Q1 2024 OptimizeRx Corporation Earnings Call
Good afternoon, everyone and thank you for joining optimize Rx is the first quarter fiscal 2024 earnings discussion.
Speaker Change: With us today is the chief Executive officer of optimize Rx Williams herbal.
He is joined by Chief Financial Officer at this time our.
Speaker Change: President Steve So that's true General counsel Maryann audience Ford Senior Vice President of corporate Finance and you just sell the silver.
Speaker Change: At the conclusion of today's earnings call I'll provide some important cautions regarding the forward looking statements made by management during today's call.
I would like to remind everyone that today's call is being recorded and will be made available for replay via webcast only.
Instructions are included in today's press release in the investors section of the company's website.
Now I would like to turn the call over to optimize Rx CEO William Fellow Sir. Please go ahead.
Speaker Change: Thank you operator, and good afternoon to everyone. Joining today's first quarter 2024 earnings call.
I'm delighted to share today's results, which came in ahead of our April 26th preliminary unaudited earnings momentum.
Momentum from Q4 2023 has continued into 2024 with Q1 revenues, increasing 51% year over year to $19 7 million, which top the high end of our pre announced revenue range.
Growth is being driven by favorable competitive dynamics, we are seeing stronger customer engagement as pharma is looking for partners with integrated precision offerings.
Have true scalability in terms of H C. P. M. P T C reach inner.
Interoperability across multiple points of care and capability to accurately report insights.
In a timely manner.
The tailings are welcome as we continue to lead with our clients around a more efficient precise platform for marketing and health care.
We are in the right place at the right time.
Our year over year top line strength was driven by a clear demand for our dynamic audience activation platform where that is.
Well as from our medics health acquisition.
Our thesis that smarter solutions, such as death, where grain market share is continuing to be validated and I believe we have significant upside potential from cross selling between the H D. D. N D. P C customer basis recall at the time of the acquisition, we only had about 20% customer base overlap.
Among the 300 plus brands on the platform.
Speaker Change: Therefore, it should not be a surprise.
Speaker Change: Our pipeline is building and an unprecedented rate in our history as a company.
This momentum as well as financial and operational continuity from Q4 of last year has carried over to the first quarter of 2024.
We are optimistic on this year and we are off to a strong start having signed nine deals in the quarter building on the 24 deals we signed in 'twenty three.
Speaker Change: While we are maintaining our guidance, which calls for revenue to reach a minimum of a 100 million for 2024 and adjusted EBITDA of at least 11 million for the year, we will continue to watch our visibility and fine tune the numbers as appropriate.
Our continued growth would not be possible without our market, leading team strives to excel and surpass expectations.
Every day I want to thank everyone on the optimize Rx team for that.
Started effort to navigate through a very complex dynamic yet still nascent digital farmer marketing landscape that the industry has adopted the.
The optimize Rx platform and solutions will fundamentally reshape the dynamics of marketing engagement among pharma patients and prescribers in our mission driven culture will attract retain and enhance all the relationships with technology company needs to be a reliable partner.
With that ill.
Turn it over to the company's president, Steve So thats sure to get more color on that as well as other commercial updates Steve.
Steve So: Thanks, well as a reminder, our dynamic audience activation platform is in essence, an AI powered patient and H C. P finder for pharma brands that we serve.
He put gap algorithms work by searching through the sea of existing patient level data to find brand eligible patients.
<unk> found that determines the best means of communication with that patient.
A call to action message can then be triggered and sent to the appropriate doctor or patient at the most opportune time.
Steve So: This process is recurring as the algorithms learn over time improving execution.
Leveraging this technology enables O P Rx to move past, our peer groups spray and pray messaging so commonly found in the space and instead deliver the appropriate information to the correct person when it's most relevant and likely to drive script left.
In doing so we're helping to build deeper relationships among pharma brands doctors and patients falling in line with industry trends as farmers pharma is looking to partner with scalable platforms that have agile precision marketing capabilities, which all falls in line with the core of Whatsapp enables.
With that said we've had a very promising start to 2024. The company is continuing to experience a meaningfully better selling environment within the pharma end market, which is in contrast to what was seen in 2022 in the first half of 2023, our commercial.
Integration strategy between optimize our accident <unk> health is also progressing ahead of schedule, we have dozens of GAAP deals in our pipeline with approximately 50% coming from the direct to consumer side of the business with numerous opportunities in late stage negotiations.
With the addition of medics house capabilities, we stand out as the most scalable platform with both HCP and direct to consumer reach.
This unique positioning enhances our ability to cross sell and upsell unlocking significant value for which we estimate the potential opportunity with existing brands alone to be over $2 billion with even greater potential for the brands, we don't get support.
This favorable environment strengthens our confidence in meeting or exceeding our financial targets in 2024 and beyond.
These larger stickier DAP deals are strategically targeted making us a more relevant partner with our client base.
Speaker Change: With our in house development capabilities and the foundational work over the last several years, that's been tailored specifically for pharmaceutical marketers O. P. Rx now has the ability to materially grow its top line with limited additional overhead.
Speaker Change: With our medics health acquisition, we are placing extra emphasis to accelerate a highly impactful DTC component.
Speaker Change: Moving forward our mission has never been clear and we continue to believe that the best is yet to come.
Speaker Change: With the addition of DAP to O P. Rx is Omnichannel network, we have a pioneering and foundational AI directed capability, which removes the mystique of seamlessly integrating point of care and traditional digital media offering a transparent and a holistic solution for pharmaceutical marketing that's able to reach nearly 240 million lives and 2 million Hcp's.
Omnichannel network: Our enhanced AI platform that coupled with channels outside of the EHR are driving powerful next best action capabilities based on real World data.
Omnichannel network: As a result, App is now used to power CRM alerts as well as social media web display and other mass digital media communication channels.
Speaker Change: All of which foster greater efficiency and collaboration with our customer sales forces.
Speaker Change: Oh P. Rx is expanding its AI solution work with clients, while others in the space are still trying to figure out how to apply AI.
Speaker Change: With that I'd like to turn the call over to our CFO, Ed Stelmach, who will walk us through the financials and the details Ed.
Edward Stelmakh: Thanks, Steve and good afternoon, everyone.
Edward Stelmakh: So this year the financial results of our first quarter ended March 31 24.
Edward Stelmakh: Copies are available for viewing and may be downloaded from the Investor Relations section of our website.
Edward Stelmakh: Additional information can be obtained through our forthcoming 10-Q.
Edward Stelmakh: First quarter revenue came in at $19 7 million an increase of 51%.
Edward Stelmakh: There are 10 million.
Edward Stelmakh: During the same period in 2000, when it would be.
Edward Stelmakh: Gross margin for the quarter increased from 52% in the quarter ended March 31st thing.
Edward Stelmakh: Yeah.
Edward Stelmakh: 2% in the quarter ended March 31st 2024.
Speaker Change: Year on year gross margin expansion is tied to higher DAP related revenue as well as a favorable channel partner.
Speaker Change: Our operating expenses for the quarter ended March 31st plenty of 24.
Speaker Change: We made $2 7 million year over year, but included <unk> 2 million in acquisition related fees and.
Speaker Change: <unk> 4 million in severance expenses.
Speaker Change: For the remainder of the increase a lot of it is tied to the medical.
Speaker Change: Sure.
Speaker Change: We had a net loss of $6 9 million or 38.
Speaker Change: Basic and diluted share.
Speaker Change: Three months ended March 31st 2024.
Speaker Change: This compares to a net loss of $6 4 million or 37.
Speaker Change: Basic and fully diluted share the same thing.
Speaker Change: Pete.
Pete: On a non-GAAP basis, our net loss for the first quarter of 'twenty. When you for one 2 million or 11 cents per fully diluted share outstanding.
Speaker Change: <unk> two in non-GAAP net loss of one 6 million or 9%.
Pete: Or what are you doing a shares outstanding and this team.
Speaker Change: Period.
Speaker Change: Our adjusted EBITDAX came in at one point you made in the first quarter of 'twenty 'twenty four.
Speaker Change: I've got 2.2 million loss during the first quarter of 'twenty or 'twenty three.
Speaker Change: Operating cash flow came in at two 1 million for the first quarter was 24.
Speaker Change: I mean, it ended the quarter with 15.2 million cash balance.
Speaker Change: The 13.9 million on December 31st wanted when it would be.
Speaker Change: Our debt balance don't understand that 37.8 million.
Speaker Change: If you recall from the $84 $5 million gas portion of our October medic Scout acquisition.
Speaker Change: Companies do on $40 million in debt financing.
Speaker Change: We paid off 2.2 million of principal through the first quarter of 'twenty 'twenty four.
Speaker Change: We continue to believe we're well funded execute against their operational goals.
Speaker Change: Now with that let's start.
Speaker Change: For the first quarter of 2024.
Speaker Change: Average revenue.
Speaker Change: Why do you need from a cyclical manufacturer now stand at 2.5 million.
Speaker Change: And we work with all the top 20 largest pharma companies in the world.
Speaker Change: Net revenue retention rate, that's showing improvement at 116% up from 86%.
Speaker Change: Q1, 'twenty to 'twenty three.
Speaker Change: Meanwhile, revenue per FTE came in at 600, what do you want that one.
Speaker Change: Wrapping this 605000, we posted in Q1 'twenty.
Speaker Change: We're encouraged by the continuing improvement and I'll keep your eyes have been more fast external market challenges.
John: Hey, John to growth and profitability as a leader in that space.
John: Now with that I'll turn the call back over to the operator for Q&A.
Operator: Thank you at this time, we'll be conducting a question and answer session.
Operator: Like to ask a question today. Please press star one from your telephone keypad and a confirmation tone will indicate your line is in the question queue.
Operator: You May press star two if you'd like to withdraw your question from the queue.
Speaker Change: All participants are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment. Please we poll for questions. Thank you.
John: Thank you and our first question is from the line of Ryan Daniels with William Blair. Please proceed with your questions.
Ryan Scott Daniels: Hey, guys. Congrats on the very strong start to the year and thank you. So much for taking the questions well maybe one for you as we look at DAP I know, it's still a relatively novel platform for you, but I'm curious what type of improvements and maybe all ROI metrics, you've been able to see as you scale the platform to get more customers get more knowledge of how to dipped.
Speaker Change: Boy, it and leverage that data to improve the product.
Ryan Scott Daniels: Yeah, Ryan Hey, thanks.
Ryan Scott Daniels: Yeah, I mean, the best proof is just more clients.
Ryan Scott Daniels: Because they're probably more discerning than anybody, but yeah theres learning all the time.
Ryan Scott Daniels: I think we've got an.
Ryan Scott Daniels: Excellent team of data scientists, who now have two and a half years of experience doing this recall, we really that's when we started.
DTC teammates: And we've also now brought in other teammates from the DTC side, who bring their expertise and if you think about the simple value proposition, which is helping our clients do more with.
DTC teammates: With one partner.
DTC teammates: And have it be more successful and a better return on their marketing dollars I think that the value proposition is really resonating.
DTC teammates: We've also really sharpened our foundational data infrastructure.
DTC Teammate: And made some investments last year to streamline reporting and analysis, which are really starting to pay off.
Ryan Scott Daniels: Because recall when we engage with the clients on this particular partnership Youre.
Executive: You're not just dealing with a brand manager you actually dealing with an executive.
Speaker Change: Data and analytics teams reporting teams technology teams and it's really just creates a stickier more holistic.
Speaker Change: Our relationship which is obviously why we are so excited but.
Speaker Change: Did I leave anything out that you want to bring up as well for the question.
Speaker Change: No I think I think you said it I mean, our our average Ryan as you know our average rois been tracking rest of tender one over time I think if you were to look.
Speaker Change: <unk> youre going to see much higher return on investment there.
Speaker Change: And you know I think it's well set our foundational data continues to grow and learn because we've now got <unk>.
Speaker Change: Lesser of DAP deals that have been live for.
Speaker Change: Quite a bit of a period of time.
Ryan: So as the machine learning carries on they get smarter and smarter and smarter the algorithms that is and so as they get smarter they become more precise and that improves the ROI.
Speaker Change: I think well covered it nicely, but definitely a trickle up a tick up off the tender one for sure.
Speaker Change: Okay. That's super helpful color and then.
Speaker Change: Maybe Steve another one for you you were pretty specific about the tone of your conversations with pharma manufacturers, improving and really being quite different than it was a year or so ago and I'm curious if you think that relates to just broader end market improvements with more stability in the FTA and with pharma companies and their internal.
Speaker Change: Staffing or is it really your improvements in your offering and DAP and the power there that's resonating in the market, especially as you've now got a combined H C. P. T. T C product at scale, which is unique in the market. So is it is it may be one of those two things is it both of them just any more color. There is I think it's a important data point.
Speaker Change: Yeah. Thanks for the question I actually think its both I think that pharma markets are coming back meaning that sort of cyclically pharma is now sort of back at the table there, they're looking to spend more they're getting more drugs approved youre seeing some blockbusters get approved that sort of obesity market is going to become very frothy here I think for everybody.
Speaker Change: Following that in the coming months or years.
Speaker Change: So spend as I think back but in addition to that I think that while spend is back it's much more focused I think during the pandemic and sort of coming out of the pandemic pharma was in a position where they needed to sort of try anything they could to try to get some leverage and some digital connectivity because they were just laggards.
Speaker Change: And coming to the digital transformation table now that they've sort of sorted through that in the last several years I think he has now picked a couple of the key winners where they want to invest in and from the looks of it. It appears that we're at that table as you can see.
Speaker Change: Having the dialogue around expanded investment so feeling feeling great about that but I would say, it's sort of a balance of both of those things.
Edward Stelmakh: Okay, Perfect and then maybe one for Ed just like I said, all three of you.
Edward Stelmakh: Solid gross margins in the quarter I'm curious if you could speak to if there's any nuances. There you think are unique to the quarter. If we can kind of carry that low 60% gross margin momentum forward throughout the remainder of the year, given what youre seeing in the market and the sales. Thanks.
Ryan: Yeah. Thanks Ryan.
Ryan: Yes. So Q1 gross margin of 38 are being driven by a DAP success and they're already in the year.
Ryan: You know, we make more margin when we sell more models.
Ryan: Well the carry through the rest of the year I mean, certainly we've got some assumptions around that continuing to grow.
Ryan: And if that materializes.
Speaker Change: There's certainly the potential to be north of 60% throughout the year.
Ryan: Okay, great. Thanks for the time and congrats again guys I appreciate it thank you.
Speaker Change: Our next question is from the line of Eric Martin Newsy with Lake Street. Please proceed with your questions.
Speaker Change: Yeah, I wanted to make sure I had a good read on seasonality for 2024, and I was looking for a specific number for Q2 revenue, but historically, we would be kind of flat to up slightly Q1 to Q2 any reason why that would be outside the normal seasonal seasonality.
Speaker Change: Yeah.
Speaker Change: Hey, it's what I can tell you, though I think you could Oh go ahead no go for it.
Speaker Change: Yes.
Eric Martin: Eric Yeah. So there should be no reason why that shouldn't continue this year, so as you're modeling numbers for the year.
Eric Martin: You should absolutely I assume the same thing if you go to last year.
Speaker Change: Okay.
Speaker Change: And then the.
Eric: I guess the the DAP deals that we saw in 2023, we had 24, we had nine in Q1 of 'twenty four.
Speaker Change: Remind me again, what qualifies size wise.
Speaker Change: And I'm curious to know you know not all that deals are equal but are these a million plus transactions that we're talking about is that what it takes to qualify and then you know should we expect that same cadence here in Q2 and beyond.
Speaker Change: Yeah.
Steve: Steve you want to grab that one yes.
Steve: Yes, no problem.
Steve: Hear your voice.
Steve: Yeah on an annualized basis, they're still running on average about $1 million I think we're seeing a little to the positive little to the negative on those but E. C. D. Wise. The average is still roughly $1 million and that's on an annualized basis. So depending on when we close the deal that will determine how much revenue will pull into the year.
Steve: But feeling great about the strong growth in DAP, and just sort of where we were compared to where we are now is I think we're all feeling pretty optimistic about it.
Steve: Okay, and just to add to that.
Steve: Your question with my book.
Speaker Change: Qualifies yeah. The question was what qualifies as adapt deal, it's really a combination of data and analysis and model building combined with message delivery.
Speaker Change: Essentially in and out.
Speaker Change: In our world, that's what qualifies as adapt deal.
Speaker Change: Right.
Speaker Change: Yeah.
Speaker Change: Thanks for taking my question.
Speaker Change: Yep.
Eric: Thanks, Eric.
Eric: Our next question is from the line of David Grossman with Stifel. Please proceed with your questions.
David Michael Grossman: Thank you for taking my question.
Eric: Okay.
Eric: It could.
David Michael Grossman: The net revenue retention it looks like it improved pretty significantly and.
David Michael Grossman: I'm just curious is is there a material difference that you noticed between DTC and the HCP business and.
Speaker Change: Just wondering whether or not how the combination of the two business may effect.
Eric: The stability and the visibility of that revenue stream year on year given.
Eric: You just have more opportunity if you will within the existing base.
Eric: Yeah, Hey, I'll start and then hand, it over to Steve, but I think you know net net one of the things that we liked about it.
Steve: The medics acquisition was it did enhance our visibility.
Steve:
Steve: And we also like the fact that we saw an up sell potential of bringing them into the world adapt our world.
Steve: Clients and so what.
Steve: What that does is it immediately allows you to do.
Speaker Change: Not only built an algorithm, but also attached.
Speaker Change: Attach more impressions or media to it and as we all know the market and the budgets on the DTC side are you know three to five X out of D. H C. P. So.
Speaker Change: There is a net positive effect relative to the potential a C D. When you bring in.
Speaker Change: The two together so.
Speaker Change: Steve said, where.
Steve: And hyper cross sell mode, and frankly haven't baked much to that into our numbers around our guide so feeling good about the progress so far and with <unk>.
Steve: I'll hand, it over to Steve if he has anything more.
Steve: Yeah.
Steve: Yeah.
David Michael Grossman: Yeah, Thanks, well Hey, David.
Steve: You know you heard us say in the prepared remarks.
David Michael Grossman: GAAP at its core is a patient finding technology, meaning finding a <unk> patient.
David Michael Grossman: And I think that we've already seen the success of finding a brand eligible patient via their H C. P and executing the messaging via the H C. P to activate drive script lift that's our core at O P. Rx.
Speaker Change: What <unk> brings to the table as you heard will sort of articulate is the ability to directly execute messaging to the patients themselves and then all of that reporting all of the actions taken gets fed back into the platform and drives another action. So on the net revenue retention, which was sort of your initial question how is that going to behave well.
Speaker Change: Yeah.
Speaker Change: Platform becomes more subscription in nature, not that we're converting everything to subscriptions, but when programs run.
Speaker Change: They basically are producing results and more information, which is feeding that baseline core data within the business and the natural occurrence of that is for clients to renew because the ROI as time goes on improves because of the machine learning that's driven by the platform. So that's I think why you're seeing early signs is net revenue retention.
Speaker Change: Trickle up and I think we'll probably continue to see that we'll see how that would go to spin.
Speaker Change: Early optimistic signs.
Speaker Change: Thanks for that Steve So do you have any sense for where.
Speaker Change: Target is it just too early to really think about what you know.
Speaker Change: It is a steady state in our off of the business you know given that you're seeing some early improvement obviously, but I'm just curious whether you have any thoughts on where that shakes out over time.
target: Yeah. We you know obviously, we've got our internal goals, which we keep internal but we'd like to get back to where we were when we had that sort of hyper.
target: Retention.
Speaker Change: So it should it should get to above 120.
Speaker Change: Inside the year, if we if we go according to plan. So that's.
Speaker Change: Yeah.
Speaker Change: We've articulated just right it actually.
Speaker Change: What we have now is even better for retention than what we had before.
Speaker Change: We were more tactical this is more strategic.
Speaker Change: And more spread out within the organization of the client. So we're very hopeful and early signs you know when Q1 is good the year is better that's generally true in our business. So we're excited about these early signs.
Speaker Change: Great and just one other question and sorry, if I missed this but did you guys provide I know you've given us pro forma revenue for the year, but.
Speaker Change: Did you give us what the pro forma growth rate would have been for the quarter.
Speaker Change: I want to take that.
Speaker Change: Sure.
Speaker Change: Yeah. So.
Speaker Change: You'll see the numbers published in the Q.
Speaker Change: Q tomorrow.
Speaker Change: So we havent provided that yet once you see the numbers again and talk about kind of some of the details that go into that.
Speaker Change: Okay got it great alright, guys. Thanks very much.
Speaker Change: Thank you.
Speaker Change: Yes.
Speaker Change: Next question is from the line of Constantine Davita is with citizens JMP. Please proceed with your question.
Constantine Davita: Thanks, well I just wanted to see.
Constantine Davita: If you could expand on some of your comments on the commercial infrastructure.
Constantine Davita: Maybe just give us a sense for if the <unk>.
Constantine Davita: Sales force has brought over for medics or in your legacy sales force are cross trained.
Constantine Davita: The size of the infrastructure is and you know it sounds like you're.
Constantine Davita: Pretty constructive on the ability to sort of leverage that in future years and again, just wondering if you can give us a little bit more color there.
Steve: Yes, I'll hand that over to Steve because he oversees it but just to say we've we've leaned in on investment there because we're seeing the adoption curve happened faster than we anticipated, but Steve you can give an update on the team and the numbers.
Steve: Happy to Hey, Constantine Thanks for the question.
Steve: We're now up to right.
Steve: Right around 20 sellers that are actively engaging with pharma, which I think is our it is our largest number of part of that is our view.
Steve: The acquisition of Medics and then we've also onboarding several new sellers from the.
Speaker Change: The competitive set.
Speaker Change: In the space.
Speaker Change: <unk> been very deliberate about recruiting best talent, all of which we've been able to successfully capture which is a good sign for the business.
Speaker Change: So we're feeling pretty good about that and we.
Will: We've structured it in line with our commercial engine engine. So we've got folks that are focused on HCP folks that are focused on DTC, both of which have cross sell incentives as you heard will mentioned earlier they are laser focused on that and showing early signs of successful execution. There and then we have some account management inside sales keep.
null: Abilities as well just to sort of address top of the funnel and pull through as we're as we're expanding the pipeline continues to grow so addressing each step of that pipeline development from inception through execution, that's really where we're focused.
Speaker Change: Thanks, and I guess just one.
Speaker Change: Follow up on just.
Speaker Change: Sort of traditional engagements first DAP.
Speaker Change: And I was wondering if you just talk about sort of the frequency and depth of our.
Speaker Change: Of your contact with your ultimate end pharma customer relative and adapt and adopt structure versus a more traditional engagement.
Speaker Change: How many times, you're talking again, the depth of those conversations it sounds like Theres just a lot more people involved just by.
Speaker Change: Some of your earlier comments, but.
Speaker Change: I'm just wondering if you can expand on that thanks.
Speaker Change: Sure Yeah happy to take that one.
Speaker Change: Yeah. I mean, there are there are definitely more stakeholder involved funny enough. The close cycle is roughly the same I believe it or not but you've got several stakeholders do you have an economic buyer you'd get a strategic buyer, meaning the brand manager economic buyers always procurement <unk> via the agency.
Speaker Change: And then there's a new buyer at the table, which is the analytics team the benefit I think of having that analytics team at the table, which was sort of a follow on to Ryans question around ROI is that the the metrics that are governing the ROI calculation and what success looks like are decided early and often by that team.
Speaker Change: Concomitantly with our analytics team and so we know exactly how we are driving and what we're driving to to to be successful and that gives our platform and ability to make adjustments on the fly and do things that optimize every engagement make sure that everything is optimized perfectly to drive a good result by the end of the campaign.
analytics team: So it's great to have them as a partner at the table and it also makes things much stickier.
Speaker Change: Once you're sort of implemented with an analytics team and the marketing team and the agency et cetera, and everyone's youre part of the workflow.
analytics team: The new ability is better and you know again the net revenue retention continues to trickle up I think that's sort of a byproduct of the stakeholder engagement.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of.
Speaker Change: Uh Huh, Stephanie Davis with SBB. Please proceed with your questions.
Speaker Change: Hey, guys.
Speaker Change: Sorry.
Speaker Change: My new home, so on and make sure yeah.
Speaker Change:
Speaker Change #100: I do want to ask so the revenue from your top com.
Speaker Change: Moving quite a bit but it is still below what we've seen.
Speaker Change: Yeah, So we're thinking about that.
Speaker Change: So have a cadre or they're naturally going to be some SKU going forward, you'll see they do the DTC mix or prior SKU due to the pandemic.
Speaker Change: Yeah, I don't think it tastes, Stephanie well I don't I don't think it's pandemic related cause me.
Speaker Change: Largely it was that didn't really have a material impact on our business during those years, but.
Speaker Change: For sure the combination of the two brands sets medics.
Speaker Change: P Rx is going to.
Speaker Change: I mean theres improvement that's good.
Speaker Change: It is DAP cross sells where that should be that should accelerate pretty nicely. So I think from the investors analysts perspective, that's something to watch relative to the success of cross selling.
Speaker Change: But net net.
Speaker Change: We're thrilled to be in all of them and up and running in <unk>.
Speaker Change: And have the kind of.
Steve: Net retention, where we like it and then as Steve said it's.
Speaker Change: The training well on the cross selling in.
Speaker Change: They are deep into the market with it.
Speaker Change #103: Helpful and then when I look at the pipeline did highlight a lot of that deal.
Speaker Change: The pipeline.
Speaker Change: Is that looking now.
Speaker Change #102: Oh quicker negotiation cycle is that something where the revenues have looked like or like how should we think about compare to your legacy book of business.
Speaker Change #101: Sure, Steve you want to grab that one.
Steve: Yeah happy to Hey, Stephanie good to hear your voice.
Steve: Look I think that there are two things that I would sort of consider so average deal size in that that range.
Steve: Range is going to be significantly larger than our normal deal size, which you know so we've already shared the ACD around that in.
Steve: In addition to that I think the sales cycle is pretty much approaching what our normal sales cycle would be and I think that's largely because we're in a scale place right now with the App as opposed to just sort of any kind.
Steve: Launch scale, which we were 12 months ago and then the other the other thing that I would submit to you is and this is kind of based on your previous question as well is that we're not just seeing DAP gained traction and be sticky in the top 10 were seeing it gain traction across the spectrum of revenue tiers in our client base and that is really.
Steve: Something that we're excited about which is to say that in the mid tier and small accounts, we're seeing spend levels that are as large on a deal basis.
Steve: As some of the major manufacturers and we think right now that that's because major manufacturers have capabilities that they assume are taking care of several of the things that they might be looking for out in the marketplace. They've got some of those things in house, whereas mid tier and smaller accounts, just simply don't and so it's it's much more cars.
Steve: Cost effective for them from both a sort of investment and a time perspective to find a solution that can cover several of the things that DAP is bringing to the table. So more to come on that but just wanted to give you a sense of the spread.
Steve: Of gap.
Steve: Based on your previous question about it.
Speaker Change #104: Okay, well go through and Jason line I wanted to follow up then on that.
Speaker Change #108: Question <unk>.
Speaker Change #105: Sounds like there's a lot of new sales and new products is it safe to think that the big improvements you're seeing in IRR is more from the sales of new products and improvements in attrition.
Speaker Change #105: All of those legacy or core products.
Speaker Change #110: Yeah, I'll start with that one of the things that's really incur.
Speaker Change #104: Encouraging that we're seeing is.
Speaker Change #104: When we do have let's say a more sizeable tactical.
Speaker Change #104: Engagement with the client.
Dave: Dave obviously, all heard of or are running some kind of that program.
Dave: We're now at that stage, where they're looking at these bigger programs to convert over to DAP to be even more efficient.
Speaker Change #111: And you don't have a price deterioration there a matter of fact, it it's considerably up.
Speaker Change #109: Not not price in the sense of our prices, but just the size of the engagement. So.
Speaker Change #109: I think it's it's early days I mean going from 24 to 33 in the first three months.
Speaker Change #107: I think when we get to half year, we'll see how many we close and what the impact is on all of these kpis, but we tend to think it's going to be pretty positive and we're not hurting our legacy business were actually lifting it up.
Speaker Change #107: And making it more relevant and sticky so that's my hats off to the team I mean that is not an easy thing to do when you're transitioning to a different type of solution no matter how great. It is.
Speaker Change #107: You can often get stuck with the client.
Speaker Change #107: Mindset, our solution set but in this case, we're actually just becoming more evolved and more meaningful more relevant so it's it's terrific.
Speaker Change #107: But all of them.
Speaker Change #112: Alright, well. Thank you for taking my question perfectly well.
Speaker Change #115: Eventually, we'll start seeing stuff mutation cycles on that call I, Oh, Yeah alright.
Speaker Change #112: Yes.
Speaker Change #112: Thank you Stephanie for much.
Speaker Change #112: Okay.
Speaker Change #114: Thank you.
William J. Febbo: Our final question is from the line of William <unk> with B Riley Securities. Please proceed with your questions.
William J. Febbo: Hi, yes. Thank you for taking my question. So it looks like the matter of Fedex.
Speaker Change #117: As you said earlier there was progressing ahead of expectations.
William J. Febbo: In the late stage negotiations are still going on so I'm just kind of curious if.
William J. Febbo: If these have already been included in the guidance for this year or if these will be extra to that and when we think all of this should be closing up in these negotiations should be starting to solidify.
Speaker Change #118: Yeah, Hey, Thanks, Great question, we basically you know when you buy a company you really get to know it. After you buy it. So we were very conservative with our 24 guidance and did not assume.
William J. Febbo: Cross selling in that number.
William J. Febbo: So if this happens at a faster pace than we anticipate then that should be a really good thing for us for.
William J. Febbo: So the guidance in the company.
William J. Febbo: And the clients and if it if it does happen I think you can anticipate it in second half.
William J. Febbo: Just because we that's mid year is a good time, where clients readjust change reallocate like we saw second half of last year.
Speaker Change #136: We expect to see that same enhancement only directed towards this inclusion of DTC. So.
William J. Febbo: It wouldn't wouldn't count on too much first half, but the pipeline build in the first half is really impressive the team is doing a terrific job.
Speaker Change #116: Got it I appreciate it it's very helpful.
Speaker Change #119: I just wanted to make sure that I'm thinking about this the right way and I know that there seems to be some seasonality in the fourth quarter the first quarter.
Speaker Change #122: When you are looking at those not year over year, so quarter over quarter basis, it looks like you're sort of almost ticked down across the board at least revenues.
Speaker Change #119: Gross revenues are adjusted each.
Speaker Change #119: EBITDA et cetera.
Speaker Change #119: But you did go up on that you've got nine depth now and so I'm just trying to you know when we think about this going forward.
Speaker Change #119: Is it essentially the fourth quarter to first quarter, you didn't take down as much and I mean, I know you came in so I'm, just trying to sort of get a better.
Speaker Change #119: Get my mind right on on how we should thinking about sort of the cadence of that and then the revenue growth growing throughout the year.
Speaker Change #120: Yeah, sure and I'll.
Speaker Change #121: Hand, you over to Andy for the seasonality numbers.
Andy: <unk> and <unk>.
Speaker Change #124: 'twenty three to 'twenty four.
Andy: Less than 20% of the business is that so you're you're you're still going to see that seasonal drop from Q4 to Q1 that we've seen historically.
Speaker Change #126: But as we scale that and you get closer to 50% a year or more of your revenue.
Speaker Change #124: You'll always have a bit of a reset but it should start to be better over time, because you've got active programs rolling forward, you've got algorithms being updated.
Speaker Change #121: And then there's a sequence to Q1.
Speaker Change #121: When we close those deals are really the first part of that is getting the model built.
Speaker Change #121: So you won't see a big pop immediately you really get that revenue of designing the algorithm and launching programs and that carries through so seasonality will all exist in this business, but it should get better as that becomes a higher percentage of our revenue.
Speaker Change #128: Hey, William and Andy I Hope you're doing well.
Speaker Change #128: Just from a first half versus second half standpoint.
Speaker Change #137: <unk>, our first half is not going to be in more than 40% of our overall revenue in the year, So call it 35% to 40% range and in the back half would be.
Speaker Change #129: The remainder so.
Speaker Change #129: I hope that gives some context, obviously is as we scale up the Apple give better insight into how the seasonality and cadence might change, but that's kind of where it's at right now.
Speaker Change #125: Yeah, no I appreciate that and thank.
Speaker Change #127: Thank you for both for taking our questions.
Speaker Change #131: I appreciate it.
Speaker Change #125: Quarter and ill.
Speaker Change #130: I'll back in queue. Thanks.
Speaker Change #135: Thank you.
Speaker Change #133: Thank you Mr.
Speaker Change #132: Mr. Kevin I will turn the floor back to you for closing remarks.
Operator: Great. Thanks, operator, and thank you everyone for joining us today.
Speaker Change #130: We trust you share our enthusiasm as we continue to build positive momentum.
Speaker Change #125: As we embark on our financial and operational journey, we're pleased to be progressing on solid ground.
Speaker Change #125: Our collaboration with pharma manufacturers to reach health care professionals and patients has seen really really nice growth fueled by our innovative AI models. This advancement is helped us address and overcome many past challenges.
Speaker Change #125: Today, we proudly offer comprehensive solutions that integrate various components into agile powerful strategies.
Speaker Change #125: These strategies effectively tackle crucial issues, such as brand awareness education affordability and the recruitment of hard to find patients.
Speaker Change #125: These are the daily challenges, our clients doctors and patients face in the current health care environment.
Speaker Change #125: We are very excited to be part of the solution, our dedication to supporting doctors and patients and aligning on quality care is the driving force behind our team.
Speaker Change #125: We're looking forward to connecting with many of you at the numerous upcoming investor conferences, we will attend before our next earnings call.
Speaker Change #125: Wishing you a great rest of the day.
Speaker Change #125: Operator.
Speaker Change #134: Thank you Sir before we conclude today's earnings call I would like to provide the company's safe Harbor statement that includes important cautions regarding forward looking statements made during today's call.
Speaker Change #138: Statements made by management during today's earnings call may contain forward looking statements within the definition of section 27, a Securities Act of 1933 as amended and section 20 <unk> of the Securities Act of 1934 as amended.
Speaker Change #134: These forward looking statements should not be used to make investment decisions.
Speaker Change #134: The words anticipate estimate expect possible and seeking and similar expressions identify forward looking statements.
Speaker Change #134: We speak only to the date that such statements are made.
Speaker Change #134: Such forward looking statements in the call include statements regarding estimation of total addressable market size market penetration revenue growth gross margin operating expenses profitability cash flow technology investments growth opportunities acquisitions and upcoming announcements.
Speaker Change #134: They also include the management's expectations for the rest of the year I mean.
Speaker Change #134: And the adoption of the company's dynamic audience activation activation platform the.
Speaker Change #134: The company undertakes no obligation to publicly update or revise any forward looking statements, whether because of new information future events or otherwise.
Speaker Change #134: Forward looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified.
Speaker Change #134: Future events and actual results could differ materially from those set forth and contemplated by.
Speaker Change #134: Our underlying these forward looking statements.
Speaker Change #134: The risks and uncertainties to which forward looking statements are subject to include but are not limited to the effects of government regulation competition and other material risks.
Speaker Change #134: Risks and uncertainties that could affect business and financial results and to which forward looking statements are subject.
Speaker Change #134: And in the Companys annual report on Form 10-K for the year ended December 31 2023.
Speaker Change #134: This Form 10-K is available on the company's website and on the SEC website at SEC Gov.
Speaker Change #139: Before we end today's earnings call I would like to remind everyone that this call will be available for replay via webcast only starting later this evening running through for a year.
Speaker Change #139: Please refer to today's press release for replay instructions available via the company's website at www dot optimum optimize Rx dotcom.
Speaker Change #139: Thank you for joining US today. This concludes today's earnings call. You may now disconnect your lines.