Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended June 30, 2023

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from ________ to ________

Commission File Number 001-35929

National Research Corporation

(Exact name of Registrant as specified in its charter)

Delaware		47-0634000
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

	1245 Q Street, Lincoln, Nebraska 68508
	(Address of principal executive offices) (Zip Code)

	(402) 475-2525
	(Registrant’s telephone number, including area code)

Securities registered pursuant to 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.001 par value	NRC	The NASDAQ stock market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.

Common Stock, $.001 par value, outstanding as of July 27, 2023: 24,567,754

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NATIONAL RESEARCH CORPORATION

FORM 10-Q INDEX

For the Quarter Ended June 30, 2023

			Page No.

PART I.	FINANCIAL INFORMATION

	Item 1.	Financial Statements

		Condensed Consolidated Balance Sheets	3
		Condensed Consolidated Statements of Income	4
		Condensed Consolidated Statements of Comprehensive Income	5
		Condensed Consolidated Statements of Shareholders’ Equity	6-7
		Condensed Consolidated Statements of Cash Flows	8
		Notes to Condensed Consolidated Financial Statements	9-20

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21-26

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27

	Item 4.	Controls and Procedures	27

PART II.	OTHER INFORMATION

	Item 1.	Legal Proceedings	27

	Item 1A.	Risk Factors	27

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28

	Item 5.	Other Information	28

	Item 6.	Exhibits	29

	Signatures		30

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Special Note Regarding Forward-Looking Statements

Certain matters discussed in this Quarterly Report on Form 10-Q are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements can generally be identified as such because the context of the statement includes phrases such as National Research Corporation, doing business as NRC Health (“NRC Health,” the “Company,” “we,” “our,” “us” or similar terms), “believes,” “expects,” “may,” “could,” “anticipates,” “estimates,” “plans,” “intends,” or the use of words such as “would,” “will,” “may,” “could,” “goal,” “focus,” or “should,” or other words of similar import. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. In this Quarterly Report on Form 10-Q, statements regarding the value and utility of, and market demand for, our service offerings, future opportunities for growth with respect to new and existing clients, our future ability to compete and the types of firms with which we will compete, future consolidation in the healthcare industry, future adequacy of our liquidity sources, future revenue sources, future revenue growth, future revenue estimates used to calculate recurring contract value, the expected impact of economic factors, including inflation, future capital expenditures including, without limitation, our headquarters renovation costs, and the timing, amount, and sources of cash to fund such capital expenditures, future stock repurchases and dividends, the expected impact of pending claims and contingencies, the future outcome of uncertain tax positions, our future use of owned and leased real property, the expected impact of the conflict in Ukraine, and the expected impact of the COVID-19 pandemic or other similar outbreak, among others, are forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which could cause actual results or outcomes to differ materially from those currently anticipated. Factors that could affect actual results or outcomes include, without limitation, the following factors:

●	The possibility of non-renewal of our client service contracts, reductions in services purchased or prices, and failure to retain key clients;

●	The likelihood that the COVID-19 or other similar outbreak will adversely affect our operations, sales, earnings, financial condition and liquidity;

●	Our ability to compete in our markets, which are highly competitive with new market entrants, and the possibility of increased price pressure and expenses;

●	The likelihood that the ongoing Russian-Ukraine conflict will adversely affect our operations, sales, earnings, financial condition and liquidity;

●	The effects of an economic downturn;

●	The impact of consolidation in the healthcare industry;

●	The impact of federal healthcare reform legislation or other regulatory changes;

●	Our ability to attract and retain key managers and other personnel;

●	The possibility that our intellectual property and other proprietary information technology could be copied or independently developed by our competitors;

●	The possibility for failures or deficiencies in our information technology platform;

●	The possibility that we or our third-party providers could be subject to cyber-attacks, security breaches or computer viruses; and

●

The factors set forth under the caption “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K, as such section may be updated or supplemented by Part II, Item 1A of our subsequently filed Quarterly Reports on Form 10-Q (including this Report) and various disclosures in our press releases, stockholder reports, and other filings with the Securities and Exchange Commission.

Shareholders, potential investors and other readers are urged to consider these and other factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included are only made as of the date of this Quarterly Report on Form 10-Q and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances, except as required by the federal securities laws.

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PART I – Financial Information

ITEM 1. Financial Statements

NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts and par value)

	June 30, 2023			December 31, 2022
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	22,496		$	25,026
Trade accounts receivable, less allowance for doubtful accounts of $100 and $65, respectively		11,891			14,461
Prepaid expenses		5,554			2,386
Income taxes receivable		212			733
Other current assets		834			1,110
Total current assets		40,987			43,716

Net property and equipment		22,609			17,248
Intangible assets, net		1,541			1,611
Goodwill		61,614			61,614
Deferred contract costs, net		1,944			2,441
Deferred income taxes		8			14
Operating lease right-of-use assets		344			556
Other		4,580			3,261
Total assets	$	133,627		$	130,461

Liabilities and Shareholders’ Equity
Current liabilities:
Current portion of notes payable	$	4,606		$	4,491
Accounts payable		2,152			1,153
Accrued wages and bonuses		4,578			4,551
Accrued expenses		3,720			3,983
Dividends payable		2,949			2,956
Deferred revenue		14,828			15,198
Other current liabilities		903			1,085
Total current liabilities		33,736			33,417

Notes payable, net of current portion and unamortized debt issuance costs		15,358			17,690
Deferred income taxes		4,517			5,274
Other long-term liabilities		2,266			2,047
Total liabilities		55,877			58,428

Shareholders’ equity:
Preferred stock, $0.01 par value, authorized 2,000,000 shares, none issued		-			-
Common stock, $0.001 par value; authorized 110,000,000 shares, issued 30,963,119 in 2023 and 30,922,181 in 2022, outstanding 24,576,092 in 2023 and 24,628,173 in 2022		31			31
Additional paid-in capital		176,646			175,453
Retained earnings (accumulated deficit)		(16,849	)		(25,184	)
Treasury stock, at cost; 6,387,027 and 6,294,008 common stock in 2023 and 2022, respectively		(82,078	)		(78,267	)
Total shareholders’ equity		77,750			72,033
Total liabilities and shareholders’ equity	$	133,627		$	130,461

See accompanying notes to condensed consolidated financial statements

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NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except for per share amounts, unaudited)

	Three months ended June 30,						Six months ended June 30,
	2023			2022			2023			2022

Revenue	$	36,161		$	37,292		$	72,634		$	75,734

Operating expenses:
Direct		13,309			13,758			27,589			28,537
Selling, general and administrative		11,966			10,748			23,750			21,397
Depreciation and amortization		1,521			1,290			2,915			2,606
Total operating expenses		26,796			25,796			54,254			52,540

Operating income		9,365			11,496			18,380			23,194

Other income (expense):
Interest income		273			14			523			19
Interest expense		(192	)		(318	)		(433	)		(635	)
Other, net		(2	)		(128	)		(15	)		(81	)

Total other income (expense)		79			(432	)		75			(697	)

Income before income taxes		9,444			11,064			18,455			22,497

Provision for income taxes		2,171			2,742			4,219			5,636

Net income	$	7,273		$	8,322		$	14,236		$	16,861

Earnings Per Share of Common Stock:
Basic Earnings Per Share	$	0.30		$	0.33		$	0.58		$	0.67
Diluted Earnings Per Share	$	0.29		$	0.33		$	0.58		$	0.67

Weighted average shares and share equivalents outstanding:
Basic		24,578			25,083			24,582			25,166
Diluted		24,716			25,211			24,727			25,300

See accompanying notes to condensed consolidated financial statements

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NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, unaudited)

	Three months ended June 30,					Six months ended June 30,
	2023		2022			2023		2022

Net income	$	7,273	$	8,322		$	14,236	$	16,861
Other comprehensive income (loss):
Foreign currency translation adjustment		--		(99	)		--		(48	)
Other comprehensive income (loss)	$	--	$	(99	)	$	--	$	(48	)

Comprehensive Income	$	7,273	$	8,223		$	14,236	$	16,813

See accompanying notes to condensed consolidated financial statements.

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NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands except share and per share amounts, unaudited)

	Common Stock		Additional Paid-in Capital		Retained Earnings (Deficit)			Treasury Stock			Total
Balances at December 31, 2022	$	31	$	175,453	$	(25,184	)	$	(78,267	)	$	72,033
Purchase of 49,296 shares treasury stock		-		-		-			(1,983	)		(1,983	)
Issuance of 20,938 shares of common stock for the exercise of stock options		-		300		-			-			300
Non-cash stock compensation expense		-		304		-			-			304
Dividends declared of $0.12 per share of common stock		-		-		(2,953	)		-			(2,953	)
Net income		-		-		6,964			-			6,964
Balances at March 31, 2023	$	31	$	176,057	$	(21,173	)	$	(80,250	)	$	74,665
Purchase of 43,723 shares treasury stock		-		-		-			(1,828	)		(1,828	)
Issuance of 20,000 shares of common stock for the exercise of stock options		-		284		-			-			284
Non-cash stock compensation expense		-		305		-			-			305
Dividends declared of $0.12 per share of common stock		-		-		(2,949	)		-			(2,949	)
Net income		-		-		7,273			-			7,273
Balances at June 30, 2023	$	31	$	176,646	$	(16,849	)	$	(82,078	)	$	77,750

See accompanying notes to condensed consolidated financial statements.

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NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands except share and per share amounts, unaudited)

	Common Stock		Additional Paid-in Capital		Retained Earnings (Deficit)			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total
Balances at December 31, 2021	$	31	$	173,942	$	(36,112	)	$	(2,375	)	$	(50,149	)	$	85,337
Purchase of 166,962 shares treasury stock		-		-		-			-			(6,679	)		(6,679	)
Non-cash stock compensation expense		-		285		-			-			-			285
Dividends declared of $0.24 per common share		-		-		(6,047	)		-			-			(6,047	)
Other comprehensive income, foreign currency translation adjustment		-		-		-			51			-			51
Net income		-		-		8,539			-			-			8,539
Balances at March 31, 2022	$	31	$	174,227	$	(33,620	)	$	(2,324	)	$	(56,828	)	$	81,486
Purchase of 427,329 shares treasury stock		-		-		-			-			(15,475	)		(15,475	)
Non-cash stock compensation expense		-		334		-			-			-			334
Dividends declared of $0.24 per common share		-		-		(5,944	)		-			-			(5,944	)
Other comprehensive income (loss), foreign currency translation adjustment		-		-		-			(99	)		-			(99	)
Net income		-		-		8,322			-			-			8,322
Balances at June 30, 2022	$	31	$	174,561	$	(31,242	)	$	(2,423	)	$	(72,303	)	$	68,624

See accompanying notes to condensed consolidated financial statements.

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NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

	Six months ended
	June 30
	2023			2022
Cash flows from operating activities:
Net income	$	14,236		$	16,861
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,915			2,606
Deferred income taxes		(750	)		(1,279	)
Reserve for uncertain tax positions		229			205
Non-cash share-based compensation expense		609			619
Net changes in assets and liabilities:
Trade accounts receivable		2,570			614
Prepaid expenses and other current assets		(3,859	)		(731	)
Deferred contract costs, net		497			605
Operating lease assets and liabilities, net		(64	)		(13	)
Accounts payable		513			139
Accrued expenses, wages and bonuses		(459	)		(718	)
Income taxes receivable and payable		521			918
Deferred revenue		(370	)		(1,715	)
Net cash provided by operating activities		16,588			18,111

Cash flows from investing activities:
Proceeds from sale of equipment		1			-
Purchases of property and equipment		(7,539	)		(3,886	)
Net cash used in investing activities		(7,538	)		(3,886	)

Cash flows from financing activities:
Payments on notes payable		(2,236	)		(2,127	)
Payments on finance lease obligations		(230	)		(242	)
Proceeds from the exercise of share-based awards		584			-
Repurchase of shares for treasury		(3,791	)		(22,154	)
Payment of deferred acquisition consideration		-			(1,950	)
Payment of dividends on common stock		(5,907	)		(9,091	)
Net cash used in financing activities		(11,580	)		(35,564	)

Effect of exchange rate changes on cash and cash equivalents		-			(48	)
Change in cash and cash equivalents		(2,530	)		(21,387	)
Cash and cash equivalents at beginning of period		25,026			54,361
Cash and cash equivalents at end of period	$	22,496		$	32,974

Supplemental disclosure of cash paid for:
Interest expense, net of capitalized amounts	$	647		$	697
Income taxes	$	4,219		$	5,790
Supplemental disclosure of non-cash investing and financing activities:
Purchase of property and equipment in accounts payable and accrued expenses	$	1,777		$	807
Repurchase of shares for treasury in accounts payable and accrued expenses	$	21		$	-

See accompanying notes to condensed consolidated financial statements.

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NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of business and basis of presentation

National Research Corporation, doing business as NRC Health (“NRC Health,” the “Company,” “we,” “our,” “us” or similar terms), is a leading provider of analytics and insights that facilitate measurement and improvement of the patient and employee experience while also increasing patient engagement and customer loyalty for healthcare organizations in the United States. Our purpose is to humanize healthcare and support organizations in their understanding of each person they serve not as point-in-time insights, but as an ongoing relationship. We believe that understanding the story is the key to unlocking the highest-quality and truly personalized care. Our end-to-end solutions enable health care organizations to understand what matters most to each person they serve – before, during, after, and outside of clinical encounters – to gain a longitudinal understanding of how life and health intersect, with the goal of developing lasting, trusting relationships. Our portfolio of solutions represents a unique set of capabilities that individually and collectively provide value to our clients.

Our condensed consolidated balance sheet at December 31, 2022 was derived from our audited consolidated balance sheet as of that date. All other financial statements contained herein are unaudited and, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments) that we consider necessary for a fair presentation of financial position, results of operations and cash flows in accordance with accounting principles generally accepted in the United States.

Information and footnote disclosures included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto that are included in our Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission (the “SEC”) on March 3, 2023.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

The condensed consolidated financial statements include the accounts of the Company and our wholly-owned subsidiary, National Research Corporation Canada. All significant intercompany transactions and balances have been eliminated.

Our Canadian subsidiary uses Canadian dollars as its functional currency. We translate its assets and liabilities into U.S. dollars at the exchange rate in effect at the balance sheet date. We translate its revenue and expenses at the average exchange rate during the period. We included foreign currency translation gains and losses in accumulated other comprehensive income (loss), a component of shareholders’ equity through December 2022. During December 2022, we substantially liquidated our investment in Canada. As a result, we reclassified the cumulative foreign currency translation adjustment balance into earnings in 2022. Currency translation changes after 2022 are recognized in Other income (expense), net in our Condensed Consolidated Statements of Income.

Revenue Recognition

We derive a majority of our revenues from our annually renewable subscription-based service agreements with our customers, which include performance measurement and improvement services, healthcare analytics and governance education services. Such agreements are generally cancelable on short or no notice without penalty. See Note 2 for further information about our contracts with customers. We account for revenue using the following steps:

	●	Identify the contract, or contracts, with a customer;
	●	Identify the performance obligations in the contract;
	●	Determine the transaction price;
	●	Allocate the transaction price to the identified performance obligations; and
	●	Recognize revenue when, or as, we satisfy the performance obligations.

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Our revenue arrangements with a client may include combinations of more than one service offering which may be executed at the same time, or within close proximity of one another. We combine contracts with the same customer into a single contract for accounting purposes when the contract is entered into at or near the same time and the contracts are negotiated together. For contracts that contain more than one separately identifiable performance obligation, the total transaction price is allocated to the identified performance obligations based upon the relative stand-alone selling prices of the performance obligations. The stand-alone selling prices are based on an observable price for services sold to other comparable customers, when available, or an estimated selling price using a cost-plus margin or residual approach. We estimate the amount of total contract consideration we expect to receive for variable arrangements based on the most likely amount we expect to earn from the arrangement based on the expected quantities of services we expect to provide and the contractual pricing based on those quantities. We only include some or a portion of variable consideration in the transaction price when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. We consider the sensitivity of the estimate, our relationship and experience with the client and variable services being performed, the range of possible revenue amounts and the magnitude of the variable consideration to the overall arrangement. Our revenue arrangements do not contain any significant financing element due to the contract terms and the timing between when consideration is received and when the service is provided.

Our arrangements with customers consist principally of four different types of arrangements: 1) subscription-based service agreements; 2) one-time specified services performed at a single point in time; 3) fixed, non-subscription service agreements; and 4) unit-priced service agreements.

Subscription-based services - Services that are provided under subscription-based service agreements are usually for a twelve- month period and represent a single promise to stand ready to provide reporting, tools and services throughout the subscription period as requested by the customer. These agreements are renewable at the option of the customer at the completion of the initial contract term for an agreed upon price increase each year. These agreements represent a series of distinct monthly services that are substantially the same, with the same pattern of transfer to the customer as the customer receives and consumes the benefits throughout the contract period. Accordingly, subscription services are recognized ratably over the subscription period. Subscription services are typically billed either annually or quarterly in advance but may also be billed on a monthly basis.

One-time services – These agreements typically require us to perform a specific one-time service in a particular month. We are entitled to a fixed payment upon completion of the service. Under these arrangements, we recognize revenue at the point in time we complete the service and it is accepted by the customer.

Fixed, non-subscription services – These arrangements typically require us to perform an unspecified amount of services for a fixed price during a fixed period of time. Revenues are recognized over time based upon the costs incurred to date in relation to the total estimated contract costs. In determining cost estimates, management uses historical and forecasted cost information which is based on estimated volumes, external and internal costs and other factors necessary in estimating the total costs over the term of the contract. Changes in estimates are accounted for using a cumulative catch-up adjustment which could impact the amount and timing of revenue for any period.

Unit-price services – These arrangements typically require us to perform certain services on a periodic basis as requested by the customer for a per-unit amount which is typically billed in the month following the performance of the service. Revenue under these arrangements is recognized over the time the services are performed at the per-unit amount.

Revenue is presented net of any sales tax charged to our clients that we are required to remit to taxing authorities. We recognize contract assets or unbilled receivables related to revenue recognized for services completed but not invoiced to the clients. Unbilled receivables are classified as receivables when we have an unconditional right to contract consideration. A contract liability is recognized as deferred revenue when we invoice clients in advance of performing the related services under the terms of a contract. Deferred revenue is recognized as revenue when we have satisfied the related performance obligation.

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Deferred Contract Costs

Deferred contract costs, net is stated at gross deferred costs less accumulated amortization. We defer commissions and incentives, including payroll taxes, and certain implementation costs if they are incremental and recoverable costs of obtaining a renewable customer contract. Deferred contract costs are amortized over the estimated term of the contract, including renewals, which generally ranges from three to five years. The contract term was estimated by considering factors such as historical customer attrition rates and product life. The amortization period is adjusted for significant changes in the estimated remaining term of a contract. An impairment of deferred contract costs is recognized when the unamortized balance of deferred contract costs exceeds the remaining amount of consideration we expect to receive net of the expected future costs directly related to providing those services. We have elected the practical expedient to expense contract costs when incurred for any nonrenewable contracts with a term of one year or less. We deferred incremental costs of obtaining a contract of $70,000 and $108,000 in the three-month periods ended June 30, 2023 and 2022, respectively. We deferred incremental costs of obtaining a contract of $233,000 and $342,000 in the six-month periods ended June 30, 2023 and 2022, respectively. Deferred contract costs, net of accumulated amortization was $1.9 million and $2.4 million at June 30, 2023 and December 31, 2022, respectively. Total amortization by expense classification for the periods ended June 30, 2023 and 2022 was as follows:

	Three months ended June 30, 2023		Three months ended June 30, 2022		Six months ended June 30, 2023		Six months ended June 30, 2022
	(In thousands)
Direct Expenses	$	43	$	35	$	78	$	71
Selling, general and administrative expenses		312		404		638		875
Total amortization	$	355	$	439	$	716	$	946

Additional expense included in selling, general and administrative expenses for impairment of costs capitalized due to lost clients was $7,000 and $400 for the three months ended June 30, 2023 and 2022, respectively and $15,000 and $1,000 in the six-month periods ended June 30, 2023 and 2022, respectively.

Trade Accounts Receivable

Trade accounts receivable are recorded at the invoiced amount. The allowance for doubtful accounts is our best estimate of the amount of probable credit losses in our existing accounts receivable, determined based on our historical write-off experience, current economic conditions and reasonable and supportable forecasts about the future. We review the allowance for doubtful accounts monthly. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

The following table provides the activity in the allowance for doubtful accounts for the six-month periods ended June 30, 2023 and 2022 (In thousands):

	Balance at Beginning of Period		Bad Debt Expense (Benefit)			Write-offs		Recoveries		Balance at End of Period

Six months ended June 30, 2023	$	65	$	113		$	81	$	3	$	100
Six months ended June 30, 2022	$	94	$	(10	)	$	22	$	3	$	65

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Leases

We determine whether a lease is included in an agreement at inception. We recognize a lease liability and a right-of-use (“ROU”) asset on the balance sheet for our operating leases under which we are lessee. Operating lease ROU assets are included in operating lease right-of-use assets in our condensed consolidated balance sheet. Finance lease assets are included in property and equipment. Operating and finance lease liabilities are included in other current liabilities and other long-term liabilities. Certain lease arrangements may include options to extend or terminate the lease. We include these provisions in the ROU asset and lease liabilities only when it is reasonably certain that we will exercise that option. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term and is included in direct expenses and selling, general and administrative expenses. Our lease agreements do not contain any residual value guarantees.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments during the lease term. ROU assets and lease liabilities are recorded at lease commencement based on the estimated present value of lease payments. Because the rate of interest implicit in each lease is not readily determinable, we use our estimated incremental collateralized borrowing rate at lease commencement, to calculate the present value of lease payments. When determining the appropriate incremental borrowing rate, we consider our available credit facilities, recently issued debt and public interest rate information.

Due to remote working arrangements, we reassessed our office needs and subleased our Seattle location under an agreement considered to be an operating lease beginning in May 2021. We have not been legally released from our primary obligations under the original lease and therefore we continue to account for the original lease separately. Rent income from the sublessee is included in the statement of operations on a straight-line basis as an offset to rent expense associated with the original operating lease included in other expenses.

Fair Value Measurements

Our valuation techniques are based on maximizing observable inputs and minimizing the use of unobservable inputs when measuring fair value. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. The inputs are then classified into the following hierarchy: (1) Level 1 Inputs—quoted prices in active markets for identical assets and liabilities; (2) Level 2 Inputs—observable market-based inputs other than Level 1 inputs, such as quoted prices for similar assets or liabilities in active markets, quoted prices for similar or identical assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data; (3) Level 3 Inputs—unobservable inputs.

The following details our financial assets within the fair value hierarchy at June 30, 2023 and December 31, 2022:

	Level 1		Level 2		Level 3		Total
	(In thousands)
As of June 30, 2023
Money Market Funds	$	22,256	$	-	$	-	$	22,256
Total Cash Equivalents	$	22,256	$	-	$	-	$	22,256

As of December 31, 2022
Money Market Funds	$	24,927	$	-	$	-	$	24,927
Total Cash Equivalents	$	24,927	$	-	$	-	$	24,927

There were no transfers between levels during the six months ended June 30, 2023.

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Our long-term debt described in Note 4 is recorded at historical cost. The fair value of long-term debt is classified in Level 2 of the fair value hierarchy and was estimated based primarily on estimated current rates available for debt of the same remaining duration and adjusted for nonperformance and credit. The following are the carrying amount and estimated fair values of long-term debt:

	June 30, 2023		December 31, 2022
	(In thousands)
Total carrying amount of long-term debt	$	20,078	$	22,315
Estimated fair value of long-term debt	$	19,453	$	21,668

The carrying amounts of accounts receivable, accounts payable, and accrued expenses approximate their fair value. All non-financial assets that are not recognized or disclosed at fair value in the financial statements on a recurring basis, which includes ROU assets, property and equipment, goodwill, intangibles and cost method investments, are measured at fair value in certain circumstances (for example, when there is evidence of impairment). As of June 30, 2023 and December 31, 2022, there was no indication of impairment related to these assets.

Annually, we consider whether the recorded goodwill and indefinite lived intangibles have been impaired. However, goodwill and intangibles must be tested between annual tests if an event occurs or circumstances change to indicate that it is more likely than not that an impairment loss has been incurred (“triggering event”).

Commitments and Contingencies

From time to time, we are involved in certain claims and litigation arising in the normal course of business. Management assesses the probability of loss for such contingencies and recognizes a liability when a loss is probable and estimable. Legal fees, net of estimated insurance recoveries, are expensed as incurred. We do not believe the final disposition of claims at June 30, 2023 will have a material adverse effect on our consolidated financial position, results of operations or liquidity.

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CONTRACTS WITH CUSTOMERS

The following table disaggregates revenue for the three- and six-month periods ended June 30, 2023 and 2022 based on timing of revenue recognition (in thousands):

	Three months ended				Six months ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Subscription services recognized ratably over time	$	34,306	$	35,480	$	68,739	$	70,930
Services recognized at a point in time		903		735		2,079		1,916
Fixed, non-subscription recognized over time		742		605		1,397		1,191
Unit price services recognized over time		210		472		419		1,697
Total revenue	$	36,161	$	37,292	$	72,634	$	75,734

The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers (In thousands):

	June 30, 2023		December 31, 2022
Accounts receivables	$	11,891	$	14,461
Contract assets included in other current assets	$	65	$	102
Deferred Revenue	$	14,828	$	15,198

Significant changes in contract assets and contract liabilities during the six-month periods ended June 30, 2023 and 2022 are as follows (in thousands):

	2023						2022
	Contract Asset			Deferred Revenue			Contract Asset			Deferred Revenue
	Increase (Decrease)
Revenue recognized that was included in deferred revenue at beginning of year due to completion of services	$	-		$	(11,375	)	$	-		$	(12,962	)
Increases due to invoicing of client, net of amounts recognized as revenue		-			11,104			-			11,182
Decreases due to completion of services (or portion of services) and transferred to accounts receivable		(81	)		-			(81	)		-
Change due to cumulative catch-up adjustments arising from changes in expected contract consideration		-			(99	)		-			63
Increases due to revenue recognized in the period with additional performance obligations before invoicing		44			-			45			-

We have elected to apply the practical expedient to not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. Total remaining contract revenue for contracts with original duration of greater than one year expected to be recognized in the future related to performance obligations that are unsatisfied at June 30, 2023 approximated $4.5 million of which $1.5 million, $2.1 million, $673,000 and $266,000 are expected to be recognized during 2023, 2024, 2025 and 2026, respectively.

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INCOME TAXES

The effective tax rate for the three-month periods ended June 30, 2023 decreased to 23.0% from 24.8% for the same period in 2022 mainly from increased tax benefits of $132,000 from the exercise of share-based compensation awards. The effective tax rate for the six-month period ended June 30, 2023 decreased to 22.9% compared to 25.1% for the same period in 2022 primarily due to increased tax benefits of $248,000 from the exercise of share-based compensation awards and lower state income taxes of approximately $259,000 which fluctuate based on various apportionment factors and rates for the states we operate in.

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(4)

NOTES PAYABLE

Our long-term debt consists of the following:

	June 30, 2023			December 31, 2022
	(In thousands)
Term Loans	$	20,078		$	22,315
Less: current portion		(4,606	)		(4,491	)
Less: unamortized debt issuance costs		(114	)		(134	)
Notes payable, net of current portion	$	15,358		$	17,690

Our amended and restated credit agreement (the “Credit Agreement”) with First National Bank of Omaha (“FNB”) includes (i) a $30,000,000 revolving credit facility (the “Line of Credit”), (ii) a $23,412,383 term loan (the “Term Loan”) and (iii) a $75,000,000 delayed draw-down term facility (the “Delayed Draw Term Loan” and, together with the Line of Credit and the Term Loan, the “Credit Facilities”). We may use the Delayed Draw Term Loan to fund any permitted future business acquisitions or repurchases of our common stock and the Line of Credit to fund ongoing working capital needs and for other general corporate purposes.

The Term Loan is payable in monthly installments of $462,988 through May 2027. The Term Loan bears interest at a fixed rate per annum of 5%.

Borrowings under the Line of Credit and the Delayed Draw Term Loan, if any, bear interest at a floating rate equal to the 30-day Secured Overnight Financing Rate (“SOFR”) plus 235 basis points (7.40% at June 30, 2023). Interest on the Line of Credit accrues and is payable monthly. Principal amounts outstanding under the Line of Credit are due and payable in full at maturity, in May 2025. As of June 30, 2023, the Line of Credit did not have a balance. There were no borrowings on the Line of Credit during 2023. There have been no borrowings on the Delayed Draw Term Loan since origination.

We are obligated to pay ongoing unused commitment fees quarterly in arrears pursuant to the Line of Credit and the Delayed Draw Term Loan facility at a rate of 0.20% per annum based on the actual daily unused portions of the Line of Credit and the Delayed Draw Term Loan facility, respectively.

The Credit Agreement is collateralized by substantially all of our assets, subject to permitted liens and other agreed exceptions, and contains customary representations, warranties, affirmative and negative covenants (including financial covenants) and events of default. The negative covenants include, among other things, restrictions regarding the incurrence of indebtedness and liens, repurchases of our common stock and acquisitions, subject in each case to certain exceptions. In June 2023, the Credit Agreement was amended to exclude our costs associated with our building renovation from or after January 1, 2023 from the fixed charge coverage ratio calculation. Pursuant to the amended Credit Agreement, we are required to maintain a minimum fixed charge coverage ratio of 1.10x for all testing periods throughout the term(s) of the Credit Facilities, which calculation excludes, unless our liquidity falls below a specified threshold, (i) any cash dividend in a fiscal quarter that, together with all other cash dividends paid or declared during such fiscal quarter, exceeds $5,500,000 in total cash dividends paid or declared, (ii) the portion of the purchase price for any permitted share repurchase of our shares paid with cash on hand, (iii) the portion of any acquisition consideration for a permitted acquisition paid with cash on hand, and (iv) up to $25 million of costs associated with our building renovation from or after January 1, 2023. We are also required to maintain a cash flow leverage ratio of 3.00x or less for all testing periods throughout the term(s) of the Credit Facilities. All obligations under the Credit Facilities are to be guaranteed by each of our direct and indirect wholly owned domestic subsidiaries, if any, and, to the extent required by the Credit Agreement, direct and indirect wholly owned foreign subsidiaries. As of June 30, 2023, we were in compliance with our financial covenants.

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SHARE-BASED COMPENSATION

We measure and recognize compensation expense for all share-based payments based on the grant-date fair value of those awards. All of our existing stock option awards and unvested stock awards have been determined to be equity-classified awards. We account for forfeitures as they occur. We refer to our restricted stock awards as “non-vested” stock in these condensed consolidated financial statements.

Our 2004 Non-Employee Director Stock Plan, as amended (the “2004 Director Plan”), is a nonqualified plan that provides for the granting of options with respect to 3,000,000 shares of our common stock. The 2004 Director Plan provides for grants of nonqualified stock options to each of our directors who we do not employ. On the date of each annual meeting of shareholders, options to purchase shares of common stock equal to an aggregate grant date fair value of $100,000 are granted to each non-employee director that is elected or retained as a director at each such meeting. Stock options vest approximately one year following the date of grant and option terms are generally the earlier of ten years following the date of grant, or three years from the termination of the non-employee director’s service.

Our 2006 Equity Incentive Plan (the “2006 Equity Incentive Plan”), as amended, provides for the granting of stock options, stock appreciation rights, restricted stock, performance shares and other share-based awards and benefits up to an aggregate of 1,800,000 shares of our common stock. Stock options granted may be either incentive stock options or nonqualified stock options. Vesting terms vary with each grant and option terms are generally five to ten years following the date of grant.

During the six-month periods ended June 30, 2023 and 2022, we granted options to purchase 96,359 and 127,227 shares of common stock, respectively. Options to purchase shares of common stock are typically granted with exercise prices equal to the fair value of the common stock on the date of grant. We do, in certain limited situations, grant options with exercise prices that exceed the fair value of the common stock on the date of grant. The fair value of stock options granted was estimated using a Black-Scholes valuation model with the following weighted average assumptions:

	2023			2022
Expected dividend yield at date of grant		2.13	%		3.39	%
Expected stock price volatility		35.12	%		35.52	%
Risk-free interest rate		3.61	%		2.33	%
Expected life of options (in years)		6.9			6.3

The risk-free interest rate assumptions were based on the U.S. Treasury yield curve in effect at the time of the grant. The expected volatility was based on historical monthly price changes of our stock based on the expected life of the options at the date of grant. The expected life of options is the average number of years we estimate that options will be outstanding. We consider groups of associates that have similar historical exercise behavior separately for valuation purposes.

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The following table summarizes stock option activity under the 2006 Equity Incentive Plans and the 2004 Director Plan for the six-month periods ended June 30, 2023:

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Terms (Years)		Aggregate Intrinsic Value (In thousands)
Outstanding at December 31, 2022		581,286	$	32.86
Granted		96,359	$	40.55
Exercised		40,938	$	14.27
Forfeited		-	$	-
Outstanding at June 30, 2023		636,707	$	35.22		5.99	$	6,268
Exercisable at June 30, 2023		392,472	$	30.26		4.61	$	5,704

As of June 30, 2023, the total unrecognized compensation cost related to non-vested stock option awards was approximately $1.9 million which was expected to be recognized over a weighted average period of 2.98 years.

There was $584,000 of cash received from stock options exercised for the six-month period ended June 30, 2023. There were no stock option exercises in the six-month period ended June 30, 2022. We recognized $278,000 and $307,000 of non-cash compensation for three-month periods ended June 30, 2023 and 2022, respectively, and $554,000 and $564,000 of non-cash compensation for the six-month periods ended June 30, 2023 and 2022, respectively, related to options, which is included in selling, general and administrative expenses.

No non-vested shares of common stock were granted under the 2006 Equity Incentive Plan during the six-month periods ended June 30, 2023 and June 30, 2022. As of June 30, 2023, we had 12,698 non-vested shares of common stock outstanding under the 2006 Equity Incentive Plan. These shares vest over five years following the date of grant and holders thereof are entitled to receive dividends from the date of grant, whether or not vested. The fair value of the awards is calculated as the fair market value of the shares on the date of grant. We recognized non-cash compensation of $27,000 for each of the three-month periods ended June 30, 2023 and 2022, respectively, and $54,000 and $54,000 for the six-month periods ended June 30, 2023 and 2022, respectively, related to this non-vested stock, which is included in selling, general and administrative expenses. The following table summarizes information regarding non-vested stock granted to associates under the 2006 Equity Incentive Plan for the six-month period ended June 30, 2023:

	Common Stock Outstanding		Weighted Average Grant Date Fair Value Per Share
Outstanding at December 31, 2022		12,698	$	42.92
Granted		-		-
Vested		-		-
Forfeited		-		-
Outstanding at June 30, 2023		12,698	$	42.92

As of June 30, 2023, the total unrecognized compensation cost related to non-vested stock awards was approximately $273,000 and is expected to be recognized over a weighted average period of 2.5 years.

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GOODWILL AND OTHER INTANGIBLE ASSETS

The following represents the carrying amount of goodwill at June 30, 2023:

Gross

Accumulated

Impairment

Net

(In thousands)

Balance at June 30, 2023

62,328

714

61,614

Intangible assets consisted of the following:

	June 30, 2023			December 31, 2022
	(In thousands)
Non-amortizing intangible assets:
Indefinite trade name	$	1,191		$	1,191
Amortizing intangible assets:
Customer related		9,192			9,192
Technology		1,959			1,959
Trade names		1,572			1,572
Total amortizing intangible assets		12,723			12,723
Accumulated amortization		(12,373	)		(12,303	)
Other intangible assets, net	$	1,541		$	1,611

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PROPERTY AND EQUIPMENT

	June 30, 2023		December 31, 2022
	(In thousands)
Property and equipment	$	58,953	$	50,756
Accumulated depreciation		36,344		33,508
Property and equipment, net	$	22,609	$	17,248

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EARNINGS PER SHARE

Basic net income per share was computed using the weighted-average shares of common stock outstanding during the period.

Diluted net income per share was computed using the weighted-average shares of common stock and, if dilutive, the potential common stock outstanding during the period. Potential shares of common stock consist of the incremental common stock issuable upon the exercise of stock options and vesting of restricted stock. The dilutive effect of outstanding stock options is reflected in diluted earnings per share by application of the treasury stock method.

We had 276,949 and 305,985 options of common stock for the three-month periods ended June 30, 2023 and 2022, respectively, which have been excluded from the diluted net income per share computation because their inclusion would be anti-dilutive. We had 265,673 and 287,655 options of common stock for the six-month periods ended June 30, 2023 and 2022, respectively, which have been excluded from the diluted net income per share computation because their inclusion would be anti-dilutive.

	For the Three Months Ended June 30						For the Six Months Ended June 30
	2023			2022			2023			2022
	(In thousands, except per share data)
Numerator for net income per share – basic:
Net income	$	7,273		$	8,322		$	14,236		$	16,861
Allocation of distributed and undistributed income to unvested restricted stock shareholders		(4	)		(4	)		(7	)		(9	)
Net income attributable to common shareholders		7,269			8,318			14,229			16,852
Denominator for net income per share – basic:
Weighted average common shares outstanding – basic		24,578			25,083			24,582			25,166
Net income per share – basic	$	0.30		$	0.33		$	0.58		$	0.67
Numerator for net income per share – diluted:
Net income attributable to common shareholders for basic computation		7,269			8,318			14,229			16,852
Denominator for net income per share – diluted:
Weighted average common shares outstanding – basic		24,578			25,083			24,582			25,166
Weighted average effect of dilutive securities – stock options		138			128			145			134
Denominator for diluted earnings per share – adjusted weighted average shares		24,716			25,211			24,727			25,300
Net income per share - diluted	$	0.29		$	0.33		$	0.58		$	0.67

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Geographic Information

The tables below present entity-wide information regarding our revenue and assets by geographic area (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Revenue:
United States	$	36,161	$	37,089	$	72,634	$	74,940
Canada		-		203		-		794
Total	$	36,161	$	37,292	$	72,634	$	75,734

	June 30, 2023		December 31, 2022
Long-lived assets:
United States	$	92,632	$	86,718
Canada		8		27
Total	$	92,640	$	86,745

Total assets:
United States	$	133,371	$	130,151
Canada		256		310
Total	$	133,627	$	130,461

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ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our results of operations and financial conditions should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q.

Our purpose is to humanize healthcare and support organizations in their understanding of each unique individual. Our commitment to Human Understanding® helps leading healthcare systems get to know each person they serve not as point-in-time insights, but as an ongoing relationship. Our end-to-end solutions enable our clients to understand what matters most to each person they serve – before, during, after, and beyond clinical encounters – to gain a longitudinal understanding of how life and health intersect, with the goal of developing lasting, trusting relationships. Our ability to measure what matters most and systematically capture, analyze, and deliver insights based on self-reported information from patients, families, and consumers is critical in today’s healthcare market. We believe access to and analysis of our extensive consumer-driven information is increasingly valuable as healthcare providers need to better understand and engage the people they serve to create long-term relationships and build loyalty.

Our portfolio of subscription-based solutions provides actionable information and analysis to healthcare organizations across a range of mission-critical, constituent-related elements, including patient experience, service recovery, care transitions, employee engagement, reputation management, and brand loyalty. We partner with clients across the continuum of healthcare services and believe this cross-continuum positioning is a unique and an increasingly important capability as evolving payment models drive healthcare providers and payers towards a more collaborative and integrated service model.

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Results of Operations

The following tables set forth, for the periods indicated, selected financial information derived from our condensed consolidated financial statements and the percentage change in such items versus the prior comparable period, as well as other key financial metrics. The discussion that follows the information should be read in conjunction with our condensed consolidated financial statements.

Three Months Ended June 30, 2023, Compared to Three Months Ended June 30, 2022

	(In thousands, except percentages) Three Months Ended June 30,						Percentage Increase (Decrease)
	2023			2022			2023 over 2022
Revenue	$	36,161		$	37,292			(3.0	)
Direct expenses		13,309			13,758			(3.3	)
Selling, general, and administrative		11,966			10,748			11.3
Depreciation and amortization		1,521			1,290			17.9
Operating income		9,365			11,496			(18.5	)
Total other income (expense)		79			(432	)		(118.3	)
Provision for income taxes		2,171			2,742			(20.8	)
Effective Tax Rate		23.0	%		24.8	%		(1.8	)

Operating margin		25.9	%		30.8	%		(4.9	)

Revenue. Revenue in the 2023 period decreased compared to the 2022 period with reductions in US revenue of $928,000 and Canadian revenue of $203,000 due to the closure of our Canadian office. US recurring revenue in our existing client base decreased $539,000. US recurring revenue from new customer sales decreased $468,000 and increased for non-recurring revenues of $79,000. We do not expect Canadian revenues in the future due to the closure of the Canadian office.

Direct expenses. Variable expenses increased $399,000 in the 2023 period compared to the 2022 period primarily from higher conference expenses due to changes in volume and type of conferences being held, as well as increased survey contracted services. Variable expenses as a percentage of revenue were 14.4% and 12.9% in the 2023 and 2022 periods, respectively. Fixed expenses decreased $849,000 primarily due to decreased salary and benefit costs from workforce attrition and automation.

Selling, general and administrative expenses. Selling, general and administrative expenses increased in the 2023 period compared to the 2022 period primarily due to growth in marketing initiative expenses of $906,000 to expand brand recognition and support sales development, increased salary and benefit costs of $659,000 in sales and client support partially offset by a reduction in innovation investments of $330,000.

Depreciation and amortization. Depreciation and amortization expenses increased in the 2023 period compared to the 2022 period primarily due to shortening the estimated useful lives of certain building assets and increased software investment amortization.

Operating income and margin. Operating income and margin decreased in the 2023 period compared to the 2022 period primarily due to a decline in revenue and growth in marketing initiatives.

Total other income (expense). Total other income (expense) increased in the 2023 period compared to the 2022 period primarily due to higher interest income of $258,000 from additional money market funds investments, lower interest expense from the declining balance on our term loan of $127,000, and $111,000 difference in revaluation adjustments from changes in the Canadian to U.S. dollar foreign exchange rate.

Provision for income taxes and effective tax rate. Provision for income taxes decreased in the 2023 period compared to the 2022 period primarily due to decreased taxable income. The effective tax rate decreased primarily due to increased tax benefits of $132,000 from the exercise of share-based compensation awards.

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Six Months Ended June 30, 2023, Compared to Six Months Ended June 30, 2022

	(In thousands, except percentages) Six Months Ended June 30,						Percentage Increase (Decrease)
	2023			2022			2023 over 2022
Revenue	$	72,634		$	75,734			(4.1	)
Direct expenses		27,589			28,537			(3.3	)
Selling, general, and administrative		23,750			21,397			11.0
Depreciation and amortization		2,915			2,606			11.9
Operating income		18,380			23,194			(20.8	)
Total other income (expense)		75			(697	)		(110.8	)
Provision for income taxes		4,219			5,636			(25.1	)
Effective Tax Rate		22.9	%		25.1	%		(2.2	)

Operating margin		25.3	%		30.6	%		(5.3	)
Recurring Contact Value	$	146,569		$	147,732			(0.8	)
Cash provided by operating activities		16,588			18,111			(8.4	)

Revenue. Revenue in the 2023 period decreased compared to the 2022 period with reductions in US revenue of $2.3 million and Canadian revenue of $793,000 due to the closure of our Canadian office. US recurring revenue in our existing client base decreased $1.4 million which included $439,000 attributed to elimination of a non-core solution. US recurring revenue from new customer sales decreased $874,000 and increased for non-recurring revenues of $15,000. We do not expect Canadian revenues in the future due to the closure of the Canadian office.

Direct expenses. Variable expenses decreased $149,000 in the 2023 period compared to the 2022 period primarily from lower conference expenses due to changes in volume and type of conferences being held. Variable expenses as a percentage of revenue were 14.3% and 13.9% in the 2023 and 2022 periods, respectively. Fixed expenses decreased $800,000 primarily due to decreased salary and benefit costs from workforce attrition and automation partially offset by contracted services to support our Human Understanding solutions.

Selling, general and administrative expenses. Selling, general and administrative expenses increased in the 2023 period compared to the 2022 period primarily due to growth in marketing initiative expenses of $2.2 million to expand brand recognition and support sales development, increased salary and benefit costs of $1.1 million in sales and client support, increased travel costs of $355,000 partially offset by a reduction in innovation investments of $833,000 and decreased building demolition costs of $548,000 related to the remodel of our headquarters.

Depreciation and amortization. Depreciation and amortization expenses increased in the 2023 period compared to the 2022 period primarily due to additional depreciation expense from shortening the estimated useful lives of certain building assets and increased software investment amortization.

Operating income and margin. Operating income and margin decreased in the 2023 period compared to the 2022 period primarily due to a decline in revenue and growth in marketing initiatives.

Total other income (expense). Total other income (expense) increased in the 2023 period compared to the 2022 period primarily due to higher interest income of $504,000 from additional money market funds investments, lower interest expense from the declining balance on our term loan of $202,000, and $60,000 difference in revaluation adjustments from changes in the Canadian to U.S. dollar foreign exchange rate.

Provision for income taxes and effective tax rate. Provision for income taxes decreased in the 2023 period compared to the 2022 period primarily due to decreased taxable income. The effective tax rate decreased primarily due to increased tax benefits of $248,000 from the exercise of share-based compensation awards and lower state income taxes of approximately $259,000 which fluctuate based on various apportionment factors and rates for the states we operate in.

Recurring Contract Value. Recurring contract value declined in 2023 compared to 2022 primarily from our strategy to focus on our core digital solutions. Our core solution recurring contract value increased slightly compared to the 2022 period. Our recurring contract value metric represents the total revenue projected under all renewable contracts for their respective next annual renewal periods, assuming no upsells, downsells, price increases, or cancellations, measured as of the most recent quarter end.

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Liquidity and Capital Resources

Our Board of Directors has established priorities for capital allocation, which prioritize funding of innovation and growth investments, including merger and acquisition activity as well as internal projects. The secondary priority is capital allocation for quarterly dividends and share repurchases. We believe that our existing sources of liquidity, including cash and cash equivalents, borrowing availability, and operating cash flows will be sufficient to meet our projected capital and debt maturity needs for the foreseeable future.

As of June 30, 2023, our principal sources of liquidity included $22.5 million of cash and cash equivalents, up to $30 million of unused borrowings under our line of credit and up to $75 million on our delayed draw term note. Of this cash, $214,000 was held in Canada. The delayed draw term note can only be used to fund permitted future business acquisitions or repurchasing our common stock.

Our cash flows from operating activities consist of net income adjusted for non-cash items including depreciation and amortization, deferred income taxes, share-based compensation and related taxes, reserve for uncertain tax positions and the effect of working capital changes. Cash provided by operating activities decreased mainly due to decreased net income net of non-cash items. Cash provided by operating activities also decreased due to working capital changes, mainly consisting of changes in prepaid expenses and other current assets primarily due to the timing of our annual business insurance payment and other annual service agreements, partially offset by changes in trade accounts receivable and deferred revenue primarily due to timing of initial billings on new and renewal contracts.

See the Condensed Consolidated Statements of Cash Flows included in this report for the detail of our operating cash flows.

We had a working capital surplus of $7.3 million and $10.3 million on June 30, 2023 and December 31, 2022, respectively. The change was primarily due to decreases in cash and cash equivalents, trade accounts receivable and income taxes receivable and increases in accounts payable, partially offset by increases in prepaid expenses. Cash and cash equivalents decreased mainly due to timing of payments of annual service agreements and repurchase of shares of our common stock for treasury. Income taxes receivable, accounts payable and prepaid expenses fluctuated due to the timing of payments. Our working capital is significantly impacted by our large deferred revenue balances which will vary based on the timing and frequency of billings on annual agreements.

Cash used in investing activities primarily consisted of purchases of property and equipment including computer software and hardware, building improvements and furniture and equipment.

Cash used in financing activities consisted of payments for borrowings under the term note and finance lease obligations. We also used cash to repurchase shares of our common stock for treasury and to pay dividends on common stock. This was partially offset by cash provided from the proceeds from the exercise of share-based awards.

Our material cash requirements include the following contractual and other obligations:

Dividends

Cash dividends of $5.9 million were paid in the six months ended June 30, 2023. Dividends of $2.9 million were declared in the three months ended June 30, 2023 and paid in July 2023. The dividends were paid from cash on hand. Our board of directors considers whether to declare a dividend and the amount of any dividends declared on a quarterly basis.

Capital Expenditures

We paid cash of $7.5 million for capital expenditures in the six months ended June 30, 2023. These expenditures consisted mainly of computer software development for our Human Understanding solutions and building renovations to our headquarters. We estimate future costs related to our headquarters building renovations to be $9.1 million and $8.2 million in 2023 and 2024, respectively, which we expect to fund through operating cash flows.

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Debt

Our amended and restated credit agreement (the “Credit Agreement”) with First National Bank of Omaha (“FNB”) includes (i) a $30,000,000 revolving credit facility (the “Line of Credit”), (ii) a $23,412,383 term loan (the “Term Loan”) and (iii) a $75,000,000 delayed draw-down term facility (the “Delayed Draw Term Loan” and, together with the Line of Credit and the Term Loan, the “Credit Facilities”). We may use the Delayed Draw Term Loan to fund any permitted future business acquisitions or repurchases of our common stock and the Line of Credit to fund ongoing working capital needs and for other general corporate purposes.

The Term Loan has an outstanding balance of $20.1 million and is payable in monthly installments of $462,988 through May 2027. The Term Loan bears interest at a fixed rate per annum of 5%.

Borrowings under the Line of Credit and the Delayed Draw Term Loan, if any, bear interest at a floating rate equal to the 30-day Secured Overnight Financing Rate (“SOFR”) plus 235 basis points (7.40% at June 30, 2023). Interest on the Line of Credit accrues and is payable monthly. Principal amounts outstanding under the Line of Credit are due and payable in full at maturity, in May 2025. As of June 30, 2023, the Line of Credit did not have a balance. There were no borrowings on the Line of Credit during 2023. There have been no borrowings on the Delayed Draw Term Loan since origination.

The Credit Agreement is collateralized by substantially all of our assets, subject to permitted liens and other agreed exceptions, and contains customary representations, warranties, affirmative and negative covenants (including financial covenants) and events of default. The negative covenants include, among other things, restrictions regarding the incurrence of indebtedness and liens, repurchases of our common stock and acquisitions, subject in each case to certain exceptions. In June 2023, the Credit Agreement was amended to exclude our costs associated with our building renovation from or after January 1, 2023 from the fixed charge coverage ratio calculation. Pursuant to the amended Credit Agreement, we are required to maintain a minimum fixed charge coverage ratio of 1.10x for all testing periods throughout the term(s) of the Credit Facilities, which calculation excludes, unless our liquidity falls below a specified threshold, (i) any cash dividend in a fiscal quarter that, together with all other cash dividends paid or declared during such fiscal quarter, exceeds $5,500,000 in total cash dividends paid or declared, (ii) the portion of the purchase price for any permitted share repurchase of our shares paid with cash on hand, (iii) the portion of any acquisition consideration for a permitted acquisition paid with cash on hand, and (iv) up to $25 million of costs associated with our building renovation from or after January 1, 2023 . We are also required to maintain a cash flow leverage ratio of 3.00x or less for all testing periods throughout the term(s) of the Credit Facilities. All obligations under the Credit Facilities are to be guaranteed by each of our direct and indirect wholly owned domestic subsidiaries, if any, and, to the extent required by the Credit Agreement, direct and indirect wholly owned foreign subsidiaries. As of June 30, 2023, we were in compliance with our financial covenants.

The Credit Facilities are secured, subject to permitted liens and other agreed upon exceptions, by a first-priority lien on and perfected security interest in substantially all of our and our guarantors’ present and future assets (including, without limitation, fee-owned real property, and limited, in the case of the equity interests of foreign subsidiaries, to 65% of the outstanding equity interests of such subsidiaries).

Leases

We have lease arrangements for certain computer, office, printing and inserting equipment as well as office and data center space. As of June 30, 2023, we had fixed lease payments of $383,000 and $97,000 for operating and finance leases, respectively payable within 12 months.

Taxes

The liability for gross unrecognized tax benefits related to uncertain tax positions was $1.8 million as of June 30, 2023. See Note 3, "Income Taxes", to the Condensed Consolidated Financial Statements contained in this report for income tax related information.

As of June 30, 2023, the balance of the deemed repatriation tax payable imposed by the U.S. Tax Cuts and Jobs Act of 2017 was $11,000, which we expect to pay in early 2024. Withholding tax of $72,000 was paid in the six-month period ended June 30, 2023, due to the deemed dividend and return of capital processed in 2022.

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Stock Repurchase Program

In May 2022, our Board of Directors authorized the repurchase of 2,500,000 shares of common stock (the “2022 Program”). Under the 2022 Program we are authorized to repurchase from time-to-time shares of our outstanding common stock on the open market or in privately negotiated transactions. The timing and amount of stock repurchases will depend on a variety of factors, including market conditions as well as corporate and regulatory considerations. The 2022 Program may be suspended, modified, or discontinued at any time and we have no obligation to repurchase any amount of common stock in connection with the 2022 Program. The 2022 Program has no set expiration date.

During the three months ended June 30, 2023, we repurchased 43,723 shares of our common stock under the 2022 Program for an aggregate of $1.8 million. As of June 30, 2023, the remaining number of shares of common stock that could be purchased under the 2022 Program was 1,831,425 shares.

Critical Accounting Estimates

There have been no changes to our critical accounting estimates described in the Annual Report on Form 10-K for the year ended December 31, 2022 that have a material impact on our Condensed Consolidated Financial Statements and the related Notes.

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ITEM 3.

Quantitative and Qualitative Disclosures about Market Risk

There are no material changes to the disclosures regarding our market risk exposures made in its Annual Report on Form 10-K for the year ended December 31, 2022.

ITEM 4.

Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report, and our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures were effective.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Accordingly, even effective internal control over financial reporting can only provide reasonable assurance of achieving its control objectives.

We have confidence in our internal controls and procedures. Nevertheless, our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure procedures and controls or our internal controls will prevent all errors or intentional fraud. An internal control system, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of such internal controls are met. Further, the design of an internal control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. As a result of the inherent limitations in all internal control systems, no evaluation of controls can provide absolute assurance that all our control issues and instances of fraud, if any, have been detected.

There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) that occurred during the quarter ended June 30, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – Other Information

ITEM 1.

Legal Proceedings

From time to time, we are involved in certain claims and litigation arising in the normal course of business. Management assesses the probability of loss for such contingencies and recognizes a liability when a loss is probable and estimable. For additional information, see Note 1, under the heading “Commitments and Contingencies,” to our condensed consolidated financial statements. Regardless of the final outcome, any legal proceedings, claims, inquiries and investigations, however, can impose a significant burden on management and employees, may include costly defense and settlement costs, and could cause harm to our reputation and brand, and other factors.

ITEM 1A.

Risk Factors

The significant risk factors known to us that could materially adversely affect our business, financial condition, or operating results are described in Part I, Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations and in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022.

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ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

In May 2022 our Board of Directors authorized the 2022 Program.

Our Credit Agreement provides that, in order for us to pay dividends or repurchase our common stock, there must be no default or event of default existing or that would result from such payment and we must show that we would comply with the Credit Agreement’s fixed charge coverage ratio and consolidated cash flow leverage ratio after giving pro forma effect to such payment.

The table below summarizes repurchases of common stock during the three months ended June 30, 2023.

Period	Total Number of Shares Purchased		Average Price Paid per Share (1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2)		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs

Apr 1 – Apr 30, 2023		-		-		-		1,875,148
May 1 – May 31, 2023		43,723		39.81		43,723		1,831,425
Jun 1 – Jun 30, 2023		-		-		-		1,831,425
Total		43,723				43,723

(1)	The average price paid per share excludes excise tax incurred on stock repurchases. For the quarter ended June 30, 2023, excise tax expense totaled $9,000.
(2)	Shares were repurchased pursuant to the 2022 Program.

ITEM 5.

Other Information

During the second quarter of 2023, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement.

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ITEM 6.

Exhibits

The exhibits listed in the exhibit index below are filed as part of this Quarterly Report on Form 10-Q.

EXHIBIT INDEX

Exhibit Number	Exhibit Description

(3.1)	Certificate of Incorporation of National Research Corporation, effective June 30, 2021 [Incorporated by reference to Exhibit 3.3 to National Research Corporation’s Current Report on Form 8-K dated June 29, 2021, and filed on July 2, 2021 (File No. 001-35929)]

(3.2)	Bylaws of National Research Corporation, as amended to date [Incorporated by reference to Exhibit 3.4 to National Research Corporation’s Current Report on Form 8-K dated June 29, 2021 and filed on July 2, 2021 (File No. 001-35929)]

(4.1)	Certificate of Incorporation of National Research Corporation, effective June 30, 2021 [Incorporated by reference to Exhibit 3.3 to National Research Corporation’s Current Report on Form 8-K dated June 29, 2021, and filed on July 2, 2021 (File No. 001-35929)]

(4.2)	Bylaws of National Research Corporation, as amended to date [Incorporated by reference to Exhibit 3.4 to National Research Corporation’s Current Report on Form 8-K dated June 29, 2021 and filed on July 2, 2021 (File No. 001-35929)]

(10.1)**	Second Amendment to Amended and Restated Credit Agreement between National Research Corporation and First National Bank of Omaha dated June 16, 2023

(31.1)**	Certification by the Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934

(31.2)**	Certification by the Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934

(32)***	Written Statement of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350

(101) **	Financial statements from the Quarterly Report on Form 10-Q of National Research Corporation for the quarter ended June 30, 2023, formatted in Inline eXtensible Business Reporting Language (iXBRL): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Cash Flows, (v) the Notes to Condensed Consolidated Financial Statements, and (vi) document and entity information.

(104) **	Cover Page Interactive Data File (formatted in the Inline XBRL and contained in Exhibit 101).

** Filed herewith

***Furnished herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	NATIONAL RESEARCH CORPORATION


Date: August 4, 2023	By:	/s/ Michael D. Hays
		Michael D. Hays
		Chief Executive Officer (Principal Executive Officer)



Date: August 4, 2023	By:	/s/ Kevin R. Karas
		Kevin R. Karas Senior Vice President Finance, Treasurer, Secretary and Chief Financial Officer (Principal Financial and Accounting Officer)

Exhibit 10.1

SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT

THIS SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”) is made and entered into as of June 16, 2023, by and between NATIONAL RESEARCH CORPORATION, a Delaware corporation (“Borrower”), and FIRST NATIONAL BANK OF OMAHA, a national banking association (“Lender”).

R E C I T A L S:

A. Borrower and Lender previously entered into that certain Amended and Restated Credit Agreement dated as of May 28, 2020, as amended by that certain First Amendment thereto dated as of September 30, 2022 (as the same may be amended, restated or otherwise modified from time to time, the “Credit Agreement”); and

B. The parties desire to amend the Credit Agreement as set forth in this Amendment.

NOW, THEREFORE, in consideration of the mutual covenants and agreements, terms and conditions hereinafter set forth, the parties hereby agree as follows:

1. Definitions. All capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement.

2. Amendments. Pursuant to Section 12.12 of the Credit Agreement, the Credit Agreement is hereby amended as follows:

(a) A new Section 9.15 is hereby added to the Credit Agreement as follows:

9.15. Maximum Capital Expenditures. Borrower will not permit Capital Expenditures paid or incurred by Borrower in connection with the Renovation Project to exceed an aggregate amount of $25,000,000.00 from or after January 1, 2023, to be tested by Lender quarterly based on the financial statements provided for in Section 8.01(a) and (b).

(b) Section 11 of the Credit Agreement is hereby amended by amending and restating the definition of “Consolidated Fixed Charge Coverage Ratio” in its entirety as follows:

“Consolidated Fixed Charge Coverage Ratio” shall mean the ratio of (a) (i) Consolidated EBITDA for a period minus (ii) unfinanced Capital Expenditures for such period (excluding unfinanced Capital Expenditures for (A) Permitted Acquisitions, unless otherwise required to be included pursuant to Section 9.08 and (B) the Renovation Project to the extent unfinanced Capital Expenditures were paid or incurred in connection with the Renovation Project on or after January 1, 2023) minus (iii) tax expenses paid in cash for such period minus (iv) Dividends (excluding Dividends which are (A) Permitted Share Repurchases or (B) Special Dividends, unless (in each case of (A) or (B)) otherwise required to be included pursuant to Section 9.08) for such period to (b) the sum of (i) Consolidated Interest Expense paid in cash for such period plus (ii) scheduled principal amortization payments or redemptions (as initially scheduled on the incurrence of such debt and excluding optional prepayments thereof) on Indebtedness required to be paid in cash for such period (other than “balloon” payments made at maturity of purchase money debt or Capitalized Lease Obligations to the extent financed with the proceeds of Indebtedness refinanced as permitted under this Agreement or the disposition of capital assets secured by funded Indebtedness), and (iii) Capitalized Lease Obligations payments for such period.

(c) Section 11 of the Credit Agreement is hereby amended by adding the following definition in the appropriate alphabetical order:

“Renovation Project” means the renovation of Borrower’s Real Property located at 1245 Q Street, Lincoln, Nebraska, including the construction of additions, alterations or repairs to such Real Property and additions, replacements or refurbishment of any furniture, fixtures or equipment at such Real Property, all as more fully described in the plans and specifications approved by Lender in connection with such renovation.

3. No Further Amendments. Except as expressly provided herein, nothing contained herein is intended to reduce, restrict or otherwise affect any warranties, representations, covenants or other agreements made by Borrower. Except as expressly provided herein, this Amendment is not intended to supersede or amend the Credit Agreement or any other Credit Document. All of the covenants and obligations of Borrower under the Credit Documents are hereby acknowledged, ratified and affirmed by Borrower, and Borrower specifically acknowledges and agrees that all Collateral pledged to Lender secures the Obligations.

4. Representations and Warranties. Borrower hereby represents and warrants to Lender as follows:

(a) The representations and warranties contained in the Credit Agreement and the other Credit Documents are true and correct on and as of the date hereof as though made on and as of this date, except to the extent that such representations and warranties relate solely to an earlier date;

(b) There is no Default or Event of Default;

(c) The execution, delivery and performance by Borrower of this Amendment and all other agreements and documents required hereunder have been duly authorized by all necessary action and do not and will not: (i) result in any breach of or constitute a default under any indenture, loan or credit agreement or any other agreement, lease or instrument to which Borrower is a party or by which it or its properties may be bound or affected; or (ii) result in, or require, for the benefit of any person or entity other than Lender, the creation or imposition of any mortgage, deed of trust, pledge, lien, security interest or other charge or encumbrance of any nature upon or with respect to any of the properties now owned or hereafter acquired by Borrower; and

(d) No authorization, approval or other action by and notice to or filing with any governmental authority or regulatory body or any other Person is required for the execution, delivery and performance by Borrower of this Amendment.

5. Conditions Precedent. As conditions precedent to the enforceability of this Amendment, Lender shall have received from Borrower or otherwise confirmed to its satisfaction, all of the following, each in form and substance satisfactory to Lender:

(a) This Amendment, executed by Borrower;

(b) Such other commercially reasonable documents, instruments or agreements from Borrower or any other Person as may be reasonably requested by Lender; and

(c) Borrower shall have paid all reasonable attorney costs and fees incurred by Lender in connection this Amendment and the Credit Documents.

6. No Waiver. This Amendment is not intended to supersede or amend the Credit Agreement or any documents executed in connection therewith except as specifically set forth herein and Borrower acknowledges that no course of dealing between Borrower and Lender, through the date hereof, has resulted in any modification to the terms of the Credit Documents and no course of dealing from and after the date hereof will modify the terms of the Credit Documents. Except as provided herein, nothing contained herein is intended to reduce, restrict or otherwise affect any warranties, representations, covenants or other agreements made by Borrower or waive any existing Events of Default, if any, under or pursuant to the Credit Documents. All of the covenants and obligations of Borrower under the Credit Documents are hereby acknowledged, ratified and affirmed by Borrower, and Borrower specifically acknowledges and agrees that all Collateral pledged to Lender secures the Obligations.

7. No Default; Release of Lender. Borrower hereby acknowledges that at the time of the execution of this Amendment, Borrower is not aware of any Lender default under the Credit Documents, and Borrower hereby remises, releases and forever discharges Lender and each of Lender’s present, future and former officers, directors and employees (collectively, “Releasees”) from any and all claims, losses, liabilities, damages and causes of action of any kind whatsoever, if any, whether absolute or contingent, matured or unmatured, that Borrower may now have or ever have had, in whatever capacity, against Lender arising in connection with the Credit Documents, except for the duties and obligations of the Releasees under this Amendment and the other Credit Documents arising from and after the date hereof.

8 Credit Agreement in Writing. A CREDIT AGREEMENT MUST BE IN WRITING TO BE ENFORCEABLE UNDER CERTAIN STATE LAWS. TO PROTECT YOU AND US FROM ANY MISUNDERSTANDINGS OR DISAPPOINTMENTS, ANY CONTRACT, PROMISE, UNDERTAKING OR OFFER TO FOREBEAR REPAYMENT OF MONEY OR TO MAKE ANY OTHER FINANCIAL ACCOMMODATION IN CONNECTION WITH THIS LOAN OF MONEY OR GRANT OR EXTENSION OF CREDIT, OR ANY AMENDMENT OF, CANCELLATION OF, WAIVER OF, OR SUBSTITUTION FOR ANY OR ALL OF THE TERMS OR PROVISIONS OF ANY INSTRUMENT OR DOCUMENT EXECUTED IN CONNECTION WITH THIS LOAN OF MONEY OR GRANT OR EXTENSION OF CREDIT, MUST BE IN WRITING TO BE EFFECTIVE.

9. Counterparts. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. An electronic transmission or facsimile of this Amendment shall be deemed an original and shall be admissible as evidence of the document and the signer’s execution.

[The Remainder of This Page Intentionally Left Blank; Signature Page Follows.]

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first above written.

		BORROWER:

		NATIONAL RESEARCH CORPORATION


	By:	/s/ Kevin R. Karas
	Name:	Kevin R. Karas
	Title:	Senior Vice President Finance, Chief Financial Officer, Treasurer and Secretary


		LENDER:

		FIRST NATIONAL BANK OF OMAHA


	By:	/s/ Mark Ostronic
	Name:	Mark Ostronic
	Title:	First National Bank of Omaha

Exhibit 31.1

Certification of Chief Executive Officer

Pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934

I, Michael D. Hays, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of National Research Corporation;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 4, 2023

/s/ Michael D. Hays

Michael D. Hays

Chief Executive Officer

Exhibit 31.2

Certification of Chief Financial Officer

Pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934

I, Kevin R. Karas, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of National Research Corporation;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(a)

(b)

(c)

(d)

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 4, 2023

/s/ Kevin R. Karas

Kevin R. Karas

Chief Financial Officer

Exhibit 32

Certification Pursuant to 18 U.S.C. Section 1350
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the accompanying Quarterly Report on Form 10-Q of National Research Corporation (the “Company”) for the three-month period ended June 30, 2023 (the “Report”), I, Michael D. Hays, Chief Executive Officer of the Company, and I, Kevin R. Karas, Chief Financial Officer, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, based on my knowledge, that:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/s/ Michael D. Hays
	Michael D. Hays Chief Executive Officer


	/s/ Kevin R. Karas
	Kevin R. Karas Chief Financial Officer

	Date: August 4, 2023

A signed original of this written statement required by Section 906 has been provided to National Research Corporation and will be retained by National Research Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

Document And Entity Information - shares	6 Months Ended
Document And Entity Information - shares	Jun. 30, 2023	Jul. 27, 2023
Document Information [Line Items]
Entity Central Index Key	0000070487
Entity Registrant Name	National Research Corporation
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2023
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	001-35929
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	47-0634000
Entity Address, Address Line One	1245 Q Street
Entity Address, City or Town	Lincoln
Entity Address, State or Province	NE
Entity Address, Postal Zip Code	68508
City Area Code	402
Local Phone Number	475-2525
Title of 12(b) Security	Common Stock, $.001 par value
Trading Symbol	NRC
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		24,567,754

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 22,496	$ 25,026
Trade accounts receivable, less allowance for doubtful accounts of $100 and $65, respectively	11,891	14,461
Prepaid expenses	5,554	2,386
Income taxes receivable	212	733
Other current assets	834	1,110
Total current assets	40,987	43,716
Net property and equipment	22,609	17,248
Intangible assets, net	1,541	1,611
Goodwill	61,614	61,614
Deferred contract costs, net	1,944	2,441
Deferred income taxes	8	14
Operating lease right-of-use assets	344	556
Other	4,580	3,261
Total assets	133,627	130,461
Current liabilities:
Current portion of notes payable	4,606	4,491
Accounts payable	2,152	1,153
Accrued wages and bonuses	4,578	4,551
Accrued expenses	3,720	3,983
Dividends payable	2,949	2,956
Deferred revenue	14,828	15,198
Other current liabilities	903	1,085
Total current liabilities	33,736	33,417
Notes payable, net of current portion and unamortized debt issuance costs	15,358	17,690
Deferred income taxes	4,517	5,274
Other long-term liabilities	2,266	2,047
Total liabilities	55,877	58,428
Shareholders’ equity:
Preferred stock, $0.01 par value, authorized 2,000,000 shares, none issued	0	0
Common stock, $0.001 par value; authorized 110,000,000 shares, issued 30,963,119 in 2023 and 30,922,181 in 2022, outstanding 24,576,092 in 2023 and 24,628,173 in 2022	31	31
Additional paid-in capital	176,646	175,453
Retained earnings (accumulated deficit)	(16,849)	(25,184)
Treasury stock, at cost; 6,387,027 and 6,294,008 common stock in 2023 and 2022, respectively	(82,078)	(78,267)
Total shareholders’ equity	77,750	72,033
Total liabilities and shareholders’ equity	$ 133,627	$ 130,461

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Allowance for doubtful accounts	$ 100	$ 65
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	2,000,000	2,000,000
Preferred stock, shares issued (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	110,000,000	110,000,000
Common stock, shares issued (in shares)	30,943,119	30,922,181
Common stock, shares outstanding (in shares)	24,567,092	24,628,173
Treasury Stock, Common, Shares (in shares)	6,387,027	6,294,008

Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenue	$ 36,161	$ 37,292	$ 72,634	$ 75,734
Operating expenses:
Direct	13,309	13,758	27,589	28,537
Selling, general and administrative	11,966	10,748	23,750	21,397
Depreciation and amortization	1,521	1,290	2,915	2,606
Total operating expenses	26,796	25,796	54,254	52,540
Operating income	9,365	11,496	18,380	23,194
Other income (expense):
Interest income	273	14	523	19
Interest expense	(192)	(318)	(433)	(635)
Other, net	(2)	(128)	(15)	(81)
Total other income (expense)	79	(432)	75	(697)
Income before income taxes	9,444	11,064	18,455	22,497
Provision for income taxes	2,171	2,742	4,219	5,636
Net income	$ 7,273	$ 8,322	$ 14,236	$ 16,861
Earnings Per Share of Common Stock:
Basic Earnings Per Share (in dollars per share)	$ 0.30	$ 0.33	$ 0.58	$ 0.67
Diluted Earnings Per Share (in dollars per share)	$ 0.29	$ 0.33	$ 0.58	$ 0.67
Weighted average shares and share equivalents outstanding:
Basic (in shares)	24,578	25,083	24,582	25,166
Diluted (in shares)	24,716	25,211	24,727	25,300

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Net income	$ 7,273	$ 8,322	$ 14,236	$ 16,861
Other comprehensive income (loss):
Foreign currency translation adjustment		(99)		(48)
Other comprehensive income (loss)		(99)		(48)
Comprehensive Income	$ 7,273	$ 8,223	$ 14,236	$ 16,813

Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Treasury Stock, Common [Member]	Total
Balances at Dec. 31, 2021	$ 31	$ 173,942	$ (36,112)	$ (2,375)	$ (50,149)	$ 85,337
Purchase of shares treasury stock	0	0	0	0	(6,679)	(6,679)
Non-cash stock compensation expense	0	285	0	0	0	285
Dividends declared of $0.12 per share of common stock	0	0	(6,047)	0	0	(6,047)
Net income	0	0	8,539	0	0	8,539
Other comprehensive income, foreign currency translation adjustment	0	0	0	51	0	51
Balances at Mar. 31, 2022	31	174,227	(33,620)	(2,324)	(56,828)	81,486
Balances at Dec. 31, 2021	31	173,942	(36,112)	(2,375)	(50,149)	85,337
Net income						16,861
Other comprehensive income, foreign currency translation adjustment						(48)
Balances at Jun. 30, 2022	31	174,561	(31,242)	(2,423)	(72,303)	68,624
Balances at Mar. 31, 2022	31	174,227	(33,620)	(2,324)	(56,828)	81,486
Purchase of shares treasury stock	0	0	0	0	(15,475)	(15,475)
Non-cash stock compensation expense	0	334	0	0	0	334
Dividends declared of $0.12 per share of common stock	0	0	(5,944)	0	0	(5,944)
Net income	0	0	8,322	0	0	8,322
Other comprehensive income, foreign currency translation adjustment	0	0	0	(99)	0	(99)
Balances at Jun. 30, 2022	31	174,561	(31,242)	$ (2,423)	(72,303)	68,624
Balances at Dec. 31, 2022	31	175,453	(25,184)		(78,267)	72,033
Purchase of shares treasury stock	0	0	0		(1,983)	(1,983)
Issuance of 20,938 shares of common stock for the exercise of stock options	0	300	0		0	300
Non-cash stock compensation expense	0	304	0		0	304
Dividends declared of $0.12 per share of common stock	0	0	(2,953)		0	(2,953)
Net income	0	0	6,964		0	6,964
Balances at Mar. 31, 2023	31	176,057	(21,173)		(80,250)	74,665
Balances at Dec. 31, 2022	31	175,453	(25,184)		(78,267)	72,033
Net income						14,236
Balances at Jun. 30, 2023	31	176,646	(16,849)		(82,078)	77,750
Balances at Mar. 31, 2023	31	176,057	(21,173)		(80,250)	74,665
Purchase of shares treasury stock	0	0	0		(1,828)	(1,828)
Issuance of 20,938 shares of common stock for the exercise of stock options	0	284	0		0	284
Non-cash stock compensation expense	0	305	0		0	305
Dividends declared of $0.12 per share of common stock	0	0	(2,949)		0	(2,949)
Net income	0	0	7,273		0	7,273
Balances at Jun. 30, 2023	$ 31	$ 176,646	$ (16,849)		$ (82,078)	$ 77,750

Condensed Consolidated Statements of Shareholders' Equity (Unaudited) (Parentheticals) - $ / shares	3 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022
Purchase of shares of treasury stock (in shares)	43,723	49,296	427,329	166,962
Shares of common stock for the exercise of stock options (in shares)	20,000	20,938
Dividends declared per common share (in dollars per share)	$ 0.12	$ 0.12	$ 0.24	$ 0.24

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash flows from operating activities:
Net income	$ 14,236,000	$ 16,861,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	2,915,000	2,606,000
Deferred income taxes	(750,000)	(1,279,000)
Reserve for uncertain tax positions	229,000	205,000
Non-cash share-based compensation expense	609,000	619,000
Net changes in assets and liabilities:
Trade accounts receivable	2,570,000	614,000
Prepaid expenses and other current assets	(3,859,000)	(731,000)
Deferred contract costs, net	497,000	605,000
Operating lease assets and liabilities, net	(64,000)	(13,000)
Accounts payable	513,000	139,000
Accrued expenses, wages and bonuses	(459,000)	(718,000)
Income taxes receivable and payable	521,000	918,000
Deferred revenue	(370,000)	(1,715,000)
Net cash provided by operating activities	16,588,000	18,111,000
Cash flows from investing activities:
Proceeds from sale of equipment	1,000	0
Purchases of property and equipment	(7,539,000)	(3,886,000)
Net cash used in investing activities	(7,538,000)	(3,886,000)
Cash flows from financing activities:
Payments on notes payable	(2,236,000)	(2,127,000)
Payments on finance lease obligations	(230,000)	(242,000)
Proceeds from the exercise of share-based awards	584,000	0
Repurchase of shares for treasury	(3,791,000)	(22,154,000)
Payment of deferred acquisition consideration	0	(1,950,000)
Payment of dividends on common stock	(5,907,000)	(9,091,000)
Net cash used in financing activities	(11,580,000)	(35,564,000)
Effect of exchange rate changes on cash and cash equivalents	0	(48,000)
Change in cash and cash equivalents	(2,530,000)	(21,387,000)
Cash and cash equivalents at beginning of period	25,026,000	54,361,000
Cash and cash equivalents at end of period	22,496,000	32,974,000
Supplemental disclosure of cash paid for:
Interest expense, net of capitalized amounts	647,000	697,000
Income taxes	4,219,000	5,790,000
Supplemental disclosure of non-cash investing and financing activities:
Purchase of property and equipment in accounts payable and accrued expenses	1,777,000	807,000
Repurchase of shares for treasury in accounts payable and accrued expenses	$ 21,000	$ 0

Note 1 - Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Significant Accounting Policies [Text Block]

(1)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of business and basis of presentation

Revenue Recognition

	●	Identify the contract, or contracts, with a customer;
	●	Identify the performance obligations in the contract;
	●	Determine the transaction price;
	●	Allocate the transaction price to the identified performance obligations; and
	●	Recognize revenue when, or as, we satisfy the performance obligations.

Deferred Contract Costs

	Three months ended June 30, 2023		Three months ended June 30, 2022		Six months ended June 30, 2023		Six months ended June 30, 2022
	(In thousands)
Direct Expenses	$	43	$	35	$	78	$	71
Selling, general and administrative expenses		312		404		638		875
Total amortization	$	355	$	439	$	716	$	946

Trade Accounts Receivable

The following table provides the activity in the allowance for doubtful accounts for the six-month periods ended June 30, 2023 and 2022 (In thousands):

	Balance at Beginning of Period		Bad Debt Expense (Benefit)			Write-offs		Recoveries		Balance at End of Period

Six months ended June 30, 2023	$	65	$	113		$	81	$	3	$	100
Six months ended June 30, 2022	$	94	$	(10	)	$	22	$	3	$	65

Leases

Fair Value Measurements

The following details our financial assets within the fair value hierarchy at June 30, 2023 and December 31, 2022:

	Level 1		Level 2		Level 3		Total
	(In thousands)
As of June 30, 2023
Money Market Funds	$	22,256	$	-	$	-	$	22,256
Total Cash Equivalents	$	22,256	$	-	$	-	$	22,256

As of December 31, 2022
Money Market Funds	$	24,927	$	-	$	-	$	24,927
Total Cash Equivalents	$	24,927	$	-	$	-	$	24,927

There were no transfers between levels during the six months ended June 30, 2023.

	June 30, 2023		December 31, 2022
	(In thousands)
Total carrying amount of long-term debt	$	20,078	$	22,315
Estimated fair value of long-term debt	$	19,453	$	21,668

Note 2 - Contracts With Customers

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

(2)

CONTRACTS WITH CUSTOMERS

The following table disaggregates revenue for the three- and six-month periods ended June 30, 2023 and 2022 based on timing of revenue recognition (in thousands):

	Three months ended				Six months ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Subscription services recognized ratably over time	$	34,306	$	35,480	$	68,739	$	70,930
Services recognized at a point in time		903		735		2,079		1,916
Fixed, non-subscription recognized over time		742		605		1,397		1,191
Unit price services recognized over time		210		472		419		1,697
Total revenue	$	36,161	$	37,292	$	72,634	$	75,734

The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers (In thousands):

	June 30, 2023		December 31, 2022
Accounts receivables	$	11,891	$	14,461
Contract assets included in other current assets	$	65	$	102
Deferred Revenue	$	14,828	$	15,198

Significant changes in contract assets and contract liabilities during the six-month periods ended June 30, 2023 and 2022 are as follows (in thousands):

	2023						2022
	Contract Asset			Deferred Revenue			Contract Asset			Deferred Revenue
	Increase (Decrease)
Revenue recognized that was included in deferred revenue at beginning of year due to completion of services	$	-		$	(11,375	)	$	-		$	(12,962	)
Increases due to invoicing of client, net of amounts recognized as revenue		-			11,104			-			11,182
Decreases due to completion of services (or portion of services) and transferred to accounts receivable		(81	)		-			(81	)		-
Change due to cumulative catch-up adjustments arising from changes in expected contract consideration		-			(99	)		-			63
Increases due to revenue recognized in the period with additional performance obligations before invoicing		44			-			45			-

Note 3 - Income Taxes

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Income Tax Disclosure [Text Block]

(3)

INCOME TAXES

Note 4 - Notes Payable

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Debt Disclosure [Text Block]

(4)

NOTES PAYABLE

Our long-term debt consists of the following:

	June 30, 2023			December 31, 2022
	(In thousands)
Term Loans	$	20,078		$	22,315
Less: current portion		(4,606	)		(4,491	)
Less: unamortized debt issuance costs		(114	)		(134	)
Notes payable, net of current portion	$	15,358		$	17,690

The Term Loan is payable in monthly installments of $462,988 through May 2027. The Term Loan bears interest at a fixed rate per annum of 5%.

Note 5 - Share-based Compensation

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

(5)

SHARE-BASED COMPENSATION

	2023			2022
Expected dividend yield at date of grant		2.13	%		3.39	%
Expected stock price volatility		35.12	%		35.52	%
Risk-free interest rate		3.61	%		2.33	%
Expected life of options (in years)		6.9			6.3

The following table summarizes stock option activity under the 2006 Equity Incentive Plans and the 2004 Director Plan for the six-month periods ended June 30, 2023:

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Terms (Years)		Aggregate Intrinsic Value (In thousands)
Outstanding at December 31, 2022		581,286	$	32.86
Granted		96,359	$	40.55
Exercised		40,938	$	14.27
Forfeited		-	$	-
Outstanding at June 30, 2023		636,707	$	35.22		5.99	$	6,268
Exercisable at June 30, 2023		392,472	$	30.26		4.61	$	5,704

	Common Stock Outstanding		Weighted Average Grant Date Fair Value Per Share
Outstanding at December 31, 2022		12,698	$	42.92
Granted		-		-
Vested		-		-
Forfeited		-		-
Outstanding at June 30, 2023		12,698	$	42.92

Note 6 - Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

(6)

GOODWILL AND OTHER INTANGIBLE ASSETS

The following represents the carrying amount of goodwill at June 30, 2023:

Gross

Accumulated

Impairment

Net

(In thousands)

Balance at June 30, 2023

62,328

714

61,614

Intangible assets consisted of the following:

	June 30, 2023			December 31, 2022
	(In thousands)
Non-amortizing intangible assets:
Indefinite trade name	$	1,191		$	1,191
Amortizing intangible assets:
Customer related		9,192			9,192
Technology		1,959			1,959
Trade names		1,572			1,572
Total amortizing intangible assets		12,723			12,723
Accumulated amortization		(12,373	)		(12,303	)
Other intangible assets, net	$	1,541		$	1,611

Note 7 - Property and Equipment

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

(7)

PROPERTY AND EQUIPMENT

	June 30, 2023		December 31, 2022
	(In thousands)
Property and equipment	$	58,953	$	50,756
Accumulated depreciation		36,344		33,508
Property and equipment, net	$	22,609	$	17,248

Note 8 - Earnings Per Share

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Earnings Per Share [Text Block]

(8)

EARNINGS PER SHARE

Basic net income per share was computed using the weighted-average shares of common stock outstanding during the period.

	For the Three Months Ended June 30						For the Six Months Ended June 30
	2023			2022			2023			2022
	(In thousands, except per share data)
Numerator for net income per share – basic:
Net income	$	7,273		$	8,322		$	14,236		$	16,861
Allocation of distributed and undistributed income to unvested restricted stock shareholders		(4	)		(4	)		(7	)		(9	)
Net income attributable to common shareholders		7,269			8,318			14,229			16,852
Denominator for net income per share – basic:
Weighted average common shares outstanding – basic		24,578			25,083			24,582			25,166
Net income per share – basic	$	0.30		$	0.33		$	0.58		$	0.67
Numerator for net income per share – diluted:
Net income attributable to common shareholders for basic computation		7,269			8,318			14,229			16,852
Denominator for net income per share – diluted:
Weighted average common shares outstanding – basic		24,578			25,083			24,582			25,166
Weighted average effect of dilutive securities – stock options		138			128			145			134
Denominator for diluted earnings per share – adjusted weighted average shares		24,716			25,211			24,727			25,300
Net income per share - diluted	$	0.29		$	0.33		$	0.58		$	0.67

Note 10 - Geographic Information

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

(10)

Geographic Information

The tables below present entity-wide information regarding our revenue and assets by geographic area (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Revenue:
United States	$	36,161	$	37,089	$	72,634	$	74,940
Canada		-		203		-		794
Total	$	36,161	$	37,292	$	72,634	$	75,734

	June 30, 2023		December 31, 2022
Long-lived assets:
United States	$	92,632	$	86,718
Canada		8		27
Total	$	92,640	$	86,745

Total assets:
United States	$	133,371	$	130,151
Canada		256		310
Total	$	133,627	$	130,461

Item 5 - Other Information

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Issuer Rule 10b5-1, Material Terms [Text Block]

ITEM 5.

Other Information

During the second quarter of 2023, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement.

Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Revenue [Policy Text Block]

Revenue Recognition

	●	Identify the contract, or contracts, with a customer;
	●	Identify the performance obligations in the contract;
	●	Determine the transaction price;
	●	Allocate the transaction price to the identified performance obligations; and
	●	Recognize revenue when, or as, we satisfy the performance obligations.

Deferred Charges, Policy [Policy Text Block]

Deferred Contract Costs

	Three months ended June 30, 2023		Three months ended June 30, 2022		Six months ended June 30, 2023		Six months ended June 30, 2022
	(In thousands)
Direct Expenses	$	43	$	35	$	78	$	71
Selling, general and administrative expenses		312		404		638		875
Total amortization	$	355	$	439	$	716	$	946

Accounts Receivable [Policy Text Block]

Trade Accounts Receivable

The following table provides the activity in the allowance for doubtful accounts for the six-month periods ended June 30, 2023 and 2022 (In thousands):

	Balance at Beginning of Period		Bad Debt Expense (Benefit)			Write-offs		Recoveries		Balance at End of Period

Six months ended June 30, 2023	$	65	$	113		$	81	$	3	$	100
Six months ended June 30, 2022	$	94	$	(10	)	$	22	$	3	$	65

Lessee, Leases [Policy Text Block]

Leases

Fair Value Measurement, Policy [Policy Text Block]

Fair Value Measurements

The following details our financial assets within the fair value hierarchy at June 30, 2023 and December 31, 2022:

	Level 1		Level 2		Level 3		Total
	(In thousands)
As of June 30, 2023
Money Market Funds	$	22,256	$	-	$	-	$	22,256
Total Cash Equivalents	$	22,256	$	-	$	-	$	22,256

As of December 31, 2022
Money Market Funds	$	24,927	$	-	$	-	$	24,927
Total Cash Equivalents	$	24,927	$	-	$	-	$	24,927

There were no transfers between levels during the six months ended June 30, 2023.

	June 30, 2023		December 31, 2022
	(In thousands)
Total carrying amount of long-term debt	$	20,078	$	22,315
Estimated fair value of long-term debt	$	19,453	$	21,668

Commitments and Contingencies, Policy [Policy Text Block]

Note 1 - Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2023

Notes Tables

Amortization of Capitalized Contract Cost [Table Text Block]

	Three months ended June 30, 2023		Three months ended June 30, 2022		Six months ended June 30, 2023		Six months ended June 30, 2022
	(In thousands)
Direct Expenses	$	43	$	35	$	78	$	71
Selling, general and administrative expenses		312		404		638		875
Total amortization	$	355	$	439	$	716	$	946

Financing Receivable, Allowance for Credit Loss [Table Text Block]

	Balance at Beginning of Period		Bad Debt Expense (Benefit)			Write-offs		Recoveries		Balance at End of Period

Six months ended June 30, 2023	$	65	$	113		$	81	$	3	$	100
Six months ended June 30, 2022	$	94	$	(10	)	$	22	$	3	$	65

Fair Value, by Balance Sheet Grouping [Table Text Block]

	Level 1		Level 2		Level 3		Total
	(In thousands)
As of June 30, 2023
Money Market Funds	$	22,256	$	-	$	-	$	22,256
Total Cash Equivalents	$	22,256	$	-	$	-	$	22,256

As of December 31, 2022
Money Market Funds	$	24,927	$	-	$	-	$	24,927
Total Cash Equivalents	$	24,927	$	-	$	-	$	24,927

	June 30, 2023		December 31, 2022
	(In thousands)
Total carrying amount of long-term debt	$	20,078	$	22,315
Estimated fair value of long-term debt	$	19,453	$	21,668

Note 2 - Contracts With Customers (Tables)

6 Months Ended

Jun. 30, 2023

Notes Tables

Disaggregation of Revenue [Table Text Block]

	Three months ended				Six months ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Subscription services recognized ratably over time	$	34,306	$	35,480	$	68,739	$	70,930
Services recognized at a point in time		903		735		2,079		1,916
Fixed, non-subscription recognized over time		742		605		1,397		1,191
Unit price services recognized over time		210		472		419		1,697
Total revenue	$	36,161	$	37,292	$	72,634	$	75,734

Contract with Customer, Contract Asset, Contract Liability, and Receivable [Table Text Block]

	June 30, 2023		December 31, 2022
Accounts receivables	$	11,891	$	14,461
Contract assets included in other current assets	$	65	$	102
Deferred Revenue	$	14,828	$	15,198

	2023						2022
	Contract Asset			Deferred Revenue			Contract Asset			Deferred Revenue
	Increase (Decrease)
Revenue recognized that was included in deferred revenue at beginning of year due to completion of services	$	-		$	(11,375	)	$	-		$	(12,962	)
Increases due to invoicing of client, net of amounts recognized as revenue		-			11,104			-			11,182
Decreases due to completion of services (or portion of services) and transferred to accounts receivable		(81	)		-			(81	)		-
Change due to cumulative catch-up adjustments arising from changes in expected contract consideration		-			(99	)		-			63
Increases due to revenue recognized in the period with additional performance obligations before invoicing		44			-			45			-

Note 4 - Notes Payable (Tables)

6 Months Ended

Jun. 30, 2023

Notes Tables

Schedule of Debt [Table Text Block]

	June 30, 2023			December 31, 2022
	(In thousands)
Term Loans	$	20,078		$	22,315
Less: current portion		(4,606	)		(4,491	)
Less: unamortized debt issuance costs		(114	)		(134	)
Notes payable, net of current portion	$	15,358		$	17,690

Note 5 - Share-based Compensation (Tables)

6 Months Ended

Jun. 30, 2023

Notes Tables

Schedule of Share-Based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	2023			2022
Expected dividend yield at date of grant		2.13	%		3.39	%
Expected stock price volatility		35.12	%		35.52	%
Risk-free interest rate		3.61	%		2.33	%
Expected life of options (in years)		6.9			6.3

Share-Based Payment Arrangement, Activity [Table Text Block]

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Terms (Years)		Aggregate Intrinsic Value (In thousands)
Outstanding at December 31, 2022		581,286	$	32.86
Granted		96,359	$	40.55
Exercised		40,938	$	14.27
Forfeited		-	$	-
Outstanding at June 30, 2023		636,707	$	35.22		5.99	$	6,268
Exercisable at June 30, 2023		392,472	$	30.26		4.61	$	5,704

Schedule of Nonvested Share Activity [Table Text Block]

	Common Stock Outstanding		Weighted Average Grant Date Fair Value Per Share
Outstanding at December 31, 2022		12,698	$	42.92
Granted		-		-
Vested		-		-
Forfeited		-		-
Outstanding at June 30, 2023		12,698	$	42.92

Note 6 - Goodwill and Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2023

Notes Tables

Schedule of Intangible Assets and Goodwill [Table Text Block]

Gross

Accumulated

Impairment

Net

(In thousands)

Balance at June 30, 2023

62,328

714

61,614

	June 30, 2023			December 31, 2022
	(In thousands)
Non-amortizing intangible assets:
Indefinite trade name	$	1,191		$	1,191
Amortizing intangible assets:
Customer related		9,192			9,192
Technology		1,959			1,959
Trade names		1,572			1,572
Total amortizing intangible assets		12,723			12,723
Accumulated amortization		(12,373	)		(12,303	)
Other intangible assets, net	$	1,541		$	1,611

Note 7 - Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2023

Notes Tables

Property, Plant and Equipment [Table Text Block]

	June 30, 2023		December 31, 2022
	(In thousands)
Property and equipment	$	58,953	$	50,756
Accumulated depreciation		36,344		33,508
Property and equipment, net	$	22,609	$	17,248

Note 8 - Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2023

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	For the Three Months Ended June 30						For the Six Months Ended June 30
	2023			2022			2023			2022
	(In thousands, except per share data)
Numerator for net income per share – basic:
Net income	$	7,273		$	8,322		$	14,236		$	16,861
Allocation of distributed and undistributed income to unvested restricted stock shareholders		(4	)		(4	)		(7	)		(9	)
Net income attributable to common shareholders		7,269			8,318			14,229			16,852
Denominator for net income per share – basic:
Weighted average common shares outstanding – basic		24,578			25,083			24,582			25,166
Net income per share – basic	$	0.30		$	0.33		$	0.58		$	0.67
Numerator for net income per share – diluted:
Net income attributable to common shareholders for basic computation		7,269			8,318			14,229			16,852
Denominator for net income per share – diluted:
Weighted average common shares outstanding – basic		24,578			25,083			24,582			25,166
Weighted average effect of dilutive securities – stock options		138			128			145			134
Denominator for diluted earnings per share – adjusted weighted average shares		24,716			25,211			24,727			25,300
Net income per share - diluted	$	0.29		$	0.33		$	0.58		$	0.67

Note 10 - Geographic Information (Tables)

6 Months Ended

Jun. 30, 2023

Notes Tables

Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Table Text Block]

	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Revenue:
United States	$	36,161	$	37,089	$	72,634	$	74,940
Canada		-		203		-		794
Total	$	36,161	$	37,292	$	72,634	$	75,734

	June 30, 2023		December 31, 2022
Long-lived assets:
United States	$	92,632	$	86,718
Canada		8		27
Total	$	92,640	$	86,745

Total assets:
United States	$	133,371	$	130,151
Canada		256		310
Total	$	133,627	$	130,461

Note 1 - Summary of Significant Accounting Policies (Details Textual) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Incremental Costs of Obtaining a Contract, Deferred During Period	$ 70,000	$ 108,000	$ 233,000	$ 342,000
Capitalized Contract Cost, Net, Noncurrent	1,944,000		1,944,000		$ 2,441,000
Capitalized Contract Cost, Impairment Loss	$ 7,000	$ 400	15,000	$ 1,000
Asset Impairment Charges, Total			$ 0		$ 0
Minimum [Member]
Capitalized Contract Cost, Amortization Period (Year)					3 years
Maximum [Member]
Capitalized Contract Cost, Amortization Period (Year)					5 years

Note 1 - Summary of Significant Accounting Policies - Amortization Expense Classification (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Capitalized contract cost	$ 355	$ 439	$ 716	$ 946
Direct Expenses [Member]
Capitalized contract cost	43	35	78	71
Selling, General and Administrative Expenses [Member]
Capitalized contract cost	$ 312	$ 404	$ 638	$ 875

Note 1 - Summary of Significant Accounting Policies - Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Balance	$ 65	$ 94
Bad debt expense	113	(10)
Write-offs	81	22
Recoveries	3	3
Balance	$ 100	$ 65

Note 1 - Summary of Significant Accounting Policies - Fair Value of Financial Assets and Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Total carrying amount of long-term debt	$ 20,078	$ 22,315
Estimated fair value of long-term debt	19,453	21,668
Fair Value, Recurring [Member]
Assets, fair value	22,256	24,927
Money Market Funds [Member] \| Fair Value, Recurring [Member]
Assets, fair value	22,256	24,927
Fair Value, Inputs, Level 1 [Member] \| Fair Value, Recurring [Member]
Assets, fair value	22,256	24,927
Fair Value, Inputs, Level 1 [Member] \| Money Market Funds [Member] \| Fair Value, Recurring [Member]
Assets, fair value	$ 22,256	$ 24,927

Note 2 - Contracts With Customers 1 (Details Textual) $ in Millions	Jun. 30, 2023 USD ($)
Long-Term Contract with Customer [Member]
Revenue, Remaining Performance Obligation, Amount	$ 4.5

Note 2 - Contracts With Customers 2 (Details Textual) - Long-Term Contract with Customer [Member]	Jun. 30, 2023 USD ($)
Revenue, Remaining Performance Obligation, Amount	$ 4,500,000
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01
Revenue, Remaining Performance Obligation, Amount	$ 1,500,000
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Year)	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01
Revenue, Remaining Performance Obligation, Amount	$ 2,100,000
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Year)	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01
Revenue, Remaining Performance Obligation, Amount	$ 673,000
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Year)	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01
Revenue, Remaining Performance Obligation, Amount	$ 266,000
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Year)	1 year

Note 2 - Contracts With Customers - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenue	$ 36,161	$ 37,292	$ 72,634	$ 75,734
Transferred over Time [Member] \| Subscription Services [Member]
Revenue	34,306	35,480	68,739	70,930
Transferred over Time [Member] \| Fixed, Non-subscription Services [Member]
Revenue	742	605	1,397	1,191
Transferred over Time [Member] \| Unit Price Services [Member]
Revenue	210	472	419	1,697
Transferred at Point in Time [Member] \| Service [Member]
Revenue	$ 903	$ 735	$ 2,079	$ 1,916

Note 2 - Contracts With Customers - Information About Receivables, Contract Assets, and Contract Liabilities From Contracts With Customers (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Accounts receivables	$ 11,891		$ 14,461
Deferred Revenue	14,828		15,198
Revenue recognized that was included in deferred revenue at beginning of year due to completion of services	(11,375)	$ (12,962)
Increases due to invoicing of client, net of amounts recognized as revenue	11,104	11,182
Decreases due to completion of services (or portion of services) and transferred to accounts receivable	(81)	(81)
Change due to cumulative catch-up adjustments arising from changes in expected contract consideration	(99)	63
Increases due to revenue recognized in the period with additional performance obligations before invoicing	44	$ 45
Other Current Assets [Member]
Contract assets included in other current assets	$ 65		$ 102

Note 3 - Income Taxes (Details Textual) - USD ($)	3 Months Ended		6 Months Ended
Note 3 - Income Taxes (Details Textual) - USD ($)	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Effective Income Tax Rate Reconciliation, Percent	23.00%	24.80%	22.90%	25.10%
Effective Income Tax Rate Change, Share-based Compensation	$ 132,000		$ 248,000
Income Tax Reconciliation, State Tax Changes				$ (259,000)

Note 4 - Notes Payable (Details Textual) - Credit Agreement [Member] - First National Bank of Omaha [Member]		3 Months Ended	6 Months Ended
	Jan. 01, 2023 USD ($)	Mar. 31, 2023	Jun. 30, 2023 USD ($)
Debt Instrument, Covenant, Minimum Fixed Charge Coverage Ratio			1.10
Debt Instrument, Covenant, Exception, Fixed Charge Coverage Ratio, Dividend Threshold			$ 5,500,000
Debt Instrument, Covenant, Maximum Cash Flow Leverage Ratio		3.00
Maximum [Member]
Debt Instrument, Covenant, Maximum Costs Associated with Building	$ 25,000,000
Secured Overnight Financing Rate (SOFR) [Member]
Debt Instrument, Basis Spread on Variable Rate			2.35%
Debt Instrument, Percentage Bearing Variable Interest, Percentage Rate			7.40%
Term Loan [Member]
Debt Instrument, Face Amount			$ 23,412,383
Debt Instrument, Periodic Payment, Total			$ 462,988
Debt Instrument, Interest Rate, Stated Percentage			5.00%
Delayed Draw Term Loan [Member]
Line of Credit Facility, Maximum Borrowing Capacity			$ 75,000,000
Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity			30,000,000
Long-Term Line of Credit, Total			$ 0
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage			0.20%

Note 4 - Notes Payable - Summary of Notes Payable (Details) - Term Loan [Member] - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Term Loans	$ 20,078	$ 22,315
Less: current portion	(4,606)	(4,491)
Less: unamortized debt issuance costs	(114)	(134)
Notes payable, net of current portion	$ 15,358	$ 17,690

Note 5 - Share-based Compensation (Details Textual) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Proceeds from Stock Options Exercised			$ 584,000	$ 0
Common Stock Options [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Gross (in shares)			96,359	127,227
Share-Based Payment Arrangement, Expense	$ 278,000	$ 307,000	$ 554,000	$ 564,000
Share-Based Payment Arrangement, Option [Member]
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount	1,900,000		$ 1,900,000
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)			2 years 11 months 23 days
Nonvested [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year)			5 years
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount	273,000		$ 273,000
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)			2 years 6 months
Nonvested [Member] \| Selling, General and Administrative Expenses [Member]
Share-Based Payment Arrangement, Expense	$ 27,000	$ 27,000	$ 54,000	$ 54,000
Director Plan 2004 [Member] \| Nonqualified Stock Options [Member] \| Director [Member]
Share Based Compensation, Arrangement By Share Based Payment Award, Options Grant, Amount			$ 100,000
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year)			1 year
Director Plan 2004 [Member] \| Nonqualified Stock Options [Member] \| Director [Member] \| Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period (Year)			10 years
Director Plan 2004 [Member] \| Nonqualified Stock Options [Member] \| Director [Member] \| Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period (Year)			3 years
Director Plan 2004 [Member] \| Common Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in shares)	3,000,000		3,000,000
The 2006 Equity Incentive Plan [Member] \| Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period (Year)			10 years
The 2006 Equity Incentive Plan [Member] \| Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period (Year)			5 years
The 2006 Equity Incentive Plan [Member] \| Nonvested [Member]
Stock Issued During Period, Shares, Restricted Stock Award, Gross (in shares)			0	0
Share-based Compensation Arrangement by Share-based Payment Award, Nonvested Restricted Stock, Outstanding Number (in shares)	12,698		12,698
The 2006 Equity Incentive Plan [Member] \| Common Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in shares)	1,800,000		1,800,000

Note 5 - Share-based Compensation - Stock Options Valuation Assumptions (Details) - Common Stock [Member]	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Expected dividend yield at date of grant	2.13%	3.39%
Expected stock price volatility	35.12%	35.52%
Risk-free interest rate	3.61%	2.33%
Expected life of options (in years) (Year)	6 years 10 months 24 days	6 years 3 months 18 days

Note 5 - Share-based Compensation - Stock Option Activity Under Equity Incentive Plans and Director Plan (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2023	Jun. 30, 2022
Exercised, number of options (in shares)	20,000	20,938
Common Stock Options [Member]
Beginning balance, outstanding, number of options (in shares)		581,286	581,286
Beginning balance, outstanding, weighted average exercise price (in dollars per share)		$ 32.86	$ 32.86
Granted, number of options (in shares)			96,359	127,227
Granted, weighted average exercise price (in dollars per share)			$ 40.55
Exercised, number of options (in shares)			40,938
Exercised, weighted average exercise price (in dollars per share)			$ 14.27
Ending balance, outstanding, number of options (in shares)	636,707		636,707
Ending balance, outstanding, weighted average exercise price (in dollars per share)	$ 35.22		$ 35.22
Outstanding, weighted average remaining contractual term (Year)			5 years 11 months 26 days
Outstanding, aggregate intrinsic value	$ 6,268		$ 6,268
Exercisable, number of options (in shares)	392,472		392,472
Weighted average exercise price (in dollars per share)	$ 30.26		$ 30.26
Exercisable, weighted average remaining contractual term (Year)			4 years 7 months 9 days
Exercisable, aggregate intrinsic value	$ 5,704		$ 5,704

Note 5 - Share-based Compensation - Non-vested Stock (Details) - Common Stock [Member]	6 Months Ended
	Jun. 30, 2023 $ / shares shares
Outstanding (in shares) \| shares	12,698
Outstanding (in dollars per share) \| $ / shares	$ 42.92
Granted (in shares) \| shares	0
Granted (in dollars per share) \| $ / shares	$ 0
Vested (in shares) \| shares	0
Vested (in dollars per share) \| $ / shares	$ 0
Forfeited (in shares) \| shares	0
Forfeited (in dollars per share) \| $ / shares	$ 0
Outstanding (in shares) \| shares	12,698
Outstanding (in dollars per share) \| $ / shares	$ 42.92

Note 6 - Goodwill and Intangible Assets - Summary of Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Goodwill, gross	$ 62,328
Goodwill, Accumulated Depreciation	714
Goodwill	61,614	$ 61,614
Amortizing intangible assets	12,723	12,723
Accumulated amortization	(12,373)	(12,303)
Other intangible assets, net	1,541	1,611
Customer Relationships [Member]
Amortizing intangible assets	9,192	9,192
Technology-Based Intangible Assets [Member]
Amortizing intangible assets	1,959	1,959
Trade Names [Member]
Amortizing intangible assets	1,572	1,572
Trade Names 1 [Member]
Indefinite trade name	$ 1,191	$ 1,191

Note 7 - Property and Equipment - Summary of Property and Equipment (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Property and equipment	$ 58,953	$ 50,756
Accumulated depreciation	36,344	33,508
Property and equipment, net	$ 22,609	$ 17,248

Note 8 - Earnings Per Share (Details Textual) - shares	3 Months Ended		6 Months Ended
Note 8 - Earnings Per Share (Details Textual) - shares	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)	276,949	305,985	265,673	287,655

Note 8 - Earnings Per Share - Net Income Per Share Computation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022
Net income	$ 7,273	$ 6,964	$ 8,322	$ 8,539	$ 14,236	$ 16,861
Allocation of distributed and undistributed income to unvested restricted stock shareholders	(4)		(4)		(7)	(9)
Net income attributable to common shareholders	$ 7,269		$ 8,318		$ 14,229	$ 16,852
Basic (in shares)	24,578		25,083		24,582	25,166
Net income per share – basic (in dollars per share)	$ 0.30		$ 0.33		$ 0.58	$ 0.67
Net income attributable to common shareholders for basic computation	$ 7,269		$ 8,318		$ 14,229	$ 16,852
Weighted average common shares outstanding – basic (in shares)	24,578		25,083		24,582	25,166
Weighted average effect of dilutive securities – stock options (in shares)	138		128		145	134
Denominator for diluted earnings per share – adjusted weighted average shares (in shares)	24,716		25,211		24,727	25,300
Net income per share - diluted (in dollars per share)	$ 0.29		$ 0.33		$ 0.58	$ 0.67

Note 10 - Geographic Information - Assets by Geographic Area (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Revenue	$ 36,161	$ 37,292	$ 72,634	$ 75,734
Long-lived assets	92,640		92,640		$ 86,745
Total assets	133,627		133,627		130,461
UNITED STATES
Revenue	36,161	37,089	72,634	74,940
Long-lived assets	92,632		92,632		86,718
Total assets	133,371		133,371		130,151
CANADA
Revenue	0	$ 203	0	$ 794
Long-lived assets	8		8		27
Total assets	$ 256		$ 256		$ 310