CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts in thousands)(unaudited) Three Months Ended March 31, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $3,440 $1,784 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,550 2,270 Share-based compensation expense 1,596 1,402 Write-off of long-lived assets 2 - Provision for bad debts 62 70 Noncash lease expenses 148 134 Deferred income tax expense 899 471 Changes in assets and liabilities: Accounts receivable (1,647) (806)Prepaid expenses and other current assets (26) (378)Other noncurrent assets (406) 156 Accounts payable (114) 722 Accrued expenses and other current liabilities (1,392) (1,347)Deferred revenue 42 (38)Operating lease liabilities (153) (135)Net cash provided by operating activities 5,001 4,305 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (50) (65)Capitalized costs included in intangible assets (2,469) (2,327)Net cash used in investing activities (2,519) (2,392)CASH FLOWS FROM FINANCING ACTIVITIES: Taxes paid related to net share settlement of vesting of restricted stock units (202) (383)Repurchases of common stock - (1,415)Dividend payable (4,181) - Net cash used in financing activities (4,383) (1,798)Net (decrease) increase in cash and cash equivalents $(1,901) $115 Cash and cash equivalents at beginning of period 36,504 32,032 Cash and cash equivalents at end of period $34,603 $32,147 SUPPLEMENTAL DISCLOSURE INFORMATION: Cash paid for interest $- $- Cash paid for income taxes $- $- Share-based compensation capitalized in intangible assets $382 $446 Retirement of treasury stock $202 $1,942 Use and Reconciliation of Non-GAAP Financial Measures Management evaluates the financial performance of our business on a variety of key indicators, including non-GAAP metrics of adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, adjusted gross profit, adjusted gross margin, and FCF.
The following is a reconciliation of net cash provided by operating activities, the most directly comparable US GAAP financial measure, to FCF: Three Months Ended March 31, (Dollars in thousands) 2025 2024 Net cash provided by operating activities $5,001 $4,305 Less: Purchase of property and equipment (50) (65)Capitalized costs included in intangible assets (2,469) (2,327)Free cash flow $2,482 $1,913 In order to assist readers of our consolidated financial statements in understanding the operating results that management uses to evaluate the business and for financial planning purposes, we present non-GAAP measures of adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, adjusted gross profit, adjusted gross margin, and FCF as supplemental measures of our operating performance.
The following is a reconciliation of net income, the most directly comparable US GAAP financial measure, to adjusted EBITDA: Three Months Ended March 31, (Dollars in thousands) 2025 2024 Net income $3,440 $1,784 Interest income (308) (365)Income tax expense 1,079 564 Depreciation and amortization 2,550 2,270 Share-based compensation expense 1,596 1,402 Litigation costs 9 27 Write-off of long-lived assets and others 2 7 Adjusted EBITDA $8,368 $5,689 Revenue $22,003 $17,511 Net income margin 16% 10%Adjusted EBITDA margin 38% 32% The following is a reconciliation of net income, the most directly comparable US GAAP financial measure, to adjusted net income: Three Months Ended March 31, (Dollars in thousands, except share data) 2025 2024 Net income $3,440 $1,784 Share-based compensation expense 1,596 1,402 Amortization of share-based compensation capitalized in intangible assets 409 275 Tax effect of adjustments(1) (613) (308)Adjusted net income $4,832 $3,153 Earnings per share: Basic $0.25 $0.13 Diluted $0.24 $0.13 Adjusted earnings per share: Basic $0.35 $0.23 Diluted $0.33 $0.22 Weighted average shares outstanding: Basic 13,998,028 13,997,064 Diluted 14,491,713 14,164,506 (1) The tax effect of adjustments is calculated using the expected federal and state statutory tax rate.
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