VerticalScope Reports Sequential Growth in ARPU and Free Cash Flow for Q3 2025
VerticalScope Holdings, a leading technology company that operates a cloud-based digital platform for online enthusiast communities, today announced its financial results for the third quarter ended September 30, 2025 (“Q3” or “the quarter”).
“Our business took several important steps forward in Q3 as we continued executing on the three core pillars of our long-term strategy—growing our direct audience, expanding new revenue streams, and driving AI-powered platform improvements,” said Chris Goodridge, CEO of VerticalScope. “While traffic from search-based sources remained variable, resulting in 83 million monthly active users (MAU) during the quarter, we saw a strong rebound in October with over 90 million MAU. Encouragingly, all major traffic sources grew in October, particularly direct MAUs, which represent an increasingly valuable share of our audience.”
Goodridge added, “We also made significant progress on monetization in Q3, with ARPU up 21% year-over-year, driven by growth in direct sales and e-commerce activity. Our efforts to diversify revenue beyond traditional advertising are yielding results, underscoring the strength of our community-centric model.”
AI Innovation Driving Engagement and Monetization
According to Goodridge, VerticalScope’s investment in artificial intelligence is becoming a major catalyst for both user engagement and revenue expansion. “AI is unlocking new growth opportunities across our platform by creating additional value for users and opening up new monetization avenues,” he explained.
“One of the best examples is Fora Frank, our new AI-powered community assistant. Fora Frank is helping users find answers, share insights, and connect more effectively within their communities. We’ve already seen meaningful gains in engagement metrics since its introduction. In addition, we are nearing completion of our integration with TollBit’s platform, which we expect will further enhance our ability to surface and capture value from data in the quarters ahead.”
Financial Highlights – Q3 2025
All comparisons below are made against the same period in 2024 unless otherwise noted. Sequential comparisons refer to Q2 2025.
- Revenue: Total revenue for Q3 2025 was $14.7 million, a decrease of 17% year-over-year, primarily due to lower MAU compared to record levels in the prior year. On a sequential basis, revenue increased 1%, reflecting stability in the Company’s core audience base.
- ARPU: Average revenue per user (ARPU) grew 21% year-over-year and 9% sequentially, supported by a 40% increase in e-commerce revenue, a return to growth in both direct and video advertising, and a rising proportion of traffic from direct channels.
- Adjusted EBITDA: Adjusted EBITDA was $6.2 million, down 16% from the prior year, but up 45% sequentially, driven by ongoing cost efficiencies and lower operating expenses recognized during the quarter.
- Margins: Adjusted EBITDA margin expanded 12 percentage points sequentially to 42%, consistent with last year’s strong performance, underscoring continued operational discipline.
- Cash Flow: Operating cash flow totaled $4.7 million, while free cash flow reached $5.9 million, up 56% sequentially. This represents a 94% free cash flow conversion rate, compared to 86% in the prior year.
- Liquidity: The Company ended the quarter with $68.4 million in available liquidity, comprising $12.4 million in unrestricted cash and $56.0 million in undrawn revolver capacity.
- Net Income (Loss): Net loss for the quarter was $0.4 million, or $(0.02) per share, compared to net income of $1.2 million or $0.06 per share in Q3 2024. The decline reflects lower revenue, partially offset by reduced operating and income tax expenses. The net loss includes $4.8 million in non-cash depreciation and amortization expense, up modestly from $4.4 million in the prior year.
