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NATIONAL RESEARCH CORP (NRC)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue was $34.6M, up 2% sequentially but down year-over-year; GAAP diluted EPS was $0.18, and Adjusted diluted EPS was $0.23 .
  • Adjusted EBITDA reached $10.9M (+11% y/y), with margin expanding to 31.4% from 27.2% y/y, driven by lower compensation expense and timing of marketing spend .
  • TRCV rose to $141.7M (+8% y/y), marking the fourth consecutive quarter of sequential TRCV growth and the strongest growth since 2020; net retention hit its highest level since 2020 .
  • Capital return accelerated: 618,264 shares repurchased for $9.3M, and the quarterly dividend was raised 33% to $0.16, payable Jan 9, 2026 .
  • Estimates context: S&P Global consensus for EPS and revenue was not available for Q3 2025*, so beat/miss vs Street cannot be determined (Values retrieved from S&P Global).

What Went Well and What Went Wrong

What Went Well

  • “We delivered our fourth consecutive quarter of recurring contract value growth, driven by strong sales and meaningful improvement in customer retention” — Trent Green, CEO .
  • Net retention reached its highest level since 2020; cross-sell/upsell activity was “the best quarterly customer expansion activity we’ve seen in six years” .
  • Adjusted EBITDA margin expanded over four points y/y to 31%, supported by reduced compensation expense and timing of marketing expenses .

What Went Wrong

  • Revenue decreased y/y from $35.8M (Q3’24) to $34.6M (Q3’25); GAAP net income fell y/y to $4.1M from $5.7M .
  • Interest expense rose to $1.46M in Q3’25 vs. $0.71M in Q3’24; notes payable increased to $76.0M from $57.9M at YE 2024, elevating leverage .
  • Management flagged that certain marketing expenses will return in Q4 (timing-related), potentially pressuring near-term margin .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$35.819 $33.551 $34.038 $34.608
GAAP Diluted EPS ($)$0.24 $0.25 -$0.01 $0.18
Adjusted Diluted EPS ($)$0.25 $0.26 $0.28 $0.23
Adjusted EBITDA ($USD Millions)$9.737 $10.335 $10.302 $10.854
Adjusted EBITDA Margin (%)27.2% 30.8% 30.3% 31.4%

KPIs

KPIQ3 2024Q3 2025
TRCV ($USD Millions)~$131.6 $141.7
Net Cash from Operating Activities ($USD Millions)$9.4 $13.8
Weighted Avg Diluted Shares (Millions)23.745 22.130

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Quarterly Dividend per Share ($)Q4 2025 (payable Jan 9, 2026)$0.12 $0.16 Raised (+33%)
Capital Returns (general)2025 YTDN/A$28.1M returned via dividends and buybacks N/A
Operating Expense TimingQ4 2025N/ACertain marketing expenses to return in Q4 (timing-related) N/A

Note: NRC did not provide quantitative revenue, margin, OpEx, OI&E, tax-rate, or segment guidance ranges in Q3 2025 materials .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
AI/Technology initiativesPlatform modernization emphasis; no explicit AI noted in Q1 PR; broader modernization underway .“Modernizing our technology platform… new AI-driven innovations” .Increasing focus on AI enablement.
Go-to-market alignmentSales reorg underway; aligning talent geographically and by product .“Evolving go-to-market model… align sales, marketing, customer success to accelerate cross-sell and new logos” .Continued organizational optimization.
Customer retention/net retentionTRCV growth and improved retention; strongest YTD sales since 2021 .Net retention highest since 2020; best expansion activity in six years .Strengthening retention and expansion.
Regulatory/CAHPS differentiationOnly a handful of vendors certified across all seven CAHPS; NRC’s healthcare focus, high-touch implementation highlighted .Reinforced healthcare-exclusive focus and client enablement in remarks .Competitive moat reiterated.
Capital allocation (dividends/buybacks)Normal dividend; repurchased ~382K shares at $14.96 .Dividend raised to $0.16; repurchased ~618K shares for $9.3M .More shareholder returns.
Marketing expense timingNot specifically noted prior.Q3 margin benefited from timing; part of marketing returns in Q4 .Temporary margin benefit reversing.
Sales wins/product performanceStrong pipeline; new logos; TRCV up 2% seq in Q2 .Multiple competitive takeaways incl. >$1M TRCV expansions and a >$0.5M new logo .Sales momentum accelerating.

Management Commentary

  • “Healthcare systems are placing their trust in NRC to drive continuous improvement — a trust we earn through authentic partnership, exceptional service, and unmatched expertise” — Trent Green (CEO) .
  • “Adjusted EBITDA… representing a 31% margin, which expanded over four percentage points from Q3 of 2024. Operating expenses were lower, due primarily to reduced compensation expense and the timing of marketing expenses” — Shane Harrison (CFO) .
  • “We empower our clients to act, providing the tools, workflows, and best practices that convert insight into measurable improvement… We’re building on a scalable, modern tech stack to support seamless integration and new AI-driven innovations” — Trent Green (CEO) .
  • “We remain committed to a disciplined approach to capital allocation, balancing dividends and opportunistic share repurchases with strategic investments… that deliver compelling ROI” — Shane Harrison (CFO) .

Q&A Highlights

  • The Q3 2025 call featured prepared remarks without an open Q&A session; the call concluded after management commentary .

Estimates Context

  • S&P Global consensus estimates for NRC’s Q3 2025 EPS and revenue were not available, preventing a beat/miss determination*. Management highlighted internal targets and momentum (TRCV growth, margin expansion), but no Street comparisons can be made for this quarter .
  • Implication: In absence of consensus, investors should anchor on TRCV trajectory (+8% y/y), margin expansion to 31.4%, and capital return profile to assess fundamental momentum .
    *Values retrieved from S&P Global.

Key Takeaways for Investors

  • Sequential revenue growth (+2% q/q) alongside y/y Adjusted EBITDA growth (+11%) and margin expansion to 31.4% signals operating leverage despite modest top-line pressure y/y .
  • TRCV growth (+8% y/y) and highest net retention since 2020, plus notable competitive takeaways, point to strengthening forward revenue visibility and customer expansion .
  • Dividend increase to $0.16 and ongoing buybacks underscore confidence in cash generation and balance-sheet capacity to return capital while investing in growth .
  • Watch Q4 for normalization of marketing expenses that could temper margin; monitor whether sales momentum offsets this opex timing headwind .
  • Elevated interest expense and higher notes payable warrant attention; continued cash flow strength ($13.8M CFO in Q3) provides cushion, but leverage trends should be monitored .
  • Strategic focus on modernizing the tech stack and introducing AI-driven innovations may enhance product differentiation and upsell/cross-sell potential over 2026 .
  • With Street estimates unavailable this quarter*, stock narrative likely hinges on internally visible KPIs (TRCV, retention, margin) and capital return cadence rather than headline “beat/miss” optics .
    *Values retrieved from S&P Global.

Additional Context: Prior Quarter Results (for trend analysis)

  • Q2 2025: Revenue $34.0M; Adjusted EBITDA $10.3M (30.3%); GAAP diluted EPS -$0.01 due to non-recurring executive comp; TRCV up 2% sequentially; ~382K shares repurchased; dividend $0.12 .
  • Q1 2025: Revenue $33.6M; Adjusted EBITDA $10.3M (30.8%); diluted EPS $0.25; sales force expansion, new repurchase authorization up to 1M shares .
  • Q3 2024 (comp): Revenue $35.8M; diluted EPS $0.24; TRCV ~$131.6M .

Selected Other Q3-Period Press Releases (Relevance to Momentum)

  • Dividend raised to $0.16 per share (declared Oct 15, 2025) .
  • Customer engagement momentum continues post-quarter (e.g., NMHS partnership announced Nov 6, 2025) supporting narrative of competitive takeaways and product breadth .