Earnings call transcript Q2 2023

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Operator

Welcome to the Definitive Healthcare Q2 2023 Earnings Call.

Our host for today's call is Robert Musslewhite. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session.

I would now like to turn the call over to your host, Robert Musslewhite, you may begin.

Matt Ruderman

you financial us results. thank Definitive to and quarterly Healthcare's afternoon for today joining review Good

and Joining Robert Krantz, Chairman; Musslewhite, on CEO; Booth, me the Jason Founder call and today are Rick CFO. Executive

to, impacts conditions anticipated opportunities, health behaviors, and industry of will solutions, anticipated liability. we macroeconomic our impact the our of and generally. commercial planned clients and statements, statements of our certain not the our of call, financial this the tax our of our results statements and our global of related investments, make business to our growth During on related performance of intelligence sales the customer financial benefits features on acquisition care including, the and benefits guidance, restatement competitive forward-looking but Populi Product to position, limited the future care market health

Securities the Any Act of forward-looking provisions harbor statements of are safe made Litigation Reform the to Private pursuant XXXX.

number uncertainties, may may undertakes differ after in to any statements the update this obligation results our required Actual of elsewhere statements or Forward-looking statements. except reflect forward-looking The SEC. to forward-looking risks call, any filings and revise discussed a including in materially that Risk sections as and no involve with Factors the events Company those conference from arise by law.

Relations the please For Investor cautionary our that of release earnings in have to we more posted included refer the portion information, statement website. just to the

website reconciliation financial conference these in Please earnings Investor most our measure. their Relations of we the non-GAAP Additionally, GAAP on for of comparable to refer release will discuss a tables the to measures our call. measures directly financial on this portion

Robert. to call over With that, turn the I'd like to

Robert Musslewhite

quarter our financial and to on all our second On us you some overview of results. provide announced Healthcare's over Matt. the quarter. today's review including quarter second seeing this highlight some market recently innovations, second afternoon turn are And of product business joining the I'll our in key what call, trends Then of wins to I results, an latest perspective review Definitive provide and some to Thanks, for we it thanks Jason acquisition. of our will from to

reviewing quarter were start line expectations. and with adjusted the I'll second results. for financial our EBITDA Revenue in by quarter our

to ability growth difficult of Our a the business profitability economy of reminder the delivering our of on is of and important an continue value our inherent balanced goal model. midst the our and platform efficiency of in

EBITDA translates which Our total $XX into adjusted $XX million, year-over-year our was revenue a which million, XX% growth was margin. represents XX%

$XX million, adjusted a XX% Our EBITDA was margin. which translates into

our driven new Our performance customer markets in and in the both quarter each wins existing of customers. target important was by with

solid about investment generation strategic This demand our growth and strength We prospects future once long-term continue gives in generation demand to ongoing are their with an conditions number increasing see conversations great normalize. customers of having us priorities. for economic confidence

investments until to However, in investing Many performance sustainable delivery, value believe growth deferring will the execution, clear products near in of meantime, seen we we stringent purchasing similar they what term, quarters. focus business drive improve. on the begin sales to their for when to continue will and Company. In that intently the have the have prospects in recent in to decisions and sight their remain environment remains customers selling we and the are line long-term

all going these of We a lot of on good across areas. have work

rapidly sales and decisions drive new with of costs our to and is drive and daily strategic down introduction demand key to future and to business driver The consolidation, of the data current improve and quality. of and health care growing continues new effectiveness. is biopharmaceuticals marketing analytics and market development A for complex help success change technologies

and execute strategies develop for challenges create in All care. changes health of these upon trying clients go-to-market to our are who

messaging help is to it marketing need it. sales be We this competing teams an team Whether identify and size successful to markets clients trial the the and needs the understand in or write important researchers most they and industry helping R&D physicians propensity drug potential create of prescriptions information dynamic to the that more with provide our for clinical or effectively highest commercialization. target accelerate

capital The is has true increasing. where cost costs higher. uncontextualized harder with and is incomplete data to world been challenge especially of come making growth a or business decisions in never by This operating are

care platform is these intelligence uniquely challenges. commercial suited to health Our address

company easy-to-use right data their a combines users initiatives. ensures interface information platform at expanding data embed put, the any selling and health the with or to product fingertips and to market an into make Simply cloud data-driven CRM in put large or systems. business business the will U.S. trillion or the its data decisions development be Healthcare, $X better able into quality go-to-market information proprietary Definitive care science that This set, other sophisticated of

not will new Atlas competitive later, still. The that And Dataset. later Atlas significant adds key technology are our our we a solutions data And in of clients provider to differentiation Populi detail release Populi strengthen a to install standing in that of as market. our discuss we care dataset. update number this for Jason our purpose-built month, will acquisition health brings

is customers' $XX on commercial is market our a with many our and top very reasons, health priorities. bullish long-term growth well its growing in these in we and of all care aligned opportunity early billion intelligence. still that offerings For strategic stage, This are the remain

from generating platform. spend customers to customer wins business highlighting numerous like I'd exciting value Now from some that quarter Healthcare few minutes Definitive second ways the the the a are demonstrate

to key mix drive claims-based KOLs rank proprietary scientific for clinical its This leader client ranking key on that first company for will medical multiple tools affairs Atlas multiyear team. leverage disease profile analysis, greater and collaborations opinion Healthcare leaders across introduced separate AI activity industry contract immunology states specialty and based expert using Definitive in of to and efficiency the chose enterprise the opinion we a global A quarter.

real manufacturer are allow contract of those million identify providers three-year Healthcare pharmaceutical opportunities time. spot Definitive gain to their IDNs multinational the they practices $X group easily excess them the clinics, market relevant in a visibility and to back track and trends Spanish with. to patients treating to will in and share better providers signed into affiliated and and A chemical

our American salesforce.com human on-demand drive instance. their with addition, their Dataset In integration of into by we of introduced vendor an in leveraging daily employees the new software will to year, quarter company from the to data capabilities first An in this enterprise us and capital the this powerful that hands this management data signed financial frontline integrate Atlas their physician agreement efforts. put

This Dataset of its its the intends Atlas increases to the single use focus vertical. on company source it as truth care health as

segment with and and and the key market and integrated build effort deduping, Dataset, marketing their maintaining With total they and sales Atlas strategy, account all contact while updating an time can associated opportunity and reducing size data. the

Suite, XXXX, causes. to commercializing Passport on a performance we genetic we by our Passport planning for at we enterprise for had Turning when a acquired Wizards significant Analytics diseases driven and and in developing rare large focused sale which biopharmaceuticals February purchased Analytical biotech

study our upon a for solutions This report to evaluation strategy monitor in and development. company mitigation and a risk to help currently drug plans use

a company patient will help journey evidence our real-world and comprehensive plan. develop this addition, solution In

This OB/GYNs enterprise that the with Atlas claims and care combination turning set with provides plans States. that distance that its deal in a should reproductive education nonprofit Finally, and Atlas health to the organization based our to and in affiliation services Suite on to a existing where signed All-Payor our United services Reporting use provider in data understand reference multiyear organization care better business. We the for and patients expand Latitude and can by region. it provided travel our

time or where access our there to course, organization is care identify more And choose you. to examples, for deserts there but the are solutions areas care. no limited In to only addition, I many of will utilize or had

turn over I'd that, Jason. to to With it like

Jason Krantz

Thanks, really leading acquisition targets to of that have a to I'm this everyone that the we commercial intelligence completed provider announce I'm Populi, care Robert. specifically share health the market. today. thrilled news with excited company

systems service dynamic share, and organizations, hospitals relationships, analytics care their optimize across including expand geographically and leakage lines. to Populi market provides network physician their health health both and reduce with

Definitive market ecosystem, including across sciences, in diversified care entire providers industries. furthers and leadership commitment acquisition health to life commercial the This intelligence care the health Healthcare's

of Founded serves addition functions. some Populi Health acquisition Populi in multiple System University analytics the The Henry and powerful utilized clients, of across Health. with XXXX, our value and Pennsylvania the them and expansion of Ford Definitive including that to helping country's Healthcare's health drive growth care departments provider deepen are systems, largest will

organization and determine can and and expansion. the help the areas: Specifically, strategy outreach largest identify services development leaders business following for which the can and liaisons solutions successful develop Physician highest-value and strategies. locations their physician have will opportunities messaging in targets

marketing, to and provider digital teams create health. plans as well of Marketing acquire social and can loyalty. care understanding teams health boost behavior physician as of determinants better can Population with as patient consumer strategic execute initiatives and and provider and a as patients well optimize retain campaigns

data. Finally, powerful accurate, departments and create source data the and analytics all a truth systems, their same to to current across access single departments have leverage comprehensive can integrations of internal ensuring

expanded to With organization synergies health greater visions ROI. benefit Populi care provider and health health that revolutionize product strong insights greatly aligned Definitive intelligence go-to-market deeper will care value, and delivering strategic and analytics, transform and to Healthcare speed commercial have care our clients,

new have previously, data acquisition cases use expand companies or set that our existing shared either: can data we overall our one, new of provide offering; that to a we As a leverage proprietary we enhance find to provide our is the strategy that two, use address. to capability to

boxes. still checks both is today, small Populi it While

and Dataset clients With most identify with our Populi, we'll service expand the helps information lines Atlas patient for attractive modeled that markets the expansion.

provider increase provider-facing deal the will and to for problems new with logos. and leverage Definitive data velocity large our Healthcare Additionally, solve our team sales clients existing current interface populate new powerful our

a leadership to as I perspective, the got at team value I'm of Populi, the teams care deliver communities. fit. teams two Both improving Healthcare know value and the our come game-changing to are and Definitive mindset cultural passionate given and an innovation-oriented together about team to their forward identified serving looking a watching health industry, rest to have and the to From customers. we back culture Robert strong the

data will set. in that In acquisition, install products the care clients to Atlas today, enhancement also which I'm addition and adding are the vendors, of technology to major about health better information data leveraging which making the opportunities excited significantly our technology We're tomorrow. that Populi organizations help more the we're about types the identify

data from our doing update sources and new this applying new algorithms than Lincoln X.X by centers surgery cleansing multiple then hospitals, more installations groups. data ambulatory we physician Overall, to and and generate million systems, intelligence. on for will health We're technology collecting proprietary

it dollar, health who budget essential every maximize likely rationalizing is IT and and organization where that software every their into where companies are is care the the most facilities to to environment macroeconomic grow. marketing a resources ecosystem, they sales in And sell target precious

to need and installations? clients competitive of increased systems IT each How know clients who edge devices? day and And more build procedures true win with information, their has these these Software effective of the have number Armed they are this sales a and competitors' installed plans using done old rates. as products? marketing

year update and parts to Atlas investing environment. and updated our difficult and data sets, behavioral the multiple including Dataset acquisition our including reference health to This reflect industry-leading intelligence, data new our the of set. Claims affiliations development, our alone, Atlas even Atlas added product in in Both Populi our data a we've and All-Payor commitment technology macroeconomic we've

will care customers. add commitment our health of new to intelligence and Atlas more development, analytics have also the we'll in our several all continue data forward, best to in Moving deliver to support we AI

I'd second like to to CFO, Definitive it now quarter turn financial in to through more Rick Healthcare's Booth, performance our over walk detail.

Rick Booth

results start unless a will remarks, and guidance a discussing year. otherwise before of I'll review I with our non-GAAP with In Jason. for the guidance reconfirming detailed all our basis, noted. my be for QX QX full our Thanks, on finishing results

include and financial was QX last highlights free months. XX unlevered to tough to Revenue conditions margin, EBITDA using adjusted us or XXXX, a flow over adjusted EBITDA a cash in results the XX% challenging flow unlevered growth, QX XX% quarter revenue compare. plus strong free XX% allowed growth margin compared the XX% in XX% deliver the XX-month model margin. cash trailing The and despite Our business solid economic

to prior results year our Revenue the up the the by for Turning midpoint Growth to due as was and the XX% million, heightened second quarter primarily new $XX was at environment. macro driven more business guidance. our we from in continue detail. experience churn tough and to upsell of

toughest struggling IT providers. most software and for health and biotech, is impact customers in emerging that are That the macro economy care the areas small of including

year-end dollar on we lead not the retention, formally MDR to overall this Although guide XXs in could basis. mid- do low an to net

customers quarter enterprise customers the of year-over-year, least with a but enterprise ARR. we customers, XX which ended X% quarter. two XXX with was in We an decrease enterprise previous customers This define at $XXX,XXX increase as the from were of

key As these of majority programs. customers go-to-market a and our a focus are reminder, represent our the ARR of

conditions Our even believe includes which expansion customers, end headwinds, X,XXX new from previous QX total smaller in count, be slightly was to the is the QX business XXXX from if continue realization Despite challenging quarter. at and in delayed. remain down XX% customer X,XXX we Overall, economic down of strong QX. opportunities the continuing and

from margin XX% XXXX QX in communicated Atlas the XXXX. from points Gross decreased we the sources as profit online data had additional was as previously. basis X% $XX.X Dataset QX million, Gross XXX up of came

expense marketing and from $XX.X XX% QX was XXXX. up Sales million,

conditions. As of end investments, in cover shortly basis later, from sales was to up a current QX order I adjusted conditions. of to percentage points quarter organization as meeting and result marketing respond sales And we of the revenue, expense natural past current after revenue, our This XX% will is XXX XXXX.

globalizing Product development XXXX expense by and efficiencies integrating from operations was as $X.X our realized million further X% up acquired pool. talent QX we

XX% revenue, QX revenue, As of a XXXX. development was percentage down product XX% expense of from in

us on have those our to enhance is existing on we'll value of efficient our identified the The we Robert touched and to investing opportunities long-term Jason for customers. highly our we of and multiple to examples launch platform And the products way some in effective in to using increase data or the sets product multiple deliver roadmap. a continue and earlier. invest

million, was from up expense XXXX. X% QX G&A $X.X

XX% XX% As G&A were QX of expenses XXXX. from in a percentage down revenue, revenue, of

costs. are from both leverage lower because We efforts expect continued these to ongoing fixed to G&A, due administrative see the and costs relatively to

from income QX margin bps a by XXX the was and XX% down percentage Operating a was result in of up gross impact of was income G&A. expansion of as the $XX X% and Atlas XXXX, offset revenue, decline year-over-year efficiencies and revenue, operating QX million, product sales The margin development Dataset of primarily versus XXXX. investments,

range. upper Adjusted EBITDA of was and end X% from above a increase our million, $XX.X the QX XXXX guidance

approximately were million diluted described the to EBITDA percentage $XX.X investments earlier, Net compared percentage adjusted of EBITDA which of in planned was was to a average lower line a year. QX $XXX.X points XX% As income $X.XX XXX per outstanding. revenue, and of share adjusted on with how weighted revenue shares QX was or we basis due based as revenue in XXXX, the million

cash from million on seasonality. on flow a flow billing Turning a cash trailing $XX.X period upfront trailing substantial Unlevered free basis, to a cash flow. were focus a requirements due XX% period ago. on the the Definitive's and $XX.X low margins, cash up X% free ago. year high CapEx provide was comparable generation. We down trailing gross XX-month cash to comparable flows XX-month XX-month $XX.X basis, flows in million year from million Operating

unlevered flow deferred revenue when Unlevered is free was a does biggest any basis, our slows, EBITDA the $XX.X on free booking million XX% driver of flow. into of TTM adjusted effectively cash of revenue, company so converting cash. of TTM SaaS growth which Like XX% cash

cash stabilize flow. growth should and As recover, unlevered rates so free

to of balance in well organic sheet, and million year-over-year. short-term fund total Current $XXX.X year-over-year, up growth profitability With the we're were X% X% XX% $XXX initiatives. inorganic with only Deferred up $XXX of of obligations revenue On quarter debt, and $XX.X year-over-year. we performance obligations was strong million both were revenue million million revenue and investments. cash and performance the ended positioned up

the because deferred You'll and as particularly more to providers, to IT note CRPO slowly upsells. from largely churn, factors is we and CRPO. These that the and sciences, up is we those as we than life revenue show guidance believe of track business cancellations anticipated, of remain for new primary been in year. small grew higher see expected, hit have and CRPO and on rates revenue. reductions immediately driver This But continue

an the collection key current impacted impact the tax. and metrics of reflect effect of adjustment results sales accounting the remittance should forward. going and revenue on the This QX impact no related Further, and to has but adjusted restatement prior periods, of no have EBITDA.

That not potential to through $X.X invoicing brief, to to undertook customers. the because sales expect have contained impact this million sales tax XXXX review go-forward sales XXXX. the in of now identified a regulations. may we ever-changing do profitability the charge tax we basis have and The systems years been In a required our of from We thorough in liability liability states is impacted which within updated collect tax definitive up review to complex areas. on to

Because any the anticipate liability. review not do encompassed all XX states, additional we remaining

seek at other by exemption In fact, disclosure we and amount plan a certificates filing voluntary gathering agreements, to actions. taking lower resolution

estimate because cannot involved. reduction of Speaking timing costs states require of the or size today, consent the in we any the VDAs

two and Subsequent end, on but quarterly before providing actions guidance. for full did our took guidance quarter each key the to year. are that not included I'll we impact in QX results, remark

First, acquired on XX, July we Populi.

tractive analytics Populi's position very small to a provider in specific market. providers company, capability deliver is large strengthens it Although our and the

them and wizards. products and and technology our Their with proven as several with we Monaco have plan we been analytics analytical large integrate with to quickly hospitals, did

same midyear timing, in terms revenue in million period. time its expect profitability, low are to Given we expected low only And single-digit the mid-single-digit the of costs by exceed need in millions contributions to XXXX. integrate the revenue during to dollar

sales exited spend. the we commercial without and The overall the marketing in year half reassessed conditions, any seeing improvements as the of second we post-quarter first our activity was

the and we a in where reduced areas team a could end as will with to sales buy year result, remains result. we struggled. As said market leaner spending the colleagues, we XX stronger Consequently, a but

now to the for prudent it of to as assume extend the guidance well. is year Moving QX current that We through XXXX. remainder conditions believe

total million would to diluted of $X.XX XX% $XX Assuming that net $XX.X $X.X million of to Adjusted is $X.XX XX%. $XX.X of shares $XX.X $XX.X on margin. income million. average we of share the rate growth or expect XXX.X revenue Adjusted XX% income Adjusted to EBITDA a outstanding. XX% million million case, or per QX, to operating of in $XX adjusted million to for million million to $XX EBITDA million to weighted

$XX.X For we year, the rate to our to of Adjusted range $XX million. range. within to $XX diluted included operating of revenue and $X.XX. full of Adjusted EBITDA net million a million margin of to million. land expect original to year for million $XX of XX%. $X.XX of XX% XX%; million guidance income $XXX million, to full a That million for profit, $XX.X $XXX to growth to earnings adjusted $XX share XX% per

includes This we guidance, conditions. macroeconomic expect to revenue on to the half in guidance in of dilutive environment, and in the end the Based of middle Populi, would of dynamics about upper effect to the discussed the we the middle external half impacts of assumes the the no ranges. earlier of profitability acquisition change lower the year but

term high growth, the for in and Healthcare capital positioned bottom predictable continuing product development a line was support top attractive well we're believe and uncertainty. believe QX invest that a the economic leadership quarter market because to for will efficiency. current summarize, We're to committed profitability To results to We while we've of efficiently a growth. clear and managing best Company long-term despite revenue levels developed the and position in long we for prudently and solid headwinds large Definitive position

back take few And with closing a thoughts for to before Robert we it questions. I'll that, hand

Robert Musslewhite

Rick. Thanks,

I well we take our Healthcare place It on to that wanted acknowledge never a X. at colleagues of the the The lightly. endeavors. Before them for say for take open and is future call reduction in all goodbye talented sad we to I to decision us friends, Definitive moment eliminate wish and and workforce their jobs questions, was took one August that to

the As the financial into year, to want on move I we deliver year. we that well are of to reiterate second the half for positioned commitments our

Our executing job on focused team customers key is growth our and and doing on remaining product initiatives. our a great

in market customers business scale We the provides and and and that the we have dynamic Healthcare shareholders. a years, our growing to confident our great large, coming meaningfully built incredible Definitive an ability generate in remain value long-term our to opportunity opportunity and substantial revenue in for profitability and for

With start like we that, to now the Operator? Q&A. would

Operator

[Operator first Stanley. question from comes Morgan today with Instructions] Hettenbach Craig Our

Craig Hettenbach

the is for Yes. dilutive? it the revenue as Populi for rate profitability next business XXXX? full the Or that would for would business? for out on to run think that about be do you say color XXXX And what would in I contribution a appreciate reasonable you look how What year year you remain

Rick Booth

this remaining we we're our within while Well, to the year cover that very dilution proud managed initial guide. initial

So continue out. major thanks to that expect performance, to would of it be to kind XXXX. And mid- be in That's strong otherwise in where the I XXXX. and just relative high-single-digits it acquisitions. dilutive of that be will small we in for pointing these would would

not our year. business growth there's think dealing is when of potential driver I for challenge outcomes. small, That's the that's dispersion next big a wide young the and with the of you're

Robert Musslewhite

to provider with to integrate really add just our to plan Craig, on And is that our that, business. business

demarcation forward, working and we're that it of going indistinguishable, by I'm that business. clear hopeful becomes business as not so between certainly that our team a line And overall a pretty XXXX, there's and

Craig Hettenbach

Can an improvement Got revenue been of balancing that's and the versus it. reduction towards of how context there there environment just seeing round. in the kind little growth commercial for this looking geared you're on just out where out a in the you're team a the follow-up macro hasn't Robert, profitability? And then, bit you the talk more job about just that workforce

Robert Musslewhite

products as around an call, business it's I solutions. we well new mean I Populi, the because acquisition it and that's hopefully to where you in through the brings sets we Yes. the strategic investment make saw particularly investments obviously, important, of think data continue think key

the and track at we good to to time, trying focus with investments drive and that we growth a And to So prudently. need delivering same those balance really future costs and we're investments on we profitability of managing of expansion. the record right growth balance have know a

And number what find choose what right one, so make that with do, well it's we means don't, and investments important us we to for and the there.

And then be prudent costs places we're we and yield secondly, not as prudent relative back to we where to where expect. be need in much pulling on We see what getting on those.

And really so last what organization seeing. We're sales investments our we I across you're that's in that very think made important year. still carrying the

at you was the after if is even think I the look larger capacity our action. it sales still than at

it call pulling to get yield right back prudent I we So And where weren't seeing at environment. would the places some macro improvement justify we see in being of thing point, that. just that we'd do. certainly, before the this as same we on have amount this But to more love back and building

Operator

Goldman Your question from with Sachs. Kash next will Rangan come

Unidentified Analyst

Jacob Kash. selling I on This and environment the on the wanted real layoffs is for quick. to touch

environment similar what in I seen mentioned the we've think selling to that recent you quarters. remain

the here. parts confirm, S&M? just also, watching? some what And where then quarter last S&M those year where sales to centered productivity less I you're ago how to relative are want that trending they're a maybe And then on? two framework And on the quarter. within we're focused and the perspective, KPIs so, are like, if So From

Robert Musslewhite

hasn't into were almost answer planned I that reverse than previously, primarily certainly within coming question investments the S&M around. been of out your And we year, a it's Sure. this focused back order. had environment in Yes, goes as tougher questions the answered there to to the kind time I improved. want

were mention, we No of little I improve would investing think a with hopes more. to need things

felt getting where So we yield. it in you're could lower was back pull -- places

you across the probably where then in And before. that market remind me, a little about mostly to where it more seen talked as back but difficulty if more first [Kash] primarily little we've call, part on the what… the of So was a focused markets, we've circle went, your markets

Unidentified Analyst

Those sales' KPIs.

Robert Musslewhite

KPIs sales track. So we

product kept a we seeing heavier down. your sales a in want going and not the in So obviously, world we've where sales is that investment curity

sales four we've productivity lower been seen we've in deteriorate. that's come there, the seen or and expected, probably quarters we've as secret no than across decline macro the So performance last true sales so as has

where and With the we with next this these plan hopeful, to move, several according plan across we year still actions. the the to months finish finish to we're year even

So the hope we found are is productivity we last we right the that relative to increase can places where quarter. where actually trending

the and then free of can that demos, We metrics coming per mean having per from of be all how things funnel the metrics control, rep. rep monitor and staying number top hopefully, number as all into wins the expect rep we way in effort manage we and all -- the such of manage down closes. to teams manage an dollars funnel convert that we to that trials sure of way you'd in, to I the most per those we're wins that control effectually getting ahead activity of all

Rick Booth

Yes.

most churned. the at biotechs, particularly software other the script, are an I smaller my The level about and eye of have those I a on sets we of look that an those expansion and is key table some really the think that, IT been providers. that ARR, churn. areas seeing to economy are commented Keeping increased challenged, as in is driver Taking which addition of

we low-XXs. expect mid- MDR So to the now to with in the end

two into half upcoming table the will for the year account. take to people year. So really I second And those the that make of want the sure set things

Operator

Your next question comes from DJ Hynes with Canaccord.

DJ Hynes

and I'm stock have EBITDA margins about has about margins helping the of that from three And moving there's you're here, to job the over view Rick, I the you've right? we mean I a would the how where done just nice a looks high you about Definitive Populi helpful. think thinking clients talk to years, more say, I'm at And we happening. us look, sub-XX. strategically its doubled should next from restructuring that but data why revenue calls us a color right? go mix super kind XX% But organic that's over base parts Any online. some hoping through? help how mean, coming and the over getting do level look, be can years, three-year think understand really from cheap, few last but with gone things

Rick Booth

DJ. Thanks,

you proud adjusted. we the needs in we've As deliver in actions we in cost a balancing and of growth did very half we're of know, strong thinking mix that We're guidance can advance the that about profitability. our the even so taken proactive of that bottom

look at the pause. this and we're deliver are of providers bounce going be markets XXXX, important. of we biotech me confident As terms that going continuing investments back, is of no to need that that to making are believes to to in the second part that critically There's innovation. and year on affected we half those I'm

remain revenue of So I in the confident we and attractive combinations that long can profitability run. drive

quite to I think the guide XXXX. are ready not pace getting of there

Robert Musslewhite

of them. Yes. And hard good lot to to that. front investments have DJ, before, It's a really that just in to I we choose us. what add between said good of It's

margin extremely relief position. because believe to things and sure We growth position that turn have is in we time, in still we're We'll the such And our choose fantastic a we're best want profitable. growth little do market be investing but a great lever it. is a in over get wisely, bit upwards. to of We to be I accelerate that the

used to three help when faster faster. we to move you going on the a years That's continue a line us top little So to we two lot and talk about line and out. bottom the can bit

DJ Hynes

The of And to your Robert Just so how I kind just of talk one understand it from? data those data then But in tech Maybe to kind at online come all That super that of as understand of investment. strategy, like you installed wants could does comes Yes. areas versus incremental it way. And coming sounds or rolling help come a where access makes whoever we why interesting. basis sense. answer. me on about that works gain once it? Jason

Jason Krantz

Appreciate it. question. the for Thanks

data. our multiple we're installed So different excited the the from much sources as very -- It of comes about actually data. tech

some third research. our modified party. acquired from a we're collecting data way through first-party the data have We've We that

of science data then, and fresh, done in as our and a get way interesting detail at some well. that really more different up-to-date to and more data that clients we've of And on is information top new really for looking all

at all change all tremendous we've testing, once on and and at of over once a continue coming to because we're bringing a work, time. replacement and we've will it modify a amount major done doing done it's So lot but of we're

them our clients their they our existing that's it get up living to grow the as really data, happening as the with as clients, with pick are are valuable clients. where beast, and of new to helps So and for is it that what is opportunities for breathing to all with them changes understand well best makes so a that identify clients

what So hopefully, that you're is looking for?

Operator

And we'll from Needham & with next Ryan hear MacDonald Company.

Matt Shea

start is the Ryan. accounts. Wanted customer This enterprise for Matt to Shea on with

the and lower then commentary So of the or attribute up-sells pressure we quarterly year, coming see metric higher whether expectations? to declines is continued your churn as of again. kind And trend expect the through year? customer declines of relative in we the the might where you in that to work back where half where then about should count it we this quarterly in given NRR back that this to more half would Wondering continue could towards enterprise

Rick Booth

enterprise is into those to even we basis, a with on see going get guiding not factor, slower customers. but quarter-by-quarter a I'm of still of certain combination expansion and a do churn segments

we that. So ended up in unsurprising that

think but tend these in management, year so even industry, a are we're of half do forecasting if we prudent across place. cost to conditions. I second you still the able to and in deliver the many the look have similar

Robert Musslewhite

in Certainly, color some there on more challenged, the are especially that of are So talked submarkets that some about. customers. the we've

On and with really the lot clients wins of big other we hand, lot good a a of really had enterprise expansion.

just to levels over that still that as But we're will customers about to are come up bullish an to best not you that a continue there segment. bit in ability be It's people counterbalance point, the than across stories segment time, So, enterprise of it's higher some Enterprise with a overall churn our growth board. us. had away for clients and and little because level to migrate segment. and our Rick's big still slower engine into about if of migration from usual of turning that our

Rick Booth

life the that remember And are providers sciences and overrepresented Enterprise in Yes. Group.

Matt Shea

Yes. point. fair That's a Got it.

improve to like house? create groups will upsell base switching customers. in maybe cross-sell And either provider opportunities that then help as And really Okay. kind the claim relative there on it overlap Populi, side sounds is what their customer the gears But curious they yours? this of in to go-to-market How strategy. the provider terms or of much penetration this of

Robert Musslewhite

bring really a with would we're Very about certainly some to really client and little a good our clients strong Dataset the solutions our of bringing reference opportunities the albeit affiliations But their small overlap. potential. about to and excited into as products customers, and your and relationships. point, customers extremely expect into their lot Atlas excited cross-sell data a base. their We some provider few company from They're we're

having great We nifty clients be Populi we're prospects They're clients them that raring prospects go-to-market and really of we're good those to hoping with us. on growth the engine with big conversations conversations with visualization have up. will excited go, a and lot product built set and a that they for board, to use good and team bring demonstrate the a to existing and

Rick Booth

providers. that our no for As strong layer but specifically with foundation created you recall, our was was data application

out quite customers. put were yet that and attention have vertical, their They of not did they building but So into the all opposite. they

And so each when was we other, recognition found immediate. the

Robert Musslewhite

business I time bring the -- fact at tough challenged drive And growing I market just these I the to don't and a little about provider market. environment can run It question. despite long talked value They need forward think opportunity this our thereby Provider them deliver very The really huge consistent I've excitement grow. with of think think business and now more that kind was don't we faster. had the for market being that provider around providers gives this growing. support. same market at a the grow to that we an I'll and to clients, a is of is us that's bit in worked think awesome time. is to a Populi. ahead a all. the to that going We product continues state-of-the-art

that a about So good despite really fact lately, we prospects we this little had in feel medium/long-term the the market. bit of rough go

Operator

Next question Brian come James. Raymond with will from Peterson

Brian Peterson

at you the I can appreciate on funnel. macro everything any all of and So, seeing are I comments generation on what But you the in top the what click pipeline double else. to terms and seeing wanted add the the there? guys color you're of

Robert Musslewhite

we can of our had several line metrics about. comment us. years, going decision-making do be releases. showing on gen to we bit pipeline the dotted what we've product what value prior and The and get pipeline. about focus there not get to been into in demos say and it's control, other the out clients, rate of control. things sort controllable But about like talking out had budget can is It felt in as for we've the little talked can this specific I'm big and a it's We We've than a is talk year. front promote been get than on and mantra doing, less we we're ultimate signing the has can win

of decisions, We clients budget even go So those year. if of deals back on because ready engage those couple have budget and went quarters, the slipped comes away. and are we're become with right see when there, make pipeline to back opportunities that a this some we and clients

good. generation I feels pipeline So Demand think generation good. feels

in the just be quarters. continue several people working the as are it interested through Definitive funnel for bottom of have past to We who tough Healthcare, those the we've seen

Brian Peterson

seeing and be M&A private I'm the maybe ambitions. Populi And valuations on cadence company targeted what you're of forward? thinking how in M&A curious we of about follow-up going a terms and Understood. should the

Robert Musslewhite

Yes, one targets. year in two we're to a lot per still optimistic see We this we can of do environment.

I we've having them. through that valuations did As had, before, like last part and into there would early pretty we've and we But we say hot feel this the end are of the of conversations year. year been commented ran still

land that we thrilled be are ours. combination, joining we're think really were a great team able Populi, about excited to going and we So it's we really to that

platform don't really there'll We has and the others. to of that important synergies most is revenue we usually or to to lot up capability a obviously, for of don't strong have think us a creates to it our aggressively. accelerates acquire or right company kind have that And And sets bring that build be into data clients ability our pull synergies. cost that that and

end lot we value deals. of So of types creation with up a from those

there. think if them a that's our through I I obviously, So And hope. are pipeline the they're early deals, of lot stage, of look but out

Operator

next Allen come with Bank from Our Lutz question of will America.

Allen Lutz

you the guys grown beginning Obviously, in about the is couple I pretty rate curious the guess of the one growth Robert, XXXX. for materially it's decelerated past market of what have quarters, past you're comments environment gaining over through share And here? you changes think XX on I'm you you're I'm pricing this is I'm any any share. do curious there the then you if that seeing? curious, think that months. have steady, that? in market, staying in losing XX%

Robert Musslewhite

Sure.

to like been this spend that. a say it teams still talked share think tougher close haven't gain about things are. and pulling deals that's lose, at look category year, when our feels competitor. I'd but we it's we been We why I from win-loss a we perspective, It's going doing to We on has a on versus won where we to lot back or a not cited lose.

pulling in the -- you around and market, in have people of the and back investments investments in someone just sales. or of win about sales is corner holding concerned what's where health sales I they're sales, like sort we tentative. more care, pulling on invest a wants they're In this growing bit is of are lot investing they're when back someone clients on not on back that a because feel still to number

And seen changed. every happened selling buy hasn't now when to into to think it's care. ready back we've But people okay, time People Definitive. get we're I that decide, health

still we're is and gaining share slower a I lot at of getting we've good we're a seen albeit say still no, before. than would I rate So clients think

this we realization that. from year reasonable our price increase took and pricing, have On normal price seen

for it's can both where lever drive performance, be year. that for opportunities this benefit So be price to I can continue look and think to to directions. historical more similar pricing a We'll us better

more little we do of price the areas can in bit look some at there generally, felt enable a certain for year -- places drive prices to our I go we're areas. in general, pricing because to volume. price hasn't each hope are We overall think lower opportunities to would at adding we that continue us that by could certain where product, several up points percentage think that that But I offer got. in we and would obviously we like that lots higher look do

Allen Lutz

up quarter? And for Rick. percent then up But some curious renewal changed of the one percent know for what or the business helpful. be XX models a has come of different. might a in quarter? XX bit contracts that Great. the been Have That's do little contracts months? come past And renewal so over I guys what typical that for of you in acquisitive, then disclosed you've

Rick Booth

Yes.

detail that. not particular gone any into have on We

substantive seen a haven't We shift.

and frequent I bit towards more we'll little renewals annual first when a QX It's little more a rate we've that customers of of the now cycles we're got the QX. renewing generally, then more little and over-weighted terms bit thereafter. make and they be of customer new think in bit three-year in a ones, and signing shift little shifts they'll a quarters, expansion there's when a been in deal underweighted new renew, because a more fourth

Operator

David question next Stifel. from Our come with Grossman will

David Grossman

Great.

you, one quick Robert Rick for ones, two Jason. one for and and Just

just you, earlier. this at So getting someone I was think Rick, for

the into half? of first high-level give Just back saw kind rate could in for insight are versus us the what churn half your what of you the of year some in the expectations you

Rick Booth

Yes.

the conditions NDR to to assuming an end with So we year expect the current the think mid low XXs, continue. in I

David Grossman

how going But up? half? not the relatively -- relative churn Right. Is is of it better? getting look half Or to would the kind second just first

Rick Booth

of would consistent. relatively That extension That's the be conditions. existing

David Grossman

maybe out same I'm what I you think Jason, don't And it. these curious, Great. in. we Robert going this, far, eventually is know to just you downturns, be the both of customers and you thus went way answer change but want which based out on Got coming one And rarely what of come you this to biggest the do? you your when seen do and you've for do

Robert Musslewhite

at Yes. I'm happy to take way that. this

been during do we our this long-term We tough it intentional sure macroeconomic is to to strategy, environment invest that incredibly growth. That's about product continue been continuing obviously drive going focused making to and really have in think we a but during been this that we've period.

we and capabilities add So companies that claims. and things we're continue data to that Obviously, on. both new Atlas exciting acquire are reference to that continuing We're ways. We is in of lot excited that going use about important. and expand Datasets, affiliations new to a the very think foundation

capabilities. AI also we're then adding And

much AI So have, than that of before. but put the we're the ever now, to of so to we our how become interesting created they've product that can internally, bits data really on right doing also and able we work proprietary both can top stronger faster various use leaner leverage that some to clients prototypes our throughout been of Company

Robert of highest we this and We're continue grow, So about in tough as see yield, going fruits that coming continue is we to time. on that all areas before. should the in focus to talked that if make the organization lean we be measure investments, have, a work during we And invest put everything we of make it. out sure lean, which that the doing what right always we have only as to

Operator

next we'll Credit And with Jonathan Yong to move Suisse.

Jonathan Yong

And there? on And elevated again many are these I or the commentary bust appreciate are or just frame around going down assumption NDR, about a being of break the any the to to slipping into any going the market of churn the there way framework entities entity? how just Is back churn. of bubble kind

Robert Musslewhite

calls. prior Yes. And about this we've talked on

pure we bills, come laying renew. of and a seen and just think one, people Number is much say, paying -- we've things. certainly a I level client just higher it's we've off their can't two and seen financial where they not distress

trying Now to... we're

Jonathan Yong

is kind do this of there obviously how or like for if slipping bubble on any you but are churn? there guidance of that comments are assumption Sorry, -- there's a that many of to is the into year, your an frame kind close for have

Robert Musslewhite

drivers. I'm kind not what they're seeing churn of you. two sorry, tell when I'm we're you now, sure really if is one and certainly I'd rate I it buckets what we sort sold three are expected has normal going at say, That's I to was look to a larger -- what of from you

we If zero you of virtually go those. years, back X.X have

like we -- now. more have We right have than happens we that

costs I and our financial vendors, not budgets second approval and having at and financial is We're they're strain. but I think places looking are levels. over distress, out those us higher they're pure that pushing all the there. dollar are their a cutting doing that making out mean with lot

we one, through, jump some to a So that's but deal within the second the of timing the we lot certainly and jump that through win -- extra to creates expect of that's normally through. go those, boost

longer want So a than those of taking get if end up them. we we deals lot

the you the to you delivered don't you again. I haven't that they There's deserve right expect what exactly clients then that to And always work our third, to see responsibility. want prove

value but certainly an matters se, a a those don't you I of where really think uptick and getting few in lose those. per in been there's And world sometimes is scrutinized.

of more well. those as into discussions get We

those on of are which a the have drive difference a we've percentages where from what seen sort areas So year those definitely ago. seen those I can't forward. might forecast of But all and put we

Jonathan Yong

And that. on Appreciate of the Okay. then just pipeline. kind

to You're at they're of only at there. time? solutions? they still that things, kind develop at Or this to are continuing color talking customers understand about any delaying but we're solution I going are customers one are Just look multiple basically, but saying, well, pipeline, looking the

Robert Musslewhite

solution. wouldn't say to I looking a trend just there's Yes. at one

we're our physicians. combination Datasets are distinctive pretty with organized data rest Atlas -- by and of our We the we recent inflation of that

are against. uniquely deliver So there we to are use cases suited that

a where situation don't and get exactly someone else, they us get doesn't or can someone else. us from from either That tend what they And happen. to in be just it's we just so

places are use growth There back times generally in on as health other would the into might I'd their sales more us. care. activity are over that probably they where cases spend with prioritize they being hesitant areas that again, and sales and characterize And pulling spending in on

that do sometimes back where them, better caught And the stuff they'll we but we know and put up on someone again. it, When that, come some pause. of they and that's they a environment about as as place keep front in get soon the invest of feel

So that's to it going in we Definitive really see. more not x the doing not, be do a to than any hey, used company more we're It's we're because the past.

Operator

we'll next [Operator move to Deutsche with George And Hill Bank. Instructions]

George Hill

one like of and for -- everybody team. have Rick have of I I else, rest kind the the for one

of So number the Rick, I want the to correctly. understand sure make I NDR mechanics

XX% point kind kind to just the for times -- $XXX million case, number. or in of revenue of think the about that's to you're way guys and do a year, the right to And $XXX the tracking this are not you guys million? off if jumping if it's can the number, if you So -- explain have XX low-XXs tracking like number year's mechanically just not? mid-XXs XX.X% Is for towards, me got or next about why towards you

Rick Booth

No.

off QX rate ARR. That's More jumping if to about roughly the I we you think expected which and revenue approximation simple hope an point in direct. of your right annualize I QX. hopefully QX think think run is And the provided. forecast, and

George Hill

for Rick, and I love then answer for a Jason simple and and direct Robert.

like might guess, the share are feel kind AI a bubble by As solutions. are towards of and because where you're months, wallet at new of losing I guess that's looking the investments you guys some your seems you have and people of redirection share you do like, shiny six consumed guys of to or on be of seeing AI-based guys -- do clients looks losing make I you customers trying world the feel focused like to how capital last been ChatGPT allocate in

Rick Booth

No.

that. I it be opposite exactly will think the of actually,

models data. extremely So in what And work order for grow. high-quality proprietary these language provide, well, and and you need to to we that's continue we large

in to accessible just this large a miles use to that amount to So take for and this opportunity us I clients. GPT see information of we -- more for make language types it vast models as tremendous have our of

happy to give a So you example. quick

is a stages. replacement, client hey, But is and they the is this are time find want a might our what has after we're that the say, doing, that to device this So still have doing that we the do -- a kind of recovery thinking a knee who a people reduces that early all joint replacements significant and country. with number data of if across

and find Now on new that filter that further down the of are a people those lot have a to readmissions replacements. quality issue having

who that Now, executives people that. in at going list. the okay, have area. to now Boston talk that tell me I'm I the I to that take me tell that need And Boston, to are

it penalized? can of different Head Financial it's been today result, data All as of as Chief that's And much they but don't the who's people leverage our could. as harder. that with Officer So the a you is and it's Orthopedics, do steps, multiple who

these that's drive than exciting. business their do It and they data ways ever than to to their far create ever we you thinking. So our use that in clients allows business could to can our more our they And really grow that type imagination of allow quicker natural language leverage could. models to

things clients organization. of ways working use we're data to invest throughout There's our So tremendous the and in to these to of and as that in exciting excitement a more talking types we're data on. about amount new

Operator

I'd to There to back turn for this are additional Mr. no the questions closing any like at further Musslewhite time. or remarks. conference

Robert Musslewhite

questions, look and we across speaking We coming of with forward for attending your everybody, weeks. the Thanks, call. you to appreciate the many

thank So you.

Operator

conference for today's attending. conclude call. you does This Thank

Definitive Healthcare (DH) 14 Aug 232023 Q2 Earnings call transcript