ACCESS Newswire Inc. Q3 2025 earnings call

Welcome to ACCESS Newswire's third quarter 2025 earnings conference call. My name is Kristen Yacovelli, and I lead the company's webcast and events division as the Vice President of Webcasting. I've been with ACCESS for nearly 20 years, including my time with an organization that became part of ACCESS through an acquisition about six years ago. It's been an incredible journey watching the company grow and evolve into what it is today. I'm excited for what's ahead and proud to continue helping some of the world's leading brands and newly public companies share their stories each quarter. Before we begin, I'd like to remind everyone that statements made in this conference call concerning future revenues, results from operations, financial position, markets, economic conditions, product releases, partnerships, and any other statements that may be construed as predictions of future performance or events are forward-looking statements.

These statements involve known and unknown risks and uncertainties that may cause actual results to differ materially from those expressed or implied by such statements. We will also discuss certain non-GAAP financial measures, which are provided for informational purposes and should be considered in addition to, not as a substitute for GAAP results. With that said, I'll turn the call over to our Founder and Chief Executive Officer, Brian Balbirnie, and our Chief Financial Officer, Steve Knerr. Brian.

Thank you, Kristen. I think it's fair to say you, as well as many of us here at ACCESS, have a significant amount of industry experience. All the credit to you for leading for over 20 years what is probably over 50,000 webcasts with you and your team. Truly amazing. You are a rare breed, and I'm so very grateful for your customer-first passion and how you lead and mentor your team. Specifically, working over this past weekend for us with one of our new IPO customers who is doing their first earnings call today. Congratulations from me, America, and thank you. With that, good morning, everyone, and thank you for joining us today to review ACCESS Newswire's third quarter 2025 results. As always, Steve and I appreciate you taking the time to be with us today, specifically on this 106th Veterans Day.

Our 8-K and 10-Q will follow tomorrow as the SEC is closed on this holiday. Our third quarter results reflect continued progress in our core business and ongoing execution against our strategic priorities. We delivered both sequential and year-over-year revenue growth, meaningful improvement in profitability, and strong operating discipline, all while continuing to invest in our product and platform enhancements that will drive our future growth. Revenue for the quarter came in at $5.7 million, up 2% sequentially and year-over-year from $5.6 million. Adjusted EBITDA increased to $933,000, representing 16% of revenue, up from $546,000, or 10% in the same quarter of last year. Our gross margins held steadily at 75%, consistent with prior year levels, and operating loss improved significantly to $184,000 compared to a loss of $604,000 in Q3 of 2024.

These results reflect the positive impacts in our operational realignment earlier this year, our continued focus on cost control, and our accelerating shift to subscription-based revenue. Before I hand the call to Steve, I want to highlight a few metrics that show the health of our business. Total active customers grew to 12,445, up slightly from the prior quarter and year. Subscription customers increased to 972, representing modest sequential growth and continued retention strength. Average recurring revenue per subscribing customer also rose to $11,651, up 14% year-over-year, evidence that our value proposition is resonating and our upselling strategy is working. We're encouraged by the progress but equally focused on the road ahead, continuing to scale efficiently while driving innovation and expanding our share in the market. With that, I'll turn the call over to Steve to walk you through some of the financial results in more detail. Steve.

Thank you, Brian, and good morning, everyone. Happy Veterans Day to all of our former members of the Armed Forces. We are extremely grateful for your service and all you've done for our country. As Brian mentioned, Q3, another quarter of generating increased EBITDA and non-GAAP net income while increasing revenue and lowering operating expenses. I will now discuss some of the details which led to these results. Total revenue for the third quarter of 2025 was $5.7 million, an increase of $84,000, or 1.5% compared to $5.6 million for the same period of 2024. For the first nine months of 2025, total revenue was $16.8 million, a $411,000, or 2% decrease from $17.2 million for the same of the prior year. The increase in revenue for the quarter was due to an increase in our core press release revenue of 7% due to an increase in volume.

For the nine months ended September 30th, 2025, press release revenue increased 1%. However, this was more than offset by declines in revenue from our pro webcasting and IR website solutions. We anticipate increases in core press release revenue will lead to higher revenue growth rates in the quarters ahead. Gross margin percentages have remained relatively flat for both the three and nine months ended September 30th, 2025, as compared to the prior year at 75% and 76%, respectively. Although we have experienced increased distribution costs as we continue to expand our distribution footprint, we have been able to offset this with efficiencies in our operations teams in order to build scale. Gross margin increased $40,000, or 1%, and decreased $233,000, or 2%, for the three and nine months ended September 30th, 2025, respectively, as compared to the same periods of the prior year.

Moving to operating loss, we posted an operating loss from continuing operations of $184,000 for the third quarter of 2025 and $1.1 million for the first nine months of 2025, compared to operating losses of $604,002 during the same period of 2024. The decrease in operating loss is a result of lower operating expenses, which decreased $380,000, or 8%, and $1.1 million, or 7%, for the three and nine months ended September 30th, 2025, respectively, as we remain committed to developing efficiencies and optimizing our teams. General and administrative expenses decreased $409,000, or 22%, for the third quarter of 2025 compared to the third quarter of 2024 due to reduction in bad debt expense, employee-related expenses, as well as savings from indirect costs associated with the compliance business.

For the first nine months of 2025, general and administrative expenses decreased $185,000, or 3%, compared to the first nine months of 2024. This is due to the same reasons I just noted, however, was partially offset by a one-time benefit recorded in the first half of 2024 of approximately $340,000 due to the reversal of stock compensation related to the resignation of an executive officer. We will continue to seek opportunities to reduce G&A expenses and are currently negotiating a sublease on our corporate offices, which we anticipate could save us over $300,000 a year. Sales and marketing expenses increased $34,000, or 2%, and decreased $924,000, or 16%, for the three and nine months ended September 30th, 2025, as compared to the same periods of 2024. The decrease for the nine-month period is due to lower headcount throughout the first six months of the year.

However, as of the third quarter, the team has been built back to where it was a year ago. Product development expenses have remained consistent for the three and nine months ended September 30th, 2025, as compared to the same periods of the prior year. Decreases in costs related to consultants were partially offset by declines in capitalized software. Brian will talk further about some product enhancements coming this quarter and the early part of next year. As such, we will expect to begin to capitalize more product development expenses related to such enhancements. On a GAAP basis, we reported a loss from continuing operations of $45,000, or $0.01 per diluted share during the third quarter of 2025, compared to a net loss of $870,000, or $0.23 per diluted share during the third quarter of 2024.

For the first nine months of 2025, net loss from continuing operations was $1 million, or $0.27 per diluted share, compared to a net loss of $2.3 million, or $0.61 per diluted share in the first nine months of 2024. There was no activity for discontinued operations during the third quarter of 2025, compared to net income of $404,000, or $0.11 per diluted share during the third quarter of 2024. For the first nine months of 2025, net income from discontinued operations was almost $6 million, or $1.53 per diluted share, compared to $1.7 million, or $0.45 per diluted share for the same period of 2024. The increase is primarily a result of the gain on the sale of the compliance business.

Looking to some non-GAAP metrics, third quarter of 2025 EBITDA was $537,000, or 9% of revenue, compared to a loss of $212,000, or 4% of revenue for the third quarter of 2024. For the first nine months of 2025, EBITDA was $1 million, or 6% of revenue, compared to $70,000 for the first nine months of 2024. Adjusted EBITDA increased to $933,000, or 16% of revenue for the third quarter of 2025, compared to $546,000, or 10% of revenue for the third quarter of 2024. For the first nine months of 2025, Adjusted EBITDA more than doubled to $2.3 million, or 14% of revenue, compared to $961,000, or 6% of revenue for the first nine months of 2024.

Non-GAAP net income for the third quarter of 2025 increased $573,000 to $760,000, or $0.20 per diluted share, compared to $187,000, or $0.05 per diluted share in the third quarter of 2024. For the first nine months of 2025, non-GAAP net income increased to $1.5 million, or $0.39 per diluted share, compared to a non-GAAP loss of $78,000, or $0.02 per diluted share during the first nine months of 2024. We ended the quarter with $3.3 million of cash on hand. However, this was negatively impacted by cash outflow from operating activities of $582,000 during the third quarter of 2025. This was primarily due to the payment of over $1.1 million in taxes, primarily related to the gain on the sale of the compliance business.

Cash generated by operating activities was $1.5 million during the third quarter of 2024, where this includes cash generated from the compliance business. For the first nine months of 2025, cash flow generated by operating activities was $300,000, compared to $2.3 million during the first nine months of 2024. Again, the year-to-date amount for 2025 includes over $1.5 million paid in taxes, primarily related to the sale of the compliance business. Adjusted free cash flow was $418,000 for the third quarter of 2025, compared to $1.4 million for the third quarter of 2024. For the first nine months of 2025, amounted to $799,000, compared to $1.9 million for the first nine months of 2024. I will now turn it back over to Brian, who will provide some updates on the business, customers, subscriptions, and volumes, along with everything else we have planned for the remainder of the year. Brian?

Thank you, Steve. Let me start by saying that the third quarter showed solid execution across the board. Our focus remains on strengthening the core, scaling recurring revenue, and driving product-led growth. Before I speak on our outlook for the remaining part of the year and into next year, I wanted to reflect on the last nine months and what we've done to put the business in the best place for the future. We rebranded the business in January. We sold our legacy compliance business in February, thus reducing the debt by 83%, also reducing then our OPEX by 7%.

We retooled our entire back-office systems and processes, increased our focus on subscription-first approach sales, also increased subscription business to approximately 50% of our revenue, and we have continued to innovate our technology application by introducing AI agents that analyze content real-time to further our commitments to both myths and disinformation. As most of you know, we are a lean business, and in reflection, this is an amazing amount of work to accomplish in nine months, as well as continue to grow minimally and improve operating results. All that said, we know the growth is key to our long-term business and are poised to do this in 2026. Customer accounts and subscriptions at the beginning of the year were guided to achieve 1,500, and I want to talk about that for a minute.

When you consider that when we disposed of the compliance business, we did actually lose 300 subscription customers from that sale. That puts us in a correctly guided number of approximately 1,200 for our communications go-forward business. Today, we ended Q3 with 972, and we know that this number is aggressive to hit the target. As long as we see continued ARR improvement and enhanced retention with overall growth, we're setting ourselves up next year for an explosive year, both in ARR contribution and strong subscriber numbers. Here's how we're going to get there, both in our internal initiatives of what we call trade-up and trade-in over the last couple of quarters we've spoken about. First, trade-up.

We have significantly planned product upgrades that include advancements to our monitoring and delivery system that will include real-time results from over 30 social media platforms, the mentions, the value and sentiment, and the impact of your brands, as well as connectivity to one of the world's largest social media management platforms that allows users to schedule, publish, and analyze content across multiple social networks from a single dashboard. Combining this at year-end and into our Access PR platform, we will see lift in our ARR and provide further value to our customers. Second is the trade-in. As we expand our product offerings, we will benefit from being able to attract a larger total addressable market as enterprise customers and scale-up brands are craving an all-in-one platform that delivers all the tools needed to tell, manage, and monitor their brand.

Also, with the advancements of our #KeelTheReport strategy, we are going to be addressing one of the biggest issues in the PR market, and that's the distribution report. The industry is full of implied metrics and results that leave many brands wondering where the actual value is. We think it is time to open this up even more and put the data in the hands of the customers by simple prompts that will alert you in real time. From there, you can build a point-in-time report that delivers that executable document to you. Very soon, we will let the old-school distribution report rest in peace. We have also been busy this past quarter building a vertical we believe can be a contributor to the long-term future of our business.

Adding this in the third quarter, we call it the EDU program, a class curriculum component of our Access PR platform, where students and academics can use our PR writing platform, media database, monitoring and pitching tool, and a class real-life simulation at no cost. Our Give Back to the Next Generation enhances the skill development with leading applications that will prepare them for the workforce, understand the storytelling process, and improve what Access can do for them in their careers. We look forward to these students graduating and taking the Access PR platform with them in their first career job. Also, just in Q3, we were awarded something that we feel very special about, and it is called the Bateman Study. I want to read a quote from this press release.

As one of the most rewarding and challenging programs PRSSA offers, the Bateman allows students to gain hands-on experience with real clients while sharpening their research strategy and execution skills," said Jeneen Garcia, Chief Programs Officer at PRSSA. What we'll see is 100 colleges and thousands of students that will be challenging their undergraduate public relations students across the country to create comprehensive campaigns for a real-world client, us. This year's participating teams will develop strategic and creative solutions designed to build awareness and engagement for ACCESS Newswire, with a focus on showcasing how the company continues to support and elevate the communications industry. We look forward to judging the competition and early next year announcing the winners and results of that program. Back to the remaining part of this year and looking forward. Revenue trends and ARR growth.

Sequential revenue growth and improved profitability show that our strategy is working. ARR continues to rise, and we expand our subscription base and enhance the average value per customer. We expect to see continued improvement throughout the rest of the year, driving new product releases and deeper customer engagement. Our ARR per employee, one of our key internal performance metrics, continues to trend upwards. Operational efficiencies, automation, and the divestiture of our compliance business have allowed us to generate more recurring revenue per full-time employee. This metric demonstrates the scalability of our model and positions us well to meet our long-term profitability goals. Subscriptions and platform expansion. We're on track with our goals of transitioning the business to a majority subscription model. The number of subscription customers increased again this quarter, and the average ARR per subscriber now exceeds $11,650, a strong indicator of product adoption and retention.

Our focus remains on customer stickiness, ensuring that as we grow, our customers stay with us longer and adopt more of our platform capabilities. We are also advancing our AI-driven automation initiatives that began earlier this year. Our internal editorial validation system is now fully deployed, saving approximately 5% of the editorial time per release. By the end of this year, we'll roll out our customer-facing version, which is expected to further reduce our editorial efforts by an additional 5% and enhance content quality and consistency. Additionally, we remain on track to launch key social media integrations with leading management platforms before the end of this year, expanding how customers can distribute and measure their news across channels in real time. Lastly, like I just mentioned earlier, the #KeelTheReport, it is on track to offer a robust agentic agent AI-based real-time prompting and alerting system to our customers.

To summarize, we are executing against the plan and achieving measurable improvement each quarter. Our ARR per employee and per subscriber continues to rise. Our operational expenses remain well-managed, supporting long-term margin expansion. Our innovation, particularly around automation and integrated reporting, will drive our future growth and differentiation. Looking ahead for the remaining part of the quarter and into next year, our focus is very clear. Continue expanding subscription revenue and recurring ARR, drive gross margin efficiency while maintaining quality, deliver new product capabilities that enhance the customer experience, preserve cost discipline while supporting our growth initiatives. We expect continued sequential improvement in both revenue and Adjusted EBITDA in the fourth quarter. ACCESS is becoming a stronger, more predictable, and more profitable business. We have said we would do this, and we are. Now it's time to grow the top line in 2026 and beyond.

With that, I'll turn the call over to the operator for the question-and-answer session. Thank you.