Q2 2026 VerticalScope Holdings Inc Earnings Call Transcript
Key Points
- MAU grew 14% year-over-year to 103 million, marking the first growth since the search landscape shift, driven by AudienceEngine and direct users.
- Programmatic revenue decline narrowed significantly to 8% year-over-year from 34% in Q1, indicating improving CPM and impression trends.
- Adjusted EBITDA increased 4% year-over-year to $4.5 million, with margin expanding 270 basis points to 32%, the first year-over-year growth since Q4 2024.
- Affiliate commerce revenue on Fora grew 13% year-over-year, driven by AI initiatives, now approaching a $1 million annual run rate.
- Direct advertising bookings for the year are pacing 7% ahead of prior year as of end of July, with new insurance customers onboarded.
- Company is in advanced discussions with a major tech company for AI content licensing deal, potentially opening a new revenue stream.
- Debt reduced by $12 million in the quarter, with total liquidity of $75.3 million, and net leverage at 1.24 times.
- AI initiatives with AltaML are driving operational efficiencies, with $1.5 million annualized savings fully realized and more expected.
- Free cash flow conversion remained strong at 81% in the quarter, despite increased AI capital spending.
- E-commerce revenue grew 7% in the first half, with Ritual contributing positively to adjusted EBITDA.
- Total revenue declined 5% year-over-year to $13.8 million, though up 20% sequentially.
- ARPU decreased 16% year-over-year to $0.045, partly due to lower monetization of acquired traffic and net revenue recognition for AudienceEngine.
- Google Search traffic remains significantly down from prior year, with recent Google changes not yet contributing to growth.
- Commerce revenue declined 5% overall due to lower marketplace revenue from Ritual.
- Operating cash flow was only $400,000 in the quarter, down from $6.4 million in the prior year, due to working capital investments in AudienceEngine and one-time benefits last year.
- Net loss narrowed but remained at $800,000 for the quarter.
- The company faces ongoing legal costs and uncertainty from its litigation against OpenAI.
- AI licensing deal with major tech company is not yet signed, and materiality is uncertain.
- AudienceEngine monetizes at a lower rate than organic search, pressuring overall ARPU.
- The company expects continued working capital swings as AudienceEngine scales, which could impact cash flow.
Welcome everyone, and thank you for joining the VerticalScope Holdings Inc., Q2 2026 earnings call. My name is Gabrielle and I will be coordinating your call today. (Operator Instructions)
I will now hand over to your host, Diane Yu, Chief Legal Officer at VerticalScope Inc. Please go ahead.
Thank you, Operator. Good morning, everyone, and welcome to VerticalScope Holdings' second quarter 2026 earnings call. I am joined by Chris Goodridge, our Chief Executive Officer; and Vince Bellissimo, our Chief Financial Officer. We will begin with commentary on the quarter before opening the floor to questions.
Before we begin, I would like to remind everyone that today's presentation contains forward-looking information that involves known and unknown risks and uncertainties and other factors that could cause actual events to differ materially from current expectations.
These statements should not be read as assurances of future performance or results. Such
| Access to All Earning Calls and Stock Analysis | |
| 30-Year Financial on one screen | |
| All-in-one Stock Screener with unlimited filters | |
| Customizable Stock Dashboard | |
| Real Time Insider Trading Transactions | |
| 8,000+ Institutional investors’ 13F holdings | |
| Powerful Excel Add-in and Google sheets Add-on | |
| All data downloadable | |
| Quick customer support | |
| And much more... |
Trustpilot
We'd love to learn more about your experiences on GuruFocus.com and how we can improve!
Take Survey
