(Adds National Bank commentary in the second and third paragraphs)

VerticalScope (FORA.TO) late on Tuesday revised its financial outlook for 2025 and provided a business update.

National Bank on Wednesday morning noted that VerticalScope had reported its Q4 2024 results on March 12 and outlined bullish 2025 guidance on its March 13 call, despite an initial flat MAU anticipated in Q1. Last night, the bank also noted, besides reflecting on a "very murky" macro economic outlook of late, the company highlighted unfolding challenges in recent weeks which impacted video advertising and traffic trends in Q1 which are likely to continue through the year while management works to rectify the problems.

National Bank noted VerticalScop now expects Adj. EBITDA in the range of $21M-$24M (consensus estimate $32M) and Free Cash Flow of $20M-$22M (FCF conversion of at least 85%). The bank said Street estimates and targets need to be "materially" revised. National Bank has updated its forecast and pushed its estimates toward the lower end of new outlook ranges. Given added risk beyond macro considerations, the bank added +10 bps to beta in its DCF. Its reduced target is based on average of 2025E DCF and 2026E NAV, with implied EV/EBITDA 7.4x 2025E and 6.2x 2026E.

Overnight Verticalscope acknowledged that following the release of its fourth-quarter and full-year 2024 results, it had observed some headwinds impacting the business in early 2025. These include changes to its video advertising products and the impact of Google's March core algorithm update, which has affected organic traffic to VerticalScope's communities.

Changes to its video advertising products have resulted in decreased bidder activity and lower costs per thousand impressions, leading to reduced revenue from video ads in the first quarter. Management now expects video advertising revenue to decline in the first quarter and to face continued headwinds for the rest of the year.

Google's March core algorithm update has led to a decline of about 10% in monthly active users. The company is working on recovery initiatives, but timelines for algorithm impacts are uncertain.

Meanwhile, VerticalScope continues to invest in its AI-driven product roadmap, including the development of AI-powered translations, answers, thread summaries and enhanced search experiences within its FORA platform.