CEO of ACCESS Newswire, welcome.
Thank you.
Good morning, everybody. How is everybody doing? Good?
Good, yeah.
Thank you. Perfect. We're going to do something a little different in this presentation than we've ever done before. Typically, we talk about where the business is today and where we're headed and what we expect to get. I want to spend a few minutes talking about where we've been over the last nine months because I think it's important for context to where we're headed. Everybody knows the forward-looking statements. I don't need to speak about them. They're on our website and in every one of our filings that you can find. Who we are today? We are ACCESS Newswire. We're not Issuer Direct anymore. We are a public relations and investor relations platform company that helps bring brand stories and their messaging to life. We do that with small startups, SMBs. We do that with micro and nano-cap companies. We do it with multi-billion dollar brands.
We'll talk about who those individuals are. We've got a couple of great sales folks here today I encourage you to go out and talk to and get to know. It's not just me. There's an entire team here. CFO's been here 14 years. Our EVP of Sales and Marketing going on five. CTO going on four. I've known each one of these people for almost 20 years. They come with a lot of credibility and a lot of trust within our organization and in our industry. I'll talk more about what each one of them are contributing and doing. Where we came from, right? ISDR, Issuer Direct, is who we were. We were the first pure compliance company to go public in 2007. We'd done over 100,000 SEC filings and served over 10,000 customers in that time.
90% of the customers, and now I'll tell you the bad part of this, were buying services. They were buying services in a very seasonal way based on 10-Qs and Ks. The revenue was always very lumpy. We did well with that business. We repurchased shares and paid dividends for four and a half or five years of our history at over $5 million. I think it's close to $6 million that we've returned to shareholders and equity statements. We completed five accretive acquisitions. We completed a stock transfer purchase. We actually bought Axiswire, the news agency we have today under the new brand and umbrella when it just started out.
The reality is, and you all know this, the total addressable market, or TAM, has continued to shrink in the compliance space, making it difficult for us to subsist as what a public company really should be: double-digit growth, good EBITDA margins, and a big opportunity to scale in the market. The reality is you have to pivot. We did just that. Enter this year, right? At the beginning of this year, we rebranded the business. We sold our compliance business. We'll talk about it in a second. We rebranded our entire product portfolio lineup to be a subscription-driven business today. We used the proceeds of the sale to pay the debt down by almost 80%. We retooled the entire back office system and e-commerce platforms to be able to handle scale and readjusted our entire SG&A structure to be able to support our new business.
We've got a product roadmap and a plan and strategy that, to be fair, sometimes makes my team's head spin that we're doing the things so quickly that we are. I'll highlight a bunch of those for you today to give you an understanding of what it is. This compliance, this pivot, right? $12.5 million was the transaction. It was one of the highest multiples paid to revenue and earnings in the compliance space over the last five years. It was sold to a group called Equiniti. If anybody knows them, they're one of the largest transfer agents in the world. Good, bad, or indifferent, we are out of that business now. Stock transfer, annual meeting management, shareholder fulfillment, and the typical EDGAR XBRL filings we no longer do. As we said, we reduced the debt by 78% using the proceeds to do that and lost about 550 customers.
200 of them were subscribers. The reason why I point that out is because I want to talk about our subscription numbers a little later. That transaction happened in February of this year. 11 folks moved over to the compliance with Equiniti. We did then adjust some of the G&A expense structures in our organization to be able to handle where this business was headed. More importantly, OpEx, right? We went from $6 million down to about $4.5 million, about a 25% reduction in our OpEx expense going forward to give you an understanding of what we believe we can do in the business. I'll talk a little bit about how that number is insulated for growth and what we're doing to achieve some of those things. At the end of Q1, we ended with about $3.3 million in debt.
We'll probably end the year just a little under $3 million and plan to have a full repayment by the end of 2026. We will accelerate that structure as we continue to generate cash in the business. Now, what do we do, right? Nine months of rebrand, sell, service, grow, change, evolve. Sometimes I reflect on the fact that we're not farther along than I wanted to be. The reality is we've done a lot. What do we sell today? We sell a subscription product for public relations. What that consists of is news distribution, our ACCESS Newswire model, which is the third largest volume news distribution outlet today. It also includes the Media Database, pitching, and analytics products. Why are those important, right? Why did we build and spend money doing this?
If you saw OpEx in the previous slides, kind of continue to grow in 2023 and early 2024, it is because we had to build these product sets to get to the full total addressable market of our business. When we looked at the compliance space, obviously shrinking, the total addressable market in the corporate communications and software industry is about $8 billion globally. We're sitting about a $23 million business today, thinking through that we've got to get to that scale. We need the products to do that. Why do those products matter to our customers? They matter because, like Anova, who was standing here before, has been a customer of ours for over 10 years. They produce their earnings statements to the markets. They want to know the engagement, both from the shareholder and the media.
Our Media Database and our media pitching and monitoring products help find and allocate who is talking about Anova, what they're saying, what the sentiment is, and give them real-time analysis to all of that. That applies both to public and private customers as well. On the ACCESS IR side, the investor relations portions of all the companies that are here today, there's 30%- 40% of them that work with us. We do their investor relations websites. We do their quarterly earnings calls. We manage their news distribution. Maybe their investor days or something else they're doing once a year to help support them in events like this. When we flipped to subscription, we were about a $9,000 annual recurring revenue. We guided that by the end of this year, we'd be at $14,000 annual recurring revenue. For the last two quarters, new deals sold are already at $14,000.
We ended the end of the nine months at about almost $12,000 already in ARR averages for our customers. About 1,000 of those folks are already working with us from a pure subscription play perspective. We're getting lift in ARR. We're doing that by providing these new products that we've talked about to keep the customers stickier and using the entire ecosystem. To be fair, getting out of this market a little bit, right? As much as we love the small micro nano-cap space, the average deals done today are between $20,000 and $40,000 for multi-billion dollar brands. We're continuing to get them every month. If you think about companies like Frontier and BlackBerry and Moderna, Kimberly-Clark, Bausch + Lomb, you name it, Nick, you probably could give me a bunch more.
We've got a really good portfolio of customers that the LTVs are not only significantly better than they are in the micro-cap space, their spends are significantly more. Their average ARRs are probably about $27,000- $30,000 a year is what the spend is there. Some of them are into the six figures, which is fantastic for us. We also do a couple of other things that folks don't really know. We don't talk about it much. There are probably 30 banks and non-bank conferences that we help manage their events. We have a Conference & Event Software platform. We do that, to be fair, for analytic purposes. We're not doing it from a revenue-driving perspective. We want to know who the investors are that are taking meetings with our customers, and how that is being analyzed by our potential customer and their IR firm. We'll continue to do that.
It's a small part of our business. If we think about revenues, gross margins and revenues over a historical period, I know that there was one question that came from the Anova presentation: why did your revenue go up and down in this one period? I'm going to have that call out in the Q&A session. I know that. We'll talk about that later. These are re-cast numbers removing compliance from our operations, which removed those 500 customers and a couple hundred of the subscription customers, sitting at about a $5.6, $5.7 million revenue run right now, continuing to grow. We're a single-digit growth business in a single-digit CAGR growth industry. We're going to talk about how we're going to get out of that and what we're going to do to be a difference.
I think it's also important to kind of guide to what analysts are saying, what they expect in Q3, Q4. You should expect to see the same things there. At the bottom, we wanted to highlight some gross margins as we still continue to believe we can scale the gross margins of the business. With double-digit growth and a top-line revenue perspective, we should see gross margins mid-next year at 80% and then adjusted EBITDA margins about 20% to 22%. We're really confident in what we're doing as a business from a subscription standpoint. We're confident in the industry that we're serving and the demand for our products and some of the roadmap things that we're going to talk about in a couple of minutes. We sell a lot of press releases. I mean, 30,000 press releases a month go out through our network.
They're distributed globally or regionally, depending on the need of the customer. A lot of them, more and more now, are being sold in a subscription way. We've built a lot of technologies to be able to insulate the deliverable or profitability off a subscription for a customer doing typically what was a services-based thing, a press release. We wanted to walk you through ARR numbers and customer numbers. In each of the periods, the values are sitting there at the ARR values at that time at the end of each quarter. Back in 2022, it was $8,600 average is what we were achieving from a customer. At the end of this year, we'll be at that $14,000 number that we've spoken about, knowing that we can continue to climb that number. One of the things that I, you know, we'll tell you all the good.
We sometimes have to tell you all the bad, too, right? That's the reality of what we do when we stand up here. We had messaged at the beginning of this year that we would see our total subscription customers come in about 1,500 at about a $14,000 ARR. The problem is we didn't allocate the fact that we lost about 200 of them in the compliance sale. If you were to remove the compliance number from the guided estimate, we're likely going to hit that 1,300 number. We're already there in our ARR number. I think it's important to call out, as we continue to grow our subscription revenue, today we're about 50% of revenue is driven from pure subscription ARR business or multi-year contracts from our customers. We expect that to be the 80/20 rule in the next 12 months.
You see 80% of our revenue is coming from subscription customers buying both ACCESS IR and ACCESS PR. Allocation, there's a couple of things to deal with. You all have been involved and invested in companies that have sold portions of their business that are tax-paying entities. We sold a business for $12.5 million. We owe the IRS money. We owe them $2.5 million, almost $3 million, in costs, tax impacts for that. We're servicing that. We're servicing our debt. We're going to introduce what probably will end up being a buyback by the end of the year. We continue to generate cash. We continue to feel confident in the profitability of the business. We're going to service our debt, obviously, and service our tax obligations.
We are definitely investing in the business and/or looking to figure out how to purchase and repurchase shares at today's value and levels, as we believe they're significantly undervalued. Why I'm here and why we're going to continue to do this is to be sure we're telling the story about who ACCESS Newswire is today and not what we were in the past. What's next, right? You could do more of the same thing. We all know what that means. That sometimes is the definition of insanity, right? You can't keep doing the same thing. What I think most of you may not know is this industry does not innovate very much. From an investor relations, public relations service company, or product company, they typically don't innovate outside of their core. They do what everybody else does because it's the safest thing to do.
In our Q2 call, I ended our closing remarks by saying to our shareholders and the audience that one of our biggest initiatives that we're going to achieve by the end of this year is something called Kill the Report. I know that sounds kind of cliché and strange to most of you. I want to explain what that is. This is one of the things that is coming next. Kill the Report in the top right there, our industry is made up of analytics and engagement from a press release. Customers love to look at a report. It tells them where the press release went, what the engagement was. They feel that sense of fulfillment that I got what I paid for. The industry has done this for 80 years. Has anybody ever seen a distribution report from a news agency before? Show of hands, right?
A couple of them. We look at those reports. It says, your press release got seen by 146 million people today. If I'm a PR and IR executive, I'm like, wow, I've done my job. My story was great. The phone doesn't ring, right? The stock doesn't move. The product doesn't sell, whatever the message is for the press release. When we began the news business, we said we're not going to tell you the fake number of people because what our industry does is gather up the aggregate number of eyeballs for each one of those distribution points, like a Bloomberg or MarketWatch or CNN or USA Today, and say all of the audience is equal to that 178 million people. When we came to market in the news business, we said to our customers we're going to give you the real engagement.
You run a press release with us, and over the five days, you'll see maybe 1,100 or 1,200 or 2,500 people that actually clicked and read your news at each one of those distribution points that we sent it to and then gave you all the analytic for that. We peeled the onion back a little bit, right? By doing that, we then forced the industry to do the same thing. As I've continued to say to my development team over the past year, we are selling a product that is dedicated to, unfortunately, half the people in this room. More than half of our customers today sit at the old end of the Gen Z era and don't ever look at a distribution report. They don't care, right? All they care about is that they get likes and hearts and all this social media interaction.
Can they prompt it with AI? That's the world that we're in. That's where we've continued to move this. In the next 90 days, we are going to remove the distribution report concept. It will be a full prompting tool that's real-time interactive with our customers to be able to tell them exactly when somebody clicks, they get an alert. If it's a journalist that covered them, it's going to send a pitch to them automatically and give them all the analytic in between, something that the market has not done. One of the reasons why we haven't released it yet is because we're trying to figure out if there's some IP there that we can protect and really figure out how to make sure that the market just doesn't copy what we're doing. Social media brands are big, powerful.
It takes hundreds of millions of dollars to build a social media listening tool or a social media platform. That's not our business. We've partnered with leading social media folks. Hootsuite will be the first one that we'll roll out here this quarter that will direct connect into our platform to share all of your Hootsuite schedules into your ACCESS Newswire platform and share data and engagement from our ACCESS Newswire platform back into Hootsuite. That social listening, all of the interactions between Facebook, Twitter, LinkedIn, or X, everything else that you've got will automatically be driven into your replacement prompting system with us and our Agentic AI. That's something else that we're working on, too. We don't want to be the company that says, we're in the AI game because then we'll be valued as an AI company. We don't want that, right?
The reality is, and I think most of you know this, if you've written a press release before, you've got the pen. You're writing the press release or typing the press release. It then hits your compliance team if you're public and maybe legal and maybe your board and rest of your management team. If we just stay focused on that example, by the time you've gotten five or six people to look at it, it's done. You come into a Newswire platform and PR Newswire and GlobeNewswire, Business Wire say, use our AI tool to make your press release better. I'm not going to do that because if I change anything, I got to go back through the five steps again and get everybody to buy off on what some AI system says. We opted to say, you know what?
We're not going to provide an AI engine or authoring tool to our customers. We're going to do something entirely different. Because we do 30,000 articles a month, I want to do 50,000 articles a month in two years. I want to do 100,000 articles a month in five years. If I do that, I'm scaling editorial and infrastructure, right? Therefore, I don't have a lot of leverage left in the business. I'm just scaling it at the same profitability. We deployed our AI engines, agentic systems, into our news editorial platforms when the article gets injected from the customer. The minute the customer submits it, our agentic systems, five agents run, scan compliance to be sure that it's the right person, the right symbol, the right exchange, whatever it is.
The second one scans it for content to be sure that it passes compliance with each one of our regulatory bodies. The third comes around and says, there's better distribution for you. You can pay more, do more. That's the next element of what we're going to be releasing here shortly. What that does for us, and we've been running this about four months, I'm saving about 8% of my editorial time today. If I save 8% of my editorial time and I can continue to deploy and learn from these agents, I can likely get 12%- 15% by early next year. I've got scale to grow at a fixed cost where I don't have to hire more editors to do the work.
That takes us into really what then does it look like for new vertical penetration and the expansion of the total addressable market we talked about earlier today that our compliance business was shrinking, our communication business is opening. As we add social listening and social media partnerships, as well as some of the other things that we're doing, we're going to be servicing the market, right? We know the market at about $8 billion spend in press releases. Like most everybody here, I can use the example.
If I'm a transfer agent, an insurance provider, an IR firm, or somebody is sponsoring us a table out here like us, I meet these customers after they've been public, generally, after they've raised capital, good, bad, or indifferent, after they may have failed and raised more capital and diluted their shareholders, whatever the reasons are, we then get them as a customer. That's great. We're thankful for it. We service them. We love them more, just like we say to all of our customers. You have to step back and say, why are we not at the early point of the existence and creation of the business? I won't really go in today to all of those areas, but just know that the business is spending a significant amount of time building partnerships to find out where the creation process happens, right?
The ideation of the business when two or three people get together and say, let's start a company. Let's go do something. There's a brand to tell there, right? That's where we want to get. If we look at some of the industries and verticals that we do, those partnerships have millions and millions of customers that interact all the time. Our industry has thousands of people interacting all the time. We've really identified four or five of these. When the materiality of this comes through, you're going to see it next year in Q1. Like I said, we're spending a lot of time there. That should likely double our total addressable market for us. The reason why I'm trying to be brief, to be fair to you, is nobody in the industry is doing this. Nobody's ever done this.
We're really being very cautious about how we talk about it in a public forum, for that obvious reason. It'll definitely be evident here in the coming few months. The last thing that we're doing is something that the industry has never done. Just because I'm interactive, guys, I'm sorry. There's a couple of you who have written and wrote a press release before. You've distributed it. You've been involved in it. You buy U.S. National. You buy North America. You buy Global. You buy all these things. As public companies, that's what you expect because that's got to go on Bloomberg and Yahoo Finance and MarketWatch and StockTwits and everything else. The hashtag symbols used, you want your press release to be there. Guess what? There are millions of private companies that don't care about that, right? What they care about is they want their brand and credibility.
They want to be seen on Forbes. They want to be seen on Reuters. They want to be seen on USA Today. They want to be seen on a university channel if they're an academic product. We have built and will be releasing any day now, pressrelease.com, which is one of our portfolio brands, a single circuit platform for the private company marketplace. We've done a lot of research in the private company space over the last year to ask customers why they never ran a second press release. It's not from us, from anybody in the industry. Most of them said, I got way more than I needed. I just needed one place for it to go because I want to put it on my website or pitch it to the media. I just need that one outlet. It gives me credibility. It gives me SEO ranking.
It gives me domain authority, whatever the reasons are for them. We're going to be the first news agency to release a single circuit product, which will drive down the average cost per press release because it's like $150- $300 compared to $700 or $1,000. It should drive some velocity, right? That flywheel concept of bringing in thousands of customers into an e-comm engine is what we're hopeful that what pressrelease.com will bring to us next year. I could talk a lot about all of this. Time is running out. This will be done all in less than the next 100 days, right? These are things that our current development team is working on and our product teams are working on. Each one of these deals and materiality have signed underlying agreements and/or have integrated data.
We are going to flip a lot of this upside down on the industry. We will be very kind of close-minded in some of the things that we're talking about today. Look, a quick summary because I think this is important. We spent a lot of time talking about the mechanics of the business and not the financial side today for obvious reasons. To take away, right, reduction of debt is something that we've done and spent a good amount of time with the proceeds of the transaction. We've aligned the business and retooled virtually everything in the back office to get the company to what we believe will be double-digit growth next year and then double-digit adjusted EBITDA earnings next year. Subscription-based businesses, we really feel strongly that this is our focus and where we're headed.
It's where we believe we'll get the biggest value for the business at some point when that determines itself, whatever that means, right? We'll leave that as it is. Whether it's M&A or whether it's appreciation and value in the market, the multiples paid for SaaS, true subscriptions that have good retention rates are significant, far beyond what we are today. Just for context, our subscription business has about a 93% retention rate today. Although industry-wide, that's about average, Nick will tell you it's not good enough, right? Nick is one of our sales managers that's here today listening to our presentation. We want it to be 98%. We believe adding these additional products and continuing the customer service and loyalty that we've got of We Love You More will shine through to the industry. We should be able to improve that. Of course, the products in the industry, right?
We're the third largest newswire. We want to aspire to be the second largest. I'm not going to give you a prediction of when that will happen. I would probably say if I was a betting man, probably in the next 12- 18 months, we'll be the second largest by volume news distribution outlet. That is something that is pretty significant for us, given that it took all these others 50- 80 years to get to where they've gotten today. We've done it in less than 10 years. There's a lot to cover. I'm running out of time. I know there's going to be a bunch of questions. I want to do that and hit the Q&A side if I could.
We got one minute for questions.
One?
One minute.
That means five questions, guys. We can do it in one minute. Anybody? I couldn't have done that good of a job. I had to have missed something. Yes, sir.
Do the competitors, like Business Wire, PR Newswire, are they doing these new things like social media?
That's a great question. We're going to run out of time as we get to this, so I'll keep talking as I jump off stage so they can get going for the next one. When you think about Businesswire, Businesswire is a single silo product. They sell press releases. That's all they do, and they're good at it. Warren Buffett owns it, right?