Kingsway Financial Services Inc. (KFS): Business Model Canvas [Dec-2025 Updated]

Honestly, you don't see many public companies successfully remaking themselves like Kingsway Financial Services Inc. (KFS) is right now; they are aggressively shifting from legacy insurance to a high-growth, acquisition-focused platform centered on the Search Fund model. This isn't just talk, either-their Q3 2025 results show the new KSX segment hitting $19.0 million in revenue, complementing the $18.2 million from their Extended Warranty business. I've mapped out the entire nine-block Business Model Canvas for you, showing exactly how they plan to use their permanent capital and significant Net Operating Losses to compound value. You need to see the details of this transformation to truly grasp the opportunity.

Kingsway Financial Services Inc. (KFS) - Canvas Business Model: Key Partnerships

You're looking at the partners Kingsway Financial Services Inc. (KFS) relies on to execute its dual-segment strategy, blending the Search Fund model with established warranty operations. The data from the third quarter of 2025 gives us a clear picture of the scale of these relationships.

Search Fund entrepreneurs and operators for KSX acquisitions

The Kingsway Search Xcelerator (KSX) segment is built on a partnership with entrepreneurial operators, or OIRs (Operators in Residence), who source and run the acquired businesses. As of late 2025, KFS has definitely accelerated this pipeline. The company completed six high-quality asset-light services business acquisitions in 2025, which is above their stated target range of 3 to 5 per year. The total count of KSX acquisitions reached 12 with the purchase of Southside Plumbing on August 14, 2025.

The financial impact of these operator-led partnerships is significant. KSX segment revenue for Q3 2025 hit $19.0 million, a surge of 104.2% compared to the prior year. The adjusted EBITDA for KSX in that quarter was $2.7 million, showing growth of 89.9% year-over-year. This segment is now a majority revenue contributor for Kingsway Financial Services Inc..

The pipeline for future partnerships remains active:

• There are three OIRs actively searching for the next platform acquisitions as of the Q3 2025 report.
• A new OIR, Colter Hanson, was added in October 2025 to target the testing, inspection and certification sector.
• The trailing 12-month adjusted run rate EBITDA attributed to the KSX operating companies is between $15.5 million and $16.5 million.

Credit unions and financial institutions for Extended Warranty distribution

The Extended Warranty segment partners with various distribution channels to market and sell its products, including credit unions, property managers, and independent agencies. While the segment's GAAP adjusted EBITDA declined to $0.8 million in Q3 2025, the underlying cash performance shows partner engagement is strong.

Here are the key metrics reflecting the strength of these distribution partnerships:

Metric	Value (Q3 2025)	Comparison
Extended Warranty Revenue	$18.2 million	Up 2.0% year-over-year
Extended Warranty Cash Sales	Not specified	Up 14.2% year-over-year
Deferred Service Revenue Increase	$2.8 million	Year-over-year increase from new contracts

The increase in cash sales, up 14.2%, suggests that the distribution network is successfully driving new business, even if GAAP revenue growth is modest at 2%.

Investment banks and private equity firms for deal sourcing and financing

Financing these acquisitions requires relationships with capital providers. Kingsway Financial Services Inc. closed a $15.7 million private placement (PIPE) in June 2025, selling 1,336,264 shares at $11.75 per share. This capital supports the M&A activity driven by the KSX operators.

The resulting debt structure as of September 30, 2025, shows the reliance on bank financing:

• Total Debt: $70.7 million.
• Bank Loans: $55.8 million.
• Subordinated Debt: $13.1 million.
• Net Debt (Debt minus Cash): $61.4 million.

World-class advisory board providing mentorship to portfolio CEOs

Kingsway Financial Services Inc. explicitly mentions backing its platform with an 'outstanding Advisory Board'. This board is partnered with the 'talented group of Operator CEO's' to provide mentorship and guidance to the portfolio companies.

Third-party administrators for managing warranty claims and services

The Extended Warranty segment relies on administrative infrastructure, which includes subsidiaries like Preferred Warranties, Inc., and Superior Warranties, Inc., that administer vehicle service contracts. The scale of this administration is reflected in the segment's overall financial footprint, which generated $18.2 million in revenue in Q3 2025. The segment's operations also include claims management and maintenance support services.

Kingsway Financial Services Inc. (KFS) - Canvas Business Model: Key Activities

You're looking at how Kingsway Financial Services Inc. (KFS) actively builds its portfolio, which centers on acquiring and scaling asset-light services companies through its public Search Fund structure.

Executing the Kingsway Search Xcelerator (KSX) acquisition playbook is a primary driver of current activity, marked by significant growth in that segment's contribution to the overall business.

The company is actively sourcing, underwriting, and integrating these businesses, which has led to exceeding its stated acquisition targets for the year.

Operational support is key to making these acquisitions perform, and the results show some subsidiaries are already ahead of the initial financial projections made during underwriting.

Managing the legacy Extended Warranty portfolio involves balancing resilient cash sales growth against GAAP reporting pressures, while capital allocation focuses on funding the accelerated M&A pace.

Here's a quick look at the performance metrics underpinning these activities for the third quarter ended September 30, 2025:

Activity Metric	Value (Q3 2025)	Comparison/Context
KSX Segment Revenue	$19.0 million	Increased 104.2% year-over-year (YoY)
KSX Segment Adjusted EBITDA	$2.7 million	Increased 89.9% YoY from $1.4 million
Extended Warranty Revenue	$18.2 million	Increased 2.0% YoY from $17.8 million
Extended Warranty Cash Sales Growth	14.2%	YoY increase, signaling underlying demand
Extended Warranty Adjusted EBITDA	$0.8 million	Decreased 63.2% YoY from $2.1 million
Total Consolidated Revenue	$37.2 million	Increased 37.0% YoY from $27.1 million
Total Net Debt	$61.4 million	Up from $52.0 million at December 31, 2024

The KSX playbook execution is visible in the sheer volume of deals and the segment's growing financial contribution:

• KSX represented the majority of Kingsway Financial Services Inc. revenue for the first time in Q3 2025.
• The annual acquisition target for KSX was raised from 2-3 per year to 3-5 per year.
• Kingsway Financial Services Inc. had acquired 6 high-quality asset-light services businesses year-to-date, exceeding the raised target.
• One specific KSX acquisition, Southside Plumbing, had a purchase price of $5.625 million plus a potential earn-out up to $1.125 million.
• In Q1 2025, an acquisition of Bud's Plumbing was made for $5.0 million, expected to add $6.0 million in annual revenue.

Operational support effectiveness is shown by the performance of recently integrated businesses:

• Roundhouse Electric & Equipment Co. and Kingsway Skilled Trades are performing ahead of their underwriting case.
• The twelve-month run-rate adjusted EBITDA for all operating companies stood between $20.5 million and $22.5 million.
• The KSX operating companies contributed $15.5 million-$16.5 million to that trailing twelve-month adjusted EBITDA.

Managing the Extended Warranty portfolio involves monitoring specific indicators of underlying health:

• The segment delivered its sixth consecutive quarter of increased cash sales as of Q2 2025.
• The twelve-month run-rate adjusted EBITDA for Extended Warranty operating companies is estimated at $5.0-6.0 million.
• Deferred service revenue related to new warranty contracts increased by $2.8 million year-over-year in Q3 2025.

Capital allocation activities are directly linked to funding the growth strategy, supported by the company's tax structure:

• Kingsway Financial Services Inc. completed a $15.7 million private placement in June 2025 at $11.75 per share.
• The company noted it continues to benefit from significant tax assets that enhance returns.
• Total cash and cash equivalents were $9.3 million as of September 30, 2025.

Finance: draft 13-week cash view by Friday.

Kingsway Financial Services Inc. (KFS) - Canvas Business Model: Key Resources

You're looking at the core assets that let Kingsway Financial Services Inc. (KFS) execute its public Search Fund strategy. These aren't just line items on a balance sheet; they are the structural advantages that allow KFS to operate differently than a traditional private equity firm. Honestly, for a company focused on long-term compounding, the structure of the capital is as important as the capital itself.

Permanent equity capital structure for long-term holding of assets.

This is a huge differentiator for Kingsway Financial Services Inc. Because the company is publicly traded, it has what management calls permanent equity capital. This means Kingsway Financial Services Inc. isn't constrained by a private fund's typical 7-to-10-year life cycle. You can hold and compound value in an acquired business for as long as it makes sense, which is key for true operational improvement. This contrasts sharply with the forced sale timelines common in the private markets.

Significant Net Operating Losses (NOLs) for tax-advantaged cash flow.

Kingsway Financial Services Inc. benefits from a tax-advantaged corporate structure, largely due to significant tax assets from past NOLs (Net Operating Losses). These NOLs act as a shield, allowing more of the future earnings from acquisitions to drop to the bottom line. This tax efficiency directly enhances the net returns realized from the portfolio companies. It's a real tailwind for the overall enterprise value creation.

Decentralized management model and a team of operator CEOs.

The operational backbone is a decentralized management model paired with a very talented team of operators. Kingsway Financial Services Inc. backs early-in-career managers-the operator CEOs-to find and run the acquired businesses. This structure is designed to compound long-term shareholder value on a per share basis by empowering the operators. The company provides the initial capital and the operating scaffolding, often implementing the Kingsway business system for operational excellence.

• Targeted acquisition size for operators: one to three million of EBITDA.
• Financing structure for acquisitions: Roughly two and a half turns of debt.
• Goal for new acquisitions: Setting an underwriting hurdle of greater than 30% IRR.

$61.4 million in net debt (as of Q3 2025) to finance acquisitions.

To fuel its growth strategy, Kingsway Financial Services Inc. actively uses leverage. As of September 30, 2025, the balance sheet showed a clear picture of this financing strategy. You need to know the leverage level to assess risk, so here are the hard numbers from the Q3 2025 report.

Metric	Amount (as of Q3 2025)
Net Debt (Debt minus Cash)	$61.4 million
Total Debt	$70.7 million
Cash and Cash Equivalents	$9.3 million

This net debt figure was up from $52 million at the end of 2024, primarily due to financing recent acquisitions like Roundhouse and Southside Plumbing. It shows you the capital deployed to grow the platform.

Proprietary acquisition pipeline and deal-sourcing network.

The engine for growth is the continuous flow of deals. Kingsway Financial Services Inc. is positioned as the only publicly-traded US company leveraging the Search Fund model, which gives it credibility with sellers looking for succession capital. Management has stated they are actively targeting two to three acquisitions per year. This pipeline is supported by the company's reputation and its established network for sourcing these lower middle-market businesses.

The trailing 12-month adjusted run rate EBITDA for all operating companies, reflecting the current portfolio, stood at approximately $20.5 million to $22.5 million as of the Q3 2025 report. Finance: draft 13-week cash view by Friday.

Kingsway Financial Services Inc. (KFS) - Canvas Business Model: Value Propositions

You're looking at the value Kingsway Financial Services Inc. (KFS) delivers across its distinct customer groups, which is rooted in its unique position as the only publicly-traded US company using the Search Fund model to acquire and build businesses. This model is the engine for all the propositions below.

For Shareholders: Unique public market access to the high-return Search Fund asset class

For you as a shareholder, KFS offers a way into the Search Fund asset class, which historically has delivered median annual returns in the mid-30% range over decades, according to Stanford GSB research. This access is direct, unlike the fragmented, small-check approach of investing in individual search funds. The market has certainly recognized this, as KFS shares gained 650% over the last five years, representing a 50% CAGR over that same period. Still, you must note the current financial state: for the third quarter of 2025, Kingsway Financial Services Inc. reported a consolidated net loss of $2.4 million. The company's net debt climbed to $61.4 million at the end of Q3 2025, up from $52.0 million at the end of 2024, showing the leverage used to fuel growth.

For Business Owners: Attractive succession solution for retiring owner/operators

If you are a retiring owner/operator, KFS provides a structured exit. The typical target for an acquisition under the Kingsway Search Xcelerator (KSX) platform involves businesses with about 1 to 3 million in Adjusted EBITDA. KFS generally acquires these businesses for a multiple of roughly 4.5 to 6.5 times that EBITDA, financing them with about 2.5 turns of debt. For example, the August 14, 2025, acquisition of Southside Plumbing had a maximum purchase price of $6.75 million. This structure allows for a clean transition supported by KFS's operational resources.

For Acquired Companies: Operational excellence framework to professionalize and scale

Once acquired, your new company benefits from the Kingsway business system, which is their framework for operational excellence. This is designed to professionalize and scale what was often a legacy business. The success of this strategy is clear in the KSX segment's performance. In Q3 2025, KSX revenue exploded by 104.2% year-over-year to $19.0 million, making it the majority of the total consolidated revenue of $37.2 million for the first time. The twelve-month run-rate adjusted EBITDA for the KSX operating companies reached $15.5-16.5 million.

Extended Warranty Customers: After-market vehicle protection services

For customers in the Extended Warranty segment, KFS provides after-market vehicle protection. This segment remains a stable cash generator, even as the KSX segment takes the lead in growth. In Q3 2025, Extended Warranty revenue grew by 2.0% to $18.2 million compared to the prior year quarter. A key indicator of underlying demand is the cash sales, which were up 14% in the quarter.

Compounding intrinsic value per share via tax-efficient structure

Kingsway Financial Services Inc. explicitly states its goal is to compound long-term shareholder value on a per share basis. This focus on per-share compounding is enhanced by the company's tax-advantaged corporate structure, which helps enhance returns. The growth from the KSX segment, which saw its adjusted EBITDA grow 90% in Q3 2025, is central to this compounding story.

Here's a quick look at the segment revenue and profitability as of the third quarter of 2025:

Metric	Q3 2025 Value	Year-over-Year Growth
Consolidated Revenue	$37.2 million	37.0%
KSX Segment Revenue	$19.0 million	104.2%
Extended Warranty Revenue	$18.2 million	2.0%
KSX Segment Adjusted EBITDA	$2.7 million	90%
Extended Warranty Adjusted EBITDA	$0.8 million	Decline from $2.1 million YoY

The shift is clear: KSX revenue now represents the majority of the company's total revenue.

You should review the latest capital structure details, specifically the cash position of $9.3 million as of September 30, 2025, up from $5.5 million at the end of 2024.

• For Business Owners: Acquisition multiples typically range from 4.5x to 6.5x Adjusted EBITDA.
• For Acquired Companies: The KSX segment now drives the majority of revenue, hitting $19.0 million in Q3 2025.
• For Shareholders: Total shareholder return over five years was 650%.
• For Warranty Customers: Cash sales in the segment increased by 14% in Q3 2025.
• For All Stakeholders: The company benefits from tax assets enhancing returns.

Finance: draft 13-week cash view by Friday.

Kingsway Financial Services Inc. (KFS) - Canvas Business Model: Customer Relationships

You're looking at how Kingsway Financial Services Inc. (KFS) manages its connections across its diverse portfolio, from the CEOs running the acquired companies to the end-users of their warranty products. It's a structure built on empowerment and long-term compounding, which is key to their Search Fund approach.

High-touch, long-term support for acquired company CEOs (decentralized model)

Kingsway Financial Services Inc. operates on a decentralized management model, which means the CEOs of the operating companies maintain significant autonomy. The corporate level is lean, focusing on high-level strategy and capital allocation, not day-to-day micromanagement. This structure is designed to support the operator CEOs, who are empowered to build their businesses while receiving support and governance from Kingsway. The model fosters entrepreneurship, as operators are deeply invested in success, often earning up to 25% in the common equity of the business they acquire. This focus on top-quality talent and operator fit is central to their relationship strategy.

• Decisions are made close to the customers and the market.
• Operators receive support and governance from the holding company.
• The model is designed to scale by adding more Operators in Residence.

Direct, service-oriented relationships with B2B/C customers of KSX portfolio

The Kingsway Search Xcelerator (KSX) segment, which is primarily B2B services companies, is showing significant growth in customer engagement. This segment achieved revenue of $19.0 million in the third quarter of 2025, representing a 104.2% increase year-over-year. For the first time, the KSX segment represented the majority of Kingsway Financial Services Inc.'s consolidated revenue. The KSX portfolio includes businesses in verticals like accounting, HR staffing, and vertical market software, all requiring direct, service-oriented relationships to drive that growth.

Managed service relationship with credit unions in the Extended Warranty segment

The Extended Warranty segment maintains its managed service relationships primarily through credit unions, property managers, and independent agencies. This segment showed resilient performance in late 2025, with revenue increasing by 2.0% to $18.2 million for the third quarter of 2025 compared to the prior year period. A positive indicator of direct customer activity is that Extended Warranty cash sales in the quarter were up 14.2% year-over-year. Furthermore, deferred service revenue associated with new warranty contracts increased by $2.8 million year-over-year, reflecting new business being booked through these channels.

Here's a quick look at the customer-facing financial metrics as of the third quarter of 2025:

Metric	Segment	Value (Q3 2025)	Change/Context
Revenue	KSX	$19.0 million	104.2% increase year-over-year
Revenue	Extended Warranty	$18.2 million	2.0% increase year-over-year
Cash Sales Growth	Extended Warranty	14.2% increase	Year-over-year for the quarter
Deferred Service Revenue Change	Extended Warranty	Increase of $2.8 million	Year-over-year change

Investor relations focused on long-term value compounding

Investor relationships are centered on the promise of compounding long-term shareholder value on a per share basis, supported by a permanent equity capital base, meaning Kingsway Financial Services Inc. isn't forced to sell assets on a fund timetable. As of late October 2025, the Market Cap stood at $363.67M. Institutional Ownership was reported at 50.49%, showing significant professional stakeholder confidence in the compounding strategy. This strategy is financially enhanced by significant tax assets, with accumulated Net Operating Loss carryforwards of roughly $622 million to $625 million, which shelters future taxable income and boosts net returns.

• Goal: Compound long-term shareholder value per share.
• Market Cap (Oct 2025): $363.67M.
• Institutions Ownership: 50.49%.
• Tax Assets (NOLs): Approximately $625 million.

Finance: draft 13-week cash view by Friday.

Kingsway Financial Services Inc. (KFS) - Canvas Business Model: Channels

You're looking at how Kingsway Financial Services Inc. (KFS) gets its value proposition to the market, which is quite distinct given its public Search Fund structure. The channels are a mix of direct integration, established partner networks, and capital market visibility.

Direct acquisition and integration of small businesses (KSX platform)

The primary channel for growth here is the Kingsway Search Xcelerator (KSX) platform, which directly integrates acquired businesses. This channel is accelerating rapidly; by the third quarter of 2025, Kingsway Financial Services Inc. had acquired 6 high-quality asset-light services businesses, which was above their recently increased target range of 3 to 5 acquisitions per year. For instance, the acquisition of Southside Plumbing Co. closed on August 14, 2025, for a purchase price of $5.625 million, with a potential earn-out up to an additional $1.125 million. This direct integration channel is now the majority revenue driver, a key milestone for the company.

The performance of this channel is evident in the segment results:

• KSX segment revenue reached $19.0 million in the third quarter of 2025.
• This represented a year-over-year growth of 104.2% for the third quarter of 2025.
• KSX segment adjusted EBITDA was $2.7 million in Q3 2025, up 90% year-over-year.

Credit union networks for distributing Extended Warranty products

For the Extended Warranty business, the distribution channel relies heavily on established third-party networks. Kingsway Financial Services Inc. markets and distributes its warranty products and services through credit unions, property managers, and independent agencies. This channel provides recurring revenue streams, though growth has been more modest compared to the KSX segment.

Here's how the Extended Warranty revenue channel performed in the first three quarters of 2025:

Metric	Q2 2025 Amount	Q3 2025 Amount	Y/Y Growth (Q3 2025 vs Q3 2024)
Extended Warranty Revenue	$17.6 million	$18.2 million	2.0%
Extended Warranty Cash Sales Growth	N/A	N/A	14.2%

The cash sales growth of 14.2% in Q3 2025 suggests strong underlying transaction volume through these existing distribution partners.

Existing B2B/B2C direct sales and service channels of portfolio companies

The revenue from the acquired and existing portfolio companies flows through their own established B2B and B2C sales and service channels. This is the operational backbone that generates the consolidated revenue figures. As of the third quarter of 2025, consolidated revenue for Kingsway Financial Services Inc. was $37.2 million, a 37.0% increase year-over-year. The KSX segment's revenue of $19.0 million made up the majority of this total for the first time. The trailing 12-month adjusted run rate EBITDA for all businesses owned stood at approximately $20.5 million to $22.5 million as of September 30, 2025.

The company's overall revenue generation channels can be summarized:

• Consolidated Revenue (Q3 2025): $37.2 million.
• KSX Segment Revenue (Q3 2025): $19.0 million.
• Extended Warranty Revenue (Q3 2025): $18.2 million.

Investor presentations and public filings for capital markets access

Access to capital is a critical channel for funding the KSX acquisitions. Kingsway Financial Services Inc. uses investor presentations and public filings to maintain this access. The company announced the closing of a $15.7 million private placement (PIPE) in June 2025, selling shares at $11.75 per share. This capital, combined with operating cash flow, funds growth ambitions. The company's structure, which includes approximately $625 Million in Net Operating Losses (NOLs) as of January 2025, is highlighted in filings to enhance its tax-advantaged structure for investors. As of September 30, 2025, total cash and cash equivalents were $9.3 million, against total debt of $70.7 million, resulting in net debt of $61.4 million.

Key capital market access points and figures include:

• June 2025 PIPE raise: $15.7 million.
• Share price in June 2025 PIPE: $11.75.
• Total Cash (September 30, 2025): $9.3 million.
• Net Debt (September 30, 2025): $61.4 million.

Finance: draft 13-week cash view by Friday.

Kingsway Financial Services Inc. (KFS) - Canvas Business Model: Customer Segments

You're looking at the customer base for Kingsway Financial Services Inc. (KFS) as of late 2025, and the picture is clearly split between two major operational areas: the high-growth acquisition engine and the established warranty business. The company is uniquely structured as a publicly-traded Search Fund, which immediately defines a key investor segment.

The customer segments are distinct, but their financial performance in the third quarter of 2025 tells a story of strategic transition. Overall consolidated revenue for Q3 2025 hit $37.2 million, a jump of 37% year-over-year. However, the underlying health varies significantly between the two main revenue drivers.

Owner/operators of small, profitable, asset-light B2B/C services companies

This group represents the target for the Kingsway Search Xcelerator (KSX) platform, which is the company's primary growth strategy. The KSX segment is where KFS acquires these businesses, like the recent purchase of Roundhouse Electric & Equipment Co. for $22.4 million. Roundhouse, for example, brought in trailing 12-month unaudited revenue of $16.0 million and had approximately 90% recurring revenue from over 200 active customers.

The success of acquiring and scaling these operators is reflected in the KSX segment's financial results. For Q3 2025, KSX revenue exploded to $19.0 million, marking a 104% increase compared to the same quarter last year. This segment's adjusted EBITDA also grew by 90% in the quarter, showing strong operating leverage as it scales. This segment now represents the majority of Kingsway Financial Services Inc.'s consolidated revenue.

Credit unions and financial institutions distributing vehicle protection

These institutions serve as the primary distribution channel for the Extended Warranty segment's products, such as Vehicle Service Agreements (VSA), Mechanical Breakdown Insurance (MBI), and Guaranteed Asset Protection (GAP). This segment generated revenue of $18.2 million in Q3 2025. While cash sales in this area saw a 14% increase, the segment's adjusted EBITDA actually declined to $0.8 million in the quarter. Kingsway Financial Services Inc. markets these warranty products through these partners, along with property managers and independent agencies.

End-consumers purchasing after-market vehicle extended warranties

These are the ultimate users of the service agreements and protection plans offered by the Extended Warranty segment's subsidiaries. While specific consumer penetration numbers aren't explicitly detailed for 2025, their purchasing decisions directly drive the $18.2 million in Q3 2025 revenue for that segment. The company's overall portfolio includes vehicle protection service agreements, home warranty products, and claims management services.

Public market investors seeking exposure to the Search Fund model

This segment is interested in the unique public Search Fund structure Kingsway Financial Services Inc. employs. As of late 2025, the company's market capitalization stood at $363.67M. Investor interest is shown by the ownership structure, with Institutions owning 50.49% of the float, while insiders hold 27.87%. These investors are betting on the long-term compounding of shareholder value through the disciplined execution of the KSX strategy. The company's balance sheet as of September 30, 2025, showed $9.3 million in cash and cash equivalents against total debt of $70.7 million.

Here is a quick look at the segment financial snapshot for the third quarter ended September 30, 2025:

Metric	Kingsway Search Xcelerator (KSX)	Extended Warranty	Consolidated Total
Revenue (in Millions USD)	$19.0	$18.2	$37.2
Year-over-Year Revenue Growth	104%	Modest (2% in one report)	37%
Adjusted Segment EBITDA (in Millions USD)	Grew 90%	$0.8	$2.1

The company's focus is clearly shifting, with the KSX segment now driving the top-line narrative. If onboarding new acquisitions like Roundhouse Electric & Equipment Co. slows down, growth in that segment will definitely stall.

Finance: draft 13-week cash view by Friday.

Kingsway Financial Services Inc. (KFS) - Canvas Business Model: Cost Structure

You're looking at the hard costs driving Kingsway Financial Services Inc. (KFS) operations as of late 2025, focusing on the expenses supporting their dual-segment model: the high-growth Kingsway Search Xcelerator (KSX) and the established Extended Warranty business. Keeping these costs in check is crucial, especially with the accelerated acquisition pace.

The debt load, primarily funding the KSX segment's growth, is a significant fixed cost component. As of September 30, 2025, Kingsway Financial Services Inc. reported total debt of $\mathbf{\$70.7 \text{ million}}$. This debt comprised $\mathbf{\$55.8 \text{ million}}$ in bank loans, $\mathbf{\$1 \text{ million}}$ in notes payable, and $\mathbf{\$13.1 \text{ million}}$ in subordinated debt. Net debt, which is total debt minus cash, stood at $\mathbf{\$61.4 \text{ million}}$ at that quarter end.

Acquisition costs within the KSX segment are lumpy but substantial when deals close. For instance, the August 14, 2025, acquisition of Southside Plumbing had a stated purchase price of $\mathbf{\$5.625 \text{ million}}$, with a potential earn-out up to $\mathbf{\$1.125 \text{ million}}$, leading to a maximum purchase price of $\mathbf{\$6.75 \text{ million}}$. Kingsway Financial Services Inc. has increased its annual acquisition target to $\mathbf{3-5}$ companies per year, up from $\mathbf{2-3}$ previously.

For the Extended Warranty segment, costs are more operational. While specific claims and underwriting costs for Q3 2025 aren't explicitly itemized as a single figure, we see related expenses. Deferred service fees from extended warranty increased by $\mathbf{\$2.8 \text{ million}}$ year-over-year. Also, $\text{hundreds of thousands of dollars}$ in commission expenses related to issuing new warranty contracts were booked upfront in the quarter.

Corporate overhead and public company compliance costs are captured in the unallocated expenses. For the full year 2024, the net expense for General and administrative expenses and other revenue not allocated to segments was $\mathbf{\$8.9 \text{ million}}$, down from $\mathbf{\$12.8 \text{ million}}$ in 2023.

Compensation for the decentralized management teams, including Operator CEOs, is a key element of the KSX model, but specific, current-period financial figures for this cost category are not detailed in the latest public disclosures. It's a variable cost tied to the performance and structure of the acquired entities.

Here's a quick look at the concrete financial figures we have for the cost structure components as of late 2025:

Cost Component Category	Specific Metric/Item	Latest Available Real-Life Amount
Debt Servicing Cost	Total Debt (as of Q3 2025)	$70.7 million
Acquisition Cost (KSX Example)	Southside Plumbing Maximum Purchase Price	$6.75 million
Corporate Overhead Proxy	G&A and Unallocated Net Expense (Full Year 2024)	$8.9 million
Extended Warranty Cost Indicator	Year-over-Year Increase in Deferred Service Fees (Q3 2025)	$2.8 million
Extended Warranty Cost Indicator	Upfront Commission Expenses (Q3 2025)	Hundreds of thousands of dollars

The shift in revenue mix, with the KSX segment representing the majority of revenue for the first time in Q3 2025, suggests a corresponding shift in the cost base toward acquisition-related expenses and management compensation, rather than just the underwriting costs of the older segment.

You'll want to track the interest expense closely, given the $\mathbf{\$70.7 \text{ million}}$ debt level; this is a non-negotiable cash outflow that needs to be covered by the operating cash flow from the portfolio companies.

Kingsway Financial Services Inc. (KFS) - Canvas Business Model: Revenue Streams

You're looking at how Kingsway Financial Services Inc. (KFS) brings in its money as of late 2025. The revenue picture is clearly shifting, with the newer acquisition-focused segment taking the lead.

The KSX segment revenue, which comes from the acquired services businesses operating under the Search Fund model, was a major highlight for the third quarter of 2025. This segment hit $19.0 million in Q3 2025, marking the first time it represented a majority of the consolidated revenue. This growth represents a massive 104.2% increase compared to the $9.3 million generated in Q3 2024.

The Extended Warranty segment, which generates revenue from service fees and commissions, remains a stable, cash-generative part of the business. For the same period, this segment brought in $18.2 million in revenue in Q3 2025, a modest 2.0% increase from the $17.8 million recorded in Q3 2024.

The overall revenue picture for the quarter shows this dynamic shift clearly. Consolidated revenue for Q3 2025 reached $37.2 million, which was up 37.0% year-over-year from $27.1 million in Q3 2024. Still, you need to keep an eye on the GAAP timing impacts in the Extended Warranty business, as they pressure reported profitability even when cash performance is solid.

Here's a quick look at the key Q3 2025 revenue and performance metrics:

Metric	Value (Q3 2025)	Comparison/Context
Consolidated Revenue	$37.2 million	Up 37.0% year-over-year
KSX Segment Revenue	$19.0 million	Up 104.2% year-over-year
Extended Warranty Revenue	$18.2 million	Up 2.0% year-over-year
Extended Warranty Cash Sales Growth	+14.2%	Year-over-year increase
Consolidated Net Loss	$2.4 million	Slightly wider than prior year's $2.3 million loss

The revenue streams are supported by several structural elements within the business model:

• Recurring revenue streams from asset-light B2B/B2C services acquired through the KSX platform.
• Deferred service revenue from new warranty contracts, which increased by $2.8 million year-over-year in Q3 2025, supporting future GAAP revenue recognition.
• The company benefits from significant tax assets, which management notes enhance returns within a tax-efficient public company framework.
• The Extended Warranty segment's revenue is derived from service fees and commission income.

Regarding the potential future tax savings from utilizing NOLs (Net Operating Losses), management has stated that Kingsway Financial Services Inc. is uniquely positioned to capitalize on the Search Fund model at scale within a tax-efficient public company framework due to these significant tax assets. What this estimate hides, though, is the exact dollar value of the NOLs available for future offsetting of taxable income.

Finance: draft 13-week cash view by Friday.