Newsmax Inc.

Previous wording

The following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” should be read in conjunction with the audited consolidated financial statements as of and for the quarter ended March 31, 2025 and the year ended December 31, 2024, and other information included elsewhere in this Quarterly Report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from such forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those identified below and those discussed in the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” included elsewhere in this Quarterly Report and our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 as may be amended, supplemented or superseded from time to time by other reports we file with the SEC. Additionally, our historical results are not necessarily indicative of the results that may be expected in any future period.

Current wording

The following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” should be read in conjunction with the unaudited consolidated financial statements for the three and six months ended June 30, 2025 and the audited consolidated financial statements for the year ended December 31, 2024, and other information included elsewhere in this Quarterly Report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from such forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those identified below and those discussed in the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” included elsewhere in this Quarterly Report and our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 as may be amended, supplemented or superseded from time to time by other reports we file with the SEC. Additionally, our historical results are not necessarily indicative of the results that may be expected in any future period.

Previous wording

The Company has developed a significant audience, reaching over 40 million Americans each month through its television broadcasts and multi-platform content, and has demonstrated remarkable growth with revenues up 332% since 2021.

Current wording

The Company has developed a significant audience, reaching over 40 million Americans each month through its television broadcasts and multi-platform content, and has demonstrated remarkable growth with revenues up 309% since 2019.

Previous wording

Newsmax Inc. is a television broadcaster and multi-platform content publisher that produces original news and editorial content for consumers through various media outlets, including through its TV news channels, digital and print publications, its popular website Newsmax.com and affiliated sites, its syndicated radio show and podcasts and other platforms in order to sell advertising to third-party marketers as well as offering paid subscriptions to more than a dozen digital and print products sold by Newsmax Media. Newsmax Media content is carried by all major linear cable and satellite pay TV platforms, or multichannel video programming distributors (“MVPDs”) for the Newsmax and World at War channels, and most over the top (“OTT”) streaming platforms for its free ad-supported streaming television service (“FAST”) channel Newsmax2, making Newsmax Media content available to over 100 million homes in the U.S. In addition, international companies have licensed Newsmax Media’s channels and brand for regional, national and local television and digital media purposes. Certain licensing agreements currently in place have allowed Newsmax Media’s partners to provide cable television and digital news under the Newsmax Media brand to viewers in several European countries, including Republic of Serbia, Republic of Croatia, Bosnia and Herzegovina, Montenegro, North Macedonia, Slovenia and Albania.

Current wording

Newsmax Inc. is a television broadcaster and multi-platform content publisher that produces original news and editorial content for consumers through various media outlets, including through its TV news channels, digital and print publications, its popular website Newsmax.com and affiliated sites, its syndicated radio show and podcasts and other platforms in order to sell advertising to third-party marketers as well as offering paid subscriptions to more than a dozen digital and print products sold by Newsmax Media. Newsmax Media content is carried by all major linear cable and satellite pay TV platforms, or multichannel video programming distributors (“MVPDs”) for the Newsmax channel, and most over the top (“OTT”) streaming platforms for its free ad-supported streaming television service (“FAST”) channel Newsmax2, making Newsmax Media content available to over 100 million homes in the U.S. In addition, international companies have licensed Newsmax Media’s channels and brand for regional, national and local television and digital media purposes. Certain licensing agreements currently in place have allowed Newsmax Media’s partners to provide cable television and digital news under the Newsmax Media brand to viewers in eastern Europe.

Previous wording

The Company’s broadcast segment derives the majority of its revenues from advertising. For the three months ended March 31, 2025, the Company generated revenues of approximately $45.3 million, of which 63.8% was generated from advertising in the broadcast and digital segments, 16.4% was generated from affiliate fee revenue, 15.4% was generated from subscriptions for publications including Newsmax+ and 4.4% was generated from other lines of business which are primarily e-commerce sales of nutraceuticals, books and licensing fees.

Current wording

The Company’s broadcast segment derives the majority of its revenues from advertising. For the three months ended June 30, 2025, the Company generated revenues of approximately $46.4 million, of which 64.3% was generated from advertising in the broadcast and digital segments, 15.8% was generated from affiliate fee revenue, 15.0% was generated from subscriptions for publications including Newsmax+ and 4.8% was generated from other lines of business which are primarily e-commerce sales of nutraceuticals, books and licensing fees.

Previous wording

For the three months ended March 31, 2024, the Company generated revenues of $40.6 million, of which approximately 62.7% was generated from advertising in the broadcast and digital segments, approximately 15.6% was generated from subscriptions for publications including Newsmax+, approximately 5.4% was generated from other lines of business which are primarily e-commerce sales of nutraceuticals, books and licensing fee and approximately 16.3% was generated from affiliate fees.

Current wording

For the three months ended June 30, 2024, the Company generated revenues of $39.2 million, of which approximately 60.3% was generated from advertising in the broadcast and digital segments, approximately 17.4% was generated from affiliate fees, approximately 16.9% was generated from subscriptions for publications including Newsmax+, approximately 5.3% was generated from other lines of business which are primarily e-commerce sales of nutraceuticals, books and licensing fee.

Previous wording

The results of operations presented below should be reviewed in conjunction with the condensed consolidated financial statements and notes included elsewhere in this Quarterly Report. The following table sets forth our results of operations data for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024:

Current wording

The results of operations presented below should be reviewed in conjunction with the unaudited condensed consolidated financial statements and notes included elsewhere in this Quarterly Report. The following table sets forth our results of operations data for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024:

Previous wording

Gross profit increased by approximately $1.4 million, or 6.8%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. Gross profit as a percent of revenues decreased to 47.8% for the three months ended March 31, 2025 from 50.0% for the three months ended March 31, 2024. Gross profit increased mainly due to an increase in revenue around advertising, affiliate fees and Newsmax+.

Current wording

Gross profit increased by approximately $0.9 million, or 5.5%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. Gross profit as a percent of revenues decreased to 38.0% for the three months ended June 30, 2025 from 42.6% for the three months ended June 30, 2024. Gross profit increased mainly due to an increase in revenue around advertising, affiliate fees and Newsmax+.

Previous wording

Broadcast Revenues increased by $6.1 million for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, due to an increase in affiliate fee revenue of approximately $0.8 million, which is attributed to new contractual relationships starting later in 2024 as well as rate increases for 2025, advertising revenue of approximately $4.3 million due to higher ratings and pricing, subscription revenue of approximately $1.3 million from Newsmax+ due to an increase in subscribers offset by a decrease in licensing revenue of approximately $(0.3) million.

Current wording

Broadcast Revenues increased by $8.4 million for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, due to an increase in advertising revenue of approximately $7.0 million due to higher ratings and pricing, affiliate fee revenue of approximately $0.5 million, which is attributed to new contractual relationships starting later in 2024 as well as rate increases for 2025, subscription revenue of approximately $0.9 million from Newsmax+ due to an increase in subscribers.

Previous wording

Digital Revenues decreased by $1.4 million for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, due to decreases in advertising revenue due to 2024 being an election year which drives digital advertising revenue as well as subscription revenue as a result of decreased marketing for new customer acquisitions.

Current wording

Digital Revenues decreased by $1.2 million for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, due to decreases in advertising revenue due to 2024 being an election year which drives digital advertising revenue as well as subscription revenue as a result of decreased marketing for new customer acquisitions.

Previous wording

Revenues increased by approximately $4.7 million, or 11.6%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. Affiliate fee revenues increased by approximately $0.8 million due to new contractual relationships as well as rate increases which took effect in 2025. Subscription revenue increased by approximately $0.6 million due to an increase in subscribers of the Newsmax+ streaming service but was offset by reductions in publication subscriptions due to decreased new customer acquisition. Product Sales increased by approximately $0.1 million due to sales of the new book releases "Pay Zero Taxes", "Turnaround" and "Plan Red" but was offset slightly by lower nutraceutical sales as a result of decreased new customer acquisition. Advertising revenue increased by approximately $3.4 million due to higher linear cable and satellite advertising revenue due to higher Nielsen ratings which translated to higher rates but was offset by reductions in digital advertising revenue due to 2024 being an election year.

Current wording

Revenues increased by approximately $11.9 million, or 14.9%, for the six months ended June 30, 2025, compared to the six months ended June 30, 2024. Advertising revenue increased by approximately $9.6 million due to higher linear cable and satellite advertising revenue due to higher Nielsen ratings which translated to higher rates but was offset by reductions in digital advertising revenue due to 2024 being an election year. Affiliate fee revenues increased by approximately $1.3 million due to new contractual relationships as well as rate increases which took effect in 2025. Subscription revenue increased by approximately $1.0 million due to an increase in subscribers of the Newsmax+ streaming service but was offset by reductions in publication subscriptions due to decreased new customer acquisition. Product Sales increased by approximately $0.2 million due to sales of the new book releases "Pay Zero Taxes", "Turnaround" and "Plan Red" but was offset by lower nutraceutical sales as a result of decreased new customer acquisition.

Previous wording

Other (expense) income net increased by approximately $5.8 million, or 3,598.6%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase was primarily driven by non-cash mark to market adjustments for the derivative and warrant liabilities offset by increases in interest and dividend income as well as an increase in unrealized gains.

Current wording

Other (expense) income net increased by approximately $4.5 million, or 4,420.7%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The increase was primarily driven by non-cash mark to market adjustments for the derivative and warrant liabilities offset by increases in interest and dividend income as well as an increases in unrealized gains on marketable securities.

Previous wording

Broadcast Segment Adjusted EBITDA decreased for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, primarily due to increases in cost of revenues and G&A expense related to increased headcount, programming and production costs on our main Newsmax TV channel as well as continued investment into Newsmax 2 for OTT to build out the programming to better monetize Newsmax 2 on FAST channels. Additional increases consisted of marketing for TV, audit, consulting and legal fees associated with becoming a public company and costs associated with coverage of President Donald J. Trump on January 20, 2025. These expense increases were offset by reductions in distribution and carriage costs, fulfillment costs and bank fees..

Current wording

Broadcast Segment Adjusted EBITDA decreased for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, primarily due to increases in cost of revenues and G&A expense related to increased headcount, programming and production costs on our main Newsmax TV channel as well as continued investment into Newsmax 2 for OTT to build out the programming to better monetize Newsmax 2 on FAST channels. Additional increases consisted of marketing for TV, audit, consulting and legal fees associated with becoming a public company and costs associated with coverage of President Donald J. Trump's inauguration on January 20, 2025. These expense increases were offset by reductions in distribution and carriage costs, fulfillment costs and bank fees..

Previous wording

Digital Segment Adjusted EBITDA decreased for the three months ended March 31, 2025, as compared to three months ended March 31, 2024, due to increased headcount, consulting and legal fees associated with becoming a public company as well as stock compensation expense for the stock options issued in March 2025.

Current wording

Digital Segment Adjusted EBITDA decreased for the six months ended June 30, 2025, as compared to six months ended June 30, 2024, due to increased headcount, consulting and legal fees associated with becoming a public company as well as stock compensation expense for the stock options issued in March 2025.

Previous wording

The Company had approximately $126.7 million of cash and cash equivalents and $89.8 million in investments as of March 31, 2025. The Company’s primary sources of liquidity include cash on hand and available-for-sale investments.

Current wording

The Company had approximately $33.8 million of cash and cash equivalents and $164.1 million in investments as of June 30, 2025. The Company’s primary sources of liquidity include cash on hand and available-for-sale investments.

Previous wording

On September 26, 2024, the Company entered into a settlement agreement with Smartmatic pursuant to which the parties agreed to resolve the lawsuits among them. The Company agreed to pay a settlement of approximately $40 million payable over time and granted a five year warrant to purchase 2,000 of Series B preferred stock at an exercise price of $5,000 per share. Following the conversion of the underlying Series B preferred stock into Class B common stock in connection with the Company's March 28, 2025 initial public offering, Smartmatic has a five year warrant to purchase 1,333,333 shares of Class B common stock at an exercise price of $7.50 per share. Refer to Note 12. Legal for details of the settlement. As of the date hereof, the Company has made payments under the settlement agreement totaling $30 million. Payment of the remaining balance of $10 million will be made on June 30,2025 . This payment will be made from the Company’s existing cash on hand.

Current wording

On September 26, 2024, the Company entered into a settlement agreement with Smartmatic pursuant to which the parties agreed to resolve the lawsuits among them. The Company agreed to pay a settlement of approximately $40 million payable over time and granted a five year warrant to purchase 2,000 of Series B preferred stock at an exercise price of $5,000 per share. Following the conversion of the underlying Series B preferred stock into Class B common stock in connection with the Company's March 28, 2025 initial public offering, Smartmatic has a five year warrant to purchase 1,333,333 shares of Class B common stock at an exercise price of $7.50 per share. Refer to Note 12. Legal for details of the settlement. As of the date hereof, the Company has made all payments required under the settlement agreement.

Previous wording

As of March 31, 2025, cash and cash equivalents balance was approximately $126.7 million. Cash and cash equivalents consist of interest-bearing deposit accounts and money market accounts managed by third-party financial institutions, and highly liquid investments with maturities of three months or less. The existing cash and cash equivalents, along with projected cash flows, are sufficient to fund our liquidity needs for the next 12 months. At this time, we do not anticipate the need to raise additional capital.

Current wording

As of June 30, 2025, cash and cash equivalents balance was approximately $33.8 million. Cash and cash equivalents consist of interest-bearing deposit accounts and money market accounts managed by third-party financial institutions, and highly liquid investments with maturities of three months or less. The existing cash and cash equivalents, along with projected cash flows, are sufficient to fund our liquidity needs for the next 12 months. At this time, we do not anticipate the need to raise additional capital.

Previous wording

Net cash used in operating activities for the three months ended March 31, 2024 was $3.3 million and was primarily due to a decrease in accounts payable.

Current wording

Net cash used in operating activities for the six months ended June 30, 2025 was $38.9 million and was primarily due to a net loss and decrease in settlement liability.

Previous wording

Net cash used in operating activities for the three months ended March 31, 2025 was $15.7 million and was primarily due to a net loss and offset by an increase in accrued expenses.

Current wording

Net cash used in operating activities for the six months ended June 30, 2024 was $7.4 million and was primarily due to a net loss and offset by the change in fair value of warrant liability and increases in settlement liability and accrued expenses.

Previous wording

Net cash used in investing activities for the three months ended March 31, 2025 was $29.5 million primarily due to an increase in the purchase of investments.

Current wording

Net cash used in investing activities for the six months ended June 30, 2025 was $104.4 million primarily due to an increase in the purchase of investments.

Previous wording

Net cash provided by investing activities for the three months ended March 31, 2024 was $0.23 million primarily due to an increase in the sale of investments offset by purchases of fixed assets.

Current wording

Net cash provided by investing activities for the six months ended June 30, 2024 was $0.11 million primarily due to an increase in the sale of investments offset by purchases of fixed assets.

Previous wording

Net cash provided by financing activities for the three months ended March 31, 2025 was $147.9 million primarily due to a proceeds received from issuances of convertible stock and common stock in the initial public offering.

Current wording

Net cash provided by financing activities for the six months ended June 30, 2025 was $153.2 million primarily due to a proceeds received from issuances of convertible stock and common stock in the initial public offering.

Previous wording

Adjusted EBITDA is defined as revenues less cost of revenues and general and administrative expenses and does not include depreciation and amortization, interest expense, net, impairment charges, unrealized gains (losses) on marketable securities, other corporate matters (consisting primarily of certain litigation expenses, and related fees, for specific legal proceedings that the Company has determined are infrequent and unusual in terms of their magnitude), other, net, and income tax expense.

Current wording

Adjusted EBITDA is defined as revenues less cost of revenues and general and administrative expenses and does not include depreciation and amortization, interest expense, net, impairment charges, unrealized gains (losses) on marketable securities, stock-based compensation, other corporate matters (consisting primarily of certain litigation expenses, and related fees, for specific legal proceedings that the Company has determined are infrequent and unusual in terms of their magnitude), other, net, and income tax expense.