Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Definitive Healthcare Corp (DH, Financial) exceeded its guidance range on both the top and bottom lines for Q1 2025.
- Adjusted EBITDA was $14.7 million, representing a 25% margin, which was well ahead of expectations.
- The company saw strong double-digit growth in the number of engagements where they integrated their data with clients' systems.
- New logo activity was solid across all end markets, indicating ongoing demand for their differentiated data.
- Definitive Healthcare Corp (DH) is making progress on its strategic priorities, including data quality, seamless integration, customer success, and digital engagement.
Negative Points
- Total revenue for Q1 2025 was $59.2 million, down 7% year-over-year.
- Retention rates remain lower than desired, impacting subscription revenue.
- Adjusted gross profit was down 11% from Q1 2024, with a decrease in gross profit margin.
- Sales and marketing expenses as a percentage of revenue increased by 220 basis points year-over-year.
- The company is facing pressures on renewals, which continue to impact subscription revenues.
Q & A Highlights
Q: Can you elaborate on the data integration partnerships and the challenges faced in integrating data into clients' workflows? Are there incentives to encourage integrated adoption?
A: Kevin Coop, CEO: Integration challenges can arise from data sharing and system compatibility issues. We offer prebuilt connectors for platforms like Salesforce.com and provide analytics capabilities to assist with complex data mastering. Our strategy includes offering seamless integration through prebuilt connectors or advanced analytics, which has led to a double-digit increase in integrations. This approach not only unlocks more value for clients but also improves retention rates.
Q: Can you explain the agency strategy and its impact on the go-to-market motion? Is there any significant contribution from the agency channel in the 2025 guidance?
A: Kevin Coop, CEO: The agency strategy is applicable to all customer segments, primarily provider diversified. We provide differentiated data and help customers activate it, either directly or through agencies. Agencies can leverage our data for their clients, creating a transactional relationship that will build over time. We expect the digital strategy to show quicker returns through direct channels, with agencies representing a longer-term opportunity.
Q: What is the expected timeline for seeing an inflection in growth rates following the operational changes?
A: Kevin Coop, CEO: We expect to see improvements within the year. Our strategy involves aligning support functions and evolving our go-to-market motion to better serve different market segments. While we are seeing positive signs, such as improved bookings in life sciences, it will take time for these changes to fully materialize.
Q: Regarding churn, is there potential to win back customers who have left, or will growth primarily come from new logos?
A: Kevin Coop, CEO: We believe our high-quality data and service can win back former customers. At the same time, there are many potential new customers who have yet to experience our offerings. We are confident in our ability to drive both new logo wins and customer retention.
Q: Can you clarify the revenue guidance for the rest of the year, considering the Q1 results and Q2 guidance?
A: Unidentified Company Representative: We expect similar revenue growth in Q2 as in Q1, with a modest step-up in subscription revenues. The second half of the year is guided to be flat at the midpoint, but there is potential for sequential growth at the high end of the range. We are focused on operational improvements and strategic objectives to drive growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
