Q3 2020 Phreesia Inc Earnings Call
Ladies and gentlemen, and this is the operator todays conference is scheduled to begin momentarily until that time your lines will again be placed on and musical. Thank you for your patience.
[music].
Good morning, ladies and gentlemen, and welcome to the free cash fiscal third quarter Twentytwenty. One earnings conference call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time I would now like to introduce the logic.
D. Vice President Investor Relations procedure, Mr. Gandhi you may begin.
Thank you operator.
Good morning, and welcome to freezes earnings conference call for the third quarter of fiscal year 2021, which ended on October 31st 2020.
Participating on today's call from Frazier, our Chief Executive Officer, and co founder and Chief Financial Officer, Tom Healthier and senior Vice President Human resources and be bad day.
Following prepared remarks from Hi, Amy and Tom we will conduct a Q and a session.
A complete disclosure of our results can be found in our earnings press release issued yesterday evening as well as in our related form 8-K submission to the FCC both of which are available and Investor Relations section of our web site and I are duct free <unk> dot com.
As a reminder, today's call is being recorded and a replay will be available following the conclusion of the call.
During today's call, we will make forward looking statements pursuant to the safe Harbor provisions for forward looking statements contained and section 27, a of the Securities Act and section 21 E of the Securities Exchange Act.
Including statements relating to the expected performance of our business.
Future financial results or strategy or partnerships expected launches of products and services.
Long term gross.
Overall future prospects and.
Moving our revenue cost of revenue and.
Operating expenses, our business outlook for the fiscal years ended January 31st 2021, and 2022 and.
And the impact of the cold and 19 pandemic on our business.
These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those projected or implied during this call.
Particular, those described in our risk factors included in our form 10-Q, which will be filed with the FCC later today.
You should not rely on our forward looking statements as predictions of future events.
All forward looking statements that we make on this call are based on assumptions and beliefs as of today and we undertake no obligation to update them as required by applicable law.
We will also refer to certain financial measures not in accordance with generally accepted accounting principles in order to provide additional information to investors.
Non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results.
A reconciliation of GAAP to non-GAAP results may be found in our earnings release, and supplemental materials, which were furnished with our form 8-K filed after the market closed on December eight with the FCC and May also be found on our Investor Relations Web site and IR Dot free show Dotcom.
As a reminder, we're participating on today's call from four different locations. So we appreciate your patience with us and we'll now turn the call over to our CEO I'm index.
Thank you bullish and good morning, everyone.
We hope you are safely now beginning the pandemic.
Third quarter results reflect solid performance across our organization for the fiscal third quarter total revenue was $38.5 million up 17% year over year.
The average number of provider clients was 1700 and 37.
10% year over year.
Average revenue per provider chlorine was $17490 up 5% year over year.
Life Sciences revenue was $8.1 million up 21% year over year.
Adjusted EBITDA.
Was $1.2 million day.
Oh, and approximately $1.8 million year over year, reflecting our continued investment in long term growth.
I want to take a moment to recognize our teams continued commitment to our clients and their communities throughout the pandemic and November their performance was recognized by class research and.
And a report based on first hand perspective of freezes clients through the pandemic class rated our patient and take management solution with the highest overall score and the high school. Good 19 response rating amongst and vendors evaluated spin.
Specifically free is your was recognized for having the broadest deepest adoption of our various functionalities, including preregistration clinical screenings payments and eligibility and benefits I would like to acknowledge our entire team for this latest third party validation and what they're important work and the value it brings.
To health care providers across the country.
Now turning to an important and play and leadership transition at free.
In conjunction with our earnings report yesterday, we issued a press release announcing the play and transition of our CFO role from Towables here to Randy Rasmussen and May 2021.
Since joining free shot and 2012, Tom has had a meaningfully positive impact across the organization.
And its impact goes well beyond our strong financial performance and deep into our culture.
Tom is retiring from the CFO post after a long and successful career.
We are thrilled that he will still and as a trusted advisor to the executive team.
I speak for the entire free is your team and thinking Tom for his contributions and wish him and his family the best as he transitions to semi retirement next year.
In anticipation of Toms retirement, and as part of our succession planning, we prioritise recruiting a strong finance and accounting leader with deep public company experience and health care and software, we found that individual and Randy who joined US as Chief Accounting Officer and November 2019.
Over the past year, Randy has played an important role and our evolution as a public company as he continues to strengthen and expand our friend and seem to position us for long term growth.
Muzzle till Randy on your new role.
Moving on to a brief update on the Companys physical footprint.
Back in March you use your prepared or company to operate remotely and definitely we continue to operate 100% remotely.
Consistent with those planes, we made the decision to allow our New York City office lease to expire at the end of January.
We will continue to have significant employee presence in the New York area.
Including many members of our leadership team, including avid and me.
However from a legal and regulatory perspective, or Raleigh, North Carolina office will soon be address a principal executive offices and our SEC filings.
No we would like to provide an update and our environmental social and governance reporting initiatives.
Faster senior Vice President of human resources, and he then dying to share the findings of an important report and gender equality that we recently published for those of you who have not met Amy She's letter each organization for over a decade.
And has been instrumental and our growth and.
Jamie.
Thank you, Mike and good morning, everyone.
I agree that we recognize that our ability to execute on our mission of creating a better more engaging health care experience relies on recruiting and retaining individuals were committed to and aligns with that mission.
We are committed to creating a diverse equitable and inclusive environment for operations.
As we organized our efforts to begin to publish S.G. data our leadership team and board determined that gender equality should be the first area we address.
We will continue to prioritize and invest in our inclusive culture.
Ward representation.
Waste and leadership for women.
Equity and strong family leave policies.
After researching the universe of reported January quality data, we determine that in order to provide objective transparent and comparable data we would follow a widely known and accepted framework for reporting subs.
A bloomberg gender equality index.
There are some highlights from the freezer 2020 gender equality report.
Covering our fiscal year ending January 31st 2020.
Women make up 50% of our employee base.
44% of employees and our top pay quite Kyle are women.
42% of senior management are women, 56% of middle or other management are women.
49% of revenue producing roles are held by women.
51% and employees promoted during the fiscal year, we are women.
And 91% of women, who returned from parental leave between February 18, and January 19th remain employed 12 months after that Richard.
Well you know that this data covers all of our U.S. employees and excludes about a third of our employee population who are based in Canada.
The full 2020 free said gender equality report is available on the about US section of our Investor Relations website, and I are not free share dot com.
The data and the report covered all of the information required by Bloomberg for inclusion and its gender equality index, which is updated annually.
We encourage you to review the report and follow up with velocity, if you have any questions.
I'll now turn the call over to Tom.
Thank you Amy and good morning, everyone.
I'll review the income statement balance sheet and cash flows for the fiscal third quarter and comment on our outlook for the remainder of fiscal 2021 and fiscal 2022.
First revenue and the third quarter.
Oh revenue was 38.5 million up 17% year over year.
Subscription and related services revenue was 17.5 million and the quarter up 20% year over year, primarily due to new provider clients and expansion of existing provider clients.
And then processing fee revenue was 12.9 million and the quarter.
Up 12% year over year as patient visit trends recovered to pre pandemic levels. During the month of September and were sustained through the end of the quarter.
Provider revenue, which combines revenue from subscription and related services and payment processing fees.
$30.4 million up 16% year over year.
The two drivers of the 16% provider revenue growth.
Average provider client growth up 10% year over year.
And the average revenue per provider clients up 5% year over year.
Our client growth was stronger than recent quarters, reflecting increased demand for our offerings.
Life Science was 8.1 million and the quarter up 21% year over year.
Our life Science results reflects both strong execution and delivering more and messages for existing campaigns and solid demand for new campaigns.
Moving onto expenses I'll review several expense line items on an adjusted non-GAAP basis, which excludes stock compensation expense from each line item.
Please note that for a full reconciliation of GAAP to non-GAAP measures, including adjusted EBITDA is included in our earnings press release, and our form 10-Q to be filed with the SEC.
Cost of revenue was 6.3 million for 16.3% of total revenue up.
310 basis points year over year, and reflecting our continued ramp up and client services organization during the quarter to support our growth.
Sales and marketing expense was 9.5 million or 24.6% of total revenue.
50 basis points year over year.
Research and development expense grew 16% year over year to $5.3 million and down 10 basis points year over year as a percentage of revenue.
We expect the pace and level of our investment in R&D to accelerate over the next several quarters.
And dollars will be allocated across the existing platform as well as into new products and solutions.
General and administrative expense was 8.7 million or 22.7% from total revenue.
Up 400 basis points year over year.
That increase is consistent with our commentary and for the past year around the continued ramping a public company expenses.
Particularly and finance and legal.
From a modeling perspective, we expect to begin to see operating leverage and the fourth quarter of fiscal 2022.
Payment processing expense was $7.5 million up 9% year over year.
Payment processing margin was 41.7% up 140 basis points year over year due to the mix of transaction type and lower cost routing and payment.
The benefit from mix was more muted versus the previous quarter as evidenced by the sequential honored and 30 basis point decline and.
And payment processing margin growth.
Moving forward, we expect margins to return to the 40% range from quarter to quarter variability due to the transaction type mix.
Adjusted EBITDA was 1.2 million down from and even 3 million in the prior year the.
The decline is largely due to the acceleration and investment across the company as we capture the growth opportunities, we are seeing and the market.
Shares outstanding as of December 4th were 44.2 million cash on the balance sheet on October 31st was 254.1 million up $169.9 million from July 31st.
Shares outstanding and the increase in cash incorporate the 5.7 million shares issued and net proceeds of 174.5 million related to our equity offering which closed on October 23rd.
Cash flow from operations for the quarter was an outflow of 667000 versus an outflow of 3 million and the prior quarter.
Capital expenditures for the quarter were $3.7 million up.
Up 200000 year over year, and a 3.7 million includes $1.9 billion of capitalized software development.
In terms of our outlook for the remainder of fiscal 2021, which ends on December 31, 2021, we expect to report right.
Revenue for the full fiscal year of 146 to 147 million.
For the full fiscal year 2022, ending January 31, 2022, we expect revenue to grow between 20 and 25% over fiscal year 2021.
We will invest more cash into the business and fiscal 2022 compared to fiscal 2021, as we continue to ramp up hiring across the organization to support our anticipated growth.
I look forward to working closely with Randy and our team over the next several months to ensure a smooth transition of the CFO rains and May Onest 2021.
Congratulations to Randy on his promotion.
We are ready to take your questions operator.
Thank you at this time, we will be conducting our question and answer session in order to ask a question. Please press Star then the number one and your telephone keypad in order to allow for as many questions as possible. We ask that you. Please limit your questions to one question with one related follow up your first question comes from the line of and Samuel.
And with JP Morgan and your line is open.
First I'd like to offer my congratulations to Tom on your upcoming retirement.
Thanks Ann Inc.
You briefly quantified the keep market opportunity and some of your presentations and I was just wondering how we should think about you know how that's going to contribute to growth going forward. You know that that part of why you think you can exceed 20% next year or should we just think about this is more providing a longer tail for growth.
Or any.
The way we've been thinking about is it is one of our growth drivers and it gives us a little bit more.
Comfort and being able to provide guidance.
Moving forward, but it it. This this to US is a multi year driver of growth not just next year.
So I think this this and helps us continuously hit our growth objectives, while providing for a comprehensive solution to a broader set of clients. That's.
That's great.
Yeah, and then maybe one more your the competition of your provider growth was just a little different this quarter, you know use our really strong growth and provider clients, but the revenue could provide or client was just a little bit lower than historical so but just wondering you know is is that maybe coal bed or is there any nuance to that.
The way I like to think about it is our sales team and our implementation team just really focused on getting out in front of people that needed our solution.
And we're really heads down and focused on getting free shut in the hands of providers and patients that needed to be able to do.
Do their jobs to treat patients and we had an unexpectedly strong corridor.
Oh and provider growth.
Great well congrats on the nice quarter guys.
Thank you good luck.
Your next question comes from the line of Ryan Daniels with William Blair Ryan Your line is open.
Yeah, guys. Thanks for taking the question I guess, one is just around the increasing R&D spend can you highlight any particular areas and the existing product suite or maybe moving into acute that you're focused on investing and on a go forward basis.
I.
Hey, Ryan Oh.
I think the best way for Us to think about it is you know.
We will continuously communicate to all of our investors and the market, where we are actively investing and.
And as we as we have visibility as we have clients and those and using those products and as we understand how we add value and drive ROI. We we are continuously committed to informing our investor base on those new products and we'll only do it after we have people using the product.
Got it it's really it's.
It's really across all the areas that weve been actively communicating.
Okay Fair enough and then.
As we look out to the coming fiscal year, obviously nice that you guys are willing to provide the 20% to 25% guidance. So a couple of questions on that number one is what are the underlying assumptions in the market is that just kind of pre pandemic normalcy and your customer base and number two just what gives you that comfort.
And before the fiscal year end to provide that guidance is just the strength and new implementations et cetera. Thanks.
Are we but when you talk about guidance are you talking about next year to see some clarification right and you talked about till the end of the year 20.
But the 2021.
Yes, 2022, Okay, 22, and a 20% to 25% guidance.
Look we think it's really important for us as an organization to be able to set the appropriate expectations and guide rails.
Around growth. We've also very clearly articulated that there are some coated disclosures and so I can't tell you what will happen with coated and the future, but we think we've we've provided ample disclosure should that.
Provide any massive change who actually did I could answer that properly.
Yes, yes, so our guidance is not sort of a some kind of broken prognostication on on the pandemic. It's just based on what we know now.
Okay, and if I can squeeze one more and just.
First congratulations and and.
And any color.
You on the the retirement and just how long you're going to standards and advisor thanks and congrats.
Thanks, Ryan Yeah.
Yeah, I'll be CFO until may 1st and planning on staying on and has an advisor I don't want to say indefinitely, but for you know for a certain period of time, we haven't worked it out exactly yet I'm, just real confident and Randy is going to be able to take the reins of the.
CFO position he has a lot of experience and public companies, including us a p. made at Medidata.
And he's been a he'll have to 10-K's under his belt and I'm very confident.
His abilities and going forward. So we're really looking forward to the transition.
Your next question comes from the line of Sean Wieland with Piper Sandler Sean Your line is open.
Hi, Thank you I'll add my 70, congrats to Tom for your semi retirement.
Are you going to be side, and the K and Ah, yes, and okay and with you stay and on.
For a little while is that going to be a fulltime role or part time.
I think it's part time special projects that kind of thing.
Got it all right and then so my question is and that the payments margins you cited.
Investments as we capture growth opportunities.
Good day.
Oh I'm sorry.
Yes.
I got two calls going on here declined and and payment margins investments as we capture growth opportunities and what investments and what growth opportunities are you seeing in the market.
Oh wait and so was that for our color for the yeah that would fit your call. Okay. Just checking so look we are investing across the board.
Our general thesis is.
We want to capture unfair share of market, we see a fair bit it did and and so we're hiring is and our SCR program, we're hiring where we're growing our sales organization. Our implementation teams a customer success teams and very specifically, our engineering teams and all that all the resources to support support.
Those we expect all of those parts of our organization to materially growth.
Significantly.
Awesome. Thank you.
Thank you.
Your next question comes from the line of Donald Hooker with Keybanc Donald and your line is open.
Oh, great good morning.
So I guess I'll push my luck here, a little bit and ask a question you may not answer, but I'll I'll take a shot.
Last quarter, you provided a little bit of an update and quantification of your exposure to the hospital space and I saw you had a very nice.
Net client out and the quarter and are we seeing can you maybe give us a little bit of quantification in terms of.
What hospitals are as a percent of your client base or revenues or anything there because it sounds sounds like an interesting opportunity that you've laid out I'm sure. It's small but just curious.
So what I will say is that our sales organization has been doing a phenomenal job as has our.
All the other parts that are working with and implementing.
Our hospital opportunities and our crack communications team.
Who I know is listening right now will absolutely communicate where appropriate or any of our hospital wins day.
They they are in charge, but not Tom MRI and how we communicate any of the successes, we have and the hospital space.
Okay Fair.
Fair enough and maybe again you might I want to answer. This question is I'm going to push on some details, but that's that's fine I understand but and it's been a tumultuous market obviously for your clients the physician practices out there. It feels like things are getting better can you maybe update us directionally or.
Or with numbers or whatever you're willing to do in terms of how how your clients you know in terms of revenue revenue retention and attrition and like that obviously at great revenue growth.
Net but just curious if I'm just getting all the changes in the marketplace that you're selling into.
How some of those typical metrics are holding up attrition and revenue retention.
So look I want to be very thoughtful because our clients as much as day.
Focus.
Or they have to pay attention to revenue the thing that they're most focused on right now is treating their patients and is.
As much as.
For the last quarter, you know when we reported a lot of visits have come back I think a lot of them.
Are acutely aware of their communities and the rise of COVID-19 in their communities and the impact it's having on their patient populations. So I think there number one focus is organizations is making sure they.
They think about and treat their patients where appropriate and all environments and that's a it's a very tough situation and I am very lucky that I get to work with organizations like that and being able to care for patients and I know everyone else to treat appeals to say and that it is very much traditional light.
If you want to talk about anything else relative.
Yeah, and just specifically to answer the question, we're not seeing any significant difference and need a rep retention numbers.
As a result of Covance.
Okay. Thank you so much and congrats Mike.
Yeah. Thank you.
Your next question comes from the line of Ryan Macdonald with Needham Ryan Your line is open.
Good morning, Thanks for taking my questions and Tom Congratulations I guess, just starting out you talked about a patient visit volumes, obviously trending back to pre pandemic levels through the end of the quarter would just be curious to understand what you're seeing sort of through the month of November to the extent you can provide some clarity as we're starting to see.
Not down and so again with another wave of cases come.
Bob why don't I talk I'll jump in and you could clarify I don't think we provide any level of near term updates on visit volume.
On this and its forum.
If we do we have our team that works closely with no.
The company worldwide and the Harbor and Harvard.
And publishing and it's all focused on shifting the public policy debate.
So just from our standpoint, I think we haven't and we will continue to not give color on visit volume and real time and.
Sure.
Sounds good and as a follow up or maybe a different view on sort of as you're looking into calendar 21, where a couple of months away obviously from hopefully from the mass distribution to the vaccine assuming that sort of hospitals and clinics providers are the ones that are managing.
The distribution is there any emerging use case or demand for the free ship platform and zero contact intake to help manage you know obviously, probably we see a sort of a strong.
Strong increase and patience visiting clinics and hospitals to.
To help manage the flow of patients during that distribution process at all thanks.
So what I will say that we will we have been and will continue to work actively with.
The breadth of our clients, including some of the major health systems and states that have been mandated with a responsibility with some of the vaccine distribution.
I know of our teams working with those clients and anything we can do.
We are committed to helping our clients help their patients and that's always been part of our mandates as an organization and it's what gets US excited to do the things we do every day so I.
And I wouldn't pencil and any type of revenue opportunity on that I would pencil and debt.
That this company continues to do the things they say, they're going to do which is to drive toward submission.
Thanks.
Your next question comes from the line of Stephanie Davis with SBB Leerink Stephens, Inc. Your line is open.
Thank you Tom Congrats on a well deserved retirement, Randy from got and you beat and high even bigger congratulations for getting out of a New York City lease not an easy feat. So good work there.
Now you've been putting up consistent outperform and and the life Sciences business for a few quarters now.
I was hoping we could take a step back and see if there's any dramatic changes that's accelerated your traction there either and the market or and your offering.
So why don't I first clarify we did not get out of our New York City lease we just let it expire and we Hadnt signed a new lease because.
We had income space that was cost effective for us before the pandemic.
Hit, but just wanted to clarify where that we didn't get out of it and our landlords have been wonderful for the decade that we were there.
So.
When it comes to life Sciences, I think you know and we've communicated this on previous calls we have continuously increased our investment with.
With the life Sciences team and that team has done just a wonderful job of.
Being very collaborative with our life sciences clients being.
Being able to provide it could not all about value through out not just this pandemic, but pretty pandemic and building trust relationships with new and existing clients.
We have also significantly.
Invested in it and we expect that to be an area of continued investment in the future across the spectrum of that organization from sales to content creation to data sites and product. So were we are.
Very pleased with the results that that team has continuously put out and the impact it has on our mission and and the company culture.
And is it safe to read through given its outperformance during low or visit volume during the pandemic that as things start to go back to normal next year, you could see even further from an uptick there.
I don't pick and this world anything as sales.
So.
What I can say is I feel very comfortable that.
We have a phenomenal group of people that will continue to do their best to deliver.
Great product and a great value and drive great results for our clients and if we continue to do that if we use and organization continued to do the right thing and drive towards our mission.
I think we're and we're in the best shape that any company could be.
Sounds good thank you.
Thank you.
Your next question comes from the line of John Ransom with Raymond James John Your line is open.
[music].
Good morning.
I have done and the other calls.
Ladies and heavy all right.
Good morning, John.
Good morning.
So life Sciences.
You know, we heard from feedback and maybe that business will be flat.
The next 50 years.
And we're optimistic there so.
[music].
Well I I can't commit on the next 50 years, because I think Tom will be 131 at that point.
What do you how old we'd be at that point so no.
No that's a.
And your though.
That's correct.
I'm not talking about one far behind.
Hi, Tom will be 121, all right so.
Look what I, what I can say is that we had a thesis that.
If we made the right investments with the right team and leadership, we would be able to produce results.
When we got comfortable that we were producing some of those results with David at the helm and a lot of the investments we made we felt more comfortable being able to.
You have talked about it a little bit more to the public markets and.
What I will say is we're going to keep making those investments because we think that it returns.
Very well to us and our investors and to our clients. So you know I will.
Well guess communicate that we will continue to make investments when we think that that capital will be returned to us.
And the Investor base.
Okay.
Your next question comes from the line of Hana Bad with D.A. Davidson Henna. Your line is open.
Hi, Thanks for taking the question and I'd like to me and congrats to Tom and retirement as well.
And are the acute care market could you compare and contrast, the length of the sales cycles between ambulatory and Q and have you devoted SCR solely to the acute sales motion.
So what we have.
Dawn is we and I and I have communicated this and the past is we mostly focus on health systems that have both hospitals and acute facilities and ambulatory and we have STR as that are focused on calling on those health systems.
We believe in the early stages of the hospital market, we are mostly going to be focused on hospitals, where we have or could have ambulatory footprint wholesale inc.
Creating a calm and front door for that patient experience.
Great. Thank you and obviously have an incredibly strong cash balance sheet post the follow on could you provide some clarity on on your plans to use this and if your overall capital allocation strategy has shifted and any regard since the IPO. Thank you.
Well I'm still cheap and I'll, probably always day cheap so from a capital allocation, we still think about it very quick each dollar being very precious to us and we want to allocate it appropriately and so a.
The general view, we have as an organization is is it going to materially returned value to us and our clients and our investor base and our employee population and.
And if it does those things and helps with the mission and we feel comfortable utilizing it and the near term I think we Tom has communicated that we will increase our investments across the board and.
No.
And I think that's all I can say about that.
Well she is that right.
Yeah, I think thats appropriate answer.
Okay.
Your next question comes from the line of Sean Dodge with RBC capital Sean Your line is open.
Thanks, and good morning.
And then maybe on the provider and time you highlighted the strength and can you give us a sense of.
Net of.
Those new ones you added in the quarter, what the portion came from existing clients that you're expanding in and how many were net new.
Or I guess and called like new logos for you.
Well.
So why don't I provide some clarification those or would be all new logos. So.
If you add to that number it is a new client so it wouldn't be and expand client.
That.
And Mike providing enough color.
No okay, and that's a good clarification. So if you've got a I don't know it and multi site multi specialty practice.
You add one site, that's why and if you add all eight sites Thats still wine, but that's just the credit to be.
Average revenue for that client.
Yes, my interpretation got it yeah.
Okay got it okay. That's all just interbody sites, and we actually spelled it out and a bunch of our documents too.
Got it okay right.
Yes, yes, that's correct.
And you could actually entity.
And the S. One there's a whole section and explain exactly what that metric is.
Alright, then the lease expiration Inc.
Can you give us a sense and the savings are realized there and then it looks like the lease for the Ontario offices also expires and in 2021.
It does and virtualization and Youre something we should expect maybe epic more company wide or and this is just specific to New York.
Yeah, So I would not pencil in any savings because I based on the research that Amy myself and a bunch of other executives and dawn revert going virtual shouldn't be viewed as a cost savings metric it should be viewed as a and.
A way to operationalize and run your business, we do expect to spend some of that money and bringing clobbered bring our people together and collaborating I don't think the goal is this is in no way shape or form and cost saving move it is a move on how we operate the company during this period.
And you should expect a change and or.
Lease footprint and auto.
Moving forward.
But we will probably still have a physical presence there for a bunch of legal reasons and and.
I think our people there do you need to actually go and for some people need to go into a footprint.
Maybe Doug and that right.
Yes.
Great response.
All right. Thank you.
Thank you.
Your next question comes from the line and Scott Schoenhof's with Stephens Scott Your line is open.
Thank you.
Hey high and been team. My first question is on your current sales pipeline. If you could provide us and the proverbial color. There. If your sales team also had to realign strategies to.
To go after a certain mix of clients as a result of cobot and the value and pending vaccine. Thanks.
And.
So what I can say about our sales pipeline is I'm.
Ever really ever going to give information about it.
What I can say our sales team is doing a phenomenal job at working with prospects and existing clients and making sure that they are.
Talking about and articulating and helping them in any way shape or form.
And the sales process and it is a phenomenal sales organization that you.
You know what I started my career I would beg to joy and if any of you know folks that would love to join a phenomenal sales organization.
Please send them to biologic because we are actively recruiting and.
And it is great place for people to grow their career.
Great UBS.
Just a follow up.
And it's kind of a follow up question on the guidance for your out year fiscal 22 revenue growth could you provide any color I am on more broadly maybe on the mix between provider clients versus revenue per provider growth in that growth rate that you.
Got it too.
Thanks for the time, and congrats Tom and their time and as well.
Thank you no problem and actually let Tom answer that question because I think.
This is Terry.
Yes.
So you know we did have outsize.
Provider client growth and the third quarter.
I think for you I think your question was around fiscal 22, and I would expect the the growth percentages to moderate back toward what we were doing free pandemic, maybe not all the way there buddy headed in that direction.
So if that answers your question.
It does great. Thank you.
And Hey, Tom just to maybe clarify a little bit more on that question could.
Could we see some fluctuation in terms of quarter to quarter on that.
Yeah, Yeah, you're going to see some fluctuation.
Quarter to quarter as low as you mentioned.
Your next question comes from the line of David Larsen with BTG, David Your line is open.
David if you're on mute. Please UN mute your line is open.
Sorry about that congratulations on a pretty good quarter guys.
Can you maybe talk about your sales force how many sales guys. Do you have now I know some of them were kind of focusing on other areas of the business. During the pandemic are they are are they all now sort of fully ramped back up.
Thanks.
No problem. So first I want to clarify we have both sales guys and sales weighted.
And our organization and Amy could happily give information on our view on gender diversity.
If you ask her about it.
And.
The sales organization has we get actually move a bunch of that folks that were doing cross sell.
Into the new sales team, just because a prioritization and.
Focus of our clients so.
Hey, Tom how many sales people do we got yep.
Excluding yes, the ours were about 40 right now.
And I think we're at 100 ish SDR and we don't really higher.
Those rules in December for.
This holiday reasons.
Okay, and then can you maybe just talk a little bit and out pricing, obviously, not getting too specific but I mean, it looks like your payment processing fees pretty good sequential increase despite the concerns around covina subscription related services. There was talk about and a potential air pocket earlier in the year it looks like.
There's no air pocket so are.
Are you are you getting any pushback on pricing at all or not really and folks just sort of want to implement this and deploy and be as productive as possible.
So the way.
I like to think about it is used to prefund and makes life at least once a week every week 30 years I like to think about it is when the pilot gets on and says we might be.
Heating and air pocket, a really good pilot likes to try to fly around those air pockets to create its little and down and a turbulence as possible and what we have done it.
As I tried to steer around as much as possible, while being able to deliver is much.
Value to our client base as possible and so what we are continuously doing is moving around where the you know the team is focused on we.
We have very tight operational meetings and fund all low group of operators in the organization that are continuously on a weekly basis watching how we're doing and.
And continuously.
Figuring out and tight trading where to.
The appropriate resources and I think that's the benefit of having a.
Tenured management organization that understands the team and.
I don't think we would be where we are with such and without such an amazing group of senior leadership.
Okay, and then just with respect to pricing like are you seeing any other solutions built within other ambulatory EMR products are now competing with here is that are putting downward pressure on price or is that or have you not really seeing that.
I think we have and always will see competing solutions.
Especially when you have most of the market just being paper.
But we haven't seen that caused massive downward price pressure.
The thing that probably affecting price pressure pricing more than anything else is.
Just you know the realities of what's happening in the world and I don't think.
And I don't even see that as being.
The.
The biggest something that we've encountered heavily.
Thanks, so much appreciate it.
Your next question comes from the line of Daniel gross like which city Daniel Your line is open.
Hi, guys and thanks for thanks for taking the question here, obviously, a pretty phenomenal.
Result in terms of the the number of providers added this quarter.
And I was wondering if you can provide a little more detail on.
On those providers are these folks that you had had initial conversations where it's kind of earlier and the year and just held off on that.
Really pulling the trigger because of code and and now they're doing it.
Or are these conversations that more recently started and going forward into 2022 do you expect most of the the ads for providers still to be folks that you had started conversations with during the pandemic and just held off on buying and new solution.
So I like to think of the World is we're always talking to as many practices and health systems and groups as possible and we've been talking to them for 16 years and were communicating with them through all different channels and.
Sometimes its with SGR, sometimes it's with.
Our marketing tools and it's not if it's just when they become freeze your clients and so you know.
Some of these two folks we've been talking to for a decade some of them we've been talking to for three months and it spans the gamut of.
Size complexity, but we're our goal is to actively be in front of as many groups as possible in many different ways as possible as cost effectively and you have our commitment that we're going to keep doing that and that allows us to continuously tightrail.
And make sure that we're able to do as much as we can for those practices.
Got it okay and on the a and the increased investments that you're going to make a going forward how much of that do you expect will flow through the income statement and how much will be a it will be capitalized.
Oh yeah.
Yeah.
You've got both components.
I can't give you an exact breakdown the capitalized costs will be mostly data center.
But and and capitalized software costs. So those are the two big cap expenditures going forward.
But the rest will flow through the income statement.
Okay, but we should see a step up in <unk> and Capex going forward.
Yeah, you're going to see it and data center and and cap software both of them.
Gotcha, Okay. Thanks.
Thanks, and I'll add my congrats to Tom on on your retirement and Randy on and your expanded Raul. Thanks, guys. Thanks, a lot per share.
Sure.
And we have time for one more question, we do have a follow up from John Ransom with Raymond James John Your line is open.
Okay.
Just to go back one more time and profit hospital ground up.
Sure senior on what's changed.
Yes.
The hiring.
Yeah.
Moving really quickly and I know you guys are consistent and circle back so.
To put your finger on what sales and secondly, these are.
Stemming from.
Locations, where you're already currently I think from there.
Oh.
Right.
Brent.
So if I you trailed off John a little bit at the end.
So I think what I heard was.
That are we mostly selling hospitals that are already ambulatory clients that right.
And it is yeah sales.
And that's better I pick up my little whole lot older I can hear you now yeah, it's great and guests are the two things what what do you think change I mean, something kind of changed over the summer where the opportunity accelerate and and then secondly, our these new friends and New places are these mostly warm leads from places where you're already handling that position inside of and site.
Okay.
These are and so what I will say is there mostly play.
Places, where we have had success on the and the physician side and that's where we can and we're tending to focus and I don't know if I want to say that its accelerator and are not accelerating and the hospital environment. I think we're just now ready to talk about it.
We have been investing in it for years.
And we expect to continue to invest and great amounts for years to come in the future and I think the hospital space is a really tough space, but one that the patient experience and intake and everything around that has a ton of areas of improvement and we're really excited.
To be able to be working with clients and that space.
Great. That's all from me thank you.
Great.
This concludes our question and answer session I will now turn the call back over to hide and ended for closing remarks.
I just want to say.
Congratulations to Tom and Randy and.
Wish everyone on this call, but soliciting a happy holidays, and a happy new year and to please stay safe and.
And I can't wait to see all of you hopefully in the new year.
Huh.
Well vaccinated alright, everyone have a great one.
Ladies and gentlemen, this concludes today's conference call I'll be have a freeze and thank you for participating you may now disconnect.
[music].