Earnings call transcript Q2 2023

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Operator

Good morning, and welcome to the HealthStream's Second Quarter 2023 Earnings Conference Call. At this time, I would like to inform you that this conference is being recorded, and that all participants are in a listen-only mode. At the request of the company, we will open the conference up for question-and-answers after the presentation.

I will now turn the conference over to Mollie Condra, Vice President of Investor Relations and Communications. Please go ahead, Ms.Condra.

Mollie Condra

morning. good and you, Thank Thank you quarter discuss second today joining results. us XXXX to our for [Technical Difficulty]

that I'll with Bobby So start, Frist. to call CEO, over now turn the

Bobby Frist

quarter and Thank to morning, Mollie. call. everyone, you, our Good second XXXX earnings welcome

little breaking Mollie, think so up. correctly, maybe I you me text off I someone hand bit, will just the if were up and breaking a heard I'm also

they you others, those you some the quarters our move or as and solid record we fact, was look, forward report than quarter, record the second quarter. But more now good revenue adjusted of this one prints, to In We're and say, a company EBITDA. in achieved this pleased morning. to results

financial metrics. So, to I'd like strong start those by highlighting

the reached was period million which same the revenue up XXXX. over $XX.X of in quarter, X% Top-line

We EBITDA, solid credentialing wins period minute, application adjusted that key of drive $XX.X which the help and suites million XXXX. the was I'll In also of same profitability our learning, over a each of results. just some of XX% delivered scheduling with describe in these up customer

I'm All breaking because need one sure lots see text up. in. I I to make I flying got right. of second not

clear. sound It says come Perfect. back here. going Okay. I I'm to

anyone So, to everyone who's a some new about before we HealthStream. is business refresh helpful dive to take moment our which to into updates, let's also business overall,

to Each through scheduling platform. the developing, of valuable, First and hStream of are believe, more and foremost, becoming SaaS-based a they achieving HealthStream are we credentialing is interoperability dedicated healthcare company, technology which workforce technology the healthcare through our solutions. because

five three our That recurring means predictable. revenues in basis We under sell subscription length. on our contracts, years which and are average solutions to a

little We and we have to no are debt. profitable,

working workforce. a also second organizations. approximately We watermark addressable define new States the of our as X.X focused HealthStream million healthcare subscriptions. healthcare adding the subscriptions We million achieved on quarter, healthcare In and, market are the the healthcare in subscriptions, specifically, XX.X United professionals more solely in high XX,XXX

of confident inflation macroeconomic our face in in will Even we are line concerns in continue recession, we which release. and earnings range, HealthStream reiterated and just guidance the our to provide with results that

fine good overall, So, and results. print a

team So, proud able we're the of and to what I'm achieve.

complete want suites Now, and learning, application in of model. of It credentialing because breadth capabilities a our I three capabilities: and them each services scheduling, a and call highlight a like learning, application singular than of suites more to course, a of primary they're suite and we scheduling. of module, credentialing just area, includes each learning

of quarter. achieving So, the some indicators let's achieved highlight some of wins in we results the we're and maybe the how

a So, the which learning Center, our reminder, as a system. application Learning is management the learning is in area flagship HealthStream

and is about the belief. onboards empower engage And it reinforce and enrolls scheduling, which privileges kind credentialing, is application SaaS for the which is Stream, We credentials, that the ShiftWizard, to staff. flagship Credential is best-in-class, our that helps solutions each a schedule and believe describe of healthcare software wins For I'm of application physicians. that

HealthStream ERP the management customers. ecosystem. library. The over our which chose integrated vendor. X,XXX one for learning cycle prior and in utilized revenue a most Center a recognized our new system continues HealthStream only of the is Center of was Learning to approximately was the Learning LMSs, major employees from second Midwestern HealthStream a customer add In with system six value The small healthcare health example, The clearly quarter, purchase

to market multiple Checklist illustrates only place health Center, win, solutions SafetyQ, Cross they bringing also Learning competitive our integration organizations which that customer application. Suite the addition products, that takeouts, clinical the added of currently. one the several included suite compliance Resuscitation of Red our content on libraries, With HealthStream the HealthStream and value is This

revenues this employee per $X immediately, customer this XXx a from at person increase. With year $XX per win, person per per grew to

we'd more of employee this this course, competitors our kind to case, many as mentioned, and like of development, related of And positioning a see in the partnerships kind displaced that together. products of, services a but getting is case, of suite and solutions to So, in contract of ecosystem our In story winning better takeout. increasingly, at I altogether. we're our

a customers the Rush and credentialing University competitive legacy conversions included enjoyed the XX,XXX in Davis solutions also quarter, approximately of In we takeouts health Health, solutions XX CredentialStream, respected highly to representing new contracted many and California new Health System from like organizations Augusta collectively. These customers second both Our new our terms quarter, Health. successful for CredentialStream. subscriptions of

rated is software this application was credentialing prestigious and number in as GX fun, HealthStream's online one CredentialStream the site. the Additionally,

a credentialing overall, for suite. strong So, quarter our

of quarter, Florida Wisconsin, of University prior-year high In report transitioned other from ShiftWizard. the satisfaction. to as from like the our ShiftWizard to second revenues Hospital customer Children's XX% customers Health over the ANSOS our grew continue the customers many new was quarter product System customers Among

As we more more ShiftWizard, is differentiated continue and to only become going in in to increase the it powerful investment marketplace.

half, these some and these some the it's finally advances highlight hear build, platform I'm from of seeing Roberts, workforce to to hStream-driven we opportunities. value together that believe a it second long our is the Scotty as that As integration to will that unique some and market of of today; suites continues our discrete replicate, three the represent relates the the to of form difficult of opportunities. power a how suite going believe enterprise each time takes come after an empowering emerge, benefits to we of solutions In application proposition of we to in interoperability a we're technology initial

a at Scotty? some I'll to Scotty over numbers back and advances. and Roberts take to circle look it of turn the about our platform talk

Scott Roberts

Thanks, right. and good All Bobby, morning.

financial Let's quarter. comparisons last the the highlights unless of the noted, And the against will begin second period otherwise with for be same year.

in many with the financial new as Bobby of for results EBITDA, of metrics mentioned. records our adjusted quarter revenue and resulted solid key year, another improving over which financial delivered We prior

income results $XX.X $X.X XX%; was $XX.X Revenues was up EBITDA finally, million, as EPS Our was up $X.XX XX%; and up adjusted were XX%; million was share, up million, up operating was follows: income per and net $X were which X%; XX%. was million,

a contributed X% last high from to last completed Our growth. quarter and subscription the X%, were million quarter. or of $XX.X CloudCME to they of of declined Organic for the million, up second second of services record that were were $X.X accounted or and was year's compared acquisitions million and revenues for $X.X two our in revenue $XX.X million eeds, revenues growth we XX%. and year, the revenues the increase by at and Revenues products from came total subscription an revenue XX% remainder professional X% while

compared changes mix. last royalties impacted year. XX.X% was growth in and Gross costs, both hosting revenue XX.X% Margins somewhat margin by revenue by were cloud and primarily to increased driven

up that expenses, over year-over-year expenses the revenues, year. were $X.X or declined of expenses completed we of Sales, year's which cost last compared increase million of came G&A marketing last two Operating second from quarter, year. increases, experienced all to excluding and half development last while acquisitions X% the approximately product

commissions, expenses which marketing revenues. increase associated higher this the in is X%, with was increased and of Sales sales which most with growth by consistent

also is X%, costs capitalized of were increased costs development labor development. which net for that by product Our software

our continued over platform increases reflect and content of and prior-year investment towards these approximately quarter. $XXX,XXX Capitalized labor the single our strategy increased our applications suite offerings. cost And

part of with made two we year. the includes the incremental increase associated Additionally, the acquisitions costs last

service services, bad G&A professional charges, including due areas, fees to and costs. by lower expense declined outside debt X% reductions recruiting infrastructure-related several other in

the a new XX% Tennessee to our apportionment approximately taxable effective from the the X% law year. as the $XXX,XXX income deferred tax is apportionment Our impacting rate in second that changed The remeasurement to of change in tax the rate tax reduce was compared tax state liabilities for income deferred benefits, last well. resulting approximately our Positively in rules. of quarter was upon expected future enactment the

EBITDA our EBITDA Finally, million, was adjusted was to up XX% XX.X% margin compared which year. $XX.X last and XX%, was adjusted

of quarter million. and Now, sheet We $XX to let's the over balance move ended cash investment the with balances metrics.

we XX generally quarter, customers last And million longer little than During through a while been million shareholders payments program. delay certain to payments. $X.X successful in had we've DSO capital increased still $X.X for returned days we've usual, expenditures our for XX year. dividend to compared the deployed and to days obtaining

and income payments, federal last by in Cash capitalization million year. by of flows to were $X.X versus tax year, Year-to-date, million million, from last than were declined year changes development increase due operations flows operations $X.X free higher compared rather million million tax in were at primarily last and $XX.X the our requires just research million and compared deductible. to to This impacted immediately $XX.X $X.X being expenditures cash was that this law which cash flows from both flows coming free cash $XX year.

cash addition, for our that I expenditures and In just flows free increase capital payments impacted higher were an in by mentioned. DSO

our announced at per stock of We dividends million Directors third quarterly two And dividend the another declare and Board Directors we intend a As per a quarter. rate cash February, first our to common quarter and in a $X.X declared policy dividend under of the cash dividend quarter. our back quarterly Board to April which adopted intends pay in dividend in cash a to on shareholders. $X.XXX returning yesterday, share fourth June, of paid

February reaffirming between the of that million; $XX to we To financial EBITDA and million. recap, million revenues guidance range expected we is announced our are are expenditures capital range Now, adjusted to XXXX. million million; $XX.X expected for million between between and $XX.X previously $XX in and to expectations, consolidated expectations and $XXX $XXX.X we range

includes of year, the assumptions does acquisitions remainder complete While include that the it any occurred of during our may the we which guidance last late year. not for eeds, acquisition

generally performance share most for anticipate half let grow to the product our offerings. steady a year. second of our about the Now me sequentially other expectations expect of quarterly and We thoughts revenues few across

enrollment clinical we continue products and market-leading nursing placement. judgment include: medical credentialing, myClinicalExchange, top-line SaaS-based our innovative AI-enabled solution; to scheduling our ShiftWizard, application; and driving onboarding and our and of growth CredentialStream, our clinical assessment student Some privileging the expect and for solution; solution Jane,

have costs were higher we for we working the half categories areas of to and anticipate We fill. we're labor in year, certain positions those Thus, currently they increase second as half in first our than expense XX over the our year. one is of be to will the Now expect expectations, staffing. the of

marketing will slated trade We over total increase about million half several $X quarters. two next that in second the the also and have for shows our spend

I'll that And comments it quarter's and for you time back your for morning, turn you, this now over Bobby. to this my concludes Thank call.

Bobby Frist

thanks. Scotty, Okay,

our good future state hStream the technology insights like I'd hStream hStream marketplace. company to to into in the by our Great give developments financial HealthStreamers little to positioning into our of results, deliver bit and some and a them. happening work the the platform all the dive related and

dive So let's in.

One shared APIs. with a platform-level our of encouraging portal, momentum APIs provides view, the development technology in when was platform the modern, it, applications beginning collection in of use architecture symbolic access which we The customers' services of the saw and architecture. developer secure portal, journey many was years a the we've we adoptions of launched launched kind been and growing of growing portal scalable my a quarter in XXXX. the fourth we to launch the hStream of In early the with and for available on

rely in applications and portal. APIs tech of had system of eight that and platform enabled to quarter, XX our to essentially large where the developer on currently several take customers, stickiness vendor our Again, applications portal in organizations. market-leading applications. capabilities. We into capabilities available on access to collectively exercise APIs XXX including health those second developers the access global developer customers, EHR company, and account robust to is our the start-ups publishing a to health For extensibility increases advantage an customers believe the we gives other extensibility a the functionality window applications have of APIs open use emerging a chosen portal, the their the the these organizations, from end At power as the to the of our meaningful begin healthcare offer

couple So, a of use. of examples

HRIS For system our user/student large we organizations automatically Center. the partners API register and new HealthStream to customers, Learning staff from their saw into using directly

the core systems So at Center hospitals. tighter the here Learning the we system like like between stronger see applications core and integrations important HRIS and HealthStream

using One our a customer Center records -- they're to was bring from their staff a educate by with HealthStream learning centralized large using video that API health system to in transcript. directly into HealthStream system from the learning their Learning records

in created transcript longitudinal the of training using APIs have truth source employees. otherwise learning transcript our -- What that organizations the Learning this data It for educational we the to does? HealthStream here, for as and the so add reinforces the center And wasn't history of single the development into transcript. the

systems APIs they become transcripts the as our we of use healthcare employees. So, learning authoritatively the to for more record into connect outside ours,

We of couple some We on think of services they their they'll those platform believe our already And that our separately. adds benefits examples start-ups of be of see, directly value capabilities the start will APIs interoperability take as integrate tech to to I capabilities. our market some around platform-level licensable we'll the health some think developer I We I a these mentioned, market to applications commerce half, portal. expect into that second poking would services. great also these to and tied applications. are just customers our differentiating see creating some and in that

believe I and overstate to the It half direct-from-platform be itself will which exciting. some it show it, small, company of moment for revenue, but a begins second first to I we'll don't kind our will in opportunity. as year, of very financial platform differentiated be the the will our So, be want drive so exciting

collaborative our subscription can and products of purchasing purchasing process benefit customers' we accounts. coordinate collaborative order facilities their The in health what on customer a participate used discounts a power to pool our ability need. the greater within Another create hStream want it's and volume purchasing mostly some been the in in larger of system and for process. a process, larger around Through is call an to for a in HealthStream while has collaborative they purchase

purchasing significantly they we the launched enhanced collaborative a process. software use through March, in However, application collaborative operate that to the

we We process. former as This valuable President, accessing service time, collaborative our they something the identity which who using their platform. at exists can most participants the to with first and HealthStream words, ID, are "We customer or benefits the other the the management are to are play hStream in that purchasing know both better right the the and in get now their since the right is For application like participants to role products Pearson, person participants hStream what that right solution the time," them. In the that. used match Eddie say, the

gamification process. that engage great feature Another of use the the purchases to is collaboratives they in

-- directly discount As see time. product they to purchases the together, their they're increase the force and facilities real of platform our our is level held add discount enables can going infrastructure. price by sales therefore, their pay volume the in price book, connecting interface purchase which to increase in decrease The automated this

can So, budget where kind and across aggregate gamified review process, and demand of and inside the around health products. the multiple cycle, we've organized they purchase system purchase

technology. exciting is this So,

collab March, process. collaboratives significantly in We is this on that this application expect customer XX% this a new to place. run XX than which collaborative collaborative on purchased which the complete first purchasing And basis, XX year, In that in empowers prior suite of last top the fact, the around year. purchasing in XX on architecture took this the they software new enhanced of a dollar more did application, will kind the the application utilized

addition, gathered what products. we who who is lot In information a of what products, is about buying reviewing

that we've purchase into the never process and review product And so, insight before. direct kind organizational of process we the had had

benefit about platform. of really being capability. on this So, hStream It's hStream excited collaborative a the

participate just collaborative the applications of mentioned. which include purchasing. And software, HealthStream access our to includes your is then, which the subscription right when hStream, you a collaborative with get, a products So, that course, the to subscription license includes to hStream, I in to it increasingly

excited beyond We we're this about hope XX accounts. expand to core program So, this.

more a We have, some few And excited we've initiative we're use expect and to this accounts sign in talent fact, moved process, up technology-enabled budget-aligned and year. this it. lead this purchasing really to added executive which about to more

in everybody. bundle using action. of to example for win, do network automatically that's products, the a able it win, software, incentivize it's So, prime a I effect purchasing, think We're win

for order services, of the to of -- of got offering. we the in products as they increase. more discount able of HealthStream, of present be or -- their in For customer, which case, they collaborative, discount this greater collective discount grow place featured is as more the size their power And and our many grow their to our And partners were are orders. orders for our the course, of got they learning part that see completeness, their the is our

So win, It's all but of ecosystem business, from makes our directions. win, I case, believe that's win. does. this a in stronger it rare kind what It in situation

our also So, only for how be purchasing that of does past, drive directly and applications, into service, I in those the incorporated quarter. new developer ERP add platform benefit capabilities of someday just tap small well that's excited their power interoperability. in have evolving. capabilities suites. it to on are process as application example, next as large into that more course, And about that I'm updates economic about like each power our hope the excited up we'll as license we talked the And portal. we suite, own to begin mentioned. We'll the to the my enables platform collaborative startups being Not will our as our application verification vendors

to and little have disclosure the A because opening is more for few read updates we exciting around to going that which then conclusion Great. have you're a I as bit [indiscernible]. again, this, statement wrap stay up, of to it's

to can And as me read for through you that well. stay so

biotechnology was is our our nationally to he founder experience, and pandemic that. Board investor leading an He for executive was centers, Head a of also city's June nationally Alex of announced medical On a Directors. X, of featured updates. response at other academic is HealthStream Health Department the addition of extensive and physician Jahangir specifically during Jahangir recognized Dr. COVID-XX couple a Dr. So, with company, Metropolitan Public owner Vanderbilt. and of to our the

is as Business on add who Board Alex Burn really He Trauma Director of Center of and someone Orthopedic Orthopedic as Executive at Directors. we're Center. well Jahangir's Dr. Medical Vice Vanderbilt Development, Patient national to University of Director our enthusiastically and Governance to Surgery our of the President of for to the Jahangir Chair pleased Directors. also So, to will Dr. Nominating Care currently of serve Board Vice Trauma, the of have Committee. on We Directors, welcome Emergency our We're caliber and Vanderbilt visibility pleased Board our Surgery

September we made As just our the ago. And will will the our of close dividend portion of reach the to about a the under yesterday, which I this third new here, remind approved paid what second payment want payments on just be the quarterly XX. installment about We policy Board policy. be plan, month you under

sheet us We our puts quarterly are to pleased cash dividend to strong position to the shareholders program. in that return and first strong company's performance a directly balance operational our value

of Halfway course the the approximately new expect the through dividend $X to track meet million a shareholders. policy are to return that our goal. year, Over to on we year, we

of is expect a of HealthStream SaaS, as So, in steady if the stock growth company PaaS in for be its its the XXXX, and we healthcare for share highly dividend, technology shareholders to to profitable, you. interested profits some directly to determined may form are gains that you revenue, deliver recurring

during we Nashville, a of their And dozen the the happening calling healthcare I Nashville Nashville organizations of Week Healthcare XX, the Tennessee, will is conferences where Sessions, will actively Sessions year. headquartered, on city are launch Healthcare the believe one the these conference. and will hosting in National we're of reason say of I the be their XX over be healthcare here weeks one each Healthcare members through want organizations Board coordinating Council weeks of because we're helping healthcare exciting most September event be to what which conference other the dynamic remind you

kick dozen the these you to for over calling National to So, a be CEO healthcare world. conferences be Sessions event of present to city, healthcare opportunity Sam to we're come different Week, across conferences. if off to sessions. and the They'll a I'll that going you Again, -- that to national Healthcare forward look register participate can participants our during we're Hazen, week Nashville's the we the interviewing in HCA, open with and community

and that. here and healthcare come You headed listen from Hope in industry by for going the hearing of leaders the should see where all join to is in you're Middle healthcare Tennessee. us

now, And opening going I'm to over back the to the going it turn statements. flip I'm to and before read operator, I

filings call contain forward-looking concerning forward-looking to the results could to these earnings the would and that this HealthStream risks SEC, that results future to are future cause cause those that XX-Q I of those from Information risks the involve XX-K, certainly including materially events, statements. and which remind the projected and forward-looking statements could differ materially other in our conference that the with I uncertainties you may release. contained did, like in and factors differ company's regarding performance statements from Forms actual

we Additionally, it is is may which measure. non-GAAP to adjusted -- supplemental in and may on net release providing included earnings measures such attributable A and issued that income information and yesterday reference EBITDA, to financial refer in to EBITDA adjusted may HealthStream this we reconciling the we table a as call.

over I'll turn operator call Q&A. the to now for the

Operator

question Instructions] Craig-Hallum. Thank have the And we first of you. today from Hewitt coming [Operator Matt is that

open. is line Your

Matt Hewitt

I who don't she if know -- called?

Bobby Frist

We can you, hear Matt.

You're on.

Matt Hewitt

right. she off, give I'm first Well, out update you there. you lot if customer model? All the Obviously, Yes, had of customers. attract an things, year Great. that But I great ago, helping the that that part your that's wage to be a does Okay. seeing a wondering may how retain on resignation, people Thank to going the but where could are you. landscape. today. one your from selling coming cut I'm guess, hospitals and talent. just growth curious that, And sits the that impact ancillary of of us

Bobby Frist

lot a turnover, experiencing still healthcare of job certainly, shifting. Well,

of some persist. think challenges the -- don't for I so, labor And

to travel by nurses of better on started by money, there's a have handle around place. specifically in benefits. and raising appeal larger more travel industry, the ways, a think the be kind I'm tired. little health essentially a There I some think on. manage, how little to the they've be place nurses that the but gotten fatigue the I some and of systems in are favors a industry -- made find a home respond I a team hospitals. sure more to to they getting hopping might positively they think little can And And

the So not only reacting talent with do higher. think the recruiting I improved benefits and they pay doing realize better they their definitely have attention retaining more and staff, little they're to of a I recruit their more to affects are to them. and bit. they That job a realities Costs needs don't the wages to higher and staff adapt pay beginning more they're to overall even wages, that temporary for in comes and that going they're if think higher of realizing offer budgets, to fix

an little it's a think employer. enlightened of of bit I So kind

well that, of think us for that our positions some do I solutions.

to Our programs to clinical cross-train them ready another. to nurses get be used department pathways one can from

and we're to them I think new timely, We to our onboarding making solutions hire that think doctors services. suite that necessary think market in when of that ready reducing is get bill the suite. credentialing they're patients see cycle best time at productive. credentialing from for like the the our the our in in are the to We steps essential shortening essentially to

in process new privilege docs. a of suite onboarding credential integrated the is our the and definitely enroll through So, winner

over gaining efficiencies seeking how going time. efficiencies and be they're overall, to think they I in operate

So, environment. environment now still tough is the a selling

always have that to. historically at large sell we the organizations margins Our been thin

in a And So we not -- solutions, market. still still while they're about It's easy more they're core market. high-volume an It's to have that. enlightened tight. need it's invest more the respect lower-margin, to

way We possible. for I a those mandatory price respect for think that have at example, best to them is help lot that we requirements the try the meet requirements. of we lowest solutions,

own, it And a I with so out you have get but think help exceed our an efficiently. of and on meeting low if the objective them of patient, is They them. have good compliance, regulations compliance I efficient can category, compliance and full think ComplyQ, the achieve for to to do good SafetyQ perfect we'll as a compliance. at And on and them the solutions our laws, business federal to for example, like certain comply and product lot business focus their us costs, focus for their of but price, and on lowering offload that the it's helping

little the that's and in I your and some I got about bit question. a the So environment the shifts of the it hope attitudes workforce. part

Matt Hewitt

simplifying of you to a processes? much their function versus was that very the and having How health win throat choke" with "one you congratulations I'm a them it Obviously, looking Thank coming big little the the to the then shifting basically for And in of gears did. You on bit. competitive there. like system. Midwest have best numerous much. solutions internal curious, all displacements was of sounds there those

Bobby Frist

bit is both, loyalty. of, it's of a brand amount a look, there Well, good because little say,

For school. their a when because content you experienced that's you example, picked clinical education maybe nursing if partner, in you're

so And their want now brand. use you to

established So ecosystem maybe cost. part equal are -- is of partner the an some the someone say be to past, can our to in better work, used from in if the or products they've or shift lower even

a think I more resulting value So replacement, of really package and more it was, and existing I'd gave more obviously, case, this many which the to see categories love almost than value, that. which in vendors aggregate

$XX $X accounts to had $XXX year our we to examples When $X from decade. over year, per or deck you last a that look several gave at built per from of person investor

as competitive course in And sale process say, would products so what days, was of over fun over XX to in. about to this place four I the developmental one go. employees concept one said, like you our addition this happened I was case, of having throat They infrastructure one talked or the about it to around essentially, efforts I putting were choke, the kind in displaced for of today their LMS think,

did their purchasing we of consolidation So, create model.

one believe partnerships Cross, from is the of case, offerings American the ironically in Red our also made, the available that most was in like categories, our marketplace. in which market alternatives, are we product to our they superior addition, In switches this

chose So what model example. they here, though, for for a resuscitation more training, lower is cost, we believe efficient

that of three was or just -- and So one four displacements.

I power sales showing call, HealthStream ecology. presenting little So and are our what the this, think our we at of a better packages the getting teams

Matt Hewitt

obviously, That's I'll press, back I'm are in platform hop curious, last But a of that elsewhere Jane, you. lot a Maybe adoption right queue. now, update in then excitement, appreciated. Jane? a talk has would in in and about a the Or you great. you've AI of one and got seeing one, lot while. the any media just been of be regarding Thank market increased the for there interest there's

Bobby Frist

and and Well, It Jane premium learning, make components is difference AI a to in it that still and is we're product. adopted. early organization beginning the stages real enhancing machine a It's of it. kind has of

the it's And to required more bit in a is foreign minimal little invest so workforce costly. little education Jane. your It's in say, a from, real bit investment This programming. a

that they is to When but the that clinical the allows the how who tests means be what and none is one insights room, you otherwise. of who well something really C. to quality, it And products believe market, have almost does, the And used room, A, knowledge. organization you can do, to something actions the If well in just and what nurse explain of and your can knows is, do differentiate do we Jane tell Jane systems not staff. beginning very of which We really nurse the who C would get the are of good most, B thinking scores act? that's the lot clinical best, reasoning an an these them that it what is well, differentiate A scientifically, and get do expert at competence delivered their teasing it's in clinical into or in your does different? B, you that out. were A, expert you never would expert the really when Jane that workforce and However, believe essentially be can

it's we're it. premium So, excited about Again, product. a

an what think on we're ability organizing we're -- and instrument the we're I AI where we to network. of curated and long call the adopters, so seeing Jane that they're I the -- to derived our progress be from Now getting and skills going mantra new real at capabilities, difference data the their develop is early our and is while with execute our differentiate as ingesting to will other of core run, we're conferencing AI, think making better our a into for And sets. this SaaS that we're data strength power

the getting XX history, workforce, we're programming. insights and into workforce, about and more more years more think longitudinal data more educational the of I

And their think credentials. at about getting competencies, skills, better we're collecting so, I information

knowledge And healthcare And out, of the right differentiates to first now, So, is for strongest. I more as Jane our certainly AI really of and staff. how staff for implications it and and nicely our more think it the examine And growing into pointed many pilots on Scotty just and as foray. have future is not is Roberts leverage as look has the HealthStream competence and us bright we the framework.

So, growing specifically. we're sets of the data and our AI, excited really Jane about future

Matt Hewitt

Thank on interesting. detail, congratulations That's quarter. strong that the and for you really

Bobby Frist

Thank you.

Operator

Richard you while for Thank prepare for our question. from be One moment coming And will next we Canaccord. next question question. Close your of the

open. Your line is

Richard Close

Yes, okay? Can thanks. you me, Congratulations. hear

Bobby Frist

got Richard. We it,

Richard Close

Great.

that more. can that just something different? talking is into HealthStream Bobby, purchased if on I'm I So, mentioned you were total Are revenue that just you Or curious client you be XX% put to client's the up year-over-year? will collaborative saying about, perspective. that you XX% just... one

Bobby Frist

be Yes, that would different.

Richard Close

to you're what want ...don't misunderstand saying.

Bobby Frist

Sure. more have and Yes, provide we'll information. should I

that So things many They us. not that the collaborative. for buy a in large are enterprise is customer customer

purchase in extend technologies not in the anything or base collaborative. They it HealthStream like example, Learning for the is didn't their that Center contract process. For

what bundle across, what So, they dozens it for, there understand the wanted products. of are that of want XX centrally, I'd was, purchase was a they say, necessarily to demand educational XX products say say, or was hospitals, didn't to

for are some products, of were for, department to are organization. each relevant or which small we so hospital, only And XX the some say, XX which of able feature whole relevant in a

for product them days hospital what to kind XX into them allow departments of XX add and and the demand was allowed aggregate the into in orders review leaders orders But dozens XX then heads that essentially, their the all it could of and do single see of products They a purchase. to place collaborative on then or of order.

many purchases were XX-day those they purchased a the year. prior products And over So and products on window, over the XX reviewed of them. up XX%

It multiyear again, does that -- -- implies are those not sometimes that of which imply XX%. that the revenue value, set products, the from commitments. that they're It account will for go order up

five value products XX% wouldn't let's then XX% years, products they XX even those be on year. be would in So three -- they order say, years. extended over added products, three It new spread XX that for the growth would be

some But never gives purchased and gamified it's dollar they focused and offering, products, orders bought kind did more is they've value. they before up way across of and they of total purchased and hope products I because in library existing very So products of extended a exciting that a process XX% in XX-day it and nonetheless, they both clarity. that were

Richard Close

maybe And hStream, side second that this Okay, something year, from the expect likely the exciting on perspective that's then commerce you half that helpful. of small. of in possibly albeit obviously,

in And As side hStream but about how of we course you with going if the of just Scotty, do or one-time think curious several the impact And should there revenue revenue though, as terms of to on impact. is margin over revenue the years, that license forward, -- that in that's fees you I'm potential commerce think has recurring margins? maybe the for that then nature? is -- think associated of that

Bobby Frist

come don't example it recurring, know an Let we really yet. how could of and me give

a bit. talk is let thing a first it's through the state, future So it little me but

I our of think one license can It's about talked revenue. verification platform itself have we services generate So, our service. that do

incorporate. we've mentioned, is we and so, a in it's current, driven so as allows platform, the And license it's API, by verify built capability, to easy organization an a to that

you're the of sell that license you So, the current. your or in example, application small nurse that know store that way a want company a you let's licenses startup nurses' and say, to for market is uses, whether you and

benefit the Our customer would have from service. future Center that be a to to you state Learning HealthStream be don't of

buy have You CredentialStream. don't our to

check to would hStream paying which the over platform, X,XXX connected is us You current us fee and a service to to our pay can pay expired case, could in to flag license. connected, check just end a say, license, our that this back you small or directly points and get

start-up that add to so, want nurses license directly. future, capability different that idea And XXX verification application, for store their they might that to here a and the the would maybe be licenses companies in service

my end the revenue-generating becoming it's So that the up future. capabilities hope of a platform several of our services in

a we've applicable as as window a see want but in reemphasize be services, into state, is to I there developer our got of developers in registered the their have and that start-ups future doing. I do which they're portal, already what noted it those to how to may couple look

competitor their such. and what a in or and the as addition, it may ERP I licenses the there. viewed ERP license of system as would in They as in is developers of validate In we currently a of license large to HRIS our some system world, service mentioned, the be their use vendor, one had largest in having one the there go

currently, is learning So license center. state, that again, a future this into but own service and -- our is plugged

checking own before in in be -- credentialing schedule own our we'll licenses Soon, our we scheduling system.

obvious but they functions to enhance the may is these applications using we're our own them, so, in And become themselves. point licensable

to we're might now, that But right revenue. or have so it people it's generate an might organizations early excited could too they because don't interest signs we the to in beginning that, undefined. want get that And and see about

people's to that's at So incorporated actually now. into starting either occur we own by be And be to we'll mean of next people's applications. that to I value quarters, The The other where That's able give it powers maybe applications, what leave platform platform the hope differentiates platform then applications. for or the few and examples other own platform. the of our platforms. our a power prop may

Richard Close

about out, curious, going win Okay, maybe just just including But there lost that's Matt's new an been six that Last the and two perspectives on talked quarter, positive. firms I'm learning changes? helpful. the vendor. system, you environment obviously, accounts. then And ERP back you think question, updates And beat any the competitive you any I learning? in Has on mentioned to meaningful

Bobby Frist

don't I No, so. think

the for learning question is over all a a major appropriate and lot the training in think the There's learning mandatory players environment I environment of how architecture. have hospitals. that architecture

I And around of lot self-directed wonderful. a For self-directed learning. example, is there's initiative -- think learning

area you Jane career directly helps that's through learning path that develop targeted needed. skills and other think maybe in pick I more However, a

might the much Jane you learning from than generic a better identifying OB to is intelligent maybe kind So, platform library from department, purchase if you want move Jane to ER about a what a where of be to going third more content you is need. party.

completeness I ecosystem. So, of then -- think and our the

out an sometimes when I all commission for our not of LMS joint needs a needs to the prints the at that meets the levels, know of So, ours, ERP commission healthcare, including, in, think, specific powerful LMS, or is, audit. walks which as example, report as joint we that

if LMS from consider, would CFO -- I you just opposed just may less to and you're aggregate the a the capable vendors does -- but happen. trying you're take as so, CEO the sometimes, that what vendor, to ERP And or an and

So, we occasionally. lose that

power differentiating just the competency our like generic said, architectures generally, from the as think industry, That in architecture, partner the the learning HealthStream told, I capabilities learning collective hear of LMSs. content products favors you learning the like our of our brands when like competing over offerings we as story systems, learning best Jane true a the

some be and ways, some competitors, features. dozens even more have and, dozens there's may bigger of budgets said, in That

may our are not features be is, exchange does The currency question not LMS -- customers. the something be Now systems. relevant international fact currency or relevant hospital a to in that may that, U.S. those conversion to a

features the aggregate our of on our because switch example of competitive, our and wholesale And where we reasons. in known this of our think I feel the are value kind needs focused So, was and those of resulted partnerships, capabilities that a an to customers, HealthStream.

Richard Close

back jump I'll in the queue. you. Thank Okay.

Operator

be will next One question prepare Barrington. next while Vincent coming question. our the And Colicchio from your for you for Thank question. of we moment

is open. Your line

Vincent Colicchio

Yes, like in the comparisons? year-over-year margins look first I'm half. terms down gross in of second year-over-year what were curious, Bobby, the should half

Bobby Frist

Scotty needed. if take in I'll that chime and one, let I'll back then

Scott Roberts

Sure. Hey, Vince, doing? how you're

Vincent Colicchio

Good.

Scott Roberts

that aiming still few of for XX% kind margins, a XX%, think points range, quarter-to-quarter. mid-XX%, we I we're teeter basis

of to example, grow the obviously, influence I continue costs and of revenue that as our stream a couple start changes, on costs for -- filter that call, be margins continue some to expand the royalties, factors CredentialStream cloud we through. hosting mix to the application, revenue As mentioned then

revenue of call, legacy then didn't And in just we see applications, prior attrition it a being on some mentioned margins one bit. and we've revenue application influencing called pulling mention but the the down still scheduling little our there reductions little mix ANSOS, a bit on from also, calls, it that's revenue obviously

of that spoke we some going the ShiftWizard also solution that also over is there's attrition just And on about, shifting obviously pure to but too.

I But for that still aiming XX% range. think I we're net-net, think to XX%

Vincent Colicchio

that. on a And follow-up

you do better the expect What's there? stabilizing? attrition forward? the to is ANSOS, the On going get trend it And

Bobby Frist

as situation. in think call, we I described the a last challenging it's

ShiftWizard. think from We're ShiftWizard needs full but capability converting announced one of ANSOS the of conversion we the meet do. today, enterprises, can. the developing we to large have development an as more I customer the to we're best We to them

legacy And so, would a we platform it's attrition. kind that that a was of acquired that some experience known quantity we company and a

that. said, getting our company ShiftWizard, That and customers. I into think trying continue as experience to as a them at own move those I called to better we're accounts we retain think application

expect the a and this be attrition hitting X% growth I rate. So, X.X%, why That's continue we're to drag.

delivering be without would better think that, I rates. growth we

today, year heard prior you quarter. the over XX% call As the grew ShiftWizard in same

So, growth a as going on applications. the of known new with general, SaaS kind we're to just application. experiencing ANSOS think I with risk and entered in ShiftWizard through the in is the it's that that that build future known risk, we're market these and the quantifiable out but manage we we drag And of a promise

Vincent Colicchio

And look like seeing the as competitive products or one landscape follow-up Are you similar of yet? you -- there? what on Jane. seeing Are no, does

Bobby Frist

state again. question Well, the

the was I So, but shared what yes, think for my Jane, I question? excitement

Vincent Colicchio

competitive look like? a seeing you landscape the product Are emerge? What does

Bobby Frist

I have not.

in we But sets in history when competence missing XX-year acquired, we I that's the something. of the of the that industry be may that it's I'm Jane, based sure there's data building unique a somewhere built believe, assessing So on were startup had because this gave us in something. in true HealthStream. company into that the infrastructure system train turned expert think asset using way, at that we time, a we market, needed a asset the think unique build was unique data to it. we've a to just I the and

So, it premium product. a is

now, So go we're get right was be I thinking price think But product. a just it. going to rate think it's a it we lower, we to keep tuning up. and differentiated of want could If working want little about adoption with that because where the product to it we

Vincent Colicchio

Nice quarter. Thank you.

Bobby Frist

you. Thank

Operator

your from for question. will Daniels next be coming for while Thank of question next moment William prepare our we question. you Ryan Blair. And One the

Your open. line is

Jack Melick

Melick Hey, This is for Ryan. hi. Jack on Good morning.

is a the more which sequentially right. here. be into Deferred year-over-year flat more math weeds was if a down period, the prior-year guess compared little billings this I quarter to and my would bit to indicate growth, revenue negative looked than So,

not triangulate nuances are and impact as that over revs us quarters? reliability metrics? your forward there a would plenty indicator. other you how next related visibility you. impact get do details of that I Thank walking Now deferred would few of the billings the might that But through mind And or to

Scott Roberts

us I can't timing both I try would billings. -- to Jack, explain and billings fluctuate in thoughts. give the of say for you're a probably interesting and I'll tend you the nature Hey, it question. few asking. that way to But

so, of of variety to us. kind smooth kind the help have a options of good our payments And we for to customers

quarter. And billings in some is seasonality-wise tend semi-annual. of for Those And have at very to for mix so, quarterly us, annual happen good a billings first us. least and also monthly billings, prominent the we

time at influence fluctuate. So revenue how in any point tends given they also to deferred

the terms contracts billing contracts see at QX, you renew just And in, well. contracts, but if typically back come look that's -- new where as increase, we so, year-over-year, often change

would have sheet of the which billings, reporting flushed by annual see versus sit likely balance most trend started generally to longer. the bit balance a end sheet more the tend quarterly which little of we've to a billing, towards on so, And through period a

Jack Melick

there. switching guess Great. a the I Okay. detail I And appreciate bit. little gears

would Thank it's to more quarters. I services, as but direction segment over of you here speaking, smart seem guess, be few professional professional in My overall its worth can't but relationship of case. business, subscription you. the there increase I the been has And help I at more the revenue get that actually outlook? Looking this but of last longer-term there two the notice lockstep, of is broadly sort Is assumption relates would to a negative be believe that chunk that these and lagging its growth this highlighting clear? reason anything a it services that is that doesn't isn't and

Bobby Frist

I that pro Yes. Great a subscription dropped. question. a build It fees being and is we am implementation believer intentionally should business. and minimize services

so, fees subscription the or fast even try recognition. with decided intentionally initial cycles, some cases, move associated And as we implementation to on implemented the to to to or in reduce and software possible lower, as get

would This fact the I if subscription If slightly X%, therefore love it. eliminate and XX% I revenues increase our find do implementation that probably predictable. believe eliminate to would. subscription, I Scotty, is a our of are about I So, our could fees, way number could price I it, I

and -- you where to configured on services these and general, remotely turned need to there's really of biggest site. to But to the it in without get can lot so So, biggest something. and on we've we're a of do people effort a got trying conscious on be charge travel implementations, involved, just

not intentionally my -- here a services not part diminished. we'll and And that probably it's it's pro a our to be our so so, where small growing would point like of material get And the vision that is financials.

But -- services. ambition we do not to have grow have pro an we

what it trying paying self-configuration require implementation, monthly get services it's I'm reduce that the fact, make online applications opposite. and don't just to In the simpler, to the the That's want. subscriber. time, we implementation by get

-- that of kind actually would hidden. a positive subscription positive of but I a it's higher down year-over-year, are in thing, it know I more mind, our revenues means is my it so, based. say that's And percentage

that, don't I add know to wants but... if Scotty anything to

Scott Roberts

and is think we I deliver how It's Yes, intentional of product the shift right. Bobby, mix services. an exactly explanation towards your more

Bobby Frist

something for in it. have think to said, people there no you on them way are But I implement it And some my you we're do pro there months, fees. like find need to we could scale it's services for is a four charge that, would we so two you goal months would and I be -- self-configured, talking that to, and large XX something if Jack put just

So, question, And to the directionally, we're the you asked is a no. answer it grow? is just trying business

Jack Melick

Yes, Really the appreciate make insight sense. there.

Operator

Thank you. moment. And one

follow-up question. Canaccord. will coming a Close from And of have question that follow-up We be Richard

open. is Your line

Richard Close

Yes, I'll Bobby, and But save keep it other just ShiftWizard. follow-ups clarification for later. quick my a on

growth. just You mentioned XX%

reason, in prepared the XX% some For you thought said I remarks.

Bobby Frist

let's can clarify? check. I Scotty, you have misspoke, may

Scott Roberts

XX%. was it think I Yes,

Bobby Frist

both solid XX%, thanks but they're yes, than better that's And Well, Good. for Okay. numbers. Richard. XX%? asking,

it out I it's year-over-year. So, guess turns as XX%

Richard Close

Okay. with you Great. Thanks. follow-up questions. other my I'll

Bobby Frist

Great. Okay.

about of to it's parts it. definitely the talked with more the kind XX comment quickly We've formed months it We've over one Just related of ANSOS, acquisitions. challenging of ShiftWizard, closing our business. whole three one

some component. paying Some had of We water. kind hot acquisition what the we're legacy roadmap gave of But -- customers. into that acquisitions a and knew a us getting

in scheduling the by is helped of have Sousa, get Michael in-charge application what position our which is system recent get the evidenced credentialing the that market-leading we the industry, team that new, leading suite, GX, helped ShiftWizard as there, and the that the as CredentialStream building relatively specifically leader the us whole into And area. really is our team the person, the now us recognition done, and

best we're practices learned. lessons those so, installing And and

I delivered executives -- on making deliver I scheduling to think we But it now in we have try well. as actually that happen in Michael prior, year other had the it. made the from playbook Sousa it said executive and it gotten to happen the to

applied some see start would in challenging experience from team leadership expect year set later So, this I there. being in hopefully, I opportunity -- on the excited gains is of returns that And we're the what, that to coming guess, early put we and will in the say. to this set about

Operator

questions no the queue. in are There

Please the back So, closing Q&A this for I call like would over turn to to concludes remarks. session. the First ahead. go Bobby

Bobby Frist

come for listening We're for quarter. in. Thank Don't forget Nashville Nashville looking Sessions. next to to to the you the all forward Healthcare

next An to we'll happen, you hi you HealthStream on update what the platform, people see you to our as the we talk hopefully, and well. to are participating hStream portal -- We'll Thank and customer technologies HealthStreamers of You'll opportunity strong made the quarter earnings for where healthcare it a call who the -- guys to great say will the that another guys stories. forward and soon. strong look customer better. changing all all to Thanks. be wins

Operator

conference today's call. the This of day. enjoy rest participating, all and your you concludes for Thank

disconnect. You may now all

HealthStream (HSTM) 25 Jul 232023 Q2 Earnings call transcript