Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended September 30, 2024

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from ________ to ________

Commission File Number 001-35929

National Research Corporation

(Exact name of Registrant as specified in its charter)

Delaware		47-0634000
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

	1245 Q Street, Lincoln, Nebraska 68508
	(Address of principal executive offices) (Zip Code)

	(402) 475-2525
	(Registrant’s telephone number, including area code)

Securities registered pursuant to 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.001 par value	NRC	The NASDAQ stock market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.

Common Stock, $.001 par value, outstanding as of October 25, 2024: 23,476,040

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NATIONAL RESEARCH CORPORATION

FORM 10-Q INDEX

For the Quarter Ended September 30, 2024

			Page No.

PART I.	FINANCIAL INFORMATION

	Item 1.	Financial Statements

		Condensed Consolidated Balance Sheets	3
		Condensed Consolidated Statements of Income	4
		Condensed Consolidated Statements of Shareholders’ Equity	5-6
		Condensed Consolidated Statements of Cash Flows	7
		Notes to Condensed Consolidated Financial Statements	8-19

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20-25

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26

	Item 4.	Controls and Procedures	26

PART II.	OTHER INFORMATION

	Item 1.	Legal Proceedings	26

	Item 1A.	Risk Factors	26

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27

	Item 5.	Other Information	27

	Item 6.	Exhibits	28

	Signatures		29

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Special Note Regarding Forward-Looking Statements

Certain matters discussed in this Quarterly Report on Form 10-Q are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements can generally be identified as such because the context of the statement includes phrases such as National Research Corporation, doing business as NRC Health (“NRC Health,” the “Company,” “we,” “our,” “us” or similar terms), “believes,” “expects,” “may,” “could,” “anticipates,” “estimates,” “plans,” “intends,” or the use of words such as “would,” “will,” “may,” “could,” “goal,” “focus,” or “should,” or other words of similar import. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. In this Quarterly Report on Form 10-Q, statements regarding the value and utility of, and market demand for, our service offerings, future opportunities for growth with respect to new and existing clients, our future ability to compete and the types of firms with which we will compete, future consolidation in the healthcare industry, future adequacy of our liquidity sources, future revenue sources, future revenue growth, future revenue estimates used to calculate recurring contract value, the expected impact of economic factors, including interest rates and inflation, future capital expenditures including, without limitation, our headquarters renovation costs, and the timing, amount, and sources of cash to fund such capital expenditures, future stock repurchases and dividends, the expected impact of pending claims and contingencies, the future outcome of uncertain tax positions, our future use of owned and leased real property, future use of AI and the cost associated therewith, and the expected impact of global conflicts, among others, are forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which could cause actual results or outcomes to differ materially from those currently anticipated. Factors that could affect actual results or outcomes include, without limitation, the following factors:

●

The possibility of non-renewal of our client service contracts, reductions in services purchased or prices, and failure to retain key clients;

●

Our ability to compete in our markets, which are highly competitive with new market entrants, and the possibility of increased price pressure and expenses;

●

The likelihood that a pandemic will adversely affect our operations, sales, earnings, financial condition or liquidity;

●

The likelihood that global conflicts will adversely affect our operations, sales, earnings, financial condition and liquidity;

●

The effects of an economic downturn;

●

The impact of consolidation in the healthcare industry;

●

The impact of federal healthcare reform legislation or other regulatory changes;

●

Our ability to attract and retain key managers and other personnel;

●

The possibility that our intellectual property and other proprietary information technology could be copied or independently developed by our competitors;

●

Our ability to maintain effective internal controls;

●

The possibility for failures or deficiencies in our information technology platform;

●

The possibility that we or our third-party providers could be subject to cyber-attacks, security breaches or computer viruses; and

●

The factors set forth under the caption “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K, as such section may be updated or supplemented by Part II, Item 1A of our subsequently filed Quarterly Reports on Form 10-Q (including this Report) and various disclosures in our press releases, stockholder reports, and other filings with the Securities and Exchange Commission.

Shareholders, potential investors and other readers are urged to consider these and other factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included are only made as of the date of this Quarterly Report on Form 10-Q and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances, except as required by the federal securities laws.

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PART I – Financial Information

ITEM 1. Financial Statements

NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts and par value)

	September 30, 2024			December 31, 2023
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	3,461		$	6,653
Trade accounts receivable, less allowance for doubtful accounts of $45 and $75, respectively		11,059			12,378
Prepaid expenses		4,871			4,228
Income taxes receivable		645			161
Other current assets		664			940
Total current assets		20,700			24,360

Property and equipment, net		36,320			28,205
Intangible assets, net		2,713			1,471
Goodwill		66,209			61,614
Other noncurrent assets		5,856			6,787
Total assets	$	131,798		$	122,437

Liabilities and Shareholders’ Equity
Current liabilities:
Current portion of notes payable, net of unamortized debt issuance costs	$	3,721		$	7,214
Line of credit		5,000			-
Accounts payable		2,588			1,301
Accrued wages and bonuses		5,392			3,953
Accrued expenses		6,279			4,893
Dividends payable		2,817			2,906
Deferred revenue		17,301			14,834
Income taxes payable		-			222
Contingent consideration		506			-
Other current liabilities		673			880
Total current liabilities		44,277			36,203

Notes payable, net of current portion and unamortized debt issuance costs		44,910			29,470
Deferred income taxes		4,131			4,139
Contingent consideration, net of current portion		293			-
Other long-term liabilities		3,564			3,670
Total liabilities		97,175			73,482

Shareholders’ equity:
Preferred stock, $0.01 par value, authorized 2,000,000 shares, none issued		-			-
Common stock, $0.001 par value; authorized 110,000,000 shares, issued 31,072,144 in 2024 and 31,002,919 in 2023, outstanding 23,476,040 in 2024 and 24,219,887 in 2023		31			31
Additional paid-in capital		180,061			178,213
Retained earnings (accumulated deficit)		(20,855	)		(30,530	)
Treasury stock, at cost; 7,596,104 Common shares in 2024 and 6,783,032 Common shares in 2023		(124,614	)		(98,759	)
Total shareholders’ equity	$	34,623		$	48,955
Total liabilities and shareholders’ equity	$	131,798		$	122,437

See accompanying notes to condensed consolidated financial statements

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NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except for per share amounts, unaudited)

	Three months ended September 30,						Nine months ended September 30,
	2024			2023			2024			2023

Revenue	$	35,819		$	37,945		$	106,154		$	110,579

Operating expenses:
Direct		15,305			14,633			42,583			42,222
Selling, general and administrative		10,988			11,802			33,459			35,552
Depreciation and amortization		1,546			1,555			4,506			4,469
Total operating expenses		27,839			27,990			80,548			82,243

Operating income		7,980			9,955			25,606			28,336

Other income (expense):
Interest income		34			256			103			779
Interest expense		(706	)		(160	)		(1,866	)		(594	)
Other, net		(12	)		(12	)		(28	)		(27	)

Total other income (expense)		(684	)		84			(1,791	)		158

Income before income taxes		7,296			10,039			23,815			28,494

Provision for income taxes		1,608			2,163			5,592			6,381

Net income	$	5,688		$	7,876		$	18,223		$	22,113

Earnings Per Share of Common Stock:
Basic Earnings Per Share	$	0.24		$	0.32		$	0.76		$	0.90
Diluted Earnings Per Share	$	0.24		$	0.32		$	0.76		$	0.89

Weighted average shares and share equivalents outstanding:
Basic		23,721			24,560			23,820			24,574
Diluted		23,745			24,695			23,868			24,715

See accompanying notes to condensed consolidated financial statements

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NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands except share and per share amounts, unaudited)

	Common Stock		Additional Paid-in Capital			Retained Earnings (Deficit)			Treasury Stock			Total
Balances at December 31, 2023	$	31	$	178,213		$	(30,530	)	$	(98,759	)	$	48,955
Purchase of 417,855 shares treasury stock		-		-			-			(17,220	)		(17,220	)
Issuance of 75,283 shares of common stock for the exercise of stock options		-		1,752			-			-			1,752
Non-cash stock compensation (benefit)		-		(36	)		-			-			(36	)
Dividends declared of $0.12 per share of common stock		-		-			(2,865	)		-			(2,865	)
Net income		-		-			6,359			-			6,359
Balances at March 31, 2024	$	31	$	179,929		$	(27,036	)	$	(115,979	)	$	36,945
Non-cash stock compensation (benefit)		-		(57	)		-			-			(57	)
Dividends declared of $0.12 per share of common stock		-		-			(2,865	)		-			(2,865	)
Net income		-		-			6,175			-			6,175
Balances at June 30, 2024	$	31	$	179,872		$	(23,726	)	$	(115,979	)	$	40,198
Purchase of 395,217 shares treasury stock		-		-			-			(8,635	)		(8,635	)
Non-cash stock compensation (benefit)		-		189			-			-			189
Dividends declared of $0.12 per share of common stock		-		-			(2,817	)		-			(2,817	)
Net income		-		-			5,688			-			5,688
Balances at September 30, 2024	$	31	$	180,061		$	(20,855	)	$	(124,614	)	$	34,623

See accompanying notes to condensed consolidated financial statements.

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NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands except share and per share amounts, unaudited)

	Common Stock		Additional Paid-in Capital		Retained Earnings (Deficit)			Treasury Stock			Total
Balances at December 31, 2022	$	31	$	175,453	$	(25,184	)	$	(78,267	)	$	72,033
Purchase of 49,296 shares treasury stock		-		-		-			(1,983	)		(1,983	)
Issuance of 20,938 shares of common stock for the exercise of stock options		-		300		-			-			300
Non-cash stock compensation expense		-		304		-			-			304
Dividends declared of $0.12 per share of common stock		-		-		(2,953	)		-			(2,953	)
Net income		-		-		6,964			-			6,964
Balances at March 31, 2023	$	31	$	176,057	$	(21,173	)	$	(80,250	)	$	74,665
Purchase of 43,723 shares treasury stock		-		-		-			(1,828	)		(1,828	)
Issuance of 20,000 shares of common stock for the exercise of stock options		-		284		-			-			284
Non-cash stock compensation expense		-		305		-			-			305
Dividends declared of $0.12 per share of common stock		-		-		(2,949	)		-			(2,949	)
Net income		-		-		7,273			-			7,273
Balances at June 30, 2023	$	31	$	176,646	$	(16,849	)	$	(82,078	)	$	77,750
Purchase of 7,384 shares treasury stock		-		-		-			(313	)		(313	)
Non-cash stock compensation expense		-		68		-			-			68
Dividends declared of $1.12 per share of common stock		-		-		(27,509	)		-			(27,509	)
Net income		-		-		7,876			-			7,876
Balances at September 30, 2023	$	31	$	176,714	$	(36,482	)	$	(82,391	)	$	57,872

See accompanying notes to condensed consolidated financial statements.

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NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

	Nine months ended
	September 30
	2024			2023
Cash flows from operating activities:
Net income	$	18,223		$	22,113
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		4,506			4,469
Deferred income taxes		(118	)		(721	)
Reserve for uncertain tax positions		211			250
Non-cash share-based compensation expense		96			677
Change in fair value of contingent consideration		23			-
Net changes in assets and liabilities:
Trade accounts receivable		1,752			(6	)
Prepaid expenses and other current assets		91			(3,257	)
Deferred contract costs, net		212			800
Operating lease assets and liabilities, net		9			(75	)
Accounts payable		599			230
Accrued expenses, wages and bonuses		1,789			493
Income taxes receivable and payable		(706	)		392
Deferred revenue		1,559			1,040
Net cash provided by operating activities		28,246			26,405

Cash flows from investing activities:
Purchases of property and equipment		(11,004	)		(12,009	)
Acquisitions, net of cash acquired		(4,833	)		-
Proceeds from the sale of property and equipment		-			1
Net cash used in investing activities		(15,837	)		(12,008	)

Cash flows from financing activities:
Payments on notes payable		(5,044	)		(3,373	)
Borrowings on notes payable		17,000			-
Borrowings on line of credit		39,000			5,000
Payments on line of credit		(34,000	)		-
Payments on finance lease obligations		(19	)		(279	)
Payment of debt issuance costs		(37	)		(8	)
Proceeds from the exercise of share-based awards		-			584
Payment of payroll tax withholdings on share-based awards exercised		(317	)		-
Repurchase of shares for treasury		(23,548	)		(4,100	)
Payment of dividends on common stock		(8,636	)		(33,419	)
Net cash used in financing activities		(15,601	)		(35,595	)

Change in cash and cash equivalents		(3,192	)		(21,198	)
Cash and cash equivalents at beginning of period		6,653			25,026
Cash and cash equivalents at end of period	$	3,461		$	3,828

Supplemental disclosure of cash paid for:
Interest expense, net of capitalized amounts	$	1,699		$	600
Income taxes	$	6,270		$	6,484
Supplemental disclosure of non-cash investing and financing activities:
Stock tendered to the Company for cashless exercise of stock options in connection with equity incentive plans	$	1,752		$	-
Purchase of property and equipment in accounts payable and accrued expenses	$	2,610		$	1,819
Repurchase of shares for treasury in accounts payable and accrued expenses	$	238		$	24
Contingent consideration recorded in connection with acquisition	$	776		$	-

See accompanying notes to condensed consolidated financial statements.

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NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of business and basis of presentation

National Research Corporation, doing business as NRC Health (“NRC Health,” the “Company,” “we,” “our,” “us” or similar terms), is a leading provider of analytics and insights that facilitate measurement and improvement of the patient and employee experience while also increasing patient engagement and customer loyalty for healthcare organizations in the United States. Our purpose is to humanize healthcare and support organizations in their understanding of each person they serve not as point-in-time insights, but as an ongoing relationship. We believe that understanding the story is the key to unlocking the highest-quality and truly personalized care. Our end-to-end solutions enable health care organizations to understand what matters most to each person they serve – before, during, after, and outside of clinical encounters – to gain a longitudinal understanding of how life and health intersect, with the goal of developing lasting, trusting relationships. Our portfolio of solutions represents a unique set of capabilities that individually and collectively provide value to our clients.

Our condensed consolidated balance sheet at December 31, 2023 was derived from our audited consolidated balance sheet as of that date. All other financial statements contained herein are unaudited and, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments) that we consider necessary for a fair presentation of financial position, results of operations and cash flows in accordance with accounting principles generally accepted in the United States.

Information and footnote disclosures included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto that are included in our Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (the “SEC”) on February 27, 2024.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

The condensed consolidated financial statements include the accounts of the Company and our wholly-owned subsidiary, National Research Corporation Canada, until it was formally dissolved in August 2024. All significant intercompany transactions and balances have been eliminated.

Our Canadian subsidiary used Canadian dollars as its functional currency. We translated its assets and liabilities into U.S. dollars at the exchange rate in effect at the balance sheet date. We translated its revenue and expenses at the average exchange rate during the period. During December 2022, we substantially liquidated our investment in Canada. As a result, currency translation changes were recognized in Other income (expense), net in our Condensed Consolidated Statements of Income. In the three-month period ended June 30, 2024 we repatriated the remaining cash from Canada.

Revenue Recognition

We derive a majority of our revenues from our annually renewable subscription-based service agreements with our customers, which include performance measurement and improvement services, healthcare analytics and governance education services. Such agreements are generally cancelable on short or no notice without penalty. See Note 3 for further information about our contracts with customers. We account for revenue using the following steps:

	●	Identify the contract, or contracts, with a customer;
	●	Identify the performance obligations in the contract;
	●	Determine the transaction price;
	●	Allocate the transaction price to the identified performance obligations; and
	●	Recognize revenue when, or as, we satisfy the performance obligations.

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Our revenue arrangements with a client may include combinations of more than one service offering which may be executed at the same time, or within close proximity of one another. We combine contracts with the same customer into a single contract for accounting purposes when the contract is entered into at or near the same time and the contracts are negotiated together. For contracts that contain more than one separately identifiable performance obligation, the total transaction price is allocated to the identified performance obligations based upon the relative stand-alone selling prices of the performance obligations. The stand-alone selling prices are based on an observable price for services sold to other comparable customers, when available, or an estimated selling price using a cost-plus margin or residual approach. We estimate the amount of total contract consideration we expect to receive for variable arrangements based on the most likely amount we expect to earn from the arrangement based on the expected quantities of services we expect to provide and the contractual pricing based on those quantities. We only include some or a portion of variable consideration in the transaction price when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. We consider the sensitivity of the estimate, our relationship and experience with the client and variable services being performed, the range of possible revenue amounts and the magnitude of the variable consideration to the overall arrangement. The majority of our revenue arrangements are for a twelve-month period but we also have multi-year arrangements. Our revenue arrangements do not contain any significant financing element due to the contract terms and the timing between when consideration is received and when the service is provided. We typically bill customers annually or quarterly in advance of services but may also bill monthly.

Our arrangements with customers consist principally of four different types of arrangements: 1) subscription-based service agreements; 2) one-time specified services performed at a single point in time; 3) fixed, non-subscription service agreements; and 4) unit-priced service agreements.

Subscription-based services - Services that are provided under subscription-based service agreements represent a single promise to stand ready to provide reporting, tools and services throughout the subscription period as requested by the customer. These agreements are renewable at the option of the customer at the completion of the initial contract term for an agreed upon price increase each year. These agreements represent a series of distinct monthly services that are substantially the same, with the same pattern of transfer to the customer as the customer receives and consumes the benefits throughout the contract period. Accordingly, subscription services are recognized ratably over the subscription period.

One-time services – These agreements typically require us to perform a specific one-time service in a particular month. We are entitled to a fixed payment upon completion of the service. Under these arrangements, we recognize revenue at the point in time we complete the service and it is accepted by the customer.

Fixed, non-subscription services – These arrangements typically require us to perform an unspecified amount of services for a fixed price during a fixed period of time. Revenues are recognized over time based upon the costs incurred to date in relation to the total estimated contract costs. In determining cost estimates, management uses historical and forecasted cost information which is based on estimated volumes, external and internal costs and other factors necessary in estimating the total costs over the term of the contract. Changes in estimates are accounted for using a cumulative catch-up adjustment which could impact the amount and timing of revenue for any period.

Unit-price services – These arrangements typically require us to perform certain services on a periodic basis as requested by the customer for a per-unit amount which is typically billed in the months following the performance of the service. Revenue under these arrangements is recognized over the time the services are performed at the per-unit amount.

Revenue is presented net of any sales tax charged to our clients that we are required to remit to taxing authorities. We recognize contract assets or unbilled receivables related to revenue recognized for services completed but not invoiced to the clients. Unbilled receivables are classified as receivables when we have an unconditional right to contract consideration. A contract liability is recognized as deferred revenue when we invoice clients in advance of performing the related services under the terms of a contract. Deferred revenue is recognized as revenue when we have satisfied the related performance obligation.

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Deferred Contract Costs

Deferred contract costs, net is stated at gross deferred costs less accumulated amortization. We defer commissions and incentives, including payroll taxes, and certain implementation costs if they are incremental and recoverable costs of obtaining a renewable customer contract. Deferred contract costs are amortized over the estimated term of the contract, including renewals, which generally ranges from three to five years. The contract term was estimated by considering factors such as historical customer attrition rates and product life. The amortization period is adjusted for significant changes in the estimated remaining term of a contract. An impairment of deferred contract costs is recognized when the unamortized balance of deferred contract costs exceeds the remaining amount of consideration we expect to receive net of the expected future costs directly related to providing those services. We have elected the practical expedient to expense contract costs when incurred for any nonrenewable contracts with a term of one year or less. We deferred incremental costs of obtaining a contract of $297,000 and $69,000 in the three-month periods ended September 30, 2024 and 2023, respectively. We deferred incremental costs of obtaining a contract of $608,000 and $301,000 in the nine-month periods ended September 30, 2024 and 2023, respectively. Deferred contract costs, net of accumulated amortization was $1.2 million and $1.5 million at September 30, 2024 and December 31, 2023, respectively. Total amortization by expense classification for the periods ended September 30, 2024 and 2023 was as follows:

	Three months ended September 30, 2024		Three months ended September 30, 2023		Nine months ended September 30, 2024		Nine months ended September 30, 2023
	(In thousands)
Direct Expenses	$	30	$	67	$	128	$	146
Selling, general and administrative expenses		219		278		655		915
Total amortization	$	249	$	345	$	783	$	1,061

Additional expense included in selling, general and administrative expenses for impairment of costs capitalized due to lost clients was $3,000 and $26,000 for the three-month periods ended September 30, 2024 and 2023, respectively and $37,000 and $41,000 in the nine-month periods ended September 30, 2024 and 2023, respectively.

Trade Accounts Receivable

Trade accounts receivable are recorded at the invoiced amount. The allowance for doubtful accounts is our best estimate of the amount of probable credit losses in our existing accounts receivable, determined based on our historical write-off experience, current economic conditions and reasonable and supportable forecasts about the future. We review the allowance for doubtful accounts monthly. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

The following table provides the activity in the allowance for doubtful accounts for the nine-month periods ended September 30, 2024 and 2023 (In thousands):

	Balance at Beginning of Period		Bad Debt Expense (Benefit)			Write-offs		Recoveries		Balance at End of Period

Nine months ended September 30, 2024	$	75	$	(72	)	$	9	$	51	$	45
Nine months ended September 30, 2023	$	65	$	100		$	89	$	9	$	85

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Leases

We determine whether a lease is included in an agreement at inception. We recognize a lease liability and a right-of-use (“ROU”) asset on the balance sheet for our operating leases under which we are lessee. Operating lease ROU assets are included in operating lease right-of-use assets in our condensed consolidated balance sheet. Finance lease assets are included in property and equipment. Operating and finance lease liabilities are included in other current liabilities and other long-term liabilities. Certain lease arrangements may include options to extend or terminate the lease. We include these provisions in the ROU asset and lease liabilities only when it is reasonably certain that we will exercise that option. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term and is included in direct expenses and selling, general and administrative expenses. Our lease agreements do not contain any residual value guarantees.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments during the lease term. ROU assets and lease liabilities are recorded at lease commencement based on the estimated present value of lease payments. Because the rate of interest implicit in each lease is not readily determinable, we use our estimated incremental collateralized borrowing rate at lease commencement, to calculate the present value of lease payments. When determining the appropriate incremental borrowing rate, we consider our available credit facilities, recently issued debt and public interest rate information.

Due to remote working arrangements, we reassessed our office needs and subleased our Seattle location under an agreement considered to be an operating lease beginning in May 2021. We have not been legally released from our primary obligations under the original lease and therefore we continue to account for the original lease separately. Rent income from the sublessee is included in the statement of operations on a straight-line basis as an offset to rent expense associated with the original operating lease included in other expenses.

Fair Value Measurements

Our valuation techniques are based on maximizing observable inputs and minimizing the use of unobservable inputs when measuring fair value. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. The inputs are then classified into the following hierarchy: (1) Level 1 Inputs—quoted prices in active markets for identical assets and liabilities; (2) Level 2 Inputs—observable market-based inputs other than Level 1 inputs, such as quoted prices for similar assets or liabilities in active markets, quoted prices for similar or identical assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data; (3) Level 3 Inputs—unobservable inputs. There were no transfers between levels during the nine months ended September 30, 2024.

The following details our assets and liabilities measured at fair value on a recurring basis:

	Level 1		Level 2		Level 3		Total
	(In thousands)
As of September 30, 2024
Financial Assets:
Money Market Funds	$	3,157	$	-	$	-	$	3,157
Total Cash Equivalents	$	3,157	$	-	$	-	$	3,157
Financial Liabilities:
Contingent Consideration Liability	$	-		-	$	799	$	799

As of December 31, 2023
Financial Assets:
Money Market Funds	$	6,471	$	-	$	-	$	6,471
Total Cash Equivalents	$	6,471	$	-	$	-	$	6,471

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Our contingent consideration liability relates to potential future payments to the former owners of Nobl Health (“Nobl”) which was acquired in the third quarter of 2024 (See Note 2). The potential future payments are contingent upon the achievement of certain customer contract metrics. Contingent consideration was recognized at the date of acquisition and is remeasured at each reporting date at its estimated fair value. The remeasured fair value could differ materially from the initial estimates and uses significant unobservable inputs classified as Level 3 inputs. We measured fair value using a discounted cash flow model based on the present value of expected future payments, which considers the likelihood of meeting contract thresholds at future payment dates. Significant increases or decreases to any of the inputs in isolation could result in a significantly higher or lower liability. The change to the contingent consideration liability from the acquisition date, at each reporting date and the final amount paid, which is capped at $1.0 million, will be recognized in earnings. We recorded an increase of $23,000 to the fair value of contingent consideration, from $776,000 at the acquisition date to $799,000 at September 30, 2024, which is included in selling, general and administrative expenses.

Our long-term debt described in Note 4 is recorded at historical cost. The fair value of fixed rate long-term debt in 2023 was classified in Level 2 of the fair value hierarchy and was estimated based primarily on estimated current rates available for debt of the same remaining duration and adjusted for nonperformance and credit. The fair value of our variable rate long-term debt is believed to approximate the carrying value because we believe the current rate reasonably estimates the current market rate for our debt.

The following are the carrying amount and estimated fair values of long-term debt:

	September 30, 2024		December 31, 2023
	(In thousands)
Total carrying amount of long-term debt	$	48,742	$	36,787
Estimated fair value of long-term debt	$	48,742	$	36,403

The carrying amounts of accounts receivable, line of credit, accounts payable, and accrued expenses approximate their fair value. All non-financial assets that are not recognized or disclosed at fair value in the financial statements on a recurring basis, which includes ROU assets, property and equipment, goodwill, intangibles and cost method investments, are measured at fair value in certain circumstances (for example, when there is evidence of impairment). As of September 30, 2024 and December 31, 2023, there was no indication of impairment related to these assets.

Annually, we consider whether the recorded goodwill and indefinite lived intangibles have been impaired. However, goodwill and intangibles must be tested between annual tests if an event occurs or circumstances change to indicate that it is more likely than not that an impairment loss has been incurred (“triggering event”).

Commitments and Contingencies

From time to time, we are involved in certain claims and litigation arising in the normal course of business. Management assesses the probability of loss for such contingencies and recognizes a liability when a loss is probable and estimable. Legal fees, net of estimated insurance recoveries, are expensed as incurred. We do not believe the final disposition of claims at September 30, 2024 will have a material adverse effect on our consolidated financial position, results of operations or liquidity.

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ACQUISITION

On July 15, 2024, we entered a Stock Purchase Agreement to acquire all outstanding equity interests of Nobl, a provider of innovative rounding solutions for healthcare organizations, for cash delivered at closing of $6.0 million, subject to certain adjustments. We acquired Nobl to expand our portfolio of solutions and further support our experience partners in gathering real time employee and patient feedback. The Stock Purchase Agreement included a contingent consideration arrangement which requires payment of up to $1.0 million undiscounted to former owners of Nobl if recurring contract value exceeds $2.0 million. The amount is measured in December and June through June 2026 and paid in the following month. The potential undiscounted amount of all future contingent consideration payments that we may be required to pay ranges from $0 to $1.0 million. The fair value of the contingent consideration arrangement of $776,000 was estimated by using a discounted cash flow model. Contingent consideration is remeasured at each reporting period through settlement with the change recognized in selling, general and administrative expenses (See Note 1).

Total consideration paid for Nobl is as follows:

	($ in thousands)
Cash paid	$	5,513
Estimated fair value of Contingent Consideration		776
Fair value of total consideration transferred	$	6,289

The acquisition was accounted for as a business combination, using the acquisition method of accounting, which requires the allocation of the purchase price to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The fair values assigned to the intangible assets acquired were determined based on management’s estimates and assumptions, as well as other information compiled by management, including third-party valuations that utilize customary valuation procedures and techniques. These values are preliminary, pending final measurement of tax accounts, current liabilities and goodwill. The following table summarizes the preliminary fair value of assets acquired and liabilities assumed at the acquisition date.

Recognized Amounts of Assets Acquired and Liabilities Assumed
	($ in thousands)
Cash	$	680
Other current assets		478
Property and equipment		15
Customer related intangible		580
Technology		830
In process research & development		890
Goodwill		4,595
Other long-term assets		72
Total assets acquired	$	8,140
Current liabilities		1,645
Other long-term liabilities		206
Total liabilities assumed		1,851
Net assets acquired	$	6,289

Customer related and developed technology intangible assets are being amortized over their estimated useful lives of 7 and 5 years, respectively and a total weighted average of 5.8 years. The goodwill and identifiable intangible assets are not deductible for tax purposes. Goodwill related to the acquisition was primarily attributable to anticipated synergies and economies of scale expected from combining Nobl’s operations with ours, and other intangibles that do not qualify for separate recognition.

In process research and development (“IPR&D”) consists of Nobl’s development activities related to a significant upgrade to Nobl’s proprietary platform. Once the project is completed, the carrying value of the IPR&D will be reclassified to software and amortized over the estimated useful life of the asset.

The financial results associated with the Nobl assets we acquired and liabilities we assumed are included in our consolidated financial statements from the date of acquisition, although the amounts are insignificant for 2024. Pro-forma information has not been presented because the amounts for 2024 are insignificant. Acquisition-related costs of $112,000 are included in selling, general and administrative expenses for the three and nine-month periods ended September 30, 2024.

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CONTRACTS WITH CUSTOMERS

The following table disaggregates revenue for the three- and nine-month periods ended September 30, 2024 and 2023 based on timing of revenue recognition (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Subscription services recognized ratably over time	$	33,196	$	35,205	$	99,571	$	103,942
Services recognized at a point in time		1,489		1,200		3,765		3,224
Fixed, non-subscription recognized over time		925		1,249		2,356		2,703
Unit price services recognized over time		209		291		462		710
Total revenue	$	35,819	$	37,945	$	106,154	$	110,579

The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers (In thousands):

	September 30, 2024		December 31, 2023
Accounts receivables	$	11,059	$	12,378
Contract assets included in other current assets	$	11	$	84
Deferred Revenue, current portion	$	17,301	$	14,834
Noncurrent Deferred Revenue included in other long-term liabilities	$	41		-

Significant changes in contract assets and contract liabilities during the nine-month periods ended September 30, 2024 and 2023 are as follows (in thousands):

	2024						2023
	Contract Asset			Deferred Revenue			Contract Asset			Deferred Revenue
	Increase (Decrease)
Revenue recognized that was included in deferred revenue at beginning of year due to completion of services	$	-		$	(14,355	)	$	-		$	(14,473	)
Increases due to invoicing of client, net of amounts recognized as revenue		-			15,966			-			15,602
Increases due to acquisition		-			948
Decreases due to completion of services (or portion of services) and transferred to accounts receivable		(83	)		-			(93	)		-
Change due to cumulative catch-up adjustments arising from changes in expected contract consideration		-			(51	)		-			(89	)
Increases due to revenue recognized in the period with additional performance obligations before invoicing		10			-			29			-

We have elected to apply the practical expedient to not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. Total remaining contract revenue for contracts with original duration of greater than one year expected to be recognized in the future related to performance obligations that are unsatisfied at September 30, 2024 approximated $69.4 million, of which $6.4 million, $26.9 million, $23.4 million, $10.8 million, $1.3 million and $623,000 are expected to be recognized during 2024, 2025, 2026, 2027, 2028 and 2029, respectively.

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INCOME TAXES

The effective tax rate for each of the three-month periods ended September 30, 2024 and 2023 was 22%. The effective tax rate for the nine-month periods ended September 30, 2024 increased to 23% from 22% for the same period in 2023. The change in the nine-month periods was mainly due to decreased tax benefits of $55,000 from the exercise of share-based compensation awards and higher state income taxes of approximately $241,000 which fluctuate based on various apportionment factors and rates for the states in which we operate.

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CREDIT AGREEMENT

Our long-term debt consists of the following:

	September 30, 2024			December 31, 2023
	(In thousands)
Term Loan	$	14,547		$	17,787
Delayed Draw Term Loan		34,195			19,000
Less: current portion		(3,721	)		(7,214	)
Less: unamortized debt issuance costs		(111	)		(103	)
Notes payable, net of current portion	$	44,910		$	29,470

Our amended and restated credit agreement (the “Credit Agreement”) with First National Bank of Omaha (“FNB”) includes (i) a $30.0 million revolving credit facility (the “Line of Credit”), (ii) a $23.4 million term loan (the “Term Loan”) and (iii) a $75.0 million delayed draw-down term facility (the “Delayed Draw Term Loan” and, together with the Line of Credit and the Term Loan, the “Credit Facilities”). We may use the Delayed Draw Term Loan through May 2026 to fund dividends, any permitted future business acquisitions, capital expenditures or repurchases of our common stock. The Line of Credit is available to fund ongoing working capital needs and for other general corporate purposes.

Our Credit Facilities were amended on August 5, 2024, which (i) extended the maturity of the Line of Credit, (ii) extended the commitment date until which FNB will make loans available under the Delayed Draw Term Loan, (iii) revised the payments on the current balances of the Term Loan and the Delayed Draw Term Loan and any future balances on the Delayed Draw Term Loan to monthly installments amortized over ten-year periods, (iv) revised the interest rate on the Term Loan from a fixed 5% rate to a floating rate based on the 30-day Secured Overnight Financing Rate (“SOFR”), (v) extended the use of the Delayed Draw Term Loan to include dividends, stock repurchases, acquisitions and capital expenditures and (vi) increased the allowable building renovations excluded from the fixed charge coverage ratio covenant.

Borrowings under the Term Loan, Delayed Draw Term Loan and Line of Credit, if any, accrue interest at a floating rate equal to the SOFR plus 235 basis points (7.55% at September 30, 2024), which is payable monthly.

Principal payments on our amended Term Loan are due in monthly installments of $92,800 through May 2027 and a ballon payment for the remaining balance of $11.6 million is due May 28, 2027.

Principal payments are due on the Delayed Draw Term Loan in monthly installments of $220,882 through May 2027 and a balloon payment for the remaining balance of $27.1 million is due in May 28, 2027. We had the availability to borrow an additional $39 million on the Delayed Draw Term Loan at September 30, 2024.

Principal amounts outstanding under the Line of Credit are due and payable in full at maturity, in May 2027. As of September 30, 2024, we had $5.0 million of borrowings outstanding and the availability to borrow $25.0 million on the Line of Credit. The weighted average borrowings on the Line of Credit for the three-month periods ended September 30, 2024 and 2023 were $8.0 million and $543,000, respectively. The weighted average borrowings on the Line of Credit for the nine-month periods ended September 30, 2024 and 2023 were $9.0 million and $183,000, respectively. The weighted average interest rate on borrowings on the Line of Credit during the three-month periods ended September 30, 2024 and 2023 were 7.65% and 7.68%, respectively. The weighted average interest on borrowings on the Line of Credit during the nine-month periods ended September 30, 2024 was 7.67% and 7.68%, respectively.

We are obligated to pay ongoing unused commitment fees quarterly in arrears at a rate of 0.20% per annum based on the actual daily unused portions of the Line of Credit and the Delayed Draw Term Loan facility.

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The Credit Agreement is collateralized by substantially all of our assets, subject to permitted liens and other agreed exceptions, and contains customary representations, warranties, affirmative and negative covenants (including financial covenants) and events of default. The negative covenants include, among other things, restrictions regarding the incurrence of indebtedness and liens, repurchases of our common stock and acquisitions, subject in each case to certain exceptions. Pursuant to the Credit Agreement, we are required to maintain a minimum fixed charge coverage ratio of 1.10x for all testing periods throughout the term(s) of the Credit Facilities, which calculation excludes, unless our liquidity falls below a specified threshold, (i) any cash dividend in a fiscal quarter that, together with all other cash dividends paid or declared during such fiscal quarter, exceeds $5.5 million in total cash dividends paid or declared, (ii) the portion of the purchase price for any permitted share repurchase of our shares paid with cash on hand, (iii) the portion of any acquisition consideration for a permitted acquisition paid with cash on hand, and (iv) up to $27.5 million of costs associated with our building renovation from or after January 1, 2023. We are also required to maintain a cash flow leverage ratio of 3.00x or less for all testing periods throughout the term(s) of the Credit Facilities. All obligations under the Credit Facilities are to be guaranteed by each of our direct and indirect wholly owned domestic subsidiaries, if any, and, to the extent required by the Credit Agreement, direct and indirect wholly owned foreign subsidiaries.

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SHARE-BASED COMPENSATION

We measure and recognize compensation expense for all share-based payments based on the grant-date fair value of those awards. All of our existing stock option awards and unvested stock awards have been determined to be equity-classified awards. We account for forfeitures as they occur. We refer to our restricted stock awards as “non-vested” stock in these condensed consolidated financial statements.

Our 2004 Non-Employee Director Stock Plan, as amended (the “2004 Director Plan”), is a nonqualified plan that provides for the granting of options with respect to 3,000,000 shares of our common stock. The 2004 Director Plan provides for grants of nonqualified stock options to each of our directors who we do not employ. On the date of each annual meeting of shareholders, options to purchase shares of common stock equal to an aggregate grant date fair value of $100,000 are granted to each non-employee director that is elected or retained as a director at each such meeting. Stock options vest approximately one year following the date of grant and option terms are generally the earlier of ten years following the date of grant, or three years from the termination of the non-employee director’s service.

Our 2006 Equity Incentive Plan (the “2006 Equity Incentive Plan”), as amended, provides for the granting of stock options, stock appreciation rights, restricted stock, performance shares and other share-based awards and benefits up to an aggregate of 1,800,000 shares of our common stock. Stock options granted may be either incentive stock options or nonqualified stock options. Options to purchase shares of common stock are typically granted with exercise prices equal to the fair value of the common stock on the date of grant. We do, in certain limited situations, grant options with exercise prices that exceed the fair value of the common stock on the date of grant.

Performance-Based Stock Option Awards

We grant stock options to selected executives with vesting contingent upon meeting certain Company-wide performance goals. The performance goals for options issued in 2024 are based on reaching a total recurring contract value target, measured at the end of the performance period, December 31, 2026. Vesting is also dependent upon remaining in our employment through the performance period. The performance awards issued in 2024 have a six-year contractual term. We recognize compensation expense prospectively from the date it is deemed probable that the performance goal will be met through the end of the performance period. We did not recognize compensation expense related to performance-based awards in 2024 since achieving the performance goals was not deemed probable. We granted 404,833 performance-based stock option awards during the nine-month period ended September 30, 2024. No performance-based stock options were awarded in 2023.

The fair value of performance-based stock options granted was estimated using a Black-Scholes valuation model with the following weighted average assumptions:

	2024
Expected dividend yield at date of grant		1.44	%
Expected stock price volatility		33.83	%
Risk-free interest rate		4.13	%
Expected life of options (in years)		4.0

The risk-free interest rate assumptions were based on the U.S. Treasury yield curve in effect at the time of the grant. The expected volatility was based on historical monthly price changes of our stock based on the expected life of the options at the date of grant. The expected life of options is the average number of years we estimate that options will be outstanding. We consider groups of associates that have similar historical exercise behavior separately for valuation purposes.

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The following table summarizes performance-based stock option activity under the 2006 Equity Incentive Plan for the nine-month period ended September 30, 2024:

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Terms (Years)		Aggregate Intrinsic Value (In thousands)
Outstanding at December 31, 2023		-	$	-
Granted		404,833	$	39.54
Exercised		-	$	-
Forfeited		-	$	-
Outstanding at September 30, 2024		404,833	$	39.54		5.30	$	-
Exercisable at September 30, 2024		-	$	-		-	$	-

Service-Based Stock Option Awards

We also grant stock options to directors and selected executives with vesting based on specified service periods. Vesting terms vary with each grant and option awards are generally five to ten years following the date of grant. We recognize compensation expense on a straight-line basis over the service period specified in the award. We granted 54,530 and 96,359 service-based stock option awards during the nine-month periods ended September 30, 2024 and 2023, respectively.

The fair value of service-based stock options granted in 2024 was estimated using a Black-Scholes valuation model with the following weighted average assumptions:

	2024
Expected dividend yield at date of grant		1.94	%
Expected stock price volatility		33.75	%
Risk-free interest rate		4.50	%
Expected life of options (in years)		5.0

The following table summarizes service-based stock option activity under the 2006 Equity Incentive Plan and the 2004 Director Plan for the nine-month period ended September 30, 2024:

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Terms (Years)		Aggregate Intrinsic Value (In thousands)
Outstanding at December 31, 2023		569,168	$	35.72
Granted		54,530	$	29.76
Exercised		75,283	$	23.27
Forfeited		56,805	$	43.83
Outstanding at September 30, 2024		491,610	$	36.03		5.47	$	567
Exercisable at September 30, 2024		344,000	$	34.50		4.41	$	567

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There was $584,000 of cash received from stock options exercised for the nine-month period ended September 30, 2023, and no cash received from options exercised in the nine-month periods ended September 30, 2024. We recognized $189,000 and $198,000 of non-cash compensation for three-month periods ended September 30, 2024 and 2023, respectively, and $252,000 and $752,000 of non-cash compensation for the nine-month periods ended September 30, 2024 and 2023, respectively, related to options, which is included in selling, general and administrative expenses.

As of September 30, 2024, the total unrecognized compensation cost related to non-vested performance-based and service-based stock option awards was approximately $5.4 million which was expected to be recognized over a weighted average period of 2.2 years.

Non-vested Stock Awards

No non-vested shares of common stock were granted under the 2006 Equity Incentive Plan during the nine-month periods ended September 30, 2024 and 2023. As of September 30, 2024, there were no non-vested shares of common stock outstanding and no related remaining unrecognized compensation cost to recognize. We recognized non-cash compensation benefit of $130,000 for the three-month period ended September 30, 2023, and $156,000 and $75,000 for the nine-month periods ended September 30, 2024 and 2023, respectively, related to this non-vested stock, which is included in selling, general and administrative expenses. There was no non-cash compensation related to non-vested stock awards in the three-month period ended September 30, 2024.The following table summarizes information regarding non-vested stock granted to associates under the 2006 Equity Incentive Plan for the nine-month period ended September 30, 2024:

	Common Stock Outstanding			Weighted Average Grant Date Fair Value Per Share
Outstanding at December 31, 2023		6,058		$	42.92
Granted		-			-
Vested		-			-
Forfeited		(6,058	)		42.92
Outstanding at September 30, 2024		-		$	-

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GOODWILL AND OTHER INTANGIBLE ASSETS

The following represents the carrying amount of goodwill:

	Gross		Accumulated Impairment			Net
	(In thousands)
Balance at December 31, 2023	$	62,328	$	(714	)	$	61,614
Goodwill acquired		4,595		-			4,595
Balance at September 30, 2024	$	66,923	$	(714	)	$	66,209

Intangible assets consisted of the following:

	September 30, 2024			December 31, 2023
	(In thousands)
Non-amortizing intangible assets:
Indefinite trade name	$	1,191		$	1,191
Amortizing intangible assets:
Customer related		9,772			9,192
Technology		2,790			1,959
Trade names		1,572			1,572
Total amortizing intangible assets		14,134			12,723
Accumulated amortization		(12,612	)		(12,443	)
Other intangible assets, net	$	2,713		$	1,471

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PROPERTY AND EQUIPMENT

	September 30, 2024		December 31, 2023
	(In thousands)
Property and equipment	$	76,319	$	63,874
Accumulated depreciation		39,999		35,669
Property and equipment, net	$	36,320	$	28,205

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EARNINGS PER SHARE

Basic net income per share was computed using the weighted-average shares of common stock outstanding during the period.

Diluted net income per share was computed using the weighted-average shares of common stock and, if dilutive, the potential common stock outstanding during the period. Potential shares of common stock consist of the incremental common stock issuable upon the exercise of stock options and vesting of restricted stock. The dilutive effect of outstanding stock options is reflected in diluted earnings per share by application of the treasury stock method.

We had 402,822 and 275,064 options of common stock for the three-month periods ended September 30, 2024 and 2023, respectively, which have been excluded from the diluted net income per share computation because their inclusion would be anti-dilutive. We had 406,713 and 268,838 options of common stock for the nine-month periods ended September 30, 2024 and 2023, respectively, which have been excluded from the diluted net income per share computation because their inclusion would be anti-dilutive.

	For the Three Months Ended September 30					For the Nine Months Ended September 30
	2024		2023			2024			2023
	(In thousands, except per share data)
Numerator for net income per share – basic:
Net income	$	5,688	$	7,876		$	18,223		$	22,113
Allocation of distributed and undistributed income to unvested restricted stock shareholders		-		(2	)		(2	)		(5	)
Net income attributable to common shareholders		5,688		7,874			18,221			22,108
Denominator for net income per share – basic:
Weighted average common shares outstanding – basic		23,721		24,560			23,820			24,574
Net income per share – basic	$	0.24	$	0.32		$	0.76		$	0.90
Numerator for net income per share – diluted:
Net income attributable to common shareholders for basic computation		5,688		7,874			18,221			22,108
Denominator for net income per share – diluted:
Weighted average common shares outstanding – basic		23,721		24,560			23,820			24,574
Weighted average effect of dilutive securities – stock options		24		135			48			141
Denominator for diluted earnings per share – adjusted weighted average shares		23,745		24,695			23,868			24,715
Net income per share – diluted	$	0.24	$	0.32		$	0.76		$	0.89

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ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our results of operations and financial conditions should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q.

Our purpose is to humanize healthcare and support organizations in their understanding of each unique individual. Our commitment to Human Understanding® helps leading healthcare systems get to know each person they serve not as point-in-time insights, but as an ongoing relationship. Our end-to-end solutions enable our clients to understand what matters most to each person they serve – before, during, after, and beyond clinical encounters – to gain a longitudinal understanding of how life and health intersect, with the goal of developing lasting, trusting relationships. Our ability to measure what matters most and systematically capture, analyze, and deliver insights based on self-reported information from patients, families, and consumers is critical in today’s healthcare market. We believe access to and analysis of our extensive consumer-driven information is increasingly valuable as healthcare providers need to better understand and engage the people they serve to create long-term relationships and build loyalty.

Our portfolio of subscription-based solutions provides actionable information and analysis to healthcare organizations across a range of mission-critical, constituent-related elements, including patient experience, service recovery, care transitions, employee engagement, reputation management, and brand loyalty. We partner with clients across the continuum of healthcare services and believe this cross-continuum positioning is a unique and an increasingly important capability as evolving payment models drive healthcare providers and payers towards a more collaborative and integrated service model.

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Results of Operations

The following tables set forth, for the periods indicated, selected financial information derived from our condensed consolidated financial statements and the percentage change in such items versus the prior comparable period, as well as other key financial metrics. The discussion that follows the information should be read in conjunction with our condensed consolidated financial statements.

Three Months Ended September 30, 2024, Compared to Three Months Ended September 30, 2023

	(In thousands, except percentages) Three Months Ended September 30,						Percentage Increase (Decrease)
	2024			2023			2024 over 2023
Revenue	$	35,819		$	37,945			(6	)
Direct expenses		15,305			14,633			5
Selling, general, and administrative		10,988			11,802			(7	)
Depreciation and amortization		1,546			1,555			(1	)
Operating income		7,980			9,955			(20	)
Total other income (expense)		(684	)		84			(914	)
Provision for income taxes		1,608			2,163			(26	)
Effective Tax Rate		22	%		22	%		-
Operating margin		22	%		26	%		(4	)

Revenue. Revenue in the 2024 period decreased compared to the 2023 period by $2.1 million. This was mainly from decreased US recurring revenue in our existing client base. Of this decrease, 26% was from our non-core solutions.

Direct expenses. Variable expenses increased $452,000 in the 2024 period compared to the 2023 period primarily from higher conference expenses partially offset by decreased data collection expenses. Variable expenses as a percentage of revenue were 18% and 16% in the 2024 and 2023 periods, respectively. Fixed expenses increased $220,000 primarily due to higher contracted services to support investments in our Human Understanding solutions partially offset by decreased salary and benefit costs from workforce changes and automation and state tax incentive adjustments. We have increased investments and will continue to invest in providing innovative AI solutions to our clients.

Selling, general and administrative expenses. Selling, general and administrative expenses decreased in the 2024 period compared to the 2023 period primarily due to decreased marketing expenses of $890,000, less web hosting and other software services of $204,000, decreased legal fees of $142,000 and less consulting fees of $141,000 partially offset by increased salary and benefit costs of $669,000 from investments in strategic leadership, product development and sales teams. We expect these investment levels to continue with the goal of driving efficiencies and savings in overall costs.

Depreciation and amortization. Depreciation and amortization expenses decreased $9,000 due to less building, furniture and computer equipment depreciation partially offset by increased software investment amortization and intangible amortization from the Nobl acquisition.

Operating income and margin. Operating income and margin decreased in the 2024 period compared to the 2023 period primarily due to the decline in revenue.

Total other income (expense). Total other expense increased in the 2024 period compared to the 2023 period primarily due to lower interest income of $222,000 from decreased money market funds investments and higher interest expense of $546,000 mainly from borrowings on our Line of Credit and Delayed Draw Term Loan, as well as the increased interest rate on our Term Loan. Other expense is expected to increase in future periods due to additional borrowings on our Delayed Draw Term Loan and the August 2024 amendment to our Credit Agreement, which extended the maturity of our debt and revised the interest rate on our Term Note to SOFR plus 2.35%.

Provision for income taxes and effective tax rate. Provision for income taxes decreased in the 2024 period compared to the 2023 period primarily due to decreased taxable income. The effective tax rate remained consistent between periods.

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Nine Months Ended September 30, 2024, Compared to Nine Months Ended September 30, 2023

	(In thousands, except percentages) Nine Months Ended September 30,						Percentage Increase (Decrease)
	2024			2023			2024 over 2023
Revenue	$	106,154		$	110,579			(4	)
Direct expenses		42,583			42,222			1
Selling, general, and administrative		33,459			35,552			(6	)
Depreciation and amortization		4,506			4,469			1
Operating income		25,606			28,336			(10	)
Total other income (expense)		(1,791	)		158			(1,234	)
Provision for income taxes		5,592			6,381			(12	)
Effective Tax Rate		23	%		22	%		1
Operating margin		24	%		26	%		(2	)
Recurring Contact Value	$	131,596		$	144,346			(9	)
Cash provided by operating activities		28,246			26,405			7

Revenue. Revenue in the 2024 period decreased compared to the 2023 period by $4.4 million. This was mainly from decreased US recurring revenue in our existing client base. Of this decrease, 28% was from our non-core solutions.

Direct expenses. Variable expenses increased $494,000 in the 2024 period compared to the 2023 period primarily from higher conference expenses partially offset by decreased data collection expenses. Variable expenses as a percentage of revenue were 16% and 15% in the 2024 and 2023 periods, respectively. Fixed expenses decreased $133,000 primarily due to decreased salary and benefit costs from workforce changes and automation partially offset by increased contracted services to support investments in our Human Understanding® solutions. We have increased investments and will continue to invest in providing innovative AI solutions to our clients.

Selling, general and administrative expenses. Selling, general and administrative expenses decreased in the 2024 period compared to the 2023 period primarily due to decreased marketing expenses of $1.4 million, less web hosting and other software services of $217,000, lower bad debt expense of $172,000 and decreased training costs of $171,000. We increased investments in strategic leadership, product development and sales during the year. We expect these investment levels to continue with the goal of driving efficiencies and savings in overall costs.

Depreciation and amortization. Depreciation and amortization expenses increased $37,000 in the 2024 period compared to the 2023 period primarily due to increased software investment amortization and intangible amortization from the Nobl acquisition.

Operating income and margin. Operating income and operating margin decreased in the 2024 period compared to the 2023 period primarily due to the decline in revenue exceeding the decline in operating expenses.

Total other income (expense). Total other expense increased in the 2024 period compared to the 2023 period primarily due to lower interest income of $676,000 from decreased money market funds investments and higher interest expense of $1.3 million mainly from borrowings on our Line of Credit and Delayed Draw Term Loan, as well as the increased interest rate on our Term Loan. Other expense is expected to increase in future periods due to additional borrowings on our Delayed Draw Term Loan and the August 2024 amendment to our Credit Agreement, which extended the maturity of our debt and revised the interest rate on our Term Note to SOFR plus 2.35%.

Provision for income taxes and effective tax rate. Provision for income taxes decreased in the 2024 period compared to the 2023 period primarily due to decreased taxable income. The effective tax rate increased mainly due to decreased tax benefits of $55,000 from the exercise of share-based compensation awards and higher state income taxes of approximately $241,000 which fluctuate based on various apportionment factors and rates for the states in which we operate.

Recurring Contract Value. Recurring contract value declined in 2024 compared to 2023 primarily due to the lack of growth in new contracts to replace losses. Our retention rate remained fairly consistent in comparison to prior years. Our recurring contract value metric represents the total revenue projected under all renewable contracts for their respective next annual renewal periods, assuming no upsells, downsells, price increases, or cancellations, measured as of the most recent quarter end.

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Liquidity and Capital Resources

Our Board of Directors has established priorities for capital allocation, which prioritize funding of innovation and growth investments, including merger and acquisition activity as well as internal projects. The secondary priority is capital allocation for quarterly dividends and share repurchases.

As of September 30, 2024, our principal sources of liquidity included $3.5 million of cash and cash equivalents, up to $25 million of unused borrowings under our Line of Credit and an additional $39 million on our Delayed Draw Term Loan. The Delayed Draw Term Loan can only be used to fund dividends, capital expenditures, permitted future business acquisitions or repurchasing our common stock.

Our cash flows from operating activities consist of net income adjusted for non-cash items including depreciation and amortization, deferred income taxes, share-based compensation and related taxes, reserve for uncertain tax positions, change in fair value of contingent consideration and the effect of working capital changes. Cash provided by operating activities increased primarily due to working capital changes, mainly consisting of changes in trade accounts receivable due to timing of invoicing and payments, accrued expenses, wages and bonuses mainly due to the timing of payments and changes in prepaid expenses and other current assets primarily due to the timing of our annual business insurance and other service agreements partially offset by changes in income taxes receivable and payable due to the timing of payments. Cash provided by operating activities was also partially offset by decreased net income net of non-cash items.

See the Condensed Consolidated Statements of Cash Flows included in this report for the detail of our operating cash flows.

We had a working capital deficit of $23.6 million and $11.8 million on September 30, 2024 and December 31, 2023, respectively. The change was primarily due to decreases in cash and cash equivalents and trade accounts receivable and increases in the borrowings outstanding on our Line of Credit and Delayed Draw Term Loan, accrued expenses, accounts payable, accrued wages and bonuses, deferred revenue and contingent consideration due to the acquisition. These were partially offset by increases in prepaid expenses primarily due to the timing of our annual business insurance payment and other service agreements, increases in income taxes receivable due to timing of payments and decreased current portion of notes payable due to the amendment of our credit agreement . Cash and cash equivalents decreased mainly due to the repurchase of shares of our common stock for treasury and cash paid to fund the Nobl acquisition, which was also funded by borrowings on our Line of Credit and Delayed Draw Term Loan. Accrued expenses, accounts payable and accrued wages and bonuses increased primarily due to the timing of payments. Trade accounts receivable decreased due to timing of billing and collections, as well as decreases in our overall recurring contract value. Our working capital is significantly impacted by our large deferred revenue balances which will vary based on the timing and frequency of billings on annual agreements. Notwithstanding our working capital deficit on September 30, 2024, we believe that our existing sources of liquidity, including cash and cash equivalents, borrowing availability, and operating cash flows will be sufficient to meet our projected capital and debt maturity needs for the foreseeable future.

Cash used in investing activities primarily consisted of payments for the acquisition of Nobl Health and purchases of property and equipment including computer software and hardware, building improvements, and furniture and equipment.

Cash used in financing activities consisted of payments for borrowings under the Term Loan, Delayed Draw Term Loan, Line of Credit and finance lease obligations. We also used cash to repurchase shares of our common stock for treasury, to pay dividends on common stock and for payment of payroll tax withholdings on options exercised. This was partially offset by cash provided from borrowings on the Line of Credit and Delayed Draw Down Term loan.

Our material cash requirements include the following contractual and other obligations:

Cash dividends of $8.6 million were paid in the nine months ended September 30, 2024. Dividends of $2.8 million were declared in the three months ended September 30, 2024 and paid in October 2024. The dividends were paid from cash on hand and borrowings on our Line of Credit. Our board of directors considers whether to declare a dividend and the amount of any dividends declared on a quarterly basis.

We paid cash of $11.0 million for capital expenditures in the nine months ended September 30, 2024. These expenditures consisted mainly of computer software development for our Human Understanding® solutions and building renovations to our headquarters. We estimate future costs related to our headquarters building renovations to be $2.5 million in 2024 and $4.7 million in 2025, which we expect to fund through operating cash flows and borrowings on the Line of Credit or Delayed Draw Term Loan.

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Debt

Our Credit Facilities were amended on August 5, 2024, which (i) extended the maturity of the Line of Credit, (ii) extended the commitment date until which FNB will make loans available under the Delayed Draw Term Loan, (iii) revised the payments on the current balances of the Term Loan and Delayed Draw Term Loan and any future balances on the Delayed Draw Term Loan to monthly installments amortized over ten-year periods, (iv) revised the interest rate on the Term Loan from a 5% fixed rate to a floating rate based on the 30-day Secured Overnight Financing Rate (“SOFR”), (v) extended the use of the Delayed Draw Term Loan to include dividends, stock repurchases, acquisitions, and capital expenditures and (vi) increased the allowable building renovations excluded from the fixed charge coverage ratio covenant.

The outstanding balance on the Term Loan was $14.5 million at September 30, 2024. Principal payments were due in monthly installments of $92,800 through May 2027 and a balloon payment for the remaining balance of $11.6 million is due May 28, 2027.

The outstanding balance on the Delayed Draw Term Loan was $34.2 million at September 30, 2024. Principal payments are due on the Delayed Draw Term Loan in monthly installments of $220,882 through May 2027 and a balloon payment for the remaining balance of $27.1 million is due in May 28, 2027. We had the availability to borrow an additional $39 million on the Delayed Draw Term Loan at September 30, 2024.

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The Credit Facilities are secured, subject to permitted liens and other agreed upon exceptions, by a first-priority lien on and perfected security interest in substantially all of our and our guarantors’ present and future assets (including, without limitation, fee-owned real property, and limited, in the case of the equity interests of foreign subsidiaries, to 65% of the outstanding equity interests of such subsidiaries).

Leases

We have lease arrangements for certain computer, office, printing and inserting equipment as well as office and data center space. As of September 30, 2024, we had fixed lease payments of $674,000 and $10,000 for operating and finance leases, respectively payable within 12 months.

Taxes

The liability for gross unrecognized tax benefits related to uncertain tax positions was $2.2 million as of September 30, 2024. See Note 4, "Income Taxes", to the Condensed Consolidated Financial Statements contained in this report for income tax related information.

In June 2024, a final deemed dividend was paid from our Canadian subsidiary and the deemed repatriation tax payable imposed by the U.S. Tax Cuts and Jobs Act of 2017 of $8,000 was paid.

Stock Repurchase Program

In May 2022, our Board of Directors authorized the repurchase of 2,500,000 shares of common stock (the “2022 Program”). Under the 2022 Program we are authorized to repurchase from time-to-time shares of our outstanding common stock on the open market or in privately negotiated transactions. The timing and amount of stock repurchases will depend on a variety of factors, including market conditions as well as corporate and regulatory considerations. The 2022 Program may be suspended, modified, or discontinued at any time and we have no obligation to repurchase any amount of common stock in connection with the 2022 Program. The 2022 Program has no set expiration date.

During the three months ended September 30, 2024, we repurchased 395,217 shares of our common stock under the 2022 Program. As of September 30, 2024, the remaining number of shares of common stock that could be purchased under the 2022 Program was 700,633 shares.

Critical Accounting Estimates

There have been no changes to our critical accounting estimates described in the Annual Report on Form 10-K for the year ended December 31, 2023 that have a material impact on our Condensed Consolidated Financial Statements and the related Notes.

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ITEM 3.

Quantitative and Qualitative Disclosures about Market Risk

There are no material changes to the disclosures regarding our market risk exposures made in its Annual Report on Form 10-K for the year ended December 31, 2023.

ITEM 4.

Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Principal Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report, and our Chief Executive Officer and Principal Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures were effective.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Accordingly, even effective internal control over financial reporting can only provide reasonable assurance of achieving its control objectives.

We have confidence in our internal controls and procedures. Nevertheless, our management, including our Chief Executive Officer and Principal Financial Officer, does not expect that our disclosure procedures and controls or our internal controls will prevent all errors or intentional fraud. An internal control system, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of such internal controls are met. Further, the design of an internal control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. As a result of the inherent limitations in all internal control systems, no evaluation of controls can provide absolute assurance that all our control issues and instances of fraud, if any, have been detected.

There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) that occurred during the quarter ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – Other Information

ITEM 1.

Legal Proceedings

From time to time, we are involved in certain claims and litigation arising in the normal course of business. Management assesses the probability of loss for such contingencies and recognizes a liability when a loss is probable and estimable. For additional information, see Note 1, under the heading “Commitments and Contingencies,” to our condensed consolidated financial statements. Regardless of the final outcome, any legal proceedings, claims, inquiries and investigations, however, can impose a significant burden on management and employees, may include costly defense and settlement costs, and could cause harm to our reputation and brand, and other factors.

ITEM 1A.

Risk Factors

The significant risk factors known to us that could materially adversely affect our business, financial condition, or operating results are described in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023.

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ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

In May 2022 our Board of Directors authorized the 2022 Program.

Our Credit Agreement provides that, in order for us to pay dividends or repurchase our common stock, there must be no default or event of default existing or that would result from such payment and we must show that we would comply with the Credit Agreement’s fixed charge coverage ratio and consolidated cash flow leverage ratio after giving pro forma effect to such payment.

The table below summarizes repurchases of common stock during the three months ended September 30, 2024.

Period	Total Number of Shares Purchased		Average Price Paid per Share (1)		Total Number of Shares Purchased as Part Of Publicly Announced Plans or Programs(2)		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs

Jul 1 – Jul 31, 2024		-	$	-		-		1,095,850
Aug 1 – Aug 31, 2024		243,242	$	21.41		243,242		852.608
Sep 1 – Sep 30, 2024		151,975	$	21.98		151,975		700,633
Total		395,217	$	21.63		395,217

(1)	The average price paid per share includes commission paid on stock repurchases and excludes excise tax incurred on stock repurchases. For the quarter ended September 30, 2024, commission paid totaled $7,904 and excise tax expense totaled $85,490.
(2)	Shares were repurchased pursuant to the 2022 Program.

ITEM 5.

Other Information

During the third quarter of 2024, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement.

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ITEM 6.

Exhibits

The exhibits listed in the exhibit index below are filed as part of this Quarterly Report on Form 10-Q.

EXHIBIT INDEX

Exhibit Number	Exhibit Description

(3.1)	Certificate of Incorporation of National Research Corporation, effective June 30, 2021 [Incorporated by reference to Exhibit 3.3 to National Research Corporation’s Current Report on Form 8-K dated June 29, 2021, and filed on July 2, 2021 (File No. 001-35929)]

(3.2)	Bylaws of National Research Corporation, as amended to date [Incorporated by reference to Exhibit 3.4 to National Research Corporation’s Current Report on Form 8-K dated June 29, 2021 and filed on July 2, 2021 (File No. 001-35929)]

(4.1)	Certificate of Incorporation of National Research Corporation, effective June 30, 2021 [Incorporated by reference to Exhibit 3.3 to National Research Corporation’s Current Report on Form 8-K dated June 29, 2021, and filed on July 2, 2021 (File No. 001-35929)]

(4.2)	Bylaws of National Research Corporation, as amended to date [Incorporated by reference to Exhibit 3.4 to National Research Corporation’s Current Report on Form 8-K dated June 29, 2021 and filed on July 2, 2021 (File No. 001-35929)]

(10.1)**	Third Amendment to Amended and Restated Credit Agreement between National Research Corporation and First National Bank of Omaha dated August 5, 2024

(31.1)**	Certification by the Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934

(31.2)**	Certification by the Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934

(32)***	Written Statement of the Chief Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350

(101) **	Financial statements from the Quarterly Report on Form 10-Q of National Research Corporation for the quarter ended September 30, 2024, formatted in Inline eXtensible Business Reporting Language (iXBRL): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income, (iii) the Condensed Consolidated Statements of Shareholders’ Equity, (iv) the Condensed Consolidated Statements of Cash Flows, (v) the Notes to Condensed Consolidated Financial Statements, and (vi) document and entity information.

(104) **	Cover Page Interactive Data File (formatted in the Inline XBRL and contained in Exhibit 101).

** Filed herewith

*** Furnished herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	NATIONAL RESEARCH CORPORATION


Date: November 8, 2024	By:	/s/ Michael D. Hays
		Michael D. Hays
		Chief Executive Officer (Principal Executive Officer)



Date: November 8, 2024	By:	/s/ Linda A. Stacy
		Linda A. Stacy Secretary, Principal Financial Officer, and Principal Accounting Officer (Principal Financial and Accounting Officer)

Exhibit 10.1

THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT

THIS THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”) is made and entered into as of August 5, 2024, by and between NATIONAL RESEARCH CORPORATION, a Delaware corporation (“Borrower”), and FIRST NATIONAL BANK OF OMAHA, a national banking association (“Lender”).

RECITALS :

A. Borrower and Lender previously entered into that certain Amended and Restated Credit Agreement dated as of May 28, 2020, as amended by that certain First Amendment thereto dated as of September 30, 2022, and that certain Second Amendment thereto dated as of June 16, 2023 (as the same may be amended, restated or otherwise modified from time to time, the “Credit Agreement”); and

B. The parties desire to amend the Credit Agreement as set forth in this Amendment.

NOW, THEREFORE, in consideration of the mutual covenants and agreements, terms and conditions hereinafter set forth, the parties hereby agree as follows:

1. Definitions. All capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement.

2. Amendments. Pursuant to Section 12.12 of the Credit Agreement, the Credit Agreement is hereby amended as follows:

(a) Section 1.06(a) of the Credit Agreement is hereby amended and restated in its entirety as follows:

(a) Repurchase Term Loan. Interest will accrue in respect of the unpaid principal amount of the Repurchase Term Loan from the Third Amendment Effective Date until the Repurchase Term Loan Maturity Date at a rate per annum equal to the sum of Term SOFR plus 2.35%. The interest rate shall be adjusted higher or lower on the 1st day of every month to reflect any change in the Term SOFR Reference Rate for the prior month, and this higher or lower rate will thereafter apply to the outstanding principal indebtedness and remain in effect until a different rate of interest is established. Term SOFR shall be determined by Lender and each determination of Term SOFR by Lender shall be conclusive and binding upon the parties hereto, in the absence of demonstrable error. Interest on the unpaid principal amount of the Repurchase Term Loan will be calculated as described in Section 12.07(b).

(b) Section 4.02(b) of the Credit Agreement is hereby amended and restated in its entirety as follows:

(b) Repurchase Term Loan.

(i) As of the Third Amendment Effective Date, the principal amount outstanding under the Repurchase Term Loan is $14,639,676.14. For the period from the Third Amendment Effective Date and continuing thereafter through and including the Repurchase Term Loan Maturity Date, equal principal and interest payments each in an amount sufficient to fully amortize the principal balance of the Repurchase Term Loan outstanding as of the Third Amendment Effective Date and interest thereon over a period of ten (10) years will be payable on the first (1st) day of each full month through and including the Repurchase Term Loan Maturity Date.

(ii) On the Repurchase Term Loan Maturity Date the outstanding principal balance of the Repurchase Term Loan and all accrued interest thereon shall be repaid in full.

Notwithstanding anything in this Agreement to the contrary, whenever increases occur in the interest rate, Lender, at its option, may increase Borrower’s payments to cover accruing interest.

(i) As of the Third Amendment Effective Date, the aggregate outstanding principal balance of the Delayed Draw-Down Term Loans is $17,416,666.64. For the period from the Third Amendment Effective Date and continuing thereafter through and including the Delayed Draw-Down Term Loan Maturity Date, equal principal and interest payments in an amount sufficient to fully amortize the aggregate outstanding principal balance of the Delayed Draw-Down Term Loans as of the Third Amendment Effective Date and interest thereon over a period of ten (10) years will be payable on the first (1st) day of each full month through and including the Delayed Draw-Down Term Loan Maturity Date.

(ii) For the period beginning on the first (1st) day of the first full month following the applicable Delayed Draw-Down Term Loan Effective Date and continuing thereafter through and including the Delayed Draw-Down Term Loan Maturity Date, equal principal and interest payments in an amount sufficient to fully amortize the principal balance of such Delayed Draw-Down Term Loan and interest thereon over a period of ten (10) years will be payable.

(iii) On the Delayed Draw-Down Term Loan Maturity Date, the aggregate outstanding principal balance of the Delayed Draw-Down Term Loans and all accrued interest thereon shall be repaid in full.

Notwithstanding anything in this Agreement to the contrary, whenever increases occur in the interest rate, Lender, at its option, may increase Borrower’s payments to cover accruing interest.

(d) Section 8.11 of the Credit Agreement is hereby amended and restated in its entirety as follows:

8.11. Use of Proceeds. Borrower will exclusively use all proceeds of (a) the Delayed Draw-Down Term Loans to fund Permitted Share Repurchases, Permitted Acquisitions, Capital Expenditures or the making of Dividends, in each case, to the extent permitted by the Credit Documents (in each case, directly or by moving Revolving Loan balances attributable to such permitted uses to one or more Delayed Draw-Down Term Loans), and (b) Revolving Loans for the working capital and general corporate purposes of Borrower and its Subsidiaries.

(e) Section 9.15 of the Credit Agreement is hereby amended and restated in its entirety as follows:

9.15. Maximum Capital Expenditures. Borrower will not permit Capital Expenditures paid or incurred by Borrower in connection with the Renovation Project to exceed an aggregate amount of $27,500,000.00 from or after January 1, 2023, to be tested by Lender quarterly based on the financial statements provided for in Section 8.01(a) and (b).

(f) Section 11 of the Credit Agreement is hereby amended by amending and restating the definition of “Delayed Draw-Down Term Loan Commitment Expiration Date” in its entirety as follows:

“Delayed Draw-Down Term Loan Commitment Expiration Date” shall mean May 28, 2026.

(g) Section 11 of the Credit Agreement is hereby amended by amending and restating the definition of “Revolving Loan Maturity Date” in its entirety as follows:

“Revolving Loan Maturity Date” shall mean May 28, 2027.

(h) Section 11 of the Credit Agreement is hereby amended by adding the following definition in the appropriate alphabetical order:

“Third Amendment Effective Date” means August 5, 2024.

3. No Further Amendments. Except as expressly provided herein, nothing contained herein Is intended to reduce, restrict or otherwise affect any warranties, representations, covenants or other agreements made by Borrower. Except as expressly provided herein, this Amendment is not intended to supersede or amend the Credit Agreement or any other Credit Document. All of the covenants and obligations of Borrower under the Credit Documents are hereby acknowledged, ratified and affirmed by Borrower, and Borrower specifically acknowledges and agrees that all Collateral pledged to Lender secures the Obligations.

4. Representations and Warranties. Borrower hereby represents and warrants to Lender as follows:

(a) The representations and warranties contained in the Credit Agreement and the other Credit Documents are true and correct on and as of the date hereof as though made on and as of this date, except to the extent that such representations and warranties relate solely to an earlier date;

(b) There is no Default or Event of Default;

(c) The execution, delivery and performance by Borrower of this Amendment and all other agreements and documents required hereunder have been duly authorized by all necessary action and do not and will not: (i) result in any breach of or constitute a default under any indenture, loan or credit agreement or any other agreement, lease or instrument to which Borrower is a party or by which it or its properties may be bound or affected; or (ii) result in, or require, for the benefit of any person or entity other than Lender, the creation or imposition of any mortgage, deed of trust, pledge, lien, security interest or other charge or encumbrance of any nature upon or with respect to any of the properties now owned or hereafter acquired by Borrower; and

(d) No authorization, approval or other action by and notice to or filing with any governmental authority or regulatory body or any other Person is required for the execution, delivery and performance by Borrower of this Amendment.

5. Conditions Precedent. As conditions precedent to the enforceability of this Amendment, Lender shall have received from Borrower or otherwise confirmed to its satisfaction, all of the following, each in form and substance satisfactory to Lender:

(a) This Amendment, executed by Borrower;

(b) Such other commercially reasonable documents, instruments or agreements from Borrower or any other Person as may be reasonably requested by Lender; and

(c) Borrower shall have paid all reasonable attorney costs and fees incurred by Lender in connection this Amendment and the Credit Documents.

6. No Waiver. This Amendment is not intended to supersede or amend the Credit Agreement or any documents executed in connection therewith except as specifically set forth herein and Borrower acknowledges that no course of dealing between Borrower and Lender, through the date hereof, has resulted in any modification to the terms of the Credit Documents and no course of dealing from and after the date hereof will modify the terms of the Credit Documents. Except as provided herein, nothing contained herein is intended to reduce, restrict or otherwise affect any warranties, representations, covenants or other agreements made by Borrower or waive any existing Events of Default, if any, under or pursuant to the Credit Documents. All of the covenants and obligations of Borrower under the Credit Documents are hereby acknowledged, ratified and affirmed by Borrower, and Borrower specifically acknowledges and agrees that all Collateral pledged to Lender secures the Obligations.

7. No Default; Release of Lender. Borrower hereby acknowledges that at the time of the execution of this Amendment, Borrower is not aware of any Lender default under the Credit Documents, and Borrower hereby remises, releases and forever discharges Lender and each of Lender’s present, future and former officers, directors and employees (collectively, “Releasees”) from any and all claims, losses, liabilities, damages and causes of action of any kind whatsoever, if any, whether absolute or contingent, matured or unmatured, that Borrower may now have or ever have had, in whatever capacity, against Lender arising in connection with the Credit Documents, except for the duties and obligations of the Releasees under this Amendment and the other Credit Documents arising from and after the date hereof.

8. Credit Agreement in Writing. A CREDIT AGREEMENT MUST BE IN WRITING TO BE ENFORCEABLE UNDER CERTAIN STATE LAWS. TO PROTECT YOU AND US FROM ANY MISUNDERSTANDINGS OR DISAPPOINTMENTS, ANY CONTRACT, PROMISE, UNDERTAKING OR OFFER TO FOREBEAR REPAYMENT OF MONEY OR TO MAKE ANY OTHER FINANCIAL ACCOMMODATION IN CONNECTION WITH THIS LOAN OF MONEY OR GRANT OR EXTENSION OF CREDIT, OR ANY AMENDMENT OF, CANCELLATION OF, WAIVER OF, OR SUBSTITUTION FOR ANY OR ALL OF THE TERMS OR PROVISIONS OF ANY INSTRUMENT OR DOCUMENT EXECUTED IN CONNECTION WITH THIS LOAN OF MONEY OR GRANT OR EXTENSION OF CREDIT, MUST BE IN WRITING TO BE EFFECTIVE.

9. Counterparts. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. An electronic transmission or facsimile of this Amendment shall be deemed an original and shall be admissible as evidence of the document and the signer’s execution.

[The Remainder of This Page Intentionally Left Blank; Signature Page Follows.]

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first above written.

BORROWER:

NATIONAL RESEARCH CORPORATION

By: /s/ Linda Stacy

Name: Linda Stacy

Title: Secretary, Principal Accounting Officer, and

Principal Financial Officer

LENDER:

FIRST NATIONAL BANK OF OMAHA

By: /s/ Mark Ostronic

Name: Mark Ostronic

Title: Senior Director

Third Amendment to Amended and Restated Credit Agreement
Signature Page

Exhibit 31.1

Certification of Chief Executive Officer

Pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934

I, Michael D. Hays, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of National Research Corporation;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2024

/s/ Michael D. Hays

Michael D. Hays

Chief Executive Officer

Exhibit 31.2

Certification of Principal Financial Officer

Pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934

I, Linda A. Stacy, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of National Research Corporation;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(a)

(b)

(c)

(d)

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2024

/s/ Linda A. Stacy

Linda A. Stacy

Principal Financial Officer

Exhibit 32

Certification Pursuant to 18 U.S.C. Section 1350
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the accompanying Quarterly Report on Form 10-Q of National Research Corporation (the “Company”) for the three-month period ended September 30, 2024 (the “Report”), I, Michael D. Hays, Chief Executive Officer of the Company, and I, Linda A. Stacy, Principal Financial Officer, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, based on my knowledge, that:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/s/ Michael D. Hays
	Michael D. Hays Chief Executive Officer


	/s/ Linda A. Stacy
	Linda A. Stacy Principal Financial Officer

	Date: November 8, 2024

A signed original of this written statement required by Section 906 has been provided to National Research Corporation and will be retained by National Research Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

Document And Entity Information - shares	9 Months Ended
Document And Entity Information - shares	Sep. 30, 2024	Oct. 25, 2024
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2024
Document Transition Report	false
Entity File Number	001-35929
Entity Registrant Name	National Research Corporation
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	47-0634000
Entity Address, Address Line One	1245 Q Street
Entity Address, City or Town	Lincoln
Entity Address, State or Province	NE
Entity Address, Postal Zip Code	68508
City Area Code	402
Local Phone Number	475-2525
Title of 12(b) Security	Common Stock, $.001 par value
Trading Symbol	NRC
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		23,476,040
Entity Central Index Key	0000070487
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q3
Amendment Flag	false

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Current assets:
Cash and cash equivalents	$ 3,461	$ 6,653
Trade accounts receivable, less allowance for doubtful accounts of $45 and $75, respectively	11,059	12,378
Prepaid expenses	4,871	4,228
Income taxes receivable	645	161
Other current assets	664	940
Total current assets	20,700	24,360
Property and equipment, net	36,320	28,205
Intangible assets, net	2,713	1,471
Goodwill	66,209	61,614
Other noncurrent assets	5,856	6,787
Total assets	131,798	122,437
Current liabilities:
Current portion of notes payable, net of unamortized debt issuance costs	3,721	7,214
Line of credit	5,000	0
Accounts payable	2,588	1,301
Accrued wages and bonuses	5,392	3,953
Accrued expenses	6,279	4,893
Dividends payable	2,817	2,906
Deferred revenue	17,301	14,834
Income taxes payable	0	222
Contingent consideration	506	0
Other current liabilities	673	880
Total current liabilities	44,277	36,203
Notes payable, net of current portion and unamortized debt issuance costs	44,910	29,470
Deferred income taxes	4,131	4,139
Contingent consideration, net of current portion	293	0
Other long-term liabilities	3,564	3,670
Total liabilities	97,175	73,482
Shareholders’ equity:
Preferred stock, $0.01 par value, authorized 2,000,000 shares, none issued	0	0
Common stock, $0.001 par value; authorized 110,000,000 shares, issued 31,072,144 in 2024 and 31,002,919 in 2023, outstanding 23,476,040 in 2024 and 24,219,887 in 2023	31	31
Additional paid-in capital	180,061	178,213
Retained earnings (accumulated deficit)	(20,855)	(30,530)
Treasury stock, at cost; 7,596,104 Common shares in 2024 and 6,783,032 Common shares in 2023	(124,614)	(98,759)
Total shareholders’ equity	34,623	48,955
Total liabilities and shareholders’ equity	$ 131,798	$ 122,437

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Allowance for doubtful accounts	$ 45	$ 75
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	2,000,000	2,000,000
Preferred stock, shares issued (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	110,000,000	110,000,000
Common stock, shares issued (in shares)	31,072,144	31,002,919
Common stock, shares outstanding (in shares)	23,476,040	24,219,887
Treasury Stock, Shares (in shares)	7,596,104	6,783,032

Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Revenue	$ 35,819	$ 37,945	$ 106,154	$ 110,579
Operating expenses:
Direct	15,305	14,633	42,583	42,222
Selling, general and administrative	10,988	11,802	33,459	35,552
Depreciation and amortization	1,546	1,555	4,506	4,469
Total operating expenses	27,839	27,990	80,548	82,243
Operating income	7,980	9,955	25,606	28,336
Other income (expense):
Interest income	34	256	103	779
Interest expense	(706)	(160)	(1,866)	(594)
Other, net	(12)	(12)	(28)	(27)
Total other income (expense)	(684)	84	(1,791)	158
Income before income taxes	7,296	10,039	23,815	28,494
Provision for income taxes	1,608	2,163	5,592	6,381
Net income	$ 5,688	$ 7,876	$ 18,223	$ 22,113
Earnings Per Share of Common Stock:
Basic Earnings Per Share (in dollars per share)	$ 0.24	$ 0.32	$ 0.76	$ 0.9
Diluted Earnings Per Share (in dollars per share)	$ 0.24	$ 0.32	$ 0.76	$ 0.89
Weighted average shares and share equivalents outstanding:
Basic (in shares)	23,721	24,560	23,820	24,574
Diluted (in shares)	23,745	24,695	23,868	24,715

Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Treasury Stock, Common [Member]	Total
Balances at Dec. 31, 2022	$ 31	$ 175,453	$ (25,184)	$ (78,267)	$ 72,033
Purchase of shares treasury stock	0	0	0	(1,983)	(1,983)
Issuance of shares of common stock for the exercise of stock options	0	300	0	0	300
Non-cash stock compensation (benefit)	0	304	0	0	304
Dividends declared	0	0	(2,953)	0	(2,953)
Net income	0	0	6,964	0	6,964
Balances at Mar. 31, 2023	31	176,057	(21,173)	(80,250)	74,665
Balances at Dec. 31, 2022	31	175,453	(25,184)	(78,267)	72,033
Net income					22,113
Balances at Sep. 30, 2023	31	176,714	(36,482)	(82,391)	57,872
Balances at Mar. 31, 2023	31	176,057	(21,173)	(80,250)	74,665
Purchase of shares treasury stock	0	0	0	(1,828)	(1,828)
Issuance of shares of common stock for the exercise of stock options	0	284	0	0	284
Non-cash stock compensation (benefit)	0	305	0	0	305
Dividends declared	0	0	(2,949)	0	(2,949)
Net income	0	0	7,273	0	7,273
Balances at Jun. 30, 2023	31	176,646	(16,849)	(82,078)	77,750
Purchase of shares treasury stock	0	0	0	(313)	(313)
Non-cash stock compensation (benefit)	0	68	0	0	68
Dividends declared	0	0	(27,509)	0	(27,509)
Net income	0	0	7,876	0	7,876
Balances at Sep. 30, 2023	31	176,714	(36,482)	(82,391)	57,872
Balances at Dec. 31, 2023	31	178,213	(30,530)	(98,759)	48,955
Purchase of shares treasury stock	0	0	0	(17,220)	(17,220)
Issuance of shares of common stock for the exercise of stock options	0	1,752	0	0	1,752
Non-cash stock compensation (benefit)	0	(36)	0	0	(36)
Dividends declared	0	0	(2,865)	0	(2,865)
Net income	0	0	6,359	0	6,359
Balances at Mar. 31, 2024	31	179,929	(27,036)	(115,979)	36,945
Balances at Dec. 31, 2023	31	178,213	(30,530)	(98,759)	48,955
Net income					18,223
Balances at Sep. 30, 2024	31	180,061	(20,855)	(124,614)	34,623
Balances at Mar. 31, 2024	31	179,929	(27,036)	(115,979)	36,945
Non-cash stock compensation (benefit)	0	(57)	0	0	(57)
Dividends declared	0	0	(2,865)	0	(2,865)
Net income	0	0	6,175	0	6,175
Balances at Jun. 30, 2024	31	179,872	(23,726)	(115,979)	40,198
Purchase of shares treasury stock	0	0	0	(8,635)	(8,635)
Non-cash stock compensation (benefit)	0	189	0	0	189
Dividends declared	0	0	(2,817)	0	(2,817)
Net income	0	0	5,688	0	5,688
Balances at Sep. 30, 2024	$ 31	$ 180,061	$ (20,855)	$ (124,614)	$ 34,623

Condensed Consolidated Statements of Shareholders' Equity (Unaudited) (Parentheticals) - $ / shares	3 Months Ended
	Sep. 30, 2024	Jun. 30, 2024	Mar. 31, 2024	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023
Purchase of shares of treasury stock (in shares)	395,217		417,855	7,384	43,723	49,296
Shares of common stock for the exercise of stock options (in shares)			75,283		20,000	20,938
Common Stock, Dividends, Per Share, Declared	$ 0.12	$ 0.12	$ 0.12	$ 1.12	$ 0.12	$ 0.12

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Cash flows from operating activities:
Net income	$ 18,223,000	$ 22,113,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	4,506,000	4,469,000
Deferred income taxes	(118,000)	(721,000)
Reserve for uncertain tax positions	211,000	250,000
Non-cash share-based compensation expense	96,000	677,000
Change in fair value of contingent consideration	23,000	0
Net changes in assets and liabilities:
Trade accounts receivable	1,752,000	(6,000)
Prepaid expenses and other current assets	91,000	(3,257,000)
Deferred contract costs, net	212,000	800,000
Operating lease assets and liabilities, net	9,000	(75,000)
Accounts payable	599,000	230,000
Accrued expenses, wages and bonuses	1,789,000	493,000
Income taxes receivable and payable	(706,000)	392,000
Deferred revenue	1,559,000	1,040,000
Net cash provided by operating activities	28,246,000	26,405,000
Cash flows from investing activities:
Purchases of property and equipment	(11,004,000)	(12,009,000)
Acquisitions, net of cash acquired	(4,833,000)	0
Proceeds from the sale of property and equipment	0	1,000
Net cash used in investing activities	(15,837,000)	(12,008,000)
Cash flows from financing activities:
Payments on notes payable	(5,044,000)	(3,373,000)
Borrowings on notes payable	17,000,000	0
Borrowings on line of credit	39,000,000	5,000,000
Payments on line of credit	(34,000,000)	0
Payments on finance lease obligations	(19,000)	(279,000)
Payment of debt issuance costs	37,000	8,000
Proceeds from the exercise of share-based awards	0	584,000
Payment of payroll tax withholdings on share-based awards exercised	(317,000)	0
Repurchase of shares for treasury	23,548,000	4,100,000
Payment of dividends on common stock	(8,636,000)	(33,419,000)
Net cash used in financing activities	(15,601,000)	(35,595,000)
Change in cash and cash equivalents	(3,192,000)	(21,198,000)
Cash and cash equivalents at beginning of period	6,653,000	25,026,000
Cash and cash equivalents at end of period	3,461,000	3,828,000
Supplemental disclosure of cash paid for:
Interest expense, net of capitalized amounts	1,699,000	600,000
Income taxes	6,270,000	6,484,000
Supplemental disclosure of non-cash investing and financing activities:
Stock tendered to the Company for cashless exercise of stock options in connection with equity incentive plans	1,752,000	0
Purchase of property and equipment in accounts payable and accrued expenses	2,610,000	1,819,000
Repurchase of shares for treasury in accounts payable and accrued expenses	238,000	24,000
Contingent consideration recorded in connection with acquisition	$ 776,000	$ 0

Note 1 - Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2024

Notes to Financial Statements

Significant Accounting Policies [Text Block]

(1)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of business and basis of presentation

Revenue Recognition

	●	Identify the contract, or contracts, with a customer;
	●	Identify the performance obligations in the contract;
	●	Determine the transaction price;
	●	Allocate the transaction price to the identified performance obligations; and
	●	Recognize revenue when, or as, we satisfy the performance obligations.

Deferred Contract Costs

	Three months ended September 30, 2024		Three months ended September 30, 2023		Nine months ended September 30, 2024		Nine months ended September 30, 2023
	(In thousands)
Direct Expenses	$	30	$	67	$	128	$	146
Selling, general and administrative expenses		219		278		655		915
Total amortization	$	249	$	345	$	783	$	1,061

Trade Accounts Receivable

The following table provides the activity in the allowance for doubtful accounts for the nine-month periods ended September 30, 2024 and 2023 (In thousands):

	Balance at Beginning of Period		Bad Debt Expense (Benefit)			Write-offs		Recoveries		Balance at End of Period

Nine months ended September 30, 2024	$	75	$	(72	)	$	9	$	51	$	45
Nine months ended September 30, 2023	$	65	$	100		$	89	$	9	$	85

Leases

Fair Value Measurements

The following details our assets and liabilities measured at fair value on a recurring basis:

	Level 1		Level 2		Level 3		Total
	(In thousands)
As of September 30, 2024
Financial Assets:
Money Market Funds	$	3,157	$	-	$	-	$	3,157
Total Cash Equivalents	$	3,157	$	-	$	-	$	3,157
Financial Liabilities:
Contingent Consideration Liability	$	-		-	$	799	$	799

As of December 31, 2023
Financial Assets:
Money Market Funds	$	6,471	$	-	$	-	$	6,471
Total Cash Equivalents	$	6,471	$	-	$	-	$	6,471

The following are the carrying amount and estimated fair values of long-term debt:

	September 30, 2024		December 31, 2023
	(In thousands)
Total carrying amount of long-term debt	$	48,742	$	36,787
Estimated fair value of long-term debt	$	48,742	$	36,403

Note 2 - Acquisition

9 Months Ended

Sep. 30, 2024

Notes to Financial Statements

Business Combination Disclosure [Text Block]

(2)

ACQUISITION

Total consideration paid for Nobl is as follows:

	($ in thousands)
Cash paid	$	5,513
Estimated fair value of Contingent Consideration		776
Fair value of total consideration transferred	$	6,289

Recognized Amounts of Assets Acquired and Liabilities Assumed
	($ in thousands)
Cash	$	680
Other current assets		478
Property and equipment		15
Customer related intangible		580
Technology		830
In process research & development		890
Goodwill		4,595
Other long-term assets		72
Total assets acquired	$	8,140
Current liabilities		1,645
Other long-term liabilities		206
Total liabilities assumed		1,851
Net assets acquired	$	6,289

Note 3 - Contracts With Customers

9 Months Ended

Sep. 30, 2024

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

(3)

CONTRACTS WITH CUSTOMERS

The following table disaggregates revenue for the three- and nine-month periods ended September 30, 2024 and 2023 based on timing of revenue recognition (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Subscription services recognized ratably over time	$	33,196	$	35,205	$	99,571	$	103,942
Services recognized at a point in time		1,489		1,200		3,765		3,224
Fixed, non-subscription recognized over time		925		1,249		2,356		2,703
Unit price services recognized over time		209		291		462		710
Total revenue	$	35,819	$	37,945	$	106,154	$	110,579

The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers (In thousands):

	September 30, 2024		December 31, 2023
Accounts receivables	$	11,059	$	12,378
Contract assets included in other current assets	$	11	$	84
Deferred Revenue, current portion	$	17,301	$	14,834
Noncurrent Deferred Revenue included in other long-term liabilities	$	41		-

Significant changes in contract assets and contract liabilities during the nine-month periods ended September 30, 2024 and 2023 are as follows (in thousands):

	2024						2023
	Contract Asset			Deferred Revenue			Contract Asset			Deferred Revenue
	Increase (Decrease)
Revenue recognized that was included in deferred revenue at beginning of year due to completion of services	$	-		$	(14,355	)	$	-		$	(14,473	)
Increases due to invoicing of client, net of amounts recognized as revenue		-			15,966			-			15,602
Increases due to acquisition		-			948
Decreases due to completion of services (or portion of services) and transferred to accounts receivable		(83	)		-			(93	)		-
Change due to cumulative catch-up adjustments arising from changes in expected contract consideration		-			(51	)		-			(89	)
Increases due to revenue recognized in the period with additional performance obligations before invoicing		10			-			29			-

Note 3 - Income Taxes

9 Months Ended

Sep. 30, 2024

Notes to Financial Statements

Income Tax Disclosure [Text Block]

(4)

INCOME TAXES

Note 5 - Credit Agreement

9 Months Ended

Sep. 30, 2024

Notes to Financial Statements

Debt Disclosure [Text Block]

(5)

CREDIT AGREEMENT

Our long-term debt consists of the following:

	September 30, 2024			December 31, 2023
	(In thousands)
Term Loan	$	14,547		$	17,787
Delayed Draw Term Loan		34,195			19,000
Less: current portion		(3,721	)		(7,214	)
Less: unamortized debt issuance costs		(111	)		(103	)
Notes payable, net of current portion	$	44,910		$	29,470

Principal payments on our amended Term Loan are due in monthly installments of $92,800 through May 2027 and a ballon payment for the remaining balance of $11.6 million is due May 28, 2027.

Note 6 - Share-based Compensation

9 Months Ended

Sep. 30, 2024

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

(6)

SHARE-BASED COMPENSATION

Performance-Based Stock Option Awards

The fair value of performance-based stock options granted was estimated using a Black-Scholes valuation model with the following weighted average assumptions:

	2024
Expected dividend yield at date of grant		1.44	%
Expected stock price volatility		33.83	%
Risk-free interest rate		4.13	%
Expected life of options (in years)		4.0

The following table summarizes performance-based stock option activity under the 2006 Equity Incentive Plan for the nine-month period ended September 30, 2024:

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Terms (Years)		Aggregate Intrinsic Value (In thousands)
Outstanding at December 31, 2023		-	$	-
Granted		404,833	$	39.54
Exercised		-	$	-
Forfeited		-	$	-
Outstanding at September 30, 2024		404,833	$	39.54		5.30	$	-
Exercisable at September 30, 2024		-	$	-		-	$	-

Service-Based Stock Option Awards

The fair value of service-based stock options granted in 2024 was estimated using a Black-Scholes valuation model with the following weighted average assumptions:

	2024
Expected dividend yield at date of grant		1.94	%
Expected stock price volatility		33.75	%
Risk-free interest rate		4.50	%
Expected life of options (in years)		5.0

The following table summarizes service-based stock option activity under the 2006 Equity Incentive Plan and the 2004 Director Plan for the nine-month period ended September 30, 2024:

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Terms (Years)		Aggregate Intrinsic Value (In thousands)
Outstanding at December 31, 2023		569,168	$	35.72
Granted		54,530	$	29.76
Exercised		75,283	$	23.27
Forfeited		56,805	$	43.83
Outstanding at September 30, 2024		491,610	$	36.03		5.47	$	567
Exercisable at September 30, 2024		344,000	$	34.50		4.41	$	567

Non-vested Stock Awards

	Common Stock Outstanding			Weighted Average Grant Date Fair Value Per Share
Outstanding at December 31, 2023		6,058		$	42.92
Granted		-			-
Vested		-			-
Forfeited		(6,058	)		42.92
Outstanding at September 30, 2024		-		$	-

Note 7 - Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2024

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

(7)

GOODWILL AND OTHER INTANGIBLE ASSETS

The following represents the carrying amount of goodwill:

	Gross		Accumulated Impairment			Net
	(In thousands)
Balance at December 31, 2023	$	62,328	$	(714	)	$	61,614
Goodwill acquired		4,595		-			4,595
Balance at September 30, 2024	$	66,923	$	(714	)	$	66,209

Intangible assets consisted of the following:

	September 30, 2024			December 31, 2023
	(In thousands)
Non-amortizing intangible assets:
Indefinite trade name	$	1,191		$	1,191
Amortizing intangible assets:
Customer related		9,772			9,192
Technology		2,790			1,959
Trade names		1,572			1,572
Total amortizing intangible assets		14,134			12,723
Accumulated amortization		(12,612	)		(12,443	)
Other intangible assets, net	$	2,713		$	1,471

Note 8 - Property and Equipment

9 Months Ended

Sep. 30, 2024

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

(8)

PROPERTY AND EQUIPMENT

	September 30, 2024		December 31, 2023
	(In thousands)
Property and equipment	$	76,319	$	63,874
Accumulated depreciation		39,999		35,669
Property and equipment, net	$	36,320	$	28,205

Note 9 - Earnings Per Share

9 Months Ended

Sep. 30, 2024

Notes to Financial Statements

Earnings Per Share [Text Block]

(9)

EARNINGS PER SHARE

Basic net income per share was computed using the weighted-average shares of common stock outstanding during the period.

	For the Three Months Ended September 30					For the Nine Months Ended September 30
	2024		2023			2024			2023
	(In thousands, except per share data)
Numerator for net income per share – basic:
Net income	$	5,688	$	7,876		$	18,223		$	22,113
Allocation of distributed and undistributed income to unvested restricted stock shareholders		-		(2	)		(2	)		(5	)
Net income attributable to common shareholders		5,688		7,874			18,221			22,108
Denominator for net income per share – basic:
Weighted average common shares outstanding – basic		23,721		24,560			23,820			24,574
Net income per share – basic	$	0.24	$	0.32		$	0.76		$	0.90
Numerator for net income per share – diluted:
Net income attributable to common shareholders for basic computation		5,688		7,874			18,221			22,108
Denominator for net income per share – diluted:
Weighted average common shares outstanding – basic		23,721		24,560			23,820			24,574
Weighted average effect of dilutive securities – stock options		24		135			48			141
Denominator for diluted earnings per share – adjusted weighted average shares		23,745		24,695			23,868			24,715
Net income per share – diluted	$	0.24	$	0.32		$	0.76		$	0.89

Insider Trading Arrangements

3 Months Ended

9 Months Ended

Sep. 30, 2024

Insider Trading Arr Line Items

Material Terms of Trading Arrangement [Text Block]

ITEM 5.

Other Information

During the third quarter of 2024, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement.

Non-Rule 10b5-1 Arrangement Terminated [Flag]

false

Rule 10b5-1 Arrangement Terminated [Flag]

false

Non-Rule 10b5-1 Arrangement Adopted [Flag]

false

Rule 10b5-1 Arrangement Adopted [Flag]

false

Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2024

Accounting Policies [Abstract]

Revenue [Policy Text Block]

Revenue Recognition

	●	Identify the contract, or contracts, with a customer;
	●	Identify the performance obligations in the contract;
	●	Determine the transaction price;
	●	Allocate the transaction price to the identified performance obligations; and
	●	Recognize revenue when, or as, we satisfy the performance obligations.

Deferred Charges, Policy [Policy Text Block]

Deferred Contract Costs

	Three months ended September 30, 2024		Three months ended September 30, 2023		Nine months ended September 30, 2024		Nine months ended September 30, 2023
	(In thousands)
Direct Expenses	$	30	$	67	$	128	$	146
Selling, general and administrative expenses		219		278		655		915
Total amortization	$	249	$	345	$	783	$	1,061

Accounts Receivable [Policy Text Block]

Trade Accounts Receivable

The following table provides the activity in the allowance for doubtful accounts for the nine-month periods ended September 30, 2024 and 2023 (In thousands):

	Balance at Beginning of Period		Bad Debt Expense (Benefit)			Write-offs		Recoveries		Balance at End of Period

Nine months ended September 30, 2024	$	75	$	(72	)	$	9	$	51	$	45
Nine months ended September 30, 2023	$	65	$	100		$	89	$	9	$	85

Lessee, Leases [Policy Text Block]

Leases

Fair Value Measurement, Policy [Policy Text Block]

Fair Value Measurements

The following details our assets and liabilities measured at fair value on a recurring basis:

	Level 1		Level 2		Level 3		Total
	(In thousands)
As of September 30, 2024
Financial Assets:
Money Market Funds	$	3,157	$	-	$	-	$	3,157
Total Cash Equivalents	$	3,157	$	-	$	-	$	3,157
Financial Liabilities:
Contingent Consideration Liability	$	-		-	$	799	$	799

As of December 31, 2023
Financial Assets:
Money Market Funds	$	6,471	$	-	$	-	$	6,471
Total Cash Equivalents	$	6,471	$	-	$	-	$	6,471

The following are the carrying amount and estimated fair values of long-term debt:

	September 30, 2024		December 31, 2023
	(In thousands)
Total carrying amount of long-term debt	$	48,742	$	36,787
Estimated fair value of long-term debt	$	48,742	$	36,403

Commitments and Contingencies, Policy [Policy Text Block]

Note 1 - Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2024

Notes Tables

Amortization of Capitalized Contract Cost [Table Text Block]

	Three months ended September 30, 2024		Three months ended September 30, 2023		Nine months ended September 30, 2024		Nine months ended September 30, 2023
	(In thousands)
Direct Expenses	$	30	$	67	$	128	$	146
Selling, general and administrative expenses		219		278		655		915
Total amortization	$	249	$	345	$	783	$	1,061

Financing Receivable, Allowance for Credit Loss [Table Text Block]

	Balance at Beginning of Period		Bad Debt Expense (Benefit)			Write-offs		Recoveries		Balance at End of Period

Nine months ended September 30, 2024	$	75	$	(72	)	$	9	$	51	$	45
Nine months ended September 30, 2023	$	65	$	100		$	89	$	9	$	85

Fair Value, by Balance Sheet Grouping [Table Text Block]

	Level 1		Level 2		Level 3		Total
	(In thousands)
As of September 30, 2024
Financial Assets:
Money Market Funds	$	3,157	$	-	$	-	$	3,157
Total Cash Equivalents	$	3,157	$	-	$	-	$	3,157
Financial Liabilities:
Contingent Consideration Liability	$	-		-	$	799	$	799

As of December 31, 2023
Financial Assets:
Money Market Funds	$	6,471	$	-	$	-	$	6,471
Total Cash Equivalents	$	6,471	$	-	$	-	$	6,471

	September 30, 2024		December 31, 2023
	(In thousands)
Total carrying amount of long-term debt	$	48,742	$	36,787
Estimated fair value of long-term debt	$	48,742	$	36,403

Note 2 - Acquisition (Tables)

9 Months Ended

Sep. 30, 2024

Notes Tables

Schedule of Consideration Paid in Business Acquisition [Table Text Block]

	($ in thousands)
Cash paid	$	5,513
Estimated fair value of Contingent Consideration		776
Fair value of total consideration transferred	$	6,289

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

Recognized Amounts of Assets Acquired and Liabilities Assumed
	($ in thousands)
Cash	$	680
Other current assets		478
Property and equipment		15
Customer related intangible		580
Technology		830
In process research & development		890
Goodwill		4,595
Other long-term assets		72
Total assets acquired	$	8,140
Current liabilities		1,645
Other long-term liabilities		206
Total liabilities assumed		1,851
Net assets acquired	$	6,289

Note 3 - Contracts With Customers (Tables)

9 Months Ended

Sep. 30, 2024

Notes Tables

Disaggregation of Revenue [Table Text Block]

	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Subscription services recognized ratably over time	$	33,196	$	35,205	$	99,571	$	103,942
Services recognized at a point in time		1,489		1,200		3,765		3,224
Fixed, non-subscription recognized over time		925		1,249		2,356		2,703
Unit price services recognized over time		209		291		462		710
Total revenue	$	35,819	$	37,945	$	106,154	$	110,579

Contract with Customer, Contract Asset, Contract Liability, and Receivable [Table Text Block]

	September 30, 2024		December 31, 2023
Accounts receivables	$	11,059	$	12,378
Contract assets included in other current assets	$	11	$	84
Deferred Revenue, current portion	$	17,301	$	14,834
Noncurrent Deferred Revenue included in other long-term liabilities	$	41		-

	2024						2023
	Contract Asset			Deferred Revenue			Contract Asset			Deferred Revenue
	Increase (Decrease)
Revenue recognized that was included in deferred revenue at beginning of year due to completion of services	$	-		$	(14,355	)	$	-		$	(14,473	)
Increases due to invoicing of client, net of amounts recognized as revenue		-			15,966			-			15,602
Increases due to acquisition		-			948
Decreases due to completion of services (or portion of services) and transferred to accounts receivable		(83	)		-			(93	)		-
Change due to cumulative catch-up adjustments arising from changes in expected contract consideration		-			(51	)		-			(89	)
Increases due to revenue recognized in the period with additional performance obligations before invoicing		10			-			29			-

Note 5 - Credit Agreement (Tables)

9 Months Ended

Sep. 30, 2024

Notes Tables

Schedule of Debt [Table Text Block]

	September 30, 2024			December 31, 2023
	(In thousands)
Term Loan	$	14,547		$	17,787
Delayed Draw Term Loan		34,195			19,000
Less: current portion		(3,721	)		(7,214	)
Less: unamortized debt issuance costs		(111	)		(103	)
Notes payable, net of current portion	$	44,910		$	29,470

Note 6 - Share-based Compensation (Tables)

9 Months Ended

Sep. 30, 2024

Notes Tables

Schedule of Share-Based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	2024
Expected dividend yield at date of grant		1.44	%
Expected stock price volatility		33.83	%
Risk-free interest rate		4.13	%
Expected life of options (in years)		4.0

	2024
Expected dividend yield at date of grant		1.94	%
Expected stock price volatility		33.75	%
Risk-free interest rate		4.50	%
Expected life of options (in years)		5.0

Share-Based Payment Arrangement, Option, Activity [Table Text Block]

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Terms (Years)		Aggregate Intrinsic Value (In thousands)
Outstanding at December 31, 2023		-	$	-
Granted		404,833	$	39.54
Exercised		-	$	-
Forfeited		-	$	-
Outstanding at September 30, 2024		404,833	$	39.54		5.30	$	-
Exercisable at September 30, 2024		-	$	-		-	$	-

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Terms (Years)		Aggregate Intrinsic Value (In thousands)
Outstanding at December 31, 2023		569,168	$	35.72
Granted		54,530	$	29.76
Exercised		75,283	$	23.27
Forfeited		56,805	$	43.83
Outstanding at September 30, 2024		491,610	$	36.03		5.47	$	567
Exercisable at September 30, 2024		344,000	$	34.50		4.41	$	567

Schedule of Nonvested Share Activity [Table Text Block]

	Common Stock Outstanding			Weighted Average Grant Date Fair Value Per Share
Outstanding at December 31, 2023		6,058		$	42.92
Granted		-			-
Vested		-			-
Forfeited		(6,058	)		42.92
Outstanding at September 30, 2024		-		$	-

Note 7 - Goodwill and Other Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2024

Notes Tables

Schedule of Intangible Assets and Goodwill [Table Text Block]

	Gross		Accumulated Impairment			Net
	(In thousands)
Balance at December 31, 2023	$	62,328	$	(714	)	$	61,614
Goodwill acquired		4,595		-			4,595
Balance at September 30, 2024	$	66,923	$	(714	)	$	66,209

	September 30, 2024			December 31, 2023
	(In thousands)
Non-amortizing intangible assets:
Indefinite trade name	$	1,191		$	1,191
Amortizing intangible assets:
Customer related		9,772			9,192
Technology		2,790			1,959
Trade names		1,572			1,572
Total amortizing intangible assets		14,134			12,723
Accumulated amortization		(12,612	)		(12,443	)
Other intangible assets, net	$	2,713		$	1,471

Note 8 - Property and Equipment (Tables)

9 Months Ended

Sep. 30, 2024

Notes Tables

Property, Plant and Equipment [Table Text Block]

	September 30, 2024		December 31, 2023
	(In thousands)
Property and equipment	$	76,319	$	63,874
Accumulated depreciation		39,999		35,669
Property and equipment, net	$	36,320	$	28,205

Note 9 - Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2024

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	For the Three Months Ended September 30					For the Nine Months Ended September 30
	2024		2023			2024			2023
	(In thousands, except per share data)
Numerator for net income per share – basic:
Net income	$	5,688	$	7,876		$	18,223		$	22,113
Allocation of distributed and undistributed income to unvested restricted stock shareholders		-		(2	)		(2	)		(5	)
Net income attributable to common shareholders		5,688		7,874			18,221			22,108
Denominator for net income per share – basic:
Weighted average common shares outstanding – basic		23,721		24,560			23,820			24,574
Net income per share – basic	$	0.24	$	0.32		$	0.76		$	0.90
Numerator for net income per share – diluted:
Net income attributable to common shareholders for basic computation		5,688		7,874			18,221			22,108
Denominator for net income per share – diluted:
Weighted average common shares outstanding – basic		23,721		24,560			23,820			24,574
Weighted average effect of dilutive securities – stock options		24		135			48			141
Denominator for diluted earnings per share – adjusted weighted average shares		23,745		24,695			23,868			24,715
Net income per share – diluted	$	0.24	$	0.32		$	0.76		$	0.89

Note 1 - Summary of Significant Accounting Policies (Details Textual) - USD ($)	3 Months Ended			9 Months Ended		12 Months Ended
	Sep. 30, 2024	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023	Jul. 15, 2024
Incremental Costs of Obtaining a Contract, Deferred During Period	$ 297,000		$ 69,000	$ 608,000	$ 301,000
Capitalized Contract Cost, Net, Noncurrent	1,200,000	$ 1,200,000		1,200,000		$ 1,500,000
Capitalized Contract Cost, Impairment Loss	3,000		$ 26,000	37,000	$ 41,000
Asset Impairment Charges				0		$ 0
Nobl Inc [Member]
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High							$ 1,000,000
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Gain (Loss) Included in Earnings		23,000
Business Combination, Contingent Consideration, Liability	$ 799,000	$ 799,000		$ 799,000			$ 776,000
Minimum [Member]
Capitalized Contract Cost, Amortization Period (Year)	3 years	3 years		3 years
Maximum [Member]
Capitalized Contract Cost, Amortization Period (Year)	5 years	5 years		5 years

Note 1 - Summary of Significant Accounting Policies - Amortization Expense Classification (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Capitalized contract cost	$ 249	$ 345	$ 783	$ 1,061
Direct Expenses [Member]
Capitalized contract cost	30	67	128	146
Selling, General and Administrative Expenses [Member]
Capitalized contract cost	$ 219	$ 278	$ 655	$ 915

Note 1 - Summary of Significant Accounting Policies - Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Balance	$ 75	$ 65
Bad debt expense	(72)	100
Write-offs	9	89
Recoveries	51	9
Balance	$ 45	$ 85

Note 1 - Summary of Significant Accounting Policies - Fair Value of Financial Assets and Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Total carrying amount of long-term debt	$ 48,742	$ 36,787
Estimated fair value of long-term debt	48,742	36,403
Fair Value, Recurring [Member]
Assets, fair value	3,157	6,471
Fair Value, Recurring [Member] \| Contingent Considerations [Member]
Liabilities, fair value	799
Money Market Funds [Member] \| Fair Value, Recurring [Member]
Assets, fair value	3,157	6,471
Fair Value, Inputs, Level 1 [Member] \| Fair Value, Recurring [Member]
Assets, fair value	3,157	6,471
Fair Value, Inputs, Level 1 [Member] \| Fair Value, Recurring [Member] \| Contingent Considerations [Member]
Liabilities, fair value	0
Fair Value, Inputs, Level 1 [Member] \| Money Market Funds [Member] \| Fair Value, Recurring [Member]
Assets, fair value	3,157	6,471
Fair Value, Inputs, Level 2 [Member] \| Fair Value, Recurring [Member]
Assets, fair value	0	0
Fair Value, Inputs, Level 2 [Member] \| Fair Value, Recurring [Member] \| Contingent Considerations [Member]
Liabilities, fair value	0
Fair Value, Inputs, Level 2 [Member] \| Money Market Funds [Member] \| Fair Value, Recurring [Member]
Assets, fair value	0	0
Fair Value, Inputs, Level 3 [Member] \| Fair Value, Recurring [Member]
Assets, fair value	0	0
Fair Value, Inputs, Level 3 [Member] \| Fair Value, Recurring [Member] \| Contingent Considerations [Member]
Liabilities, fair value	799
Fair Value, Inputs, Level 3 [Member] \| Money Market Funds [Member] \| Fair Value, Recurring [Member]
Assets, fair value	$ 0	$ 0

Note 2 - Acquisition (Details Textual) - Nobl Inc [Member] - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2024	Jul. 15, 2024
Business Acquisition Gross Price			$ 6,000,000
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High			1,000,000
Business Combination, Contingent Consideration, Recurring Contract Value			2,000,000
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, Low			0
Business Combination, Contingent Consideration, Liability	$ 799,000	$ 799,000	$ 776,000
Business Combination, Acquisition Related Costs	$ 112,000	$ 112,000
Weighted Average [Member]
Finite-Lived Intangible Asset, Useful Life	5 years 9 months 18 days	5 years 9 months 18 days
Customer-Related Intangible Assets [Member]
Finite-Lived Intangible Asset, Useful Life	7 years	7 years
Technology-Based Intangible Assets [Member]
Finite-Lived Intangible Asset, Useful Life	5 years	5 years

Note 2 - Acquisitions - Schedule of Business Acquisitions by Acquisition (Details) - Nobl Inc [Member] - USD ($)	3 Months Ended
	Sep. 30, 2024	Jul. 15, 2024
Cash paid	$ 5,513,000
Liabilities, fair value	799,000	$ 776,000
Fair value of total consideration transferred	$ 6,289,000

Note 2 - Acquisition - Recognized Amounts of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Goodwill	$ 66,209	$ 61,614
Nobl Inc [Member]
Cash	680
Other current assets	478
Property and equipment	15
Goodwill	4,595
Other long-term assets	72
Total assets acquired	8,140
Current liabilities	1,645
Other long-term liabilities	206
Total liabilities assumed	1,851
Net assets acquired	6,289
Nobl Inc [Member] \| In Process Research and Development [Member]
Indefinite-Lived Intangibles	890
Nobl Inc [Member] \| Customer-Related Intangible Assets [Member]
Finite-Lived Intangibles	580
Nobl Inc [Member] \| Technology-Based Intangible Assets [Member]
Finite-Lived Intangibles	$ 830

Note 3 - Contracts With Customers 1 (Details Textual) $ in Millions	Sep. 30, 2024 USD ($)
Long-Term Contract with Customer [Member]
Revenue, Remaining Performance Obligation, Amount	$ 69.4

Note 3 - Contracts With Customers 2 (Details Textual) - Long-Term Contract with Customer [Member]	Sep. 30, 2024 USD ($)
Revenue, Remaining Performance Obligation, Amount	$ 69,400,000
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-10-01
Revenue, Remaining Performance Obligation, Amount	$ 6,400,000
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Year)	3 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01
Revenue, Remaining Performance Obligation, Amount	$ 26,900,000
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Year)	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01
Revenue, Remaining Performance Obligation, Amount	$ 23,400,000
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Year)	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-01-01
Revenue, Remaining Performance Obligation, Amount	$ 10,800,000
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Year)	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2028-01-01
Revenue, Remaining Performance Obligation, Amount	$ 1,300,000
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Year)	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2029-01-01
Revenue, Remaining Performance Obligation, Amount	$ 623,000
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Year)	1 year

Note 3 - Contracts With Customers - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Revenue	$ 35,819	$ 37,945	$ 106,154	$ 110,579
Transferred over Time [Member] \| Subscription Services [Member]
Revenue	33,196	35,205	99,571	103,942
Transferred over Time [Member] \| Fixed, Non-subscription Services [Member]
Revenue	925	1,249	2,356	2,703
Transferred over Time [Member] \| Unit Price Services [Member]
Revenue	209	291	462	710
Transferred at Point in Time [Member] \| Service [Member]
Revenue	$ 1,489	$ 1,200	$ 3,765	$ 3,224

Note 3 - Contracts With Customers - Information About Receivables, Contract Assets, and Contract Liabilities From Contracts With Customers (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Accounts receivables	$ 11,059		$ 12,378
Revenue recognized that was included in deferred revenue at beginning of year due to completion of services	(14,355)	$ (14,473)
Deferred Revenue, current portion	17,301		14,834
Increases due to invoicing of client, net of amounts recognized as revenue	15,966	15,602
Noncurrent Deferred Revenue included in other long-term liabilities	41		0
Increases due to acquisition	948
Decreases due to completion of services (or portion of services) and transferred to accounts receivable	(83)	(93)
Change due to cumulative catch-up adjustments arising from changes in expected contract consideration	(51)	(89)
Increases due to revenue recognized in the period with additional performance obligations before invoicing	10	$ 29
Other Current Assets [Member]
Contract assets included in other current assets	$ 11		$ 84

Note 3 - Income Taxes (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
Note 3 - Income Taxes (Details Textual) - USD ($)	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Effective Income Tax Rate Reconciliation, Percent	22.00%	22.00%	23.00%	22.00%
Effective Income Tax Rate Change, Share-based Compensation			$ 55,000
Income Tax Reconciliation, State Tax Changes			$ 241,000

Note 5 - Credit Agreement (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
Note 5 - Credit Agreement (Details Textual) - USD ($)	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Aug. 05, 2024	Dec. 31, 2023
Debt Instrument, Variable Interest Rate, Type [Extensible Enumeration]			us-gaap:SecuredOvernightFinancingRateSofrMember
Line of Credit, Current	$ 5,000,000		$ 5,000,000			$ 0
First National Bank of Omaha [Member] \| Line of Credit [Member]
Line of Credit Facility, Interest Rate During Period	7.65%	7.68%	7.67%	7.68%
Credit Agreement [Member] \| First National Bank of Omaha [Member]
Debt Instrument, Covenant, Minimum Fixed Charge Coverage Ratio			1.1
Debt Instrument, Covenant, Exception, Fixed Charge Coverage Ratio, Dividend Threshold			$ 5,500,000
Debt Instrument, Covenant, Maximum Cash Flow Leverage Ratio			3
Credit Agreement [Member] \| First National Bank of Omaha [Member] \| Maximum [Member]
Debt Instrument, Covenant, Maximum Costs Associated with Building			$ 27,500,000
Credit Agreement [Member] \| First National Bank of Omaha [Member] \| Term Loan [Member]
Debt Instrument, Face Amount	$ 23,400,000		23,400,000
Debt Instrument, Interest Rate, Stated Percentage					5.00%
Debt Instrument, Periodic Payment, Principal			92,800
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid	11,600,000		11,600,000
Credit Agreement [Member] \| First National Bank of Omaha [Member] \| Line of Credit [Member]
Line of Credit Facility, Maximum Borrowing Capacity	30,000,000		30,000,000
Line of Credit Facility, Remaining Borrowing Capacity	25,000,000		25,000,000
Line of Credit, Current	5,000,000		5,000,000
Line of Credit Facility, Average Outstanding Amount	8,000,000	$ 543,000	9,000,000	$ 183,000
Credit Agreement [Member] \| First National Bank of Omaha [Member] \| Delayed Draw Term Loan (DDTL) [Member]
Line of Credit Facility, Maximum Borrowing Capacity	75,000,000		75,000,000
Debt Instrument, Periodic Payment, Principal			220,882
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid	27,100,000		27,100,000
Line of Credit Facility, Remaining Borrowing Capacity	$ 39,000,000		$ 39,000,000
Term Loan, Delayed Draw Term Loan and Line of Credit [Member] \| First National Bank of Omaha [Member]
Debt Instrument, Basis Spread on Variable Rate			2.35%
Debt Instrument, Variable Interest Rate, at Point in Time	7.55%		7.55%
Line of Credit and Delayed Draw Term Loan [Member] \| First National Bank of Omaha [Member] \| Revolving Credit Facility [Member]
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage			0.20%

Note 5 - Credit Agreement - Summary of Notes Payable (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Less: current portion	$ (3,721)	$ (7,214)
Less: unamortized debt issuance costs	(111)	(103)
Notes payable, net of current portion	44,910	29,470
Term Loan [Member]
Secured Debt	14,547	17,787
Delayed Draw Term Loan (DDTL) [Member]
Secured Debt	$ 34,195	$ 19,000

Note 6 - Share-based Compensation (Details Textual) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Proceeds from Stock Options Exercised			$ 0	$ 584,000
Share-Based Payment Arrangement, Option [Member]
Allocated Share Based Compensation, Expense (Benefit)	$ 189,000	$ 198,000	252,000	$ 752,000
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount	5,400,000		$ 5,400,000
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)			2 years 2 months 12 days
Performance based Stock Options [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Expiration Period (Year)			6 years
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Gross (in shares)			404,833		0
Service based Stock Options [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Gross (in shares)			54,530	96,359
Service based Stock Options [Member] \| Maximum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Expiration Period (Year)			10 years
Service based Stock Options [Member] \| Minimum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Expiration Period (Year)			5 years
Nonvested [Member]
Share-Based Payment Arrangement, Expense	$ 0	$ 130,000	$ 156,000	$ 75,000
Director Plan 2004 [Member] \| Share-Based Payment Arrangement, Option [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Authorized (in shares)	3,000,000		3,000,000
Director Plan 2004 [Member] \| Nonqualified Stock Options [Member] \| Director [Member]
Share Based Compensation, Arrangement By Share Based Payment Award, Options Grant, Amount			$ 100,000
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period (Year)			1 year
Director Plan 2004 [Member] \| Nonqualified Stock Options [Member] \| Director [Member] \| Maximum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Expiration Period (Year)			10 years
Director Plan 2004 [Member] \| Nonqualified Stock Options [Member] \| Director [Member] \| Minimum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Expiration Period (Year)			3 years
The 2006 Equity Incentive Plan [Member] \| Common Stock [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Authorized (in shares)	1,800,000		1,800,000
The 2006 Equity Incentive Plan [Member] \| Nonvested [Member]
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount	$ 0		$ 0
Share-based Compensation Arrangement by Share-based Payment Award, Nonvested Restricted Stock, Outstanding Number (in shares)	0		0

Note 6 - Share-based Compensation - Stock Options Valuation Assumptions (Details)	9 Months Ended
	Sep. 30, 2024
Performance based Stock Options [Member]
Expected dividend yield at date of grant	1.44%
Expected stock price volatility	33.83%
Risk-free interest rate	4.13%
Expected life of options (in years) (Year)	4 years
Service based Stock Options [Member]
Expected dividend yield at date of grant	1.94%
Expected stock price volatility	33.75%
Risk-free interest rate	4.50%
Expected life of options (in years) (Year)	5 years

Note 6 - Share-based Compensation - Stock Option Activity Under Equity Incentive Plans and Director Plan (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended			9 Months Ended		12 Months Ended
	Mar. 31, 2024	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Exercised, number of options (in shares)	75,283	20,000	20,938
Performance based Stock Options [Member]
Beginning balance, outstanding, number of options (in shares)	0			0
Beginning balance, outstanding, weighted average exercise price (in dollars per share)	$ 0			$ 0
Granted, number of options (in shares)				404,833		0
Granted, weighted average exercise price (in dollars per share)				$ 39.54
Exercised, number of options (in shares)				0
Exercised, weighted average exercise price (in dollars per share)				$ 0
Forfeited, number of options (in shares)				0
Forfeited, weighted average exercise price (in dollars per share)				$ 0
Ending balance, outstanding, number of options (in shares)				404,833		0
Ending balance, outstanding, weighted average exercise price (in dollars per share)				$ 39.54		$ 0
Outstanding, weighted average remaining contractual term (Year)				5 years 3 months 18 days
Outstanding, aggregate intrinsic value				$ 0
Exercisable, number of options (in shares)				0
Weighted average exercise price (in dollars per share)				$ 0
Service based Stock Options [Member]
Beginning balance, outstanding, number of options (in shares)	569,168			569,168
Beginning balance, outstanding, weighted average exercise price (in dollars per share)	$ 35.72			$ 35.72
Granted, number of options (in shares)				54,530	96,359
Granted, weighted average exercise price (in dollars per share)				$ 29.76
Exercised, number of options (in shares)				75,283
Exercised, weighted average exercise price (in dollars per share)				$ 23.27
Forfeited, number of options (in shares)				56,805
Forfeited, weighted average exercise price (in dollars per share)				$ 43.83
Ending balance, outstanding, number of options (in shares)				491,610		569,168
Ending balance, outstanding, weighted average exercise price (in dollars per share)				$ 36.03		$ 35.72
Outstanding, weighted average remaining contractual term (Year)				5 years 5 months 19 days
Outstanding, aggregate intrinsic value				$ 567
Exercisable, number of options (in shares)				344,000
Weighted average exercise price (in dollars per share)				$ 34.5
Exercisable, weighted average remaining contractual term (Year)				4 years 4 months 28 days
Exercisable, aggregate intrinsic value				$ 567

Note 6 - Share-based Compensation - Non-vested Stock (Details) - Nonvested [Member]	9 Months Ended
	Sep. 30, 2024 $ / shares shares
Outstanding (in shares) \| shares	6,058
Outstanding (in dollars per share) \| $ / shares	$ 42.92
Granted (in shares) \| shares	0
Granted (in dollars per share) \| $ / shares	$ 0
Vested (in shares) \| shares	0
Vested (in dollars per share) \| $ / shares	$ 0
Forfeited (in shares) \| shares	(6,058)
Forfeited (in dollars per share) \| $ / shares	$ 42.92
Outstanding (in shares) \| shares	0
Outstanding (in dollars per share) \| $ / shares	$ 0

Note 7 - Goodwill and Intangible Assets - Summary of Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Dec. 31, 2023
Goodwill, gross	$ 66,923	$ 62,328
Goodwill, Accumulated Depreciation	(714)	(714)
Goodwill	66,209	61,614
Amortizing intangible assets	14,134	12,723
Accumulated amortization	(12,612)	(12,443)
Other intangible assets, net	2,713	1,471
Nobl Inc [Member]
Goodwill	4,595
Goodwill, Acquired During Period	4,595
Goodwill, Accumulated Depreciation acquired	0
Customer Relationships [Member]
Amortizing intangible assets	9,772	9,192
Technology-Based Intangible Assets [Member]
Amortizing intangible assets	2,790	1,959
Trade Names [Member]
Amortizing intangible assets	1,572	1,572
Trade Names 1 [Member]
Indefinite trade name	$ 1,191	$ 1,191

Note 8 - Property and Equipment - Summary of Property and Equipment (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Property and equipment	$ 76,319	$ 63,874
Accumulated depreciation	39,999	35,669
Property and equipment, net	$ 36,320	$ 28,205

Note 9 - Earnings Per Share (Details Textual) - shares	3 Months Ended		9 Months Ended
Note 9 - Earnings Per Share (Details Textual) - shares	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)	402,822	275,064	406,713	268,838

Note 9 - Earnings Per Share - Net Income Per Share Computation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2024	Jun. 30, 2024	Mar. 31, 2024	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2024	Sep. 30, 2023
Net income	$ 5,688	$ 6,175	$ 6,359	$ 7,876	$ 7,273	$ 6,964	$ 18,223	$ 22,113
Allocation of distributed and undistributed income to unvested restricted stock shareholders	0			(2)			(2)	(5)
Net income attributable to common shareholders	$ 5,688			$ 7,874			$ 18,221	$ 22,108
Weighted average common shares outstanding – basic (in shares)	23,721			24,560			23,820	24,574
Net income per share – basic (in dollars per share)	$ 0.24			$ 0.32			$ 0.76	$ 0.9
Net income attributable to common shareholders for basic computation	$ 5,688			$ 7,874			$ 18,221	$ 22,108
Weighted average effect of dilutive securities – stock options (in shares)	24			135			48	141
Denominator for diluted earnings per share – adjusted weighted average shares (in shares)	23,745			24,695			23,868	24,715
Net income per share – diluted (in dollars per share)	$ 0.24			$ 0.32			$ 0.76	$ 0.89

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