National Research Corp. Q3 FY2026 earnings call

• Strong Growth and Margin Expansion: Revenue grew 11%, accelerating from 4% in H1 2026. Adjusted EBITDA margin improved to 28% sequentially, despite a one-time four percentage point drag from moving the HUB conference to Q3.
• Large Customer Implementation Success: A major multi-solution agreement went live on schedule in July, contributing a full quarter of revenue. The company is leveraging existing infrastructure for the next phase (enablement/rounding) scheduled for Q3 2027.
• Customer Retention and Multi-Year Deals: Several longstanding customers moved from annual to multi-year agreements, signaling confidence and increasing recurring revenue visibility. Retention remains strong.
• Broadening Demand: Market Insights achieved its strongest quarterly sales since before the pandemic, adding new logos. The Governance Institute is on track for its strongest sales year in over a decade, driven by dedicated commercial teams.
• Strategic Product Focus: NRC Health is shifting from merely measuring experience to improving it through AI-enabled capabilities and deeper integration into frontline workflows.
• Leadership Transition: Thanked outgoing CFO Shane Harrison; currently searching for a replacement while the finance team operates smoothly.

Revenue: $38 million, up 11% year-over-year. Adjusted EBITDA: $10.9 million (28% margin). Net Income: $4.7 million. Free Cash Flow: $7 million. Total Recurring Contract Value (TRCV): $154 million, up 9% year-over-year. The transcript does not provide specific revenue contribution percentages for individual product segments (Experience, Market Insights, Governance Institute), but notes that Experience led TRCV growth with meaningful contributions from the other two segments.

• Q4 Margin Improvement: Management expects further sequential margin improvement in Q4 as the HUB conference expenses are absorbed and existing implementations continue to contribute revenue.
• Continued Revenue Growth: While no specific numerical target was provided, management stated that underlying conditions support continued growth, particularly as Market Insights and Governance Institute products are activated.
• Seasonality Reminder: Investors should note that Q4 historically benefits from seasonality, including one-time events like annual employee experience surveys, which may create a temporary uptick in revenue.
• No Specific Long-Term Target: Management declined to provide a specific longer-term growth rate target, emphasizing the importance of multi-quarter progression and durability of the customer base.

• Variability in Financial Metrics: Revenue, profitability, and free cash flow will not move in a straight line due to enterprise purchasing decisions, implementation timing, and seasonal patterns.
• Macroeconomic Softness: Fewer experience management RFPs were observed this year, though the pipeline remains strong.
• Competitive Landscape: Mention of softness related to the Prescani-Qualtrics merger impacting the broader market context.
• Leadership Transition: Ongoing search for a new CFO introduces a period of transition, though operations are described as smooth.

Q: Constantine Davides asked about the impact of macro factors, specifically the Prescani-Qqualtrics merger, on the sales cycle and pipeline, and requested updates on retention rates and upsell attach rates during renewals. / A: Trent Green clarified that while fewer RFPs occurred, the opportunity pipeline increased, driven by clarity in NRC’s offerings. He noted that retention remains very strong, with several customers moving to multi-year agreements. Regarding upsells, he emphasized the 'connective tissue' between products, stating that cross-selling remains a key initiative during renewal conversations to expose customers to the broader portfolio.