What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-10 compared with 2026-05-06 · 114 added, 50 removed, 209 unchanged (44% of the section changed)

6 unchanged sentences

Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements.

These factors include those contained in this Form 10-Q, as well as the disclosures made in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 filed on March 4, 2026 (“Form 10-K”), and other filings we make with the Securities and Exchange Commission (the "SEC").

These factors include those contained in this Form 10-Q, as well as the disclosures made in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 filed on March 4, 2026 (the “2025 Form 10-K”), and other filings we make with the Securities and Exchange Commission (the "SEC").

We do not undertake any obligation to update forward-looking statements, except as required by law.

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FOREWARN is an app-based solution currently tailored for the real estate industry, providing instant knowledge prior to face-to-face engagement with a consumer, helping professionals identify and mitigate risk.

As of March 31, 2026 and 2025, IDI had 10,422 and 9,241 billable customers, respectively, and FOREWARN had 417,680 and 325,336 users, respectively.

As of June 30, 2026 and 2025, IDI had 10,869 and 9,549 billable customers, respectively, and FOREWARN had 443,173 and 346,671 users, respectively.

We define a billable customer of IDI as a single entity that generated revenue during the last three months of the period.

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Pricing contracts are generally annual contracts or longer, with auto renewal.

For the three months ended March 31, 2026 and 2025, 75% and 74% of total revenue was attributable to customers with pricing contracts, respectively, versus 25% and 26% attributable to transactional customers, respectively.

For each of the three months ended June 30, 2026 and 2025, 77% of total revenue was attributable to customers with pricing contracts, versus 23% attributable to transactional customers.

For each of the six months ended June 30, 2026 and 2025, 76% of total revenue was attributable to customers with pricing contracts, versus 24% attributable to transactional customers.

We endeavor to understand our customers’ needs at the moment of first engagement.

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See Note 1(b), “ Recently issued accounting standards,” in “Notes to Condensed Consolidated Financial Statements.”

First Quarter Financial Results

For the three months ended March 31, 2026 as compared to the three months ended March 31, 2025:

Second Quarter Financial Results

For the three months ended June 30, 2026 as compared to the three months ended June 30, 2025:

• Total revenue increased 23% to $26.7 million.

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Adjusted EBITDA margin increased to 42% from 35%.

• Adjusted net income increased 29% to $6.6 million, which resulted in adjusted earnings of $0.46 per basic and diluted share.

• Adjusted net income increased 58% to $7.2 million, which resulted in adjusted earnings of $0.51 and $0.50 per basic and diluted share, respectively.

• Net cash provided by operating activities increased 42% to $10.6 million.

• Cash and cash equivalents were $43.5 million as of March 31, 2026.

First Quarter and Recent Business Highlights

• Added 400 customers to IDI during the first quarter, ending the quarter with 10,422 customers.

• Added 27,662 users to FOREWARN during the first quarter, ending the quarter with 417,680 users.

Over 640 REALTOR ® Associations throughout the U.S.

• Cash and cash equivalents were $50.0 million as of June 30, 2026.

Second Quarter and Recent Business Highlights

• Announced the August 2026 closing of an underwritten public offering of 1,916,667 shares of common stock, including 250,000 shares of common stock sold pursuant to the full exercise of the underwriters’ option, providing net proceeds of approximately $109.0 million, after deducting underwriting discounts and commissions and estimated offering expenses.

The Company intends to use the net proceeds from the offering for working capital and general corporate purposes, including potential strategic acquisitions.

• Added 447 customers to IDI during the second quarter, ending the quarter with 10,869 customers.

• Added 25,493 users to FOREWARN during the second quarter, ending the quarter with 443,173 users.

660 REALTOR ® Associations throughout the U.S.

are now contracted to use FOREWARN.

• Purchased 73,250 shares of the Company’s common stock year to date through April 30, 2026, at an average price of $41.90 per share pursuant to the Company’s Stock Repurchase Program.

As of April 30, 2026, the Company had $15.6 million remaining under the Stock Repurchase Program.

• Purchased 74,500 shares of the Company’s common stock year to date through June 30, 2026, at an average price of $41.87 per share pursuant to the Company’s Stock Repurchase Program.

As of June 30, 2026, the Company had $15.5 million remaining under the Stock Repurchase Program.

Use and Reconciliation of Non-GAAP Financial Measures

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The following is a reconciliation of net income, the most directly comparable US GAAP financial measure, to adjusted EBITDA:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(Dollars in thousands)

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The following is a reconciliation of net income, the most directly comparable US GAAP financial measure, to adjusted net income:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(Dollars in thousands, except share data)

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Weighted average shares outstanding:

(1) The tax effect of adjustments is calculated using the expected combined federal and state statutory tax rate, which was approximately 26.00% for the three months ended March 31, 2026 and 2025.

(1) The tax effect of adjustments is calculated using the expected combined federal and state statutory tax rate, which was approximately 26.00% for each of the three and six months ended June 30, 2026 and 2025.

The resulting tax effect may differ from applying such rate to total adjustments due to the tax treatment of certain items.

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The following is a reconciliation of gross profit, the most directly comparable US GAAP financial measure, to adjusted gross profit:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(Dollars in thousands)

Cost of revenue (exclusive of depreciation and amortization)

Cost of revenue (exclusive of depreciation and

amortization)

Depreciation and amortization related to cost of revenue

Depreciation and amortization of certain intangible assets (1)

Depreciation and amortization of certain intangible

Adjusted gross profit

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The following is a reconciliation of net cash provided by operating activities, the most directly comparable US GAAP financial measure, to FCF:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(Dollars in thousands)

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Results of Operations

Three months ended March 31, 2026 compared to three months ended March 31, 2025

Revenue increased $3.8 million, or 17%, to $25.8 million for the three months ended March 31, 2026, compared to $22.0 million for the same period in 2025.

Three months ended June 30, 2026 compared to three months ended June 30, 2025

Revenue increased $4.9 million, or 23%, to $26.7 million for the three months ended June 30, 2026, compared to $21.8 million for the same period in 2025.

The increase was driven by strong onboarding of new customers and volume expansion across the existing customer base.

• Revenue from new customers increased $0.5 million, or 36%, to $2.0 million;

• Revenue from existing customers increased $4.4 million, or 22%, to $24.7 million.

Revenue from new customers represents total monthly revenue generated from customers during their first six full calendar months of revenue contribution.

Revenue from existing customers represents total monthly revenue generated from customers beginning in their seventh full calendar month of revenue contribution.

As of June 30, 2026, our IDI billable customer base increased to 10,869 customers, up from 9,549 customers a year earlier.

Our FOREWARN user base increased to 443,173 users, up from 346,671 users a year earlier.

Cost of revenue (exclusive of depreciation and amortization)

Cost of revenue (exclusive of depreciation and amortization) increased $0.3 million, or 9%, to $3.8 million for the three months ended June 30, 2026, compared to $3.5 million for the same period in 2025.

Our cost of revenue primarily consists of data acquisition costs, which include the cost to acquire data under flat-fee licensing agreements, including unlimited usage arrangements, as well as purchases on a transactional basis.

We continue to enhance the breadth and depth of our data by the addition and expansion of relationships with key data suppliers, including our largest data supplier, which accounted for 46% of our total data acquisition costs for each of the three months ended June 30, 2026 and 2025.

Effective on May 1, 2025, we entered into an amendment with our largest data supplier, extending the term of the agreement through April 30, 2031.

Additional components of our cost of revenue include cloud infrastructure fees, and pertinent personnel-related costs and share-based compensation expense.

Due to the fixed-cost nature of our primary data licensing structure, cost of revenue as a percentage of revenue decreased to 14% for the three months ended June 30, 2026, compared to 16% for the same period in 2025.

We expect this percentage to continue to decline over time as our revenue increases.

Sales and marketing expenses

Sales and marketing expenses increased $0.2 million, or 2%, to $5.8 million for the three months ended June 30, 2026, compared to $5.6 million for the same period in 2025.

We continued to invest in expanding our go-to-market capabilities to support long-term revenue growth.

Sales and marketing expenses include personnel-related expenses, advertising, marketing and agency expenses, travel expenses, and share-based compensation expense incurred by our sales team, and provision for bad debts.

For the three months ended June 30, 2026 and 2025, sales and marketing expenses consisted primarily of:

• personnel-related expenses of $4.5 million and $4.5 million, respectively;

• share-based compensation expense of $0.1 million and $0.2 million, respectively;

• advertising, marketing and agency expenses of $0.4 million and $0.3 million, respectively.

General and administrative expenses

General and administrative expenses increased $1.0 million, or 14%, to $8.3 million for the three months ended June 30, 2026, compared to $7.3 million for the same period in 2025.

The increase reflects higher personnel-related expenses and share-based compensation expense to support the continued growth of the business.

For the three months ended June 30, 2026 and 2025, general and administrative expenses consisted primarily of:

• personnel-related expenses of $4.1 million and $3.5 million, respectively;

• share-based compensation expense of $2.1 million and $1.6 million, respectively;

• professional fees of $1.4 million and $1.6 million, respectively.

Professional fees included $0.05 million and $0.4 million, respectively, of acquisition-related costs incurred in connection with the due diligence of potential strategic targets.

Depreciation and amortization

Depreciation and amortization expenses increased $0.2 million, or 5%, to $2.8 million for the three months ended June 30, 2026, compared to $2.6 million for the same period in 2025.

The increase was primarily driven by the amortization of intangible assets that became ready for their intended use after June 30, 2025.

Interest income

Interest income increased $0.1 million, or 16%, to $0.4 million for the three months ended June 30, 2026, compared to $0.3 million for the three months ended June 30, 2025.

The interest income was primarily attributable to yields on money market fund investments.

Income before income taxes

Income before income taxes increased $3.4 million, or 110%, to $6.5 million for the three months ended June 30, 2026, compared to $3.1 million for the same period in 2025.

The increase was primarily driven by:

• an increase of $4.9 million in revenue,

partially offset by:

• an increase of $0.3 million in cost of revenue (exclusive of depreciation and amortization);

• an increase of $0.7 million in personnel-related expenses;

• an increase of $0.4 million in share-based compensation expense;

• an increase of $0.2 million in depreciation and amortization expense.

Income tax expense

Income tax expense was $1.5 million for the three months ended June 30, 2026, compared to $0.4 million for the same period in 2025.

The increase in income tax expense was primarily attributable to higher pre-tax income and the increase in the Company’s effective tax rate to 24% for the three months ended June 30, 2026 from 13% for the same period in 2025.

For additional information, refer to Note 5, “Income taxes,” in the “Notes to Condensed Consolidated Financial Statements.”

Net income increased $2.3 million, or 85%, to $5.0 million for the three months ended June 30, 2026, compared to $2.7 million for the same period in 2025, as a result of the foregoing.

Six months ended June 30, 2026 compared to six months ended June 30, 2025

Revenue increased $8.7 million, or 20%, to $52.5 million for the six months ended June 30, 2026, compared to $43.8 million for the same period in 2025.

The increase was driven by volume expansion across the existing customer base, partially offset by the decrease in revenue from new customers.

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Revenue from existing customers represents total monthly revenue generated from customers beginning in their seventh full calendar month of revenue contribution.

As of March 31, 2026, our IDI billable customer base increased to 10,422 customers, up from 9,241 customers a year earlier.

As of June 30, 2026, our IDI billable customer base increased to 10,869 customers, up from 9,549 customers a year earlier.

Our FOREWARN user base increased to 443,173 users, up from 346,671 users a year earlier.

Cost of revenue (exclusive of depreciation and amortization)

Cost of revenue (exclusive of depreciation and amortization) increased $0.1 million, or 4%, to $3.8 million for the three months ended March 31, 2026, compared to $3.7 million for the same period in 2025.

Cost of revenue (exclusive of depreciation and amortization) increased $0.4 million, or 7%, to $7.6 million for the six months ended June 30, 2026, compared to $7.2 million for the same period in 2025.

We continue to enhance the breadth and depth of our data by the addition and expansion of relationships with key data suppliers, including our largest data supplier, which accounted for 46% and 43% of our total data acquisition costs for the three months ended March 31, 2026 and 2025, respectively.

We continue to enhance the breadth and depth of our data by the addition and expansion of relationships with key data suppliers, including our largest data supplier, which accounted for 46% and 45% of our total data acquisition costs for the six months ended June 30, 2026 and 2025, respectively.

Effective on May 1, 2025, we entered into an amendment with our largest data supplier, extending the term of the agreement through April 30, 2031.

Additional components of our cost of revenue include cloud infrastructure fees, and pertinent personnel-related costs and share-based compensation expense.

Due to the fixed-cost nature of our primary data licensing structure, cost of revenue as a percentage of revenue decreased to 15% for the three months ended March 31, 2026, compared to 17% for the same period in 2025.

Due to the fixed-cost nature of our primary data licensing structure, cost of revenue as a percentage of revenue decreased to 15% for the six months ended June 30, 2026, compared to 16% for the same period in 2025.

We expect this percentage to continue to decline over time as our revenue increases.

Sales and marketing expenses

Sales and marketing expenses increased $0.5 million, or 8%, to $5.9 million for the three months ended March 31, 2026, compared to $5.4 million for the same period in 2025.

Sales and marketing expenses increased $0.6 million, or 5%, to $11.6 million for the six months ended June 30, 2026, compared to $11.0 million for the same period in 2025.

We continued to invest in expanding our go-to-market capabilities to support long-term revenue growth.

For the three months ended March 31, 2026 and 2025, sales and marketing expenses consisted primarily of:

For the six months ended June 30, 2026 and 2025, sales and marketing expenses consisted primarily of:

• personnel-related expenses of $9.1 million and $9.1 million, respectively;

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General and administrative expenses

General and administrative expenses increased $1.7 million, or 28%, to $7.9 million for the three months ended March 31, 2026, compared to $6.2 million for the same period in 2025.

General and administrative expenses increased $2.8 million, or 20%, to $16.2 million for the six months ended June 30, 2026, compared to $13.4 million for the same period in 2025.

The increase reflects higher personnel-related expenses and share-based compensation expense to support the continued growth of the business.

For the three months ended March 31, 2026 and 2025, general and administrative expenses consisted primarily of:

For the six months ended June 30, 2026 and 2025, general and administrative expenses consisted primarily of:

• personnel-related expenses of $8.1 million and $6.6 million, respectively;

1 unchanged sentence

• professional fees of $3.0 million and $2.6 million, respectively.

Professional fees included $0.3 million and $0, respectively, of acquisition-related costs incurred in connection with the due diligence of potential strategic targets.

Professional fees included $0.3 million and $0.4 million, respectively, of acquisition-related costs incurred in connection with the due diligence of potential strategic targets.

Depreciation and amortization

Depreciation and amortization expenses increased $0.2 million, or 10%, to $2.8 million for the three months ended March 31, 2026, compared to $2.6 million for the same period in 2025.

The increase was primarily driven by the amortization of intangible assets that became ready for their intended use after March 31, 2025.

Depreciation and amortization expenses increased $0.4 million, or 8%, to $5.6 million for the six months ended June 30, 2026, compared to $5.2 million for the same period in 2025.

The increase was primarily driven by the amortization of intangible assets that became ready for their intended use after June 30, 2025.

Interest income

Interest income was $0.3 million for each of the three months ended March 31, 2026 and 2025.

Interest income increased $0.1 million, or 14%, to $0.7 million for the six months ended June 30, 2026, compared to $0.6 million for the six months ended June 30, 2025.

The interest income was primarily attributable to yields on money market fund investments.

Income before income taxes

Income before income taxes increased $1.3 million, or 28%, to $5.8 million for the three months ended March 31, 2026, compared to $4.5 million for the same period in 2025.

Income before income taxes increased $4.7 million, or 61%, to $12.3 million for the six months ended June 30, 2026, compared to $7.6 million for the same period in 2025.

The increase was primarily driven by:

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partially offset by:

• an increase of $0.4 million in cost of revenue (exclusive of depreciation and amortization);

• an increase of $1.9 million in personnel-related expenses;

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Income tax expense

Income tax expense was $1.4 million for the three months ended March 31, 2026, compared to $1.1 million for the same period in 2025.

The increase in income tax expense was primarily attributable to higher pre-tax income, as the Company’s effective tax rate remained consistent at 24% in both periods.

Income tax expense was $2.9 million for the six months ended June 30, 2026, compared to $1.5 million for the same period in 2025.

The increase in income tax expense was primarily attributable to higher pre-tax income and the increase in the Company’s effective tax rate to 24% for the six months ended June 30, 2026 from 19% for the same period in 2025.

For additional information, refer to Note 5, “Income taxes,” in the “Notes to Condensed Consolidated Financial Statements.”

Net income increased $1.0 million, or 28%, to $4.4 million for the three months ended March 31, 2026, compared to $3.4 million for the same period in 2025, as a result of the foregoing.

Net income increased $3.2 million, or 53%, to $9.3 million for the six months ended June 30, 2026, compared to $6.1 million for the same period in 2025, as a result of the foregoing.

Effect of Inflation

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Cash flows provided by operating activities

For the three months ended March 31, 2026, net cash provided by operating activities was $6.6 million.

For the six months ended June 30, 2026, net cash provided by operating activities was $17.2 million.

This was primarily driven by:

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• non-cash adjustments totaling $12.5 million, including share-based compensation expense, depreciation and amortization, write-off of long-lived assets, provision for bad debts, noncash lease expenses, and deferred income tax expense;

• changes in operating assets and liabilities, which resulted in a net use of cash of $4.0 million, primarily due to an increase in accounts receivable, and a decrease in accrued expenses and other current liabilities, partially offset by the decrease in prepaid expenses and other current assets.

For the three months ended March 31, 2025, net cash provided by operating activities was $5.0 million.

• changes in operating assets and liabilities, which resulted in a net use of cash of $4.6 million, primarily due to an increase in accounts receivable, and a decrease in accounts payable, and accrued expenses and other current liabilities.

For the six months ended June 30, 2025, net cash provided by operating activities was $12.5 million.

This was primarily driven by:

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• non-cash adjustments totaling $10.3 million, including share-based compensation expense, depreciation and amortization, write-off of long-lived assets, provision for bad debts, noncash lease expenses, and deferred income tax expense;

• changes in operating assets and liabilities, which resulted in a net use of cash of $3.7 million, primarily due to an increase in accounts receivable and other noncurrent assets, and a decrease in accrued expenses and other current liabilities.

• changes in operating assets and liabilities, which resulted in a net use of cash of $4.0 million, primarily due to an increase in accounts receivable, and prepaid expenses and other current assets, and a decrease in accounts payable, accrued expenses and other current liabilities, and operating lease liabilities.

Cash flows used in investing activities

For the three months ended March 31, 2026 and 2025, net cash used in investing activities was $3.5 million and $2.5 million, respectively, primarily as a result of capitalized costs included in intangible assets.

For the six months ended June 30, 2026 and 2025, net cash used in investing activities was $7.0 million and $5.2 million, respectively, primarily as a result of capitalized costs included in intangible assets.

Cash flows used in financing activities

For the three months ended March 31, 2026, net cash used in financing activities was $3.2 million.

For the six months ended June 30, 2026, net cash used in financing activities was $3.8 million.

This was primarily driven by:

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The Stock Repurchase Program was originally authorized by the Company's Board of Directors on May 2, 2022, permitting repurchases of our common stock from time to time, which was subsequently amended on each of December 19, 2023, March 28, 2024, and November 3, 2025, bringing the total authorization to $30.0 million.

For the three months ended March 31, 2025, net cash used in financing activities was $4.4 million.

For the six months ended June 30, 2025, net cash used in financing activities was $4.9 million.

This was primarily driven by:

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The dividend, totaling $4.2 million, was paid on February 14, 2025.

As of March 31, 2026, we had material commitments under data licensing agreements and a cloud service agreement totaling $39.8 million.

As of June 30, 2026, we had material commitments under data licensing agreements and a cloud service agreement totaling $35.5 million.

We expect to fund these commitments, as well as our ongoing operating and capital requirements, using available cash on hand and cash flows generated from operations over the next twelve months.

Capital Resources

We reported net income of $4.4 million and $3.4 million for the three months ended March 31, 2026 and 2025, respectively.

As of March 31, 2026, we had total shareholders’ equity of $104.5 million and cash and cash equivalents of $43.5 million.

We reported net income of $5.0 million and $2.7 million for the three months ended June 30, 2026 and 2025, respectively, and $9.3 million and $6.1 million for the six months ended June 30, 2026 and 2025, respectively.

As of June 30, 2026, we had total shareholders’ equity of $111.6 million and cash and cash equivalents of $50.0 million.

Also, in August 2026, we closed an underwritten public offering of our common stock with net proceeds to us of approximately $108.6 million, after deducting underwriting discounts and commissions and estimated offering expenses.

See Note 11, “Subsequent events,” in “Notes to Condensed Consolidated Financial Statements” for additional information on the offering.

Based on our projected growth in revenue and operating results over the next twelve months, and the available cash on hand, we believe that our existing resources will be sufficient to fund operations and expected capital expenditures for at least the next twelve months.

While we anticipate continuing to fund our business through internally generated cash flows, future capital needs may arise based on the pace of revenue growth, investment in technology, or strategic initiatives.

In such cases, we may seek to raise additional capital through the issuance of equity and/or debt securities.

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Off-Balance Sheet Arrangements

As of March 31, 2026, we did not have any off-balance sheet arrangements, as defined in Item 303 of Regulation S-K.

As of June 30, 2026, we did not have any off-balance sheet arrangements, as defined in Item 303 of Regulation S-K.

Quantitative and Qualitati ve Disclosures About Market Risk.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis