Executive Summary

Q1 2021 revenue was $35.464M (+5% YoY) and operating income was $12.020M (+7% YoY), while diluted EPS fell to $0.36 on a sharply higher effective tax rate (20% vs. a 3% benefit in Q1 2020) .
Total Recurring Contract Value (TRCV) rose 6% to $149.5M, supported by continued client wins and 19% YoY growth in Voice of the Customer offerings .
Mix and cost dynamics were favorable in Direct expenses (34% of revenue vs. 37% last year), but SG&A rose to 27% of revenue on higher software hosting, contracted services, and compensation .
The company executed its M&A strategy by acquiring PatientWisdom’s IP and reiterated a capital allocation approach emphasizing organic growth, M&A, and dividends; NRC declared a quarterly dividend in April 2021, reinforcing shareholder returns .
Potential stock reaction catalysts: VOC momentum and TRCV growth vs. EPS pressure from tax normalization and FX-driven other expense; estimates from S&P Global were unavailable for Q1 2021, limiting beat/miss assessment .

What Went Well and What Went Wrong

What Went Well

“Revenue from our Voice of the Customer offerings increased by 19% in the first quarter of 2021 compared to 2020,” with new client wins including Wake Forest Baptist Health, San Francisco Health Network, and UC San Diego Health .
TRCV increased 6% to $149.5M, signaling sustained demand and network effects from added clients .
Direct expenses fell and improved mix: 34% of revenue vs. 37% last year, driven by lower postage/printing/paper and conference expenses (virtual format), partially offset by contracted services and higher salaries/benefits .

What Went Wrong

Diluted EPS declined to $0.36 from $0.46 YoY, primarily due to a higher effective tax rate as share-based compensation tax benefits decreased by $2.8M and state taxes rose .
SG&A rose to 27% of revenue (from 26% YoY), reflecting higher software hosting, contracted services, compensation, accounting/legal, and lease costs despite lower travel/meals .
Other net expense swung to a $408k expense from $176k income YoY, driven by FX revaluation on intercompany transactions, partially offset by lower interest expense from a declining term loan balance .

Financial Results

Consolidated P&L and EPS vs. Prior Periods

Metric	Q3 2020	Q4 2020	Q1 2021
Revenue ($USD Millions)	$33.477	$34.774	$35.464
Operating Income ($USD Millions)	$12.021	$10.187	$12.020
Total Operating Expenses ($USD Millions)	$21.989	$24.587	$23.444
Direct Expenses ($USD Millions)	$12.189	$12.818	$11.940
SG&A ($USD Millions)	$7.953	$8.887	$9.520
Depreciation/Amortization/Impairment ($USD Millions)	$1.847	$2.882	$1.984
Other Income (Expense) ($USD Millions)	($0.355)	($0.313)	($0.408)
Income Tax Provision ($USD Millions)	$2.088	$1.662	$2.380
Net Income ($USD Millions)	$9.578	$8.212	$9.232
Diluted EPS ($USD)	$0.37	$0.32	$0.36
Effective Tax Rate (%)	18%	17%	20%

Notes:

Q1 2021 revenue increased 5% YoY; operating income rose 7% YoY, while EPS declined on tax normalization .
Q4 2020 operating income was pressured by accelerated VOC improvements, distributed workforce changes, and goodwill impairment in Canada .

KPIs and Balance Sheet Highlights

KPI	Q3 2020	Q4 2020	Q1 2021
Total Recurring Contract Value ($USD Millions)	$147.5	$145.1	$149.5
VOC Recurring Contract Value ($USD Millions)	$115.5	$116.4	n/a
Net New Sales ($USD Millions)	$11.2	$4.6	n/a
Cash & Cash Equivalents ($USD Millions)	$21.855	$34.690	$43.454
Deferred Revenue ($USD Millions)	$17.328	$15.585	$17.614
Notes Payable (Current + LT) ($USD Millions)	$31.591	$30.608	$29.607

Margin Mix (Selected Ratios Provided by Company)

Ratio	Q3 2020	Q4 2020	Q1 2021
Direct Expenses as % of Revenue	36%	n/a	34%
SG&A as % of Revenue	24%	n/a	27%
Depreciation/Amortization/Impairment as % of Revenue	n/a	n/a	6%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Company guidance	FY/Q1 2021	None disclosed	None disclosed	Maintained (no formal guidance)
Dividends	Q2 2021	n/a	Declared quarterly dividend (April 2021)	Announced

No explicit revenue, margin, OpEx, OI&E, or tax-rate guidance ranges were issued in Q1 2021 materials; dividend announcements support shareholder return policy .

Earnings Call Themes & Trends

Note: A Q1 2021 earnings call transcript was not found in the available document set; themes are synthesized from press releases.

Topic	Q3 2020 (Prev-2)	Q4 2020 (Prev-1)	Q1 2021 (Current)	Trend
Voice of the Customer (VOC)	Strong demand; VOC RCV $115.5M (+27% YoY)	VOC RCV $116.4M (+19% YoY); efficiencies but margin pressures from platform acceleration	VOC revenue +19% YoY; continued new client wins	Positive demand momentum
TRCV growth	+10% YoY to $147.5M	+6% YoY to $145.1M	+6% YoY to $149.5M	Stable growth
Cost structure	Direct down as % of revenue; SG&A 24%	Increased D&A/impairment; Canada unit impairment	Direct 34%; SG&A 27%; D&A 6%	Mixed: efficiency in direct costs offset by higher SG&A
Distributed workforce/real estate	Shortened asset lives; moving to distributed model	Additional expenses; right-of-use impairment; renovations	Continued D&A and impairment impacts	Ongoing transformation
Conferences	Shift to virtual; reduced expenses	n/a	Conference revenue down $0.605M due to timing/format	Temporary headwind
Tax rate	18%	17%	20% (vs. 3% benefit PY)	Normalization upward
FX/Other income	Other expense ($0.355M)	Other expense ($0.313M)	Other expense ($0.408M) on FX revaluation	Continued FX sensitivity
M&A	n/a	n/a	Acquired PatientWisdom IP; plan to integrate capabilities	Strategic expansion

Management Commentary

“As we emerge from the impact of COVID-19, our focus continues on increasing revenue growth rate and enabling human understanding for the clients we serve.”
“Revenue from our Voice of the Customer offerings increased by 19% in the first quarter of 2021… and we continued our momentum of winning new clients, including Wake Forest Baptist Health, San Francisco Health Network and UC San Diego Health.”
“We have adopted a capital allocation strategy that… will leverage our available liquidity, along with our continued strong free cash flow to support additional M&A activity, as well as provide returns to shareholders through our dividends.”
CFO detail: SG&A increased due to software/platform hosting, contracted services, compensation, accounting/legal, and lease costs; Direct expenses decreased due to lower postage/printing/paper and conference expenses; and other expense reflected FX revaluation .
Tax commentary: Effective tax rate rose to 20% from a 3% benefit, primarily due to decreased tax benefits from share-based compensation and higher state taxes .

Q&A Highlights

A Q1 2021 earnings call transcript could not be located; NRC did publish a press release and maintained investor communications, including dividend announcements. No public Q&A transcript was available for analysis .

Estimates Context

Wall Street consensus estimates from S&P Global for Q1 2021 EPS and revenue were unavailable at the time of this analysis due to data access limitations. As a result, we cannot assess beats/misses relative to consensus for Q1 2021. Values would be retrieved from S&P Global if available.

Key Takeaways for Investors

VOC momentum and TRCV growth underpin medium-term revenue visibility; client wins in notable systems reinforce competitive differentiation and network effects .
EPS decline is largely tax-driven; operating performance (revenue and operating income growth) remains intact, suggesting normalization rather than operational deterioration .
Cost mix is improving in Direct expenses, but SG&A intensity reflects investment in platforms, services, and talent; monitor SG&A leverage as revenue scales .
FX revaluation can introduce volatility in “Other” income/expense; interest expense decline from debt amortization provides a partial offset .
M&A (PatientWisdom IP) aligns with Human Understanding strategy; integration timing later in the year may unlock incremental client value—watch for commercialization updates .
Dividend continuity supports total return profile; April 2021 declaration signals ongoing capital return alongside organic/M&A growth .
Without consensus data, trading catalysts hinge on narrative: VOC growth, tax normalization path, and operating leverage in SG&A; seek future disclosures that quantify near-term growth expectations .

NATIONAL RESEARCH CORP (NRC)·Q1 2021 Earnings Summary