National Research (NRC) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue decreased 3% year-over-year to $35.0 million, mainly due to lower recurring revenue from US clients and non-core solutions.

• Net income for Q2 2024 was $6.2 million, down from $7.3 million in Q2 2023; diluted EPS was $0.26 compared to $0.29 in the prior year quarter.

• Operating margin for Q2 2024 was 25%, down slightly from 26% in Q2 2023.

• Recurring contract value declined to $138.4 million as of June 30, 2024, reflecting a lack of new contract growth to offset losses.

• NRC acquired Nobl, Inc. (NOBL Health) for $5.5–$6 million in cash plus up to $1 million in earnout, expanding patient and employee experience offerings.

Financial highlights

• Six-month revenue ended June 30, 2024 was $70.3 million, a 3% decrease year-over-year.

• Operating income for the first half of 2024 was $17.6 million, down from $18.4 million in the prior year period.

• Cash provided by operating activities increased to $18.8 million for the first half of 2024, up from $16.6 million in 2023.

• Cash and cash equivalents were $485,000 at June 30, 2024, with $21 million available on the line of credit and $56 million on the delayed draw term loan.

• Net indebtedness at June 30, 2024, was $42 million.

Outlook and guidance

• Management expects increased direct and SG&A expenses in future quarters due to investments in AI solutions, new leadership, and product development.

• Other expense is expected to rise due to the August 2024 credit agreement amendment, which extended debt maturity and revised interest rates.

• New and acquired products, including AI-powered features and NOBL Health's rounding tool, to be released in the next 30 days.

• Future capital expenditures for headquarters renovations are estimated at $4.9 million in 2024 and $3.4 million in 2025.