INOV - Earnings call transcript Q3 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen. And welcome to the Inovalon Third Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded. turn over will Kim your I Collins. now, the to conference host, And go Please ahead.

Kim Collins

a is results Senior Officer. Dr. Kim distributed Communications This Boldt, our Chairman afternoon. The Good Collins, will and shortly, Board; press our on to and financial I Chief Officer call. Jonathan here this welcome of Inovalon’s call the at quarter Chief was release Inovalon’s Vice am quarter earnings for today of like XXXX third third Dunleavy, with be all Financial Keith Inovalon’s Executive posted and to I’d Inovalon. of Investor the President today’s on website. replay afternoon, Relations announcing available the page you

call, are that remarks call. you not initial call For statements those of I of you as be be this made remind characterized during listening XXXX, this remind made updated the we to and herein earnings October will of the XX, today, to will may certain subsequent you that this rebroadcast under for involve Private factors results plans, of including results could Reform related Litigation position, statements Those the operations. differ our to Securities Act of cause future XXXX, and and objectives business growth, materially. of strategy to market financial our a and number future statements operations actual forward-looking that as

to website. the provide information earnings available filings with accompanied is section and additional release the IR is a this concerning information company’s and presentation, an contained factors which of these effort In the Additional our by conference on webcast to in is SEC. call investors,

our this You copy presentation are prepared encouraged along of a with download to remarks. to follow

measures. certain includes financial Our presentation also non-GAAP

the and measures definitions end of charts earnings website. these on release You company’s reconciliation the and company’s will find non-GAAP at the of

call the Keith Now, to turn Dr. is my pleasure Dunleavy. to over it

Dr. Keith Dunleavy

everyone, thank for joining call. afternoon, our Good you and

year-to-date. Together, clients for continue industry-leading of and Inovalon by many bring during they begin as and new saying, I meaningful serve. well the the entire are with innovations they to our team value devotion the as unwavering impressed millions of helping quarter me that be online Let the patients drive

expansion well impacted performance team, us me we for more the to guide to term and pandemic continued legacy business, pockets very Inovalon’s that legacy have renewals, in shine very the continued months platform coming a on weakness as in strong I go non-subscription also sales, track services rest no and we And the There implementations revenue some for of offerings services on our areas the metrics metrics several response While accelerating of is and beyond. of COVID-XX strong our as our while for outlook the experience a and help COVID-XX further to performances to short-term in towards and lower multi-year innovation is quarter offerings, performance that top for our of Inovalon bottomline you drive impact. doubt state-specific will innovations live we was COVID-XX profitability elaborate with continue quarter. key term into related profitability. to track let let But first, insight firmly frustrating margin me that topline substantive Jon medium the whole in with growth patterns longer third and path and and XXXX, will XXXX further technology during ahead. provide the key the

participants of seen larger increased and engagement continue the XXXX launches move healthcare we by continuous both we environment platform an and of progression Product navigate it. within innovation. the a broader a through COVID-XX to larger As and array have ecosystem

and totaling reflected success the $XXX.X the same new third the quarter’s XX% continued with months seen have in you now strong ACV trailing the period-over-period third XX growth quarter. quarters several pattern and sales For momentum million in ACB up

Third quarter which a new million a Recall per $XX.X of expected XX% and year-over-year contracts revenue platform new first the that period. sales signed year-over-year. from ACV XX% reflects ACV only months $XX.X totaled is up contract up metric value new XX million ACV totaled sales or annual during

We of Inovalon SaaS segments marketplace continue driven ONE multiple for turning of Platform to as see the purpose-built adoption steady cloud-based are data Inovalon to platforms. the its

the contracts notable world’s in we far one for largest know, each the wins consumer you payers one As medical have durations. retailers, and of to seven-year world’s Health largest one distributors five of including entered of into announced of Walmart long-term so world’s XXXX largest Cardinal the several which

a of million. With the in resulting alone contract value greater $XXX total contract payer than a

am way further strong these are the clients streams the of and to I hand, place these on all subscription-based of layering with and excited existing SaaS exciting come fourth they as see industry-leading and in who market and online others. beyond. wins discussions substantive positive XXXX engagements have year completing multiple XX to implementations have and report the effect next secured These to we addition for announced of are track Inovalon what are market’s we the are top organizations marquee With to these of revenue pleased in several early in a expansions long-term with choosing expand recurring are that In very and paving currently and Inovalon. options the very with quarter are the multiple large Solutions are familiar in meaningful alternative

product setting to to of value total positive retention subscription are and commitments coordination mix we metrics, am rates and performances revenue indicators higher the power, higher teams teams, in Medicare product growing pricing favorable seeing year-over-year longer include that performance key client margin I year-over-year, the business, aligned recurring from addition our impressive term high technology renewal and increasing underlying which report a base of pleased in strong and client In Medicaid. teams. shift, growth across client membership also and success

Said and sets another approximately outlook expansion rate the a of experiencing we result further in our profitability with amounts growing continued of Inovalon up growth the our strong resulting into in building to place very XX.X% is solid become in meaningful profitability EBITDA With feature adjusted unlocking foundations the leverage way, as and EBITDA of our guidance available, year-over-year expansion of large new increasingly the of of propel innovation, XXXX, is shortly, points of Continuing platform a arsenal XX%. operating and continued net XX% of modular honed ONE adjusted up are success to XX% growth accelerating will accelerating. basis as innovation outline in capabilities what translates opportunity. Jon in XX%. the As revenue and XXXX pressure-tested key approximately to and organic another driving blocks to addition in our strong the margin growth XX

increasingly terms the more at the data-driven is increasingly ecosystem, world and Inovalon more companies As within the provided for the healthcare of a digital battle real are plans seat across becoming table determined and data, being cries strategy discussion.

may excited huge can massive apps scale DataStream healthcare honing to sales derivations as avoid to quarter, of the availability our recall like that app The avoid about the succeed investments cloud-based processes power of you access, any integrated enterprise focused mobile many offerings on can our around part the the can travel aggregation, This we offering meetings otherwise, this, initiatives means benefit enterprise large, Inovalon that and the to remote on the need platforms the healthcare healthcare benefit. second XXXX, both this quarter data paused are antiquated comprehensive announced platforms COVID-XX larger consumer-specific for This Separately, the API. new to older and in of mobile large organizations be enterprise we of and authorized provides in from replace data Needless software and technology capability that time. analytical with we demand As the data connectivity backbones sales rip real expansion mobile and our of system the the low being and apps very patient-specific during around traditional team or consumer-focused decisions. of sure serve emerging analytics environment. rapidly we future and in built say, as set. out

As months sales the new ACV we we the expansion this strong fourth pipeline further ahead selling have pandemic sales demonstrated this environment to expect quarter. several continued the force even over and of the success a in restarted within strong and through past have with strong continue

sales have team teams been we in the quarters and of an the sales important teams product you teams and to the in various that seen our are Our which have engineering success to numbers success the story strong you providing the come. forward in metrics look part alignment results client with showing very to-date and deepening

execution in delay going lot a overall engineering, Jon of very positive related business strong human innovations existing turn Altogether administration adjusted XX% me put to Yes coming many and allow I to Before the into our from driving projected and With client Jonathan? organic part demand COVID-XX a large expansions over and to frustrating revenue new rates translating fronts Jonathan. on simply to leading sales small to call the retention but XX% handed online. pipelines sales strong client EBITDA all growth that market on over our to meaningful client resources short-term here. non-subscription product and scale XXXX. implementations many XX% growth XX% in there’s

Jonathan Boldt

key points like I’d Keith’s building and a Keith, remarks. to afternoon. on having good opening you, Thank by few begin

margin profitability leverage cash of the and shine pandemic quarter the ongoing parts business. continue and operating First, to COVID-XX challenges Inovalon’s flow expansion despite non-subscription from resulted exceptional to some our

for lower strong calls which adjusted underlying should were And income organic continued are XX% the and is that more growth marquee to solid execution large of our rates XX% importantly sales of to Net third and XXXX strong against XXXX and retention Second, XX%. to implementations share approximately business. of by quarter non-GAAP net and XX% the per EBITDA guidance reflects guidance XXX%, offerings forward growth third, With the legacy continued growth to margin million provide not income $XX.X the adoption. XX% annual to excited revenue company services customer growth platform expectations underway growth client specifically XX% subscription-based momentum, diluted of of XX%. overshadow non-subscription-based more impacted XXXX for continue

Now third turning results. our to quarter

compared $X.X COVID-XX continued approximately third and cloud-based core representing total by compared and platform This quarter transition of quarter million the to cloud-based subscription in being compared our This the year-over-year $XXX.X XXXX growth the of decrease actual of revenue of a new $X.X revenues representing third to response was increase of Third quarter total in a million, our an X%. specific third X% wins a was previous with legacy XX% representing stream compared in revenue of to year-over-year. offerings. states growth longer million third the revenue or sales continued offerings Subscription-based third $XX.X revenue revenue XX% $XXX.X of in platform in company’s revenue quarter quarter. million, legacy remaining This to platform lower for driven XX-month decrease XX-month XX% million of the primarily XXXX legacy to was and revenue our in ACV to expectations, Trailing compared business. services period. Services $X.X XX% revenue XXXX decrease the XX% in subscription-based the a by the more quarter million preceding $XXX.X by strong and driven to platform was million quarter expectations represented pandemic resulted respectively.

of during million an sales $XX.X at increase quarter ACV the came XX% in year-over-year. New

XX% $XX.X services of million Third quarter or year-over-year. an sales new was increase platform excluding ACV

at a margin XXX increase $XX.X gross basis was quarter Looking margin represents year-over-year. third of points an which million gross

efficiency Our shifts well positioned company’s driven as the platform model the streams by offerings offerings. of subscription company’s be increasing as higher our to nicely product mix strong delivery for scalable profitable platform and growth. structure revenue margin continues and gross to business the and continued company scale The value

XXX of million $XX.X to period. X% was increase XX-month was basis EBITDA increase $X.X trailing million for representing period. was or increase of EBITDA an compared adjusted margin year-over-year. preceding XX% The of million with ago EBITDA our quarter points $XXX.X a the XX-month Third an XX.X% year of adjusted the a $XXX.X an Adjusted total compared million,

non-GAAP year-over-year XX-month to margin XXXX XX.X% per quarter And EBITDA of an trailing period. adjusted to income X% basis for $X.XX and net third preceding points compared increase increase compared within million. range. was was quarter. in to The an of provided Cash is at QX operating increased $XX increased share XX.X% healthy third after the XXX the expense previous XX% XX-month $XX.X third is which cash in by Net interest flow very activities guidance the in our payments quarter coming of million

activities operating a On trailing $XX providing a increase was of $XX.X cash million. million net the compared was XX-month XX-month during period. CapEx quarter basis preceding XX% $XXX.X Third by an million to

cash XX%. free flow trailing of an million, increase Additionally $XX.X was XX-month

net leverage from QX as continue Inovalon ended million. in September strong and financial was was the quarter to million. X.XX:X ratio XXXX debt debt million third quarter defined our The cash, the second equivalents company’s as XXXX, of of debt position balance to the our $XXX.X of net fees cash improve balance agreement as of outstanding net third the discounts was position. Moving $XXX.X a sheet end as as debt in of X.XX:X the at end Total down and of XXXX. to reported $XXX.X financing to was compared debt The XXXX million. and deferred Inovalon’s X.XX:X $XXX.X within the XX, of quarter issuance sheet

highlights. our turn me key let Now, provide outlook and financial to

as we the full XXXX, year XXXX revising our For guidance follows. are

reducing $XXX million subscription-based reflect million XX% services full updating expected contribution offerings, revenue guidance our XX% legacy stream the range to to our X% mix are We from offerings. contribution for from and revenue $XXX year to from and

activities, net year-over-year of income and million Adjusted to and XX% to $XX $X.XX are X% X% of $X.XX EBITDA ranges increasing respectively. ranges, million, $XX a our growth adjusted $XXX XXXX. range to compared quarter up reflecting million shift. $XXX to stream to fourth fourth our to net and to the year-over-year by income increase million in points XXXX XX%. which revenue, model We EPS are business $XX A to we our make share of like X% reflect EPS net to I $X.XX mix guidance. net about These non-GAAP per $XX of and reaffirming diluted a two to quarter EBITDA in to increase of XXXX operating non-GAAP revised guidance million There million And cash the results strong GAAP year-over-year updated and the income of $X.XX, are of financial XX%. revenue profile provided all

is of COVID-XX lower associated our million revenue impact and profit update offerings. pandemic guidance $XX.X services our on First, with non-subscription legacy softness the

remains Second our despite profitability flow revenue unchanged guidance updates. cash and the

For XXXX our financial outlook follows. is as

revenue revenue of organic XX%. $XXX to million growth XX% expect We to representing $XXX of million

adjusted XX% representing to We $XXX of to EBITDA million of expect million growth XX%. $XXX XXXX

or share per million in refer And $X.XX quarter of and a details today’s expect encourage We to XX%. of $X.XX expect third be for revenues. and $XX non-GAAP our supplemental to to XXXX earnings guidance you increase diluted $XX XXXX to income expected net of year-over-year I we XX% and to on million representing X% deck expected please and XXXX earnings release our ranges revenue cadence. CapEx

over driven resulting a to to open strength mix conduct cash call are seeing our product back and our strong in shifts outlook Q&A the we that, revenue expanding the positive to our growth by let reiterate implementations with very driven I me fueling session. operating we and retention strong profitability for and innovation that expansion renewals leverage Before continued of XXXX organic beyond. With and client are pace in combined like turn to acceleration flows operator a environment sales our Q&A value pricing the continuing

Operator

[Operator comes question Santangelo of you. Glen Guggenheim. the line Our Thank Instructions] from first of

is open. Your line

Glen Santangelo

Yeah. want for my about question. ask I Dunleavy, Oh! XQ to a Thanks little Dr. bit taking more in detail. you

of I sort curious probably And follow-up And You at on if on a have was comment the was we the the you business. That But were lower X%. a guidance? than the kind expecting. growth platform growth it I am the look primarily of a I lower due little only revenue, could business. subscription comment of your then the shortfall on up made subscription was revenue margin to that platform

Dr. Keith Dunleavy

the your I for and Jason on also being Thanks Jon call. questions. to Glen. I appreciate here are and the answer Hey, question.

So have $X.X for platform quarter. have we as worth we the at could we on with an implementations single matters the that you look to when really don’t expect million quarter, and nor come even get steam things about the numbers of have platform quarter. this platform In and signed associated do every had into we the them. It expansion

those in And that quarter, pre-signing. is weren’t amount that the okay, on the so platform pre-signing they of that but

what really platform expected. line QX amount So with much was very we the of in

in it, strong strong and see solid value sales to it it. continue really it, in for what expanding client seeing pipeline We strong it implementations using demand in on they strong in are

for we us for a what platform are what So expecting really on just we difference than expected. very small

Glen Santangelo

of comment and the that of Okay. visibility Charles total numbers And there of so guidance, maybe these platform you maybe into QX QX a maybe translates you it’s XX% on I on revenues already point? the could and same on the the big over almost for you at could how your line if kind with range just the follow-up XXXX in have on level that third have have out quarter alone the this on you revenue visibility cultural

Jonathan Boldt

Yeah. Hey, afternoon. Glen. Good

Glen Santangelo

Hey.

Jonathan Boldt

we standpoint visibility in our we sales implementation continued what have strong a is From ACV timeline. see the

legacy while the QX So still we and range demand range and the a there it into the is potential what gives full continue specific that we have expectation to result state to provided. have in that of so see tried really which strong range visibility very just for of is have of how as we takes model services we still a we

Dr. Keith Dunleavy

we had a platform client the very client legacy around lot we nice elements and Glen add on. just gives wider giving are in a renewals remarks is we services that impact and visibility us seeing a if onto solid maybe of COVID retentions of to if strong something very our is that piece something are very things the prepared range

Glen Santangelo

the Okay. comments. Thanks for

Operator

Thank you.

of line Hooker the from of Our next Donald comes question KeyBanc.

open. is line Your

Donald Hooker

a we just so But legacy understand subscription to I Great. here COVID that. referenced visualize elaborate I give couple even revenues focus understand maybe model though services you didn’t a quite legacy I our is of on I Good are can impact and moving patterns Yeah. response can that maybe bit understand not the sort on can of those services afternoon. it? the you here you I pandemic state so and examples

Dr. Keith Dunleavy

for question. the Don. Hey, Thanks

pandemic picture coming was were California to a and specifically the but a level around out in of dynamic. overall have headquarters it of two started on basis. across world things to responding Good the we as concentrations QX. when York and York, looking and disproportionately that examples New well and in those the a national what customer are So consistent QX were country different metropolitan more us in and Pennsylvania was improvement well QX states for higher where differently positive that emerge more other a states the individual than California few country as New pharmaceutical of were impacted what seeing we than space areas

Donald Hooker

Okay.

then the to that working the some stuff just kind when evidence follow-up more will Are jump the life I mainly And in about queue. pharma are sciences that we guess maybe specific Okay. it then we specific…? one of are talking of -- providers pharma about talking I there just world this is of I or any think to trying real you other am on? back are

Dr. Keith Dunleavy

Yeah.

New is New the life you sciences mentioning of done. that Don. of -- where some of them and York work and in there’s So amount because a services Jersey fair thanks concentration our see The of Pennsylvania mentioning is

quarter sciences what more were our we they softer be disproportionately that time are country. of during in and doing material life of will rest for the companies seeing some the elements the -- of on they we the So were

Donald Hooker

you. Thank Okay.

Operator

you. Thank

Our Stanley. Ricky of next question comes Morgan Goldwasser from

and your line your Goldwasser, sure is please lift if line open. phone handset. your speaker Your unmuted is make

next… to go will We the

Unidentified Analyst

Hey.

about Sorry This… that.

Operator

you Oh! right. There are. All

Unidentified Analyst

on for question. Raymond Yeah. Ricky. [ph] for the This Thanks is

the about the you would growth of year. So that what guidance, and XXXX% that I issues been through some normalized some puts takes we the if wondering of kind wanted ask I could third walk had quarter? given am in are we the absent the XXXX to seeing have of in the the topline

Dr. Keith Dunleavy

sit But you back and Can your it let thanks question. customer for slightly voting me you. want I maybe the sure question different I So a to we it. -- take make understand to

Unidentified Analyst

Yeah.

some remove growth the like if your So What impact these to business. rate and services portions legacy were of you the to like topline for of true is XXXX?

Dr. Keith Dunleavy

just am trying to. I

for third and right? remove third we have next quarter we if if only so elements year around next its decreased right? it that in see legacy remove also that full And guidance have we then from year, obviously Because and the X%, we it year decreased was in So from obviously from you the quarter.

in replace been as like it remember then back decreased the year, we We that here or X% because our next that more not so or of it have might part obviously for that in you that. have projection X% wasn’t like would but or and decreased fourth would -- it it something

be presuming XXXX. COVID So we down continues into going have taken that there that to

So a we and platform sell legacy are rate predominantly at we anymore. growth don’t of now looking

if if think down that on you it will we year So sort makes a you because of I on is have neutral taken in -- there’s both. net us? that question your Is versus next QX

Unidentified Analyst

it. Got Yeah.

Oh! it. got ahead. Go So

Dr. Keith Dunleavy

to on us million the with the add Well X%. is X% as $XX.X end basis was the QX to we out arraignment. would in we to up you non-subscription normalized gave previous puts on getting normalize the line gains in just Now that

you of impact. kind you obviously think out it when -- about that So normalize we how that’s

Unidentified Analyst

very follow-up the on helpful. That’s then may it. And Got a margin I if expansion.

organic force could that invest think wondering point expansion the on -- am where a think if more I the how number kind us gross your margin expand I that I much us may can to think margin there you looking takes like of guess sales is your be Keith organically? margin to will you about in through you the expansion and of are So on puts given your kind help EBITDA

Dr. Keith Dunleavy

will places. are expansion getting Sure. we in to on. hand Jonathan I over this on mean, comment different multiple Sure. margin to just I But

marketplace and very be price deliver our continued the are a first clients. more nice business of positive. offerings to for our for the we expand leverage of nice continue products operational have point in The our But all, by topline. to value a for we our more model seeing overall as also amount product strength we So, we as

also seeing through We of and period multiple time. rounds is are you makes of also gain as well offering extensions implementations, lower a which efficiency which of for nice are very not contracts, in going nice the margin typically retention a client because

the what seeing a also, to they obviously shift also then actually mix more see operations and company. to you Those in are are more headcount buying more automation as for SaaS we do offerings. we supplemental nice we of profitability very and we our the We can and profile of have pure deck, more the reduce continue proportional or And to platform of have are cloud-based. in the and types company size efficiencies there products purely gaining

things breakdown. let So, model I will the Jonathan the multiple profit adding And that to on comment are different or wise business expansion. margin gross specifically operationally

Jonathan Boldt

in as leverage And we have and you subscription-based model obviously, what operating is our think margins, are we Yeah. gross that platform. Keith, QX the seeing business the in really

were quarter, the months, third the in XX.X%. XX.X% So, witnessed trailing we margin, gross XX

Raymond, our in dollar that. and worth product and engine continue growth. that where we continuing and profit really to where development of and continue research is where really what invest we engine to our decide perspective, are continue our are is that And have decide seeing worth of we you to have goes sales us to engine, goes we in is it And drive $X.XX invest to where to you from sell seeing invest in invest we to to our it us So, what in every continue profit growth. in sales topline

very are further expand So, business, EBITDA we very to the margins. invest us obviously have in adjusted but a margin healthy gross to to very, fortunate not allowing also only

Unidentified Analyst

Got it.

question EBITDA that into incorrectly. queue the Thank the impact ask but I I and I margins will to I will margins, again know meant there. asked I you. the back jump you later. gross -- that think I like

Dr. Keith Dunleavy

Thanks, Raymond.

Operator

Thank you.

Draper of Truist question Securities. next from comes Our the of Sandy line

Your line is open.

Sandy Draper

Thanks very much.

what’s at a in So about full the I SaaS ranges, going back expecting like it nice quarter that of to guide your if keep up sort pretty questions get recurring number implied look to you year fourth the step the to revenue, bit there. and a ask are looks little your

that million implementations think mentioned not Keith like or that more else maybe of or going be it’s $X increase? sequential is So, sequentially there driving you from Is a dollars when million. going I that’s looks quarter, like it anything that sequential million dollars that predictable just about but up to nice $XX every maybe timing to

Dr. Keith Dunleavy

Sandy that’s -- the simple in it’s implementations implementations wrap as as will. you today really or whether the timing it’s if just up the of effect

Sandy Draper

platform? Okay. to business you for to as that of to you the SaaS there little reflective or is touched COVID for revenue continued focus that continued this year? The that bit. drive uncertainty a legacy then next Got next it. guiding -- And on is X% of around said of the really couple years. Is Is a reflection just the

Dr. Keith Dunleavy

more expectations. Sandy, in tailwind. impact, that we would a if of become the we XXXX But continuation want X% our less the in a of COVID factor saw of former, It’s COVID to

do it. in still not are place are we have selling we So, legacy products, with using clients that long-term but contracts

we much them expect next toning use would We year. how are down to just

out substantially we a better So, see let’s things situation, that vaccines X% But continued did if become could roll and COVID. of have say we to a a return it presumption would reflect tailwind. rather

Sandy Draper

Okay. Great. Thanks so much.

Dr. Keith Dunleavy

Sure.

Operator

you. Thank

comes Blair. Daniels question next of line William Ryan of from Our the

please. question Your

Jared Haase

for This afternoon. Good in is Ryan. Jared Yeah.

you that and hopefully Just XXXX. comps just obviously, here, could of a of talk growth on an some relatively factor understand wanted am to bit and is XXXX the quite a the guess I to business to that continue your investments growth profile? think are looking just that curious rates about are kind to the implied growth course achieve acceleration year I accelerated easier in can of conditions far over thing. you show because normalizing of could -- little that though, guidance there you sort you a stick next have marketing specific and may if to mentioned, that rate? you that But invest make organically as and drive investments specifically maybe of I growth sales bit accelerated any as anything curious of there’s

Dr. Keith Dunleavy

Thanks, Thanks Jared. for the question. Thanks.

got going to a have going to and in we we have of been continue that bunch things in. are invest on investing So we

are all So in acceleration due. been now implementations growth as first now reporting come have those that hit really seeing is we that to is ACV starting that of that all we

trailing basis deliver now into or of are platform So that in amount on ACV have seeing expansion as a last done of platform months million the $XXX layering now of XX-month just seeing so we XX our something over that XX%-ish worth large sales are sales we platform growth. you you

are numbers also in are Medicaid seeing and there also positives Medicare us. nice that for We growth growth

retention We rates client seeing are well. seeing we are in and price year-over-year core adjustments increases as nice great

into a So that. lot give things of layering us

we Now direct-to-consumer investing bringing work we focused consumerism be investment products continuing to XXXX. what we ongoing have and going forward to additionally our in on are been has that been will and are in continue

the mentioned saw in things have that period remarks We to kind QX had in that we we we of QX in restarted this to figured wanting We strength our a sure in sales with for out nice of environment. that as our force paused make sell further sales. process growing prepared QX certainly into

team. across number end constantly in we expansion us to our in investment of continue strong bringing obviously seeing our larger set profitability our a a have to some an something been and of better tail future. people to be towards -- expand It’s opportunities. expansions people process. faster Really that talent facilitated that Jason in better So sales and we that’s by for us talent that started leading and company other Really industry and help the success to brought been the team has QX in over grow sales now the top are expansion re-expanding of have just

and are future. profitability the on we story is the investing will and you continuing see So places which our fortunate this to are to very if risk of the invest drive growth we upside have you that part to

Jared Haase

the will the with Great. XXXX tack margin relative the then the kind that here operating supplemental assumption expansion of for That sense. will make and just flat may of follow-up the essentially guidance. looking of and guidance implying deck the that’s flow if XX cash like Yeah. that’s on looks like I it kind for looks to about And from operations of quick the leverage I EBITDA at business. for And points one basis XXXX

around So could dynamics the year? cash on for flow comment expectations of you the some maybe briefly next just that

Jonathan Boldt

Jon. yeah. Jared, It’s

So receivables we was that have guidance our previously originally gave worth XXXX. did collect in in expecting when we million announced were we of flow cash what increased it for which $XX were for XXXX to XXXX collected

fees looks but a you earnings that’s So what’s kind slide look there. supplement dynamic the if we show of kind take you that like adjusted on XX of driving of what our

Jared Haase

helpful. Yeah. Thanks. That’s That’s okay.

Operator

you. Thank

Our Stephanie from next question comes the line of Leerink. Davis of SVB

Your open. line is

Stephanie Davis

guys. you, Thank

is any quarter Given legacy to faster business way this down what leverage we the force a seen have mix shift. there in to leg this

experienced the already of business? pain mix have kind We of the in legacy

Dr. Keith Dunleavy

Hey, Stephanie. and thanks the Great hear to you for question.

we are activity legacy tailwind, see that same could improves going thinking projections. of will be rest them correct them We of numbers regularly but a is similar expand on year presume still okay? of kind we are those progress And activity are platform our two three, a grow talking --so in if and is convert get We COVID of some next of over correct move the platform that. frankly, to to I COVID kind or We to want clients the we But activity level them ways, we level nice our and their next are and to that we additional making over one And have some those level. see just absolutely right? COVID it for to we XXXX. to the this platform onto and like world guess on be that year way. one of and we then,

are We advantage. those clients benefit that working to to their of platform convince the is the

Stephanie Davis

And have option legacy maybe thought work or setting the no making supporting the of some just really of you ever from it? longer

Dr. Keith Dunleavy

our QSI or to platform sunset. an last them want decisions to to moved We we willingness sneeze to just We on to cloud-based didn’t had message QSI-XL but to we judgment how enterprise business. over we to do to was We certainly into all approach, that has sunset nothing support year of like have as enterprise a Stephanie, Absolutely. to make we X% our legacy on judgment clients a it cloud every at. that want example, their and some was them, put definitely where approach treat our an their it and it capability we process, try meaning to go and sequence to business. clients, that appreciate our the At we all from process. didn’t that. appreciate calls time, obviously On with a that those have through have had deal that taken

do onto So legacy we the support and and them take But right the often come our want way to over them particular we ultimately platform. this in approach. treat that business, see clients

Stephanie Davis

then the modeling, of next up refresh one in give recent one on just And wins the could sort the timeline some looking us quick of you Understood. ramp year? on for

Dr. Keith Dunleavy

you do again, forgive me. mind Stephanie repeating that Sorry,

Stephanie Davis

Manbugs timeline for looking The [ph] refresh implementation of the to win recent into XXXX.

Dr. Keith Dunleavy

the always do view into of question, Stephanie, our in ACV models. a Yeah. how layering good so we

We month are replace the one obviously of they you time because ACV, to piece all on that have a a XXXX. months, revenue a that the are their see the thumb period ACV, nicely as to almost year bit third the at growth trailing time, lot business components But by of as helps for during going of platform saw to back XX has on platform ACV look those rule each you service leaving XX-month the schedule the at community of XX analyst of a ACV XX months you about become signed little a or the that layer you on is each shorter components it by in large of are forward. year we period, look originally very have if themselves that basis, the on A because them. those two-thirds to engagements. starting And if the very of implementations get in part planned

to that continuing see pattern. are we So,

are clients the Just getting a little bit larger. larger and

seeing progression sign in not preceded as see is happened being the starting refilling strong and going because are the same time-to-time But pipeline, those. pump shines it. the very exactly to We are to implementation a quarter are from what line we pipeline still of that of of we

Stephanie Davis

helpful. seems That’s you. Thank

Operator

Thank you.

of Our Sandler. Piper next question comes Wieland from Sean

Your open. line is

Jess Tassan

you Sean. taking Hi. This for is on the for Thank Jess question.

think interested off know. were to first just I we

two I something pretty guess if consistent to So revenue we of think get I million quarter. attributable we revenue And look of with legacy at $XX.X the year. and that like the the less services. looks in just to That’s quarters first total description

So COVID in but guess I legacy the just services. headwinds was in

So were it And to COVID why? expecting stronger you at that guess come than the much headwind. I in seen

Jonathan Boldt

it’s Jess, Jon. Yes. Hey.

right. So you absolutely are

revenue do part do change for guidance headwinds of and quarter reduction is the X% the in non-subscription we of contained that second stream. on that from all XX% total guidance subscription-based and only remaining impact not we So see what of when we the XX% XXXX. up we represented done from services COVID XX.X% non-subscription-based XXXX all those expected pieces revenue what worth quarter. When platform an our those legacy gave only streams. coming really and is the XX% of When think were subscription-based $XX.X impact our the reflect mix what but expected the kind from coming XXXX in from have witnessed guidance our you an from expecting our of from different a And this And quarter have add revenue in of you those, the of at our non-subscription quarter we the for you the for XXXX experienced of for million our business remaining we revenue about the mix throughout engine. platform mix now then our for

Jess Tassan

just was was services would that think seasonally guys double legacy you and made what that there to in was be and QX essentially it clear something it QX… been have So

Jonathan Boldt

So…

Jess Tassan

… at of the midpoint guidance?

Jonathan Boldt

so a there XXXX. we return we in to So, yeah what expect had -- one to be experienced

what So we way that was those that what the for had originally And we work phenomenon than still the we thinking gave guidance experienced in had did were XXXX as up revenue our we part a different the catch saw Unfortunately state expecting really same we were specific how of QX go remaining to and because up. we responses ended XXXX. it that’s see happen.

Jess Tassan

it. Got

Okay.

an to there adjustment I could CMS for interested think we tailwind were if implications we the a that you a understand XXXX transition I the impact what understand, you think is us to help for EDS you or changing is into heading guidelines of just or secondly, risk reps from opportunity just does some that is guys that be? can might just of

Dr. Keith Dunleavy

Keith. is This Jess. Thanks, Obviously.

at an contracting hasn’t of had XXXX in is effect our Our well much this it past point frankly. contracts typical

keep we that capabilities methodologies reps of some that a fair their the are done clients advisory sure to how the work make with I affect are amount or guess, is to, have Those their call rescore. strategy We different. The data through it But their on unchanged. of which EDS, that and transition to financials. you all they accuracy will underlying to the support some of necessary work those flows, understand

than actually of get because bit a You to we do But little usual that. right. are absolutely work more

Jess Tassan

if into quickly, the guidance, factored if I could your revenue more launch API that XXXX customers? of payer primarily solution, the that just guidance Got And on -- into from it. product? of sale what is the And one being anything, ask sold

Dr. Keith Dunleavy

forgive you... to Jess you so Hey. through just happy will We to want two, it we get me? to keep everybody have

Jess Tassan

Yeah.

So thanks questions. for taking the

Dr. Keith Dunleavy

you very No. much, Thank Jess.

Operator

Thank you.

Our the of of comes from question Daniel next line Citi. Grosslight

Your line is open.

Daniel Grosslight

for the same that Hey, the I DataStream. guys. actually Jess on question. Thanks as taking had question

can to And you But large. there Maybe at Walmart, dimensionalize, Is on. obviously little revenue any on percent what can TCV wins on versus of I contracts want win, not your go Cardinal XXXX nice and a back very looking just am are had to but different basis, at a guidance necessarily you narrow that then way but pretty kind way, last those in health included we of noted look plan XXXX? maybe I it tackle are they ACV wrap of before. if a into ACV if a that that large I to that I bit in quarter, So, I conversion question. that think

from give DataStream on would it the specifically anything XXXX? on helpful? And factored what very then into that So question can Jess’s you is us be

Dr. Keith Dunleavy

Yeah. Sure.

all, for the First questions. thanks of

other ones we have this three been not from we start of we the going some marketplace ramping very we the into that their seeing fact this But doing see processes. have of TVC the have we quite very in But we the releases the large into pretty strategic nice ones a several nice that year doing even showing we those year not So been and that are clients significant us. as typically a those year think the and positive some multi-year only clients and is as release announced are or on in mentioned name request of important we is business We But top well TCV. sorts press that some in I considers of them. ours did this part others in have but space. can’t with the us point release press XX as forgive very have on of other me of we Obviously endeavors announcements during don’t gone coming growth those why expansion expansions don’t on call. and away those press we on them few comment color have in competitors and significant aspects alternatives

we how client quite are strong question population dynamics about we layering thoughtful guidance young rates number are rates their put products To retention nicely talked stages. now. all the of other expansions DataStream that we a about are then the that second in also the are right quite really into have renewal early implementations being So and we about your are

are guidance. in products of our expectations putting newer -- we have don’t we into So avoiding

very how that are to come while that we significant see guidance as the a those this see point. not guidance. for in about we a not into we being So layering would some them quite them and market, market but growth we go driver like at product But behave we we we time rather put are in excited out for the they with before -- into

Daniel Grosslight

COVID Jon you for in the Understood. maybe one is quarterly can guidance into you cadence are hit on XQ the So just that pretty you the year? then throughout assuming guidance? And how XXXX comment in much are qualitatively that on Thanks. or you of most supplemental, spreading quarterly factored of the

Jonathan Boldt

Daniel. that’s it half to more currently and have to normal the kind at and based the of to back looking really impacting data first of getting the return We on then part we all today. years first the Hey, our metrics are

Daniel Grosslight

you. Thank Great.

Dr. Keith Dunleavy

I as I time you, let taking that few I everybody And for to thank you our on with at the question want just the Thank being Daniel. a want here. I top go to Great. last being the tonight’s hour of call. just salient points. But before close

lot dealing all a sales, areas are the and real expansion we product industry the new you company. to heard dataset of the retention, COVID strong while key First, innovations, talent world with of tonight leading ACV as metrics impacts is additions Inovalon client in experiencing really

track growth on the and revenue realization have we in large accelerated year, the for to XXXX throughout with us our firmly this beyond. are and implementations significant we speaking valuation, driving for been multiple go clients to live Second,

drive XXXX, EPS revenue non-GAAP this a up to operating stronger profitability finally, efficiencies as EBITDA gross cash tonight new as XX% seen adjusted all putting to pricing and this product and seeing XX% leveraged, power, up flows with is you mix platform getting with EBITDA even strong a highs. up and to value-based all we well, have XX% margins together, And XX%. and driving as nice adjusted shift we XX%, strong to XX% Third, talked about are margin, really very

interest So, again day and you, good associates job in and shareholders. thank fantastic your to are thank time, our doing clients you want and unbelievably year. I’d a appreciate to throughout night. I your every Thank committed that, really our attention our We who like your with continued this Inovalon.

Operator

you Thank and conference. for this Ladies participating. gentlemen, concludes today’s

disconnect. now may You

Inovalon (INOV) 29 Oct 202020 Q3 Earnings call transcript