Executive Summary

Q2 revenue was $7.687M, up 10% sequentially vs Q1 ($6.962M) and down 20% YoY vs Q2 2023 ($9.651M); gross margin improved to 77% from 75% in Q1. GAAP net income was ~$0.007M ($0.00 diluted EPS), and non-GAAP EPS was $0.22 .
Communications was flat YoY and +9% QoQ; ACCESSWIRE revenue increased 17% QoQ on volume recovery and pricing, with average price up ~15% in the quarter. Compliance revenue fell 53% YoY given prior-year one-time proxy/print projects; deferred revenue ended Q2 at $5.476M .
Management announced a plan to sell the Compliance business and pivot fully to subscription/MRR, targeting ~$400k quarterly cost savings in H2 and an additional $300–500k by year-end; term loan covenants were amended and the company aims to be debt-free nearly two years earlier if the sale occurs .
Consensus estimates from S&P Global were unavailable for ISDR this quarter; no beat/miss analysis vs Street can be provided. We will monitor for SPGI mapping availability.

What Went Well and What Went Wrong

What Went Well

ACCESSWIRE rebounded: “revenue increased 17% over the first quarter,” with volumes “come back in line” and average price up ~15%, driven by new large accounts and broader distribution add-ons .
Margin execution: Communications gross margin rose to 78% (from 75% in Q1), supporting consolidated gross margin improvement to 77% in Q2 .
Strategic pivot: Management “beginning the process to establish a time line to sell the Compliance business” and shift to subscription-first MRR, alongside $400k per quarter cost savings in H2 and further $300–500k by year-end .

What Went Wrong

Top-line YoY decline: Q2 revenue fell 20% YoY to $7.687M, reflecting the absence of 2023’s one-time proxy/print projects; compliance revenue down 53% YoY .
GAAP profitability compressed: Operating income declined to $334k vs $1.747M in Q2 2023 and GAAP net income fell to $7k from $1.363M; operating cash flow was negative $(190)k in Q2 .
Project-driven Compliance volatility: Transfer agent and print/proxy volumes were lower as market activity slowed, highlighting lumpiness and underscoring the need for a portfolio mix shift to recurring communications .

Financial Results

Metric	Q4 2023	Q1 2024	Q2 2024
Revenue ($USD Millions)	$7.539	$6.962	$7.687
GAAP Diluted EPS ($)	$(0.19)	$(0.04)	$0.00
Gross Margin (%)	74%	75%	77%
Operating Income ($USD Millions)	$(0.105)	$(0.052)	$0.334
EBITDA Margin (%)	3%	13%	15%
Adjusted EBITDA Margin (%)	14%	11%	19%
Non-GAAP Diluted EPS ($)	$0.15	$0.08	$0.22
Operating Cash Flow ($USD Millions)	$0.770	$0.986	$(0.190)

Key comparisons:

Q2 YoY: Revenue $7.687M vs $9.651M (-20%), gross margin 77% vs 76% (+100bps), GAAP EPS $0.00 vs $0.36, Non-GAAP EPS $0.22 vs $0.53 .
Q2 QoQ: Revenue +10% vs Q1, Communications +9%, ACCESSWIRE +17% .

Segment and mix:

Segment Mix/Change	Q4 2023	Q1 2024	Q2 2024
Communications % of Revenue	75%	78%	77%
Compliance YoY Change	+20% YoY	−27% YoY	−53% YoY

KPIs:

KPI	Q4 2023	Q1 2024	Q2 2024
Active Customers (TTM)	11,924	12,093	12,388
Subscriptions (Count)	1,053	1,043	1,032
Deferred Revenue ($USD Millions)	$5.412	$5.584	$5.476
Avg Subscription ARR per Customer ($/yr)	$8,523 (Q2’23)	—	$10,057 (Q2’24)

Note on commentary discrepancy: CEO noted “combined news distribution brands…revenues grew 12% YoY” for the quarter, while press release shows Communications flat YoY; the CEO’s remark appears to be specific to the news distribution sub-segment within Communications rather than total segment revenue .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
News Distribution Volumes	H2 2024	“Flat remainder of year” (early indicators)	Volumes up; exceeding pace to reach high-teens % by year-end; targeting ~20% next year	Raised
Cost Savings (Run-rate)	H2 2024 onward	Not quantified	~$400k per quarter; plus $300–500k additional by year-end	New/Quantified
Subscription/MRR Pivot	2024–2025	Testing subscriptions; 5–10% quarterly subscription growth	Full shift underway; pilot added ~100 subscriptions in a month; report MRR/churn/NDR next quarter	Accelerated
Avg Subscription ARR per Customer	Through Q3 2025	~$6,750 entry tier; mid/high tiers planned	~$14,000 per year target by Q3 2025	Raised
Capital Allocation	2024	Hold cash; dividends/paydown unlikely in 2024	Consider buybacks if excess cash and after covenant compliance; potential proceeds from Compliance sale for debt paydown and buybacks	More optionality
Debt Reduction Timeline	Original maturity Dec 2028	$20M term loan; ~$18M balance at Q2	Aim to be debt-free almost two years earlier contingent on Compliance sale; covenants amended for headroom	Pulled forward

Earnings Call Themes & Trends

Topic	Q4 2023 (Q-2)	Q1 2024 (Q-1)	Q2 2024 (Current)	Trend
AI/Technology (AImee)	Media Suite launched; ARR tiers and roadmap	Capitalized dev $245k; platform enhancements	~20% customers using AImee for drafting; higher usage in pitching; plan to monetize via auto scheduling by year-end	Adoption rising; monetization ahead
Macro/Industry Volumes	Market share up; Canada slowdown; incumbents’ volumes tracked	Industry-wide PR volumes flat; pricing pressure in Q1	PR slowdown tied to capital markets; industry CAGR ~8% historically, now ~0%; ISDR gaining share	Industry weak; ISDR share gains
Product Performance (ACCESSWIRE/Newswire)	ACCESSWIRE +1% QoQ; pricing held	ACCESSWIRE down YoY; aggressive pricing/APIs; margins pressured	ACCESSWIRE revenue +17% QoQ; avg price +15%; large account wins; add-ons broaden regions	Rebound and mix/pricing tailwind
Regional Trends	Canada cautious; U.S. pricing/lift	—	More global add-ons (NA, APAC, Europe) in distribution packages	Broader geo distribution
R&D Execution	New CTO; product teams; Media Suite iteration focus	Capitalized $245k dev; IR webcast/website growth	New customer experience and product orgs; plan to disclose MRR/NDR next quarter	Scaling org for SaaS KPIs
Regulatory/Legal/Compliance	Compliance growth from projects	Compliance down sharply; project-based volatility	Plan to sell Compliance; consider shared services with buyer; accounting treatment for discontinued ops	Strategic exit

Management Commentary

“We are beginning the process to establish a time line to sell the Compliance business…to be a fully public relations and investor relations communication technology company.”
“Volumes were up…combined news distribution brands showed nice signs of recovery…Average price did move 15% higher as well for the quarter.”
“We will see approximately $400,000 of savings per quarter…further savings…$300,000 to $500,000 by the end of the year.”
“We…entered into an amendment of the term loan to modify the covenants…believes that [we] will be able to exit a portion of the Compliance business…to be debt-free almost 2 years earlier than originally planned.”
“Subscription customers…up 2% year-over-year…pilot…added 100 of these new subscriptions…we will be moving our metrics to MRR, churn rate, net dollar retention…”

Q&A Highlights

Buybacks and capital allocation: Management will prioritize generating cash and covenant compliance; repurchases are possible if excess cash is achieved and/or from sale proceeds, consistent with past buybacks .
Volume/pricing dynamics: Volume rebound reflects market share gains and new sales leadership; pricing uplift from larger customers and expanded regional add-ons (NA/APAC/Europe) .
Compliance divestiture: No formal process yet; market canvass planned; target to complete within <6 months if market values align; potential shared services post-transaction .
AImee adoption: ~20% of customers use AImee for drafting; highest usage in pitching; roadmap to auto-schedule posts and drive subscription revenue by year-end .
Industry slowdown drivers: Capital markets constraints reduce PR output; budgets down across PR firms; ISDR growing share even as industry growth near zero .
Subscription pilot conversion/margins: ~50% one-call closes with existing customers; MRR product at ~80% gross margin with defined add-on roadmap .

Estimates Context

Wall Street consensus estimates via S&P Global were unavailable for ISDR this quarter due to missing CIQ mapping. As a result, we cannot provide a formal beat/miss analysis vs consensus. We will monitor for mapping resolution to include estimate comparisons in future quarters.

Key Takeaways for Investors

Sequential recovery with margin leverage: Revenue +10% QoQ, gross margin +200bps QoQ to 77%, and EBITDA/Adj. EBITDA margins improved; ACCESSWIRE volumes/pricing momentum are tangible positives .
Strategic simplification is a catalyst: Planned sale of Compliance and pivot to subscription/MRR should reduce lumpiness, enhance visibility, and potentially re-rate valuation toward SaaS peers .
Cost actions underpin near-term earnings power: ~$400k/qtr savings in H2 plus $300–500k incremental by year-end create operating leverage if volumes/pricing sustain .
Balance sheet path improves: Covenant amendments plus potential proceeds from Compliance sale could accelerate debt-free status nearly two years earlier than planned; optionality for buybacks increases thereafter .
KPI evolution: Expect disclosure of MRR, churn, and NDR next quarter; average subscription ARR per customer already at $10,057, with management targeting ~$14,000 by Q3 2025 .
Watch narrative risks: Project-based Compliance declines, industry-wide PR volume softness, and Q2 negative operating cash flow highlight execution importance through the transition .
Near-term trading setup: Potential announcement milestones (Compliance sale process, subscription metrics, volume/pricing updates) are likely stock catalysts in H2; monitor inbound enterprise wins and ACCESSWIRE growth .

ISSUER DIRECT CORP (ISDR)·Q2 2024 Earnings Summary