Q4 2024 OptimizeRx Corp Earnings Call
Speaker Change: Good morning, everyone and thank you for joining optimize our axis fourth quarter and full year fiscal 2024 earnings conference call.
Speaker Change: With us today is chief Executive Officer, Steve So.
Speaker Change: Joe He is joined by Chief Financial Officer, Ed Stelmach, Chief Legal Officer, Marion I wouldn't sport and senior Vice President of corporate Finance Andrew to silver.
Speaker Change: At the conclusion of today's call I will provide some important cautions regarding the forward looking statements made by management during today's call. The company will also be discussing certain non-GAAP financial measures, which it believes are useful in evaluating the company's operating results a reconciliation of such.
Speaker Change: non-GAAP financial measures is included in the earnings release, the company issued this morning as well as in the Investor Relations section of the company's website.
Speaker Change: I would like to remind everyone that today's call is being recorded and will be made available for replay as an audio recording of this conference call will also be provided on the Investor Relations section of the company's website.
Speaker Change: Now I would like to turn the call over to optimize our ex CEO, Steve Silver strokes. Sir. Please go ahead.
Speaker Change: Thank you operator, and good morning, everyone. Thank you for joining today's fourth quarter and fiscal 2024 earnings call. As many of you know this is my third day as optimizer extra new CEO I am honored to have the opportunity to lead the next phase of optimizer excess growth and transformation.
Speaker Change: Now more than ever we will be laser focused on operational excellence, while ensuring we delight, our customers and forged stronger relationships with valued business partners.
Speaker Change: For the past few months, we've completed an extensive strategic review of the Companys business process operations and growth plans and we believe we're on the right path forward, we're working towards continuing the company's growth focusing very closely on customer centricity and delight continuing to expand our unique value proposition with pharma converting customers to our reoccur.
Speaker Change: Seeing revenue model, while driving to become a rule of 40 company and unlocking new opportunities for profitable revenue growth.
Speaker Change: Importantly, I'm looking forward to meeting more of our investors throughout the year and hearing our investors thoughts and perspectives on our shared objective shareholder value creation.
Speaker Change: While we believe we are executing the right strategies, we're always open to hearing our investors thoughts on alternative strategies that further our shared goals.
Speaker Change: As for 2020 for financials I'm happy to say that we beat our guidance and street expectations with revenue and adjusted EBITDA coming in at $92 1 million and $11 7 million respectively.
Speaker Change: Believe optimize Rx is uniquely positioned to drive value creation and build long term sustainable shareholder growth by leveraging one of the largest EHR any description networks in the country to help pharma manufacturers reach healthcare providers at the point of care.
Speaker Change: Building on that we are combining that unparalleled network with a unique purpose built omni channel technology platform that is transforming how pharmaceutical companies physicians and patients engaged ultimately improving care outcomes for patients.
Speaker Change: These elements give us a distinct competitive edge with an unrivaled point of care reach we believe we are the only company in the industry that can effectively connect both doctors and patients at scale.
Speaker Change: This has allowed us to develop the broadest suite of solutions in the industry, enabling us to meet the diverse needs of our customers across the full spectrum of their product lifecycle.
Speaker Change: Coupled with our highly experienced team and a long standing track record of delivering for top tier pharma clients. We firmly believe we are in a leadership position in the industry that will take others years to match.
Speaker Change: As our business continues to evolve our offerings are scaling as we continue to tackle some of farm is toughest commercial challenges, including brand visibility as many clinicians and providers have reduced in person meetings and are spending more time in front of computers.
Speaker Change: Script abandonment is approximately 50% of patients never fill their scripts at the pharmacy.
Speaker Change: Interoperability.
Speaker Change: As providers and ability to access relevant patient information in one place to make more informed decisions at the point of care and finally, the shift to more complex and expensive specialty medications, where more complex diagnosis criterias required to identify brand eligible patients as expensive specialty medications now account for roughly half of total drug expenditures in the U S.
Speaker Change: On average, we're driving strong brand engagement with measurable success when launching a six month program with a brand we consistently achieve an ROI well over 10 to one on HCP marketing spend. Additionally, we see a 25% average script left in our six month programs. These capabilities enable us to capture greater share of wallet.
Speaker Change: From established customers.
Speaker Change: In 2020 for our top five customers averaged over $9 million in revenue and we're on track to elevate at least one more customer to this level in 2025.
Speaker Change: A great example of our impact comes from one of our largest customers a top five pharma manufacturer. After a successful 2023 supporting multiple brands, including our launch brand 'twenty 'twenty four begin with strong bookings across the portfolio.
Speaker Change: Independent program analysis for this manufacturer demonstrated a material impact on prescription lift leading supported brands to increase their share of voice across the Optimizer X network.
Speaker Change: To drive further results some brand teams focused on boosting incremental new prescriptions and addition to refills before year end.
Speaker Change: To support this objective we identified key areas, where additional investment could expand program scale physician reach improving patient conversion for each program.
Speaker Change: As I move forward in my new role as optimize our ex CEO I'm working with our executive team to implement a robust multi year plan to grow the business and increase shareholder value.
Speaker Change: While many aspects of the business will be the same everything will be going through the lens of getting us to a rule of 40 company over the next several years.
Speaker Change: And moving towards this financial goal, we expect to drive substantial operating leverage and build a more predictable business, including by establishing a consistent reoccurring revenue component to our business as we aim to convert our DAP customers to a subscription based model from the data component of our offerings.
Speaker Change: We believe this will improve margins and visibility over time, while substantially enhancing the overall predictability of our revenue streams in turn this will also enhance our ability to scale the business and plan for substantial growth that we and our investors are seeking.
Speaker Change: With a $10 billion Tam and a large underpenetrated market and tailwind driven by increased pharma advertising spend on digital channels optimize Rx today is well positioned to execute on our revamped strategic plan our customers remain deeply embedded within our ecosystem of offerings and it remains our goal to help them state presence throughout the patient care journey across our integrated HCP and <unk>.
Speaker Change: DTC business we.
Speaker Change: We have strong momentum coming into 2025 and with that I'd like to turn the time over to our CFO, Ed Stelmach will be walking us through our financial results Ed.
Thanks, Steve and good afternoon, everyone.
Speaker Change: The press release was issued with the financial results of our fourth quarter and fiscal year ended December 31st 2024.
Speaker Change: Copies are available for viewing and may be downloaded from the Investor Relations section of our website additional information can be obtained.
Speaker Change: Through our forthcoming 10-K.
Speaker Change: Fourth quarter revenue came in at $32.2 million, an increase of 14%.
Speaker Change: $28 4 million recognized during the same period in 2023.
Which was the result of the company benefiting from the increased depth related revenue streams in the fourth quarter.
Speaker Change: Gross margin from 62, 9% in the quarter ended December 31st when you think me.
68, 2% in the quarter ended December 31st 2024.
Speaker Change: Year over year gross margin expansion.
Speaker Change: Favorable to loosen and channel partner mix.
Speaker Change: Our operating expenses for the quarter ended December 31st 2024.
Speaker Change: Decreased by 10 4 million year over year, largely due to lower M&A related costs as we completed the Medicare.
Speaker Change: During the fourth quarter of 2020.
Speaker Change: In addition, with significant benefits from cost cutting initiatives approaching $5 million annually.
Speaker Change: So the integration efforts with a position.
Speaker Change: Meanwhile, our net loss came in at point $1 million for the fourth quarter of 2024.
Speaker Change: Care to a net loss of 4.1 million during the fourth quarter of 2020.
Speaker Change: On a non-GAAP basis, our net income for the fourth quarter of 2024 was $5 5 million or <unk> 30 cents.
Speaker Change: Diluted shares outstanding.
This compares to a non-GAAP net income of $4 6 million or 26 cents per diluted shares outstanding in the same year ago period.
Speaker Change: Our adjusted EBITDAX came in at 8.8 million for the fourth quarter of 2024.
Speaker Change: 258 million during the fourth quarter of 2023.
Speaker Change: We ended the year with cash and short term investments totaled $13 4 million.
Remember 31 24.
Speaker Change: As compared to 13.9 million on December 31st 2023.
The majority of the year over year decline was due to the pay down of principal of our debt.
Speaker Change: Well, we made an incremental 2 million that were being during the fourth quarter of 2024.
Speaker Change: Our current debt balance stands at 30 413 million hours after being off $2.5 million of principal during the fourth quarter.
Speaker Change: We continue to believe we are well funded to execute against our strategic and operational goals.
Speaker Change: Now I'd like to turn to our Kpis for the 12 months ended December 31st 2024.
Speaker Change: Which showed broad based improvement as our business continues to evolve.
Speaker Change: Average revenue per top 20 pharmaceutical manufacturer.
Speaker Change: $2.9 million, which is an increase of 22% from the same period one year ago.
Speaker Change: This is driven by our continued success in expanding our share of wallet with.
Speaker Change: That manufacturers and especially our top five accounts, which hit an all time high with an average of $9 $1 million in 'twenty to 'twenty four.
Speaker Change: Net revenue retention rate showing improvement at 121% up from 105% in the trailing 12 months prior period.
Speaker Change: Revenue per FTE came in at 701000 tapping the 586000 as opposed to doing a 12 months ended December 31st 2023.
Speaker Change: With that I will turn the call back over to Steve Steve.
Steve: Thanks, Ed operator, now, let's move to Q&A.
Steve: We will now begin the question and answer session.
Speaker Change: To ask a question.
Speaker Change: And then one on your telephone keypad.
Speaker Change: Speakerphone, please pick up your handset before pressing the keys.
Speaker Change: Is that anytime Youre question has been addressed and you would like.
Speaker Change: Your question. Please press Star then two.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: Our first question comes from.
Speaker Change: I'm Jared Haas with William Blair. Please go ahead.
Speaker Change: Hi, Good morning. This is Jared Haase on for Ryan Daniels, Thanks for taking our questions and Steve Congrats to you on stepping into the CEO seat for in a permanent basis here, maybe I'll start with one for you you mentioned both in the release and in the prepared comments you alluded to the idea of really focusing on customer Centricity and.
Speaker Change: Driving more and more value for our clients. So I'm curious if you could just unpack that a little bit in terms of you know from your perspective, what might be different going forward are guiding the strategy and how you engage with clients.
Steve: Hey, Jared good to hear your voice and thanks for the question, Yes, I mean, I think throughout our business. We're looking at opportunities to increase the level of customer Centricity and really what we mean by that is taking the lens of the customer and promulgating that throughout the organization, making sure that we're easy to do business with the clients evident, but pleasurable experience with us we're driving good results.
Steve: For them, which we've consistently done historically, but sort of enabling them to make it easy to renew and continue to expand footprint. So that's really a big lift.
Steve: Within the organization a big focal point right now you'll continue to hear that from us as we go forward.
Speaker Change: Okay. I appreciate that and then you also alluded to youre transitioning to more and more subscription based revenue in terms of these data services contracts in.
Just was hoping to maybe understand what impact that might have on that revenue model any changes we should be thinking about in terms of the predictability of the business. The only thing that might shift in terms of the core sort of variables are drivers of contract value going forward, just would love to unpack that a little bit more as well.
Speaker Change: Sure I'll answer and then maybe Ed Natty can also China, but essentially over the last 24 months, we've been <unk>.
Speaker Change: <unk>, we've launched and had been scaling our DAP solution, which is got a data component, which is subscription in nature and then it's got a transactional component.
Getting clients to be able to come along that journey of trying it proving it out and then scaling it which we sort of talked about in previous earnings calls.
Speaker Change: We sort of taken them on that journey now we're at a point, where it's really starting to scale pretty significantly and so the opportunity to move the data component that feeds through all of the systems to more of a subscription recurring revenue model.
Speaker Change: Is there and so we have a pretty large push now going there and so from your perspective, I think from everyone's perspective, certainly ours.
Speaker Change: A larger portion of the revenue will be predictable and reoccurring so Andy it anything else you would add to that.
Andy: I think you covered it well, Steve yes basically.
Andy: If the data portion about adapt deals either were pushing to get more to a subscription model, which then obviously creates the ability to renew and extend contract values are into the future.
Andy: The more predictable stickier revenue.
Andy: That makes sense, maybe a quick follow up is there a way to contextualize kind of how youre thinking about what portion of total contract value could come from data services versus more transactional over the next couple of years.
Yes, it's a little difficult to estimate that Ah I mean, if you look at our kind of like a.
Andy: E C D plus DTC business.
<unk>, we are trying to move as much as possible into DAP overall.
Andy: And as you know that is covered.
Andy: Round 23, 80% of our business overtime.
So do you take basically a portion of that attributed to data.
Andy: And that should be better to give you a nice little.
Andy: Benchmark to go after.
Speaker Change: Okay, that's helpful and I'll I'll I'll hop back in queue, but congrats on all the momentum thanks guys.
Jeff: Thanks, Jeff I appreciate it.
Anderson shock: Our next question comes from Anderson shock with B Riley. Please go ahead.
Jeff: Yeah.
Anderson shock: Hi, Congrats on the great quarter and thank you for taking my questions.
Anderson shock: First you saw a pretty significant gross margin expansion in the quarter can you discuss what drove this and whether you expect this level of gross margin to continue going forward.
Anderson shock: Okay. Thanks, David.
Speaker Change: Go ahead Ed.
Speaker Change: Anderson, Yeah, it's really bad.
Speaker Change: Driven by product mix aggregate of a large portion of our revenue attributed to adapt.
Speaker Change: And a lot of the things that we just talked about related to data analysis.
Speaker Change: Kind of what you should be targeting this generation.
Speaker Change: Those are things that are first of all in the Maverick Shareable revenues, so we get to keep a larger portion of it.
Speaker Change: So we have a higher margin profile.
Speaker Change: Okay and do you expect this level of gross margin to continue in the future.
Speaker Change:
Speaker Change: We're hoping to get to that level on a more permanent basis, but it is.
Speaker Change: And much higher than we typically see.
Speaker Change: Seasonal Q4 phenomenon to be always seen in our.
Speaker Change: Revenue flow in this time.
Speaker Change: Our gross margin profile as well so I don't think we're going to stay at that level.
Speaker Change: But obviously the more of a push on what Steve just described.
Speaker Change: The closer you get to that number.
Speaker Change: Yeah, a little bit more color on that so our margins should be in the high <unk> to mid 60 range. Obviously, the fourth quarter was in the high 60 range.
Speaker Change: So thats something we aspire to you but.
Speaker Change: It wouldn't be something we would expect.
Speaker Change: Okay got it.
Speaker Change: And it was a really excellent quarter for new DAP deals can you just go into what maybe drove this and talk on your backlog and visibility into the next year for new deals.
Speaker Change: Yeah happy to do that Anderson, so I mean, we've been pretty vocal about the progress with <unk>. Our last 24 months and really what we're seeing now is the scale up so typical of pharma they'll try things out proved a measure the ROI if things work well does start to scale, both within the existing program as well as across therapeutic areas or disease.
Speaker Change: <unk> and.
Speaker Change: And we really saw that in several clients in the fourth quarter, which we talked about earlier on in the script.
Speaker Change: So our view into 2025 is that that drumbeat will continue theres definitely a demand for audience creation and dynamic audiences, specifically and so that will affect both our ECP business as well as our DTC business, which is sort of a thesis of why we acquired <unk> to begin with was to drive best in class audience has enabled the market.
Speaker Change: The other piece that I would say, which would be interesting for folks on this call here is <unk>.
Speaker Change: Given that we're commercializing these audiences and we're having such a degree of success. The audiences aren't always tied as Ed said to message execution and so if those audiences continue to grow at the rate that we're seeing which we're all encouraged that they will that will change. The go forward margin profile of the business and the recurring revenue of the business both positively.
Speaker Change: And so we're leaning pretty heavily into that but we're encouraged very much by the progress we've seen here in the fourth quarter and then coming into this year.
Yeah I can take the second part of your question in terms of visibility into the year. So we are a significantly stronger than we were a year ago.
Speaker Change: A year ago, we were probably in the low 50% range as far as.
Speaker Change: Contracted revenue is concerned.
Speaker Change: We're sitting here to be at.
Speaker Change: What was <unk> in terms of percentage of total revenue.
Speaker Change: For the year, so up about 20% year on year.
Speaker Change: Yeah.
Speaker Change: Okay got it that's very helpful. Thank you again for taking my questions and congrats on a great quarter.
I understood I appreciate the support.
Speaker Change: Our next question comes from.
David: David is with citizens. Please go ahead.
David: Thanks, you guys have alluded to sort of transforming into a rule.
David: 40 company and I know some of that is coming from some of the things you've outlined for us today, but I guess over what time frame is that of an expectation can you maybe just bridge between.
David: How much of that is sort of top line growth acceleration and maybe what the margins of the business look like at scale.
David: Yeah, Ed do you want to take that one yeah yeah.
So as far as I'm concerned.
David: Certainly.
David: I gotta be one year that could be a journey more abruptly due to a five year journey.
David: As far as the breakdown would be topline and bottomline.
David: As you know, we've said that a number of times our business model was alley.
David: <unk> so the drop through as we grow.
David: Significant if I could if you look at our results in Q4 of this year you can see the kind of margins we can generate when we have you know.
David: High level of profitability.
Growth rates on the top line.
David: So I would say most of it is going to come from.
David: EBITDA expansion.
David: But a good chunk of it will come from top line growth as well so a combination of the two which would get us to over 40.
David: Uh huh.
David: My guesstimate.
David: The five year timeframe.
David: Great. Thanks, and then.
David: Yes, just in terms of 2025 guidance are there any.
David: Kind of quarterly puts and takes with respect to either margins or.
David: Typical sort of seasonality on the revenue front that we should contemplate.
David: Again for 2025.
David: Yeah, Yeah, I can give that information actually so far.
David: As far as the margin goes I, followed the historical kind of seasonality that youre seeing.
David: Natural progression throughout the year type of situation and then as far as quarters go I would say in the typical seasonal ranges.
David: 20% revenue in Q1.
David: 20% to 23% in Q2.
David: 25% to 30% of revenue in Q3, and then Q4, obviously biggest quarter I'd say about 30% 40% of revenue in Q4.
Thank you.
Constantine: Thanks, Constantine looking forward to seeing you hopefully soon.
Speaker Change: Our next question comes from Richard Baldry.
Richard Baldry: Roth capital. Please go ahead.
Richard Baldry: If you look at just baseline growth expectations for next year. It looks like it's a little a baseline does seen all around that 10% number but.
Richard Baldry: Net retentions in the twenties, the number of DAP deals was up 100% year over year, there's a lot of trending argues higher so.
Richard Baldry: Can you talk about sort of the backdrop that that's put that baseline in for your forecasting how conservative do you think it is if there is any.
Richard Baldry: Externalities, we should be thinking about as we think about next year.
Speaker Change: Hey, rich happy to happy to talk about it good to hear your voice and maybe I'll start and then pass it back to you sure.
Speaker Change: So I think we were encouraged rich by the by the start to the new year, we're feeling very optimistic about what the year could look like but as we talked about several weeks back during my interim period, we're going to err on the side of conservatism and go for a beat each time.
Speaker Change: So we will let the numbers speak for themselves.
Youre right about the Kpis and how things are looking going forward and I think we're all encouraged by that but it's still early days for us and so we're going to have a bias toward conservatism naturally and.
Speaker Change: And just let the numbers speak for themselves, but Ed feel free to chime in and share anything else you'd like to you there.
Ed: I think you've covered it well Steve I would just say look I mean out of the gates. Our book of business is solid we were up 20% versus last year's Q1.
Ed: There's still a lot of wood to chop a throughout the year and obviously the second half of the year is always our biggest.
Ed: No.
Ed: Two quarters.
We are optimistic, but we want to be cautious and when it makes it this year, we actually delivered on what we are putting out there.
Ed: The one thing one thing I'd say to you just to sort of.
Ed: Sort of strengths and sort of give a strong response to your question here is we've not had this level of visibility in our business for a very long time to ed's earlier comments. So I think we're all feeling encouraged about that but we have committed to under promise and over deliver throughout the year and so that'll be the drumbeat you hear from us, but we're off to a great start.
Ed: Yeah.
Ed: So I often think about companies when they're net retention rates as strong as yours is the customers are obviously pretty happy with what they have the existing customers.
Ed: How does that translate to new client or a new drug win rates. How do you think your pipeline for that looks how those cadences sort of changed as <unk> become more recognized in the market. Thanks.
Speaker Change: Yes, Great question I'll take it and then Andy if you wanted to China, one of the things that was great about the fourth quarter for US was we did see a significant increase in new logos coming into the business and that was very encouraging said net revenue retention looking great. New logos also looking very strong and one of the key learnings for us as a business was we saw.
Speaker Change: All of that the <unk> solution and other solutions that we have in the portfolio and the DTC solutions.
Speaker Change: Meet sort of several business needs that mid tier and smaller companies can't afford to bring in house or do for themselves and so they outsource a lot more of their thinking to companies like ours and that was radically beneficial. So we're starting to see growth in the mid and small markets.
Speaker Change: Super encouraging because as you know rich the long tail is a massive opportunity that no one's really addressing at this point. So great question, Andy anything else you'd add to that.
Andy: Yeah, Yeah, well, while still fairly early days I would say, we're seeing some synergies with our sales team.
Andy: Stronger collaborations and that's just fostering a better culture and driving more business.
Andy: So again still early.
Andy: We'd like to see more of what we've been seeing over the last six months continue.
Andy: But definitely optimistic.
Andy: And that's why I'm looking to add to that.
Andy: On the external factors I mean, a couple of years ago, we had a little hiccup with M D.
Andy: Number of approval was dropped significantly so we're watching that very closely especially with some of the things that are going on with Boston and Washington D. C.
Andy: So far so good and the twenty-five theres about five accruals versus last year's three approvals at the same time.
Andy: You know a man in the middle of the year, so as long as that number continues to.
Andy: Kind of more of that piece pharma typically.
Andy: We'll be pretty pleased in terms of their portfolio health and the ability to get products to market.
Andy: One metric we are watching very closely.
Andy: Great. Thanks, and congrats on a on the new seat Stifel.
Speaker Change: Thanks, Rich I appreciate the support.
Speaker Change: Our next question comes from Eric Martin Newsy with Lake Street.
Speaker Change: Excuse me. Our next question comes from David Grossman with Stifel. Please go ahead.
David Grossman: Good morning, guys. Thank you.
Speaker Change: I know, Steve you talked already a little bit about your migration to a subscription based model, but just wondering if you could just explore that a little bit more and talk about.
Speaker Change: First what what compels the customer.
Speaker Change: To migrate towards subscription more of a subscription versus the transactional model.
Speaker Change: Yes, how does this potentially slowing down the parts of the business maybe that are more transactional in nature now, but could actually convert to a subscription based businesses down the road.
Speaker Change: Hey, David Great to hear your voice.
Speaker Change: Yes. So if you think about our historical business. It was largely transactional base, because we were delivering or have been and continue to deliver messages, whether its point of care or on the DTC front via the DST and that'll still be a large component of the business. The pieces that have evolved over the last I would say 36 months.
Speaker Change: So really the DAP components, which as mobilization of data, so I'm thinking about finding patients and physicians.
Speaker Change: And mobilizing that data to be able to deliver those messages based off of that information and that's a growing part of our business as Ed said. It went from 10 to 15 to now over 30% of our business and that lends itself to being naturally subscriptions because clients are looking for regular real time updates.
Speaker Change: To where those patients and where those physicians are so theyre not looking to buy in a single point in time have a scale list and then have to buy it again 12 months down the road so.
Speaker Change: The frequency of that information being updated real time is a major value driver within the market and that applies both to DTC and to Hcp's of both components of our business and we're confident that that growth rate will continue and that's why we're seeing kind of that reoccurring subscription revenue start to grow which.
Speaker Change: I think very encouraging for this business the transactional components of message delivery those won't be subscriptions those will continue to be transactional thats the nature of how that business operates.
Speaker Change: But a good component of the growth will now come from audience creation within our business.
Speaker Change: And is there any.
Speaker Change: Material difference in the customer acquisition cost.
Speaker Change: For the.
Speaker Change: The data component versus the transactional component anything to think about there.
Speaker Change: No material difference at all it's the same conversation same call point same sales team that's doing it so customer acquisition is exactly the same and in fact, the DAP deals that we've done.
Speaker Change: A good component of each of those DAP deals has been that audience has been that that dynamic audience. In addition to the transactional stuff. So we're already now 24, probably 36 months into that transition.
Speaker Change: Right.
Speaker Change: And then just on the I know this past earlier about the revenue retention rate.
Speaker Change: Is there something in the 2020 I'm trying to remember something in the 24 number that.
Speaker Change: Impacts that so that too.
Speaker Change: 2025 will not necessarily be a good comp to that.
Speaker Change: Just trying to remember wasn't that number as you know.
Speaker Change: Artificially high and maybe we should expect that at least from a modeling perspective should come down a little bit on a year over year basis.
Speaker Change: Are you talking about yeah are you sorry are you talking about the.
Speaker Change: Portion of DAP revenue as far as the model.
Speaker Change: So I don't think that's going to be as pronounced in 'twenty five as it was in 'twenty four there are definitely still be some of that going on.
But it won't be as pronounced.
Speaker Change: Okay can you Andy can you give us a better sense of how to think about revenue retention had 25, just as we think about building our models.
Speaker Change: Net revenue retention.
Speaker Change: Yes.
Speaker Change: Yeah, I would say, we're targeting a 100% for the year.
Speaker Change: Our revenue growth.
Speaker Change: At the one.
Speaker Change: $100 million, just under 10% right. So typically we see.
Speaker Change: Call it between five and 20% of our business coming from new logos.
Speaker Change: Yes, we're targeting 100%.
Speaker Change: Great Alright, guys. Thank you and good luck.
David I.: Thanks, David I. Appreciate this is David.
Speaker Change: Now our next question comes from Eric.
Martin Newsy with Lake Street. Please go ahead.
Yes, just curious regarding the administration of the medics business one of the issues that the company faced in 2024 was a shift on the amount of managed services. So customers going from managed service to self service was wondering where we are in that transition have most of the large <unk>.
Speaker Change: Closures been been handled there or are we still kind of midstream.
Speaker Change: Hey, Eric Great to hear from you. Thanks for the question, Yes. Luckily we are through that transition of managed service. There is still a very small component of the business.
Speaker Change: Format ex that would that has some rather attached to managed service, but it's de minimis.
Speaker Change: What we can share also was that.
Speaker Change: Notwithstanding that kind of one time hit last year of the adjustment for managed service. The other solutions in our portfolio are growing very nicely.
And specifically the audience a component of that business is what's showing the most growth and that's obviously our highest margin best profile solutions. So very much in line with.
Kind of the guidance and the direction that we've shared on the call today.
Speaker Change: Got it thanks for taking my question.
Speaker Change: Absolutely great to hear from you.
Speaker Change: Our next question comes from Jeff Garro with Stephens, Inc. Please go ahead.
Jeff Garro: Yeah. Good morning, guys. Thanks for taking the questions and Steve Let me chime in as well with congrats on the new Impermanent rule and what wanted to hit on the margin outlook embedded in the guidance and maybe we can break that down to gross margin and opex.
Jeff Garro: The gross margin front curious if theres any kind of changes in product mix you would call out at it it seems like it should continue to trend favorably with the emphasis on the data subscriptions, but wanted to check in there and on the Opex front, Steve any incremental opex investment too.
Jeff Garro: It really push that customer Centricity that you were speaking about earlier thanks.
Speaker Change: Thanks, Jeff I appreciate the question I'll ask Ed to go ahead and comment.
Ed: Yes, so as far as margin breakdown is concerned we don't guide the gross margin level, but you can probably figure out that we're going to be in the low to mid 60% range and that increases as the year goes on.
Speaker Change: Mainly due to mix.
Speaker Change: As the year goes on we get more and more new Dab doosan and those generate higher margins for us.
Speaker Change: As far as the bottom line is concerned the same biggest whoever you go business model. So.
Speaker Change: So we are guiding to kind of a at.
Speaker Change: At least $12 million.
Speaker Change: Adjusted EBITDA.
Speaker Change: You know the first quarter or two are typically are on the low side and then we'll start to ramp up pretty aggressively on the back end of the year.
Speaker Change: Yeah.
Speaker Change: Got it that helps and then wanted to ask one on the competitive environment.
Speaker Change: Our early here.
Here in 2025 competitor added to its direct to consumer capabilities.
Speaker Change: I wanted to check in on whether you're seeing any impact from them or others mirroring your strategy of combining HCP and DTC approaches or any other changes to the competitive environment, including on that data subscription side.
Speaker Change: Gained momentum of late.
Speaker Change: Yeah. Thanks, Jeff.
Speaker Change: The competitive environment is definitely interesting I mean with the DTC our acquisition of the DTC business. In addition to our business it brought a whole.
Speaker Change: Sort of different component of competition.
Speaker Change: We're dealing with which I think is obviously welcome.
Speaker Change: Also has given us a good sort of landing pad for learning in terms of where.
Speaker Change: Where we have opportunities to bring the HCP and DTC business together to compete more effectively we still remain the only business out there that's able to bring HCP and DTC together at scale with a proprietary network and so as we said in the script really has.
Speaker Change: We're pretty sanguine on our position in terms of our competitive advantage in that area and ability to scale and I think.
Speaker Change: I'll give a shot out to our chief product and Technology Officer, Doug bass, who has done a wonderful job of bringing those audiences together.
Speaker Change: And that's the data component that we've been kind of talking about throughout this call and when you start to bring those together and deliver those sub simply to the same client Theres, obviously revenue synergy there's growth opportunity there is that larger subscription growth specifically.
Speaker Change: And it just creates a much a much better recurring business and a stronger.
Speaker Change: Foothold with our existing client base I think we're all encouraged by what we're seeing there.
Speaker Change: And feel pretty confident that we're in a good position to beat the competition will continue to be humble about it and lean in and see how we go Jeff, but we're feeling pretty strong.
Excellent. Thanks again for taking the questions.
Speaker Change: You got it thanks for taking the questions.
Steve: This concludes our question and answer session I would now like to turn the conference over to Steve <unk> for any closing remarks.
Speaker Change: Thank you operator, and once again, thank you everyone for joining us on today's call. Even though these remain early days and still relatively nascent industry. We believe that our business model solutions and tech platform are responding to and meaningfully addressing customers' needs as it stands today, our synchronized HCP and DTC Mark.
Speaker Change: <unk> capabilities, which are based on brand eligibility signals coupled with expanded functionality that includes micro neighborhood targeting that delivers hyper local privacy privacy patient and HCP audiences is widening the competitive moat against our competitors. The remainder of the year will be extremely focused on increased customer utilization of gap.
Speaker Change: And are establishing consistent recurring revenue component to our business as we convert our customers to a subscription based model as we drive towards becoming a rule of 40 company. We believe these initiatives will be transformative and are critical to our efforts to drive shareholder value creation.
Speaker Change: You for your time today, and I look forward to our next quarter's earnings call as well as meeting with more view at the upcoming conferences throughout the year have a fantastic rest of your day. Operator. Please proceed with optimizer <unk> Safe Harbor statement.
Speaker Change: Thank you Sir before we conclude today's 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: Statements made by management during today's call may contain forward looking statements with the definition of section 27 a M.
Speaker Change: Security Act of 1933 as amended and section 21 E of the Securities Act of 1934 as amended.
Speaker Change: Forward looking statements should not be used to make investment decisions.
The words anticipate estimate expect possible and seeking and similar expressions.
Speaker Change: Forward looking statements.
Speaker Change: And they speak only to the date that such statements are made.
Speaker Change: Forward looking statements in this call include statements regarding our growth plans plans for shareholder value creation converting more customers, who are reoccurring model, becoming a rule of 40 company unlocking new opportunities for profitable revenue growth.
Speaker Change: To make our revenue streams more predictable plans to drive substantial operating leverage.
Speaker Change: Estimated 2025 revenue and adjusted EBITDA ranges.
Speaker Change: Estimation of total addressable market size.
Speaker Change: Penetration revenue growth gross.
Speaker Change: Margin operating expenses profitability cash flow technology investments growth Hopper.
Speaker Change: Acquisition and upcoming announcements forward looking statements also include the management's expectations for the rest of the year.
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: Forward looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified future events and actual results could differ materially from those set forth in contemplated by or underlying these forward looking statements.
Speaker Change: The risks and uncertainties to which forward looking statements are subject to include but are not limited to the effects of government regulation competition.
Speaker Change: Pendants on a concentrated group of customers cyber security incidents that could disrupt operations.
To keep pace with curling and evolving technology.
Speaker Change: To maintain contracts with electronic prescription platforms electronic health record network and other material risks.
Risks and uncertainties to which forward looking statements are subject could affect business and financial results are included in the company's annual report on Form 10-K for the year ended December 31st 2023.
Speaker Change: And in other filings the company has made and May make with the S. E C in the future.
Speaker Change: These filings are available on the company's website and on the SEC website at S E.
Speaker Change: E C dot Gov.
Speaker Change: Before we end today's conference.
Speaker Change: Remind everyone that an audio recording of this conference call will be available for replay starting later this evening and running through for a year on the investors section of the company's website.
Speaker Change: Thank you for joining US today. This concludes today's conference call you may now disconnect your lines.