0001393883-26-000070
SEC filingMixed Q1: revenue declined 8% on macro headwinds, but profitability surged as prior-year restructuring and impairment charges did not repeat.
Revenue for the first quarter of 2026 was $29.7 million, an 8.1% decrease from $32.3 million in the same period last year. The decline was primarily due to macroeconomic conditions that led to lower customer counts and renewal rates, particularly in the recruitment package customer base. The decrease in backlog compared to both December 31, 2025 and March 31, 2025 further reflects reduced demand for the Company's services.
Operating income improved significantly to $3.1 million from a loss of $8.9 million in the prior year, a 134.5% increase. This swing was driven by the absence of the prior year's restructuring charge and goodwill impairment, along with decreases in compensation-related costs and depreciation expense. Net income was $1.5 million, compared to a net loss of $9.4 million in the prior year, a 116.4% improvement. Diluted earnings per share were $0.04, versus a loss of $0.21 per share in the prior year. Gross margin remained high at 84.0%, while operating margin reached 10.3%.
The decrease in backlog compared to both December 31, 2025 and March 31, 2025 was due to macroeconomic conditions causing lower demand for the Company's services. This trend may continue to pressure near-term revenue.
Management uses Adjusted EBITDA and Adjusted EBITDA Margin as performance measures for internal monitoring and planning. The Company continues to focus on cost discipline and operational efficiency to navigate the challenging macroeconomic environment. Forward-looking statements are based on assumptions regarding historical trends, current conditions, and expected future developments.