ACCESS Newswire Inc. (ACCS) Q3 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call presents a mixed sentiment. Financial performance shows modest improvement, with revenue and EBITDA growth, but cash flow is negative due to tax payments. Product development costs are expected to rise, and regulatory risks persist. The Q&A highlights some positive trends in market share and strategic growth plans, but management's lack of detail on future initiatives tempers optimism. The overall sentiment is neutral, as improvements are offset by uncertainties and lack of guidance.

Key Financial Performance

Revenue $5.7 million, up 2% sequentially and year-over-year from $5.6 million. The increase was due to an increase in core press release revenue of 7% driven by higher volume.

Adjusted EBITDA $933,000, representing 16% of revenue, up from $546,000 or 10% in the same quarter of last year. This improvement reflects operational realignment, cost control, and a shift to subscription-based revenue.

Gross Margins 75%, consistent with prior year levels. Despite increased distribution costs, efficiencies in operations offset these costs.

Operating Loss $184,000, significantly improved from a loss of $604,000 in Q3 of 2024. This improvement is attributed to lower operating expenses and operational efficiencies.

Total Active Customers 12,445, up slightly from the prior quarter and year, indicating customer retention and modest growth.

Subscription Customers 972, showing modest sequential growth and retention strength.

Average Recurring Revenue per Subscribing Customer $11,651, up 14% year-over-year, driven by successful upselling strategies and a strong value proposition.

General and Administrative Expenses Decreased by $409,000 or 22% for the quarter compared to Q3 2024, due to reductions in bad debt expense, employee-related expenses, and indirect costs.

Sales and Marketing Expenses Increased by $34,000 or 2% for the quarter but decreased by $924,000 or 16% for the first 9 months of 2025 compared to the same period in 2024, due to lower headcount earlier in the year.

Non-GAAP Net Income $760,000 or $0.20 per diluted share, up from $187,000 or $0.05 per diluted share in Q3 2024, reflecting improved profitability.

Cash on Hand $3.3 million, negatively impacted by $1.1 million in tax payments related to the sale of the compliance business.

Adjusted Free Cash Flow Negative $418,000 for the quarter, compared to $1.4 million in Q3 2024, primarily due to tax payments related to the compliance business sale.

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Operating Highlights

AI-driven automation initiatives: Internal editorial validation system fully deployed, saving approximately 5% of editorial time per release. Customer-facing version to be rolled out by year-end, expected to save an additional 5%.

Social media integrations: Key integrations with leading management platforms to be launched by year-end, enabling real-time news distribution and measurement.

# kill the report initiative: Developing an AI-based real-time prompting and alerting system to replace traditional distribution reports.

Subscription-based revenue growth: Subscription customers increased to 972, with average recurring revenue per subscriber rising to $11,651, up 14% year-over-year.

Expansion into education sector: Launched EDU program offering free access to PR tools for students and academics, aiming to build long-term brand loyalty.

Operational efficiencies: Operating loss reduced significantly to $184,000 in Q3 2025 from $604,000 in Q3 2024. General and administrative expenses decreased by 22% year-over-year.

Cost control measures: Negotiating a sublease on corporate offices, expected to save over $300,000 annually.

Shift to subscription-first approach: Subscription revenue now accounts for approximately 50% of total revenue, reflecting a strategic pivot.

Rebranding and divestiture: Rebranded the business and sold the legacy compliance business, reducing debt by 83% and operating expenses by 7%.

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Risk or Challenges

Revenue Growth: Revenue growth is modest, with only a 2% year-over-year increase. This slow growth could hinder the company's ability to scale and compete effectively in the market.

Decline in Revenue Streams: Revenue from Pro webcasting and IR website solutions has declined, offsetting gains in press release revenue. This indicates potential challenges in diversifying revenue streams.

Operating Loss: Although operating losses have decreased, the company still posted a loss of $184,000 for Q3 2025, which could impact financial stability.

Cash Flow Challenges: Negative adjusted free cash flow of $418,000 for Q3 2025 and significant tax payments related to the sale of the compliance business have strained cash reserves.

Customer Growth: Customer growth is modest, with subscription customers at 972, falling short of the 1,200 target. This could impact future revenue and market share.

Dependence on Subscription Model: The shift to a subscription-based model is ongoing but not yet fully realized, posing risks to revenue stability during the transition.

Distribution Costs: Increased distribution costs, despite operational efficiencies, could pressure gross margins in the future.

Economic Uncertainty: Forward-looking statements highlight risks from economic conditions and market uncertainties, which could impact future performance.

Product Development Costs: While product development expenses have remained consistent, the company anticipates higher costs for upcoming enhancements, which could strain resources.

Regulatory and Compliance Risks: The company has divested its compliance business, but regulatory risks remain a potential challenge, especially with ongoing SEC reporting requirements.

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Guidance & Outlook

Revenue Growth: The company anticipates increases in core press release revenue will lead to higher revenue growth rates in the quarters ahead.

Subscription Model Transition: The company is on track with its goals of transitioning to a majority subscription model, with subscription customers increasing and average ARR per subscriber exceeding $11,650. The focus remains on customer retention and platform adoption.

Product Enhancements: Planned product upgrades include advancements to monitoring and delivery systems, real-time results from social media platforms, and integration with a major social media management platform. These enhancements are expected to drive ARR growth and provide additional value to customers.

AI-Driven Automation: The company is advancing AI-driven automation initiatives, including a customer-facing editorial validation system to be rolled out by year-end, expected to reduce editorial efforts by 5% and improve content quality.

Social Media Integrations: Key social media integrations with leading management platforms are on track to launch before the end of the year, expanding distribution and measurement capabilities for customers.

#KillTheReport Initiative: The company plans to introduce an AI-based real-time prompting and alerting system to replace traditional distribution reports, providing customers with actionable insights.

Educational Program (EDU): The company has launched an EDU program offering its PR platform to students and academics at no cost, aiming to build long-term brand loyalty and prepare the next generation of professionals.

Revenue and Profitability Outlook: The company expects continued sequential improvement in revenue and adjusted EBITDA in the fourth quarter, with a focus on expanding subscription revenue, driving gross margin efficiency, and delivering new product capabilities.

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Shareholder Return Plan

The selected topic was not discussed during the call.

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Key Q&A

Q:Can you provide additional details on the sequential growth in subscription ARR?

A:At the end of Q3, the average contract value was about $13,000, slightly down from Q2 but still trending positively overall in total ARR.

Q:Do you expect to reach 1,200 subscription customers this year or next year?

A:The target of 1,200 subscription customers is expected to be slightly missed this year. However, the company anticipates exceeding 1,500 to 1,600 subscription customers by this time next year.

Q:Why did gross margins come in below 75% this quarter, and what is the outlook?

A:Gross margins were at 75% for Q3, impacted by additional distribution and infrastructure costs to scale operations. The company expects gross margins to expand next year, supported by internal AI automations and industry growth.

Q:What are the growth expectations for IPO candidates, existing public companies, and add-on sales?

A:The company is focusing on a 'trade-up, trade-in, trade-up' strategy, targeting large enterprise brands and IPO markets. They expect growth from both new and existing customers, with plans for significant growth initiatives to be announced next year.

Q:How have industry volumes in the press release industry trended recently?

A:The company has grown its market share from 0% to 20% over the last 8 years, while competitors have seen declines. The industry is expected to grow due to AI-driven content needs, with the company positioned to benefit from this trend.

Q:Are there additional cost savings expected after the sublease of the corporate office?

A:The sublease will save $300,000 annually over the next two years. Additional savings of $30,000 to $50,000 per quarter are expected from infrastructure optimizations, but these savings are considered nominal and will likely be reinvested for growth.

Q:How has the marketing strategy changed after the sale of the compliance business and rebranding?

A:The rebranding to ACCESS Newswire has streamlined the business and improved brand recognition. The company now focuses on communications, brand building, and storytelling, with increased traffic and engagement post-rebrand.

Q:Review of Unclear Management Responses

A:Management avoided providing specific details on the significant growth initiatives planned for next year, stating they would be discussed in the year-end call. Additionally, while discussing cost savings, they did not provide precise percentages or detailed breakdowns of future savings.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

ACCS Transcript

ACCESS Newswire Inc. (ACCS) Q3 2025 Earnings Call Transcript

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ACCESS Newswire Inc. (NYSE:ACCS) Q1 2025 Earnings Call Transcript

Unknown5-20

The earnings call presents a mixed picture: improved cash flow, gross margin increase, and debt reduction are positive, but revenue and EPS misses, operating loss, and competitive pressures are concerning. Q&A insights reveal some uncertainties in sales cycles and product impacts. The lack of a share repurchase program and unclear guidance dampens optimism. Given the company's small size and the mixed signals, a neutral stock price movement is likely over the next two weeks.

ACCESS Newswire, Inc. (ACCS) Q1 2025 Earnings Call Transcript

Unknown5-13

The earnings call revealed mixed results: improved gross margins and cash flow, but a decline in revenue and an operating loss. The Q&A highlighted efficiency gains and subscription growth, but management's lack of clarity on certain strategies raises concerns. Given the absence of a share repurchase program and market uncertainties, the stock price is likely to remain stable in the short term, leading to a neutral prediction.

Earnings call transcript: ACCESS Newswire Q4 2024 revenue miss impacts stock

Unknown3-25

The earnings report reveals a significant net loss and decreased revenue, despite slight improvements in EBITDA. The transition to a subscription model and competitive pressures add uncertainty. The Q&A highlights strategic priorities but lacks clear timelines, adding to the uncertainty. Despite debt reduction, the financial health is concerning, with increased operating expenses and cash depletion. These factors outweigh the positive aspects like non-GAAP profitability and planned share repurchases, leading to an overall negative sentiment.

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