nrc20250331_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2025

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from ________ to ________

Commission File Number 001-35929

National Research Corporation

(Exact name of Registrant as specified in its charter)

Delaware		47-0634000
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

	1245 Q Street, Lincoln, Nebraska 68508
	(Address of principal executive offices) (Zip Code)

	(402) 475-2525
	(Registrant’s telephone number, including area code)

Securities registered pursuant to 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.001 par value	NRC	The NASDAQ stock market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.

Common Stock, $.001 par value, outstanding as of April 25, 2025: 22,785,421

			Page No.

PART I.	FINANCIAL INFORMATION

	Item 1.	Financial Statements	2

		Condensed Consolidated Balance Sheets	2
		Condensed Consolidated Statements of Income	3
		Condensed Consolidated Statements of Shareholders’ Equity	4
		Condensed Consolidated Statements of Cash Flows	6
		Notes to Condensed Consolidated Financial Statements	8-18

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19-23

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24

	Item 4.	Controls and Procedures	24

PART II.	OTHER INFORMATION

	Item 1.	Legal Proceedings	24

	Item 1A.	Risk Factors	24

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25

	Item 5.	Other Information	25

	Item 6.	Exhibits	26

	Signatures		27

	March 31, 2025			December 31, 2024
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	2,502		$	4,233
Trade accounts receivable, less allowance for doubtful accounts of $40 and $40, respectively		11,326			11,054
Prepaid expenses		5,845			3,480
Income taxes receivable		141			141
Other current assets		588			692
Total current assets		20,402			19,600

Net property and equipment		40,390			38,269
Intangible assets, net		2,519			2,616
Goodwill		66,152			66,152
Operating lease right-of-use assets		1,497			1,627
Deferred contract costs, net		1,538			1,562
Other noncurrent assets		2,677			2,713
Total assets	$	135,175		$	132,539
Liabilities and Shareholders’ Equity
Current liabilities:
Current portion of notes payable, net of unamortized debt issuance costs	$	3,036		$	4,789
Revolving loan		3,500			-
Accounts payable		2,030			1,194
Accrued wages and bonuses		4,915			4,774
Accrued expenses		4,713			5,091
Dividends payable		2,735			2,770
Deferred revenue		15,507			15,786
Income taxes payable		274			353
Other current liabilities		1,064			1,101
Total current liabilities		37,774			35,858

Notes payable, net of current portion and unamortized debt issuance costs		58,669			57,895
Deferred income taxes		5,391			3,531
Other long-term liabilities		3,669			3,971
Total liabilities		105,503			101,255

Shareholders’ equity:
Preferred stock, $0.01 par value, authorized 2,000,000 shares, none issued		-			-
Common stock, $0.001 par value; authorized 110,000,000 shares, issued 31,082,158 in 2025 and 31,072,144 in 2024, outstanding 22,785,421 in 2025 and 23,083,116 in 2024		31			31
Additional paid-in capital		180,552			180,249
Retained earnings (accumulated deficit)		(14,012	)		(17,064	)
Treasury stock, at cost; 8,296,737 and 7,989,028 Common shares in 2025 and 2024, respectively		(136,899	)		(131,932	)
Total shareholders’ equity		29,672			31,284
Total liabilities and shareholders’ equity	$	135,175		$	132,539

	Three months ended March 31,
	2025			2024

Revenue	$	33,551		$	35,313

Operating expenses:
Direct		13,057			13,856
Selling, general and administrative		10,356			11,250
Depreciation and amortization		1,542			1,447
Total operating expenses		24,955			26,553

Operating income		8,596			8,760

Other income (expense):
Interest income		19			44
Interest expense		(899	)		(605	)
Other, net		7			(5	)

Total other expense		(873	)		(566	)

Income before income taxes		7,723			8,194

Provision for income taxes		1,936			1,835

Net income	$	5,787		$	6,359

Earnings Per Share of Common Stock:
Basic Earnings Per Share	$	0.25		$	0.27
Diluted Earnings Per Share	$	0.25		$	0.27

Weighted average shares and share equivalents outstanding:
Basic		22,972			23,868
Diluted		22,974			23,963

	Common Stock		Additional Paid-in Capital		Retained Earnings (Deficit)			Treasury Stock			Total
Balances at December 31, 2024	$	31	$	180,249	$	(17,064	)	$	(131,932	)	$	31,284
Purchase of 307,709 shares treasury stock		-		-		-			(4,967	)		(4,967	)
Issuance of 10,014 shares of common stock for the exercise of stock options		-		132		-			-			132
Non-cash stock compensation expense		-		171		-			-			171
Dividends declared of $0.12 per share of common stock		-		-		(2,735	)		-			(2,735	)
Net income		-		-		5,787			-			5,787
Balances at March 31, 2025	$	31	$	180,552	$	(14,012	)	$	(136,899	)	$	29,672

	Three months ended
	March 31
	2025			2024
Cash flows from operating activities:
Net income	$	5,787		$	6,359
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,542			1,447
Deferred income tax expense (benefit)		1,860			(246	)
Reserve for uncertain tax positions		76			133
Non-cash share-based compensation expense (benefit)		171			(36	)
Change in fair value of contingent consideration		31			-
Loss on extinguishment of debt		67			-
Amortization of debt issuance costs		15			9
Net changes in assets and liabilities:
Trade accounts receivable		(272	)		1,251
Prepaid expenses and other current and long-term assets		(2,419	)		(1,620	)
Deferred contract costs, net		24			199
Operating lease assets and liabilities, net		(26	)		(22	)
Accounts payable		627			(151	)
Accrued expenses, wages and bonuses		(472	)		2,482
Income taxes receivable and payable		(80	)		1,872
Deferred revenue		(285	)		360
Net cash provided by operating activities		6,646			12,037

Cash flows from investing activities:
Purchases of property and equipment		(2,986	)		(4,138	)
Net cash used in investing activities		(2,986	)		(4,138	)

Cash flows from financing activities:
Borrowings on notes payable		27,738			-
Payments on notes payable		(28,724	)		(1,621	)
Borrowings on revolving loan		8,000			13,000
Payments on revolving loan		(4,503	)		(6,000	)
Payment of debt issuance costs		(62	)		-
Payments on finance lease obligations		(2	)		(11	)
Proceeds from the exercise of share-based awards		132			-
Payment of payroll tax withholdings on share-based awards exercised		-			(317	)
Payment of acquisition contingent consideration		(280	)		-
Repurchase of shares for treasury		(4,920	)		(14,999	)
Payment of dividends on common stock		(2,770	)		(2,906	)
Net cash used in financing activities		(5,391	)		(12,854	)

Effect of exchange rate changes on cash and cash equivalents		-			1
Change in cash and cash equivalents		(1,731	)		(4,954	)
Cash and cash equivalents at beginning of period		4,233			6,653
Cash and cash equivalents at end of period	$	2,502		$	1,699

	●	Identify the contract, or contracts, with a customer;
	●	Identify the performance obligations in the contract;
	●	Determine the transaction price;
	●	Allocate the transaction price to the identified performance obligations; and
	●	Recognize revenue when, or as, we satisfy the performance obligations.

	2025		2024
	(In thousands)
Direct expenses	$	20	$	67
Selling, general and administrative expenses	$	356	$	213
Total amortization	$	376	$	280

	Level 1		Level 2		Level 3		Total
As of March 31, 2025
Financial Assets:
Money Market Funds	$	2,063	$	-	$	-	$	2,063
Total Cash Equivalents	$	2,063	$	-	$	-	$	2,063
Financial Liabilities:
Contingent Consideration Liability	$	-	$	-	$	610	$	610

As of December 31, 2024
Financial Assets:
Money Market Funds	$	4,199	$	-	$	-	$	4,199
Total Cash Equivalents	$	4,199	$	-	$	-	$	4,199
Financial Liabilities:
Contingent Consideration Liability	$	-	$	-	$	859	$	859

	In thousands
Contingent Consideration Liability, December 31, 2024	$	859
Increase to fair value included in selling, general & administrative expenses		31
Payments made		(280	)
Contingent Consideration Liability, March 31, 2025	$	610

	Level 1		Level 2		Total Fair Value		Carrying Amount
As of March 31, 2025	$	62,164	$	-	$	62,164	$	62,164
As of December 31, 2024	$	62,801	$	-	$	62,801	$	62,801

	2025		2024
Subscription services recognized ratably over time	$	31,042	$	33,271
Services recognized at a point in time		1,741		1,421
Fixed, non-subscription recognized over time		645		495
Unit price services recognized over time		123		126
Total revenue	$	33,551	$	35,313

	March 31, 2025		December 31, 2024
Trade accounts receivables	$	11,326	$	11,054
Contract assets included in other current assets	$	86	$	186
Deferred revenue, current portion	$	15,507	$	15,786
Noncurrent deferred revenue included in other long-term liabilities	$	210	$	216

	2025						2024
	Contract Asset			Deferred Revenue			Contract Asset			Deferred Revenue
	Increase (Decrease)
Revenue recognized that was included in deferred revenue at beginning of year due to completion of services	$	-		$	(7,649	)	$	-		$	(7,303	)
Increases due to invoicing of client, net of amounts recognized as revenue		-			7,377			-			7,672
Decreases due to completion of services (or portion of services) and transferred to accounts receivable		(152	)		-			(39	)		-
Change due to cumulative catch-up adjustments arising from changes in expected contract consideration		-			(13	)		-			(9	)
Increases due to revenue recognized in the period with additional performance obligations before invoicing		52			-			32			-

SEC Form 10-Q filed by National Research Corporation