VerticalScope (TSE:FORA) programmatic decline compresses to 8% as AI licensing talks advance

Programmatic advertising at VerticalScope Holdings (TSE:FORA) posted an 8% year-over-year decline in the second quarter of 2026, compressing sharply from 34% in the first quarter, while the company said it was in advanced discussions with a major technology company on an ongoing AI-content licensing arrangement. Chief Executive Officer Chris Goodridge called the move into single-digit decline the quarter's most important trend. The next catalyst to watch is a definitive agreement on that licensing deal.

The numbers

Q2 revenue came in at $13.8 million, down 5% year over year and up 20% sequentially. Adjusted EBITDA rose 4% to $4.5 million, with margin expanding 270 basis points to 32%. Net loss narrowed to $800,000 from $1.8 million in the year-ago quarter. Free cash flow conversion was 81% in Q2 and 83% for the first half.

Monthly active users averaged 103 million, a 14% year-over-year gain and the company's first such increase since search algorithm changes depressed organic traffic. Goodridge said most of the lift came from AudienceEngine, VerticalScope's paid traffic tool, with Google Search traffic stabilizing recently but remaining significantly below the prior-year level. Chief Financial Officer Vince Bellissimo noted the accounting effect: AudienceEngine visitors are counted at full weight in MAU while related revenue is recorded net of acquisition costs, a presentation that contributed to a 16% year-over-year decline in average revenue per user to $0.045.

Digital advertising revenue was $10.9 million, down 5% year over year. Direct advertising was flat in Q2 but grew 3% in the first half; Bellissimo said direct bookings through the end of July were pacing 7% above the prior year, and the company added two new insurance advertising customers in July. E-commerce revenue totaled $2.9 million. Affiliate commerce on the Fora platform rose 13% year over year, and Goodridge said AI-driven affiliate-commerce initiatives were approaching a $1 million annual revenue run rate, roughly double the level at the prior disclosure.

The setup

Operating expenses fell 13% year over year, including an 18% reduction in wages and consulting costs and a 14% decline in platform and technology expenses. The company said $1.5 million in previously announced annualized savings were now fully reflected in the cost base. AI-related capital spending in Q2 was $400,000, and the company said it remains on track for approximately $2 million of incremental AI investment for the full year.

VerticalScope repaid $12 million on its revolving credit facility during the quarter, closing June with gross debt of $32 million and total liquidity of $75.3 million. Net leverage ended Q2 at 1.24 times. In July the company drew approximately $6 million on the revolver to fund a $6.1 million secured debt investment in AltaML, the applied AI firm running workflow automation across VerticalScope's platform. Bellissimo said leverage moved to approximately 1.5 times after that draw and that the company expects to return toward low 1-times leverage by year-end. The investment is interest-bearing, carries an 18-month maturity extendable to 30 months at AltaML's option, and comes with a warrant and an option to participate in AltaML's next equity financing round.

The first AltaML workflow phase was only entering production at Q2's close, meaning its efficiency contribution is absent from reported results. VerticalScope filed a statement of claim against OpenAI in Ontario Superior Court of Justice in May.

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