ACCESS Newswire Inc. (ACCS) Earnings Call Transcript & Summary

Welcome to ACCESS Newswire's Second Quarter 2026 Earnings Conference Call. My name is Forrest MacConnell, and I'm a product manager here at ACCESS Newswire on the IR product team. I've been with the company since 2021, initially joining what was then our onboarding team, which has since evolved into our customer experience team. Today, I lead our Investor Relations products and services across websites, newsrooms and shareholder engagement, supporting hundreds of our public company customers as well as emerging companies preparing to enter the public markets. Additionally, my team and I also managed the New York Stock Exchange subsidy Whistleblower product and implementation for some of the world's largest and most recognizable brands. My time here at ACCESS has been incredibly rewarding, and I couldn't be more excited about what's ahead for our customers, for our company and for my team as we continue to grow and evolve our products and services. Before we begin, we'd like to remind everyone that statements made in this conference call concerning future revenues, results from operations, financial position, markets, economic conditions, product releases, partnerships and any other statements that may be construed as predictions of future performance or events are forward-looking statements. These statements involve known and unknown risks and uncertainties as they may cause actual results to differ materially from those expressed or implied by such statements. We will also discuss certain non-GAAP financial measures, which are provided for informational purposes and should be considered in addition to, not as a substitute for GAAP results. With that, I'll turn the call over to our Founder and Chief Executive Officer, Brian Balbirnie; and our Chief Financial Officer, Steven Knerr.

Thank you, Forrest, and good morning, everyone, and thank you for joining us to discuss our second quarter 2026 results. Let me start with the headline number. Second quarter revenues was $5.6 million, up 5% sequentially from $5.3 million in the first quarter and essentially consistent with the second quarter of last year. Core press release revenue increased 2% year-over-year which tells us that the underlying engine of this business remains healthy. That was offset, however, by lower revenues from our webcast business where we saw fewer virtual annual meetings and less reseller activity. I want to spend a moment on where we made our real progress. Average ARR per subscription customer was $12,718 at the end of the quarter, up from $11,039 a year ago, a 15% increase and another quarter of ARR growth. This is the clearest evidence of our platform strategy, moving customers on to higher-value tiers continues to work. That progress is being driven by the products that we built and have brought to market over the last 90 days. Our social monitoring platform and our new insights and analytics report are both live and early adoption is encouraging. We expect to release several more products before year's end, and our focus is now turning that innovation into subscriber and revenue growth in our subscription business. Steve is going to walk you through the numbers in detail, and then I'd like to touch on a few topics from the first half of this year and what our priorities are for the second half of the year. Steve?

Thank you, Brian, and good morning, everyone. I will now take you through the second quarter and first half 2026 financial results. Total revenue for the second quarter of 2026 was $5.6 million, an increase of approximately $291,000 or 5% compared to Q1 2026 and essentially unchanged compared to Q2 2020. The sequential increase was primarily driven by a 10% increase in volume from our core press release business, reflecting the seasonal pattern we typically see following the first quarter. Core press lease revenue increased 2% compared to Q2 2025, while lower revenue from our Pro Plan customers partially offset that growth. Webcasting revenue was also lower compared to Q2 2025 due to fewer virtual annual meetings and reseller activity. For the first 6 months of 2026, total revenue was $10.9 million, down $152,000 or 1% from $11.1 million in the first half of 2025. The year-over-year decline was primarily attributable to lower webcasting and Pro Plan revenue. Importantly, revenue from our Core press release business increased 1% for the first half of 2026 compared to the same period last year. Gross margin for Q2 2026 was $4.1 million or 73% of revenue compared to $4 million or 74% of revenue in Q1 2026, and $4.3 million or 76% of revenue in Q2 2025. The first half of 2026 gross margin was $8.1 million or 74% of revenue compared to $8.6 million or 77% of revenue in the first half of 2025. The year-over-year decline in gross margin percentage primarily reflects higher press release distribution costs from a combination of new partners price increases from existing partners and additional usage under variable contracts. As Brian will discuss, we have implemented initiatives designed to reduce cost of revenues by approximately $150,000 in the back half of the year. Moving to operating expenses. Total operating expenses were $4.4 million in Q2 2026, down slightly from $4.5 million in Q2 2025. For the first 6 months, total operating expenses were $9.1 million, down approximately $0.4 million or 4% from $9.5 million in the first half of 2025. We continue to balance cost discipline with targeted investment in areas we believe can support future growth. General and administrative expenses were $1.35 million in Q2 2026, down $402,000 or 23% year-over-year. For the first half of 2026, G&A expenses were $3.1 million, down $574,000 or 15%. The decrease reflects lower nonrecurring expenses, stock-based compensation and bad debt expense as well as lower insurance and office costs following the sale of the compliance business and our move to remote work environment. Sales and marketing expense was $1.9 million in Q2 2026, up $427,000 or 29% compared to Q2 2020. For the first half of 2026, sales and marketing expense was $3.6 million, up $514,000 or 17%. This increase reflects our deliberate investment in advertising and trade shows as we work to convert our product innovation into customer and revenue growth. Product development expense was $533,000 in Q2 2026, down $122,000 or 19% year-over-year and $1.1 million for the first half of 2026, down $295,000 or 21%. The decrease was primarily due to higher capitalized software costs. We capitalized $110,000 of software development costs in Q2 2026 and $209,000 for the first 6 months of 2026 compared to $0 and $23,000, respectively, in the comparable periods of last year. The costs mostly reflect the investment we made in our social monitoring and insight and analytics enhancements that we rolled out during the second quarter, as well as some additional enhancements Brian will speak more about. Operating loss for Q2 2026 was $307,000 compared to $249,000 during the second quarter of 2025. For the first half of 2026, operating loss was $1 million compared to $926,000 in the first half of 2025. The year-over-year change was primarily driven by lower gross margin, partially offset by lower operating expenses. On a GAAP basis, net loss from continuing operations was $354,000 or $0.09 per diluted share for Q2 2026 compared to $239,000 or $0.06 per diluted share during the second quarter of 2025. For the first 6 months, net loss from continuing operations was $965,000 or $0.25 per diluted share compared to $1 million or $0.26 per diluted share in the first half of 2025. On a non-GAAP basis, EBITDA was $0.5 million or 8% of revenue for the second quarter of 2026 compared to $0.5 million or 9% of revenue during the second quarter of 2025. Adjusted EBITDA was $0.6 million or 11% of revenue for Q2 2026 compared to $0.8 million or 15% of revenue in Q2 2025. Non-GAAP net income was $0.3 million or $0.08 per diluted share during the second quarter of 2026 compared to $0.6 million or $0.14 per diluted share in the prior year quarter. Adjusted free cash flow was $50,000 for Q2 2026 compared to $250,000 in Q2 2025. For the first half of 2026, EBITDA amounted to $0.5 million or 4% of revenue, consistent with the first half of 2025. Adjusted EBITDA was $1.2 million or 11% of revenue compared to $1.4 million or 13% of revenue in the prior year period. Non-GAAP net income was $0.7 million or $0.18 per diluted share compared to $0.8 million or $0.20 per diluted share last year. Adjusted free cash flow was $1 million for the first half of 2026 compared to $1.2 million for the first half of 2025. Cash flow from operations was $173,000 in Q2 2026 compared to $135,000 in Q2 2025. We ended the quarter with just under $3 million in the bank, and Brian will talk a little further about our share repurchase activity, which was ongoing during the quarter. Deferred revenue balance, which we expect to recognize over the next 12 months, was $5.1 million as of June 30, 2026, compared to $5.3 million at December 31, 2025. As we enter the second half of the year, our financial priorities remain consistent: maintain operating disciplines to invest selectively behind the product and go-to-market initiatives that can drive revenue and subscription growth and continue to strengthen the economics of the business. The progress in subscription ARR per customer continued positive adjusted EBITDA and our focus on cost efficiencies gives us a solid foundation as we work to improve top line performance. With that, I will turn it back over to Brian.

Thanks, Steve. To expand a few points to what Steve mentioned, let me try to tie to actionable results that you will see in the back half of this year as well as the things that we have planned on our radar. But first, I want to begin by discussing a little bit about our capital allocation, specifically our share repurchase plan, which has continued nicely this quarter. We repurchased 40,000 shares for a little over $300,000 in the quarter, pushing our total repurchase results since December '25 to 90,000 shares or $700,000 as of today. This leaves us roughly $300,000 in the plan to be used here this quarter. The buyback has resulted in us returning over 2% of our common shares outstanding to date. Once the plan is completed, the Board of Directors will review the company's performance, share price and liquidity; and if all continues to align, we will institute another repurchase plan. It is my belief that we will continue to be active in buybacks as we continue to run the business with the cost discipline you have seen from us here this year, which has resulted in a 23% reduction in G&A this quarter. Additionally, as Steve mentioned, we have also undertaken steps to implement cost savings initiatives that we expect to reduce cost of revenue by approximately $150,000 in the back half of this year or 125 to 150 basis point improvement. Cost cutting is not our singular motive. The cost of revenue savings is being deployed around the business, specifically in sales and marketing with our new hires to fuel customer acquisition and top line revenue growth for the future, something that we will watch and work hard to deliver both in growth and customer accounts at the same time, maintain or reduce our customer acquisition costs. Having the incremental gross margin savings and anticipated customer revenue growth will help us also improve to move our gross margins back into the higher 70% range in the back half of the year. We are expecting these new products that will be released the rest of the year as well as average initial purchase increasing as the 2 drivers to this expectation. For the quarter, both our social monitoring add-on and our new Kilda report now called Inside Analytics performed well. Specifically, the new insight and analytics is driving average purchases higher, seeing several hundred customers opt to upgrade to this new actionable insight dashboard. We have learned a lot in the past few weeks that this report has been available to our customers and intend to continue to push the envelope in leading the industry in report engagement, brand monitoring and real-time actionable sentiment. Social monitoring also solidified a missing component of our platform and will help us push our offerings to a broader audience in the future, specifically under some of our brands like pressrelease.com, where customers will be able to begin buying social monitoring for 30 days to try before committing to a full annual subscription. We believe this will help our smaller SMB customers understand and derive value from our platform without the bigger commitment upfront. Now what is coming. We have a full product road map for the second half of the year. I will try to touch on a few key components, but be sure to be watching for our marketing messaging and press releases to learn more. On the Investor Relations side of the business, we have 2 products ready in the queue. The first is an extension of our commitment to excellence and really a part of our ACCESS Verified solution that we rolled out earlier this year at no cost to our clients. This is geared towards our reporting and publicly traded customers whereby they can submit the earnings release or really any financial release into our Access Verified for Financials platform and get back an assurance report, what our platform is looking for the consistency of financial tables into and with the narrative to be sure that every representation of a financial metric is accurate, crossed, tick, tied and consistent throughout the document. We have tested this with hundreds of customers earnings releases from the past, worked with our Investor Relations community and audit firms to gather feedback and are excited to bring this to market this coming week. Second, on the IR product front, we'll begin our upgraded ACCESS events platform, where we are upgrading our events workflow technology into and with our ecosystem. This new upgrade will allow customers to preschedule their entire year's earnings calls, advisory releases for earnings announcements and move between shared solutions from our PR and IR in a seamless way. Our continued commitment is to have 2 new upgrades to our customers each quarter, one that improves communication workflow and technology by allowing our customers to tell their stories easier and with more options at no additional cost. And a second, whereby we provide a value add on and a small incremental increase in the press release, actionable or subscription business. By doing this, we feel we will continue to drive value to our customers beyond what the market is doing and also put us in a position to have the opportunity to garner higher revenues as the incremental products are utilized. On the public relations side of the business, we have a new content distribution component, we think is going to be spectacular, both not only in the future, but truly well beyond and where we're headed as a business. The first initial rollout is going to give customers the ability to expand upon time to distribution of a press release to a broader audience without all the complexity of human capital time to accomplish this. This new feature will give customers the ability to select any social platform, journalist group and tailor their messages to those audiences within our platform rather than going to several different tools to post press releases and everything else to accomplish this. In early Q4, our customer is going to have the option to add on our new ACCESS content studio or at least the initial version of this fully robust MCP supported product. The content studio will connect to your social accounts, build an FAQ of your business and brand message for that press release, Sketch out of white paper and Newsletter Block and format all of these options to automatically be delivered to your audiences wherever they consume your message and content. We see this opportunity to roll this out to our customers at a 10% to 15% increase in current subscription. The value of the customer is going to be significant. First, they will have one central real-time platform for all their engagement analytics, story generation, audience building and targeting wrapped into one. This innovation will lead us to a full studio toolbox concept that we have spoken about recently by the end of the year and into next year, we'll be releasing. As I said earlier, we have a full product pipeline that is robust and tied to our revenue growth strategy over the next couple of years. It is not easy to articulate all of these in what we're doing while remaining competitively agile as one of the only publicly traded newswires. Customer numbers were up 24% in Q2 for this year compared to last year, an increase of 6% over the prior quarter as well. Where I'm most encouraged is in the private customer growth that we achieved this quarter. This is largely being driven from our e-commerce initiatives as private company brand platforms. As we continue to learn from these customer needs, we feel very good about moving a fair percentage of these customers into subscribers over the next 12 months. Today, it's about delivering for them, helping build their stories and educating them on the immense opportunity our platform can bring to a brand when they're seeking to find coverage and exposure. But it's critical to listen to them today, so we're afforded these opportunities in the future. And Q2 ARR increased 15% year-over-year from $11,039 to $12,018, as Steve and I said previously, pushing subscriber revenue 23% higher for the prior period. We also ended the quarter up in total subscriptions ending with 1,162 up 4% from 1119. Retaining these customers is critical to our long-term business Retention for the quarter was 94%, up 2% from the end of Q1 this year and 3% prior year quarter. Our net revenue retention has also continued to grow since last year and now ended Q2 at 124%. It'd be nice to guide improvements here in retention and net revenue retention, but our focus in the back half of the year is going to be on new subscriptions while maintaining this threshold for current customers in the back half. Additionally, we continue to focus and refine our other revenues and learn how we can move these customers into lower tier subscriptions. Like we have said before, these are reoccurring at the time of delivery revenue customers that do commit to a fixed amount of dollars spread over a fixed period. That business today is approximately 40% of our overall revenues or nonsubscription revenue, if you think about it that way. And while we have planned in the second half of the year, we will see our recurring revenue business, our ARR business, get closer to the 80% number where we want to be this time next year. So why are all these new products, metrics or customer growths and increased investment in sales and marketing important? Well, Gartner recently published a report that speaks to the PR industry, calling it to double by the end of 2027. AI being a significant contributor to this. This is exactly what we have been saying to our shareholders late last year and early this year. We independently also have a view that this market is going to return to double-digit growth in 2027 and beyond, and we intend to capture it. Yes, AI is enabling this, but the number of new businesses being formed is also driving this assumption. This is coming from the research that we've done that we'll refer to as the hustle generation. This is tied to tiers right between Gen Z and Millennials. These are the new decision makers in the IR, PR landscape, and our growing number of these have both regular career positions and side hustles, resulting in these additional businesses being registered and needing help tell their stories with products that we brought to market this year, like social monitoring and our insights and analyst reports that have contributed to revenue in the second quarter. Although I'm not fully satisfied with the overall results in the second quarter, I am proud of the advances that we've made and we continue to enter a new phase for ACCESS. We have one of the most comprehensive investor relations and public relations platforms in the industry that can be between both public markets and private enterprises globally. We remain confident in our ability to continue to strengthening our competitive position from here. I want to thank our teams, customers, partners and shareholders for their trust and ongoing support that allow us to bring access into every company in the world. With that, I'll turn the call over to the operator for questions. Operator?

[Operator Instructions] And the first question today is coming from Luke Horton from Northland Securities.

I just wanted to touch on pricing. As you think about all of these product enhancements kind of slated for the back half of the year, how are you kind of layering in any pricing increases or add-on pricing? Or just how do you think about pricing in general, given the product enhancement slated for this year and going forward?

Yes. Luke, it's Brian. Yes, each of the products that we've released already, the insight and analytics and social give customers the ability to try before you commit and have a different pricing here. So let me try to walk through a couple of them. In the Insight and analytics, for example, are customers that are paying for a press release as they get to consume it without a long-term contract or subscription, have the option to add it to any press release for an additional fee. So there's an incremental increase. We're seeing the benefits of our average price per release increase as a result of that. We think that's going to continue to get better. It's about 600-plus insights and analytics reports will run during kind of half of the Q2 period that we released that product. Our social monitoring, for example, initially was rolled out as an upgrade for $200 a month for our subscriber clients. They had the option to opt into that. Starting next month, we're going to move that product to, I think I said earlier on our pressrelease. com platform to give customers the ability to try before they commit to a longer-term contract. So like I said, we're hopeful that each of the quarters going forward over the next 6 to 8 quarters, we're going to have 2 products, one that further identifies the moat that we're building for our platform to give our customers more ability to establish their brand voice in their story in the press release without any additional cost. And then a very competitive product advancement that has an economic benefit to us. So this always ties back to our strategic view a couple of years ago when we guided to $15,000 in ARR, we have a product pipeline that will get us there. So the content studio will be another incremental $200 to $300 a month. The customers can add this on, and then the toolkit at full release next year will drive even more value. And that's not to say that we may not release a couple of additional things along the way that, again, have a no charge benefit to give our customers some value and keep them sticky.

Okay. Great. That's helpful. And then I guess just on the kind of sales efforts here, I guess, how much of the focus is growing with your existing client base versus kind of outbound sales efforts and any of these product enhancements specifically geared towards kind of customer acquisition or more so just kind of giving them a better product and growing with existing customers.

Yes. The investment in sales and marketing is really kind of a bifurcated model. So it's very comprehensive and Steve mentioned it earlier in his prepared remarks. For the first half of the year, we've probably spent 50% more in trade shows and conferences, right? Getting ourselves out there into the field to start to talk to customers on the street, understand their needs, what they're looking for and build our brand to help drive pipeline for us an opportunity. On the flip side, from a sales investment, we've hired more head count in our sales teams to be able to handle the number of inbound leads. And so conversely, for the past year, we've been focused on how do we take a customer from $10,000 to $11,000 to $12,000 in ARR. How do we convert customers from a bundled package or press release to add ARR subscription model. And we've done that, I think, relatively well. We've done it with good retention. We've done it with good dollar retention. And because of the investment in sales and marketing, now we're turning our focus more to outbound new customer acquisition to push and really deliver on the top line numbers that we want and will help fuel our growth for the future. So it's been a little bit of both. But right now, we're really wanting to maintain our current account base. We still feel like there'll be small percentages of our customers will see value from a bundled product to a subscription, but the growth really over the next 6 to 12 months is going to come from new customers coming into the platform.

And the next question will be from Jacob Stephan from Lake Street Capital.