Q3 2024 Waystar Holding Corp Earnings Call
The End
Speaker Change: Good day and thank you for sending by. Welcome to the Ways Starts, their quarter 2020 24 earnings conference call. At this time, I'll participate on a listen only mode.
Speaker Change: and for the speaker's presentation, it will be a question and answer session.
to the question during a session, you need to press star 1-1 on your telephone. You didn't hear an automated message advising your hand is raised.
Speaker Change: To withdraw your question, please press star one again. Please be a lie. The today's conference is being recorded. I will now hand the conference over to your first figure today. Sandy Draper, head of investor relations. Please go ahead.
Sandy Draper: Thank you, operator and good afternoon everyone. It is my pleasure to welcome you to Wastar Holdy Corporation's third quarter, 224 earnings call.
Sandy Draper: Today's calls being webcast and a replay, along with the transcript, will be available on our website, along with other related materials, following the conclusion of this call.
Ways our Chief Executive Officer and Steve Oreskovich.
Sandy Draper: Waste our chief financial officer are joining me today. After their remarks, we will open the call to your questions.
Speaker Change: Earlier today, we issued a press release announcing our financial results and a presentation slide debt to accompanying our prepared remarks. The materials are available on the Investor Relations section of our website at investors.wastar.com.
Speaker Change: Before we get started, I will remind you that this call contains forward-looking statements.
Speaker Change: which include all statements that are not historical facts. Examples of these statements include expectations of future financial results, growth and margins.
Speaker Change: These statements do not guarantee future performance and evolve a number of risks and uncertainties and undo reliance should not be placed on these four looking statements.
Speaker Change: Actual results may differ materially from those expressed in these statements.
for a full discussion of the risks and other factors that may impact these forward-looking statements.
and our business generally, please refer to this evening's press release and our perspectives filed with the SEC on June 7, 2024, and in other reports we filed with the SEC, all of which are available on the Investor Relations website page of our website.
Speaker Change: In a forward-looking statement provided during this call, our made only as of the date of this call, and we undertake no obligation to update or revise such statements, except as required by law.
Speaker Change: During today's call, we will also discuss certain non-gap financial measures, which we believe may be useful in evaluating our financial performance.
Speaker Change: We have provided reconciliations of a Jesse EBITDA and non-GatNet income and earnings per share and certain other non-Gat financial measures included in our remarks to the most directly comparable Gat measures.
Speaker Change: Together with the explanations of these measures, in the appendix of the presentation slide deck and our early release.
Speaker Change: These non-get measures should not be considered in isolation or is the substitute for our financial results prepared in accordance with gap.
Speaker Change: Lastly, we are pleased to note our participation in the Evercore ISI Health Connect Conference in Miami and the Barclays Technology Conference in San Francisco. Both in December where we look forward to engaging with many of you.
Speaker Change: With that, I'll turn over to that.
Speaker Change: Thank you, Sandy and good afternoon everyone. Thank you for joining our Q3 2024 earnings call.
Speaker Change: Today I'll cover 4 key topics that highlight our progress and future direction.
Speaker Change: Burshik.
Speaker Change: We'll discuss Wastars compounding and sustainable revenue growth. Second, I'll share our improvements driving operational profitability and efficiency across the business.
Speaker Change: Third, I'll highlight the latest innovations in our software platform that deliver value to our clients. And fourth, we'll review recent successes in our client and team member experiences.
Speaker Change: Then I'll turn the call over to our CFO Steve who will provide a detailed view of our financial materials and annual guidance for 2024.
Speaker Change: First, Sustainable Revenue Growth.
Speaker Change: In Q3, we start delivered another quarter of strong top line growth. Our revenue reached 240 million. Representing a 22% year-over-year increase and an acceleration from the 20% growth in Q224.
Speaker Change: We drove this girl through solid client retention.
Speaker Change: Effective cross-selling, new client acquisitions, and modest pricing increases that demonstrate our software's value.
Speaker Change: Our sustainable growth strategy prioritizes building enduring plant relationships.
Speaker Change: By delivering a tangible return on investment and lowering the total cost of ownership, we drive client retention and ongoing product expansion.
Speaker Change: This approach is a fundamental part of our proven strategy, as evidenced by two key metrics that track our performance and reinforce our durable growth model.
Speaker Change: 1st, Net Revenue Retention came in at 109% in Q3. This result is consistent with our historical range of 108% to 110% over the last 13 quarters.
Speaker Change: Second, the number of clients generating more than 100,000 in trailing 12 month revenue grew to 1,173, and increase of 14% year over year.
Speaker Change: Our Q3 growth reflects our success in attracting clients seeking a reliable, courin house after the February cyber event that impacted a competitor.
Speaker Change: As we shared in our previous earnings call, we welcome more than 30,000 new providers to waste our rapidly implementing them to ensure they quickly resume to cash flow.
Speaker Change: Many of these providers have signed standard waste-star business agreements with two to three year terms and are already expanding their use of the waste-star platform beyond clearing house capabilities.
Speaker Change: Our Sustainable Growth Strategy prioritizes cybersecurity.
Speaker Change: We start demonstrates its commitment to system resiliency by investing in advanced cybersecurity measures that protect our clients' information through proactive monitoring and rapid restoration ensuring operational continuity.
Speaker Change: Waste our software is essential to providers business operations and cash flow generation.
Speaker Change: We start advocates for system resiliency through non-exclusive connections that deploy modern technical protocols to enable providers to exchange information securely and efficiently with payers.
Speaker Change: We believe that exclusive relationships between some pairs and clearinghouses may contribute to a lack of system resiliency.
Speaker Change: So far in 2024, Wastar has established dozens of new direct connections to payers, enhancing our extensive network of payer connections.
Speaker Change: Many of these were previously exclusive with a competitor's clearinghouse.
Speaker Change: These direct connections are non-exclusive and increase the speed of payment and improve network resiliency.
Speaker Change: Our focus is to create an efficient exchange of information allowing providers to prioritize patient care.
Speaker Change: Moving to profitability and efficiency.
Speaker Change: This quarter continues the trend of strong even got performance.
Speaker Change: adjusted EVID-19 to reach $97 million, reflecting a 19% year-over-year increase, and a 40% adjusted EVID-19 margin, including a full quarter of public company expenses.
Speaker Change: This performance highlights the value of our software platform and our commitment to vigilant cost management while we continue to make strategic long-term investments that position waste our computer growth.
Speaker Change: Our Q3 performance also highlights our business models strong cash flow conversion.
Speaker Change: We experienced a step up year over year and quarter over quarter in Unlovered Free Cash Flow, which increased to $89 million in Q3. The improvement underscores our operational efficiency and focus on cash collections.
Speaker Change: Due to the growth in Ivada and additional debt paydown, we successfully lowered our net leverage ratio to 3 times compared to the 3.7 times at the end of Q2 2024.
Speaker Change: Waste Arts Cacheal profile continues to provide us the flexibility to evaluate internal investments, explore M&A opportunity.
Speaker Change: and reduced debt. We remain committed to leveraging our strong position to drive sustainable growth and maximize value for our investors.
Speaker Change: Next, I'll speak to platform innovation.
Speaker Change: The inefficiencies in healthcare are unsustainable.
Speaker Change: 63% of revenue cycle leaders indicate that their teams are understaffed, highlighting a pressing need for mission critical solutions that promote automation and the reduction of manual work.
Speaker Change: Recent market research conducted by modern healthcare in collaboration with Wastar underscores the industry's strong appetite for artificial intelligence.
Speaker Change: Reeling substantial returns on investments for early adopters and forecasting a significant surge in generative AI solutions over the next 12 to 18 months.
Speaker Change: We start holds a leading position in this transformative landscape with our purpose-built software a depth-lead addressing complex industry challenges through intelligent automation and delivering demonstrable ROI.
Speaker Change: We are uniquely positioned to leverage the power of generative AI through our expansive data network, which facilitates over 5 billion transactions spanning approximately 50% of patients in the United States.
Speaker Change: With nearly a decade of successful AI deployment and ongoing investments in innovation, we are actively working on more than a dozen generative AI use cases in waste arts innovation lab.
Speaker Change: At our client conference in September, we demonstrated generative AI software applications and authorization automation.
Speaker Change: Denial Prevention and Appeal Management.
Speaker Change: which are highly anticipated advancements that we expect to begin launching in 2025.
Speaker Change: Each use case is thematically designed to help providers achieve additional operational efficiencies.
Speaker Change: Promote more intelligent and accurate interactions with payers and patients and achieve faster time to payment.
Speaker Change: Our commitment to innovation is not just a promise but a reality. We launch hundreds of new features and enhancements each quarter throughout our cloud-based software platform.
Speaker Change: In Q3, we introduced automated workflows to identify missing insurance coverage across the patient financial journey. Launched self-service tools that enable providers to manage claims and expedite payer payments.
Speaker Change: and expanded patient payment options, including the use of Apple Pay.
Speaker Change: These innovations empower providers to receive payments faster, more accurately, and more efficiently than ever, positively impacting their operations.
Speaker Change: Our number one ranking in client satisfaction across all care settings is a testament to our commitment to innovative excellence and positions us as a trusted partner for providers.
Speaker Change: Thank you. Thank you.
Speaker Change: Lastly, I will speak to client and team successes.
Speaker Change: At Waystar, we prioritize delighting our clients in fostering enduring relationships built on trust.
Speaker Change: A recent survey revealed that 97% of all respondents believe that Waystar's best days lie ahead.
Speaker Change: reflecting their confidence in our software, innovations like generative AI, and our commitment to a secure modern platform.
Speaker Change: In September, we hosted our annual client conference, Waystar True North.
Speaker Change: which attracted a 50% increase in attendance compared to the previous year.
Speaker Change: This event provided an invaluable opportunity for our client community to connect with industry leaders and peers, exchange best practices, and deepen their understanding of our software platform.
Speaker Change: At the conference
Speaker Change: Our Waystar Innovation Lab displayed our latest AI and generative AI capabilities alongside advancements in cybersecurity. Clients experienced hands-on demonstrations of our software, further highlighting our dedication to innovation and client engagement.
Speaker Change: We also convened our Waystar Advisory Board, uniting a nationwide network of health care executives from leading health care organizations renowned for their achievements and expertise.
Speaker Change: These members shared valuable insights on market challenges and provided guidance on Waystar's initiatives and generative AI product innovation.
Speaker Change: that advance our mission of simplifying health care payments.
Speaker Change: This quarter, Waystar continued to earn recognition as a leader in innovation and a top workplace.
Speaker Change: We received several Stevie Awards at the 2024 International Business Awards.
Speaker Change: achieving honors in four categories within the software and health care sectors including the Gold Stevie Award for company of the year in health care and the Gold Stevie Award for best payments solution.
Speaker Change: Additionally, we celebrated our reputation as an employer of choice, receiving Best Place to Work awards from the Atlanta Business Chronicle and Louisville Business First.
Speaker Change: For the second consecutive year, Fortune certified Waystar as a great place to work, and this fall, we proudly earned a spot on Fortune's 2024 list of Best Workplaces in Healthcare.
Speaker Change: Together, these accomplishments reinforce our commitment to delivering exceptional value and position us for continued growth in the future.
Speaker Change: In conclusion, we are pleased to report our achievements in Q3 and maintain a positive outlook for the future.
Speaker Change: As we strategically target a substantial addressable market, we recognize the immense opportunities that lie ahead.
Speaker Change: Our cloud-based software platform, which features advanced technology like generative AI, combined with our unwavering commitment to exceptional client service,
Speaker Change: uniquely positions us to achieve sustained durable growth that outpaces the market both now and in the coming years. These advancements not only increase our competitive distinction but also reinforce our capacity to meet the evolving needs of our clients.
Speaker Change: Our results affirm our expectation of normalized low double-digit growth as we continue to cultivate a stable, enduring growth compounder. With that, Steve will now provide a detailed overview of our financial performance.
Steve Oreskovich: As Matt indicated, we had another strong quarter with all financial metrics showing impressive growth resulting in an increase to our full year guidance.
Steve Oreskovich: Revenue increased 22% year-over-year in the third quarter to $240 million.
Speaker Change: This growth was primarily driven by the strength of our software business model and ability to deliver compounding, low double-digit growth.
Speaker Change: This includes continuing to execute our proven plan to drive cross-sell and up-sell with existing clients.
Speaker Change: We successfully expanded the number of clients producing more than 100,000 LTM revenue.
Speaker Change: to 1,173 as of the end of Q3, adding 56 clients in the quarter and increased our net revenue retention rate to 109%.
Speaker Change: Additionally, we continue to recognize faster revenue than normal from the clients we rapidly implemented last quarter, who were impacted by the competitor clearing house cyber event.
Speaker Change: These rapid implementations, along with sustained higher levels of transactions from existing clients,
Speaker Change: generated $12 million of revenue above our normal business model in Q3, which is an increase from the $9 million that positively impacted Q2 results.
Speaker Change: Seeing these results for the second quarter in a row validates our prior expectation of a notable and endurable increase to our revenue baseline.
Speaker Change: Thank you for watching!
Speaker Change: Finally, the two small acquisitions in the second half of 2023 continued to modestly benefit the third quarter year-over-year growth rate.
Speaker Change: While 22% year-over-year growth for Q3 and 20% growth in the first nine months of 2024 are strong, we continue to see normalized, low double-digit revenue growth during these periods when accounting for the factors I just noted.
Speaker Change: Thank you for watching!
Speaker Change: Gap net income for the third quarter of 2024 was $5 million, compared to a net loss of $16 million in the prior year.
Speaker Change: Thank you for watching!
Speaker Change: Q3 2024 includes $16 million of expenses associated with the planned relocation of one of our offices.
Speaker Change: The vast majority of which is a non-cash charge.
Speaker Change: Adjusted EBITDA of $97 million for the third quarter increased 19% year-over-year.
Speaker Change: The adjusted EBITDA margin of 40% reflects continued investment in the business items Matt touched on to ensure we meet client expectations and ongoing technology advancements.
Speaker Change: Thank you for watching!
Speaker Change: We continue to steadily improve our capital structure in the quarter, including using net proceeds from the Green Shoe Exercise, along with $8 million of cash, to pay down $111 million of debt.
Speaker Change: Since the beginning of the year, we've reduced our debt by over $1 billion.
Speaker Change: Ending the quarter with $1.1 billion of net debt.
Speaker Change: On a trailing 12-month basis, our net debt to adjusted EBITDA leverage ratio is three times, which is down three quarters of a turn in the quarter and already meets the long-term target we previously articulated.
Speaker Change: Thank you for watching!
Speaker Change: Unleveraged free cash flow was $89 million in the third quarter of 2024.
Speaker Change: operating results.
Speaker Change: and Working Capital Management, along with a single quarterly tax payment in Q3, drove the $40 million sequential quarter-over-quarter improvement.
Speaker Change: The EBITDA to unleveraged free cash flow conversion was 92% in the quarter.
Speaker Change: well above our 70% long-term target, bringing the year-to-date conversion to 65%.
Speaker Change: Unlevered free cash flow for the third quarter includes a tax burden of $12 million as we continue to be a full taxpayer.
Speaker Change: Our capital allocation priorities remain the same.
Speaker Change: We expect to continue to de-lever the balance sheet, targeting approximately one turn a year.
Speaker Change: We continue to invest in the business to drive sustainable, top-line growth.
Speaker Change: And we will also look at opportunities for inorganic growth based on our disciplined acquisition criteria.
Speaker Change: Looking forward, we are raising our revenue guidance for fiscal 2024 to a range of $926 to $934 million.
Speaker Change: At the midpoint, this represents 18% full-year growth over 2023 and 12% growth for the fourth quarter.
Speaker Change: This updated revenue range incorporates the continued performance of the business and the durable uplift benefit of the rapid onboarding of clients as we have described.
Speaker Change: It also considers the seasonal impact of patient payments processed on our software platform.
Speaker Change: which are typically higher in the first half of the year compared to the second half.
Speaker Change: Finally, while we are seeing a nice pickup in sales activities and interactions with existing and prospective clients.
Speaker Change: Buying behaviors and implementation timelines reflect a more normal cadence, which we expect to continue going forward.
Speaker Change: We are also raising our adjusted EBITDA guidance to a range of 374 to 378 million.
Speaker Change: representing twelve and a half percent year-over-year growth at the midpoint.
Speaker Change: along with an adjusted EBITDA margin of 40% for 2024.
Speaker Change: Our expectations for adjusted EBITDA incorporate public company expenses.
Speaker Change: Continued investments in software development, cybersecurity initiatives, and go-to-market excellence.
Speaker Change: Thank you for watching!
Speaker Change: While it will not be our normal pattern to give future year guidance on our third quarter call, given this year's unique circumstances of revenue growth well above our low double-digit target,
Speaker Change: We will provide our preliminary thoughts on 2025 revenue.
Speaker Change: Thank you for watching!
Speaker Change: We expect 2025 revenue to approach $1 billion.
Speaker Change: compared to the midpoint of our 24 revenue guidance.
Speaker Change: This represents growth in the high single digits on an as-reported basis.
Speaker Change: and after adjusting for the unique circumstances in 2024 low double-digit growth on a normalized basis.
Speaker Change: Thank you for watching!
Speaker Change: This initial 2025 outlook is subject to the completion of our 2025 planning process and may change.
Speaker Change: We plan to give full guidance on our fourth quarter 2024 earnings call.
Speaker Change: We are now ready to answer your questions.
Speaker Change: Thank you. As a reminder, to ask a question, you will need to press star 1 1 on your telephone and wait for a name to be announced. To withdraw your question, please press star 1 1 again. One moment for our first question.
Speaker Change: Thank you for watching!
Speaker Change: Our first question will come from Adam Hodgkiss from Goldman Sachs. Your line is open.
Speaker Change: Thank you. Have a great week.
Adam Hodgkiss: Great, thanks so much for taking the questions. Matt, to start, I know we've talked a lot about
Speaker Change: the sustainable wave of larger customers making clearinghouse decisions post a changed cyber attack.
Speaker Change: It seems like you saw some incremental benefit this quarter, as you mentioned. Could you maybe talk about your updated view on how sustainable the elevated demand picture is here, particularly on the new logo side and after the September conference? And then, Steve, how did you contemplate some of that in your 2025 initial remarks? Thanks so much.
Speaker Change: Thanks, Adam. It's good to hear from you.
Speaker Change: 2024 has been a unique and a very important year for Waystar. We see our business model
Speaker Change: Our teams are high-functioning, high-performing.
Speaker Change: We've seen our pipeline grow.
Speaker Change: throughout the course of the year. And we're very pleased with the progress that we continue to make in the hospital and health system market, as well as in the ambulatory side of the market. We did experience the phenomenon in addressing the cyber event that occurred in rapidly onboarding clients to Waystar, as we highlighted in our prepared remarks.
Speaker Change: That was a phenomenal time for us. We were able to showcase how rapidly we can deploy the Waystar software platform.
Speaker Change: We were able to delight clients, and as we said, many of those signed...
Speaker Change: Standard Waste Star Agreements, two to three years in length. They're already beginning to look at other software modules and begin to use software modules in many cases.
Speaker Change: We see that trend continuing and one of the things that we believe that is on hospital decision-makers minds is We see that they expect utilization to continue to
Speaker Change: check up.
Speaker Change: and they're busy, they are going through a very rigorous process to evaluate their long-term clearinghouse partner.
Speaker Change: and we're getting invited just given our brand reputation and the trust that we've built and the referenceability that we've built with clients to many.
Speaker Change: prospect and other new client opportunity discussions.
Speaker Change: We've seen
Speaker Change: One other comment I'd add is that we've seen an uptick in the number of RFPs and in the complexity of those RFPs. We've seen more and more questions asked about cybersecurity, for example, and there tend to be more decision makers at the table. So we look at overall, we'd say,
Speaker Change: Anticipated demand is robust. People are focused on smart IT spend. We think that Waystar can play a major role with hospitals and health systems, as well as the ambulatory clients that we serve, and we look forward to the future.
Speaker Change: Yeah, Adam, this is Steven. With regards to your question on 2025, you know, I appreciate the
Speaker Change: the desire for information, but ask for your patience for us to finish our planning process to provide any specifics there, and we plan to speak to them in the next quarter's call, but
Speaker Change: What I can provide you is directionally...
Speaker Change: Back to the prepared comments that, you know, we have seen buying behaviors and implementation time range reflect a more normal cadence.
Speaker Change: And as I said in the prepared comments, we would expect that to continue going forward without putting a timeline, a specific timeline to that.
Speaker Change: Okay, really helpful. And then just quick follow-up on patient payment. Where did Q3 shake out versus your expectations of a normalization and some of the patient payments activity? It felt like things came in, you know, a little bit better than expected on the volume-based side, but any more color on the financials there would be useful.
Speaker Change: Yeah, a couple of things. As you're well aware, we tend to see seasonality between the first half and second half.
Speaker Change: as patients that are...
Speaker Change: Pardon me, all of us that are in...
Speaker Change: High deductible plans tend to hit our deductibles.
Speaker Change: reached those in the latter half of the year.
Speaker Change: That being said, we have seen increased volume and usage of healthcare services across all of our solutions during 2024, and in particular in the third quarter, slightly above our expectations.
Speaker Change: Really helpful. Thank you both.
Speaker Change: Thanks, Adam.
Speaker Change: One moment for our next question.
Speaker Change: Thank you for watching!
Speaker Change: Our next question comes from Stephanie Davis from Barclays. Your line is open.
Stephanie Davis: Hey guys, thanks so much for taking my question, and congrats on another fantastic quarter.
Stephanie Davis: So you mentioned delighting the client with those accelerated on-burns earlier this year, but what learning did you have for this?
Speaker Change: And looking forward, are you thinking never again that speed of market was unsustainable? Or is there something from that accelerated experience you could leverage to improve your forward onboarding efficiency and differentiate yourself?
Speaker Change: Thanks, Stephanie. Yes, we had a lot of learnings come out of this period of time that I think really stand out to us.
Speaker Change: We were grateful to be in a position to move so quickly.
Speaker Change: to help these providers who had been impacted be able to resume normal business operations as we were able to, in some cases, in as little as three days, deploy Waystar's cloud-based software and get that into use.
Speaker Change: You can imagine we're an organization that's focused on continuous process improvement. And so with the thousands of providers that we were able to help during that time,
Speaker Change: Our Solution Adoption Team
Speaker Change: and our product teams have all been focused on the incremental learnings, how to automate enrollments, for example, how to strengthen our project management to ensure we do certain things within that project management work that delight clients.
Speaker Change: And so we feel like the momentum that we created during that time
Speaker Change: being able to showcase the speed and adaptability of our organization, that momentum
Speaker Change: It carries us forward. And we've become even smarter and more focused as an organization, I believe, because of it. We also see that client referenceability and the fact that we've been able to demonstrate proven partnership.
Speaker Change: where now we see clients are actually referring their friends, so to speak, and we're getting a bit of the benefit associated with that as we examine our sales pipeline and we see that increase.
Speaker Change: and we're grateful for that. So referenceability, learnings that help us internally, and as we go forward, we highlighted a couple of generative AI solutions.
Speaker Change: Some of those are designed to help us rapidly deploy software, too, and be able to effectively help clients as they evaluate their payer contracts and rules and be able to rapidly get those in place in the Waystart software platform and begin to deploy those. So thank you for the question.
Speaker Change: I guess related to that word of mouth kind of momentum you're getting, should we think of this quarter's inflection on large client growth as reflective of, you know, the existing clients buying more and getting their funds in order to buy more as well, or is there anything else to call out in the uptick?
Speaker Change: Thank you for watching!
Speaker Change: Yeah, Stephanie, this is Steve. I think there's a mix in there of a couple of things. One is you touched upon the expansion of solutions within the existing client base.
Speaker Change: in the quarter.
Speaker Change: Thank you for watching!
Speaker Change: together here. Thank you much.
Speaker Change: You're welcome.
Speaker Change: One moment for our next question.
Speaker Change: Our next question comes from Anne Samuel from J.P. Morgan. Your line is open.
Speaker Change: And your line is open.
Speaker Change: All right, one moment for our next question.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Sean Dodge from RBC Capital Markets. Your line is open.
Sean Dodge: Yeah, thank you. Good afternoon and congratulations on another great quarter.
Speaker Change: On the 24 revenue guidance, I'm just trying to better understand the volume-based cadence for the fourth quarter. Your subscription revenue should be pretty stable, I'd imagine.
Speaker Change: probably up a little bit sequentially in Q4. But then if I look at what that implies for volume based, that'd mean a pretty significant step down, like on the order of $7 million sequentially to even get to the top end of your guidance for the full year.
Speaker Change: I know there's, I appreciate there's seasonality, Steve, as you mentioned in volume-based, but directionally, do you think there was that much volume that was pulled forward into Q3? I guess just looking for any more help you can provide kind of squaring all this and how to think about modeling volume-based into Q4.
Speaker Change: the revenue from patient payments processed on the...
Speaker Change: software platform. What we've seen for three quarters now
Speaker Change: the volumes and the amount of activity being above our expectations. So.
Speaker Change: As we're looking at specifically to the fourth quarter, what we're thinking and what we've modeled in from a full year guidance, and I should say what it implies for the fourth quarter, is a volume for the full year, getting back to what we would have expected. Now that full year...
Speaker Change: volume and associated dollars are an increase when you look at it from a year-over-year
Speaker Change: same store for lack of a better term basis, but we are trying to take a prudent approach in our view for the rest of the year, understanding that, you know, the first three quarters so far have continued running above our expectations.
Speaker Change: Thank you for watching!
Speaker Change: Okay, that's helpful. And then, Matt, your comments earlier on AI inefficiency, you mentioned plans to launch some of those.
Speaker Change: Things that you're piloting now, beginning, it sounds like, next year. If we think about the savings or the efficiency boost you can potentially derive from those, is there any kind of color you can share just to help us understand how meaningful those could be?
Speaker Change: Yeah, so we will hold on commenting anything specific at this point in time. What I would say, Sean, and we thank you for the question and the coverage,
Speaker Change: that we believe that there's real opportunity in launching the generative AI use cases that we've now had a chance to show many of our clients. We have some clients that are participating in co-development work with us.
Speaker Change: We know that we're getting traction and interest in this, and that's informing how we're thinking about the incremental benefit.
Speaker Change: For example, new software modules and potential revenue associated with them, as well as some of the efficiencies that, as we test these at this point in time, what are we able to help our clients achieve, what are we able to achieve ourselves internally.
Speaker Change: and that will inform how we think about getting more tactical and detailed around pricing with new modules and or operating efficiencies to your specific question.
Speaker Change: I will comment just one other thought, if it's okay, Sean. There was a recent study done where the vast majority of decision makers are not currently deploying
Speaker Change: really AI at scale or generative AI at all, and yet 90% of the decision makers that participated in this survey
Speaker Change: suggest that they really want to begin to use AI and generative AI in the near future, and of that 90%, 93% suggested that they'd like to work with a scaled partner who they trust.
Speaker Change: And so we do feel like, amidst all of this learning and active work that we are doing, that Waystar is very well positioned to capitalize on the momentum and interest here, and we're at the same time being very cautious.
Speaker Change: at making sure that the solutions that we launch will have tangible return on investment that would be consistent with how we offer our other software modules within the software platform.
Speaker Change: Thank you for watching!
Speaker Change: Okay, that's great color. Thanks again and congrats again. Thanks so much, Sean.
Speaker Change: Thank you. One moment for our next question.
Speaker Change: Thank you for watching!
Speaker Change: Our next question will come from the line of Richard Close from Canon Corp Genuity. Your line is open.
Richard Close: Yeah, thanks. Congratulations.
Richard Close: Steve, you referenced the $12 million related to new clients from Rapid Onboarding. I think you also said something about existing contributing to that. That sounds somewhat new to me and so I was hoping you could explain that a little bit more. That would be great. And then do you think the $12 million is
Richard Close: you know, considering the pipeline commentary that you just provided as well.
Steve Oreskovich: Thank you, Richard. A couple of things to your first question. Yes, the $12 million includes both
Richard Close: the new clients we onboarded that were impacted by the competitor's cyber event.
Richard Close: to their sister or, for lack of a better term, other organization within the larger company.
Richard Close: So it's a mix of both of those, and I apologize if I didn't clarify that that same $9 million from last quarter is a mix of both of those two items as well.
Richard Close: With respect to sort of the curve or the aperture of the gains above our normal
Richard Close: you know, implementation and time to revenue. I often...
Richard Close: tell people, my crystal ball may be a little cracked when it comes to exactly predicting some of these pieces, but we would expect a continued.
Richard Close: pull through a new setting of the baseline based on what we've seen these last couple of quarters with respect to our overall revenue. So does the number look...
Richard Close: slightly larger or smaller in the next quarter.
Speaker Change: don't have that specific to provide, but we would expect there's still a continuation and a pull through if you look at a normal timeline of implementation.
Speaker Change: which would typically in a smaller organization be, you know, a month or month, and as you get to a larger, more complex organization with multiple solutions in it, could be anywhere up to 12 to 18 months.
Speaker Change: You know attendees expanding their relationships with you or anything along those lines
Speaker Change: Thanks Richard and what I'd say is that it's our second year of hosting an in-person conference. We call it Waystar True North. It was fantastic.
Speaker Change: We don't disclose specific numbers here, but we love the uptick in participation.
Speaker Change: For us, we're really focused on creating a community.
Speaker Change: of peer-to-peer learning, of hands-on training, and examining our products and looking and getting feedback from these clients and these participants. We have had a longer history of hosting virtual sessions.
Speaker Change: where we call them virtual Waystar TrueNorth.
Speaker Change: will oftentimes have thousands of people that will join us and participate in those learnings. And so we're still fairly early days, but we love the momentum that we're creating. We love to look out and you can probably appreciate this from my perspective just to see hundreds and hundreds of people talking to each other.
Speaker Change: and getting the benefit of that peer-to-peer learning we kind of feel like we're in this community focused on transforming
Speaker Change: this part of healthcare and bringing operating efficiency, bringing automation as a theme, and sharing best practices for how to make things better. So we're pleased to be able to help bring that together.
Speaker Change: Great. Congratulations. Thanks, Richard.
Speaker Change: One moment for our next question.
Speaker Change: Our next question comes from Elizabeth Anderson from Evacor ISI. Your line is open.
Speaker Change: Hi guys, this is Samir Patel on for Elizabeth Anderson. Congrats on a quarter. I was wondering if you could talk to us a little bit about the upsell traction you're seeing on these newly onboarded customers related to the disruption. Are you starting to have conversations about adding other modules and additional products like patient pay or is that still a bit too early?
Speaker Change: Well, thank you, Samir. I'll speak to that. We are absolutely, our growth team is a very disciplined, focused, high-performing team.
Speaker Change: We go to market and our focus is to have a portion of our team only focused on new client acquisition and then another dedicated team focused on cross-selling and upselling to your specific question. We organize our teams that way by
Speaker Change: by market. So there's an ambulatory-focused team and there's a hospital health system-focused team that's much the same. And what I'd say is, we are, as soon as we onboard a new client,
Speaker Change: To your specific question, when they came to us from change and we onboarded them, we immediately began talking to them about other software modules that they could begin to use, including the patient payment module, but also many others.
Speaker Change: Eligibility Automation, Insurance Coverage Detection.
Speaker Change: and prior authorization, claims management, remit deposit manager. There are several software modules that the team begins to talk to.
Speaker Change: to these clients about, and that's kind of our core play.
Speaker Change: That's why we think there's so much embedded growth on our platform.
Speaker Change: because we get these...
Speaker Change: These clients, we're so grateful to work with them. And then we're just very consistently reaching out, showcasing additional solutions. We have ROI calculators that will kind of show and harness the power of each incremental software module that we have the chance to introduce to these new clients.
Speaker Change: and any client and and then we're we're kind of layering on also client testimonials and showing others that are very similar to the type of client profiles that we're working with how others are able to succeed and so that that's helping us drive
Speaker Change: existing client engagement and cross-sell upsell opportunities and that's why we believe in the embedded growth on our platform.
Speaker Change: Got it. That makes sense. And then maybe just, if you can, put some color on the $12 million contribution from, you know, the rapid onboarding or the switch of existing customers. Is any of that from upsell, or is that strictly like clearinghouse-related revenues at this point?
Speaker Change: Yeah, the vast majority of that is clearing customer.
Speaker Change: Got it, super helpful, congrats again. Thank you Samir.
Speaker Change: Thank you. One moment for our next question.
Speaker Change: Our next question will come from Brian Peterson from Raymond James. Your line is open.
Speaker Change: Hi, thank you. This is Jonathan McCarrion for Bryan here. So we saw an impressive acceleration in RR this quarter. I just wanted to ask how durable you think that expansion cadence could be going forward? I know you mentioned pricing, but how would you stack rank the products and then the levers of expansion more broadly that drove that metric up this quarter?
Speaker Change: Thanks, Jonathan, for joining.
Speaker Change: Please give Brian our best as well. I think our net revenue retention is very consistent, as we noted in our prepared remarks.
Speaker Change: I think 13 quarters of consistent net revenue retention between 108 and 110%. So we did notice a little bit of an uptick this last quarter, which we're pleased with.
Speaker Change: It all starts for us with gross revenue retention of around 97%. So we start there and our growth algorithm, as you unpack it, is always a function of a modest price increase.
Speaker Change: given the value that we're delivering to clients, and then the cross-cell, up-cell work that we typically do. And so that's a little bit of overview for how we think about it. Steve, is there anything you'd comment on specifically in the quarter that that we noticed or observed?
Steve Oreskovich: I'd say, Jonathan, it is an LPM-based metric, so it's not specific to any activity in a single quarter. If you think about the prior comment I've made about the volume-based.
Steve Oreskovich: piece running higher than our expectations for the past
Steve Oreskovich: few quarters now. That is another component along with the two that Matt had mentioned when you're bridging the gap between gross and the net revenue retention rate. So I think that that is also helpful to what we've seen in the third quarter number.
Speaker Change: Thank you.
Speaker Change: Okay, very helpful. And then...
Speaker Change: I think you guys have done a great job laying out Waystar versus The Legacy and we appreciate you're seeing more complex RFPs.
Speaker Change: I'm actually hoping to get an update on how you think you're performing versus more modern players also looking to gain share from Legacy so
Speaker Change: Is there anything that you can share there on win rates or what you're hearing from clients on Waystar versus the more modern solutions? Thanks.
Speaker Change: Yeah, thank you. We're one of the more modern solutions and we like how we're positioned. We won't comment on...
Speaker Change: any specific competitor or what we see. What we will say is that we are pursuing a large addressable market opportunity that's very fragmented. It's a fact that we are replacing homegrown legacy solutions in many cases and even manual services. Internally, we track
Speaker Change: a lot of things, including win rates and decision factors that go into how these
Speaker Change: These clients and prospects are making decisions and we believe that we're trending well there.
Speaker Change: What I'd say is thematically, I think there are some scale advantages that a player like Waystar can bring to the table.
Speaker Change: and we're realizing that and that there's a bit of momentum there.
Speaker Change: In our go-to-market efforts, we're very focused on tangible ROI. What's on the minds of these provider decision-makers in all the heroic work that they do day in and day out, they're focused on operating efficiency,
Speaker Change: increased automation
Speaker Change: They want a trusted partner that this isn't their first rodeo, so to speak, and we can bring a lot of client testimonials and case studies to bear there. And then they want a cloud-based
Speaker Change: software approach. And the one thing that we're seeing, Jonathan, is that we're seeing more and more decision makers make the platform software approach.
Speaker Change: knowing that they're going to start somewhere in the platform and begin to expand their use of the platform versus a point decision, a point solution approach. And so while there might be some modern, you know,
Speaker Change: software that might only do one specific thing.
Speaker Change: I think we see more and more decision makers leaning toward how do I work with an enterprise caliber, scaled, modern software vendor like a Waystar. And so we like how we set up to compete. We think that our win rates are consistent with what we've reported in the last several quarters.
Speaker Change: Thank you for watching!
Speaker Change: Great, thank you.
Speaker Change: One moment for our next question.
Speaker Change: Our next question comes from Liz Lee from
Liz Lee: Hi, good afternoon. Thank you for taking the question. We have been hearing a lot of chatter from both provider organizations about claim denial and payers about claim appeals. Can you talk about whether you're seeing any meaningful trends of either an increase or decrease in claim denial rates and talk about the company's role in helping providers reconcile these denials?
Speaker Change: Yes, thank you Liz. You know, denied claims is one of the most unfortunate things that occur in the industry.
Liz Lee: We understand the payer side. The payers are trying to prevent fraud, waste, and abuse. We understand that.
Speaker Change: From a provider perspective, we are focused on helping to deliver
Speaker Change: cloud-based software that accurately submits claims the first time.
Speaker Change: And all of the work that we do from pre-service to mid-service is focused on how do we deliver an accurate claim to the payer that the payer can trust and quickly adjudicate.
Speaker Change: and we talk internally about an efficiency measure there that's correlated to lowering denial rates.
Speaker Change: And that efficiency measure is what we what the industry would refer to as a first pass claim acceptance rate. When you look across Waystar's entire platform, we believe that we have market leading first pass claim acceptance rate.
Speaker Change: rates that correlate to lower denial rates when clients begin using the Waystar software platform.
Speaker Change: Additionally, in our efforts to help providers, we offer a denial and appeal management software module that is really helping providers to reduce
Speaker Change: In the event that a claim does get denied, we have many use cases that showcase how much Waystar's
Speaker Change: clients are able to reduce their denied claim rate. But even then, when a claim does get denied,
Speaker Change: We offer a solution that helps automate the appeal, follow-up, and management of that.
Speaker Change: In fact,
Speaker Change: There's efforts internal to Waystar today. One of our gen AI use cases is focusing on taking that even further and even automating more of the appeal.
Speaker Change: management and follow-up process for the providers that we work with in an effort to help them rapidly follow up and get the revenue that they deserve to receive once they perform the health service.
Speaker Change: and we think that that will have particular interest for the clients that we're working with.
Speaker Change: Thank you for watching!
Speaker Change: Thank you, very helpful.
Speaker Change: Thank you. One moment for our next question.
Speaker Change: Our next question comes from Ryan Daniels from William Blair. Your line is open.
Ryan Daniels: Yeah, guys, thanks for taking the questions in all the colors so far. Congrats on the strong performance. Matt, maybe one for you. You've discussed when highlighting the uptick in RFPs, you're also seeing more parties involved and more complexity in those deals. So on the surface, it sounds like that could be a good thing with larger, again, more platform-oriented deals, but
Ryan Daniels: I'm also curious if that's extending the sales cycle at all or impacting the close rate or if it's still such a kind of urgent area for investment, you don't see that happening?
Speaker Change: Thank you, Ryan. Good to hear from you. Hope you're doing well. What I'd say is that.
Ryan Daniels: It is becoming complex and so I don't know that it's extending the
Ryan Daniels: the sales cycle beyond what we would normally experience. There was certainly a time earlier this year where it was so rapid and we were following up so quickly. You know, depending on the organization, if it's a hospital or health system, sometimes those organizations make
Ryan Daniels: decisions in 12 to 18 month cycles and so it's very much a discovery process we're working to identify all the appropriate
Ryan Daniels: People involved in the decision. Sometimes there are committees. So we've oriented our approach to bring the right subject matter expertise to bear the right tools to discover and then we're proactively leading with
Ryan Daniels: Cybersecurity, we recognize that that's table stakes in the world that we're living in. Modern technology, case references and studies. So we think all the things that will combine.
Ryan Daniels: along with the ROI calculators that we're using will help us maintain consistency in that sales cycle.
Ryan Daniels: We are continuing, as I mentioned earlier...
Ryan Daniels: to see continued growth in our sales pipeline. And assuming that the sales cycles resume to more of a normal fashion, and we can continue to have the types of win rates that we've experienced, then we feel good about the momentum and the opportunity we have to compete in this market.
Speaker Change: Okay, very helpful. And then maybe a broader, bigger picture question, obviously, very successful True North event with your clients. And I'm curious,
Speaker Change: Other than what you've kind of highlighted earlier, if there's any really key pain points that clients mentioned, and if there are those things that you think you can meet with the current platform, or is that impacting your R&D or maybe even your M&A outlook as we go forward? Thanks again.
Speaker Change: Thanks, Ryan.
Speaker Change: You know, one of the real advantages of hosting these conferences, we have an exceptional product management team and technology team, and we bring them to the conference to listen.
Speaker Change: and we gather feedback and we do hear pain to the question that you mentioned and also to the one that Liz from Deutsche Bank mentioned earlier. Denial rates are a big point of concern.
Speaker Change: Thank you for tuning in. Have a great day.
Speaker Change: And so we're actively working to address that, as I mentioned. Another one, Ryan, is just the fact that these provider organizations...
Speaker Change: They're seeing more utilization, and they're still having to manage that increase with the same amount of resources or sometimes even less.
Speaker Change: And so they're always, they seem to be looking for how do I introduce more automation as a form of operating efficiency gain within my organizations. And so at our user conference, we have all these little learning pods where we have interactions and we're listening to the pain points and then
Speaker Change: We're checking the box on the things that are already in development or that we already have to offer by way of software modules.
Speaker Change: but we're also informing some of our new product innovation with
Speaker Change: some of the things that we're hearing, and we're encouraged by that.
Speaker Change: and the reason that we've seen so much interest in the generative AI work
Speaker Change: that we showed these clients at the conference was because...
Speaker Change: I think that work is designed to...
Speaker Change: attack head-on the pain points and reduce some of these burdens that they've faced for so long. The last thing I'd say is that we use that same type of information to inform
Speaker Change: are
Speaker Change: Disciplined approach to M&A and we do have a dedicated team. We are active in the market. We will be very
Speaker Change: and we will take a disciplined approach to evaluating certain technologies that we think we could add to the Waystar software platform through M&A to help these providers address the pain points that they face each and every day.
Speaker Change: Thank you for watching!
Speaker Change: Great color. Thank you again. Thanks, Ryan.
Speaker Change: Thank you. One moment for our next question.
Speaker Change: And our next question will come from Anne Samuel from JP Morgan. Your line is open.
Anne Samuel: Alright, thanks so much for the question.
Anne Samuel: Maybe just on the volume-based revenue, you had kind of tempered expectations on the second quarter call. I was just curious, you know, were you not expecting utilization levels to hold? And maybe where did that upside surprise come in, you know, relative to your expectations? And then
Anne Samuel: Looking out to 4Q and next year, if utilization were to stay kind of similar to where it is now, would that be upside to your high single-digit target? I think earlier you had said your customers were still expecting utilization to stay high. Thanks.
Anne Samuel: Yeah, and this is Steve. I appreciate the question. I think, yes, we are continuing to see strong volume-based
Anne Samuel: growth and interactions, continued strong interactions between patients and the providers, which obviously are utilizing our software to generate that volume.
Anne Samuel: above the minimums in the contract. So we did see greater, or Q3's actuals did.
Anne Samuel: coming greater than our expectations. To your question about carry-through opportunity, if that demand within the health...
Anne Samuel: healthcare system were to continue, specific to your question, while trying not to speak overly, too much to 2025, that could be above what our current expectations would be.
Speaker Change: That's really helpful. Thank you. And then, you know, just, you know, you've seen some really nice revenue outperformance and that's obviously translated to EBITDA dollar beats as well. But, you know, you kind of stayed around that 40% margin threshold. So curious, you know, is there leverage potential in the model from faster growth? And just, I guess, how do we think about your philosophy on balancing, you know, reinvestment versus leverage? Thank you.
Speaker Change: Yep, thanks Annie.
Speaker Change: So
Speaker Change: We are we're pleased first of all we think 40% EBITDA margins a nice EBITDA margin especially as we
Speaker Change: as we highlighted, that we took on a full quarter of being public and having public company expenses.
Speaker Change: That being said, we're always looking for operating efficiency. We have several active projects.
Speaker Change: with dedicated team members focused on driving operating efficiencies across our business. I'd highlight two or three, and then we could talk philosophically about how we orient ourselves toward innovation back in the business and what to do with the incremental cash that we generate as well. We're focused on a couple. One, reducing patient payment transaction fees.
Speaker Change: and lowering interchange fees associated with processing patient payments. We have a great team focused on that.
Speaker Change: , and . . . . . . . . . . . . .
Speaker Change: The other one or two that I'd highlight is continuing to optimize our payer network.
Speaker Change: where we get the most efficient, direct connections to payers and there are fee reductions typically associated with that. And then the third that's much more longer term, Annie, that I'd highlight is the increase in digital engagement with patients. We've taken a holistic approach to connecting providers to patients for many years.
Speaker Change: Some of that is paper-based, as we've described.
Speaker Change: We see that over a longer period of time, there's opportunity to digitize that interaction.
Speaker Change: and create more efficiency in our business. And as we do, we're constantly evaluating, do we reinvest for innovation, reinvest for go-to-market, do we harvest it for cash and use it to de-lever further, to do other things, disciplined M&A as we talk about. But we're pleased with.
Speaker Change: how we're performing thus far and what our commitment is to be vigilant in and disciplined in driving operational efficiency in the business.
Speaker Change: really helpful thank you and agree 40% is nothing to sneeze at. Thank you, thank you, okay.
Speaker Change: I'm not showing any further questions at this time. I would now like to turn the call back over to Matt for any closing remarks. Thank you, Vincent. So, just quickly, as we conclude today's call, I want to take a moment
Matt: in this setting to thank our incredible dedicated Waystar team members.
Matt: We, we, great software companies.
Speaker Change: really take great people, and we have incredible people who I'm grateful to work alongside.
Speaker Change: We have remarkable clients who are our heroes and we constantly admire the work that they do to care for patients and it just inspires our purpose and mission to do anything we can to help them be more productive so they can prioritize more of their time caring for patients.
Speaker Change: And we're grateful for both our new and existing investors on this public company journey. This is our second public company earnings call. So we're learning our way there. We're pleased with our performance and results thus far. We remain focused on executing our game plan.
Speaker Change: Looking ahead, we're excited about the opportunities that lie before us. We're confident in our ability to execute and deliver strong performance in the quarters ahead. Thank you all for joining us today. We hope you have a great evening.
Speaker Change: All right. Thank you. Thank you.
Speaker Change: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone have a great day.
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Speaker Change: Good day and thank you for standing by. Welcome to the Waystar third quarter 2024 earnings conference call. At this time all participants are in a listen-only mode. After the speaker's presentation there will be a question and answer session.
Speaker Change: To ask a question during a session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised.
Speaker Change: To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would like to hand the conference over to your first speaker today, Sandy Draper, Head of Investor Relations. Please go ahead.
Sandy Draper: Thank you, operator, and good afternoon everyone. It is my pleasure to welcome you to Waystar Holding Corporation's third quarter 2024 earnings call.
Speaker Change: Today's call is being webcast and a replay along with the transcript will be available on our website along with other related materials following the conclusion of this call.
Speaker Change: Matt Hawkins, Waystar's Chief Executive Officer, and Steve Oreskovich.
Speaker Change: Waystar's Chief Financial Officer are joining me today. After their remarks, we will open the call to your questions.
Speaker Change: Earlier today we issued a press release announcing our financial results and a presentation slide deck to accompany our prepared remarks. The materials are available on the investor relations section of our website at investors.waystar.com.
Speaker Change: Before we get started, I will remind you that this call contains forward-looking statements.
Speaker Change: which include all statements that are not historical facts. Examples of these statements include expectations of future financial results, growth, and margins. These statements do not guarantee future performance and involve a number of risks and uncertainties, and undue reliance should not be placed on these forward-looking statements.
Speaker Change: Actual results may differ materially from those expressed in these statements.
Speaker Change: for a full discussion of the risks and other factors that may impact these forward-looking statements.
Speaker Change: and our business generally, please refer to this evening's press release and our perspectives filed with the SEC on June 7, 2024, and in other reports we filed with the SEC, all of which are available on the Investor Relations website page of our website.
Speaker Change: Any forward-looking statements provided during this call are made only as of the date of this call and we undertake no obligation to update or revise such statements except as required by law.
Speaker Change: During today's call, we will also discuss certain non-GAAP financial measures, which we believe may be useful in evaluating our financial performance.
Speaker Change: We have provided reconciliations of adjusted EBITDA and non-GAAP net income and earnings per share and certain other non-GAAP financial measures included in our remarks to the most directly comparable GAAP measures.
Speaker Change: together with the explanations of these measures in the appendix of the presentation slide deck and our earnings release.
Speaker Change: These non-GAAP measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP.
Speaker Change: Lastly, we are pleased to note our participation in the Evercore ISI HealthConnects Conference in Miami and the Barclays Technology Conference in San Francisco, both in December, where we look forward to engaging with many of you.
Speaker Change: With that, I'll turn it over to Matt.
Matt Hawkins: Thank you, Sandy, and good afternoon, everyone. Thank you for joining our Q3 2024 earnings call.
Speaker Change: Today, I'll cover four key topics that highlight our progress and future direction.
Speaker Change: first
Speaker Change: We'll discuss Waystar's compounding and sustainable revenue growth. Second, I'll share our improvements driving operational profitability and efficiency across the business.
Speaker Change: Third, I'll highlight the latest innovations in our software platform that deliver value to our clients. And fourth, we'll review recent successes in our client and team member experiences.
Speaker Change: Then, I'll turn the call over to our CFO, Steve, who will provide a detailed view of our financial materials and annual guidance for 2024.
Speaker Change: First, sustainable revenue growth.