Shares of Kingsway Financial Services Inc. (KFS) have plunged 12.9% since the company released its third-quarter 2025 results for the period ended Sept. 30, 2025. Over the same post-earnings span, the S&P 500 gained 0.8%. The stock’s performance has also lagged the broader market over the past month, sliding 19.2% while the S&P 500 advanced 3.6%.KFS’ Earnings SnapshotIn the third quarter of 2025, Kingsway Financial generated revenues of $37.2 million, up 36.9% from $27.1 million a year earlier. Growth was d ...

Core Insights - Kingsway Financial Services Inc. reported a revenue growth of 37% to $37.2 million for the three and nine months ended September 30, 2025 [1] - KSX revenue experienced a significant increase of 104% to $19.0 million, marking a notable performance [1] - Extended warranty revenue grew by 2% to $18.2 million, with cash sales in this segment up by 14% [1] - For the first time, KSX represented a majority of the company's revenue [1] - Management will host a conference call on November 6, 2025, at 5 p.m. ET to discuss these results [1]

Core Insights - Kingsway Financial Services Inc. (KFS) reported a consolidated revenue increase of 16.9% year over year to $30.9 million for Q2 2025, primarily driven by a 42.1% surge in the Kingsway Search Xcelerator (KSX) segment [2][3] - Despite revenue growth, the company experienced a widening net loss of $3.2 million compared to $2.2 million a year ago, and adjusted consolidated EBITDA fell by 32.6% to $1.7 million [2][3] Financial Performance - The KSX segment's revenue rose to $13.3 million from $9.3 million, while the Extended Warranty segment saw a modest increase to $17.6 million from $17.1 million, reflecting a 3.1% growth [2] - KSX adjusted EBITDA climbed 31% to $2.4 million, while Extended Warranty adjusted EBITDA dropped 61.8% to $0.6 million [3] - Total net debt decreased to $46.2 million from $52 million, supported by a $15.7 million private placement [4] Management Commentary - CEO JT Fitzgerald described the quarter as a "major inflection point," highlighting the capital infusion from the PIPE transaction and an increased acquisition target for KSX [5][11] - CFO Kent Hansen emphasized that the Extended Warranty segment remains cash generative despite near-term EBITDA pressure [6] Growth Drivers - The strong revenue growth was attributed to KSX's expansion and improved performance in portfolio companies, alongside a one-time legal expense of $0.6 million that will not recur [7] - Management expressed confidence in sustaining growth momentum through the KSX platform and plans to remain active in the M&A market [8] Recent Acquisitions - In Q2 2025, Kingsway Financial closed three acquisitions, including Roundhouse Electric & Equipment Co. for $22.4 million and AAA Flexible Pipe Cleaning Corp. for up to $5 million [10]

Investment Highlights - Kingsway has an Adjusted EBITDA run-rate of approximately $18 to $19 million [10, 89] - Kingsway possesses approximately $792 million in Net Operating Losses (NOLs) for tax-advantaged cash flow [10, 89] Extended Warranty Business - The Extended Warranty segment had TTM Pro Forma Revenue of $11138 thousand as of 9/30/22, excluding PWSC revenue [30] - The Extended Warranty segment had Warranty Segment Adjusted EBITDA of $11138 thousand as of TTM 9/30/22 [30] - The extended warranty industry is estimated at over $121 billion globally and forecast to grow at 74% CAGR through 2027 [24] - Extended Warranty Borrowings is $167 million with interest rate of 533% [33] Kingsway Search Xcelerator (KSX) - Ravix Financial, Inc was acquired for $11 million (~40X TTM Adjusted EBITDA) [45] - CSuite Financial Partners was acquired for $85 million (~45X TTM Adjusted EBITDA) [51] - Secure Nursing Service, Inc was acquired for $109 million (~40X TTM Adjusted EBITDA) [62] - Ravix Financial Inc has TTM 9/30/22 Revenue of $156 million [47]