VerticalScope (TSE:FORA) executives told investors the company saw sequential improvement across key operating and financial metrics in the fourth quarter of 2025, even as year-over-year results remained pressured by changes in search-driven traffic and weaker programmatic advertising conditions.
On the company’s Q4 and full-year 2025 earnings call, CEO Chris Goodridge said the broader digital ecosystem experienced a “significant structural evolution” during 2025 as AI altered how users discover content. He said VerticalScope’s focus has been on adapting to that shift while building what he called “a stable and resilient foundation from which to grow.”
Q4 results: sequential progress, year-over-year pressure
Revenue in Q4 totaled $15.4 million, up 5% sequentially but down 22% to 23% year-over-year, according to management. Goodridge said the year-over-year decline was “almost entirely” due to lower programmatic advertising versus a strong Q4 in the prior year, when traffic and CPMs were higher. CFO Vince Bellissimo added that digital advertising revenue declined 29% in the quarter, driven by lower MAU and fewer programmatic impressions.
When asked on the call, management clarified that programmatic revenue was down 43% year-over-year in Q4, while direct advertising declined 1%.
Profitability remained a central theme. VerticalScope reported a 45% adjusted EBITDA margin in Q4, generating $6.9 million of adjusted EBITDA. Bellissimo said free cash flow conversion was 101% in the quarter, “primarily driven by prior period cash tax refunds deposited in the quarter,” and 94% excluding refunds.
Channel mix: direct ads steady, e-commerce grows
Management emphasized stability and momentum in direct advertising and continued growth in e-commerce. Goodridge said direct advertising was relatively stable in Q4, and he highlighted that direct bookings for 2026 were already up “double digits” over the prior year as of the end of February. He also said the company won new mandates with insurance and telecommunications customers in both the U.S. and Canada.
E-commerce posted its third consecutive quarter of growth, increasing 21% year-over-year in Q4. Bellissimo noted the e-commerce result included incremental contributions from the company’s acquisition of Ritual Technologies.
Goodridge also described an uncharacteristic softness in open-market programmatic CPMs during Q4, saying they did not see a normal seasonal spike and that the experience appeared consistent with broader industry trends. He said the company expects programmatic conditions to improve in 2026 and return to more typical seasonal patterns.
Full-year 2025: EBITDA and cash generation highlighted
For the full year, revenue was $58.1 million, down 16% year-over-year. Adjusted EBITDA was $21.1 million, and Bellissimo said the company converted those profits to cash at a 94% rate. The company reported an $8 million net loss for the year, which Bellissimo attributed primarily to $21.2 million of non-cash depreciation and amortization related largely to acquired intangible assets.
VerticalScope generated $18.5 million in cash flows from operating activities and $19.7 million in free cash flow in 2025, reflecting the 94% conversion rate from adjusted EBITDA, up from 92% in the prior year.
Bellissimo said the company exited 2025 with $16.4 million in unrestricted cash—its highest year-end cash balance since 2021—and $72 million of liquidity, including $56 million available under its revolving credit facility. Net debt stood at $28 million, with leverage of 1.4x under its credit agreement, which management expects to trend downward.
AI initiatives: Fora Frank, Audience Engine, and cost optimization
Goodridge and Bellissimo described multiple AI-driven initiatives aimed at boosting engagement, diversifying growth, and improving efficiency. Goodridge said the company continues to roll out translations, which he described as a “steady source of growing traffic,” and noted the mobile app has been gaining users while the company works on “multi-community experiences” intended to strengthen network effects.
Goodridge highlighted the impact of the AI-powered community assistant, Fora Frank, saying the company is seeing close to a 40% increase in posting rates for new users who receive a reply from Frank. He said management sees opportunities to expand Frank’s capabilities, including commerce-related use cases over time.
A newer initiative, Audience Engine, was beta-launched in Q4. Goodridge described it as an AI system that uses “advanced data signals” to identify and engage high-intent users across multiple platforms and monetize them efficiently. In response to an analyst question, he said Audience Engine works by acquiring audiences on third-party platforms and bringing them into VerticalScope’s environment, with monetization currently “mainly programmatic.” He added that the company expects to expand its use to support direct advertising and explore commerce applications.
Goodridge said Audience Engine reached a run rate of $1.4 million in annualized EBITDA in January and that the current growth rate puts it “on a path to double that by the end of Q2.” He described it as a high-margin revenue source the company expects to scale with AI rather than headcount.
On the cost side, Bellissimo said VerticalScope is looking beyond “copilots and chatbots” to “agentic workflows” that connect directly to existing software and databases. He suggested this could reduce reliance on third-party software and help automate high-volume “busy work,” benefiting wages and software costs over time. However, in response to a question about the magnitude of potential savings, Bellissimo said it was “too early to tell,” while adding he expects savings to be “meaningful.”
Data licensing and capital allocation
Management also discussed protecting and potentially monetizing VerticalScope’s content in an AI-driven internet. Goodridge said data licensing is not yet a primary revenue driver and that the company is taking a patient approach as legal and technical frameworks evolve, citing the RSL Collective as an example of industry progress. He said the current landscape remains challenging as large language models can bypass traditional robots.txt protocols and terms of use.
Goodridge said VerticalScope implemented TollBit technology in September to block and redirect unauthorized AI bot traffic. Between late September and the end of January, he said the company blocked and redirected 415 million scrape attempts from leading LLMs. He also said that while TollBit works with more than 7,000 online properties, VerticalScope accounts for over 20% of all AI bot requests across the TollBit platform. Goodridge said the company remains in active engagement with major AI players and will continue blocking unauthorized attempts until commercial agreements are reached.
On capital allocation, Goodridge said VerticalScope completed two tuck-in acquisitions in Q4, bringing the total to six for 2025, and entered 2026 with its strongest liquidity position in several years and low leverage. He said the company views investing in growth as the highest-return use of cash, including disciplined M&A focused on deepening user connections, supporting AI-driven innovation, and diversifying revenue through channels such as e-commerce. In the Q&A, the company confirmed it had not made acquisitions since year-end.
Looking ahead, Bellissimo said 2026 results will be driven by protecting profitability and free cash flow, returning to revenue growth through MAU stability, yield expansion and new monetization channels, and maintaining disciplined capital stewardship. Management reiterated that seasonality typically results in lower adjusted EBITDA margins in Q1 and peak profitability in Q4, a pattern it does not expect to change.
About VerticalScope (TSE:FORA)
VerticalScope Holdings Inc is a technology company that operates a cloud-based digital community platform comprising hyper-focused apps, forums, marketplaces, editorial, and e-commerce rating and brand review websites.
