Star Equity Holdings (STRR) Q2 2025 earnings summary

Executive summary

• Q2 2025 revenue was $35.5M, down 0.5% year-over-year, while adjusted net revenue rose 5.8% to $18.6M, driven by contracting growth and new client wins.

• Adjusted EBITDA increased to $1.3M from $0.7M a year ago, and adjusted net income per diluted share improved to $0.12 from $0.04.

• Net loss widened to $0.7M ($0.23/share) from $0.4M ($0.15/share) in Q2 2024.

• Strategic acquisitions included Alpha Consulting Group (Japan) and McKinsey CMO Group, expanding geographic reach and service offerings.

• Announced a definitive merger agreement with Star Equity Holdings, pending shareholder approval, expected to diversify revenue and deliver cost synergies.

Financial highlights

• Cash and equivalents at June 30, 2025, totaled $16.8M–$17.5M, including $0.7M restricted cash; no outstanding debt under main credit facilities.

• Cash flow from operations was an inflow of $0.1M in Q2 2025, compared to a $4.3M outflow in Q2 2024.

• Working capital (excluding cash) was $12.2M, slightly above year-end 2024.

• Share repurchase program: $2.9M spent to date, $2.1M remaining.

• Adjusted net revenue margin for Q2 2025 was 52.5%, up from 49.3% in Q2 2024.

Outlook and guidance

• Management expects continued year-over-year growth in adjusted net revenue and adjusted EBITDA through 2025 and into 2026.

• Long-term guidance includes 13% net revenue growth for 2025, 26% for 2026, and 17-18% annual growth over the next five years, assuming stable macroeconomic conditions.

• Growth is expected from new logo wins, geographic expansion, and increased share of wallet with existing clients.

• The pending merger, if completed, will materially change the business model and financial profile.

• Sufficient liquidity is expected for at least the next 12 months, with cash on hand and available credit.