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Key highlights

• Profitability gains: The company delivered a 25% adjusted EBITDA margin, which is the profit left after running the business but before certain costs, up from 22.5% a year ago. This expansion shows the business is becoming more efficient even while revenue growth remains difficult to find.
• Large customer stability: The number of customers paying more than $50,000 annually improved year over year, helping keep total recurring revenue at $440.8 million. Focusing on these larger, more stable accounts is essential for protecting the core business while the company moves toward newer AI products.
• Aggressive share buybacks: Management spent $140 million to buy back 24.3 million shares and added another $100 million to its future buyback plans. Reducing the number of shares outstanding helps increase the value for remaining owners by giving them a larger piece of the company.
• Revenue under pressure: Total revenue fell to $107.9 million from $109.5 million last year as the company transitions its strategy toward AI agents. This slight dip highlights the challenge of replacing older search business with new technology faster than customers leave.

Our take: This was a mixed quarter that prioritized profits over growth. While missing the revenue target is a concern, hitting a 25% profit margin and aggressively buying back shares shows management is focused on shareholder value. These results keep the long term case intact while we wait for new AI products to drive growth.