Company Overview

Our company provides software solutions and services to financial institutions, primarily community banks and credit unions. Our main offerings are Lending Software Solutions and Data Verification Software Solutions. We generate revenue through subscription fees, professional services, and other sources.

Financial Performance

Our revenues increased by 4% from 2023 to 2024, reaching $316.3 million. This was driven by higher revenue from our Lending Software Solutions, which offset a decline in revenue from our Data Verification Software Solutions. Our gross profit increased by 6% to $207.8 million, as the decrease in third-party costs outweighed higher employee-related expenses and amortization of developed technology.

Operating Expenses

Our operating expenses increased by 13% to $203.1 million. This was primarily due to a $23.8 million (26%) increase in general and administrative expenses, which included higher share-based compensation, legal fees, and advisory fees. Research and development expenses decreased by $8.1 million (17%) due to lower headcount, while sales and marketing expenses increased by $7.4 million (21%) from higher employee-related costs.

Profitability and Cash Flows

We reported a net loss of $29.8 million in 2024, compared to a net loss of $42.5 million in 2023. This improvement was driven by higher gross profit, partially offset by the increase in operating expenses. Our adjusted EBITDA, a non-GAAP metric, increased from $113.0 million in 2023 to $130.7 million in 2024.

Cash provided by operating activities increased from $68.0 million in 2023 to $77.8 million in 2024, primarily due to higher net income after adjusting for non-cash items. We used $7.5 million in investing activities in 2024, mainly for capitalized software development. Financing activities used $58.0 million in 2024, primarily for stock repurchases.

Strengths and Weaknesses

A key strength of our company is our focus on the community banking and credit union market, which we believe represents significant growth potential as these institutions continue to adopt online lending and account opening practices. Our patented debt optimization engine and Partner Marketplace also provide competitive advantages.

However, we face risks from economic uncertainty, elevated inflation, and rising interest rates, which could lead to decreased customer spending and loan volumes. We also incurred significant legal and advisory fees in 2024, which impacted our profitability.

Outlook and Strategy

Going forward, we believe there are opportunities to expand our customer base by targeting larger financial institutions with over $10 billion in assets under management. We also plan to continue investing in research and development, sales and marketing, and our internal services and support organization to drive growth.

To manage costs, we completed a restructuring plan in 2024 that reduced our workforce by 12%. We also recently obtained additional debt financing and authorized a new $129.5 million stock repurchase program to provide financial flexibility.

Overall, while we faced some headwinds in 2024, we believe our focus on innovation, customer service, and strategic partnerships positions us well for future growth and profitability.