National Research Corporation Reports Q1 Earnings with Mixed Results
Shares of National Research Corporation (NRC) have risen by 12.8% following the company’s earnings report for the quarter ending March 31, 2025, surpassing the S&P 500 index’s growth of 0.7% during the same timeframe. Despite this positive performance, NRC stock has seen a slight decrease of 0.6% over the past month, which remains a milder drop than the broader market’s 1.6% decline.
Quarterly Earnings Overview
In the first quarter of 2025, NRC reported earnings per share (EPS) of 25 cents, down from 27 cents a year ago. The company’s revenues totaled $33.6 million, reflecting a 5% decrease from $35.3 million in the previous year. Net income reached $5.8 million, a 9% decline compared to $6.4 million in the prior-year quarter. Operating income was recorded at $8.6 million, slightly below the $8.7 million from the first quarter of 2024, indicating some operational pressure due to reduced revenue and rising interest costs.
Price, Consensus, and EPS Surprise Analysis
National Research Corporation price-consensus-eps-surprise-chart | National Research Corporation Quote
Key Business Metrics
A noteworthy aspect of the quarter was the sequential increase in total recurring contract value, indicating growth for the second consecutive quarter. This metric is viewed by management as a leading indicator for potential future revenue growth, supporting the notion that the company’s strategic realignment is making progress.
On the expense front, total operating expenses decreased to $25 million from $26.6 million a year earlier, driven by lower direct costs and reduced selling, general, and administrative (SG&A) expenses. Direct expenses fell 6% to $13.1 million, while SG&A costs were down 8% to $10.4 million. However, depreciation and amortization saw a slight increase to $1.5 million from $1.4 million.
Additionally, interest expense climbed by 49% year over year to $0.9 million, reflecting increased debt usage, including a new $3.5 million drawdown from its line of credit during the quarter.
Management Insights
CEO Michael D. Hays highlighted progress in rebuilding NRC’s sales force, calling it a significant milestone that has positively impacted pipeline growth, win rates, and total sales. He acknowledged that rebuilding is a gradual process, but the current results justify a more aggressive expansion of the team. Hays also underscored the importance of a tailored market message and broader product offerings to enhance sales outcomes.
Hays credited COO Helen Hrdy for implementing operational efficiencies that enable the company to invest in growth while simultaneously returning value to shareholders. Moreover, NRC announced a leadership transition, with Trent Green set to become CEO in June 2025, with introductory meetings planned for June 9 and 10, aimed at ensuring transparent communication with stakeholders during the changeover.
Factors Impacting Financial Results
The year-over-year decreases in both revenues and earnings were somewhat mitigated by stricter cost controls, although rising financing costs affected profitability. The company’s use of its revolving credit facility contributed an additional $3.5 million in debt, with interest expenses increasing by nearly $0.3 million from the previous year. It is worth noting that details regarding gross margin trends were not disclosed, leaving some uncertainty regarding core profitability drivers beyond revenues and operating expenses.
Deferred revenues, considered an indicator of future business stability, remained steady at $15.5 million, suggesting consistent contracted business levels, but with limited short-term growth prospects.
Additional Developments
During the quarter, NRC completed its existing share repurchase program initiated in 2022. On April 25, the board approved a new repurchase plan for up to one million shares of common stock, reflecting a commitment to shareholder returns. Additionally, the company declared a quarterly dividend of 12 cents per share, scheduled for payment on July 11 to shareholders on record as of June 27. These capital allocation decisions highlight NRC’s strategy to balance growth reinvestment with direct shareholder returns.
