Q3 2022 Phreesia Inc Earnings Call
Good morning, ladies and gentlemen, and welcome to the freeze your fiscal third quarter 2022 earnings conference call.
At this time all participants are in a listen only mode. We will provide instructions for the question and answer session to follow.
First I would like to introduce <unk> Gandhi Senior Vice President Investor Relations for Freescale. Mr. <unk> you may begin.
Thank you operator, good morning, and welcome to freezes earnings conference call for the fiscal third quarter.
2022, which ended on October 31st 2021.
Joining me on today's call are fresher, as Chief Executive Officer, and co founder Chaim Index.
And Chief Financial Officer, Randy Rasmussen.
<unk> discussion 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 SEC, including our quarterly stakeholder letter.
These documents are available on the Investor Relations section of our website at IR Dot Freesia 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 within the meaning of section 27, a of the Securities Act.
Section 21 E of the Securities Exchange Act.
Although we believe that the expectations reflected in these forward looking statements are reasonable these statements relate to future events.
For our future operational or financial performance and involve known and unknown risks uncertainties and other factors that may cause our actual results performance or achievements to be materially different from any future results performance or achievements expressed or implied by these forward looking statements.
Furthermore, actual results may differ materially from those described in the forward looking statements may be affected by a variety of risks and factors that are beyond our control, including without limitation statements about our future financial performance, including our revenue cash flows cost of revenue and operating expenses are anticipated growth our predictions.
Our industry.
The impact of the COVID-19 pandemic on our business.
Our ability to attract retain and cross sell to healthcare provider clients and our ability to realize the intended benefits of our acquisitions.
These statements are also subject to other risks and uncertainties, including those more fully described in our filings with the SEC, including in our quarterly report on Form 10-Q that will be filed with the SEC later today.
Forward looking statements made on this call speak only as of the date on which these statements are made we undertake no obligation to update and expressly disclaims any obligation to update any forward looking statements to reflect events or circumstances. After the date of this call or to reflect new information or the occurrence of unanticipated events, except as required.
By law.
Also refer to certain financial measures not in accordance with generally accepted accounting principles in order to provide additional information to investors.
These 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 stakeholder letter, which were furnished with our form 8-K filed after the market closed on December eight with the SEC.
It may also be found on our Investor Relations website at IR Dot Freesia Dot com.
As a reminder, we are participating on today's call from three different locations and based on your feedback we think the call will be more streamlined and efficient if I moderate the Q&A I will now turn the call over to our CEO Jaime <unk>.
Thanks, Carlos and.
Good morning, everyone and thank you for joining us for your just celebrated an important milestone in September as we surpassed over 100 million patient visits enabled by our platform during the previous 12 months.
Every member of the freezer team has contributed to this achievement and wed like to control I would like to congratulate them on reaching this milestone.
This is the latest in a long line of accomplishments celebrate over the past 16 years achieved through the hard work and dedication of our current and former team members. We also thank our clients for trusting us to create a better more engaging health care experience.
I hope everyone has had a chance to review our earnings press release and stakeholder letter.
Operator, we can open up the call for Q&A.
Yeah.
Hello.
Okay.
Lovely.
I am here.
Operator.
Yes.
Can we open up the call for Q&A.
Sorry, technical difficulty here, ladies and gentlemen at this time I would like to remind everyone in order to have.
Ask a question press Star then the number one on your telephone keypad will pause for a moment to compile the Q&A roster.
And your first question comes from John Ransom from Raymond James. Please go ahead.
Hey, good morning.
Obviously, the story has changed from that.
20% top line to a higher top line higher spending story.
Yeah, we figured union raise all that money for nothing but maybe you could help the market understand how outside looking in to think about the returns and the timing on that.
That's nothing that's it thanks.
Yeah, Hey, Joe.
Oh, Hey, John I think how I'm got cut off with the technical difficulties did you hear the question time.
No.
Alright.
Repeat yourself.
It was really it was really all like one I don't think I can talk myself, so I'll try it again.
So obviously the story has changed from kind of a 20% top line story with margins insight too.
You know double that topline growth, but with the stepped up spending and.
The EBITDA negative EBITDA growing so maybe we could help the market understand.
Kind of your expectation on the timing and returns on that spending and that kind of what led to this a shift in the narrative.
Thanks, John sorry to make you repeat it.
So we're John we're fortunate to have a leadership team that's worked together for over a decade.
US even longer.
And way back to 2005, each time, we've made decisions around significantly increasing our investment it's been a little scary and this is very similar sometimes our investments.
For a year or more out than our revenue and frankly with a much smaller cash balance at the time, but our decisions have always been based on data.
What all you have.
All of you have this data.
We've been public for 10 quarters, it's public stretching even further back towards <unk> about how we invest when we get it back and how we get it back we're extremely pleased and excited about the returns we're getting on our investments which is why we're accelerating them.
We know it's not an easy discussion for a lot of you on this call.
And it hasn't been an easy discussion for us internally either.
We've made hard decisions over the years and built trust and confidence with each passing inflection point.
For a lot of you that were investors with us in March and April in 2020, you trusted us to make those decisions based on the data we saw it in real time then too.
The data has never failed us and the direct the decisions as biologic calls have been Directionally correct.
And we look at this data on a weekly basis, and we continuously of course, correct and we do it with all of the trust and confidence of our team.
Yeah.
And the Great news for a lot of US now as we're not making a lot of these decisions with just a small set of data we have a lot more data and a lot more firepower, especially on randy's team.
And Randy Who's been with us for over two years ago.
It is a big part of that decision making process.
And I thought I'll, let Randy speak a little to answer the rest of that.
I think time.
I think that you know we look a weekly monthly.
Lee at <unk>.
Our investments are performing and where we're going I think we are really focused on sustainable and profitable revenue growth.
Instead, we view our cash our capital there's pressure.
And we look for efficiencies in our investments.
Dr Program doesn't get examples.
Where we bring in leads at a cost effective way. So that we can pump that engine that drives the top line. So we think very carefully about how we spend this money and make sure that that results in profitable and sustainable growth in future years.
So.
Just as a follow up.
As a simple way to think about it.
Let's say you spend $100 at time zero a year out.
Maybe that $100 generates a $100 of incremental revenue.
At your sort of average gross margin.
I know thats over simplified, but I think the public market needs some kind of quantitative but to think about this.
Yeah.
Yes, I think from the perspective of the spending that you're seeing now is is for future growth.
Revenue numbers that we are putting up this quarter are based on those investments that we made a year ago.
So you know the Timeframes I think can range from.
One to three years, depending on the type of spend the sales spend that comes in a little bit sooner, but some of the R&D spend has a longer term timeframe as we build out our products and provide excellent solutions to our customers.
Thank you I'll get back in the queue.
Okay.
And your next question comes from.
<unk> from J P. Morgan. Please go ahead.
Hey, guys. Thanks for taking the question.
Hoping maybe you could help us understand some of the inputs that went into the guide you know the 20% to 25% for next year headwinds until ones that you're considering.
Just in light of the performance that you put up this year and and you know the investments that youre, making.
Yes, so I think the way that we look at.
Guidance for future years.
It's a 25% is our long term outlook, we were playing the long game in this business and.
That's what's important for us to focus I think there will be quarters and periods of time, where we will grow faster than that 20% to 25%, but there could also be periods of time, where that declines from that that higher level.
We're playing the long game here and really are looking for that long term.
Sustainable and profitable growth.
That's helpful. And then on the you had really nice growth in your provider clients. This quarter was hoping maybe you could talk about some of the factors that are driving that you know our labor shortages playing into that and are you. Considering you know maybe that as a tailwind for next year as well.
So I think any.
I think one of the things that we've seen is that.
Our people have gotten in front of a massive labor shortage.
Issue for our for our clients and prospects, we've seen a ton of land and expand I think our increased offerings have also played a part in winning a lot of those clients and a lot of that spend up in the back of increased R&D investment.
So we feel pretty good about.
Being able to get out in front of a lot of clients get them a solution build their trust show them a huge ROI and then continuously expand Randy what do you call. It like Randy's team has a name for it which I always mess up.
Yes, I think as we sell more solutions into our client we referred to that a density we want high levels of dentists density as they clients adopt our solution and then intensity is important we want our clients to expand across their locations or even within a location lots of providers.
As far as the product that they have already a license from us so.
<unk>.
Yes that density and intensity, a real key drivers to our growth strategy and expanding our footprint in our existing customer base.
Maybe just a follow up on that as we think about like the 20% to 25% revenue growth for next year, how much of that is increasing your density versus adding new clients.
It's both.
Think that we are focused equally on both this last year, we've invested a lot in our customer success group and the other ones that are primarily focused on the expands and they've been doing really well we've seen a lot of success with that so.
That's really important that the new logos are also important because as we add new provider clients that also increases our network and gives us more opportunity to attach payments and deliver digital engagements from our life science business. So we view them both as equally important.
Great. Thanks, so much guys.
Your next question comes from Ryan Daniels from William Blair. Please go ahead.
Hey, Good morning. This is Jared haase in for Ryan. Thanks for taking the question wanted to ask a similar question just on the outlook going forward here, but focusing more on the adjusted EBITDA line and understanding that.
And in the prepared remarks, you know youre, not giving a formal number yet for 2023.
But just curious if I look at the implied Q4 guidance definitely too around the loss of around 35 million for fiscal 'twenty. Two so is it fair to think of that as a good exit run rate for next year.
Kind of on an annualized basis or would there be any sort of context, we'd be missing with that framework and then similarly is there any color you can share just around sort of the magnitude of the expected cadence in terms of the Opex ramp next year. Thanks.
Yes, Jared. Thanks. This is <unk>, let me sort of replay that and set it up and then maybe Randy can pick it up but.
Obviously, you know we want to be careful here, we're not providing guidance for fiscal 'twenty three.
And one of the reasons as we did last year one of the reasons, we're providing some kind of framework and starting point for fiscal 'twenty. Three in December is because theres, probably what 433 to four months before we talked to you all again in this sort of format.
And we don't want to wait that long. So that's that's sort of the revenue guidance.
And in terms of EBITDA.
We thought it was important especially based on some of the feedback from from last quarter. When we we did ramp up spending to provide guidance for the fourth quarter.
And I think you're just going to have to wait, but I think the comments in the letter and <unk>.
Certainly suggests that it's not going to be.
Pulling back and when we say accelerating maybe just so we're clear.
We don't mean accelerating as a percentage, we just mean accelerating as a dollar amount and so maybe Randy if you. If you wanted to add anything to that.
Yeah, I mean, yeah I agree.
Not prepared to.
Well I.
I guess, the timing isn't right for us to talk about.
The EBITDA guidance for fiscal 'twenty, three but you know as as we've talked about before I mean, we've had a history of profitability and made a conscious decision to.
<unk> increased our investment levels to get that sustainable growth I think as you as we've hired you also start to see.
Some of the hiring that we did in Q3 was done near the end of the quarter.
So.
That's why the guidance for Q4 comes in with the numbers increase.
As you said.
Plan is to continue with this investment cycle.
Okay fair enough and I appreciate the comments there and just wanted to ask a quick follow up wanted to turn to a different theme here.
The announced an acquisition of insignia.
Would love to just get a little bit of color here on the background. It sounds like from the prepared remarks.
A company that you had some familiarity with so just curious if you could talk a little bit.
Just sort of the genesis of that deal.
You can ask them that's embedded in a lot of your clients.
Just curious what exactly you are seeking the market that made you want to add that capability.
Alright, I'll lead off and all that type of thing.
Otherwise you got something at the end. So we're really really excited to bring this to our clients. We have we have some overlap with our clients, but we believe that.
He will add tremendous value.
Two a lot of our clients and prospects and we're really excited we've known about this organization and the pain score for years.
Mission oriented and it's rooted in decades of academic research Dr. <unk> as lead author of the patient activation measure and she's joined Fringe Uh Huh.
An adviser.
It's increasingly relevant to value based programs.
Excuse me it works with some of the most incredible organized group, including.
Our own government from the government in the United Kingdom, So we're pretty excited about it.
And we think that activation is a core clinical measure that helps change the outputs.
And the outcomes for <unk>.
For patients and that our practices are continuously looking at.
<unk> should be able to improve outcomes. We think this is the gold standard.
Really really excited to have this as part of our Arsenal.
Okay.
The last thing you want to add to that.
I think <unk> covered a lot of it I think when you just think about <unk> core strengths.
We're very good at putting tools in the hands of patients.
We believe all patients want the opportunities to participate in their own care and our commitment is to driving high rates of self utilization.
And it has made us experts really in doing that.
Reaching a vast majority of patients you saw where we hit the 100 million Mark. So when you think about those core strengths that <unk> has in our mission of driving a better patient experience.
We think we're a very attractive home for for a company like insignia and the Pam.
Measure and so we were we were thrilled that day.
Agreed.
Yeah.
Got it makes sense and thanks again for the color.
Your next question comes from Richard close from Canaccord Genuity. Please go ahead.
Yeah, great. Thanks for the question and congratulations.
One question here with a follow up but first I wanted to dive on the life Sciences, obviously outperforming versus expectations can.
Can you provide some momentum on that.
Division or business is it just simply the growth in the client base over the last several years or is there something.
Related to the shift in marketing initiatives with Farber, that's driving the outsized growth.
Yeah.
Hi, Richard this is.
I appreciate you, bringing this up this is a good example of us using information data trusting ourselves and our team.
And we saw our volume, which I think everyone can now see more than double since we IPO, Ed right and because of the investments we proactively continuously made in data science, we were able to better monetize that investment for all of our stakeholders.
And so that.
We think this a huge Tam it's I think we've been pretty clear.
The $900 million Tam and based on the investments that we started to make we thought we could get to gather and capture more of that available market and that investment has paid off and will continue to make those kinds of investments really based on data and the knowledge that we have on how to interpret the information.
They make the right decisions.
And that.
The benefit of having a very seasoned team.
We've seen many cycles.
Okay. That's helpful. And then just to go back to the acquisition could you go into a little bit more details where that sits in the workflow is that something where the patients are continuously engaging.
With the offering is it like pre visit post spin.
Maybe a little bit more details on that front.
Sure Yeah.
Tom do you want me to go ahead start on that yes sure.
Yes, Richard So I mean, the company insignia currently the customer set is in the payer space and the life Sciences space.
And in the care delivery space. So when you think about.
Those three delivery settings, you have very different orientations, but ultimately it's a patient reported outcome measure. So the questions are asked to a patient they answered those questions.
And today I mean, you know we're obviously just just completed the transaction last week, but today insignia.
Pushes those questions out in different ways to the patient directly.
And we will sort of as we get to work with them more closely to figure out how that might intersect with with how free Jane or expectations, but.
That's sort of the way to think about it and there's different care about care management platforms that integrate with obviously you know EHR PM systems that integrate with so there's a lot of commonalities with Frazier, but that's that's sort of the way to think about it is it's pushed out to a patient that those questions get answered and then you know.
The information is used to help.
To drive outcomes.
Okay. That's helpful. Thank you.
Okay.
Okay.
Your next question comes from Glen Santangelo from Jefferies. Please go ahead.
Yeah, Thanks for taking my questions.
And Randy I hate to do it but I did want to follow up on this investment spending it seems like a lot of where the incremental spending came in was more on sales and marketing versus R&D and when we look at the head count of the company. The number of employees has more than doubled over the past 12 months and so I guess what investors really.
Trying to figure out is how much more do you have to invest in it.
In particular, when you look at the guidance.
For next year, I think investors are kind of nervous that it feels like the company is spending.
Incremental dollars to chase fewer revenue dollars and so maybe you could help us think about.
Where the company is today from a head count perspective, what else you may be thank you need.
And kind of give people a sense for how much more there is to go in and then I had a follow up question on the acute care market.
Yes, I think I think Randy you can start with that answer I'm glad I can just tell you one answer to the head count at the end of October we had <unk> thousand 590 people and obviously given our comments about the fourth quarter. We continue to hire so we're north of $40 90 today.
But maybe Randy you can.
Cover some of our brothers.
Glen's questions.
Yeah, I think when we think about how do we look at what our head count needs are and how does that seat growth we look at.
Data on a weekly basis, what kind of lead generation as the SDR team producing.
What do our provider sales teams what are their close rates.
We look at this on a weekly basis and make adjustments I think from our perspective.
When is it enough I think as we continue to grow as long as that investment continues.
To provide a sustainable and profitable growth in the future periods.
We continue to invest I think this last quarter was a very large increase in.
And head count.
I don't think that.
We were very thoughtful about capital capital is precious to us and.
We understand from an investor perspective.
They want us to use those dollars to grow the company and we think about that as we look at the data on a weekly basis and make decisions about what are the next hiring plans in the coming months in the coming quarter and throughout next year.
Yeah.
Alright, maybe if I could just sort of follow up on that that's sort of segways into my acute care question.
The lead generations that youre talking about are they more on the physician side or on the acute care side, because we've been getting some questions around the transition to the acute care market, how its going you know in the past you've disclosed.
Our relationship with our one.
So maybe if you can just sort of comment how that transition is going and where we're the lead generations are coming from that would be helpful. Thanks.
Yeah, So I'll pick this one up the.
You know I think we've commented you know for the past.
I don't know how many quarters that we always sort of lead with the ambulatory side and then we try to pick up their acute hospitals. After we built the reputation that we have on the ambulatory side and that continues to be the strategy and it continues to execute very very well really part of the land and expand stratas.
We are.
Very very good at providing a holistic solution across the entire spectrum of the health system.
And we don't announce most deals, but we continues to be continuing to feel really good about the returns we're getting and the long term outlook of continued to continually investing in the hospital market and all the ancillary services surrounding it as much as we are investing in to the ambulatory market, we think theyre very a couple.
Entry, but we tend to always lead with ambulatory <unk>.
First pet declined.
Yeah.
And thank you for your other question around did you are one I did have a question on one in particular because.
Yes, sorry, I did have a question on our one in particular right because you've disclosed that relationship in the past they've made an acquisition in early 2020 that seems like it's a little bit competitive with sort of what youre doing in it and so I was just wondering if you could provide any update as far as that's concerned.
No I think the thing they're still a valued client and partner and we look forward to continuing that relationship and I think we have lots of partners and clients, but also use and have other competitive thing and we're comfortable with that it's a huge market and what we tend to do really well.
We tend to do really well with our product where a product led.
So when customers want or need or are our full solution and or a division of that we do really well.
And we appreciate the partnership and relationship with our one.
Okay. Thank you.
Your next question comes from Joseph.
Please go ahead.
Great Hi, everyone.
Yes, just going back to the sales and SDR investments can you maybe discuss the productivity of the new hire cohort and how this compares to the expectation you might have had when embarking on the accelerated investment strategy. Obviously the team is quite a bit larger but I imagine also younger.
Tenure, so is there a better sales efficiency to still come and we can expect as these new hires go through <unk>.
<unk> productivity ramp.
Hi.
From a productivity standpoint, I think we're fairly comfortable with where they are and we're always looking for more and better productivity I know, it's been on calls continuously where Karen and the team has done phenomenal work at being able to continuously improve productivity.
I mean.
The success of that team and you know.
We're always we always look at that and that's how we've gotten to where we are and improve the business, but we're really happy with how that SCR organization has grown and frankly maintain the success that it's had.
Yeah.
Okay great.
And then.
Just kind of going back to your your growth framework.
Is it fair to think that of course, it frees us executing year. Following one west accelerated investment spending should typically track above the company's long term growth framework.
Ken can you repeat that one I'm not sure I followed it.
Yes.
The 20% to 25% growth I appreciate that kind of a marker and it aligns with your long term growth framework.
But we're also in the midst of seeing accelerated investment this year and that's going to continue into next year. So I suppose all else equal do you think it's a fair expectation to think that following that type of investment environment growth should trip. It typically track kind of above long term targets as opposed to in <unk>.
Line with long term targets.
I mean, I think without speaking specifically to next year I think it's not necessarily this year as investments are impacting extra directly I think its probably maybe Randy it's worth repeating I think an earlier question on this topic around around how we think about longer term growth.
Yeah, Yeah I think.
As we said I think the long term.
Sustainable profitable growth of the.
25%.
There are there will be periods, where we will outperform that long term goal and I think.
Yes.
What we want right I think we like to grow I think it's a good growth its profitable growth. So yes.
So from that perspective.
I don't think we can really.
It into what the guidance is for next year that that's been bottles, but.
Yes, I think we continue to invest.
That strong growth in mind.
Great. Thank you very much.
Yeah.
Your next question comes from Ryan Macdonald from Needham. Please go ahead.
Alright, thanks for taking my questions.
Just an additional question on insignia really interesting acquisition and technology, they're with the patient activation measure just thinking about how we would like to know a little more color on how youre thinking about the go to market strategy there.
I think interesting use cases on value based care models for their practices.
There is obviously potential benefit on the life sciences side and sort of that additional information on patients and sort of utilization just curious how youre thinking about sort of the prioritizing the go to market there as you integrate that acquisition.
Hum.
Generally we don't talk about what we're gonna do.
That hasn't changed and it won't change.
But as as we start.
Moving it into our product offering and making available I'm sure. It will become noticeable we are really excited about having this founder led organization here.
And I'm going to refer back to velocities thesis I think theres a lot you can unpack from it but we think this is a core measure potentially.
Potentially on the long term.
Got it got it Okay, and then and then just a follow up in terms of the life Sciences opportunity.
<unk> going to see great growth rates. There just curious obviously, we're seeing a shift materially to digital spend from life Sciences companies can you talk about sort of the magnitude of the impact that thats, obviously, having an on the growth in the business and and.
As you look at sort of your customers right now.
Talk generally about sort of percent of spend that is starting to shift over to digital and how you might be able to capture more share of that over time. Thanks.
Well the way, we've been able to capture and grow that.
So please.
Yeah based on our information or data and having a very senior and tenured team.
Running that we knew where we needed to make those investments and we started ramping up those investments a couple of years ago, and so to us the shift.
You can usually see the shift happening way before it's happening.
Based on the information that is available and.
As an organization, we pride ourselves on making decisions around spending around product investment around resourcing all around data and the experience we have an understanding that data and we think there's a there's continued opportunity for us to grow in life Sciences, and I think we've been articulating that we will.
We'll continue to invest in that area and we're fortunate to have just a phenomenal team.
They just executed brilliantly.
Understanding.
That you know we have a competitive advantage in being able to see what's happening in the market.
Yeah.
Okay.
And your next question comes from Donald Hooker from Keybanc. Please go ahead.
Great. Thank you and this maybe dovetails in fills out some prior questions as well, obviously, great number of provider clients added in the quarter.
You guys I always think of you, adding clients and then revenues follow from that not just out of the gate, but from that I'm. Just wondering if that dynamic of land and expand is any way changed.
Our clients adopting more solutions out of the gate or is it sort of a similar pattern that we should expect from the past in terms of adding clients and landing and expanding.
Randy you want to.
Go for it.
Yes, I think.
To answer your question no our thesis hasn't changed we still are very successful with that.
The land and expand strategy, it's important for us to grow across the customer base.
I think also we think about networks and the more provider clients that may have it gives us more opportunity to deliver digital engagements.
And.
And there are certain things that can get adopted right away. So for a customer that takes payments that typically is sometimes the first dollar of revenue that comes in but it may take a while for that provider to switch over to our payment solution with their volumes and and basically burned down their previous.
Payment provider, but we do see lots of interest in our new products.
I think that the texting solution is interesting that we highlighted in the quarterly stakeholder letter.
So we do see high levels of adoption of additional products.
Great and then a quick follow up.
Then a strong provider client add count in the quarter can you update us on in terms of your I mean, how sort of your.
<unk> in terms of adding clients successfully.
And update us on in terms of like how many clients are being implemented remotely versus on site is there any kind of changes there how do you feel about that.
Jaime do you want to you want to talk about that.
Yeah.
I think what are the reasons why we feel pretty comfortable about these client adds.
Well first of all our clients like they're already live.
Using us paying us.
More often than not running transactions through us and a lot of our ability to be able to take them live.
Mostly remotely has been because of the investments that we've made.
Based on the information that we've seen so we've tried to get ahead as far as possible on being able to staff and support. So we continue to have just phenomenal levels of support and have.
Need of implementation and a lot of that is based on the information that we see so we've really ramped up the team's continuously.
Sales implementation and customer success and those teams have just done.
Phenomenal job at being able to support those new and expanding client.
Thank you.
Okay.
Your next question comes from Scott <unk> from Stephens. Please go ahead.
Hey team Thanks for taking my question.
I just wanted to follow up on the land and expand strategy and the density and really just getting to some statistics here that you guys.
Had offered in the past I think you at one point mentioned you had 27 modules I'm sure. It has increased since then and that the average client has about half that or 13 modules is there any update to that stat, and I think that could provide more.
Color on the opportunity there to expand on the revenue per provider clients.
Hey, Scott.
One of the things you can refer to.
In our slide presentation and in the letter is just we tend to update every quarter.
Platform slide.
So you can see how that's changed over time and then what's been added in.
I think things are evolving.
Obviously as we as we do new releases et cetera. So we can follow up with you on that but I would I would.
Once you there.
I don't know if theres anything you want to talk about in terms of what's there.
Going onto our product organization.
Right from a product standpoint, the investments we've been making in product had been paying off people. They had a phenomenal amount of value and we tried to get it in the hands of the right clients at the right times and the more product products, we got our clients the more value we provide them and the happier they are and I think some of you continues to do.
Channel checks and as we've grown tremendously our clients remained normally happy but continuously.
<unk> that we're able to add more and more value to them on their journey to support their patients. So we feel very good about our continued investment in product to get them in the hands of our patients.
In the hands of their patients and our providers that we support.
Great. Thanks, and just as a follow up I wanted to kind of drift driving deeper on the new employees in <unk>.
The hiring in the sales and marketing team.
Are you seeing anything I hate to use the word transitory, but are you seeing anything that's happening given the late tight labor market now that wood.
Lead you to believe that.
These elevated expenses could part of it could be more transitory.
Be less challenged in 12 months from now when the labor market changes just any additional color there would be helpful. Thanks.
Okay.
Well I think what we found in.
Alright.
I'll, let our HR organization for.
10 years and has seen multiple cycles.
As <unk> talked a lot about internally is we've really seen a competitive environment, where we have to get out in front to make sure that we are.
Continuously.
<unk> bar.
Our entire.
The entire package to make sure that we are.
<unk> employer of choice for both our current.
And future team members and it's been a.
It's frankly, the compensation aspect of that has been.
Growing at a faster rate than I, probably would have predicted two years ago, but we've we've really maintained a sort of in front of that so that we can continuously attract and retain phenomenal individuals' organization.
Great people generally.
Are worth their weight in gold.
We continuously found that when we think we have just a phenomenal group of people here for each other.
And your next question comes from Daniela Cross flight from Citi. Please go ahead.
Hi, guys. Thanks for taking the question.
Most of my my questions have already been answered, but maybe if we can dig a little deeper into the <unk> EBITDA guide.
Which implies around a $17 million increase in operating expenses sequentially.
I look at three <unk> and the sequential increase in spend it looks like most of it is coming from that sales and marketing line followed by R&D as we think about <unk> and beyond should we think about the investments you're making as the kind of theme in terms of proportional to.
S N M and R&D or do you think we'll see some catch up in R&D.
And a little less acceleration in that sales and marketing line.
Yes, I mean, I think Directionally you know all of the lines will grow.
R&D is one of the areas, where there is focus on the investments I think you will see increased investment there. It's really those two areas that we continue to focus on them because those are really the things that contribute to that.
Sustainable growth on the top line.
You know I think it's similar to when I talk about you know revenue from quarter to quarter I think hiring can also have patterns too.
We look for the best talent to add to our company sometime.
Sometimes it takes a little bit longer to find the right talent in the engineering area.
See some variability.
Quarter to quarter as we are building those teams.
Okay, but would it be right to say that on a dollar basis. The increase in R&D spending for Q is going to be greater than the increase in sales and marketing spend.
<unk>.
From <unk> to <unk>.
Yes, I mean, I think on the first thing we don't really.
Provide detail of that guidance on a on a line item level. They both directionally are.
Being invested in so they both will go up.
Yeah got you and then as a follow up on the Cigna transaction <unk> you made an interesting comment about it.
He used not just by kind of providers and life Sciences, but also payers, which would be a new market for you guys. So I'm curious and obviously they have that.
Very strong relationship with CMS with NHS.
Curious on how this may.
<unk> opened up new markets for you I E. The payer market and if there is a kind of concerted strategy there to have this be.
A beachhead and expand your Tam even further.
So I think we've been thinking about this market for years.
And it's right.
We believe sort of the.
Relationship between payers providers and life Sciences continues to be blurred when we our theory.
As I did to have capabilities that and.
The team that we bring with us to help complement a lot of the investments we've been making.
And we think the insignia we're going with that.
That's something we've been thinking about for years.
We're really excited.
Got it thanks guys.
Thanks, Daniel and operator, I think we're a couple of minutes beyond 930 years. So we should probably wrap up the call do you have any closing remarks, you would like.
I just wanted to thank everyone, our clients or our investors our employees.
For trusting us to continue to improve the health care.
System, and we think we are heads down as we can as we do that we're really excited about.
What lies ahead I havent been more excited.
But what we're doing.
This is it's amazing, but we're very pumped over here for sure.
And this concludes today's conference call you may now disconnect. Thank you.
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