Q1 2022 National Research Corp Earnings Call

2022, ending <unk> decreased by 1% over the prior year.

The decline in Trs <unk> growth rate was impacted by our strategy to continue to evolve our business mix as we focus on growing our digital core solutions, while at the same time, eliminating certain legacy or noncore solutions or adjusted <unk>.

2022 tier CV growth rate without those eliminations was 2% increase.

Net income for the first quarter of 2022 was $8 5 million compared to $9 2 million for the same period in 2021.

The lower net income was due to a decrease in operating income as well as increases in our effective tax rate.

The effective tax rate for the first quarter of 2022 increased to 25% compared to 21% for the same period in 2021, mainly due to decreased tax benefits from the exercise of share based compensation awards and higher state income tax.

Mrs.

Cash flow from operations was $8 3 million in the first quarter of 2022 down from $14 4 million in 2021.

The company ended the quarter with a cash balance of $47 3 million up from $43 5 million in the first quarter of 2021.

The company's board of directors has established priorities for capital allocation with funding of innovation and growth investments, including both M&A activity as well as internal projects as the preferred use of capital.

The company funded $3 1 million for innovation and growth purposes in the first quarter of 2022.

Next priority is capital allocation for quarterly dividends and share repurchases.

In the first quarter of 2022, we paid $3 three.

$3 million in quarterly.

Quarterly dividends to shareholders and $6 $7 million for share repurchases.

That concludes my comments for this morning, and I'll now turn the call back to Mike.

At this point in time, operator, we'd like to turn the call or open the call excuse me too.

<unk> from the group thank you.

Thank you if you would like to ask a question. Please press star followed by one on your telephone keypad. If you changed your mind don't wish to withdraw your question. Please press star two.

We have a question from George Dangelo from Alpine peaks capital. Please go ahead.

Sure.

Hey, good morning, guys.

I was just wondering about the first quarter.

Yeah.

About the first quarter profitability levels.

Are those investments and higher expenses more one time or are these profitability levels that it would make sense to annualize going forward.

Yeah, Hi, George this is Kevin.

So.

There are two pieces to that one is our conference expenses, which.

Those.

Can change quarter to quarter year to year based on timing of conferences.

So that shifted some of expense we may have seen in later periods into Q1, we're also going to be spending more going forward as we.

Reopened our conferences from being virtual only being hybrid. So so that that increase is a little of both we will see some increase for future conferences, but a good piece of that was timing, which won't recur as we move some conferences in the first quarter.

The innovation and an associated empowerment investments.

You know that that really occurs quarter to quarter.

Those are decisions, we make too.

As we generate additional.

Operating income.

Kind of in line with our capital allocation strategy, where we want to.

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Approve some incremental spending on innovation around our offerings.

As well as our some enhancements we made to our <unk>.

Employee our associate benefit program.

So again there is a mix in there some of those are.

It's going to be timing.

Going forward quarter to quarter, it will really depend on decisions, we make around how to allocate our capital and in incremental operating income.

That's helpful and then.

To 8% growth rate in Q1 is that a good indicator.

For where you expect growth to be for the rest of the year.

Yes.

Well.

George we typically do not give guidance on revenue growth So I don't.

We really have a direct answer for that question.

I think.

We have a lot of that will depend on what happens with our sales and retention quarter to quarter. So we don't really have an estimate or any kind of future growth rate that we.

Happy to share right now.

Okay, that's fair.

I guess the reason I ask is because it seems like.

Based on the total recurring contract value I would've expected a lower growth rate and so just trying to understand.

Why the sales growth is coming in higher than than I would've thought.

To some degree when you look at our business model.

As we grow contract value the.

The revenue growth tends to follow so.

There is.

A time lag.

Between changes, we've seen contract value and how that rolls through revenue and a lot of cases so.

It's not necessarily going to lineup every quarter with the contract value growth. So I think that's part of what Youre seeing right now.

Yes.

Got it and just one more if I can could you describe some of the conversations that youre, having with customers about.

Human understanding are there any specific customer types or categories that are getting more traction than others. Thanks.

Sure This is Mike.

The feedback that we're gaining actually is fairly universal and cuts across a multitude of customer segments.

Large small highly integrated healthcare systems as well as individual community hospitals, so size and complexity does not seem to be a determining factor as to the acceptance of the program.

Sure.

Most organizations as you may know have within their mission statement something about.

Individualized care to each individual to which they serve in those words of course differ depending on the organization.

Given the fact that human understanding is a fundamental philosophy baked into most every healthcare organizations mission.

I think the.

Adoption or the organizations embracing the philosophy.

Is universal.

I think the adoption however, maybe by segment right. So you find some organizations that are simply more ready to deploy personalized care at scale. They may in fact have different characteristics that we will learn about going forward.

But the acceptance to the philosophy and embracing our product offering.

Uniquely universal.

And in those conversations that might be too early but.

In terms of pricing of the new.

Offerings.

<unk>.

Date, you can provide us.

I don't have any specific I mean, our goal is to get double digit topline.

Growth rates.

And this program will assuming successful deployment and implementation.

This will check that box. So we would look for a significant double digit.

Increase from current contract value amongst those organizations that.

Purchase and deploy the program over whatever period of time that happens to take.

No.

The strategy is part and parcel of our.

<unk> aspirations to increase our topline growth rate.

Thanks, a lot guys.

As a reminder, if I take the questions. Please press star one on your telephone keypad.

It appears we have no further questions on the call. So I'll hand, the floor back to you.

Thank you operator, and thank you all for your time today listening to Kevin in a nice.

Earnings call, we'll look forward to reporting our progress again next quarter.

You again.

This concludes today's conference. Thank you all very much for joining you may now disconnect your lines.

Yes.

Yes.

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