·

Revenues increased 43% to $7.6M from $5.3M in Q3 2022

·

Adjusted EBITDA of $1.8M, up 45% from Q3 2022

·

Subscriptions increased to 1,050 compared to 971 in Q3 2022

·

Revenue - Total revenue was $7,569,000, a 43% increase from $5,280,000 in Q3 2022 and a 22% decrease from $9,651,000 in Q2 2023. Communications revenue increased 74% from Q3 2022 and 2% from Q2 2023. The increase from Q3 2022 is primarily due to an increase in revenue generated by Newswire, which was acquired on November 1, 2022, as well as an increase in revenue generated from ACCESSWIRE, partially offset by a decrease in webcasting and events revenue due to less virtual events and annual meetings. Communications revenue was 80% of total revenue for Q3 2023, compared to 66% for Q3 2022 and 62% for Q2 2023. Revenue from our Compliance business decreased 17% from Q3 2022 and 60% from Q2 2023. The decrease in Compliance revenue from Q2 2023 is due to seasonality as well as a few significant projects which occurred in Q2 2023 and did not occur in Q3 2023.  The decrease from Q3 2022 is also related to a decrease in revenue from our print and proxy fulfillment services due to smaller projects during the quarter, as well as transfer agent revenue due to a decrease in corporate actions and directives during the quarter.

·

Gross Margin - Gross margin for Q3 2023 was $5,772,000, or 76% of revenue, compared to $4,068,000, or 77% of revenue, during Q3 2022 and $7,315,000, or 76%, in Q2 2023. Communications gross margin percentage was 75%, compared to 77% in Q3 2022 and 76% in Q2 2023. The decrease in gross margin percentage for the period is primarily due to an increase in distribution costs as we continue to expand our reach and global footprint.

·

Operating Income - Operating income was $593,000 for Q3 2023, as compared to $789,000 during Q3 2022. The decrease in operating income is primarily related to amortization expense attributed to intangible assets acquired during the Newswire acquisition.

·

Net Income - On a GAAP basis, net income was $273,000, or $0.07 per diluted share during Q3 2023, compared to net income of $686,000, or $0.19 per diluted share during Q3 2022.

·

Operating Cash Flows - Cash flows from operations for Q3 2023 were $287,000 compared to $1,381,000 in Q3 2022.

·

Non-GAAP Measures – Q3 2023 EBITDA was $1,503,000, or 20% of revenue, compared to $952,000, or 18% of revenue during Q3 2022. Adjusted EBITDA was $1,756,000, or 23% of revenue for Q3 2023 compared to $1,213,000, or 23% for Q3 2022. Non-GAAP net income for Q3 2023 was $1,015,000, or $0.27 per diluted share, compared to $978,000, or $0.27 per diluted share, during Q3 2022. Adjusted free-cash flow was $127,000 for Q3 2023 compared to $1,441,000 for Q3 2022.

·

Revenue - Total revenue was $25,839,000, a 58% increase from $16,375,000 during the first nine months of 2022. Communications revenue increased 76% during the first nine months of 2023 compared to the same period of the prior year. The increase in Communications revenue was primarily related to the acquisition of Newswire, which is all included in Communications revenue. We also generated increased revenue from our ACCESSWIRE business, which increased 10% compared to the same period of the prior year. These increases were partially offset by a decrease in webcasting and events revenue, primarily due to less virtual events and annual meetings as compared to the prior year. Communications revenue was 72% of total revenue for the first nine months of 2023, compared to 65% for the same period in 2022. Revenue from our Compliance business increased 25% during the first nine months of 2023 compared to the same period of the prior year. The increase in Compliance revenue was primarily related to an increase in revenue from our print and proxy fulfillment services due to a few significant transactions which occurred during the first half of the year as well as an increase in revenue from our transfer agent services due to an increase in corporate actions and directives during the first half of 2023.

·

Gross Margin - Gross margin for the first nine months of 2023 was $19,877,000 or 77% of revenue, compared to $12,567,000, also 77% of revenue, during the same period of 2022. Communications gross margin percentage was 77% during the first nine months of 2023, down from 78% during the first nine months of 2022. The decrease in gross margin percentage is primarily due to an increase in distribution costs as we continue to expand our reach and global footprint.

·

Operating Income - Operating income was $2,921,000 for the first nine months of 2023, as compared to $2,625,000 during the same period of 2022. The increase in operating income is related to the increase in revenue, partially offset by an increase in operating expenses.

·

Net Income - On a GAAP basis, net income was $1,492,000, or $0.39 per diluted share, during the first nine months of 2023, compared to $2,043,000, or $0.55 per diluted share, during the first nine months of 2022. Despite the increase in operating income, net income decreased because it was impacted by interest expense associated with our new credit agreement and the debt incurred to finance the Newswire acquisition, as well as a one-time cost to extinguish our debt associated with the Newswire transaction, partially offset by income resulting from the change in fair value of our interest rate swap.

·

·

Non-GAAP Measures – EBITDA for the first nine months of 2023 was $5,147,000, or 20% of revenue, compared to $3,112,000, or 19% of revenue, during the same period of 2022. Adjusted EBITDA was $6,663,000, or 26% of revenue, for the first nine months of 2023, compared to $3,851,000, or 24%, for the same period of 2022. Non-GAAP net income for the first nine months of 2023 was $4,314,000, or $1.13 per diluted share, compared to $2,883,000, or $0.77 per diluted share, during the same period of 2022. Adjusted free-cash flow was $2,638,000 for the first nine months of 2023 compared to $3,123,000 for the same period of 2022.

·

As of September 30, 2023, we had 12,171 customers who had an active contract during the past twelve months, compared to 7,084 as of September 30, 2022. Active customers as of September 30, 2023, included 4,877 customers from Newswire.

·

During the quarter, the Company had 1,050 active customers subscribing to our products, compared to 971 customers during the same period last year. The Company defines a subscription as any customer who enters into a contract for a minimum of one year for one or more products.

Net income:

Adjustments:

Depreciation and amortization

Interest expense (income)

Income tax expense

EBITDA:

Acquisition and/or integration expenses (1)

Other non-recurring (income) expenses (2)

Stock-based compensation expense (3)

Adjusted EBITDA:

Net income:

Adjustments:

Depreciation and amortization

Interest expense (income)

Income tax expense

EBITDA:

Acquisition and/or integration expenses (1)

Other non-recurring expenses (2)

Stock-based compensation expense (3)

Adjusted EBITDA:

(1)

This adjustment gives effect to one-time corporate projects, including acquisition and/or integration expenses, incurred during the periods.

(2)

For the three months ended September 30, 2023, this adjustment gives effect to a gain recorded on the change in fair value of our interest rate swap of $165,000. For the nine months ended September 30, 2023, this adjustment gives effect to a $370,000 payment related to early extinguishment of our Seller Note and one-time, non-recurring expenses of $45,000, partially offset by a gain recorded on the change in fair value of our interest rate swap of $379,000. For the nine months ended September 30, 2022, this adjustment gives effect to a one-time executive recruiting fee of $90,000.

(3)

The adjustments represent stock-based compensation expense related to awards of stock options, restricted stock units, or common stock in exchange for services. Although we expect to continue to award stock in exchange for services, the amount of stock-based compensation is excluded as it is subject to change as a result of one-time or non-recurring projects.

Net income:

Adjustments:

Amortization of intangible assets (1)

Stock-based compensation (2)

Other unusual items (3)

Tax impact of adjustments (4)

Non-GAAP net income:

Nine Months Ended September 30,

2023

2022

Amount

Per diluted share

Amount

Per diluted share

Net income:

Adjustments:

Amortization of intangible assets (1)

Stock-based compensation (2)

Other unusual items (3)

Tax impact of adjustments (4)

Non-GAAP net income:

1)

The adjustments represent the amortization of intangible assets related to acquired assets and companies.

2)

The adjustments represent stock-based compensation expense related to awards of stock options, restricted stock units or common stock in exchange for services. Although the Company expects to continue to award stock in exchange for services, the amount of stock-based compensation is excluded as it is subject to change as a result of one-time or non-recurring projects.

3)

For the three months ended September 30, 2023, this adjustment gives effect to a gain recorded on the change in fair value of our interest rate swap of $165,000, partially offset by one-time corporate projects, including acquisition and/or integration related expenses incurred during the period of $59,000. For the nine months ended September 30, 2023, this adjustment gives effect to one-time corporate projects, including acquisition and/or integration related expenses incurred during the period of $430,000 and a $370,000 payment related to early extinguishment of our Seller Note and $45,000 of one-time, non-recurring expenses, partially offset by a gain recorded on the change in fair value of our interest rate swap of $379,000. For the nine months ended September 30, 2022, this adjustment gives effect to one-time corporate projects, including acquisition and/or integration related expenses incurred during the period of $90,000 and a one-time executive recruiting fee of $90,000.

4)

This adjustment gives effect to the tax impact of all non-GAAP adjustments at the current Federal rate of 21%.

Net cash provided by operating activities

Payments for purchase of fixed assets and capitalized software

Free cash flow

Cash paid for acquisition and/or integration items(1)

Adjusted free cash flow

Nine Months Ended September 30,

2023

2022

Amount

Amount

Net cash provided by operating activities

Payments for purchase of fixed assets and capitalized software

Free cash flow

Cash paid for acquisition and/or integration items(1)

Cash paid for other unusual items(2)

Adjusted free cash flow

1)

This adjustment gives effect to one-time corporate projects, including acquisition and/or integration expenses, paid during the periods.

2)

For the nine months ended September 30, 2023, this adjustment gives effect to a one-time payment of approximately $370,000 related to the early termination of the note payable associated with the Newswire acquisition. For the nine months ended September 30, 2022, this adjustment gives effect to payment of a one-time executive recruiting fee payment of $60,000.

Date:

November 9, 2023

Time:

4:30 p.m. eastern time

Toll & Toll Free:

973-528-0011 | 888-506-0062

Access Code:

512722

Live Webcast:

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Toll & Toll Free:

919-882-2331| 877-481-4010

Passcode:

49403

Webcast Replay & Transcript

http://www.issuerdirect.com/earnings-calls-and-scripts/

ASSETS

Current assets:

Cash and cash equivalents

Accounts receivable (net of allowance for doubtful accounts of $1,018 and $745, respectively)

Income tax receivable

Other current assets

Total current assets

Capitalized software (net of accumulated amortization of $3,408 and $3,364, respectively)

Fixed assets (net of accumulated depreciation of $727 and $610, respectively)

Right-of-use asset – leases

Other long-term assets

Goodwill

Intangible assets (net of accumulated amortization of $8,877 and $6,821, respectively)

Total assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

Accrued expenses

Income taxes payable

Current portion of long-term debt

Deferred revenue

Total current liabilities

Long-term debt (net of debt discount of $92 and $0, respectively)

Deferred income tax liability

Lease liabilities – long-term

Total liabilities

Commitments and contingencies

Stockholders' equity:

Preferred stock, $0.001 par value, 1,000,000 shares authorized, no shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively.

Common stock $0.001 par value, 20,000,000 shares authorized, 3,811,649 and 3,791,020 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively.

Additional paid-in capital

Other accumulated comprehensive loss

Retained earnings

Total stockholders' equity

Total liabilities and stockholders’ equity

Revenues

Cost of revenues

Gross profit

Operating costs and expenses:

General and administrative

Sales and marketing expenses

Product development

Depreciation and amortization

Total operating costs and expenses

Operating income

Interest (expense) income, net

Other income, net

Income before taxes

Income tax expense

Net income

Income per share – basic

Income per share – fully diluted

Weighted average number of common shares outstanding – basic

Weighted average number of common shares outstanding – fully diluted

Cash flows from operating activities:

Net income

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

Bad debt expense

Deferred income taxes

Change in fair value of interest rate swaps

Stock-based compensation expense

Measurement period adjustments

Amortization of debt issuance costs

Changes in operating assets and liabilities:

Decrease (increase) in accounts receivable

Decrease (increase) in other assets

Increase (decrease) in accounts payable

Increase (decrease) in accrued expenses

Increase (decrease) in deferred revenue

Net cash provided by operating activities

Cash flows from investing activities:

Capitalized software

Purchase of fixed assets

Purchase of acquired business, net of cash received

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Exercise of stock options

Payment for stock repurchase and retirement

Payment of note payable

Proceeds from issuance of term loan

Payment for capitalized debt issuance costs

Net cash used in financing activities

Net change in cash and cash equivalents

Cash and cash equivalents – beginning

Currency translation adjustment

Cash and cash equivalents – ending

Supplemental disclosures:

Cash paid for income taxes

Cash paid for interest