NRC's Q2 Earnings Rise Y/Y on Cost Control and TRCV Growth

Shares of National Research Corporation NRC have declined 10% since the company reported its earnings for the quarter ended June 30, 2025. This compares to the S&P 500 index’s 0.7% decline over the same time frame. Over the past month, the stock has declined 24.4% compared with the S&P 500’s 2.1% growth.

National Research reported second-quarter 2025 adjusted net income per share of 28 cents, up from 26 cents in the year-ago quarter. 

The company posted revenues of $34 million, down 2.8% from $35 million in the year-ago quarter. The company posted a net loss of $0.1 million compared to the net income of $6.2 million in the second quarter of 2024. This downturn was driven primarily by one-time executive compensation expenses. 

However, on an adjusted basis, excluding these non-recurring items and non-cash stock compensation, adjusted net income rose slightly to $6.4 million from $6.1 million a year ago.

Adjusted EBITDA for the quarter was $10.3 million, essentially flat year over year, with a margin of 30.3%, reflecting stable profitability when excluding unusual items.

National Research Corporation Price, Consensus and EPS Surprise

National Research Corporation price-consensus-eps-surprise-chart | National Research Corporation Quote

Recurring Revenue Momentum Continues

Total recurring contract value (TRCV), a key measure of projected revenues under renewable contracts for the next 12 months, grew 2% sequentially, marking the third straight quarter of growth and the strongest sequential gain since early 2021. Management attributed this to a strengthened salesforce, improved customer retention, and a product suite resonating with the market. These improvements were evident in the increasing rate of new logo acquisitions and successful cross-selling initiatives.

Executive Commentary and Leadership Transition

New CEO Trent S. Green expressed optimism about the company’s trajectory, citing growing enthusiasm from customers and prospects. He emphasized the organization’s dedication to delivering a high-touch service model alongside a compelling product portfolio. Green also reinstated the company’s quarterly earnings calls to enhance transparency and shareholder communication.

Impact of Executive Compensation on Net Results

The headline net loss for the quarter was largely the result of $6.6 million in non-recurring executive compensation expenses related to leadership transitions following the departure of the founder. This, along with elevated stock-based compensation, led to a 0% GAAP net margin. However, excluding these costs, NRC’s operational performance remained steady, supported by continued cost discipline and higher revenue per full-time employee. SG&A expenses surged to $17.7 million from $11.2 million last year, reflecting the bulk of the compensation impact, while direct costs declined 3.3% year over year.

Shareholder Returns and Capital Allocation

NRC continued returning capital to shareholders, repurchasing 381,736 shares at an average price of $14.96 during the quarter. Year to date, the company has returned $16.1 million through dividends and buybacks. Its board of directors also declared a quarterly dividend of 12 cents per share, payable on Oct. 10, 2025, to shareholders of record as of Sept. 26, 2025.

Balance Sheet Position

As of June 30, 2025, NRC reported $5.3 million in cash, up from $4.2 million at the end of 2024. However, total debt increased to $81 million from $62.7 million, with higher notes payable reflecting greater leverage. Shareholders’ equity fell to $21.3 million from $31.3 million at year-end, largely due to treasury stock purchases and net losses on a GAAP basis.

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This article originally published on Zacks Investment Research (zacks.com).

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