Q2 2025 ACCESS Newswire Inc Earnings Call

Speaker #1: Welcome to ACCESS Newswire's second quarter 2025 earnings conference call. My name is Oscar Roque, and I work in the finance team as the accounting manager, and as of this September, I will have been here six years.

Oscar Roque: Welcome to Access Newswire's second quarter 2025 earnings conference call. My name is Oscar Roque, and I work in the finance team as the Accounting Manager. As of this September, I will have been here six years. I started working at the company in 2019 in the compliance division as an XBRL compliance specialist, and for the past three years in the accounting and finance department. It's such a pleasure to be your host today. In just a moment, you will hear from our Founder and Chief Executive Officer, Brian Balbirnie, and our Chief Financial Officer, Steven Knerr, who will walk you through the company's performance for the quarter.

Speaker #1: I started working at the company in 2019 in the compliance division as an XBRL compliance specialist and for the past three years in the accounting and finance department.

Speaker #1: It's such a pleasure to be your host today. In just a moment, you'll hear from our founder and chief executive officer, Brian Balbirnie, and our chief financial officer, Steve Knerr.

Speaker #1: Who will walk you through the company's performance for the quarter. Before we begin, I'd like to read a brief version of our safe harbor statement.

Oscar Roque: Before we begin, I would like to read a brief version of our safe harbor statement. I would like to remind you 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 a prediction of future performance or events are forward-looking statements, which may involve known and unknown risks, uncertainties, and other factors which may cause actual results to differ materially from those expressed or implied by such statements. Non-GAAP results will also be discussed on the call. The company believes the presentation of non-GAAP information provides useful supplementary data concerning the company's ongoing operations and is provided for informational purposes only. With that said, I would like to introduce the company's Founder and Chief Executive Officer, Brian Balbirnie, and our Chief Financial Officer, Steven Knerr. Brian?

Speaker #1: I'd like to remind you that statements made in this conference call concerning future revenues result from operations, financial position, markets, economic conditions, product releases, partnerships, and any other statements that may be construed as a prediction of future performance or events are forward-looking statements.

Speaker #1: Which may involve known and unknown risks, uncertainties, and other factors, which may cause actual results to differ materially from those expressed or implied by such statements.

Speaker #1: Non-GAAP results will also be discussed on the call. The company believes the presentation of non-GAAP information provides useful supplementary data concerning the company's ongoing operations and is provided for informational purposes only.

Speaker #1: With that said, I'd like to introduce the company's founder and Chief Executive Officer, Brian Balbirnie, and our Chief Financial Officer, Steven Knerr. Brian,

Speaker #3: Good Good morning and thank you, Oscar. I've enjoyed watching you progress over the years from working within our compliance team at the beginning then becoming a member of our accounting department.

Brian Balbirnie: Good morning, and thank you, Oscar. I have enjoyed watching you progress over the years from working within our compliance team at the beginning, then becoming a member of our accounting department to you sitting and passing your CPA exams just recently. By passing, I mean crushing it. Now, in the recent quarter, becoming our new Accounting Manager. Congratulations, sir. You exemplify everything a company and a coworker could ever ask for. Your passion for the business, your coworkers, and our customers are truly amazing. I have no doubt you will continue to thrive and continue to contribute in an absolutely meaningful way. Little fact I hope Oscar will not mind me sharing: not only has Oscar converted thousands of financial statements into XBRL and ticked and tied dozens of quarterly statements under Steve's direction, but most impressively, Oscar is multilingual and speaks four different languages.

Speaker #3: To you sitting and passing your CPA exams just recently. And by passing, I mean crushing it. And now in the recent quarter becoming our new accounting manager.

Speaker #3: Congratulations, sir. You've exemplified everything a company and a coworker could ever ask for. Your passion for the business, your coworkers, and our customers are truly amazing.

Speaker #3: I have no doubt you will continue to thrive and continue to contribute in an absolute meaningful way. Little fact I hope Oscar won't mind me sharing, not only is Oscar converted thousands of financial statements into XBRL and ticked and tied dozens of core release statements under Steve's direction, but most impressively, Oscar is multilingual and speaks four different languages.

Speaker #3: As you know, regardless of how busy or focused we are at any given period, we have to enjoy having a little fun with our team each quarter.

Brian Balbirnie: As you know, regardless of how busy or focused we are at any given period, we have to enjoy having a little fun with our team each quarter. Having them host a company call builds a connection beyond management to the shareholders, partners, and listeners. With that, good morning, everyone, and welcome, and thank you for taking the time to speak with Steve and I today on the second quarter results and our performance. Our press release, which is accessible in our newsroom, was released pre-market this morning and provides key takeaways on the performance for the quarter. Revenues delivered from the second quarter were $5.6 million, compared to $6 million in Q2 last year and $5.5 million in the first quarter of this year. The year-over-year decrease is attributable to our product mix transformation from a pay-as-you-go business to a subscription-based business.

Speaker #3: Having them host a company call builds a connection beyond management to the shareholders, partners, and listeners. With that, good morning, everyone, and welcome. Thank you for taking the time to speak with Steve and me today on the second quarter results and our performance.

Speaker #3: Our press release, which is accessible at our newsroom, was released pre-market this morning and provides key takeaways on the performance for the quarter. Revenues delivered from second quarter were 5.6 million, compared to 6 million in Q2 last year, and 5.5 million in first quarter of this year.

Speaker #3: The year-over-year decrease is attributable to our product mix transformation from a pay-as-you-go business to a subscription-based business. As this begins to shape our business long-term, this is an indicator of the sequential growth that we are now seeing from first to second quarter.

Brian Balbirnie: As this begins to shape our business long term, this is an indicator of the sequential growth that we are now seeing from the first to the second quarter. The shift drove further ARR on our subscription business higher for the quarter over the prior year. Specifically, our subscription customers increased 12% to $9.71 from $8.67 in Q2 of last year, and also up 2% from Q1 sequentially this year of $9.55. ARR also increased 10% from $10,000 to a little over $11,000 in the second quarter of the year compared to last year, and sequentially consistent from the Q1 of this year. We are encouraged to see gross margins coming in at 76% for the quarter, something I know we need to continue to evolve. Customer experience and editorial continue to be the focus of improvements, refinements, and automation. This is something to build on.

Speaker #3: The shift drove further ARR on our subscription business, higher for the quarter over the prior year. Specifically, our subscription customers increased 12% to 9.71 from 8.67 in Q2 of last year, and also up 2% from Q1 sequentially this year of 9.55.

Speaker #3: ARR also increased 10% from $10,000 to a little over $11,000 in the second quarter of the year, compared to last year, and sequentially remained consistent from Q1 of this year.

Speaker #3: We are encouraged to see gross margins coming in at 76% for the quarter, something I know we need to continue to evolve. Customer experience and editorial continue to be the focus of improvements, refinements, and automation.

Speaker #3: This is something to build on, I think we're on plan and will continue to be mindful of further efficiencies to deliver at these levels without sacrificing customer satisfaction.

Brian Balbirnie: I think we are on plan and will continue to be mindful of further efficiencies to deliver at these levels without sacrificing customer satisfaction. Before I turn the call over to Steve to discuss the results in more detail, I wanted to highlight some of the go-forward metrics that we will discuss on today's call: total customer counts, total subscriptions, ARR of our subscription business, news distribution volumes, and something new to discuss is our ARR per employee. There is a lot more to talk about today, so I will turn the call over to Steve to cover the quarter and year-end highlights. Steve.

Speaker #3: Before I turn the call over to Steve to discuss the results in more detail, I wanted to highlight some of the go-forward metrics that we will discuss on today's call.

Speaker #3: Total customer counts, total subscriptions, ARR of our subscription business, news distribution volumes, and something new to discuss is our ARR per employee. There's a lot more to talk about today, so I will turn the call over to Steve to cover the quarter and year-end highlights.

Speaker #3: Steve.

Speaker #4: Thank you, Brian, and good morning, everyone. As Brian mentioned, we had a solid quarter, generating increased EBITDA, non-GAAP net income, and positive cash flow from operating activities.

Oscar Roque: Thank you, Brian, and good morning, everyone. As Brian mentioned, we had a solid quarter generating increased EBITDA, non-GAAP net income, and positive cash flow from operating activities. I will now discuss some of the details which led to these results. Total revenue for the second quarter of 2025 was $5.6 million, a decrease of $399,000 or 7% compared to $6 million for the same period of 2024. For the first half of 2025, total revenue was $11.1 million, a $495,000 or 4% decrease from $11.6 million. The decrease was due to a slight decrease across our various product lines, including a decrease in core press release revenue of 4% and 2% respectively, due to lower revenue per release as a result of product mix. However, we experienced an increase in volumes of 8% and 6% during these periods.

Speaker #4: I will now discuss some of the details that led to these results. Total revenue for the second quarter of 2025 was $5.6 million, a decrease of $399,000, or 7%, compared to $6 million for the same period in 2024.

Speaker #4: For the first half of 2025, total revenue was 11.1 million dollars, a 495 thousand dollar or 4% decrease from 11.6 million dollars. The decrease was due to a slight decrease across our various product lines, including a decrease in core press release revenue of 4% and 2% respectively, due to lower revenue per release as a result of product mix.

Speaker #4: However, we experienced an increase in volumes of 8% and 6% during these periods. As we move customers to subscriptions, we expect to see some ebb and flow regarding average price per release as we learn our customers' behaviors.

Oscar Roque: As we move customers to subscriptions, we expect to see some ebb and flow regarding average price per release as we learn our customers' behaviors. During the quarter, our gross margin percentage decreased 1% from 77% of revenue to 76%. However, it increased overall for the first half of 2025 to 77% of revenue from 76%. The increase for the six-month period is primarily driven by optimization of our operational teams and lower headcount. The quarterly results were impacted by higher distribution costs as we continue to enhance our distribution network, as well as lower revenue reported during the period. Gross margin decreased $362,000 or 8% and $273,000 or 3% for the three and six months ended June 30th, 2025, respectively, as compared to the same period of the prior year.

Speaker #4: During the quarter, our gross margin percentage decreased 1%, from 77% of revenue to 76%. However, increased overall for the first half of 2025 to 77% of revenue from 76%.

Speaker #4: The increase for the six-month period is primarily driven by optimization of our operational teams and lower headcount. The quarterly results were impacted by higher distribution costs, as we continue to enhance our distribution network, as well as the lower revenue reported during the period.

Speaker #4: Gross margin decreased 362 thousand dollars, or 8%, and 273 thousand dollars, or 3% for the three and six months ended June 30th, 2025, respectively.

Speaker #4: As compared to the same period of the prior year. Moving to operating loss, we posted an operating loss from continuing operations of 249 thousand dollars, for Q2 2025, and 926 thousand dollars for the first half of 2025.

Oscar Roque: Moving to operating loss, we posted an operating loss from continuing operations of $249,000 for Q2 2025 and $926,000 for the first half of 2025, compared to operating losses of $531,000 and $1.4 million during the same periods of 2024. The decrease in operating loss, despite the decrease in gross margin, is a result of lower operating expenses. General and administrative expenses decreased $90,000 or 5% the second quarter of 2025 compared to the second quarter of 2024, due to a reduction in headcount and employee-related expenses, including stock compensation expenses. For the first half of 2025, general and administrative expenses increased $224,000 or 6% compared to the first half of 2024, which was primarily driven 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.

Speaker #4: Compared to operating losses of 531 thousand dollars, and 1.4 million dollars during the same periods of 2024. The decrease in operating loss, despite the decrease in gross margin, is a result of lower operating expenses.

Speaker #4: General and administrative expenses decreased 90 thousand dollars, or 5%, for the second quarter of 2025, compared to the second quarter of 2024, due to a reduction in headcount and employee-related expenses, including stock compensation expenses.

Speaker #4: For the first half of 2025, general and administrative expenses increased 224 thousand dollars, or 6%, compared to the first half of 2024. Which was primarily driven by a one-time benefit recorded in the first half of 2024, of approximately 340 thousand dollars, due to the reversal of stock compensation related to the resignation of an executive officer.

Speaker #4: Sales and marketing expenses decreased 481 thousand dollars, or 25%, and 958 thousand dollars, or 24%, for the three and six months ended June 30th, 2025, as compared to the same periods of 2024.

Oscar Roque: Sales and marketing expenses decreased $481,000 or 25% and $958,000 or 24% for the three and six months ended June 30, 2025, as compared to the same periods of 2024. This decrease is due to lower employee-related and advertising expenses, partially offset by additional rebranding costs incurred during the six-month period of 2025. Product development expenses decreased $64,000 or 9% during the three months ended June 30, 2025, as compared to the same period of 2024, and remain consistent for the six months ended June 30, 2025, as compared to the same period of the prior year. Decreases in costs related to consultants were partially offset by declines in capitalized software. Overall, operating expenses decreased by $644,000 or 12% and $740,000 or 7% for the three and six months ended June 30, 2025, as compared to the prior year, as we remain focused on developing efficiencies and optimizing our teams.

Speaker #4: This decrease is due to lower employee-related and advertising expenses, partially offset by additional rebranding costs incurred during the six-month period of 2025. Product development expenses decreased 64 thousand dollars, or 9%, during the three months ended June 30th, 2025, as compared to the same period of 2024.

Speaker #4: And remain consistent for the six months ended June 30th, 2025. As compared to the same period of the prior year. Decreases in costs related to consultants were partially offset by declines in capitalized software.

Speaker #4: Overall, operating expenses decreased by 644 thousand dollars, or 12%, and 740 thousand dollars, or 7%, for the three and six months ended June 30th, 2025, as compared to the prior year.

Speaker #4: As we remain focused on developing efficiencies and optimizing our teams. The GAAP basis, we reported a loss from continuing operations of 239 thousand dollars, or 6 cents per diluted share during the second quarter of 2025, compared to a net loss of 683 thousand dollars, or 18 cents per diluted share during the second quarter of 2024.

Oscar Roque: On a GAAP basis, we reported a loss from continuing operations of $239,000 or $0.06 per diluted share during the second quarter of 2025, compared to a net loss of $683,000 or $0.18 per diluted share during the second quarter of 2024. For the first half of 2025, net loss from continuing operations was $1 million or $0.26 per diluted share, compared to a net loss of $1.5 million or $0.38 per diluted share in the first half of 2024. Net loss from discontinued operations was $236,000 or $0.06 per diluted share for the second quarter of 2025, compared to net income from discontinued operations of $690,000 or $0.18 per diluted share in the second quarter of 2024.

Speaker #4: For the first half of 2025, net loss from continuing operations was 1 million dollars, or 26 cents per diluted share, compared to a net loss of 1.5 million dollars, or 38 cents per diluted share in the first half of 2024.

Speaker #4: Net loss from discontinued operations was 236 thousand dollars, or 6 cents per diluted share for the second quarter of 2025, compared to net income from discontinued operations of 690 thousand dollars, or 18 cents per diluted share in the second quarter of 2024.

Speaker #4: For the first half of 2025, net income from discontinued operations was almost 6 million dollars, or 1 dollar and 54 cents per diluted share, compared to 1.3 million dollars, or 35 cents per diluted share for the same period of 2024.

Oscar Roque: For the first half of 2025, net income from discontinued operations was almost $6 million or $1.54 per diluted share, compared to $1.3 million or $0.35 per diluted share for the same period of 2024. The increase is primarily as a result of the gain from the sale of the compliance business. Looking to some non-GAAP metrics, EBITDA was $480,000 or 9% of revenue for the second quarter of 2025, compared to $211,000 or 4% of revenue for the second quarter of 2024. For the first half of 2025, EBITDA was $476,000 or 4% of revenue, compared to $282,000 or 2% for the first half of 2024. Adjusted EBITDA increased as well to $836,000 or 15% of revenue for the second quarter of 2025, compared to $528,000 or 9% of revenue for the second quarter of 2024.

Speaker #4: The increase is primarily as a result of the gain from the sale of the compliance business. Looking to some non-GAAP metrics, EBITDA was 480 thousand dollars, or 9% of revenue for the second quarter of 2025, compared to 211 thousand dollars, or 4% of revenue for the second quarter of 2024.

Speaker #4: For the first half of 2025, EBITDA was 476 thousand dollars, or 4% of revenue, compared to 282 thousand dollars, or 2% for the first half of 2024.

Speaker #4: Adjusted EBITDA increased as well, to $836,000, or 15% of revenue for the second quarter of 2025, compared to $528,000, or 9% of revenue for the second quarter of 2024.

Speaker #4: For the first half of 2025, adjusted EBITDA more than tripled, to 1.4 million dollars, or 13% of revenue, compared to 415 thousand dollars, or 4% of revenue for the first half of 2024.

Oscar Roque: For the first half of 2025, adjusted EBITDA more than tripled to $1.4 million or 13% of revenue, compared to $415,000 or 4% of revenue for the first half of 2024. Non-GAAP net income for the second quarter of 2025 increased $455,000 to $556,000 or $0.14 per diluted share, compared to $101,000 or $0.03 per diluted share in the second quarter of 2024. For the first half of 2025, non-GAAP net income increased over $1 million to $762,000 or $0.20 per diluted share, compared to a non-GAAP loss of $265,000 or $0.07 per diluted share during the first half of 2024. On the cash flow statement, we had another quarter of generating positive cash flow from operating activities, generating $135,000 for the quarter, compared to negative $190,000 for the second quarter of 2024.

Speaker #4: Non-GAAP net income for the second quarter of 2025 increased 455 thousand dollars, to 556 thousand dollars, or 14 cents per diluted share, compared to 101 thousand dollars, or 3 cents per diluted share in the second quarter of 2024.

Speaker #4: For the first half of 2025, non-GAAP net income increased over 1 million dollars, to 762 thousand dollars, or 20 cents per diluted share, compared to a non-GAAP loss of 265 thousand dollars, or 7 cents per diluted share during the first half of 2024.

Speaker #4: On the cash flow statement, we had another quarter of generating positive cash flow from operating activities, generating $135,000 for the quarter, compared to negative $190,000 for the second quarter of 2024.

Speaker #4: For the first half of 2025, cash flow generated by operating activities increased to $882,000, compared to $796,000 for the first half of 2024.

Oscar Roque: For the first half of 2025, cash flow generated by operating activities increased to $882,000, compared to $796,000 for the first half of 2024. Adjusted free cash flow also increased for both the quarter and first half of 2025, amounting to $250,000 for the second quarter of 2025, compared to negative $491,000 for the second quarter of 2024. For the first half of 2025, it amounted to $1.2 million, compared to $491,000 for the first half of 2024. I will now turn it back over to Brian, who will provide some updates on the business, customers, subscriptions, along with everything else we have planned for the remainder of the year. Brian?

Speaker #4: Adjusted free cash flow also increased for both the quarter and first half of 2025, amounting to 250 thousand dollars for the second quarter of 2025, compared to negative 491 thousand dollars for the second quarter of 2024, and for the first half of 2025, amounted to 1.2 million dollars, compared to 491 thousand dollars for the first half of 2024.

Speaker #4: I will now turn it back over to Brian, who will provide some updates on the business, customers, subscriptions, along with everything else we have planned for the remainder of the year.

Speaker #4: Brian?

Speaker #3: Thank you, Steve. I wanted to acknowledge the dedication of our team and the continued trust of our customers. While we continue to see industry headwinds in the quarter, we also achieve measurable progress in the areas that matter most for our long-term strategy.

Brian Balbirnie: Thank you, Steve. I wanted to acknowledge the dedication of our team and the continued trust of our customers. While we continue to see industry headwinds in the quarter, we also achieve measurable progress in the areas that matter most for our long-term strategy: growing recurring revenue, improving operational efficiencies, and continuing to enhance the value of every customer relationship. The revenue trends and sequential growth that we are seeing in the quarter, as Steven and I said a few minutes ago, total revenue for the second quarter came in at $5.6 million, representing a 3% sequential increase from Q1 year-over-year. We were down 7% compared to $6 million in the same quarter last year.

Speaker #3: Growing recurring revenue, improving operational efficiencies, and continuing to enhance the value of every customer relationship. The revenue trends and sequential growth that we're seeing in the quarter, as Steve and I said a few minutes ago, total revenue for the second quarter came in at 5.6 million, representing a 3% sequential increase from Q1 year over year.

Speaker #3: We were down 7% compared to 6 million, in the same quarter last year. And we anticipate that, given the focus spent on post-closed compliance business service agreements, but the sequential growth tells a more important story, we're finding our footing again and the underlying demand of our core business is healthy.

Brian Balbirnie: We anticipated that given the focus spent on post-close compliance business service agreements, but the sequential growth tells a more important story. We are finding our footing again, and the underlying demand of our core business is healthy. The average revenue per employee and operational leverage is something else I would like to talk about. One of the most encouraging metrics this quarter is our annual recurring revenue per employee, or ARR. This is an important measurement for us in the business as it reflects both our productivity and the scalability of our business model. Over the past several quarters, we have been disciplined about staffing levels while continuing to invest in automation and efficiency tools while shedding our compliance business. The result is that our ARR per employee has grown meaningfully, even in a challenging revenue environment.

Speaker #3: The average revenue per employee and operational leverage is something else I'd like to talk about. One of the most encouraging metrics this quarter is our annual recurring revenue per employee, or ARR.

Speaker #3: This is an important measurement for us in the business, as it reflects both our productivity and the scalability of our business model. Over the past several quarters, we have been disciplined about staffing levels while continuing to invest in automation and efficiency tools, while shedding our compliance business.

Speaker #3: The result is that our ARR per employee has grown meaningfully, even in a challenging revenue environment. This is not just a cost control story; it's about building a business that can scale profitably as we add more customers without adding additional equivalent headcount.

Brian Balbirnie: This is not just a cost control story; it is about building a business that can scale profitably as we add more customers without adding additional equivalent headcount. It is about creating operational leverage so that each incremental dollar of ARR carries more margin to the bottom line. ARR on a full-time basis for FTE came in at $216,000 for the period ended June 30th, a business KPI we believe we can continue to increase by year's end. For context, according to Virtual Research, SaaS medium ARR per full-time equivalent comes in about $283,000, and top-performing enterprises deliver a little over $300,000 per employee. As a comparison, at the beginning of 2024, ARR per employee was $205,000. Obviously, key to this is top-line revenue growth and continued operational efficiencies, but we feel strongly we can deliver top SaaS performance over the next 18 to 24 months.

Speaker #3: It's about creating operational leverage, so that each incremental dollar of ARR carries more margin to the bottom line. ARR, on a full-time basis for FTE, came in at 216 thousand dollars for the period ended June 30th, a business KPI we believe we can continue to increase by year's end.

Speaker #3: For context, according to virtual research, SaaS medium ARR per full-time equivalent comes in around $283,000, and top-performing enterprises deliver a little over $300,000 per employee.

Speaker #3: As a comparison, at the beginning of 2024, ARR per employee was $205,000. Obviously, key to this is top-line revenue growth and continued operational efficiencies, but we feel strongly we can deliver top SaaS performance over the next 18 to 24 months.

Speaker #3: Our shift towards subscriptions. Another major focus area is our ongoing transition to a more subscription-driven revenue mix. Historically, a meaningful portion of our revenues had been tied to project-based and transactional activity.

Brian Balbirnie: Our shift towards subscriptions, another major focus area, is our ongoing transition to a more subscription-driven revenue mix. Historically, a meaningful portion of our revenues had been tied to project-based and transactional activity. While those can be high margin and valuable, they are still less predictable. We know that for sustained growth and shareholder value creation, we need a higher percentage of our business coming from renewable subscription-based contracts. We have been systematically repositioning our offerings, our sales process, and even our pricing structure to support this shift. This includes bundling services in a way that creates more value for the customer while locking in multiple period commitments. It also means investing in onboarding and customer success so that once a client comes in, they see enough immediate value to stay for years, not just months.

Speaker #3: While those can be high-margin and valuable, they are still less predictable. We know that our sustained growth in shareholder value creation, we need a higher percentage of our business coming from renewable subscription-based contracts.

Speaker #3: We've been systematically repositioning our offerings, our sales process, and even our pricing structure to support this shift. This includes bundling services in a way that creates more value for the customer while locking in multiple-period commitments.

Speaker #3: It also means investing in onboarding and customer success, so that once a client comes in, they see enough immediate value to stay for years, not just months.

Speaker #3: This is an area that we need to continue to get better at and feel confident in our platform and our people to deliver. With the transaction of compliance, we spent a good bit of time since February dedicated to the separation of the business units.

Brian Balbirnie: This is an area that we need to continue to get better at and feel confident in our platform and our people to deliver. With the transaction of compliance, we spent a good bit of time since February dedicated to the separation of the business units, something we expected to be done sooner. As a result, our product development and feature-rich expected add-ons were delayed slightly for good reason, something we are fully confident we will have back on track in the second half of the year. The internal AI-driven editorial tools and proprietary language models have been deployed. We ended the prior quarter talking about this coming, and the internal press release validation process has been delivered into production for our staff, saving approximately 5% of the editorial time spent per article.

Speaker #3: Something we expected to be done sooner, and as a result, our product development and feature-rich expected add-ons were delayed slightly for good reason. Something we are fully confident we will have back on track in the second half of the year.

Speaker #3: The internal AI advancements and proprietary language models have been deployed. We ended the prior quarter talking about this coming, and the internal press release validation process has been delivered into production, for our staff, saving approximately 5% of the editorial's time, spent per article.

Speaker #3: In the second half of the year, we will be releasing the customer-facing components to this, so that we expect that we'll deliver clearer, more actionable stories for our customers that we also further deliver operational efficiencies of another 5 to 10 percent of editorial time.

Brian Balbirnie: In the second half of the year, we will be releasing the customer-facing components to this so that we expect it will deliver clearer, more actionable stories for our customers, that we also further deliver operational efficiencies of another 5% to 10% of editorial time. To deliver on this growth, we have to become a complete platform for our customer communication needs. Therefore, we will be delivering before year's end some significant social media partnerships that will integrate our platforms with leading social media management tools. The use of segments in a press release is going to be a key driver to how a brand message is delivered to its audiences via traditional news outlets, social platforms, internal corp com systems, as well as how the media and influencers cover the brand and how we report and benchmark the impact of the story.

Speaker #3: To deliver on this growth, we have to become a complete platform for our customer communication needs. Therefore, we will be delivering, before year's end, some significant social media partnerships that will integrate our platforms with leading social media management tools.

Speaker #3: The use of segments in a press release is going to be a key driver to how a brand message is delivered to its audiences, via traditional news outlets, social platforms, internal core comm systems, as well as how the media and influencers cover the brand and how we report and benchmark the impact of the story.

Speaker #3: Our subscriber growth targets, we've set clear goals by year's end, we still aim to have over 1,500 subscribers on our platform. This is an ambitious target, and we are going to do everything in our ability to deliver on the target.

Brian Balbirnie: Our subscriber growth targets, we have set clear goals. By year's end, we still aim to have over 1,500 subscribers on our platform. This is an ambitious target, and we are going to do everything in our ability to deliver on the target. A shift in keeping customers stickier has become a priority, and I believe there is more work to be done here in order to move our business closer to 75% recurring subscription revenue by the end of the year. We ended the quarter with growth in subscription count, and more importantly, the quality of those subscriptions is still continuing to improve, meaning longer contract durations, larger leveraged contract values, and higher cross-product adoption. We look forward to our sales funnel and see strong conversion rates in areas that we need to improve and that they have been identified.

Speaker #3: But a shift in keeping customers stickier has become a priority, and I believe there is more work to be done here in order to move our business closer to 75% recurring subscription revenue by the end of the year.

Speaker #3: We ended the quarter with growth in subscription count, and more importantly, the quality of those subscriptions are still continuing to improve, meaning longer contract durations, larger leveraged contract values, and higher cross-product adoption.

Speaker #3: We look forward to our sales funnel and see strong conversion rates in areas that we need to improve and that they've been identified. Our sales and marketing teams have been focused on specific verticals where our value proposition is strongest, and our pipeline going into the second half of the year supports our confidence in hitting our subscriber revenue numbers.

Brian Balbirnie: Our sales and marketing teams have been focused on specific verticals where our value proposition is strongest, and our pipeline going into the second half of the year supports our confidence in hitting our subscriber revenue numbers. Our ARR growth to the year-end road is a key metric that will define our 2025 success. As I mentioned earlier, ARR per employee is trending upwards, but we are also focused on the total ARR expansion. We believe that by leaning into subscription sales, leveraging upsell opportunities with our existing customer base, and continuing to expand our distribution reach, we can finish the year with ARR meaningfully higher than where we are standing today.

Speaker #3: Our ARR growth to the year-end road is a key metric that will define our 2025 success. As I mentioned earlier, ARR per employee is trending upwards, but we're also focused on the total ARR expansion, we believe that by leaning into subscription sales, leveraging upsell opportunities, with our existing customer base, and continuing to expand our distribution reach, we can finish the year with ARR meaningfully higher than we were where we're standing today.

Speaker #3: I want to emphasize that ARR growth is not just about top-line expansion; it's also about building a resilient revenue base that we can count on for quarters and quarters, even when market conditions are less predictable.

Brian Balbirnie: I want to emphasize that ARR growth is not just about top-line expansion; it is also about building a resilient revenue base that we can count on for quarters and quarters, even when market conditions are less predictable. It is about creating visibility for our investors, stability for our employees, and ongoing value for our customers. New subscriptions sold in the second quarter were an average ARR of almost $12,000. If we move along to cost structure and margin improvement, something we have talked about in prior calls, earlier this year, we committed to reducing our operational expenses. I am pleased to report that these reductions have been realized, and you are seeing them here in Q2 results today, and they will continue to be fully reflected in the second half of the year, absent the investment that we are making in our sales and marketing teams.

Speaker #3: It's about creating visibility for our investors, stability for our employees, and ongoing value for our customers. New subscription sold in the second quarter were an average ARR of almost 12 thousand dollars.

Speaker #3: Now, if we move along to cost structure and margin improvement, something we've talked about in prior calls, earlier this year we committed to reducing our operational expenses.

Speaker #3: I'm pleased to report that these reductions have been realized, and you're seeing them here in Q2 results today. They'll continue to be fully reflected in the second half of the year, absent the investment that we're making in our sales and marketing teams.

Speaker #3: This is evident in our cash flows from operations, as well as our adjusted EBITDA numbers, as Steve just spoke about. Combined with our shift towards higher-margin subscription revenues, we expect these savings to flow directly into improved operating margins. This positions us well for the second half of the year and beyond.

Brian Balbirnie: This is evident in our cash flows from operations, as well as our adjusted EBITDA numbers Steven Knerr just spoke about. Combined with our shift towards higher margin subscription revenues, we expect these savings to flow directly into improved operating margins. This positions us well for the second half of the year and beyond, with incremental ARR growth should yield us even greater profitability without proportional increases in costs. Before I close, I want to take a moment to talk about the broader market landscape. The communications and investor relations technology sector is evolving rapidly. Customers are looking for integrated solutions that combine content creation, distribution, analytics, and engagement in a single platform. They also expect faster turnaround times, deeper reach, and more actionable insights. Access Newswire is positioned to deliver exactly that.

Speaker #3: With incremental ARR growth, should yield us even greater profitability without proportional increases in costs. Before I close, I want to take a moment to talk about the broader market landscape, the communications and investor relations technology sector is evolving rapidly.

Speaker #3: Customers are looking for integrated solutions that combine content creation, distribution, analytics, and engagement in a single platform. They also expect faster turnaround times, deeper reach, and more actionable insights.

Speaker #3: ACCESS Newswire is positioned to deliver exactly that. Our ACCESS distribution network is not only competitive in terms of reach and reliability, but it is also backed by a platform that makes it easier for customers to create, manage, and measure their communications.

Brian Balbirnie: Our Access distribution network is not only competitive in terms of reach and reliability, but it is also backed by a platform that makes it easier for customers to create, manage, and measure their communications. This is an important differentiator. Many of our competitors focused on one piece of the puzzle, but our integrated approach allows us to capture more of the customer's workflow and potentially increase stickiness and lifetime value. Another advantage is our scale in target verticals. We have developed strong transactions in industries like life sciences, small-cap public companies, newly formed SMBs, and certain regulatory sectors where our backgrounds of compliance expertise make us a differentiator. These verticals often require ongoing, frequent communication with investors and the public and the markets, making them ideal candidates for subscription-based services.

Speaker #3: This is an important differentiator. Many of our competitors focused on one piece of the puzzle, but our integrated approach allows us to capture more of the customer's workflow and potentially increase stickiness and lifetime value.

Speaker #3: Another advantage is our scale and target verticals. We've developed strong transactions in industries like life sciences, small-cap public companies, newly formed SMBs, and certain regulatory sectors, where our backgrounds of compliance expertise make us a differentiator.

Speaker #3: These verticals often require ongoing, frequent communication with investors and the public, and the markets, making them ideal candidates for subscription-based services. A controversial area that I'm personally pushing our teams to think about is something that is very bold and internally I've called #KillTheReport.

Brian Balbirnie: A controversial area that I am personally pushing our teams to think about is something that is very bold and internally I have called #KillTheReport, and not only really get rid of the distribution report but revolutionize the traditional way it is delivered and consumed by the customer. The industry has grown old, okay, very old, of the five-day PR report and nothing more than links to your releases, traffic counts, and geographic locations of your engagement. If you're lucky, integrated brand monitoring reports from a third party for an additional fee, often not shareable or easy to benchmark against. We are somewhat guilty following the market and what the customer perception is for a deliverable. It's what I actually used to call the PR report as the deliverability report.

Speaker #3: And not only really get rid of the distribution report, but revolutionize the traditional way it is delivered and consumed by the customer. The industry has grown old, okay, very old, of the five-day PR report, and nothing more than links to your releases, traffic counts, and geographic locations of your engagement.

Speaker #3: If you're lucky, integrated brand monitoring reports from a third party for an additional fee. Often, not shareable or easy to benchmark against. We are somewhat guilty.

Speaker #3: Following the market and what the customer perception is for our deliverable. It's what I actually used to call the PR report as the deliverability report.

Speaker #3: I envision a very different concept here. One where the report is built based on what you want to know by the hour, by the day, or by the week.

Brian Balbirnie: I envision a very different concept here, one where the report is built based on what you want to know by the hour, by the day, or by the week. A report that delivers on every metric you could ever want in one interface, not like today where companies are buying several different analytic systems and brand monitoring and benchmarking software to help them measure their engagement. We will deliver on this by the beginning of 2026 for all of our subscribing customers. This will also be a deliverable we believe we can drive further ARR but also help improve retention and differentiation in the market. On our next quarterly call, we will talk a lot about the details of this new product. We're seeing sequential revenue growth and healthy demand for our core business.

Speaker #3: A report that delivers on every metric you could ever want in one interface, not like today where companies are buying several different analytic systems and brand monitoring and benchmarking softwares to help them measure their engagement.

Speaker #3: We will deliver on this by the beginning of 2026, for all of our subscribing customers. This will also be a deliverable we believe we can drive further ARR, but also help improve retention and differentiation in the market.

Speaker #3: On our next quarterly call, we will talk a lot about the details of this new product. We're seeing sequential revenue growth and healthy demand for our core business.

Speaker #3: Our ARR per employee is improving, indicating we're gaining more productivity and efficiency from our teams. Evident in our operating expenses decreasing 12% for the quarter.

Brian Balbirnie: Our ARR per employee is improving, indicating we're gaining more productivity and efficiency from our teams, evident in our operating expenses decreasing 12% for the quarter. We're well on our way to transitioning into a new subscription-led business model. Our target subscribers by year-end are aggressive but within reach, supported by a healthy sales pipeline and strong retention. Cost disciplines are in place, and we expect incremental margin improvement in the back half of the year. Our marketing position is strong, with clear competitive advantages in our target verticals. We believe these steps will create a stronger, more predictable, and more profitable Access Newswire, one that's positioned to grow not just in size but in quality of earnings. With that, I'll turn the call over to the operator for the question and answer session. Thank you.

Speaker #3: We're well on our way to transitioning into a new subscription-led business model. Our target subscribers by year-end is aggressive, but within reach, supporting by healthy sales pipeline and strong retention.

Speaker #3: Cost disciplines are in place and we expect incremental margin improvement in the back half of the year. Our marketing position is strong, with clear competitive advantages in our target verticals.

Speaker #3: We believe these steps will create a stronger, more predictable, and more profitable ACCESS Newswire, one that's positioned to grow not just in size, but in quality of earnings.

Speaker #3: With that, I'll turn the call over to the operator for the question and answer session. Thank you.

Speaker #5: Thank you. At this time, we'll be conducting our question and answer session. If you would like to ask a question, please press star one on your telephone keypad.

Speaker 5: Thank you. At this time, we will be conducting our question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue, and you may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. Thank you. Our first question is coming from Luke Horton with Northland Securities. Your line is live.

Speaker #5: A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue.

Speaker #5: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions.

Speaker #5: Thank you. Our first question is coming from Luke Horton with Northland Securities. Your line is live.

Speaker #6: Yeah, hey guys. Thanks for taking the questions here. I just wanted to start with an overall update on the new business today. So, you sold the compliance business, and you've combined the Newswire and ACCESSWIRE brands. I'm just wondering if there are any incremental synergies or benefits to the business from these actions that maybe you didn't expect originally.

Luke Horton: Hey guys, thanks for taking the questions here. I just wanted to start on an overall update on the new business today. You sold the compliance business, you have combined the Newswire and Accesswire brands. I am just wondering if any incremental synergies or benefits to the business from these actions that maybe you did not expect originally?

Speaker #7: Hey, good morning, Luke. Anything additional that we were able to achieve has yet to show through in the financials. I would tell you that there's likely some infrastructure costs that we'll see benefits for in the back half of this year, likely after this month, that will flow through in the OpEx savings side of the equation.

Steven Knerr: Hey, good morning, Luke. Anything additional that we were able to achieve has yet to show through in the financials. I would tell you that there is likely some infrastructure costs that we will see benefits for in the back half of this year, likely after this month, that will flow through in the OpEx savings side of the equation. I would tell you that the core Access Newswire business, as a headcount perspective and an OpEx expense perspective, is likely fairly consistent today as to what it will be through the end of the year. So we will see some, probably call it $100,000 to $150,000 in savings here in a quarter and a half from infrastructure costs, and going into next year, we will continue to see that.

Speaker #7: I, I tell you that the core ACCESS Newswire business, as a headcount perspective and an op-ex expense perspective, is likely fairly consistent today as to what it will be through the end of the year.

Speaker #7: So we'll see some, you know, probably call it 100, 150 thousand dollars in savings here in a quarter and a half, from infrastructure costs and going into next year, we'll continue to see that.

Speaker #7: But, but I would, you know, be fair to caution the fact that, to be honest, as we scale infrastructure for, you know, natural language processing and AI, you're likely going to see some of those costs come back, as customers begin to use more of those solutions.

Steven Knerr: But I would be fair to the cost and the fact that, to be honest, as we scale infrastructure for natural language processing and AI, you are likely going to see some of those costs come back as customers begin to use more of those solutions on our platform. We will also see some additional AI benefits to automation that will also help optimize some headcount levels, both inside and outside the company. So we will definitely talk about that in the next quarter or so.

Speaker #7: on our platform. you know, we will also see some additional AI benefits to automation that will also help optimize some headcount levels, both inside and outside the company.

Speaker #7: and so we'll, we'll definitely talk about that in the next quarter or so.

Speaker #6: Okay, got it. Yeah, and then, just kind of shifting over to the kind of new customer pipeline, I know you've got a big, existing base of customers who aren't on subscriptions yet.

Luke Horton: Okay, got it. Yeah, then just kind of shifting over to the new customer pipeline. I know you have a big existing base of customers who are not on subscriptions yet. I guess how much of the focus is on the existing customers getting over to the subscription model versus net new customers you are going after? Could you just give us a reminder of what the sweet spot is here for new customers or for the new customer pipeline?

Speaker #6: I guess, how much of the focus is on the existing customers getting over to the subscription model versus kind of net new customers you're going after?

Speaker #6: And could you just give us a reminder of what kind of the sweet spot is here for new customers? Or for the new customer pipeline?

Speaker #7: Yeah, we, and, and the, and the last three quarters we've, we've worked through our, our customer, demographic profiles of, of usage and spend. To delineate which ones we believed would be, most advantageous to convert from a pay-as-you-go or a bundle product or a standalone product into a full subscription.

Steven Knerr: Yeah, we, in the last three quarters, we've worked through our customer demographic profiles of usage and spend to delineate which ones we believed would be most advantageous to convert from a pay-as-you-go or a bundle product or a standalone product into a full subscription. Generally, we're targeting customers that had annual previous spends above $5,000, sub $15,000, and this is the majority of those customers. We've done a fairly good job of converting the ones in those categories. As you climb up in spends, the customers are generally very different.

Speaker #7: So generally, we're targeting customers that had annual previous spends above $5,000 and below $15,000, and this is the majority of those customers. We've done a fairly good job of converting the ones in those categories, but as you climb up in spends, the customers are generally very different.

Speaker #7: And so that's where we see some of the ARR benefits to us, both on an ARR per customer as well as per employee, as likely shown and talked about today.

Steven Knerr: That's where we see some of the ARR benefits to us, both on an ARR per customer as well as per employee, is that, like we showed and talked about today, we've got some large-cap customers coming in, buying the platform at $30,000, $40,000, $50,000, and two-year deals that we are getting confidence there that we'll be able to start focusing on those folks at the back half of the year. To be fair, to get to our numbers, we've got to have an inbound flux of customers coming in, finding value in our subscriptions, both public and private, to be able to continue that growth.

Speaker #7: We've got some large-cap customers coming in, buying the platform at 30, 40, 50 thousand dollars and, and, and, you know, two-year deals. That we are getting confidence there that we'll be able to start focusing on those folks.

Speaker #7: At the back half of the year, but look, to be fair, to get to our numbers, we've got to have an inbound flux of customers coming in, finding value in our subscriptions, both public and private, to be able to continue that growth.

Speaker #6: Got it. And then, I guess just on, on subscriptions, for, for your customers that do have subscriptions, is there a percentage that are under multi-year subscriptions?

Luke Horton: Got it. For your customers that do have subscriptions, is there a percentage that are under multi-year subscriptions? Is that a focus here, or is it mostly just annual renewals as pricing is still working itself out here? Are you focusing more on trying to get more of those multi-year subscriptions?

Speaker #6: Is that kind of a focus here or, or it's mostly just annual renewals kind of as pricing is still, working itself out here or are you focusing, more trying to get more of those, those multi-year subscriptions?

Speaker #7: Yeah, I, I, I think it's indicative to believe that a multi-year subscription comes from a more enterprise and larger mega-cap company, right? The, the SMB categories, if I can just kind of put those in a, in a bucket of, you know, small micro and nano-cap companies and just private companies in general, call them SMBs, they typically are not going to commit for a long-term contract.

Steven Knerr: Yeah, I think it's indicative to believe that a multi-year subscription comes from a more enterprise and larger mega-cap company. The SMB categories, if I can just kind of put those in a bucket of, you know, small micro nano-cap companies and just private companies in general, call them SMBs, they typically are not going to commit for a long-term contract. That's not just us, that's kind of an industry standard thing that we see and have seen for years. If you think about companies like a Sherwin-Williams or a BlackBerry or Moderna, some of the larger brands that we've got, they're generally buying in two, three, four-year deals, or buying on terms that give them the right to have the fixed pricing for multi-years. That, I think, is not going to change.

Speaker #7: and that's not just us, that's kind of an industry standard thing. that we see and have seen for years. but, you know, if you think about companies like, you know, a Servant Williams, or, you know, a, a BlackBerry, a Moderna, some of the larger brands that we've got, they're, they're generally buying in two, three, four-year deals.

Speaker #7: or buying on terms that give them the right to have fixed pricing for multiple years. So, I think that is not going to change.

Speaker #7: To be fair, as we launch our PressRelease.com single circuit platform next month, we likely are going to see, you know, maybe even a shorter-term subscription, as we get customers really wanting to utilize the benefits of the platform to get them stickier.

Steven Knerr: To be fair, as we launch our pressrelease.com single circuit platform next month, we likely are going to see maybe even a shorter-term subscription as we get customers really wanting to utilize the benefits of the platform to get them stickier. I do not know that that's as big an issue as much as it is us just making sure that we're showing value to the customer every day that keeps them coming back.

Speaker #7: So, I don't know that that's as big an issue as much as it is, let's just making sure that we're showing value to the customer every day and to keep them coming back.

Speaker #6: Got it. Yeah, and then just lastly here, I know you touched on this on in your prepared remarks, but could, could you just, kind of go over some of the product enhancements, you mentioned that are slated for the back half of the year and, and kind of what you're most excited about?

Luke Horton: Got it. Yeah, and then just lastly here, I know you touched on this in your prepared remarks, but could you just kind of go over some of the product enhancements you mentioned that are slated for the back half of the year and what you are most excited about as we progress through 2025 and into 2026?

Speaker #6: as we progress through 25 and into 26?

Speaker #7: Yeah, absolutely. Yeah, and, and a lot of my wish that we would have been able to talk about and show today, but for obvious reasons with TSAs, with our compliance business, that there's only, you know, so much that can be done, here this quarter, we likely will take our, our what we're calling internally is our PR checker and validator system, that is helping our editors move through articles much quicker, than, than previously.

Steven Knerr: Yeah, absolutely. A lot of them I wish that we would have been able to talk about and show today, but for obvious reasons, with TSAs, with our compliance business, there is only so much that can be done. Here this quarter, we likely will take our, what we are calling internally, our PR checker and validator system that is helping our editors move through articles much quicker than previously. We are going to review that tool in an interface with our customer this quarter to allow the client to have access to it. So what that is going to do is check the tonality, check their messaging, run through our compliance distribution requirements, and before even the editor sees it, give the customer some sort of benefit to what they should expect to get out of this press release. What kind of engagement will they get?

Speaker #7: We're going to review that tool, in an interface with our customer this quarter to allow the client to have access to it. So what that's going to do is check the tonality, check their messaging, run through our compliance distribution requirements, and, and before even the editor sees it, give the customer some sort of benefit to what they should expect to get out of this press release.

Speaker #7: What kind of engagement will they get, at the ticking the right distribution, should they be selecting different distribution, and using our media database to pitch those customers all at the same time.

Steven Knerr: Are they picking the right distribution? Should they be selecting different distributions and using our Media Database to pitch those customers all at the same time? So, that, although it does not sound like a very, to be fair, sexy add-on and feature benefit, it is going to move the customer throughout the ecosystem and the platform, getting them to use more of the tools, which in our belief creates a more sticky process. That is kind of a stepping stone to what we talked about at the end of the call, is what the new distribution engagement profile will look like for a customer, is that it will not only pull where your article is going, who is seeing it, but also who you pitched and did they engage and what your ranking is against your peers.

Speaker #7: So that, although it does not sound like a very, you know, to be fair, sexy add-on and feature benefit, it is going to move the customer throughout the ecosystem of the platform, getting them to use more of the tools, which in our belief creates some more sticky process.

Speaker #7: And that's kind of a stepping stone to what we talked about at the end of the call, is what the new distribution engagement profile will look like for a customer.

Speaker #7: It will not only pull where your article is going, who's seeing it, but also who you pitched, did they engage, and what your ranking is against your peers.

Speaker #7: and so that will be, you know, kind of late this year, early next year as we release some of those. You'll see some sprinkled features that will come into the system.

Steven Knerr: So that will be, you know, kind of late this year, early next year as we release some of those. You will see some sprinkled features that will come into the system. We have got a very significant upgrade coming to our Whiteglove webcasting platform that is about to happen here in about a month and a half. It is a big refresh, something we have not had in quite some time. It is one of our most stable sticky LTV products that we have ever had in the subscription side. So we are advancing that solution to make our Earnings Calls a little more interactive with our clients and much more scalable because we are seeing audiences starting to grow again across the board and in webcast and less in teleconference.

Speaker #7: We've got a very significant upgrade coming to our, our white glove webcasting platform, that's about to happen here in about a month and a half.

Speaker #7: it's a big refresh, something we have not, had in quite some time. It's one of our most stable, sticky LTV products that we've ever had in the subscription side.

Speaker #7: So we're advancing that solution to make our, our earnings calls a little more interactive with our clients. And much more scalable, because we're seeing audiences starting to grow again across the board and, and, in webcast and, and less in teleconference.

Steven Knerr: Yeah, there is a whole slate of them next quarter. We are going to talk specifically about them and spend a good bit of time. If we are fortunate enough with our webcast upgrade, we will be able to actually show some real-time things for folks to see as well.

Speaker #7: yeah, there's a whole slate of them next quarter we're going to talk specifically about them and spend a good bit of time, and, and if we're fortunate enough, with our webcast upgrade, we'll be able to actually show some real-time things for folks to see as well.

Speaker #6: Okay, great. Awesome. Well, I appreciate the updates, there, Brian, and, and thanks for taking the questions and, and congrats on a nice quarter here.

Luke Horton: Okay, great. Awesome. I appreciate the update there, Brian, and thanks for taking the questions and congrats on a nice quarter here.

Speaker #7: Thanks, Luke. I appreciate it.

Steven Knerr: Thanks, Luke. I appreciate it.

Speaker #5: Thank you. Our next question is coming from Jacob Stefan with Lake Street Capital Markets. Your line is live.

Brian Balbirnie: Thank you. Our next question is coming from Jacob Stefan with Lake Street Capital Markets. Your line is live.

Speaker #8: Hey, good morning, guys. appreciate you taking the questions. I just wanted to touch on a comment you guys made in the, in the prepared remarks.

Jacob Stefan: Hey, good morning, guys. Appreciate you taking the questions. I just wanted to touch on a comment you guys made in the prepared remarks. You kind of mentioned annual recurring revenue could be meaningfully higher than today. I think last quarter, you know, we kind of talked about annual recurring revenue of $14,000 per customer for new onboards. But has that shifted at all, or is there anywhere that you're, you know, maybe exceeding that number or falling short?

Speaker #8: You kind of mentioned that ARR should be meaningfully higher than today. I think last quarter, you know, we talked about an ARR of $14,000 per customer for new onboards.

Speaker #8: but, I mean, has that shifted at all, or is there anywhere that you're, you know, maybe exceeding that number or falling short?

Speaker #7: Yeah, I think you're, you're right. I think new deals in Q1 were 14. But I think the, the sequential growth when you look at all subscriptions for Q1, compared to Q2, had some minimal gain there.

Steven Knerr: Yeah, I think you are right. I think new deals in Q1 were 14, but I think the sequential growth when you look at all subscriptions for Q1 compared to Q2 had some minimal gain there. Average deals sold in Q2 were about $12,000. I think it was $12,039, is what the number was. So, sequentially a little down, but it is really not a benchmark that we are looking at as a barometer to suggest if our subscription business is healthy or not. Some of that comes weighted into larger deals that happen during a quarter. I think for us, the more salient thing is for us to look at the frequency. How many are we getting? What is the demographic profile and where are they coming from?

Speaker #7: average deals sold in Q2 were about $12,000, I think it was 12,039 dollars is what the number was. so yeah, sequentially a little down, but it, it's really not a benchmark that we're looking at as a barometer to suggest if our subscription business is healthy or not.

Speaker #7: Some of that comes weighted into larger deals that happened during the quarter. I think for us, the more salient thing is for us to look at the frequency.

Speaker #7: How many are we getting? What is the demographic profile and where are they coming from? And, and one of the things we didn't touch on in our prepared remarks that I I think is worth noting in this, is that we as a marketplace in the corporate communications, investor relations, public relations space, you know, have an industry tag of single digits.

Steven Knerr: One of the things we did not touch on in our prepared remarks that I think is worth noting in this is that we as a marketplace in the corporate communications, investor relations, public relations space, have an industry tag of single digits. There is a tremendous amount of what we call internally white space in the market to where we can go find new opportunities where our peers and competitors are not.

Speaker #7: And there is a tremendous amount of what we call internally white space in the market, where we can go find new opportunities that our peers and competitors are not.

Speaker #7: and we've identified several of those places and that's where we get the confidence and where we'll be able to grow this number. and, and the quarters to come, is because there's areas that the industry is just not focused on that we've identified, and that we believe if we can be successful there, that's going to drive and fuel a good amount of our growth over the next several quarters and, and into the next couple of years.

Steven Knerr: We have identified several of those places, and that is where we get the confidence and where we will be able to grow this number in the quarters to come, is because there are areas that the industry is just not focused on that we have identified and that we believe if we can be successful there, that is going to drive and fuel a good amount of our growth over the next several quarters and into the next couple of years. I am not concerned about the number being different sequentially. Year over year is higher, and I think that is the important barometer for us. Lastly, I think the reality for us is, we have got to get stickier, right? We have got to continue to have feature advancements, and get to our customers and be talking to them and do case studies and white papers.

Speaker #7: so I'm not concerned about the number being different sequentially. It, year over year, is higher. And I think that's the important barometer for us.

Speaker #7: and lastly, I think the reality for us is, you know, we've got to get stickier, right? We've got to continue to have feature advancements.

Speaker #7: and get to our customers and be talking to them and do case studies and white papers and, you know, we just have not been able to do that in Q2, but we're, we're, we're focused on trying to achieve that here in the back half of the year.

Steven Knerr: We just have not been able to do that in Q2, but we are focused on trying to achieve that here in the back half of the year.

Speaker #6: Got it. That's, that's really helpful. and then maybe just to touch on kind of, Luke's question from, from the last one here. the social media partnerships that you guys announced in, in the second half here, that should be coming.

Jacob Stefan: Yeah, that is really helpful. Then maybe just to touch on kind of Luke's question from the last one here, the social media partnerships that you guys announced in the second half here that should be coming, maybe help us kind of understand what does this do for your customers? How does it kind of change the overall value prop for them?

Speaker #6: Maybe help us kind of understand, you know, what is due for, you know, your customers, how does it kind of change the, the overall, the value prop for them?

Speaker #7: Yeah, I don't want to profess, and I'm going to use an analogy here— I don't want to profess that we are them, but we're taking a very Apple-esque model to this.

Steven Knerr: Yeah, if I do not want to profess, and I am going to use an analogy here, I do not want to profess that we are them, but we are taking a very Apple-esque model to this. We do not, we have not been first to market in social media, right? A lot of things that Apple do really well, they let others go do it first. We have looked at what Cision did, for example. Cision, I think, at last count, spent $500 million to $600 million buying social media platforms, trying to integrate it into Cision. When you go to Cision today to draft a press release or monitor media or pitch, there are six or seven different platforms to log into. The customer has no value to this.

Speaker #7: We don't, we, we have not been first to market in social media, right? Like, like a lot of things that Apple do really well, they let others go do it first.

Speaker #7: What we've, we've looked at what Cision did, for example. Cision, I think, at last count, spent five or six hundred million dollars buying social media platforms, trying to integrate it into Cision.

Speaker #7: And when you go to Cision today to draft a press release or monitor media or pitch, there are six or seven different platforms to log into.

Speaker #7: So the customer has no value to this. And so, the reason why I bring this up is that if we're going into SMBs or established enterprises, everybody has to make the assumption and understand in this industry that the customer has already long picked their social media platform.

Steven Knerr: The reason why I bring this up is that if we are going into SMBs or established enterprises, everybody has to make the assumption and understand in this industry that the customer has already long picked their social media platform, right? Corporate communications and other departments in the organization that have that budget have already picked their tools, right? They are already integrated their enterprise into whatever social media monitoring, pitching, and analytics system they have got. It really would be very shortsighted of us to believe that we could build something that they would want to buy, in materiality, or to even integrate somebody else's solution to believe that we are going to get them to change. The focus that we have had in our product team is go out and find the top three social media platforms that both SMB and enterprise use and partner with them.

Speaker #7: Right? Corporate communications and other departments in the organization have that budget and have already picked their tools, right? They've already integrated their enterprise into whatever social media monitoring, pitching, and analytic system they've got.

Speaker #7: It, it really would be very short-sighted of us to believe that we could build something that they would want to buy. and, you know, in materiality, or two, even integrate somebody else's solution to believe that we're going to get them to change.

Speaker #7: So the focus that we've had in our product team is to go out and find the top three social media platforms that both SMB and enterprise use, and partner with them.

Speaker #7: So the reality would be as a customer, in the back half of this year, we'll, we'll log into their ACCESS Newswire platform, and they'll be prompted to connect those tools automatically with single API sign-ons.

Steven Knerr: The reality would be that the customer in the back half of this year will log into their Access Newswire platform, and they will be prompted to connect those tools automatically with single API signups. Then we will be able to share and pull analytics back and forth between those systems to create an environment of which we are not asking them to switch or change. If they do not have one of those tools and they want to subscribe, we will have a partner referral agreement with them that they will be able to create an account on the fly automatically. We believe that is the best approach. To be fair, we are not in the business of wanting to deliver shareholders and raise tens of millions of dollars to try and buy some social startup company. The risk factor just does not meet our profile for investment.

Speaker #7: And then we'll be able to share and pull analytics back and forth between those systems to create an environment of which we're not asking them to switch or change, and if they don't have one of those tools, and they want to subscribe, we'll have a partner referral agreement with them that they'll be able to create an account on the fly automatically.

Speaker #7: We believe that's the best approach. To be fair, we're not in the business of wanting to deliver shareholder value and raise tens of millions of dollars to try and buy some social startup company.

Speaker #7: The risk factor just doesn’t meet our profile for investment, and we think this strategic side of partnering is the best way to embrace this.

Steven Knerr: We think this strategic side of partnering is the best way to approach this.

Speaker #6: Okay. maybe just last one. You know, I, I think the 1,500 customer target by year-end is kind of a new metric. a new kind of detail that you've given us.

Jacob Stefan: Okay, maybe just last one. You know, I think the 1,500 customer target by year-end is kind of a new metric, or a new kind of detail that you have given us. Maybe help us kind of think through that in terms of what that means for annual recurring revenue. Do you expect most of those to be new customers? Do you expect them to be more transition customers from the existing? Or just kind of help us think through that.

Speaker #6: Maybe help us kind of think through that in terms of what that means for, you know, ARR. Do you expect most of those to be new customers?

Speaker #6: Do you expect them to be more transition customers from the existing, or just kind of help us think through that?

Speaker #7: Yeah, I, I think it's 70, 30 for growth. 70 percent coming from new, 30 percent coming from current customers that are, that are upgrading.

Steven Knerr: Yeah, I think it's 70/30 for growth, 70% coming from new, 30% coming from current customers that are upgrading, and/or converting from single pay-go solutions that they've had in the past. I think that is going to be a big driver. It is an aggressive number, right? We've said that a year ago what the goal was. Look in hindsight, you look at your customer account numbers. We had compliance customers in there that were subscribers during that time. So when you pull the numbers back, it is.

Speaker #7: and/or converting from, you know, single paygo solutions that they've had in the past. I, I think that is a big, going to be a big driver.

Speaker #7: It is an aggressive number, right? We've said that a year ago. What the, what the goal was, you know, look in hindsight. You look at your customer account numbers; we had compliance customers in there that were subscribers during that time.

Speaker #7: And so, when you pull the numbers back, it is an aggressive target for us to hit. But we think both the social media partnerships and add-ons that we're going to bring, and the additional things will drive some customer activity.

Alex: an aggressive target for us to hit, but we think both the social media partnerships and add-ons that we are going to bring and the additional things will drive some customer activity. We do have some new platforms like pressrelease.com that is scheduled to be re-released at the end of this month or early next month that we feel like will fuel our opportunities to find customers that are willing to pay into a subscription model.

Speaker #7: and we do have some new platforms, like press release.com, that's scheduled to, to be re-released at the end of this month or early next month, that we feel like will, will fuel our opportunities to find customers that are willing to pay into a subscription model.

Speaker #6: Okay, got it. Very helpful. I appreciate the details here, guys.

Oscar Roque: Okay, got it. Very helpful. I appreciate the details here, guys.

Speaker #7: Yeah, thank you. I think I missed the ARR add-on. You know, will the number get to 15? I think it was our goal. By the end of the year, right?

Alex: Yeah, thank you. I think I missed the ARR add-on. Will the number get to 15? I think it was our goal by the end of the year, right? I think we will come really close. I think both are aggressive numbers. Feature product add-on is going to be key to us to be able to get to that point. If we see something changing in the next quarter, we will definitely message that. But at this time, we are seeing the opportunities for us to get there.

Speaker #7: I think we'll, we'll come really close. I think it's, it's a, it's both are aggressive numbers. feature product add-on is going to be key to us to be able to get to that point.

Speaker #7: And look, if we see something changing in the next quarter, we'll definitely message that. But at this time, we're seeing the opportunities for us to get there.

Oscar Roque: Okay, thank you.

Alex: Thanks, Jacob.

Rachel Schmidt: Thank you. Thank you. I was ready to say, if you have any questions or comments, please press one on your telephone keypad.

Alex: I'd like to turn the call back over to Brian Balbirnie for any closing comments.

Rachel Schmidt: Thank you, Alex. We're pleased at where we're headed, and we have a clear focus on strategy and where we're going here this year and into next year. We know the revenue growth is the ultimate barometer, and getting the business to scale is paramount. We will deliver on this, and we will continue to see these levels of gross margins, expanded cash flow from operations, and EBITDA percentages back to where we all want them to be, where we want them to be in the next couple of quarters. Thank you all. Have a good day.

Alex: Thank you, ladies and gentlemen. This does conclude today's call. You may disconnect your lines at this time and have a wonderful day, and we thank you for your participation.