Margin](index=43&type=section&id=Adjusted%20EBITDA%20and%20Adjusted%20EBITDA%20Margin) | Adjusted EBITDA (in millions) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | North America | $157.3 | $178.2 | $323.5 | $330.3 | | International | $59.0 | $53.8 | $119.5 | $118.1 | | Corporate and other | $(10.2) | $(14.1) | $(26.0) | $(29.2) | | Consolidated total | $206.1 | $217.9 | $417.0 | $419.2 | | Adjusted EBITDA Margin | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | North America | 39.5% | 44.0% | 40.6% | 41.7% | | International | 31.5% | 31.3% | 32.4% | 33.8% | | Consolidated total | 35.2% | 37.8% | 35.8% | 36.8% | - Consolidated Adjusted EBITDA decreased by **$11.8 million (5.5%)** for **Q2 2025** and **$2.2 million (0.5%)** for **H1 2025**, primarily due to higher costs (data acquisition, personnel) partially offset by revenue growth and lower cloud infrastructure costs[216](index=216&type=chunk)[217](index=217&type=chunk) [Consolidated](index=44&type=section&id=Consolidated) - Consolidated net loss margin on a GAAP basis was **5.8%** for **Q2 2025** (down **300 bps**) and **4.2%** for **H1 2025** (down **70 bps**) compared to prior year periods[216](index=216&type=chunk)[217](index=217&type=chunk) - Consolidated Adjusted EBITDA decreased by **$11.8 million (5.5%)** for **Q2 2025** and **$2.2 million (0.5%)** for **H1 2025**[216](index=216&type=chunk)[217](index=217&type=chunk) - Consolidated Adjusted EBITDA margin was **35.2%** for **Q2 2025** (down **260 bps**) and **35.8%** for **H1 2025** (down **100 bps**)[216](index=216&type=chunk)[217](index=217&type=chunk) [North America Segment](index=44&type=section&id=North%20America%20Segment) - North America Adjusted EBITDA decreased by **$20.9 million (11.7%)** for **Q2 2025** and **$6.8 million (2.1%)** for **H1 2025**, primarily due to higher data acquisition costs and net personnel costs, and lower revenue[218](index=218&type=chunk)[219](index=219&type=chunk) - North America Adjusted EBITDA margin was **39.5%** for **Q2 2025** (down **450 bps**) and **40.6%** for **H1 2025** (down **110 bps**)[218](index=218&type=chunk)[219](index=219&type=chunk) [International Segment](index=44&type=section&id=International%20Segment) - International Adjusted EBITDA increased by **$5.2 million (9.5%)** for **Q2 2025** and **$1.4 million (1.2%)** for **H1 2025**, driven by revenue growth, partially offset by higher net personnel and data acquisition costs[220](index=220&type=chunk)[221](index=221&type=chunk) - International Adjusted EBITDA margin was **31.5%** for **Q2 2025** (up **20 bps**) and **32.4%** for **H1 2025** (down **140 bps**)[220](index=220&type=chunk)[221](index=221&type=chunk) [Corporate and Other](index=44&type=section&id=Corporate%20and%20Other) - Corporate Adjusted EBITDA loss improved by **$3.9 million (27.6%)** for **Q2 2025** and **$3.2 million (10.7%)** for **H1 2025**, primarily due to lower net personnel costs[222](index=222&type=chunk)[223](index=223&type=chunk) [Interest Income (Expense) — Net](index=45&type=section&id=Interest%20Income%20(Expense)%20%E2%80%94%20Net) | Interest Income (Expense) – Net (in millions) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Interest income | $1.8 | $1.2 | $3.3 | $2.8 | | Interest expense | $(50.3) | $(59.0) | $(103.2) | $(144.3) | | Interest income (expense) – net | $(48.5) | $(57.8) | $(99.9) | $(141.5) | - Interest expense decreased by **$8.7 million** for **Q2 2025** due to reduced interest rates and higher amortization loss in the prior year from interest rate swap amendments[224](index=224&type=chunk) - Interest expense decreased by **$41.1 million** for **H1 2025**, primarily due to a **$37.1 million** write-off of debt issuance costs in the prior year and reduced interest rates, partially offset by higher amortization loss from interest rate swap amendments in the current year[225](index=225&type=chunk) [Other income (expense) - net](index=45&type=section&id=Other%20income%20(expense)%20-%20net) | Other Income (Expense) – Net (in millions) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :----------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Non-operating pension-related income | $5.9 | $5.1 | $11.6 | $10.0 | | Miscellaneous other income (expense) – net | $(4.2) | $(3.7) | $(8.6) | $(8.5) | | Total Other income (expense) – net | $1.7 | $1.4 | $3.0 | $1.5 | - Non-operating pension-related income increased by **$0.8 million** for **Q2 2025** and **$1.6 million** for **H1 2025**, primarily due to higher expected return on plan assets[226](index=226&type=chunk) - Miscellaneous other income (expense) - net increased by **$0.5 million** for **Q2 2025** and **$0.1 million** for **H1 2025**, mainly due to lower dividends received from cost investments, partially offset by lower fees related to the accounts receivable securitization facility[227](index=227&type=chunk) [Provision for Income Taxes](index=45&type=section&id=Provision%20for%20Income%20Taxes) - The effective tax rate for **Q2 2025** was **3.4%** (tax benefit of **$1.2 million**) compared to **15.0%** for **Q2 2024**, primarily due to increased tax rates in certain U.S. states[228](index=228&type=chunk) - The effective tax rate for **H1 2025** was **1.6%** (tax benefit of **$0.8 million**) compared to **54.6%** for **H1 2024**, due to increased U.S. state tax rates and higher earnings in non-U.S. jurisdictions[229](index=229&type=chunk) - The company is currently assessing the impact of the One Big Beautiful Bill Act (OBBBA), enacted on **July 4, 2025**, which introduces significant changes to U.S. federal income tax law[230](index=230&type=chunk)[231](index=231&type=chunk) [Net Income (Loss)](index=46&type=section&id=Net%20Income%20(Loss)) - Net loss attributable to Dun & Bradstreet Holdings, Inc. increased to **$33.7 million** (EPS of **$(0.08)**) for **Q2 2025**, from **$16.4 million** (EPS of **$(0.04)**) for **Q2 2024**[232](index=232&type=chunk) - Net loss attributable to Dun & Bradstreet Holdings, Inc. increased to **$49.5 million** (EPS of **$(0.11)**) for **H1 2025**, from **$39.6 million** (EPS of **$(0.09)**) for **H1 2024**[233](index=233&type=chunk) - The higher loss in **Q2 2025** was primarily due to lower operating income and lower tax benefit, partially offset by lower net interest expense[232](index=232&type=chunk) - The higher loss in **H1 2025** was primarily due to lower tax benefit and reduced operating income, partially offset by lower net interest expense (driven by prior year debt issuance cost write-off)[233](index=233&type=chunk) [Adjusted Net Income and Adjusted Net Earnings per Diluted Share](index=46&type=section&id=Adjusted%20Net%20Income%20and%20Adjusted%20Net%20Earnings%20per%20Diluted%20Share) | Adjusted Net Income (in millions) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Adjusted net income | $81.8 | $99.1 | $172.7 | $184.1 | | Adjusted net earnings per diluted share | $0.19 | $0.23 | $0.39 | $0.42 | - Adjusted net income decreased to **$81.8 million** (EPS of **$0.19**) for **Q2 2025**, from **$99.1 million** (EPS of **$0.23**) for **Q2 2024**, primarily due to lower Adjusted EBITDA and higher depreciation and amortization, partially offset by lower interest and tax expense[234](index=234&type=chunk) - Adjusted net income decreased to **$172.7 million** (EPS of **$0.39**) for **H1 2025**, from **$184.1 million** (EPS of **$0.42**) for **H1 2024**, primarily due to higher depreciation and amortization and lower Adjusted EBITDA, partially offset by lower interest expense[235](index=235&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) The company's primary liquidity sources are operating cash flows, cash on hand, and its credit facility, used for working capital, capital investments, debt service, and acquisitions. It expects sufficient liquidity for the next twelve months. Cash and cash equivalents totaled **$278.7 million** at June 30, 2025, with a significant portion held by foreign operations. Operating cash flows increased in **H1 2025**, while net cash used in investing activities decreased, and net cash used in financing activities increased [Overview](index=46&type=section&id=Overview) - Primary liquidity sources include cash flows from operating activities, cash and cash equivalents on hand, and short-term borrowings under the senior secured credit facility[236](index=236&type=chunk) - Principal uses of liquidity are working capital, capital investments (including computer software), debt service, business acquisitions, and other general corporate purposes[236](index=236&type=chunk) - The company believes cash provided by operating activities, supplemented by financing arrangements, will be sufficient to meet short-term needs for at least the next **twelve months**[237](index=237&type=chunk) - Exposure to interest rate variability is mitigated by interest rate swaps, reducing net exposure to approximately **$10 million** for a **100 basis point change**[239](index=239&type=chunk)[243](index=243&type=chunk) [Cash Flow Overview](index=48&type=section&id=Cash%20Flow%20Overview) - Cash and cash equivalents totaled **$278.7 million** as of June 30, 2025, with **$264.7 million** held by foreign operations[240](index=240&type=chunk) | Cash Flows (in millions) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | $ Increase (decrease) | | :------------------------------------------ | :----------------------------- | :----------------------------- | :-------------------- | | Net cash provided by (used in) operating activities | $213.2 | $195.6 | $17.6 | | Net cash provided by (used in) investing activities | $(80.5) | $(112.1) | $31.6 | | Net cash provided by (used in) financing activities | $(72.7) | $(6.5) | $(66.2) | | Total cash provided during the period before FX | $60.0 | $77.0 | $(17.0) | [Cash Provided by (Used in) Operating Activities](index=48&type=section&id=Cash%20Provided%20by%20(Used%20in)%20Operating%20Activities) - Operating cash flows increased by **$17.6 million** for the **six months ended June 30, 2025**, primarily due to changes in the AR Securitization facility, lower interest payments, and improved working capital (higher accounts receivable collections), partially offset by higher income tax payments[242](index=242&type=chunk) [Cash Provided by (Used in) Investing Activities](index=48&type=section&id=Cash%20Provided%20by%20(Used%20in)%20Investing%20Activities) - Net cash used in investing activities decreased by **$31.6 million** for the **six months ended June 30, 2025**, primarily due to lower additions to computer software (**$26.2 million**) and higher net cash received from foreign exchange contract settlements (**$5.3 million**)[244](index=244&type=chunk) [Cash Provided by (Used in) Financing Activities](index=48&type=section&id=Cash%20Provided%20by%20(Used%20in)%20Financing%20Activities) - Net cash used in financing activities increased by **$66.2 million** for the **six months ended June 30, 2025**, primarily due to higher net debt issuance proceeds in the prior year and higher net payments from the Revolving Facility in the current year, partially offset by lower term loan repayments and reduced payments for dividends and share repurchases[245](index=245&type=chunk) [Capital Resources and Debt](index=49&type=section&id=Capital%20Resources%20and%20Debt) | Borrowings (in millions) | June 30, 2025 Carrying Value | December 31, 2024 Carrying Value | | :----------------------- | :----------------------------- | :----------------------------- | | Total short-term debt | $31.0 | $31.0 | | Total long-term debt | $3,474.7 | $3,497.7 | | Total debt | $3,505.7 | $3,528.7 | [Contractual Obligations](index=49&type=section&id=Contractual%20Obligations) - During the three and six months ended June 30, 2025, the company entered into data contracts with an aggregate commitment of approximately **$59 million** and **$141 million**, respectively, over the next five years[91](index=91&type=chunk)[247](index=247&type=chunk) [Off-Balance Sheet Arrangements](index=49&type=section&id=Off-Balance%20Sheet%20Arrangements) - The company does not have any off-balance sheet arrangements other than its foreign exchange forward contracts, interest rate swaps, and cross-currency swaps[248](index=248&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=49&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's market risks primarily involve changes in currency exchange rates, market value of investments, and interest rates on borrowing costs and fair value calculations. As of **June 30, 2025**, no material changes in these market risks have occurred compared to the disclosure in the Annual Report on Form 10-K filed on **February 21, 2025** - No material changes in market risks (foreign exchange rates, market value of investments, interest rates) occurred as of **June 30, 2025**, compared to the Annual Report on Form 10-K filed on **February 21, 2025**[249](index=249&type=chunk) [Item 4. Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO evaluated the effectiveness of the company's disclosure controls and procedures as of **June 30, 2025**, concluding they were effective in providing reasonable assurance for timely and accurate reporting. There were no material changes in internal control over financial reporting during the quarter ended **June 30, 2025** - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of **June 30, 2025**[254](index=254&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended **June 30, 2025**, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[255](index=255&type=chunk) [PART II. OTHER INFORMATION](index=49&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note 17 to the condensed consolidated financial statements - Information on legal proceedings is included in Note 17 — Contingencies[256](index=256&type=chunk) [Item 1A. Risk Factors](index=49&type=section&id=Item1A.%20Risk%20Factors) There have been no material changes in the company's risk factors since its Annual Report on Form 10-K filed on **February 21, 2025** - No material changes in risk factors have occurred since the Annual Report on Form 10-K filed on **February 21, 2025**[257](index=257&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=50&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There was no share repurchase activity during the three months ended **June 30, 2025**. The 2024 Stock Repurchase Program was suspended subsequent to the definitive agreement with Clearlake on **March 23, 2025** - No shares were repurchased during the three months ended **June 30, 2025**[258](index=258&type=chunk)[259](index=259&type=chunk) - The 2024 Stock Repurchase Program was suspended after the definitive agreement with Clearlake on **March 23, 2025**[259](index=259&type=chunk) [Item 3. Defaults Upon Senior Securities](index=50&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the reporting period - No defaults upon senior securities occurred[260](index=260&type=chunk) [Item 4. Mine Safety Disclosures](index=51&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are not applicable[261](index=261&type=chunk) [Item 5. Other Information](index=51&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 trading arrangement for the purchase or sale of company securities during the second quarter of 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement for company securities in **Q2 2025**[261](index=261&type=chunk) [Item 6. Exhibits](index=51&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including certifications from the Chief Executive Officer and Chief Financial Officer, and the Inline Extensible Business Reporting Language (iXBRL) formatted financial statements - Exhibits include certifications from the CEO (**31.1, 32.1**) and CFO (**31.2, 32.2**) pursuant to Sarbanes-Oxley Act[262](index=262&type=chunk) - Exhibit 101 contains the Condensed Consolidated Financial Statements formatted in Inline Extensible Business Reporting Language (iXBRL)[262](index=262&type=chunk)

[Special Note Regarding Forward-Looking Statements](index=4&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) The report contains forward-looking statements subject to risks and uncertainties, including those related to the proposed acquisition by The Western Union Company - The report contains forward-looking statements, including those concerning the proposed acquisition by The Western Union Company, and is subject to various risks and uncertainties[9](index=9&type=chunk)[10](index=10&type=chunk) [Part I - Financial Information](index=7&type=section&id=PART%201%20-%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements and management's analysis of financial condition and operations [Item 1. Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, income statements, statements of changes in stockholders' equity, and cash flow statements, along with detailed notes explaining the company's business, accounting policies, acquisitions, revenues, and other financial components for the periods ended June 30, 2025, and December 31, 2024 [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | | Total Assets | $518,015 | $462,377 | +$55,638 | | Cash and cash equivalents | $174,723 | $130,503 | +$44,220 | | Accounts receivable, net | $141,651 | $107,077 | +$34,574 | | Total Liabilities | $375,762 | $327,453 | +$48,309 | | Wire transfers and money orders payable, net | $144,196 | $85,044 | +$59,152 | | Total Stockholders' Equity | $142,253 | $134,924 | +$7,329 | [Condensed Consolidated Statements of Income and Comprehensive Income](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) This statement details the company's financial performance, including revenues, expenses, and net income, for the three and six months ended June 30, 2025 and 2024 | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :------------- | :----------------------------- | :----------------------------- | :------------- | | Total Revenues | $161,133 | $171,531 | -6.1% | $305,443 | $321,943 | -5.1% | | Wire transfer and money order fees, net | $132,970 | $145,837 | -8.8% | $253,137 | $272,758 | -7.2% | | Foreign exchange gain, net | $23,681 | $22,800 | +3.9% | $43,862 | $43,146 | +1.7% | | Other income | $4,482 | $2,894 | +55.2% | $8,444 | $6,039 | +40.0% | | Total Operating Expenses | $141,672 | $148,627 | -4.7% | $271,907 | $279,453 | -2.7% | | Operating Income | $19,461 | $22,904 | -15.0% | $33,536 | $42,490 | -21.1% | | Net Income | $11,007 | $14,033 | -21.6% | $18,776 | $26,139 | -28.2% | | Basic EPS | $0.37 | $0.43 | -14.0% | $0.62 | $0.79 | -21.5% | | Diluted EPS | $0.37 | $0.42 | -11.9% | $0.62 | $0.78 | -20.5% | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) This statement outlines changes in the company's equity components, including retained earnings and treasury stock, for the periods presented | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------- | :------------ | :---------------- | :----- | | Total Stockholders' Equity | $142,253 | $134,924 | +$7,329 | | Retained Earnings | $276,246 | $257,470 | +$18,776 | | Additional Paid-in Capital | $82,895 | $79,592 | +$3,303 | | Treasury Stock, at cost | $(217,030) | $(200,696) | -$16,334 | - The company acquired **1,348,214 shares of treasury stock** for **$16.3 million** during the six months ended June 30, 2025[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement reports the cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :-------------------------------- | :----------------------------- | :----------------------------- | :----- | | Net cash provided by operating activities | $81,184 | $28,666 | +$52,518 | | Net cash used in investing activities | $(10,033) | $(20,150) | +$10,117 | | Net cash used in financing activities | $(29,767) | $(14,066) | -$15,701 | | Net increase (decrease) in cash and cash equivalents | $44,220 | $(5,994) | +$50,214 | | Cash and cash equivalents, end of period | $174,723 | $233,209 | -$58,486 | - Net cash provided by operating activities increased by **$52.5 million**, primarily due to a **$58.8 million change in working capital**[235](index=235&type=chunk) - Net cash used in financing activities included **$12.5 million of net repayments** under the revolving credit facility and **$16.3 million for common stock repurchases**[237](index=237&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and disclosures supporting the condensed consolidated financial statements, clarifying accounting policies, significant transactions, and financial components [Note 1 – Business and Accounting Policies](index=13&type=section&id=NOTE%201%20%E2%80%93%20BUSINESS%20AND%20ACCOUNTING%20POLICIES) This note describes the company's business operations as a money transmitter and outlines its significant accounting policies and the proposed merger details - The Company operates as a money transmitter from the U.S., Canada, Spain, Italy, UK, and Germany to Mexico, Guatemala, other Latin American countries, Europe, Africa, and Asia[22](index=22&type=chunk) - On August 10, 2025, the Company entered into a Merger Agreement with The Western Union Company, under which each share of common stock will be converted into the right to receive **$16.00 in cash**[26](index=26&type=chunk) - Consummation of the Merger is subject to stockholder approval, regulatory clearances (including Hart-Scott-Rodino Act and money transmitter licenses), and other customary closing conditions[27](index=27&type=chunk) - A substantial portion of the company's paying agents are concentrated in a few large banks, financial institutions, and retail chains in Latin American countries[29](index=29&type=chunk) [Note 2 – Acquisitions](index=14&type=section&id=NOTE%202%20%E2%80%93%20ACQUISITIONS) This note details the company's acquisition activities, including the purchase of a UK money services entity and related restructuring costs - On July 2, 2024, the Company acquired a UK money services entity for approximately **$1.4 million in cash**, gaining access to outbound remittance services from the UK[34](index=34&type=chunk)[35](index=35&type=chunk) - The acquisition resulted in **$1.2 million in goodwill**, representing the value of the assembled workforce and expected synergies[35](index=35&type=chunk)[36](index=36&type=chunk) - Restructuring costs for the six months ended June 30, 2025, were approximately **$0.3 million**, primarily for workforce reduction[37](index=37&type=chunk) Transaction Costs (in thousands) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Transaction Costs | $2,224 | $26 | $3,393 | $36 | [Note 3 – Revenues](index=16&type=section&id=NOTE%203%20%E2%80%93%20REVENUES) This note provides a breakdown of the company's revenue streams, including wire transfer fees, foreign exchange gains, and other income, along with changes in loyalty programs Revenue Category (in thousands) | Revenue Category (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (%) | | :------------------------------ | :----------------------------- | :----------------------------- | :------------- | :----------------------------- | :----------------------------- | :------------- | | Wire transfer and money order fees, net | $132,970 | $145,837 | -8.8% | $253,137 | $272,758 | -7.2% | | Foreign exchange gain, net | $23,681 | $22,800 | +3.9% | $43,862 | $43,146 | +1.7% | | Other income | $4,482 | $2,894 | +55.2% | $8,444 | $6,039 | +40.0% | | Total revenues | $161,133 | $171,531 | -6.1% | $305,443 | $321,943 | -5.1% | - The loyalty program was terminated effective February 1, 2025, with points redeemable until July 31, 2025[40](index=40&type=chunk) - The Company acts as principal for most revenues, reporting on a gross basis, but acts as an agent for remittance-as-a-service relationships with digital partners[42](index=42&type=chunk) [Note 4 – Accounts Receivable and Agent Advances Receivable, Net of Allowance](index=17&type=section&id=NOTE%204%20%E2%80%93%20ACCOUNTS%20RECEIVABLE%20AND%20AGENT%20ADVANCES%20RECEIVABLE%2C%20NET%20OF%20ALLOWANCE) This note details the composition of accounts receivable and agent advances, including the allowance for credit losses and collateralization Accounts Receivable and Agent Advances Receivable (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------- | :------------ | :---------------- | :----- | | Accounts receivable, net | $141,651 | $107,077 | +$34,574 | | Allowance for credit losses (total) | $5,509 | $3,836 | +$1,673 | | Provision for credit losses (6 months) | $3,924 | $3,371 | +$553 | | Agent advances receivable, net | $4,083 | $4,285 | -$202 | - Agent advances receivable of **$4.4 million** at June 30, 2025, are collateralized by personal guarantees and business assets[45](index=45&type=chunk) [Note 5 – Prepaid Expenses and Other Assets](index=18&type=section&id=NOTE%205%20%E2%80%93%20PREPAID%20EXPENSES%20AND%20OTHER%20ASSETS) This note outlines the company's prepaid expenses, other assets, right-of-use assets, and exposure from funds held by seized banking entities Prepaid Expenses and Other Assets (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------- | :------------ | :---------------- | :----- | | Prepaid expenses and other current assets | $11,098 | $10,998 | +$100 | | Other assets | $29,628 | $32,198 | -$2,570 | | Right-of-use assets, net | $16,558 | $18,511 | -$1,953 | | Funds held by seized banking entities, net of allowance | $1,699 | $1,539 | +$160 | - The Company has approximately **$5.9 million exposure** from deposits held with a closed Mexican financial institution and maintains a **$4.2 million valuation allowance** as of June 30, 2025[48](index=48&type=chunk) [Note 6 – Goodwill and Intangible Assets](index=19&type=section&id=NOTE%206%20%E2%80%93%20GOODWILL%20AND%20INTANGIBLE%20ASSETS) This note provides details on the company's goodwill and intangible assets, including their composition, amortization, and impairment assessment Goodwill and Intangible Assets (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------- | :------------ | :---------------- | :----- | | Goodwill | $55,195 | $55,195 | $0 | | Intangible assets, net | $26,905 | $26,847 | +$58 | | Amortization expense (6 months) | $2,257 | N/A | N/A | - Intangible assets include agent relationships, trade names (Intermex, La Nacional, Amigo Paisano, I-Transfer), and developed technology, amortized over up to **15 years**[49](index=49&type=chunk) - No impairment charges were recognized for goodwill or intangible assets during the three and six months ended June 30, 2025[49](index=49&type=chunk) [Note 7 – Leases](index=19&type=section&id=NOTE%207%20%E2%80%93%20LEASES) This note details the company's lease liabilities and right-of-use assets, including weighted-average lease terms and discount rates Leases (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------- | :------------ | :---------------- | :----- | | Right-of-use assets | $16,558 | $18,511 | -$1,953 | | Total Lease liabilities | $22,642 | $25,050 | -$2,408 | | Operating lease cost (6 months) | $3,493 | $3,524 | -$31 | - Weighted-average remaining lease term is **6.5 years**, and the weighted-average discount rate is **6.35%** as of June 30, 2025[56](index=56&type=chunk) [Note 8 – Wire Transfers and Money Orders Payable, Net](index=21&type=section&id=NOTE%208%20%E2%80%93%20WIRE%20TRANSFERS%20AND%20MONEY%20ORDERS%20PAYABLE%2C%20NET) This note details the company's obligations for wire transfers and money orders payable, including customer voided wires subject to unclaimed property laws Wire Transfers and Money Orders Payable (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------- | :------------ | :---------------- | :----- | | Wire transfers and money orders payable, net | $144,196 | $85,044 | +$59,152 | | Wire transfers payable, net | $77,746 | $22,437 | +$55,309 | | Customer voided wires payable | $35,034 | $32,583 | +$2,451 | | Money orders payable | $31,416 | $30,024 | +$1,392 | - Customer voided wires payable are considered unclaimed property, subject to state laws with abandonment periods ranging from three to seven years[58](index=58&type=chunk) [Note 9 – Accrued and Other Liabilities](index=21&type=section&id=NOTE%209%20%E2%80%93%20ACCRUED%20AND%20OTHER%20LIABILITIES) This note outlines the company's accrued and other liabilities, including commissions payable and deferred revenue from the loyalty program Accrued and Other Liabilities (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------- | :------------ | :---------------- | :----- | | Accrued and other liabilities | $45,023 | $47,434 | -$2,411 | | Commissions payable to sending agents | $17,795 | $18,080 | -$285 | | Deferred revenue loyalty program | $543 | $2,692 | -$2,149 | | Accrued transaction costs | $316 | $1,600 | -$1,284 | - Deferred revenue from the loyalty program decreased significantly due to its termination effective February 1, 2025, with points expiring by July 31, 2025[40](index=40&type=chunk)[59](index=59&type=chunk) [Note 10 – Debt](index=22&type=section&id=NOTE%2010%20%E2%80%93%20DEBT) This note details the company's debt, primarily from its revolving credit facility, including outstanding amounts, available capacity, interest rates, and covenants Debt (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------- | :------------ | :---------------- | :----- | | Debt, net | $144,132 | $156,623 | -$12,491 | | Revolving credit facility | $144,114 | $156,600 | -$12,486 | - The Company has a **$425.0 million multi-currency revolving credit facility**, with **$144.1 million outstanding** and **$380.9 million available** as of June 30, 2025[62](index=62&type=chunk)[220](index=220&type=chunk) - The effective interest rate for the revolving credit facility was **2.74%** for the six months ended June 30, 2025[66](index=66&type=chunk)[223](index=223&type=chunk) - The credit agreement includes covenants requiring a quarterly minimum interest coverage ratio of **3.00:1.00** and a maximum consolidated leverage ratio of **3.50:1.00**, with which the company was in compliance as of June 30, 2025[69](index=69&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk) [Note 11 – Fair Value Measurements](index=24&type=section&id=NOTE%2011%20%E2%80%93%20FAIR%20VALUE%20MEASUREMENTS) This note explains the company's fair value measurements for financial and non-financial assets, including the use of Level 3 inputs for non-recurring valuations - Financial assets and liabilities are carried at amortized cost, with carrying amounts generally representative of fair values due to short turnover or market-approximating interest rates[73](index=73&type=chunk)[74](index=74&type=chunk) - Non-financial assets (goodwill and intangible assets) are measured at fair value on a nonrecurring basis using **Level 3 inputs**, including forecasted revenues, agent turnover, technology obsolescence, and market rates[72](index=72&type=chunk) [Note 12 – Share-Based Compensation](index=25&type=section&id=NOTE%2012%20%E2%80%93%20SHARE-BASED%20COMPENSATION) This note details the company's share-based compensation plans, including authorized shares, expense recognition, and unrecognized compensation - The A&R 2020 Plan increased authorized shares for issuance by **2.5 million**, with **3.2 million shares** remaining available for future awards as of June 30, 2025[77](index=77&type=chunk) Share-based Compensation (in thousands) | Share-based Compensation (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Stock Options Expense | $0 | $42.4 | $0 | $86.8 | | RSUs Expense | $1,000 | $900 | $2,300 | $1,900 | | RSAs Expense | $500 | $400 | $1,000 | $800 | | PSUs Expense | $600 | $1,000 | $900 | $1,700 | | Total Share-based Compensation (6 months) | N/A | N/A | $4,245 | $4,545 | - Unrecognized compensation expense related to RSUs, RSAs, and PSUs is approximately **$19.7 million**, expected to be recognized over a weighted-average period of **1.9 years**[82](index=82&type=chunk)[85](index=85&type=chunk)[89](index=89&type=chunk)[134](index=134&type=chunk) [Note 13 – Equity](index=29&type=section&id=NOTE%2013%20%E2%80%93%20EQUITY) This note provides information on the company's equity, including the stock repurchase program and significant share repurchases - The stock repurchase program was increased by an additional **$63.8 million** on August 26, 2024, with **$48.3 million** available for future repurchases as of June 30, 2025[91](index=91&type=chunk)[92](index=92&type=chunk)[229](index=229&type=chunk)[230](index=230&type=chunk) - During the six months ended June 30, 2025, the Company repurchased **1,348,214 shares** for **$16.3 million**[92](index=92&type=chunk)[230](index=230&type=chunk) - A privately-negotiated transaction on March 12, 2025, involved purchasing **100,000 shares** for **$1.3 million** from a related party[92](index=92&type=chunk)[231](index=231&type=chunk) [Note 14 – Earnings Per Share](index=29&type=section&id=NOTE%2014%20%E2%80%93%20EARNINGS%20PER%20SHARE) This note presents the company's basic and diluted earnings per share, along with the weighted-average common shares outstanding and factors affecting EPS Earnings Per Share | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :------------- | :----------------------------- | :----------------------------- | :------------- | | Net Income (in thousands) | $11,007 | $14,033 | -21.6% | $18,776 | $26,139 | -28.2% | | Basic EPS | $0.37 | $0.43 | -14.0% | $0.62 | $0.79 | -21.5% | | Diluted EPS | $0.37 | $0.42 | -11.9% | $0.62 | $0.78 | -20.5% | | Weighted-average common shares outstanding – basic | 29,843,687 | 32,698,951 | -8.8% | 30,213,762 | 33,187,196 | -8.9% | | Weighted-average common shares outstanding – diluted | 29,912,615 | 33,090,806 | -9.7% | 30,370,069 | 33,639,811 | -9.7% | - The decrease in EPS reflects lower net income, partially offset by a reduced share count due to stock repurchases (**880,152 shares for 3 months, 476,934 shares for 6 months**)[97](index=97&type=chunk)[164](index=164&type=chunk)[203](index=203&type=chunk) [Note 15 – Income Taxes](index=30&type=section&id=NOTE%2015%20%E2%80%93%20INCOME%20TAXES) This note details the company's income tax provision, statutory tax rates, valuation allowances on deferred tax assets, and the impact of recent tax legislation Income Taxes (in thousands) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (%) | | :-------------------- | :----------------------------- | :----------------------------- | :------------- | :----------------------------- | :----------------------------- | :------------- | | Income before income taxes | $16,368 | $19,809 | -17.3% | $27,743 | $36,693 | -24.5% | | Income tax provision | $5,361 | $5,776 | -7.2% | $8,967 | $10,554 | -15.0% | | U.S statutory tax rate | 21% | 21% | 0% | 21% | 21% | 0% | - A valuation allowance is recorded on deferred tax assets for Canadian, Spanish, Italian, German, Dutch, and British net operating loss carryforwards due to a history of taxable losses in these foreign subsidiaries[99](index=99&type=chunk) - The One Big Beautiful Bill Act (OBBBA) was enacted on July 4, 2025, and the Company is evaluating its impact on consolidated financial statements[101](index=101&type=chunk) [Note 16 – Segment Reporting](index=31&type=section&id=NOTE%2016%20%E2%80%93%20SEGMENT%20REPORTING) This note clarifies that the company operates as a single reportable segment, focusing on global omnichannel money remittance services - The Company operates as one operating and reportable segment, focusing on global omnichannel money remittance services, primarily from the U.S. to LAC corridor[102](index=102&type=chunk) - Robert Lisy, Chairman, CEO, and President, is the CODM and uses consolidated financial results, including Net Income, for key operating decisions[103](index=103&type=chunk) [Note 17 – Commitments and Contingencies](index=32&type=section&id=NOTE%2017%20%E2%80%93%20COMMITMENTS%20AND%20CONTINGENCIES) This note addresses the company's legal proceedings, claims, and compliance with licensing laws, asserting no material adverse effects are expected - Management believes that current legal proceedings and claims will not have a material adverse effect on the Company's results of operations or financial condition[106](index=106&type=chunk)[108](index=108&type=chunk) - The Company's subsidiaries comply with applicable licensing laws requiring minimum tangible net worth and liquid assets to cover wire transfers and money orders payable[109](index=109&type=chunk) [Note 18 – Subsequent Events](index=33&type=section&id=NOTE%2018%20%E2%80%93%20SUBSEQUENT%20EVENTS) This note discloses material events occurring after the reporting period, including the proposed merger with Western Union and new legislation - No material subsequent events were identified through August 11, 2025, other than the proposed merger with Western Union and the enactment of the OBBBA[110](index=110&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a detailed analysis of the Company's financial performance, condition, and operational results for the three and six months ended June 30, 2025, compared to the prior year. It covers key factors affecting the business, including the proposed merger with Western Union, restructuring efforts, market trends, and a comprehensive review of revenues, expenses, and non-GAAP financial measures. It also discusses liquidity, capital resources, and critical accounting estimates [Overview](index=34&type=section&id=Overview) This overview describes the company's core business as a global money remittance provider and highlights key trends in transaction volumes and principal amounts sent - The Company is a global omnichannel money remittance service provider, primarily focused on the U.S. to LAC corridor, with services to over **60 countries**[112](index=112&type=chunk) - Revenue is generated from consumer fees, which are shared with agents, and foreign exchange gains from currency exchange spreads[113](index=113&type=chunk) - For the six months ended June 30, 2025, principal amount sent decreased by **0.8% to $11.8 billion**, and total remittances processed decreased by **6.3% to 26.9 million**[114](index=114&type=chunk) - The decrease in volume is attributed to a contraction in the remittance market, especially the Mexico corridor, and a change in consumer behavior towards fewer, higher-value transactions[114](index=114&type=chunk) [Proposed Merger with The Western Union Company](index=36&type=section&id=Proposed%20Merger%20with%20The%20Western%20Union%20Company) This section details the proposed acquisition by Western Union, including the per-share cash consideration, closing conditions, and potential termination fees - On August 10, 2025, the Company agreed to be acquired by Western Union for **$16.00 cash per share**[117](index=117&type=chunk) - The merger is subject to stockholder approval, regulatory clearances (Hart-Scott-Rodino Act, money transmitter licenses), and other closing conditions[117](index=117&type=chunk) Termination Fees | Termination Scenario | Termination Fee | | :------------------- | :-------------- | | Antitrust-related Restraint or failure to obtain antitrust approvals | $27,300,000 | | Company enters Superior Proposal or Adverse Recommendation Change | $19,800,000 | [Restructuring Costs](index=36&type=section&id=Restructuring%20Costs) This section outlines the company's restructuring efforts, primarily workforce reduction, and the expected annual cost savings from these initiatives - Restructuring costs for the six months ended June 30, 2025, were approximately **$0.3 million**, mainly for workforce reduction in foreign operations and La Nacional[119](index=119&type=chunk) - The restructuring plan aims to reorganize the workforce, streamline operations, and integrate technology, expecting to reduce compensation and facilities expenses by approximately **$2.0 million annually**, primarily in 2026[119](index=119&type=chunk)[121](index=121&type=chunk) [Key Factors and Trends Affecting our Business](index=36&type=section&id=Key%20Factors%20and%20Trends%20Affecting%20our%20Business) This section discusses critical external and internal factors influencing the business, including merger-related risks, market competition, regulatory changes, and digital investment strategies - The proposed merger with Western Union introduces risks of business disruption, management distraction, and potential failure to close[122](index=122&type=chunk) - Key external factors include changes in immigration laws, new technology/competitors (digital platforms), tax law changes (remittance taxes from 2026), economic factors (inflation, recession), and foreign exchange rate volatility[124](index=124&type=chunk) - The Company is making significant investments in digital market penetration, customer acquisition, and enhanced digital offerings, which are expected to provide mid- to long-term financial benefits but may adversely affect short-term operating results[125](index=125&type=chunk) - The money remittance market is highly competitive, with competition from large providers (Western Union, MoneyGram, Remitly, Euronet) and smaller niche players, primarily based on value, service, and technology[126](index=126&type=chunk) [How We Assess the Performance of Our Business](index=40&type=section&id=How%20We%20Assess%20the%20Performance%20of%20Our%20Business) This section explains the key performance indicators and non-GAAP financial measures used by management to evaluate the company's operational and financial performance - Key performance indicators include revenues, service charges from agents and banks, salaries and benefits, other selling, general and administrative expenses, and net income[131](index=131&type=chunk) - Non-GAAP financial measures (Adjusted Net Income, Adjusted EPS, Adjusted EBITDA) are used to evaluate performance by excluding items not indicative of core operating results, such as non-cash compensation and amortization of intangibles[131](index=131&type=chunk)[165](index=165&type=chunk)[172](index=172&type=chunk) [Results of Operations](index=44&type=section&id=Results%20of%20Operations) This section provides a comparative analysis of the company's financial results for the three and six months ended June 30, 2025 and 2024 [Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024](index=45&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Three%20Months%20Ended%20June%2030%2C%202024) This subsection analyzes the company's financial performance for the three-month period, highlighting changes in revenues, expenses, and net income Financial Performance (in thousands) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :------------- | | Total Revenues | $161,133 | $171,531 | -6.1% | | Wire transfer and money order fees, net | $132,970 | $145,837 | -8.8% | | Foreign exchange gain, net | $23,681 | $22,800 | +3.9% | | Other income | $4,482 | $2,894 | +55.2% | | Service charges from agents and banks | $102,257 | $113,369 | -9.8% | | Salaries and benefits | $18,525 | $16,893 | +9.5% | | Other selling, general and administrative expenses | $12,354 | $10,481 | +18.1% | | Restructuring costs | $0 | $2,711 | -100% | | Transaction costs | $2,224 | $26 | +8453.8% | | Depreciation and amortization | $4,454 | $3,371 | +32.1% | | Net Income | $11,007 | $14,033 | -21.6% | | Diluted EPS | $0.37 | $0.42 | -11.9% | - The decrease in wire transfer fees was due to lower transaction volume in the Mexico corridor and a shift to higher average principal sent per transaction[147](index=147&type=chunk)[148](index=148&type=chunk) - Other selling, general and administrative expenses increased due to higher advertising for digital channels (**$1.1 million**) and a legal contingency settlement gain in 2024 (**$0.6 million**)[154](index=154&type=chunk)[157](index=157&type=chunk) [Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024](index=52&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Six%20Months%20Ended%20June%2030%2C%202024) This subsection analyzes the company's financial performance for the six-month period, detailing changes in revenues, operating expenses, and net income Financial Performance (in thousands) | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :------------- | | Total Revenues | $305,443 | $321,943 | -5.1% | | Wire transfer and money order fees, net | $253,137 | $272,758 | -7.2% | | Foreign exchange gain, net | $43,862 | $43,146 | +1.7% | | Other income | $8,444 | $6,039 | +40.0% | | Service charges from agents and banks | $196,045 | $211,303 | -7.2% | | Salaries and benefits | $36,813 | $34,999 | +5.1% | | Other selling, general and administrative expenses | $23,343 | $20,434 | +14.2% | | Provision for credit losses | $3,924 | $3,371 | +16.4% | | Restructuring costs | $306 | $2,711 | -88.7% | | Transaction costs | $3,393 | $36 | +9325% | | Depreciation and amortization | $8,083 | $6,599 | +22.5% | | Net Income | $18,776 | $26,139 | -28.0% | | Diluted EPS | $0.62 | $0.78 | -20.5% | - The decrease in wire transfer fees was due to a contraction in the remittance market, particularly the Mexico corridor, and a change in consumer behavior of sending a lower number of money transfers at a higher average principal sent per transaction[187](index=187&type=chunk) - Other selling, general and administrative expenses increased due to higher advertising for digital channels (**$1.8 million**), increased IT-related expenses (**$0.7 million**), and a legal contingency settlement gain in 2024 (**$0.6 million**)[197](index=197&type=chunk) [Non-GAAP Financial Measures](index=48&type=section&id=Non-GAAP%20Financial%20Measures) This section reconciles and explains the company's non-GAAP financial measures, including Adjusted Net Income, Adjusted EPS, and Adjusted EBITDA [Adjusted Net Income and Adjusted Earnings per Share](index=50&type=section&id=Adjusted%20Net%20Income%20and%20Adjusted%20Earnings%20per%20Share) This subsection presents the company's Adjusted Net Income and Adjusted EPS, excluding non-cash and non-core items for a clearer view of operating performance Adjusted Net Income and Adjusted Earnings per Share (in thousands, except per share) | Metric (in thousands, except per share) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (%) | | :-------------------------------------- | :----------------------------- | :----------------------------- | :------------- | :----------------------------- | :----------------------------- | :------------- | | Net Income | $11,007 | $14,033 | -21.6% | $18,776 | $26,139 | -28.2% | | Adjusted Net Income | $15,249 | $18,095 | -15.7% | $26,177 | $32,772 | -20.1% | | Adjusted Basic EPS | $0.51 | $0.55 | -7.3% | $0.87 | $0.99 | -12.1% | | Adjusted Diluted EPS | $0.51 | $0.55 | -7.3% | $0.86 | $0.97 | -11.3% | - Adjusted Net Income and Adjusted EPS exclude non-cash amortization of intangibles, non-cash compensation costs, restructuring costs, transaction costs, and other non-core items[172](index=172&type=chunk)[177](index=177&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk) [Adjusted EBITDA](index=51&type=section&id=Adjusted%20EBITDA) This subsection defines and presents Adjusted EBITDA, a non-GAAP measure used to assess the company's operational profitability before certain non-operating and non-cash expenses Adjusted EBITDA (in thousands) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (%) | | :-------------------- | :----------------------------- | :----------------------------- | :------------- | :----------------------------- | :----------------------------- | :------------- | | Net Income | $11,007 | $14,033 | -21.6% | $18,776 | $26,139 | -28.2% | | Adjusted EBITDA | $28,788 | $31,052 | -7.3% | $50,406 | $56,466 | -10.8% | - Adjusted EBITDA is defined as net income before depreciation and amortization, interest expense, income taxes, and adjusted for non-cash share-based compensation, restructuring costs, transaction costs, and other non-recurring items[182](index=182&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk) [Liquidity and Capital Resources](index=58&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's sources of liquidity, cash flow activities, and capital resources, including its revolving credit facility and merger-related restrictions - Principal liquidity sources are cash from operations and borrowings under the **$425.0 million revolving credit facility**, with **$380.9 million available** as of June 30, 2025[217](index=217&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk) - Net cash provided by operating activities increased by **$52.5 million to $81.2 million** for the six months ended June 30, 2025, primarily due to a **$58.8 million change in working capital**[235](index=235&type=chunk) - Net cash used in financing activities included **$12.5 million of net repayments** under the revolving credit facility and **$16.3 million for common stock repurchases** during the six months ended June 30, 2025[237](index=237&type=chunk) - The Merger Agreement imposes restrictions on assuming additional debt, issuing equity, repurchasing equity, and making certain capital expenditures[233](index=233&type=chunk) [Critical Accounting Estimates](index=62&type=section&id=Critical%20Accounting%20Estimates) This section identifies the company's critical accounting estimates, such as allowance for credit losses, goodwill, intangible assets, and income taxes - Critical accounting estimates include Allowance for Credit Losses, Goodwill and Intangible Assets, and Income Taxes[243](index=243&type=chunk) - No material changes to critical accounting estimates occurred during the three and six months ended June 30, 2025[240](index=240&type=chunk) [Recent Accounting Pronouncements](index=62&type=section&id=Recent%20Accounting%20Pronouncements) This section outlines recent accounting pronouncements and the company's ongoing evaluation of their potential impact on financial statements - The Company is evaluating the impact of ASU 2023-09 (Income Tax Disclosures, effective 2025), ASU 2024-03 (Expense Disaggregation, effective 2026), and ASU 2025-05 (Credit Losses for Accounts Receivable, effective 2025)[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk)[241](index=241&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=63&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section details the Company's exposure to market risks, including foreign currency risk, interest rate risk, and credit risk. It outlines how these risks are managed and their potential impact on financial performance, providing specific data on currency exchange rates, debt interest rates, and credit loss provisions [Foreign Currency Risk](index=63&type=section&id=Foreign%20Currency%20Risk) This section describes the company's exposure to foreign currency fluctuations and its strategies for managing this risk, including the impact of exchange rate changes on revenues - Foreign currency risk is managed through business structure and active risk management, with tom and spot transactions settled within two business days[244](index=244&type=chunk) - Revenues from foreign subsidiaries account for approximately **3% of consolidated revenues**, so a **10% change in foreign currency rates** would have a de minimis impact on overall operating results[247](index=247&type=chunk) - Long-term appreciation of the Mexican peso or Guatemalan quetzal against the U.S. dollar could negatively affect revenues and profit margins[248](index=248&type=chunk) Currency Exchange Rates | Currency Pair | Spot Rate (June 30, 2025) | Average Rate (6 Months Ended June 30, 2025) | Spot Rate (Dec 31, 2024) | Average Rate (6 Months Ended June 30, 2024) | | :-------------------------- | :------------------------ | :------------------------------------------ | :----------------------- | :------------------------------------------ | | U.S. dollar/Mexican Peso | 18.80 | 19.95 | 20.75 | 17.10 | | U.S. dollar/Guatemalan Quetzal | 7.67 | 7.68 | 7.68 | 7.77 | | U.S. dollar/Canadian Dollar | 1.37 | 1.41 | 1.44 | 1.36 | | U.S. dollar/Dominican Peso | 59.47 | 60.89 | 61.10 | 58.85 | | U.S. dollar/Euro | 0.85 | 0.92 | 0.96 | 0.93 | | U.S. dollar/British Pound Sterling | 0.73 | 0.77 | 0.80 | — | [Interest Rate Risk](index=63&type=section&id=Interest%20Rate%20Risk) This section explains the company's exposure to interest rate fluctuations, particularly on its variable-rate revolving credit facility, and quantifies the potential impact of rate changes - The Company's revolving credit facility has variable interest rates (SOFR, EURIBOR, SONIA), exposing it to interest rate risk[249](index=249&type=chunk) - A hypothetical **1% increase in interest rates** on the **$144.1 million outstanding debt** as of June 30, 2025, would increase annual cash interest expense by approximately **$1.4 million**[250](index=250&type=chunk) [Credit Risk](index=64&type=section&id=Credit%20Risk) This section details the company's credit risk exposure from cash balances and receivables, along with its management strategies and the provision for credit losses - The Company is exposed to credit risk from uninsured cash balances in U.S. and foreign banks, and from receivables with sending agents and digital partners[251](index=251&type=chunk)[252](index=252&type=chunk) - Credit risk is managed by diversifying cash balances among financial institutions and conducting credit reviews for agents[251](index=251&type=chunk)[252](index=252&type=chunk) Provision for Credit Losses (in thousands) | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (%) | | :-------------------- | :----------------------------- | :----------------------------- | :------------- | | Provision for credit losses | $3,900 | $3,400 | +14.7% | | % of Total Revenues | 1.3% | 1.1% | +0.2% | - The increase in provision for credit losses is primarily due to higher outstanding accounts receivable from sending agents[253](index=253&type=chunk) [Item 4. Controls and Procedures](index=65&type=section&id=Item%204.%20Controls%20and%20Procedures) This section addresses the effectiveness of the Company's disclosure controls and procedures and reports on any changes in internal control over financial reporting. Management concluded that disclosure controls were effective as of June 30, 2025, with no material changes to internal control during the quarter [Evaluation of Disclosure Controls and Procedures](index=65&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This subsection presents management's conclusion on the effectiveness of the company's disclosure controls and procedures as of June 30, 2025 - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[256](index=256&type=chunk) - Disclosure controls are designed to provide reasonable, not absolute, assurance that objectives are met[255](index=255&type=chunk) [Changes in Internal Control Over Financial Reporting](index=65&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This subsection reports on any material changes in the company's internal control over financial reporting during the most recent fiscal quarter - No material changes in internal control over financial reporting occurred during the most recently completed fiscal quarter[257](index=257&type=chunk) [Part II - Other Information](index=66&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section provides additional information not covered in Part I, including legal proceedings, updated risk factors, equity security sales, and other disclosures [Item 1. Legal Proceedings](index=66&type=section&id=Item%201.%20Legal%20Proceedings) The Company is involved in various legal claims and litigation as part of its ordinary course of business. Management believes these actions will not have a material adverse effect on the Company's business, financial condition, or results of operations - The Company is involved in ordinary course legal proceedings, but management does not expect a material adverse effect on its business or financial condition[259](index=259&type=chunk) [Item 1A. Risk Factors](index=66&type=section&id=Item%201A.%20Risk%20Factors) This section updates the risk factors from the previous annual report, highlighting new risks primarily related to the proposed merger with Western Union. These include potential business disruptions, uncertainty for stakeholders, diversion of management attention, significant transaction costs, and the possibility of the merger not being consummated, which could lead to termination fees and adverse impacts on the business - No material changes to principal risk factors from the 2024 Form 10-K, except for new risks related to the proposed merger with Western Union[261](index=261&type=chunk) - Risks related to the proposed merger include business disruptions, uncertainty for customers/agents/employees, management distraction, significant transaction costs, and the potential for the merger to not be completed, which could result in termination fees[262](index=262&type=chunk)[263](index=263&type=chunk)[264](index=264&type=chunk)[265](index=265&type=chunk) - Securities class action and derivative lawsuits related to the merger could result in substantial costs and delay or prevent its completion[266](index=266&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=68&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the quarter ended June 30, 2025, the Company repurchased 981,610 shares of common stock, with 980,341 shares under its publicly announced repurchase program. Approximately $48.3 million remains available under the program, but repurchase activity has been suspended due to restrictive covenants in the proposed Merger Agreement Share Repurchase Activity | Period | Total Number of Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Publicly Announced Program | Approximate Dollar Value of Shares that May Yet be Purchased under the Program | | :---------------------- | :----------------------------- | :--------------------------- | :----------------------------------------------------- | :------------------------------------------------------------- | | April 1 through April 30 | 330,367 | $12.18 | 329,642 | $55,510,523 | | May 1 through May 31 | 344,317 | $11.37 | 344,136 | $51,596,312 | | June 1 through June 30 | 306,926 | $10.75 | 306,563 | $48,299,973 | | Total (Q2 2025) | 981,610 | $11.43 (avg) | 980,341 | N/A | - As of June 30, 2025, **$48.3 million** remained available for future share repurchases under the program[267](index=267&type=chunk) - The Company has suspended repurchase activity under the program due to restrictive covenants in the Merger Agreement[267](index=267&type=chunk) [Item 3. Defaults Upon Senior Securities](index=68&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the reported period - No defaults upon senior securities were reported[268](index=268&type=chunk) [Item 4. Mine Safety Disclosures](index=68&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - Not applicable[269](index=269&type=chunk) [Item 5. Other Information](index=68&type=section&id=Item%205.%20Other%20Information) During the quarter ended June 30, 2025, no officer or director adopted or terminated any Rule 10b5-1 trading plan or non-Rule 10b5-1 trading arrangement - No officer or director adopted or terminated any Rule 10b5-1 trading plan or non-Rule 10b5-1 trading arrangement during Q2 2025[270](index=270&type=chunk) [Item 6. Exhibits](index=70&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications (31.1, 31.2, 32.1, 32.2) and Inline XBRL documents - The report includes certifications (31.1, 31.2, 32.1, 32.2) and Inline XBRL documents as exhibits[272](index=272&type=chunk) [Signatures](index=71&type=section&id=SIGNATURES) The report is duly signed on August 11, 2025, by Robert Lisy, Chief Executive Officer and President, and Andras Bende, Chief Financial Officer - The report was signed on August 11, 2025, by Robert Lisy (CEO and President) and Andras Bende (CFO)[278](index=278&type=chunk)

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This part presents the unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, financial performance, and financial position changes for the periods ended June 30, 2025 and 2024 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------------- | :------------ | :---------------- | :----- | :------- | | Total assets | $80,093 | $126,644 | $(46,551) | -36.76% | | Total liabilities | $64,360 | $63,304 | $1,056 | 1.67% | | Total stockholders' equity | $15,733 | $63,340 | $(47,607) | -75.16% | | Cash and cash equivalents | $7,442 | $4,108 | $3,334 | 81.16% | | Goodwill | $10,152 | $56,324 | $(46,172) | -82.00% | | Debt | $34,864 | $36,956 | $(2,092) | -5.66% | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines the company's financial performance over specific periods, including revenues, expenses, and net loss Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | 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 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $20,450 | $23,097 | $42,224 | $47,609 | | Gross profit | $11,533 | $13,218 | $23,717 | $27,990 | | Operating loss | $(819) | $(2,069) | $(50,487) | $(4,348) | | Net loss | $(2,282) | $(2,927) | $(52,622) | $(7,621) | | Basic and diluted loss per share | $(0.05) | $(0.07) | $(1.19) | $(0.18) | | Goodwill impairment | $- | $- | $47,951 | $- | [Condensed Consolidated Statements of Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) This section presents the net loss and other comprehensive income or loss components, reflecting changes in equity from non-owner sources Condensed Consolidated Statements of Comprehensive Loss Highlights (in thousands) | 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 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(2,282) | $(2,927) | $(52,622) | $(7,621) | | Foreign currency translation adjustments | $2,622 | $(128) | $3,914 | $(911) | | Other comprehensive income (loss) | $2,659 | $(94) | $3,968 | $(678) | | Comprehensive income (loss) | $377 | $(3,021) | $(48,654) | $(8,299) | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) This section details changes in the company's equity accounts, including common stock, additional paid-in capital, accumulated deficit, and other comprehensive loss Stockholders' Equity Changes (in thousands) | Metric | Balance at Dec 31, 2024 | Net Loss (6 months) | Other Comprehensive Loss (6 months) | Balance at June 30, 2025 | | :---------------------- | :---------------------- | :------------------ | :---------------------------------- | :----------------------- | | Common Stock | $441 | $4 | $- | $445 | | Additional Paid-in Capital | $236,579 | $1,072 | $- | $237,622 | | Accumulated Deficit | $(158,010) | $(52,622) | $- | $(210,632) | | Accumulated Other Comprehensive Loss | $(15,670) | $- | $3,968 | $(11,702) | | Total Stockholders' Equity | $63,340 | $(52,622) | $3,968 | $15,733 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Cash Flow Highlights (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2025 | 2024 | | :------------------------------------ | :----- | :----- | | Net cash provided by operating activities | $5,741 | $557 | | Net cash (used in) provided by investing activities | $(916) | $233 | | Net cash used in financing activities | $(2,462) | $(878) | | Increase (decrease) in cash and cash equivalents | $3,334 | $(235) | | Cash and cash equivalents at end of period | $7,442 | $4,048 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the condensed consolidated financial statements [1. Basis of Presentation and Summary of Significant Accounting Policies](index=9&type=section&id=1.%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) The financial statements are unaudited and prepared in accordance with SEC rules, with certain disclosures condensed or omitted. The Company's ability to continue as a going concern is in substantial doubt due to outstanding debt obligations and the uncertainty of refinancing by December 5, 2025. Estimates are used in financial reporting, and actual results may differ - Substantial doubt exists about the Company's ability to continue as a going concern due to outstanding debt and uncertain refinancing by December 5, 2025[20](index=20&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk) Other Operating Expenses (in thousands) | Expense Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Employee retention tax credit fees | $170 | $- | $341 | $472 | | Unclaimed property audits expense | $- | $(147) | $- | $347 | | Restructuring expenses | $30 | $396 | $123 | $396 | | Total other operating expenses | $200 | $249 | $464 | $1,215 | - The Company is assessing the impact of recently issued accounting pronouncements: ASU No. 2023-09 (Income Taxes, effective Dec 2025) and ASU No. 2024-03 (Expense Disaggregation, effective Dec 2026)[24](index=24&type=chunk)[25](index=25&type=chunk) [2. Earnings (Loss) per Share](index=10&type=section&id=2.%20Earnings%20%28Loss%29%20per%20Share) Basic and diluted loss per share calculations are presented, showing a significant increase in loss per share for the six months ended June 30, 2025, compared to the prior year Basic and Diluted Loss Per Share (in thousands, except per share data) | 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 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(2,282) | $(2,927) | $(52,622) | $(7,621) | | Weighted average shares outstanding - basic | 44,303 | 43,486 | 44,200 | 43,443 | | Basic loss per share | $(0.05) | $(0.07) | $(1.19) | $(0.18) | | Diluted loss per share | $(0.05) | $(0.07) | $(1.19) | $(0.18) | [3. Revenues](index=11&type=section&id=3.%20Revenues) Revenue decreased across most categories and geographic regions for both the three and six months ended June 30, 2025, primarily driven by lower sales of instruments, equipment, software, and accessories, and reduced customer advances Revenues by Type (in thousands) | Revenue Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Instruments, equipment, software and accessories | $18,178 | $21,292 | $38,043 | $44,051 | | Service, maintenance and warranty contracts | $2,272 | $1,805 | $4,181 | $3,558 | | Total revenues | $20,450 | $23,097 | $42,224 | $47,609 | Revenues by Geographic Region (in thousands) | Region | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | United States | $9,656 | $10,805 | $19,483 | $21,788 | | Americas - Other | $422 | $663 | $1,251 | $1,424 | | Europe, Middle East and Africa | $6,588 | $6,599 | $12,618 | $13,222 | | China | $2,451 | $3,249 | $5,185 | $7,631 | | Asia - Other | $1,333 | $1,781 | $3,687 | $3,544 | | Total | $20,450 | $23,097 | $42,224 | $47,609 | Contract Liabilities (in thousands) | Contract Liability Type | June 30, 2025 | December 31, 2024 | Change | Percentage Change | | :------------------------------------ | :------------ | :---------------- | :----- | :---------------- | | Deferred revenue (Service, maintenance, warranty) | $1,434 | $1,560 | $(126) | -8% | | Installation and training | $611 | $806 | $(195) | -24% | | Customer advances | $1,098 | $1,440 | $(342) | -24% | | Total short-term contract liabilities | $3,143 | $3,806 | $(663) | -17% | | Long-term service, maintenance and warranty contracts | $258 | $- | $258 | 100% | | Total contract liabilities | $3,401 | $3,806 | $(405) | -11% | [4. Goodwill and Long-Lived Assets](index=12&type=section&id=4.%20Goodwill%20and%20Long-Lived%20Assets) The Company recorded a significant goodwill impairment charge of $48.0 million for the three months ended March 31, 2025, triggered by a sustained decrease in stock price, recent operating results, liquidity risk, and macroeconomic conditions. No further impairment was required as of June 30, 2025 - A goodwill impairment charge of **$48.0 million** was recorded for the three months ended March 31, 2025, due to a sustained decrease in stock price, operating results, liquidity risk, and macroeconomic conditions[32](index=32&type=chunk)[34](index=34&type=chunk) Goodwill Carrying Amount (in thousands) | Metric | Amount | | :-------------------------- | :------- | | Carrying amount at Dec 31, 2024 | $56,324 | | Goodwill impairment | $(47,951) | | Effect of change in currency translation | $1,779 | | Carrying amount at June 30, 2025 | $10,152 | Intangible Assets, Net (in thousands) | Intangible Asset Type | June 30, 2025 Net | December 31, 2024 Net | | :-------------------------- | :---------------- | :-------------------- | | Customer relationships | $4,749 | $5,153 | | Technology and software development | $3,419 | $4,841 | | Trade names and patents | $753 | $943 | | Total amortizable intangible assets | $8,921 | $10,937 | | Indefinite-lived intangible assets | $218 | $195 | | Total intangible assets | $9,139 | $11,132 | [5. Balance Sheet Information](index=14&type=section&id=5.%20Balance%20Sheet%20Information) This section provides details on inventories and other current liabilities, highlighting the increase in employee retention tax credit funds held as liabilities due to received refunds Inventories (in thousands) | Inventory Type | June 30, 2025 | December 31, 2024 | | :--------------- | :------------ | :---------------- | | Finished goods | $5,935 | $5,222 | | Work in process | $1,556 | $2,754 | | Raw materials | $14,764 | $15,269 | | Total | $22,255 | $23,245 | Other Current Liabilities (in thousands) | Liability Type | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Compensation | $2,124 | $1,714 | | Employee retention tax credit funds | $5,420 | $3,154 | | Total | $12,473 | $9,409 | - The Company received **$2.2 million** in ERTC refunds during the six months ended June 30, 2025, and **$3.2 million** in 2024, which are included in other current liabilities[39](index=39&type=chunk) [6. Marketable Equity Securities](index=15&type=section&id=6.%20Marketable%20Equity%20Securities) The Company sold all its remaining Harvard Apparatus Regenerative Technology, Inc. (HRGN) shares during the six months ended June 30, 2024, resulting in a $1.6 million loss on equity securities. No HRGN stock was held in the current period - The Company sold all remaining HRGN shares during the six months ended June 30, 2024, generating **$1.9 million** in proceeds and recording a **$1.6 million** loss on equity securities. No HRGN shares were held as of June 30, 2025[42](index=42&type=chunk) [7. Leases](index=15&type=section&id=7.%20Leases) The Company's operating lease liabilities increased to $8.45 million as of June 30, 2025, with a weighted average remaining lease term of 4.6 years and a discount rate of 8.0% Operating Lease Information (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Operating lease right-of-use assets | $7,131 | $6,132 | | Total operating lease liabilities | $8,450 | $7,539 | | Weighted average remaining lease term (years) | 4.6 | 5.2 | | Weighted average discount rate | 8.0% | 8.9% | Future Minimum Lease Payments for Operating Leases (in thousands) | Year Ending December 31, | Amount | | :----------------------- | :----- | | 2025 (remainder of year) | $997 | | 2026 | $2,216 | | 2027 | $2,200 | | 2028 | $2,138 | | 2029 | $1,899 | | Thereafter | $808 | | Total lease payments | $10,258 | | Less imputed interest | $(1,808) | | Total operating lease liabilities | $8,450 | [8. Debt](index=16&type=section&id=8.%20Debt) The Company's total debt decreased slightly to $34.86 million as of June 30, 2025. The Company was not in compliance with refinancing milestones and financial covenants, leading to the August 2025 Amendment which waived defaults but increased the interest rate to SOFR plus 700 bps and requires refinancing or repayment by December 5, 2025 Debt Breakdown (in thousands) | Debt Type | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Term loan | $22,700 | $24,700 | | Revolving line | $12,650 | $12,650 | | Less: unamortized deferred financing costs | $(486) | $(394) | | Total debt | $34,864 | $36,956 | - The Company was not in compliance with refinancing milestones and quarterly financial covenants as of June 30, 2025. The August 2025 Amendment waived these defaults but increased the interest rate margin to **SOFR plus 700 bps** and requires refinancing or repayment by December 5, 2025[51](index=51&type=chunk)[52](index=52&type=chunk) - The effective interest rate on borrowings increased to **8.8%** for the three months ended June 30, 2025 (from 7.9% in 2024) and **8.7%** for the six months ended June 30, 2025 (from 7.8% in 2024)[48](index=48&type=chunk) [9. Derivatives](index=17&type=section&id=9.%20Derivatives) The Company uses an interest rate swap contract to hedge against variable SOFR-based debt, effectively converting $18.9 million of debt to a fixed annual rate of 4.75%. This swap is treated as an effective cash flow hedge - An interest rate swap contract with a notional amount of **$18.9 million** (as of June 30, 2025) converts SOFR-based variable interest to a fixed annual rate of **4.75%**, maturing on December 22, 2025[54](index=54&type=chunk)[55](index=55&type=chunk) Effect of Cash Flow Hedge on OCI and Earnings (in thousands) | 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 | | :---------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Gain recognized in OCI on derivatives | $37 | $34 | $54 | $233 | | Amounts reclassified from AOCI to interest expense | $(17) | $44 | $(34) | $91 | [10. Fair Value Measurements](index=19&type=section&id=10.%20Fair%20Value%20Measurements) The Company's interest rate swap agreement is measured at fair value using the market approach technique, classified as Level 2 in the fair value hierarchy Fair Value of Interest Rate Swap Agreement (in thousands) | Asset (Liability) | Fair Value as of June 30, 2025 | Fair Value as of December 31, 2024 | | :------------------------ | :----------------------------- | :--------------------------------- | | Interest rate swap agreement | $(44) | $(99) | [11. Stock-Based Compensation](index=19&type=section&id=11.%20Stock-Based%20Compensation) Stock-based compensation expense decreased for both the three and six months ended June 30, 2025, compared to 2024. As of June 30, 2025, $2.2 million in compensation costs for unvested awards remains unrecognized, expected to be recognized over approximately 1.4 years Stock-Based Compensation Expense Allocation (in thousands) | Expense Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of revenues | $31 | $66 | $61 | $118 | | Sales and marketing expenses | $106 | $159 | $224 | $289 | | General and administrative expenses | $240 | $927 | $599 | $1,698 | | Research and development expenses | $95 | $126 | $188 | $221 | | Total stock-based compensation | $472 | $1,278 | $1,072 | $2,326 | - Total unrecognized compensation costs related to unvested awards were **$2.2 million** as of June 30, 2025, with a weighted average recognition period of approximately **1.4 years**[59](index=59&type=chunk) - The aggregate fair value of RSUs that vested during the six months ended June 30, 2025, was **$0.2 million**, down from **$0.5 million** in 2024[60](index=60&type=chunk) [12. Income Tax](index=21&type=section&id=12.%20Income%20Tax) The Company reported an income tax expense for the three months ended June 30, 2025, and a benefit for the six months, with effective tax rates significantly lower than the U.S. statutory rate primarily due to the tax effect of goodwill impairment and changes in valuation allowances Income Tax Expense (Benefit) and Effective Tax Rates | 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 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income tax expense (benefit) | $28 | $(353) | $(426) | $(143) | | Effective tax rate | 1.2% | 10.8% | 0.8% | 1.8% | - The lower effective tax rate for the six months ended June 30, 2025, was primarily due to the tax effect of goodwill impairment and the release of reserves related to uncertain tax positions[64](index=64&type=chunk)[101](index=101&type=chunk) [13. Commitments and Contingent Liabilities](index=21&type=section&id=13.%20Commitments%20and%20Contingent%20Liabilities) The Company is subject to routine claims and lawsuits, which management does not expect to have a material adverse effect. An unclaimed property audit was completed in Q2 2024, resulting in a credit for the three months ended June 30, 2024 - Management believes that the outcome of current legal matters will not have a material adverse effect on the Company's business, results of operations, financial condition, or cash flows[66](index=66&type=chunk) - A credit of **$(0.1) million** was recorded during the three months ended June 30, 2024, related to the completion of an unclaimed property audit[67](index=67&type=chunk) [14. Restructuring Costs](index=21&type=section&id=14.%20Restructuring%20Costs) The Company initiated additional restructurings during the first half of 2025, expecting to incur $0.1 million in severance costs primarily from headcount reductions in North America and Europe, with completion anticipated by year-end 2025 - Additional restructurings initiated in H1 2025 are expected to incur **$0.1 million** in severance costs due to headcount reductions in North America and Europe, with completion by December 31, 2025[70](index=70&type=chunk) Changes in Accrued Liability for Restructuring (in thousands) | Metric | Severance | | :-------------------------- | :-------- | | Balance at December 31, 2024 | $82 | | Restructuring costs | $123 | | Cash payments | $(176) | | Effect of change in currency translation | $2 | | Balance at June 30, 2025 | $31 | [15. Segment Information](index=23&type=section&id=15.%20Segment%20Information) The Company operates as a single operating segment, with the chief operating decision maker (CODM) allocating resources and assessing performance based on consolidated net income (loss) and available liquidity - The Company conducts business as a single operating segment, with consolidated net income (loss) as the key measure for resource allocation and performance assessment[72](index=72&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial performance, condition, and liquidity, highlighting revenue declines due to market conditions and tariffs, significant goodwill impairment, and ongoing challenges with debt compliance and refinancing [Overview](index=24&type=section&id=Overview) This section introduces Harvard Bioscience, Inc. as a global developer and manufacturer of life science technologies, products, and services - Harvard Bioscience, Inc. is a leading global developer, manufacturer, and seller of technologies, products, and services for life science applications, serving academic institutions, government laboratories, and pharmaceutical/biotechnology organizations[74](index=74&type=chunk) [Trends and Developments](index=24&type=section&id=Trends%20and%20Developments) This section discusses key factors impacting the company's performance, including declining demand, government funding uncertainties, tariffs, and debt covenant non-compliance - Revenue has been negatively impacted by softening worldwide demand from academic research institutions and CROs, uncertainties in government funding (e.g., NIH), and increased tariffs on international trade, particularly between the U.S. and China[75](index=75&type=chunk) - As of June 30, 2025, the Company was not in compliance with certain refinancing milestones and financial covenants under its Credit Agreement, though a waiver was obtained via the August 2025 Amendment[77](index=77&type=chunk) [Selected Results of Operations](index=25&type=section&id=Selected%20Results%20of%20Operations) The Company experienced a decline in revenues and gross profit for both the three and six months ended June 30, 2025, primarily due to reduced demand and tariffs. Operating expenses decreased due to compensation reductions, but a significant goodwill impairment charge led to a substantial net loss for the six-month period Selected Results of Operations (Three Months Ended June 30, in thousands) | Metric | 2025 | % of revenue | 2024 | % of revenue | | :-------------------------- | :----- | :----------- | :----- | :----------- | | Revenues | $20,450 | 100.0% | $23,097 | 100.0% | | Gross profit | $11,533 | 56.4% | $13,218 | 57.2% | | Sales and marketing expenses | $4,539 | 22.2% | $5,395 | 23.4% | | General and administrative expenses | $4,262 | 20.8% | $5,686 | 24.6% | | Research and development expenses | $2,189 | 10.7% | $2,626 | 11.4% | | Interest expense | $791 | 3.9% | $749 | 3.2% | | Loss on equity securities | $- | 0.0% | $281 | 1.2% | | Income tax expense (benefit) | $28 | 0.1% | $(353) | -1.5% | Selected Results of Operations (Six Months Ended June 30, in thousands) | Metric | 2025 | % of revenue | 2024 | % of revenue | | :-------------------------- | :----- | :----------- | :----- | :----------- | | Revenues | $42,224 | 100.0% | $47,609 | 100.0% | | Gross profit | $23,717 | 56.2% | $27,990 | 58.8% | | Sales and marketing expenses | $9,510 | 22.5% | $11,299 | 23.7% | | General and administrative expenses | $9,447 | 22.4% | $11,649 | 24.5% | | Research and development expenses | $4,510 | 10.7% | $5,511 | 11.6% | | Goodwill impairment | $47,951 | 113.6% | $- | 0.0% | | Interest expense | $1,593 | 3.8% | $1,500 | 3.2% | | Loss on equity securities | $- | 0.0% | $1,593 | 3.3% | | Income tax benefit | $(426) | -1.0% | $(143) | -0.3% | - Revenues decreased by **11.5%** for the three months and **11.3%** for the six months ended June 30, 2025, primarily due to softening worldwide demand from academic research institutions and CROs, and the impact of reciprocal tariffs[80](index=80&type=chunk)[91](index=91&type=chunk) - Gross profit decreased by **12.7%** for the three months and **15.3%** for the six months ended June 30, 2025, with gross margin declining to **56.4%** and **56.2%** respectively, due to lower revenues, under-absorption of fixed manufacturing costs, and a higher mix of lower-margin products[81](index=81&type=chunk)[92](index=92&type=chunk) - Operating expenses (Sales & Marketing, G&A, R&D) decreased across the board for both periods, primarily due to reduced compensation costs[82](index=82&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk) - A non-cash goodwill impairment charge of **$48.0 million** was recorded for the six months ended June 30, 2025, triggered by a sustained decrease in stock price, recent operating results, liquidity risk, and macroeconomic conditions[97](index=97&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) The Company's cash and cash equivalents increased, but it faces substantial doubt about its ability to continue as a going concern due to non-compliance with debt covenants. An August 2025 amendment waived defaults but requires refinancing or repayment by December 5, 2025, with increased interest rates. Operating cash flow significantly improved, while investing and financing activities used more cash - Cash and cash equivalents increased to **$7.4 million** as of June 30, 2025, from **$4.1 million** at December 31, 2024[102](index=102&type=chunk) - The Company received **$5.4 million** in Employee Retention Tax Credit (ERTC) refunds as of June 30, 2025, with **$1.1 million** received in Q2 2025[103](index=103&type=chunk) - Substantial doubt exists about the Company's ability to continue as a going concern due to non-compliance with debt covenants and the uncertainty of refinancing or repaying the Credit Agreement by December 5, 2025[106](index=106&type=chunk) - Net cash provided by operating activities significantly increased to **$5.7 million** for the six months ended June 30, 2025, from **$0.6 million** in 2024, driven by inventory reduction and ERTC refunds[108](index=108&type=chunk) - Net cash used in investing activities was **$0.9 million** for the six months ended June 30, 2025, a shift from **$0.2 million** provided in 2024, primarily due to capital expenditures[109](index=109&type=chunk) - Net cash used in financing activities increased to **$2.5 million** for the six months ended June 30, 2025, from **$0.9 million** in 2024, mainly due to debt repayments and issuance costs[110](index=110&type=chunk) [Impact of Foreign Currencies](index=29&type=section&id=Impact%20of%20Foreign%20Currencies) This section analyzes the effects of foreign currency exchange rate fluctuations on the company's revenues, expenses, and comprehensive loss - Changes in foreign currency exchange rates had a favorable effect on revenues (**$0.4 million** for Q2 2025, **$0.2 million** for H1 2025) and an unfavorable effect on expenses (**$0.4 million** for Q2 2025, **$0.3 million** for H1 2025)[112](index=112&type=chunk) - A significant gain of **$2.6 million** (Q2 2025) and **$3.9 million** (H1 2025) was recognized in other comprehensive loss due to foreign equity translation adjustments, compared to losses in the prior year[113](index=113&type=chunk) [Critical Accounting Policies](index=29&type=section&id=Critical%20Accounting%20Policies) This section confirms no material changes to critical accounting policies since the last annual report - There have been no material changes to the critical accounting policies since the Annual Report on Form 10-K for the fiscal year ended December 31, 2024[115](index=115&type=chunk) [Recent Accounting Pronouncements](index=29&type=section&id=Recent%20Accounting%20Pronouncements) This section directs to Note 1 for details on recently issued accounting pronouncements - Information on recent accounting pronouncements is detailed in Note 1 to the Condensed Consolidated Financial Statements[116](index=116&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This item is marked as not applicable for the reporting period - This section is not applicable for the current reporting period[117](index=117&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) The Company's disclosure controls and procedures were deemed ineffective as of June 30, 2025, due to previously reported material weaknesses in controls over the order-to-cash cycle and physical inventory counts. Remediation efforts are ongoing and expected to continue throughout fiscal year 2025 - The Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were not effective as of June 30, 2025[119](index=119&type=chunk) - Material weaknesses were previously identified in internal control over financial reporting related to controls over (i) the order-to-cash cycle and (ii) physical inventory counts[120](index=120&type=chunk) - Remediation efforts for the material weaknesses are ongoing and expected to continue throughout fiscal year 2025, with effectiveness demonstrated after a sufficient period of operation and testing[121](index=121&type=chunk) [PART II - OTHER INFORMATION](index=31&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This part covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note 13 to the Condensed Consolidated Financial Statements, indicating no material adverse effects are expected - Information on legal proceedings is incorporated by reference from Note 13 of the financial statements[125](index=125&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) The Company faces significant risks including substantial debt and non-compliance with credit agreement covenants, which could lead to immediate repayment demands. Additionally, the Company is non-compliant with Nasdaq's minimum bid price requirement, risking delisting and negative impacts on its business and stock liquidity - The Company has substantial debt and was non-compliant with certain covenants as of June 30, 2025. While a waiver was granted, failure to comply with future terms or refinance by December 5, 2025, could result in immediate debt repayment[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk) - The Company received a Nasdaq notice for non-compliance with the **$1.00** minimum bid price requirement and has until October 1, 2025, to regain compliance, potentially requiring a reverse stock split[130](index=130&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk) - Delisting from Nasdaq would negatively impact the Company's ability to raise capital, stock liquidity, and could lead to loss of confidence from employees, customers, and investors[133](index=133&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities during the reporting period - No unregistered sales of equity securities occurred during the period covered by this report[134](index=134&type=chunk) [Item 3. Defaults Upon Senior Securities](index=32&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[135](index=135&type=chunk) [Item 4. Mine Safety Disclosures](index=32&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is marked as not applicable - This section is not applicable[135](index=135&type=chunk) [Item 5. Other Information](index=32&type=section&id=Item%205.%20Other%20Information) The Company regained compliance with Nasdaq's Audit Committee composition rule on July 17, 2025, but remains non-compliant with the Minimum Bid Price Requirement - As of July 17, 2025, the Company regained compliance with Nasdaq Listing Rule 5605(c)(2)(A) regarding Audit Committee composition[136](index=136&type=chunk) - The Company has not yet regained compliance with the Nasdaq Minimum Bid Price Requirement[136](index=136&type=chunk) [Item 6. Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the 10-Q report, including various agreements, certifications, and XBRL documents - The exhibits include Letter Agreements, Incentive Plans, Employment Agreements, Certifications (302 and 906), and Inline XBRL documents[138](index=138&type=chunk) [SIGNATURES](index=34&type=section&id=SIGNATURES) The report is duly signed on behalf of Harvard Bioscience, Inc. by its Chief Executive Officer, John Duke, and Interim Chief Financial Officer, Mark Frost, as of August 11, 2025 - The report was signed by John Duke, Chief Executive Officer, and Mark Frost, Interim Chief Financial Officer, on August 11, 2025[141](index=141&type=chunk)[142](index=142&type=chunk)

[Third Quarter Summary](index=1&type=section&id=Third%20Quarter%20Summary) Energy Services of America's Q3 2025 showed significant sequential improvement, driven by strong Gas & Water Distribution revenue growth and an increased backlog, with an optimistic outlook for future projects [Management Commentary and Outlook](index=1&type=section&id=Management%20Commentary%20and%20Outlook) Energy Services of America reported significant sequential improvement in Q3 2025, driven by strong Gas & Water Distribution revenue and increased backlog, with an optimistic outlook for future projects - Third quarter results show **significant sequential improvement**, entering more favorable spring and summer weather[5](index=5&type=chunk) - Strong revenue growth from the prior-year quarter primarily driven by the **Gas & Water Distribution business line**[5](index=5&type=chunk) - Backlog increased by **$24 million sequentially**, partly due to increased opportunities for water and wastewater projects[5](index=5&type=chunk) - Optimistic outlook for fiscal 2025 and 2026, with strong opportunities in electrical, mechanical, general construction, and ongoing water/wastewater pipe replacement projects[5](index=5&type=chunk) [Key Financial Highlights](index=1&type=section&id=Key%20Financial%20Highlights) For the fiscal third quarter ended June 30, 2025, Energy Services of America reported a 21% increase in revenue, while gross profit and net income decreased, and backlog saw a substantial increase | Metric | Q3 FY25 | Q3 FY24 (YoY Change) | | :----- | :------ | :------------------- | | Revenue | $103.6 million | +21% | | Gross profit | $12.0 million | vs. $15.3 million | | Net income | $2.1 million | ($0.12 per diluted share) | | Backlog | $304.4 million | vs. $250.9 million | [Fiscal Third Quarter 2025 Financial Results](index=2&type=section&id=Third%20Quarter%20Fiscal%202025%20Financial%20Results) This section details Energy Services of America's Q3 2025 financial performance, including revenue, profitability, expenses, and backlog, with comparative data [Revenue Analysis](index=2&type=section&id=Revenue%20Analysis) Total revenues for the third quarter of fiscal 2025 increased by 21% year-over-year, primarily driven by increased work in the Gas & Water Distribution and Electrical, Mechanical and General business lines, which offset a decline in Gas & Petroleum Transmission | Metric | Q3 FY25 | Q3 FY24 | YoY Change | | :----- | :------ | :------ | :--------- | | Total Revenues | $103.6 million | $85.9 million | +21% | - Year-over-year increase primarily driven by increased work within the **Gas & Water Distribution** and **Electrical, Mechanical and General business lines**[7](index=7&type=chunk) - Increase more than offset a decline in **Gas & Petroleum Transmission**[7](index=7&type=chunk) [Profitability Analysis](index=2&type=section&id=Profitability%20Analysis) Gross profit decreased to $12.0 million, resulting in a lower gross margin of 11.6% due to reduced operational efficiency, while net income significantly declined to $2.1 million, or $0.12 per diluted share, compared to $17.5 million, or $1.06 per diluted share in the prior-year quarter, which had benefited from a substantial legal judgment | Metric | Q3 FY25 | Q3 FY24 | | :----- | :------ | :------ | | Gross profit | $12.0 million | $15.3 million | | Gross margin | 11.6% | 17.8% | | Net income | $2.1 million | $17.5 million | | Diluted EPS | $0.12 | $1.06 | - Decrease in gross margin related to **lower operational efficiency** resulting in less fixed cost coverage[8](index=8&type=chunk) - Prior-year quarter net income included approximately **$11.4 million**, or **$0.69 per diluted share**, from a legal judgment[10](index=10&type=chunk) [Selling and Administrative Expenses](index=2&type=section&id=Selling%20and%20Administrative%20Expenses) Selling and administrative expenses increased to $8.8 million from $6.8 million in the prior-year quarter, primarily attributed to additional personnel hired for expected growth, the acquisition of Tribute in December 2024, and increased consulting and audit fees due to the company becoming an accelerated filer | Metric | Q3 FY25 | Q3 FY24 | | :----- | :------ | :------ | | S&A Expenses | $8.8 million | $6.8 million | - Increase primarily related to **additional personnel hired** to secure and manage work for expected growth[9](index=9&type=chunk) - Increase also due to the **acquisition of Tribute in December 2024** and increased consulting and audit fees from becoming an an accelerated filer[9](index=9&type=chunk) [Backlog](index=2&type=section&id=Backlog) The company's backlog as of June 30, 2025, reached $304.4 million, demonstrating a sequential increase from $280.7 million as of March 31, 2025, and a year-over-year increase from $250.9 million as of June 30, 2024 | Date | Backlog | | :--- | :------ | | June 30, 2025 | $304.4 million | | March 31, 2025 | $280.7 million | | June 30, 2024 | $250.9 million | [Consolidated Statements of Operations (Unaudited)](index=3&type=section&id=Consolidated%20Statements%20of%20Operations%20(Unaudited)) This section presents the unaudited consolidated statements of operations, offering a detailed comparison of financial performance for the three and nine months ended June 30, 2025, versus 2024, covering key line items from revenue to net income | | Three Months | | Three Months | | Nine Months | | Nine Months | | --- | --- | --- | --- | --- | --- | --- | --- | | | Ended | | Ended | | Ended | | Ended | | | June 30, | | June 30, | | June 30, | | June 30, | | | 2025 | | 2024 | | 2025 | | 2024 | | Revenue | $ 103,601,585 | | $ 85,923,760 | | $ 280,926,850 | | $ 247,214,602 | | Cost of revenues | 91,618,987 | | 70,615,936 | | 258,602,810 | | 214,828,263 | | Gross profit | 11,982,598 | | 15,307,824 | 22,324,040 | | 32,386,339 | | Selling and administrative expenses | 8,814,545 | | 6,815,191 | 25,602,253 | | 21,335,862 | | Income (loss) from operations | 3,168,053 | | 8,492,633 | (3,278,213) | | 11,050,477 | | Other income (expense) | | | | | | | | | Proceeds from lawsuit judgement | - | | 15,634,499 | | - | 15,634,499 | | Other nonoperating expense | (38,529) | | (27,446) | (107,407) | | (33,935) | | Interest expense | (781,198) | | (546,960) | (2,140,686) | | (1,771,560) | | (Loss) gain on sale of equipment | (128,710) | | 571 | 50,532 | | 292,166 | | | (948,437) | | 15,060,664 | (2,197,561) | | 14,121,170 | | Income (loss) before income taxes | 2,219,616 | | 23,553,297 | (5,475,774) | | 25,171,647 | | Income tax expense (benefit) | 137,987 | | 6,039,670 | (1,612,718) | | 6,724,653 | | Net income (loss) | $ 2,081,629 | $ 17,513,627 | $ (3,863,056) | | $ 18,446,994 | | Weighted average shares outstanding-basic | 16,625,761 | | 16,565,827 | 16,644,028 | | 16,567,034 | | Weighted average shares-diluted | 16,666,135 | | 16,597,982 | 16,644,028 | | 16,602,903 | | Earnings (loss) per share-basic | $ 0.13 | $ 1.06 | $ (0.23) | | $ 1.11 | | Earnings (loss) per share-diluted | $ 0.12 | $ 1.06 | $ (0.23) | | $ 1.11 | [Adjusted EBITDA Reconciliation (Unaudited)](index=3&type=section&id=Adjusted%20EBITDA%20Reconciliation%20(Unaudited)) This section provides a reconciliation of net income (loss) to Adjusted EBITDA for the three and nine months ended June 30, 2025, and 2024, detailing adjustments for income tax, interest, non-operating expenses, lawsuit income, gain/loss on equipment sale, and depreciation/amortization | | Three Months | | Three Months | | Nine Months | | Nine Months | | --- | --- | --- | --- | --- | --- | --- | --- | | | Ended | | Ended | | Ended | | Ended | | | June 30, | | June 30, | | June 30, | | June 30, | | | 2025 | | 2024 | | 2025 | | 2024 | | Net income (loss) | $ 2,081,629 | $ 17,513,627 | $ (3,863,056) | $ 18,446,994 | | Add (less): Income tax expense (benefit) | 137,987 | 6,039,670 | (1,612,718) | 6,724,653 | | Add: Interest expense, net of interest income | 781,198 | 546,960 | 2,140,686 | 1,771,560 | | Add: Non-operating expense | 38,529 | 27,446 | 107,407 | 33,935 | | Less: Income from lawsuit judgement | - | (15,634,499) | - | (15,634,499) | | Add (less): Loss (gain) on sale of equipment | 128,710 | (571) | (50,532) | (292,166) | | Add: Depreciation and intangible asset amortization expense | 3,291,414 | 2,264,418 | 9,172,704 | 6,662,650 | | Adjusted EBITDA | $ 6,459,467 | $ 10,757,051 | $ 5,894,491 | $ 17,713,127 | [Use of Non-GAAP Financial Measures](index=4&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) This section explains the company's use of non-GAAP financial measures, particularly Adjusted EBITDA, to provide additional insights into operational performance [Explanation of Non-GAAP Measures](index=4&type=section&id=Explanation%20of%20Non-GAAP%20Measures) Energy Services of America utilizes non-GAAP financial measures, specifically Adjusted EBITDA, to provide additional insight into its operating performance and cash-generating activities, believing these measures offer a consistent comparison and are useful to investors, while also acknowledging their limitations as analytical tools and emphasizing that they should not replace GAAP results - Non-GAAP financial measures, such as **Adjusted EBITDA**, are included to enhance the understanding of operating performance[12](index=12&type=chunk) - Adjusted EBITDA is considered a relevant indicator of trends relating to the **cash generating activity of operations** and facilitates comparison with other companies[12](index=12&type=chunk) - Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for GAAP financial results[12](index=12&type=chunk) [About Energy Services](index=4&type=section&id=About%20Energy%20Services) This section provides an overview of Energy Services of America Corporation, including its operations, service areas, and core values [Company Profile](index=4&type=section&id=Company%20Profile) Energy Services of America Corporation is a contractor and service company based in Huntington, WV, operating primarily in the mid-Atlantic and Central United States, serving various industries including natural gas, petroleum, water distribution, automotive, chemical, and power, employing over 1,000 individuals with core values of safety, quality, and production - Energy Services of America Corporation (NASDAQ: ESOA) is headquartered in **Huntington, WV**[13](index=13&type=chunk) - Operates primarily in the **mid-Atlantic and Central regions** of the United States[13](index=13&type=chunk) - Provides services to customers in the **natural gas, petroleum, water distribution, automotive, chemical, and power industries**[13](index=13&type=chunk) - Employs **1,000+ employees** on a regular basis, with core values of safety, quality, and production[13](index=13&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section provides a disclaimer regarding forward-looking statements, highlighting inherent risks and uncertainties that may cause actual results to differ [Disclaimer Regarding Future Performance](index=4&type=section&id=Disclaimer%20Regarding%20Future%20Performance) This section contains a standard disclaimer for forward-looking statements, indicating that such statements involve known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied, cautioning investors against undue reliance and stating that the company disclaims any obligation to update these statements - Statements using words like 'believes,' 'anticipates,' 'intends,' 'expects' are considered **forward-looking statements**[14](index=14&type=chunk) - Such statements involve known and unknown risks, uncertainties, and other factors that may cause **actual results to differ materially**[14](index=14&type=chunk) - Factors include general economic and business conditions, changes in business strategy, integration of acquired businesses, and risks related to financial statement restatement[14](index=14&type=chunk) - Prospective investors are cautioned not to place undue reliance on forward-looking statements, and the Company disclaims any obligation to update them[14](index=14&type=chunk) [Contact Information](index=4&type=section&id=Contact) This section provides essential contact details for investor relations inquiries [Investor Relations Contact](index=4&type=section&id=Investor%20Relations%20Contact) This section provides the contact details for investor relations inquiries, handled by Three Part Advisors - Contact persons: **Steven Hooser or John Beisler** at Three Part Advisors[15](index=15&type=chunk) - Contact phone number: **(214) 872-2710**[15](index=15&type=chunk)

[Introduction](index=1&type=section&id=Introduction) [Parties and Amendment Effective Date](index=1&type=section&id=Parties%20and%20Amendment%20Effective%20Date) This section identifies the parties involved in the Amendment No. 2 to the Amended and Restated Water Gathering and Disposal Agreement, including Solaris Midstream DB-NM, LLC as 'Gatherer' and a consortium of entities (COG Operating LLC, COG Production LLC, Concho Oil & Gas LLC, and COG Acreage LP) collectively as 'Producer', and specifies the effective date of this amendment - The Amendment No. 2 to Amended and Restated Water Gathering and Disposal Agreement is made effective as of **July 29, 2025**[2](index=2&type=chunk) - The parties to the amendment are **Solaris Midstream DB-NM, LLC** ('Gatherer') and **COG Operating LLC, COG Production LLC, Concho Oil & Gas LLC, and COG Acreage LP** (collectively 'Producer')[2](index=2&type=chunk) [Recitals and Purpose of Amendment](index=1&type=section&id=Recitals%20and%20Purpose%20of%20Amendment) This section provides the background for the amendment, noting the original agreement's effective date and a previous amendment, and explicitly states the primary objective of the current amendment: to extend the Primary Term of the existing agreement - The original Amended and Restated Water Gathering and Disposal Agreement was effective **June 11, 2020**, and previously amended on **February 15, 2024**[4](index=4&type=chunk) - The primary purpose of this Amendment is to extend the Primary Term of the Agreement by **seven (7) years**[4](index=4&type=chunk) [Core Amendments](index=1&type=section&id=Core%20Amendments) [Amendment to Section 7.1 (Term)](index=1&type=section&id=Amendment%20to%20Section%207.1%20(Term)) This section details the modification of Section 7.1 of the original agreement, which governs the term. The Primary Term is extended, and provisions for further extensions and termination notices are outlined - Section 7.1 of the Agreement is deleted and replaced, extending the Primary Term until **May 31, 2040**[5](index=5&type=chunk) - The Producer has the option to extend the Primary Term by an additional **five (5) years**, up to two times, requiring at least **365 days**' prior notice[5](index=5&type=chunk) - Termination by either Party at the end of the Primary Term or any yearly extension requires at least **365 days**' prior written notice[5](index=5&type=chunk) [Limited Effect of Amendment](index=2&type=section&id=Limited%20Effect%20of%20Amendment) This clause confirms that, except for the explicitly stated changes, all other terms and provisions of the original agreement remain fully effective. It also establishes that this Amendment takes precedence in the event of any conflict with the original agreement - All terms and provisions of the original Agreement remain in full force and effect, except as expressly provided in this Amendment[6](index=6&type=chunk) - In the event of a conflict between this Amendment and the Agreement, this Amendment shall control[6](index=6&type=chunk) [General Legal Provisions](index=2&type=section&id=General%20Legal%20Provisions) [Representations and Warranties](index=2&type=section&id=Representations%20and%20Warranties) Each Party provides standard legal assurances, representing and warranting that they possess the full authority to execute and fulfill the obligations set forth in this Amendment, and that the Amendment constitutes a legally binding obligation - Each Party represents and warrants that it has the full right, power, and authority to enter into and perform its obligations under this Amendment[7](index=7&type=chunk) - This Amendment has been duly executed and delivered, constituting a legal, valid, and binding obligation of each Party[7](index=7&type=chunk) [Miscellaneous Provisions](index=2&type=section&id=Miscellaneous%20Provisions) This section covers various standard legal clauses, including the governing law, dispute resolution mechanisms, provisions for successors and assigns, the interpretive role of headings, the allowance for execution in counterparts, and the declaration that this document, along with the original agreement, constitutes the entire agreement between the parties - This Amendment and any disputes shall be governed by the law of the **State of Texas**[10](index=10&type=chunk) - The Dispute Resolution and Arbitration provisions of GTC Section XIII(b) of the Agreement are incorporated[10](index=10&type=chunk) - This Amendment may be executed in one or more counterparts, including electronically[10](index=10&type=chunk) - The Agreement and this Amendment constitute the sole and entire agreement between the Parties[10](index=10&type=chunk) [Execution and Acknowledgment](index=3&type=section&id=Execution%20and%20Acknowledgment) [Producer Signatures and Acknowledgments](index=3&type=section&id=Producer%20Signatures%20and%20Acknowledgments) This section contains the signatures and notarized acknowledgments for each of the Producer entities: COG Operating LLC, COG Production LLC, Concho Oil & Gas LLC, and COG Acreage LP, all executed by Garrett Rychlik as Attorney-in-Fact - **Garrett Rychlik**, Attorney-in-Fact, signed on behalf of **COG Operating LLC, COG Production LLC, Concho Oil & Gas LLC, and COG Acreage LP**[12](index=12&type=chunk)[14](index=14&type=chunk)[16](index=16&type=chunk)[18](index=18&type=chunk) - **Erica Adkins**, Notary Public for the **State of Texas**, acknowledged the signatures for all Producer entities on **July 29, 2025**[13](index=13&type=chunk)[15](index=15&type=chunk)[17](index=17&type=chunk)[19](index=19&type=chunk) [Gatherer Signature and Acknowledgment](index=7&type=section&id=Gatherer%20Signature%20and%20Acknowledgment) This section includes the signature and notarized acknowledgment for the Gatherer entity, Solaris Midstream DB-NM, LLC, executed by Amanda Brock as CEO - **Amanda Brock**, CEO, signed on behalf of **Solaris Midstream DB-NM, LLC** ('Gatherer')[20](index=20&type=chunk) - **Melody Chappell**, Notary Public for the **State of Texas**, acknowledged the signature for the Gatherer on **July 30, 2025**[21](index=21&type=chunk)

Second Quarter 2025 Financial Results Overview Viant Technology reported strong Q2 2025 financial performance with double-digit growth across key metrics and significant business achievements [Q2 2025 Financial Performance (GAAP & Non-GAAP)](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) Viant Technology reported strong double-digit year-over-year growth in Q2 2025 across key financial metrics, including revenue, gross profit, contribution ex-TAC, and adjusted EBITDA. Net income attributable to Viant Technology Inc. saw a significant increase Q2 2025 Financial Performance | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Change (%) | | :----------------------------------- | :--------------------- | :--------------------- | :--------- | | **GAAP** | | | | | Revenue | $77,853 | $65,866 | 18 % | | Gross profit | $35,883 | $30,744 | 17 % | | Net income | $1,787 | $1,488 | 20 % | | Net income attributable to Viant Technology Inc. | $290 | $55 | 427 % | | Earnings per share of Class A common stock—basic | $0.02 | $0.00 | NM | | Earnings per share of Class A common stock—diluted | $0.02 | $0.00 | NM | | **Non-GAAP** | | | | | Contribution ex-TAC | $48,372 | $41,558 | 16 % | | Adjusted EBITDA | $11,283 | $9,600 | 18 % | | Non-GAAP net income | $8,012 | $7,207 | 11 % | | Non-GAAP earnings per share of Class A common stock—basic | $0.10 | $0.08 | 25 % | | Non-GAAP earnings per share of Class A common stock—diluted | $0.09 | $0.08 | 13 % | [Recent Business Achievements](index=1&type=section&id=Recent%20Business%20Highlights) Viant achieved record CTV ad spend, launched the third phase of ViantAI, established a substantial growth pipeline with major U.S. advertisers, and continued its stock repurchase program - Generated record Connected TV (CTV) ad spend in the second quarter, accounting for approximately **45% of total ad spend** on the platform[3](index=3&type=chunk) - Launched the third phase of the ViantAI product suite, 'AI Measurement and Analysis,' designed to revolutionize reporting with on-demand insights[3](index=3&type=chunk) - Established a growth pipeline of over **$250 million** in potential annualized ad spend opportunities associated with major U.S. advertisers[3](index=3&type=chunk) - Purchased **3.8 million shares** of Class A common stock from May 1, 2024, through August 8, 2025, for a total of **$50.2 million**, including **$28.5 million** year-to-date[3](index=3&type=chunk) - Appointed ad-tech industry veteran and AI expert, Brett Wilson, to the Viant board of directors as an independent director[4](index=4&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) CEO Tim Vanderhook highlighted record Q2 results driven by strategic execution, including advancements in CTV Direct Access and addressability solutions, and the successful launch of AI Measurement and Analysis. CFO Larry Madden emphasized strong revenue, contribution ex-TAC, and adjusted EBITDA growth, along with a robust new business pipeline - CEO Tim Vanderhook noted record Q2 results, driven by strategic priorities like advancing CTV Direct Access, expanding Household ID and IRIS_ID, and launching ViantAI's AI Measurement and Analysis[2](index=2&type=chunk) - CFO Larry Madden reported **18% revenue growth**, **16% contribution ex-TAC growth**, and **18% adjusted EBITDA growth** year-over-year, citing a robust pipeline of new business opportunities with major U.S. advertisers[4](index=4&type=chunk) Financial Outlook & Company Information This section provides Q3 2025 financial guidance, an overview of Viant Technology Inc., forward-looking statements, and investor contact details [Q3 2025 Financial Guidance](index=3&type=section&id=For%20the%20third%20quarter%202025,%20the%20Company%20expects) Viant provided guidance for Q3 2025, expecting revenue between $83.5 million and $86.5 million, and adjusted EBITDA between $14.0 million and $15.0 million Q3 2025 Financial Guidance | Metric | Q3 2025 Guidance (in millions) | | :-------------------------- | :----------------------------- | | Revenue | $83.5 - $86.5 | | Contribution ex-TAC | $51.0 - $53.0 | | Non-GAAP operating expenses | $37.0 - $38.0 | | Adjusted EBITDA | $14.0 - $15.0 | [About Viant Technology Inc.](index=4&type=section&id=About%20Viant) Viant Technology Inc. is a leader in AI-powered programmatic advertising, offering an omnichannel platform for connected TV campaigns. The company is focused on autonomous advertising solutions and has received industry recognition - Viant Technology Inc. (NASDAQ: DSP) is a leader in AI-powered programmatic advertising, dedicated to driving innovation in digital marketing with an omnichannel platform built for connected TV[12](index=12&type=chunk) - The company is building the future of fully autonomous advertising solutions with ViantAI and has been recognized with awards such as Best Demand-Side Platform by MarTech Breakthrough and the Business Intelligence Group's AI Excellence Award[12](index=12&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section contains standard forward-looking statements regarding future performance, operating results, growth prospects, and strategic initiatives, emphasizing that actual results may differ due to various risks and uncertainties - The press release contains forward-looking statements, including financial guidance, growth prospects, strategic priorities, and impacts from ViantAI, which are subject to risks and uncertainties that may cause actual results to differ materially[13](index=13&type=chunk)[14](index=14&type=chunk) [Investor Relations & Contacts](index=3&type=section&id=Investor%20Relations%20%26%20Contacts) Viant provides details for accessing supplemental financial information, conference call and webcast details, and contact information for media and investors. The company also outlines its official channels for investor communication - Supplemental financial and other information can be accessed through Viant's Investor Relations website at investors.viantinc.com, with the Quarterly Report on Form 10-Q expected to be filed on August 11, 2025[8](index=8&type=chunk)[9](index=9&type=chunk) - Viant will host a conference call and webcast to discuss financial results on Monday, August 11, 2025, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time), accessible via its Investor Relations website[10](index=10&type=chunk) - Viant uses its Investor Relations website, LinkedIn accounts of its CEO and COO, and X (formerly Twitter) accounts (@viant_tech, @cvanderhook) to post information important to investors[10](index=10&type=chunk) Condensed Consolidated Financial Statements (GAAP) This section presents Viant Technology Inc.'s GAAP condensed consolidated statements of operations, balance sheets, and cash flows [Condensed Consolidated Statements of Operations](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) The condensed consolidated statements of operations show revenue growth for both the three and six months ended June 30, 2025, compared to 2024, alongside changes in operating expenses and net income/loss Condensed Consolidated Statements of Operations | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Revenue | $77,853 | $65,866 | $148,495 | $119,259 | | Total operating expenses | $77,841 | $66,637 | $153,342 | $125,722 | | Income (loss) from operations | $12 | $(771) | $(4,847) | $(6,463) | | Net income (loss) | $1,787 | $1,488 | $(1,520) | $(1,726) | | Net income (loss) attributable to Viant Technology Inc. | $290 | $55 | $(900) | $(892) | | Basic EPS (Class A common stock) | $0.02 | $0.00 | $(0.06) | $(0.05) | | Diluted EPS (Class A common stock) | $0.02 | $0.00 | $(0.06) | $(0.05) | [Condensed Consolidated Balance Sheets](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) The condensed consolidated balance sheets present the company's financial position as of June 30, 2025, compared to December 31, 2024, showing changes in assets, liabilities, and stockholders' equity Condensed Consolidated Balance Sheets | Metric (in thousands) | As of June 30, 2025 | As of December 31, 2024 | | :------------------------------------ | :------------------ | :---------------------- | | Cash and cash equivalents | $172,816 | $205,048 | | Accounts receivable, net of allowances | $135,338 | $146,951 | | Total current assets | $315,750 | $362,489 | | Total assets | $397,972 | $440,804 | | Total current liabilities | $123,379 | $145,451 | | Total liabilities | $142,369 | $166,729 | | Total equity | $255,603 | $274,075 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) The condensed consolidated statements of cash flows detail the cash generated from or used in operating, investing, and financing activities for the six months ended June 30, 2025, and 2024 Condensed Consolidated Statements of Cash Flows | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $16,482 | $18,207 | | Net cash used in investing activities | $(12,566) | $(8,758) | | Net cash used in financing activities | $(36,148) | $(16,163) | | Net decrease in cash and cash equivalents | $(32,232) | $(6,714) | | Cash and cash equivalents at end of period | $172,816 | $209,744 | Non-GAAP Financial Measures and Reconciliations This section defines Viant's key non-GAAP financial measures and provides detailed reconciliations to their GAAP equivalents [Definitions and Rationale for Non-GAAP Measures](index=9&type=section&id=Non-GAAP%20Financial%20Measures_Definitions) This section defines key non-GAAP financial measures used by Viant, including Contribution ex-TAC, Non-GAAP operating expenses, Adjusted EBITDA, Non-GAAP net income, and Non-GAAP earnings per share, explaining their relevance to management and investors - Contribution ex-TAC is a key profitability measure, calculated as gross profit plus other platform operations expense, used by management and the board to evaluate operating performance and trends[23](index=23&type=chunk) - Non-GAAP operating expenses exclude Traffic Acquisition Costs (TAC), stock-based compensation, depreciation, amortization, and certain non-core items, providing insight into core controllable costs[24](index=24&type=chunk) - Adjusted EBITDA is defined as net income (loss) before interest, taxes, depreciation, amortization, stock-based compensation, and certain non-core items, used to evaluate core operating performance and trends[25](index=25&type=chunk) - Non-GAAP net income (loss) and Non-GAAP earnings (loss) per share adjust GAAP figures for stock-based compensation, certain non-core items, and their tax effects, aiding in period-to-period comparisons and strategic decisions[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk) [Reconciliation of Non-GAAP Financial Measures to GAAP](index=10&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) Detailed tables are provided to reconcile non-GAAP financial measures such as Contribution ex-TAC, Non-GAAP operating expenses, Adjusted EBITDA, Non-GAAP net income, and Non-GAAP EPS to their most directly comparable GAAP counterparts for the reported periods Contribution ex-TAC Reconciliation | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Gross profit | $35,883 | $30,744 | $66,445 | $54,257 | | Add: Other platform operations | $12,489 | $10,814 | $24,657 | $21,422 | | **Contribution ex-TAC** | **$48,372** | **$41,558** | **$91,102** | **$75,679** | Non-GAAP Operating Expenses Reconciliation | Metric (in thousands) | 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 operating expenses | $77,841 | $66,637 | $153,342 | $125,722 | | Less: Traffic acquisition costs | $(29,481) | $(24,308) | $(57,393) | $(43,580) | | Less: Stock-based compensation | $(6,343) | $(5,537) | $(11,982) | $(9,977) | | Less: Depreciation and amortization | $(4,559) | $(4,167) | $(8,883) | $(8,313) | | **Non-GAAP operating expenses** | **$37,089** | **$31,958** | **$74,417** | **$63,004** | Adjusted EBITDA Reconciliation | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net income (loss) | $1,787 | $1,488 | $(1,520) | $(1,726) | | Add back: Interest income, net | $(1,484) | $(2,359) | $(3,208) | $(4,740) | | Add back: Provision for (benefit from) income taxes | $(291) | $99 | $(444) | — | | Add back: Depreciation and amortization | $4,559 | $4,167 | $8,883 | $8,313 | | Add back: Stock-based compensation | $6,343 | $5,537 | $11,982 | $9,977 | | **Adjusted EBITDA** | **$11,283** | **$9,600** | **$16,685** | **$12,675** | Non-GAAP Net Income Reconciliation | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net income (loss) | $1,787 | $1,488 | $(1,520) | $(1,726) | | Add back: Stock-based compensation | $6,343 | $5,537 | $11,982 | $9,977 | | Less: Income tax benefit (expense) related to Viant Technology Inc.'s share of non-GAAP pre-tax income (loss) | $(487) | $(486) | $(653) | $(547) | | **Non-GAAP net income** | **$8,012** | **$7,207** | **$10,801** | **$8,555** | Non-GAAP EPS Reconciliation | 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 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Basic EPS (Class A common stock) | $0.02 | $0.00 | $(0.06) | $(0.05) | | Non-GAAP Basic EPS (Class A common stock) | $0.10 | $0.08 | $0.14 | $0.09 | | Diluted EPS (Class A common stock) | $0.02 | $0.00 | $(0.06) | $(0.05) | | Non-GAAP Diluted EPS (Class A common stock) | $0.09 | $0.08 | $0.12 | $0.09 |