Q2 2026 Waystar Holding Corp Earnings Call

Speaker #1: Okay, and thank you for standing by. Welcome to the WasteStar Q2 2026 earnings conference call. At this time, all participants are in a listen-only mode.

Speaker #1: After the speaker's presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Edward Parker.

Speaker #1: Head of Investor Relations. Please go ahead.

Speaker #2: Thank you, operator. Good afternoon, everyone, and thank you for joining WasteStar Q2 2026 earnings call. Joining me today are Matt Hawkins, WasteStar's Chief Executive Officer, and Steve Oreskevich, WasteStar's Chief Financial Officer.

Speaker #2: This afternoon, we issued a press release announcing our financial results and publishing accompanying presentation deck. You can find these materials at investors.wastestar.com. Before we begin, I would like to remind you that this call contains forward-looking statements, which are predictions or beliefs about future events or performance.

Speaker #1: Good day, and thank you for standing by. Welcome to the Waystar second quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode.

Speaker #1: After the speaker's presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Edward Parker, Head of Investor Relations.

Speaker #2: Example of these statements include expectations of future financial results, growth, and margins. These statements involve a number of risks and uncertainties that may cause actual results to differ materially from those expressed in these statements.

Speaker #1: Please go ahead.

Speaker #2: For a full discussion of the risks and other factors that may impact these forward-looking statements, please refer to this afternoon's press release and the reports we file with the SEC, all of which are available on the Investor Relations page of our website.

Speaker #2: Thank you, operator. Good afternoon, everyone, and thank you for joining Waystar's second quarter 2026 earnings call. Joining me today are Matt Hawkins, Waystar's Chief Executive Officer, and Steven Oreskovich, Waystar's Chief Financial Officer.

Speaker #2: Any forward-looking statements made on this call are only as of today and will not be updated unless required by law. We will also discuss certain non-GAAP financial measures.

Speaker #2: This afternoon, we issued a press release announcing our financial results and publishing an accompanying presentation deck. You can find these materials at investors.waystar.com. Before we begin, I would like to remind you that this call contains forward-looking statements, which are predictions or beliefs about future events or performance.

Speaker #2: These measures are intended to provide additional insight into our performance and should not be considered in isolation or as a substitute for financial information prepared in accordance with GAAP.

Speaker #2: We have provided reconciliations of the non-GAAP financial measures included in our remarks to the most directly comparable GAAP measures together with explanations of these measures in the appendix of the presentation slide deck and our earnings release.

Speaker #2: Examples of these statements include expectations of future financial results, growth, and margins. These statements involve a number of risks and uncertainties that may cause actual results to differ materially from those expressed in these statements.

Speaker #2: For a full discussion of the risks and other factors that may impact these forward-looking statements, please refer to this afternoon's press release and the reports we've filed with the SEC, all of which are available on the Investor Relations page of our website.

Speaker #2: With that, I'd like to turn the call over to Matt.

Speaker #3: Thank you, Edward, and good afternoon, everyone. Thank you for joining our Q2 2026 earnings call. We delivered another solid quarter as we executed our strategy supported our clients and advanced the WasteStar platform toward a more autonomous revenue cycle.

Speaker #2: Any forward-looking statements made on this call are only as of today and will not be updated unless required by law. We will also discuss certain non-GAAP financial measures.

Speaker #2: These measures are intended to provide additional insight into our performance and should not be considered in isolation or as a substitute for financial information prepared in accordance with GAAP.

Speaker #3: During the quarter, we delivered revenue of $320 million representing 18% year-over-year growth and adjusted EBITDA of $137 million. Resulting in an adjusted EBITDA margin of 43%, which exceeded consensus expectations for the quarter.

Speaker #2: We have provided reconciliations of the non-GAAP financial measures, included in our remarks to the most directly comparable GAAP measures, together with explanations of these measures in the appendix of the presentation slide deck and our earnings release.

Speaker #2: With that, I'd like to turn the call over to Matt.

Speaker #3: Thank you, Edward, and good afternoon, everyone. Thank you for joining our Q2 2026 earnings call. We delivered another solid quarter as we executed our strategy supported our clients and advanced the Waystar platform toward a more autonomous revenue cycle.

Speaker #3: We also delivered another strong quarter of bookings supported by ongoing momentum with larger provider organizations expansion across our client base and sustained demand for WasteStar's AI-powered solutions.

Speaker #3: While the operating environment continues to evolve, the breadth of our platform, the diversity of our client base, and the mission-critical nature of our solutions support healthy demand across the business.

Speaker #3: During the quarter, we delivered revenue of $320 million, representing 18% year-over-year growth and adjusted EBITDA of $137 million, resulting in an adjusted EBITDA margin of 43%, which exceeded consensus expectations for the quarter.

Speaker #3: At WasteStar, our focus is to help providers lower the costs to collect, accelerate reimbursement, and improve payment accuracy across the revenue cycle. In Q2, we saw healthy demand across the business, broader adoption of WasteStar solutions.

Speaker #3: We also delivered another strong quarter of bookings, supported by ongoing momentum with larger provider organizations, expansion across our client base, and sustained demand for Waystar's AI-powered solutions.

Speaker #3: Large platform deployments drove strong bookings during the quarter, including a double-digit number of $1 million plus ACV bookings, reinforcing the trend we have discussed over the past several quarters and our view that providers increasingly value a connected platform approach.

Speaker #3: While the operating environment continues to evolve, the breadth of our platform, the diversity of our client base, and the mission-critical nature of our solutions support healthy demand across the business.

Speaker #3: At Waystar, our focus is to help providers lower the cost to collect, accelerate reimbursement, and improve payment accuracy across the revenue cycle. In Q2, we saw healthy demand across the business, ongoing client expansion, and broader adoption of Waystar solutions.

Speaker #3: Larger client relationships also continue to grow, clients generating more than $100,000 of trailing 12-month revenue grew to $1,453, up 15% year over year. Within this cohort, clients have expanded their use of WasteStar solutions over the past several years demonstrating the compounding value clients realize as they adopt additional WasteStar capabilities over time.

Speaker #3: Large platform deployments drove strong bookings during the quarter, including a double-digit number of $11 million-plus ACV bookings, reinforcing the trend we have discussed over the past several quarters and our view that providers increasingly value a connected platform approach.

Speaker #3: Net revenue retention was $108%, within our historical range, demonstrating continued expansion within our existing client base. At the same time, new clients are increasingly selecting multiple WasteStar solutions as part of their initial purchase decision.

Speaker #3: Larger client relationships also continue to grow. Clients generating more than $100,000 of trailing 12-month revenue grew to 1,453, up 15% year over year. Within this cohort, clients have expanded their use of Waystar solutions over the past several years, demonstrating the compounding value clients realize as they adopt additional Waystar capabilities over time.

Speaker #3: Platform consolidation continues to accelerate as providers move away from fragmented point solutions in favor of a single connected software platform. Class researches inaugural revenue cycle management suites report reflects that shift.

Speaker #3: Among providers using multiple solutions, from a single vendor the study found that WasteStar clients reported some of the strongest improvements in collections performance and cost to collect.

Speaker #3: Net revenue retention was 108%, within our historical range, demonstrating continued expansion within our existing client base. At the same time, new clients are increasingly selecting multiple Waystar solutions as part of their initial purchase decision.

Speaker #3: Providing independent validation of the operational and financial benefits providers can achieve when more of the revenue cycle is managed on a single platform. One of our million-dollar-plus ACV bookings is a nonprofit help system serving Central New Jersey and Southeastern Pennsylvania.

Speaker #3: Platform consolidation continues to accelerate as providers move away from fragmented point solutions in favor of a single connected software platform. Class researchers inaugural revenue cycle management suites report reflects that shift.

Speaker #3: The win reflects the value of WasteStar's platform, with the provider selecting WasteStar to replace three separate vendors across claims management, patient financial care, clinical documentation integrity, and revenue capture.

Speaker #3: Among providers using multiple solutions from a single vendor, the study found that Waystar clients reported some of the strongest improvements in collections performance and cost to collect.

Speaker #3: We also continue to see existing clients expand their relationships with WasteStar. This quarter, one of the largest nonprofit help systems in the country began implementing an expanded partnership across eligibility verification and insurance coverage detection.

Speaker #3: Providing independent validation of the operational and financial benefits providers can achieve when more of the revenue cycle is managed on a single platform. One of our million-dollar-plus ACV bookings is a nonprofit health system serving Central New Jersey and Southeastern Pennsylvania.

Speaker #3: Already a seven-figure WasteStar client, the added solutions are expected to generate more than $1 million in incremental annual revenue. Reinforcing the advantage of a single connected platform over a patchwork of point solutions.

Speaker #3: The win reflects the value of Waystar's platform, with the provider selecting Waystar to replace three separate vendors across claims management, patient financial care, clinical documentation integrity, and revenue capture.

Speaker #3: Another established client and multi-billion-dollar academic help system with more than 3,000 beds and 9,000 physicians also recently went live with additional WasteStar Altitude AI capabilities designed to prevent denials as part of its strategy to centralize revenue cycle operations.

Speaker #3: We also continue to see existing clients expand their relationships with Waystar. This quarter, one of the largest nonprofit help systems in the country began implementing an expanded partnership across eligibility verification and insurance coverage detection.

Speaker #3: The go-live increases the client's annual investment in WasteStar by an incremental seven figures while helping lower its costs to collect, reduce manual follow-up, and operate more efficiently at enterprise scale.

Speaker #3: Already a seven-figure Waystar client, the added solutions are expected to generate more than $1 million in incremental annual revenue, reinforcing the advantage of a single connected platform over a patchwork of point solutions.

Speaker #3: During the quarter, we also saw encouraging adoption of iodine solutions within the existing WasteStar client base. More than $6 million of bookings came from existing WasteStar clients purchasing iodine capability.

Speaker #3: Another established client and multi-billion-dollar academic health system with more than 3,000 beds and 9,000 physicians also recently went live with additional Waystar Altitude AI capabilities designed to prevent denials as part of its strategy to centralize revenue cycle operations.

Speaker #3: An early proof point of our expanding cross-sell opportunity as clients bring together financial and clinical data to improve outcomes. As coverage dynamics evolve and self-pay population grow, providers need stronger capabilities to identify available coverage and protect reimbursement.

Speaker #3: The go-live increases the client's annual investment in Waystar by an incremental seven figures, while helping lower its cost to collect, reduce manual follow-up, and operate more efficiently at enterprise scale.

Speaker #3: During the quarter, we also saw encouraging adoption of Iodine solutions within the existing Waystar client base. More than $66 million of bookings came from existing Waystar clients purchasing Iodine capability, an early proof point of our expanding cross-sell opportunity as clients bring together financial and clinical data to improve outcomes.

Speaker #3: In a newly published success story, ProMedica, a hospital and physician network serving 4.7 million patients annually, leveraged WasteStar's patient insurance coverage solution to uncover nearly $10 million in previously unidentified billing opportunities that may have otherwise been missed.

Speaker #3: This quarter, we published an in-depth analysis of data from hundreds of hospitals using WasteStar's clinical integrity and revenue capture capabilities. The analysis showed clients experienced outsized returns, including three times greater financial impact from integrated clinical documentation workflows, generating $2.17 million in incremental reimbursement per 10,000 discharges, and a 90% year-over-year increase in rebuild dollars caught by our revenue leakage protection capabilities.

Speaker #3: As coverage dynamics evolve and self-pay populations grow, providers need stronger capabilities to identify available coverage and protect reimbursement. In a newly published success story, ProMedica—a hospital and physician network serving 4.7 million patients annually—leveraged Waystar's patient insurance coverage solution to uncover nearly $10 million in previously unidentified billing opportunities that may have otherwise been missed.

Speaker #3: Collectively, these examples demonstrate the value of the WasteStar platform as clients adopt more capabilities they reduce complexity improve performance and drive stronger financial outcomes.

Speaker #3: This quarter, we published an in-depth analysis of data from hundreds of hospitals using Waystar's clinical integrity and revenue capture capabilities. The analysis showed clients experienced outsized returns, including three times greater financial impact from integrated clinical documentation workflows, generating $2.17 million in incremental reimbursement per 10,000 discharges, and a 90% year-over-year increase in rebuild dollars caught by our revenue leakage protection capabilities.

Speaker #3: The momentum we're seeing across the business reflects more than strong execution, it reflects the position WasteStar occupies within the healthcare payment ecosystem and the advantages that position creates for our clients.

Speaker #3: WasteStar sits at the center of the healthcare payment ecosystem, connecting providers and payers through critical workflows that span the payment lifecycle from authorization and claim submission through adjudication, payment, and reimbursement.

Speaker #3: Collectively, these examples demonstrate the value of the Waystar platform as clients adopt more capabilities they reduce complexity improved performance and drive stronger financial outcomes.

Speaker #3: Providers see their workflows, payers see their workflows. WasteStar connects and acts autonomously across both. Operating at that intersection gives us insight into the interactions, dependencies, and friction points between providers and payers.

Speaker #3: The momentum we're seeing across the business reflects more than strong execution; it reflects the position Waystar occupies within the healthcare payment ecosystem, and the advantages that position creates for our clients.

Speaker #3: That perspective enables us to improve performance across the revenue cycle and deliver better payment outcomes. Every transaction provides intelligence about how payments move through the system.

Speaker #3: Waystar sits at the center of the healthcare payment ecosystem, connecting providers and payers through critical workflows that span the payment lifecycle from authorization and claim submission through adjudication, payment, and reimbursement.

Speaker #3: As payer requirements change, WasteStar helps identify friction, adapt quickly, and continuously improve performance across the network. The result is stronger operational and financial performance for clients, including faster payment decisions, accelerated time to payment, fewer errors, and less rework across the revenue cycle.

Speaker #3: Providers see their workflows; payers see their workflows. Waystar connects and acts autonomously across both. Operating at that intersection gives us insight into the interactions, dependencies, and friction points between providers and payers.

Speaker #3: WasteStar processes more than 7.5 billion transactions annually. The scale of that network creates a unique combination of connectivity, data, workflow intelligence, and payment intelligence that strengthens the value of the platform, supports innovation across the business, and increasingly enables the application of AI across the revenue cycle.

Speaker #3: That perspective enables us to improve performance across the revenue cycle and deliver better payment outcomes. Every transaction provides intelligence about how payments move through the system.

Speaker #3: As payer requirements change, Waystar helps identify friction, adapt quickly, and continuously improve performance across the network. The result is stronger operational and financial performance for clients, including faster payment decisions, accelerated time to payment, fewer errors, and less rework across the revenue cycle.

Speaker #3: These advantages are reinforced by the four structural foundations you've heard me discuss previously. Mission-critical infrastructure, proprietary data, and extensively deployed network, and deep domain expertise.

Speaker #3: We believe these advantages contribute to the strong win rates we achieve and support our ability to compete successfully against point solutions broader software platforms and to end service providers and newer market entrants.

Speaker #3: Waystar processes more than 7.5 billion transactions annually. The scale of that network creates a unique combination of connectivity, data, workflow intelligence, and payment intelligence that strengthens the value of the platform, supports innovation across the business, and increasingly enables the application of AI across the revenue cycle.

Speaker #3: Taken together, these strengths create a durable advantage that is difficult to replicate and increasingly valuable as providers look to reduce administrative burden, improve efficiency, and drive better financial outcomes.

Speaker #3: These advantages are reinforced by the four structural foundations you've heard me discuss previously: mission-critical infrastructure, proprietary data, an extensively deployed network, and deep domain expertise.

Speaker #3: As we've discussed over the last several quarters, we continue advancing our vision of creating the industry's first autonomous revenue cycle. Our goal is not simply to deploy AI, it is to orchestrate the right AI at the right moment across the revenue cycle to reduce administrative burden improve performance, and deliver better outcomes for providers.

Speaker #3: We believe these advantages contribute to the strong win rates we achieve and support our ability to compete successfully against point solutions, broader software platforms, end service providers, and newer market entrants.

Speaker #3: Taken together, these strengths create a durable advantage that is difficult to replicate and increasingly valuable as providers look to reduce administrative burden, improve efficiency, and drive better financial outcomes.

Speaker #3: Our AI deployment is not experimental. It is embedded and monetized, and it delivers meaningful outcomes inside the mission-critical workloads our clients rely on every day.

Speaker #3: External recognition during the quarter provided additional validation of these efforts. With WasteStar named to the Time 100 Most Influential Companies list, and earning the Time Impact in AI award.

Speaker #3: As we've discussed over the last several quarters, we continue advancing our vision of creating the industry's first autonomous revenue cycle. Our goal is not simply to deploy AI; it is to orchestrate the right AI at the right moment across the revenue cycle to reduce administrative burden, improve performance, and deliver better outcomes for providers.

Speaker #3: More than a dozen clients have committed to our next-generation anomaly detection solution during the first half of the year. This solution represents an important step forward because it combines iodine's clinical documentation capabilities with WasteStar's revenue capture engine.

Speaker #3: Our AI deployment is not experimental; it is embedded and monetized, and it delivers meaningful outcomes inside the mission-critical workflows our clients rely on every day.

Speaker #3: We are encouraged by the interest it is generating from large hospitals and health systems. Early adopters are seeing approximately $3 million in incremental revenue recovered per 10,000 admissions through automated revenue leakage detection.

Speaker #3: External recognition during the quarter provided additional validation of these efforts. With Waystar named to the Time 100 Most Influential Companies list and earning the Time Impact in AI award, more than a dozen clients have committed to our next-generation anomaly detection solution during the first half of the year.

Speaker #3: We are also seeing promising results from our newest WasteStar Altitude AI-powered solution focused on payer takebacks. US Renal Care a dialysis provider with more than 500 centers across 32 states achieved an 88% autonomous match rate between recruitments and original claims reducing the time spent managing recruitments by approximately 80%.

Speaker #3: This solution represents an important step forward because it combines Iodine's clinical documentation capabilities with Waystar's revenue capture engine. We are encouraged by the interest it has generated from large hospitals and health systems.

Speaker #3: Early adopters are seeing approximately $3 million in incremental revenue recovered per 10,000 admissions through automated revenue leakage detection. We are also seeing promising results from our newest Waystar Altitude AI-powered solution focused on payer takebacks.

Speaker #3: As we look ahead we are focused on the same priorities that have guided us over the last several quarters. Simplifying healthcare payments, driving innovation, and delivering meaningful value for our clients, our team members, and our shareholders.

Speaker #3: The fundamentals of the business are strong. Client partnerships are healthy, and our long-term opportunity is significant. We look forward to sharing more about our strategy, client adoption trends, and long-term vision at the investor day in August.

Speaker #3: US Renal Care a dialysis provider with more than 500 centers across 32 states achieved an 88% autonomous match rate between recruitments and original claims reducing the time spent managing recruitments by approximately 80%.

Speaker #3: Before I turn the call over to Steve, I want to take a moment to recognize him and thank him for everything he has done for WasteStar.

Speaker #3: As we look ahead, we are focused on the same priorities that have guided us over the last several quarters: simplifying healthcare payments, driving innovation, and delivering meaningful value for our clients, our team members, and our shareholders.

Speaker #3: As we announced earlier today, Steve will be transitioning from the chief financial officer role after eight years with the company. Steve has been a tremendous leader trusted advisor and great friend.

Speaker #3: The fundamentals of the business are strong, client partnerships are healthy, and our long-term opportunity is significant. We look forward to sharing more about our strategy, client adoption trends, and long-term vision at Investor Day in August.

Speaker #3: He has played a critical role in helping build WasteStar into the company we are today. Helping us scale the business, build a world-class finance organization, navigate our IPO, and establish the strong financial foundation that supports our continued growth today.

Speaker #3: Before I turn the call over to Steve, I want to take a moment to recognize him and thank him for everything he has done for Waystar.

Speaker #3: More importantly, Steve has been an invaluable partner to me and our leadership team. His judgment, integrity, and steady leadership have had a lasting impact on this company and we are all better because of his contributions.

Speaker #3: As we announced earlier today, Steve will be transitioning from the Chief Financial Officer role after eight years with the company. Steve has been a tremendous leader, trusted advisor, and great friend.

Speaker #3: While Steve will be transitioning from the CFO role, he will remain with WasteStar as an advisor over the coming months to help ensure a smooth transition.

Speaker #3: He has played a critical role in helping build Waystar into the company we are today—helping us scale the business, build a world-class finance organization, navigate our IPO, and establish the strong financial foundation that supports our continued growth today.

Speaker #3: We are pleased to welcome Alpana Wegner who joined WasteStar this week as our next CFO. Alpana brings extensive public company finance and software industry leadership experience, having served as CFO at several public software companies and held a variety of senior finance and operating leadership roles throughout her career.

Speaker #3: More importantly, Steve has been an invaluable partner to me and our leadership team. His judgment, integrity, and steady leadership have had a lasting impact on this company, and we are all better because of his contributions.

Speaker #3: I look forward to introducing her to you in the coming weeks. Steve, thank you again. You've been a great partner and a great friend.

Speaker #3: While Steve will be transitioning from the CFO role, he will remain with Waystar as an advisor over the coming months to help ensure a smooth transition.

Speaker #3: On behalf of all of us at WasteStar, thank you for your leadership, your friendship, and everything you've done for this company. We wish you and your family the very best.

Speaker #3: We are pleased to welcome Alpana Wegner, who joined Waystar this week as our next CFO. Alpana brings extensive public company finance and software industry leadership experience, having served as CFO at several public software companies and held a variety of senior finance and operating leadership roles throughout her career.

Speaker #3: With that, I'll turn it over to you.

Speaker #2: Thanks, Matt. And thank you for the kind words. Serving as CFO of WasteStar over the past eight years has been one of the greatest privileges of my professional career.

Speaker #2: I've had the opportunity to work alongside an exceptional team, support incredible clients, and be part of a remarkable journey. I'm incredibly proud of what we've built together and even more confident in where the company is headed.

Speaker #3: I look forward to introducing her to you in the coming weeks. Steve, thank you again. You've been a great partner and a great friend.

Speaker #2: I want to thank our team members, clients, shareholders, and the many friends I've made along the way for their trust, support, and partnership. I'm grateful for the opportunity to have been part of this team and this company.

Speaker #3: On behalf of all of us at Waystar, thank you for your leadership, your friendship, and everything you’ve done for this company. We wish you and your family the very best.

Speaker #3: With that, I'll turn it over to you.

Speaker #2: And with that, let me turn to the quarter. Revenue increased 18% year over year in the second quarter to $320 million, and organic revenue grew 7% year over year.

Speaker #2: Thanks, Matt. And thank you for the kind words. Serving as CFO of Waystar over the past eight years has been one of the greatest privileges of my professional career.

Speaker #2: I've had the opportunity to work alongside an exceptional team, support incredible clients, and be part of a remarkable journey. I'm incredibly proud of what we've built together, and even more confident in where the company is headed.

Speaker #2: Excluding previously discussed items affecting comparability, normalized organic growth was approximately 10% in the quarter. Performance in the quarter reflects expansion across the client base, healthy adoption of high-value solutions, and continued strong execution.

Speaker #2: I want to thank our team members, clients, shareholders, and the many friends I've made along the way for their trust, support, and partnership. I'm grateful for the opportunity to have been part of this team and this company.

Speaker #2: Total booking value and expected margin composition again exceeded internal expectations. Bookings also include a double-digit count of 1 million plus annual contract value engagements with activity continuing to skew towards larger platform deployments and new solutions such as the prebuild demand Matt discussed.

Speaker #2: And with that, let me turn to the quarter. Revenue increased 18% year over year in the second quarter to $320 million, and organic revenue grew 7% year over year.

Speaker #2: Excluding previously discussed items affecting comparability, normalized organic growth was approximately 10% in the quarter. Performance in the quarter reflects expansion across the client base, healthy adoption of high-value solutions, and continued strong execution.

Speaker #2: Clients generating more than $100,000 of revenue in the last 12 months increased by 20 in the second quarter to $1,453 a quarter end, an increase of 15% year over year.

Speaker #2: Our net revenue retention rate also viewed on a last 12-month basis was $108% at the end of Q2. Within our historical range of $108 to $110%.

Speaker #2: Total booking value and expected margin composition again exceeded internal expectations. Bookings also include a double-digit count of $1 million-plus annual contract value engagements, with activity continuing to skew towards larger platform deployments and new solutions such as the pre-bill demand Matt discussed.

Speaker #2: Subscription revenue of $176 million for the second quarter increased 34% year over year 2% sequentially and was 55% of total revenue. On an organic basis, subscription revenue grew 12% year over year continuing to grow at a double-digit rate and reinforcing the health of the core WasteStar business.

Speaker #2: Clients generating more than $100,000 of revenue in the last 12 months increased by 20 in the second quarter to 1,453 at quarter end, an increase of 15% year over year.

Speaker #2: Volume-based revenue of $142 million for the second quarter increased 3% year over year and 2% sequentially. Please recall the items impacting second quarter year over year comparability are volume-based.

Speaker #2: Our net revenue retention rate also viewed on a last 12-month basis was $108% at the end of Q2. Within our historical range of $108 to $110%.

Speaker #2: Subscription revenue of $176 million for the second quarter increased 34% year over year, 2% sequentially, and was 55% of total revenue. On an organic basis, subscription revenue grew 12% year over year, continuing to grow at a double-digit rate and reinforcing the health of the core Waystar business.

Speaker #2: We are pleased that both subscription and volume-based revenue performance align with expectations indicated on our prior earnings call. Adjusted EBITDA of $137 million for the second quarter increased 21.5% year over year.

Speaker #2: The adjusted EBITDA margin of 43% was consistent with the prior quarter and is indicative of the scalable nature of our platform model disciplined cost management and the favorable margin profile of the solutions driving growth across the business.

Speaker #2: Volume-based revenue of $142 million for the second quarter increased 3% year over year and 2% sequentially. Please recall the items impacting second quarter year-over-year comparability are volume-based.

Speaker #2: Our capital position remains strong with healthy cash flows as we ended the quarter with $192 million in cash equivalents and short-term investments and $1.5 billion in gross debt.

Speaker #2: We are pleased that both subscription and volume-based revenue performance align with expectations indicated on our prior earnings call. Adjusted EBITDA of $137 million for the second quarter increased 21.5% year over year.

Speaker #2: In May, our board of directors authorized a stock repurchase plan for up to $200 million and during the second quarter we repurchased $13 million worth of WasteStar stock at an average price of $19.24 per share.

Speaker #2: The adjusted EBITDA margin of 43% was consistent with the prior quarter and is indicative of the scalable nature of our platform model, disciplined cost management, and the favorable margin profile of the solutions driving growth across the business.

Speaker #2: Unleveraged free cash flow was $64 million in the second quarter and we converted $47% of adjusted EBITDA to unleveraged free cash flow. Cash flow in the conversion ratio reflect the typical timing of estimated federal tax payments in the quarter.

Speaker #2: Our capital position remains strong with healthy cash flows as we ended the quarter with $192 million in cash equivalents and short-term investments and $1.5 billion in gross debt.

Speaker #2: Additionally, capital expenditures including capitalized software development increased year over year as we continue investing in AI platform capabilities that we believe will support future growth, drive greater automation, and advance our vision for the autonomous revenue cycle over time.

Speaker #2: In May, our board of directors authorized a stock repurchase plan for up to $200 million and during the second quarter we repurchased $13 million worth of Waystar stock at an average price of $19.24 per share.

Speaker #2: As of June 30th, net leverage was 2.5 times compared to 2.7 times at the end of last quarter which aligns with our historical ability to and cadence of delevering.

Speaker #2: Unleveraged free cash flow was $64 million in the second quarter, and we converted 47% of adjusted EBITDA to unleveraged free cash flow. Cash flow and the conversion ratio reflect the typical timing of estimated federal tax payments in the quarter.

Speaker #2: And is well below our goal of running the business at or below a three times leverage ratio. Based on our performance through the first half of 2026 and current expectations for the rest of the year, we are raising the low end of our revenue guidance range by $2 million resulting in a revised guidance range of $1.276 billion to $1.294 billion and a midpoint of $1.285 billion representing 17% year over year growth.

Speaker #2: Additionally, capital expenditures, including capitalized software development, increased year over year as we continue investing in AI platform capabilities that we believe will support future growth, drive greater automation, and advance our vision for the autonomous revenue cycle over time.

Speaker #2: As of June 30th, net leverage was 2.5 times, compared to 2.7 times at the end of last quarter, which aligns with our historical ability and cadence of delevering.

Speaker #2: We are also raising our adjusted EBITDA guidance to a range of $535 million to $545 million with a midpoint of $540 million. An increase of $5 million versus prior guidance midpoint.

Speaker #2: And is well below our goal of running the business at or below a 3x leverage ratio. Based on our performance through the first half of 2026 and current expectations for the rest of the year, we are raising the low end of our revenue guidance range by $2 million, resulting in a revised guidance range of $1.276 billion to $1.294 billion and a midpoint of $1.285 billion, representing 17% year-over-year growth.

Speaker #2: This concludes our opening remarks with that we are ready for your questions. Operator, please open the call.

Speaker #3: To answer question, please press star 11 on your telephone. And wait for your name to be announced. To withdraw your question, please press star 11 again.

Speaker #3: In the interest of time, yes, if you please limit yourself to one question. Please stand by while we compile the Q&A roster. Our first question comes from Ryan Daniels with William Blair, your line is open.

Speaker #2: We are also raising our adjusted EBITDA guidance to a range of $535 million to $545 million, with a midpoint of $540 million—an increase of $5 million versus the prior guidance midpoint.

Speaker #4: Yeah, Matt. Quick question for you and congratulations to Steve. On the announcement, best wishes to you. I was hoping you could go into a little bit of detail about what you're hearing in the end market with kind of all the noise that's going on in healthcare with the ACH change lives.

Speaker #2: This concludes our opening remarks with that we are ready for your questions. Operator, please open the call.

Speaker #3: To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Speaker #4: Rolling off into uninsured with Medicaid lives going down with OBBA likely to continue to push that down. I guess the question is what are you seeing in regards to transaction volume or patient pay because of that and what are you hearing from your customers about demand for different solutions to help them combat some of those changes in the market?

Speaker #3: In the interest of time, yes, if you would please limit yourself to one question. Please stand by while we compile the Q&A roster. Our first question comes from Ryan Daniels with William Blair. Your line is open.

Speaker #4: Thanks.

Speaker #5: Thank you, Ryan. Appreciate your thoughtful question and your well wishes for Steve. We are seeing the demand environment return to from a transaction utilization perspective return to the long-term average of kind of that 1 to 2%.

Speaker #4: Yeah, Matt, quick question for you—and congratulations to Steve on the announcement, best wishes to you. I was hoping you could go into a little bit of detail about what you're hearing in the end market with all the noise that's going on in healthcare with the ACH change lives.

Speaker #5: We know that the long-term secular trend is that 1 to 2% in recent years it's been higher based on probably a little bit of COVID catch-up, maybe higher 3 or 4%.

Speaker #4: Rolling off into uninsured with Medicaid lives going down, with OBBA likely to continue to push that down. I guess the question is, what are you seeing in regards to transaction volume or patient pay because of that? And what are you hearing from your customers about demand for different solutions to help them combat some of those changes in the market?

Speaker #5: There are some trends that you rightly highlighted whether it's a little bit of regulatory uncertainty around certain uninsured populations or things like that. The decrease in Medicaid lives covered.

Speaker #4: Thanks.

Speaker #2: Thank you, Ryan. Appreciate your example question and your well wishes for Steve. We are seeing the demand environment return to from a transaction utilization perspective return to the long-term average of kind of that 1 to 2%.

Speaker #5: That does create uninsurance. That really does create demand for WasteStar solutions. When you think about what providers are most focused on, it is lowering the cost to collect, optimizing payment yield whether from an insurance reimbursement or from a patient, and reducing time to collect.

Speaker #2: We know that the long-term secular trend is that 1 to 2%; in recent years, it's been higher, probably based on a little bit of COVID catch-up—maybe higher, 3 or 4%.

Speaker #5: We know that they want to use a platform approach versus a point solution. Because there's this point solution fatigue where many of them are using well over a dozen point solutions to in a patchworked way to try to figure out how they can optimize their collections and address their patient population.

Speaker #2: There are some trends that you rightly highlighted, whether it's a little bit of regulatory uncertainty around certain uninsured populations or things like that—the decrease in Medicaid lives covered.

Speaker #2: That does create uninsurance. That really does create demand for Waystar solutions. When you think about what providers are most focused on, it is lowering the cost to collect, optimizing payment yield—whether from an insurance reimbursement or from a patient—and reducing time to collect.

Speaker #5: And we think that that is that setup is squarely within the line of what the value proposition is for WasteStar solutions. We know that our solutions are mission critical that they can be very helpful to providers in addressing the utilization environment, helping them do more with less, helping them have optionality to address the self-pay population or the uninsured population with many of the software modules and capabilities that we have on WasteStar's platform.

Speaker #2: We know that they want to use a platform approach versus a point solution, because there’s this point solution fatigue, where many of them are using well over a dozen point solutions, in a patchworked way, to try to figure out how they can optimize their collections and address their patient population.

Speaker #5: And certainly to continue to optimize and detect coverage where a patient may be eligible for coverage our solutions use AI to detect that coverage.

Speaker #2: And we think that that setup is squarely within the line of what the value proposition is for Waystar solutions. We know that our solutions are mission-critical, that they can be very helpful to providers in addressing the utilization environment, helping them do more with less, and helping them have optionality to address the self-pay population or the uninsured population with many of the software modules and capabilities that we have on Waystar's platform.

Speaker #5: And so we think those factors all contribute to a strong demand environment that we see at WasteStar and have contributed to strong bookings momentum and a robust pipeline as we address the second half of the year.

Speaker #4: Perfect. Thank you so much. Appreciate all the color.

Speaker #3: Thank you. Our next question comes from Michael Cherney with Leering Partners, your line is open.

Speaker #6: Good afternoon. Thanks for taking the question. Maybe if I can build a little bit on Ryan's question thinking about the end market. As you go into RFPs and really nice to see some of these business wins, but especially now as you go in with iodine, what is the pitch that you're making and are you seeing any different responses either against module components or potentially embedded EHR players as you drive towards your NR levels and other new wins that you saw in the quarter?

Speaker #2: And certainly, to continue to optimize and detect coverage where a patient may be eligible for coverage, our solutions use AI to detect that coverage.

Speaker #2: And so we think those factors all contribute to a strong demand environment that we see at Waystar and have contributed to strong bookings momentum and a robust pipeline as we address the second half of the year.

Speaker #6: Thank you.

Speaker #4: Perfect. Thank you so much. Appreciate all the color.

Speaker #5: Thank you. Thank you, Michael. We are seeing client interest in combining clinical and financial intelligence. And that's exactly the opportunity that we saw when we acquired iodine.

Speaker #3: Thank you. Our next question comes from Michael Cherney with Leerink Partners. Your line is open.

Speaker #5: Good afternoon. Thanks for taking the question. Maybe if I can build a little bit on Ryan's question, thinking about the end market. As you go into RFPs—it's really nice to see some of these business wins—especially now as you go in with Iodine.

Speaker #5: We know that in doing so, what we're doing is effectively reaching further upstream into the clinical workflows and beginning there, working to prevent denials from occurring in the first place, which really helps providers.

Speaker #5: What is the pitch that you're making? And are you seeing any different responses, either against module components or potentially embedded EHR players, as you drive towards your NR levels and other new wins that you saw in the quarter?

Speaker #5: Working to detect anomalies where as they begin to form a claim, we want that claim to be highly accurate so we're deploying AI to help them.

Speaker #5: Thank you.

Speaker #5: We've seen some really nice wins as we called out in our prepared remarks in the quarter. More than $6 million of some of the pre-bill anomaly detection capabilities that really come about because now iodine and WasteStar are one company.

Speaker #2: Thank you. Thank you, Michael. We are seeing client interest in combining clinical and financial intelligence, and that's exactly the opportunity that we saw when we acquired Iodine.

Speaker #5: And we see strong pipeline and momentum in that regard. And again, all of it is oriented toward what our vision was at the outset of acquiring iodine, which was to use iodine as the AI engine to help form new solutions that are AI-based that can thematically prevent denials from occurring and create that perfect undeniable claim that will lead to accurate and timely payment.

Speaker #2: We know that, in doing so, what we're doing is effectively reaching further upstream into the clinical workflows and beginning there—working to prevent denials from occurring in the first place, which really helps providers.

Speaker #2: We're working to detect anomalies. As claim formation begins, we want those claims to be highly accurate, so we're deploying AI to help with this process.

Speaker #2: We've seen some really nice wins, as we called out in our prepared remarks in the quarter—more than $6 million from some of the pre-bill anomaly detection capabilities that really come about because now Iodine and Waystar are one company.

Speaker #5: So we do like the setup and we feel good about the strategy. We believe it's intact.

Speaker #2: And we see strong pipeline and momentum in that regard. And again, all of it is oriented toward what our vision was at the outset of acquiring Iodine, which was to use Iodine as the AI engine to help form new solutions that are AI-based, that can thematically prevent denials from occurring and create that perfect, undeniable claim that will lead to accurate and timely payment.

Speaker #3: Thank you. Our next question comes from Steven Vallequette with Mizuho Securities, your line is open.

Speaker #6: Yeah. Thanks. Good afternoon. Just kind of a high-level question. Just kind of curious about just overall RCM platform approach. Obviously, now you have iodine with CDI software.

Speaker #6: A lot of vendors sell medical coding software and CDI together. Just curious about your appetite for other vertical solutions within RCM to kind of round things out and does medical coding software make Thanks.

Speaker #2: So, we do like the setup, and we feel good about the strategy. We believe it's intact.

Speaker #5: Thanks, Steven. Yeah. We're absolutely focused on building toward the robust autonomous revenue cycle solution. And again, the acquisition and the strategic logic of why iodine is very much a part of that vision because we're uniting the front end of our platform with the middle part that perfect puzzle piece that you've heard me describe in quarters past with the back end, clearing house capabilities, which as you all know, the clearing house is the heart and soul of the revenue cycle because that's where all the things that you do building up to payment, that's where the rubber hits the road, so to speak, and where the action occurs.

Speaker #3: Thank you. Our next question comes from Steven Vallequette with Mizuho Securities. Your line is open.

Speaker #6: Yeah, thanks. Good afternoon. Just kind of a high-level question—just kind of curious about your overall RCM platform approach. Obviously, now you have Iodine with CDI software.

Speaker #6: A lot of vendors sell medical coding software and CDI together. Just curious about your appetite for other vertical solutions within RCM to kind of round things out, and does medical coding software make sense tied into CDI?

Speaker #6: Thanks.

Speaker #2: Thanks, Steven. Yeah. We're absolutely focused on building toward the robust autonomous revenue cycle solution. And again, the acquisition and the strategic logic of why iodine is very much a part of that vision because we're uniting the front end of our platform with the middle part, that perfect puzzle piece that you've heard me describe in quarters past with the back end, clearinghouse capabilities, which as you all know, the clearinghouse is the heart and soul of the revenue cycle because that's where all the things that you do building up to payment, that's where the rubber hits the road, so to speak, and where the action occurs.

Speaker #5: And so really our platform is a system of action. And it's driving real benefit. Within the mid-cycle, you highlight some important things. That we believe that we have the right to do or the right to partner with others in the space.

Speaker #5: So on the one end of the clinical documentation improvement capability where again, iodine is deploying over 150 AI models and delivering more and more all the time.

Speaker #5: There is the ambient listening category. We know those players and there's opportunity for us to partner there. On the other end, you highlighted coding.

Speaker #2: And so, really, our platform is a system of action, and it's driving real benefit. Within the mid-cycle, you highlight some important things—that we believe we have the right to do, or the right to partner with others in the space.

Speaker #5: And in particular, there's the autonomous coding category or the auto coding category. With all the work that we're doing, we believe that we have the right to explore that area and expand our addressable market opportunity.

Speaker #2: So, on the one end of the clinical documentation improvement capability—where, again, Iodine is deploying over 150 AI models and delivering more and more all the time.

Speaker #5: We certainly are studying that space carefully. And I won't say more than that at this point in time. But again, when you look long-term at what we're building toward, envision this autonomously acting revenue cycle platform where a lot of work is shifting from automated work to orchestrated work by agents acting on behalf of revenue cycle experts.

Speaker #2: There is the ambient listening category. We know those players, and there's opportunity for us to partner there. On the other end, you highlighted coding.

Speaker #2: And in particular, there's the autonomous coding category, or the auto coding category. With all the work that we're doing, we believe that we have the right to explore that area and expand our addressable market opportunity.

Speaker #5: To create that perfect round-the-clock behaving solution that benefits providers and creates a highly informed patient who can engage in their financial responsibility where we seek payments as well.

Speaker #2: We certainly are studying that space carefully, and I won't say more than that at this point in time. But again, when you look long-term at what we're building toward, envision this autonomously acting revenue cycle platform, where a lot of work is shifting from automated work to orchestrated work by agents acting on behalf of revenue cycle experts.

Speaker #5: That's where we're headed. And I hope my answer helps address some of the ways we're thinking about added opportunity in the middle part of the revenue cycle.

Speaker #6: Yep. That's great. Thank you.

Speaker #5: Thank you.

Speaker #3: Thank you. Our next question comes from Scott Schoenhaus with KeyBank, your line is open.

Speaker #4: Thanks, guys, for taking my question. So you noted the strength in the large provider clients. And you talked about bookings. I'm just wondering on the RFP process specifically, on the pipeline there, are you seeing more large provider clients this year versus last year in your RFP process?

Speaker #2: To create that perfect round-the-clock behaving solution that benefits providers and creates a highly informed patient who can engage in their financial responsibility where we seek payments as well.

Speaker #4: And what are they coming specifically for? Is iodine the lead catalyst for that? I'm just trying to get a better sense of the RFP process given all the concern around large hospital systems.

Speaker #2: That's where we're headed, and I hope my answer helps address some of the ways we're thinking about added opportunity in the middle part of the revenue cycle.

Speaker #6: Yep. That's great. Thank you.

Speaker #4: Contemplating whether in-house or other third-party AI platforms here. Thank you.

Speaker #2: Thank you.

Speaker #3: Thank you. Our next question comes from Scott Schoenhaus with KeyBank. Your line is open.

Speaker #5: Yeah. Thank you, Scott. We are seeing an uptick in RFPs. And we're participating in more RFPs. And that is leading to the types of strong bookings results that we see.

Speaker #5: Thanks, guys, for taking my question. So, you noted the strength in the large provider clients and you talked about bookings. I'm just wondering, on the RFP process specifically, on the pipeline there, are you seeing more large provider clients this year versus last year in your RFP process?

Speaker #5: And because these are larger wins recent wins and as we look ahead in our robust pipeline, their RFP activities going on within our bookings pipeline, some of these are taking slightly longer to implement.

Speaker #5: And what are they coming specifically for? Is iodine the lead catalyst for that? I'm just trying to get a better sense of the RFP process given all the concern around large hospital systems, contemplating whether in-house or other third-party AI platforms here.

Speaker #5: And it's not just one solution. It's multiple solutions, front, middle, or back. And often all. And so that's a thrilling for us to be able to participate in those things.

Speaker #5: Thank you.

Speaker #2: you, Scott. We are seeing an uptick in RFPs. And we're participating in more RFPs. And that is leading to the types of strong bookings results that we see.

Speaker #5: We're creating Deliated clients as we take them live. And when I step back, Scott, this is what we were alluding to all the way back in 2024 when we were working to rapidly address not only the phase one as you may have heard me talk about it, clients that needed rescuing when a competitor of ours was cyber attacked.

Speaker #2: And because these are larger wins, recent wins, and as we look ahead in our robust pipeline, there are RFP activities going on within our bookings pipeline. Some of these are taking slightly longer to implement.

Speaker #5: And their network was taken down. But we alluded to a phase two, what we thought was going to be a longer tail of phase two.

Speaker #2: And it's not just one solution. It's multiple solutions, front, middle, or back. And often all. And so that's a thrilling for us to be able to participate in those things.

Speaker #5: We didn't know how to timebox it at the time. We didn't know how big it was going to be. But we had a sense that this was going to be a longer phase two.

Speaker #5: We're living in that now. And we have seen an uptick. Some of that uptick is already resulted in bookings. But we don't see that diminishing.

Speaker #2: We're creating Deliated clients as we take them live. And when I step back, Scott, this is what we were alluding to all the way back in 2024 when we were working to rapidly address not only the phase one as you may have heard me talk about it, clients that needed rescuing when a competitor of ours was cyber attacked and their network was taken down.

Speaker #5: And we believe that Waystar is well positioned to continue to participate and to win given the strength of our win rates I highlight in our prepared remarks.

Speaker #5: That class report that named us a top platform solution. It's inaugural report in this topic. We were thrilled with that. And I think that's an evidence point for how we're positioning Waystar to be successful in this exciting phase two that you've heard us talk about.

Speaker #2: But we alluded to a phase two, what we thought was going to be a longer tail of phase two. We didn't know how to timebox it at the time.

Speaker #2: We didn't know how big it was going to be, but we had a sense that this was going to be a longer phase two.

Speaker #6: Thank you.

Speaker #2: We're living in that now. And we have seen an uptick. Some of that uptick is already resulted in bookings, but we don't see that diminishing.

Speaker #3: Thank you. Our next question comes from Brian Peterson with Raymond James that your line is open.

Speaker #2: And we believe that Waystar is well positioned to continue to participate and to win, given the strength of our win rates I highlighted in our prepared remarks.

Speaker #4: Hey, guys. Thanks for taking the question. And congrats on the strong bookings. So I wanted to unpack the transaction component a bit. And how did that trend versus your internal expectations in the quarter?

Speaker #4: It looks like the patient volume was up a bit, but the provider was down. Is there anything that you can share that gives us more context on that?

Speaker #2: That class report that named us a top platform solution. It's inaugural report in this topic. We were thrilled with that. And I think that's an evidence point for how we're positioning Waystar to be successful in this exciting phase two that you've heard us talk about.

Speaker #4: Thank you.

Speaker #5: Yeah. Thanks, Brian. This is Steve. I'll take that. So I'd say for the quarter, the patient utilization aligns with both our expectations and with overall guidance for the year.

Speaker #5: Thank you.

Speaker #5: And as Matt alluded to earlier, it's in line with what we've seen from a long-term historical annual uplift year-over-year, recognizing that we're looking at a tough comp when we're looking at 26 versus 25.

Speaker #3: Thank you. Our next question comes from Brian Peterson with Raymond James that your line is open.

Speaker #5: Hey, guys. Thanks for taking the question and congrats with a strong booking. So I wanted to unpack the transaction component a bit. And how did that trend versus your internal expectations in the quarter?

Speaker #5: Because those that utilization was elevated in 25. To your question and I'll probably specify a little more on the volume-based revenue we talked about, that in the past being about 45% of revenue, 142 million in the quarter.

Speaker #5: It looks like the patient volume was up a bit, but the provider was down. Is there anything that you can share that gives us more context on that?

Speaker #5: Thank you.

Speaker #2: Yeah, thanks, Brian. This is Steve. I'll take that. So, I'd say for the quarter, the patient utilization aligns with both our expectations and with overall guidance for the year.

Speaker #5: That is up 3% year-over-year. If you were to normalize the items that we talked about that on prior calls, whether they were specific to 25 or earlier in 26, that volume-based revenue on a normalized basis is more like 8% year-over-year.

Speaker #2: And as Matt alluded to earlier, it's in line with what we've seen from a long-term historical annual uplift year-over-year, recognizing that we're looking at a tough comp when we're looking at 26 versus 25 because those that utilization was elevated in '25.

Speaker #5: So feel really good about, again, where it is for the quarter. And then where we've seen it so far year to date versus our expectations from a guidance perspective, recognizing that it is in line with the long-term historical trends versus what we've experienced or seen in the last couple of years.

Speaker #2: To your question and I'll probably specify a little more on the volume-based revenue we talked about, that in the past being about 45% of revenue, 142 million in the quarter.

Speaker #2: That is up 3% year-over-year. If you were to normalize the items that we talked about on prior calls, whether they were specific to '25 or earlier in '26, that volume-based revenue on a normalized basis is more like 8% year-over-year.

Speaker #5: Yeah. I mean, I'd say, Brian, really quickly, adding on to what Steve just highlighted, speaking specifically, we called out those three large client implementations a year ago in 25 that we were able to take live on a very compressed timeline.

Speaker #5: And as we noted, then they were larger and the nature of the agreements we had with them were transactional volume-based. And so that's part of what leads to the year-over-year comp that optically looks the way it does.

Speaker #2: So feel really good about, again, where it is for the quarter. And then where we've seen it so far year to date versus our expectations from a guidance perspective, recognizing that it is in line with the long-term historical trends versus what we've experienced or seen in the last couple of years.

Speaker #5: But we feel good about the volume-based aspect of our business. And the growth opportunity there.

Speaker #2: Yeah. I mean, I'd say, Brian, really quickly, adding on to what Steve just highlighted, speaking specifically, we called out those three large client implementations a year ago in '25 that we were able to take live on a very compressed timeline.

Speaker #3: Thank you. Our next question comes from Brian Pinkelet with Jefferies. Your line is open.

Speaker #6: Hey, good afternoon. And Steve, thank you. And good luck with the move. So maybe just my question. As I think about guidance and the move on the EBITDA range, you beat by 7 million Q1, 6 million Q2 roughly.

Speaker #2: And as we noted then, they were larger and the nature of the agreements we had with them were transactional volume-based. And so that's part of what leads to the year-over-year comp that optically looks the way it does.

Speaker #6: Just curious, is there anything we should be thinking about in the back half of the year that kind of preventing you from guiding at least by the beats that you've seen this year?

Speaker #2: But we feel good about the volume-based aspect of our business and the growth opportunity there.

Speaker #5: Well, Brian, thank you. So first, we're pleased with the performance of the business. This is the ninth consecutive quarter of beating analysts' expectations and consensus on both revenue and EBITDA.

Speaker #3: Thank you. Our next question comes from Brian Pinkelette with Jefferies. Your line is open.

Speaker #5: Hey, good afternoon. And Steve, thank you, and good luck with the move. So maybe just my question—as I think about guidance and the move on the EBITDA range, you beat by $7 million in Q1, $6 million in Q2, roughly.

Speaker #5: We have confidence in our full year outlook. And what I'd say is that a couple of thoughts on EBITDA production in particular. We have a number of internal initiatives that you've heard us talk about in the past.

Speaker #5: Just curious, is there anything we should be thinking about in the back half of the year that's kind of preventing you from guiding, at least by the beats that you've seen this year?

Speaker #5: Some of those are AI operating leverage type initiatives that create improvement in gross margin, which I think you see show up in our P&L.

Speaker #5: Also, continued expansion of our adjusted EBITDA margin. As noted in the quarter, we're balancing that with the tremendous opportunity we see to continue to invest for the long-term growth of the business.

Speaker #2: Well, Brian, thank you. So first, we're pleased with the performance of the business. This is the ninth consecutive quarter of beating analysts' expectations and consensus on both revenue and EBITDA.

Speaker #5: And that is additional growth investments in AI and continuing to position Waystar to be the category leader of this AI-first autonomous revenue cycle platform.

Speaker #2: We have confidence in our full-year outlook. And what I'd say is that, a couple of thoughts on EBITDA production in particular: we have a number of internal initiatives that you've heard us talk about in the past.

Speaker #5: So we are certainly confident in our full year guide on revenue and EBITDA. But we want to reserve a little bit of room for us to invest as appropriate.

Speaker #2: Some of those are AI operating leverage-type initiatives that create improvement in gross margin, which I think you see show up in our adjusted EBITDA margin.

Speaker #5: And by the way, we think that the 40-plus percent adjusted EBITDA margins that were delivering are great because it is putting us in a strong capital position.

Speaker #2: As noted in the quarter, we're balancing that with the tremendous opportunity we see to continue to invest for the long-term growth of the business.

Speaker #5: As you see us driving free cash flow. Steve, would you highlight anything incrementally? Yeah. Just to tie up what Matt just said, as you look through the entirety of the financials, Brian, I just and you saw it in my prepared remarks call out the capital software spend where it's capitalized, sorry, software spend where it ties directly into what Matt said about how we're focused on driving new solutions and implementing and inserting AI into our existing platform to round out the capabilities and drive an already impressive ROI for our clients even higher.

Speaker #2: And that is additional growth investments in AI and continuing to position Waystar to be the category leader of this AI-first autonomous revenue cycle platform.

Speaker #2: So we are certainly confident in our full-year guide on revenue and EBITDA, but we want to reserve a little bit of room for us to invest as appropriate.

Speaker #2: And by the way, we think that the 40-plus percent adjusted EBITDA margins that were delivering are great because it is putting us in a strong capital position as you see us driving free cash flow.

Speaker #5: If you looked at the capitalized software spend in the first half of the year, you'd see it's roughly double what it was in 2025.

Speaker #2: Steve, would you highlight anything incrementally? Yeah. Just to tie up what Matt just said, as you look through the entirety of the financials, Brian, I just and you saw it in my prepared remarks call out the capital software spend where it's capitalized, sorry, software spend where it ties directly into what Matt said about how we're focused on driving new solutions and implementing and inserting AI into our existing platform to round out the capabilities and drive an already impressive ROI for our clients even higher.

Speaker #5: And that is a reflection of how we're investing, as Matt said, into the products to date to drive revenue growth for the future. And I'd say we're doing it in a very thoughtful manner as well as you could see that from the unleveraged free cash flow conversion of adjusted EBITDA being 47% in the quarter.

Speaker #5: I mentioned a couple of other items out there. But we're looking to invest in and spend it in prudent manners and to Matt's point, just to circle back to it, we would expect some of that to be flowing through to the P&L in the second half of the year.

Speaker #2: If you looked at the capitalized software spend in the first half of the year, you'd see it's roughly double what it was in 2025.

Speaker #5: And really, as we look at the full year guide of 42% adjusted EBITDA margin, I think that's phenomenal based upon how we're looking to invest for the future while being stewards of the business today.

Speaker #2: And that is a reflection of how we're investing, as Matt said, into the products to date to drive revenue growth for the future. And I'd say we're doing it in a very thoughtful manner, as well. You can see that from the unleveraged free cash flow conversion of adjusted EBITDA being 47% in the quarter.

Speaker #6: I appreciate that. Thank you.

Speaker #3: Thank you. Our next question comes from Elizabeth Anderson with Evercore ISI. Your line is open.

Speaker #7: Hi guys. This is Ayushan for Elizabeth. Thanks for taking my question. You've talked about the 6 to 18-month lead time for large bookings a couple of quarters ago.

Speaker #2: I mentioned a couple of other items out there, but we're looking to invest in and spend it in prudent manners and to Matt's point, just to circle back to it, we would expect some of that to be flowing through to the P&L in the second half of the year.

Speaker #7: And as you scale this number of $1 million contracts, as you kind of mentioned in the prepared remarks, are you seeing that range tighten closer to like 0 to 12 months now, or is 6 to 18 months sort of the right way to still think about it?

Speaker #2: And really, as we look at the full-year guide of 42% adjusted EBITDA margin, I think that's phenomenal based upon how we're looking to invest for the future while being stewards of the business today.

Speaker #5: Thank you, Ayushan. And give Elizabeth our best. I'd say that 6 to 18 months is still generally how we're thinking about it. We're certainly working to pull that in as tight as we can.

Speaker #5: I appreciate that. Thank you.

Speaker #3: Thank you. Our next question comes from Elizabeth Anderson with Evercore ISI. Your line is open.

Speaker #5: We see once in a while people moving much faster and we're always grateful for that as we position ourselves to win. But most often, it's a very deliberate, thoughtful process that provider decision-makers go through.

Speaker #6: Hi guys. This is Ayushan for Elizabeth. Thanks for taking my question. You've talked about the 6 to 18-month lead time for large bookings a couple of quarters ago.

Speaker #6: And as you've scaled this number of $1 million contracts, as you kind of mentioned in the prepared remarks, are you seeing that range tighten closer to like 0 to 12 months now, or is 6 to 18 months sort of the right way to still think about it?

Speaker #5: And it tends to be that 6 to 18 months, especially for the larger deals that where we've highlighted some examples. The good news is we have a robust growth team.

Speaker #2: Thank you, Ayushan, and give Elizabeth our best. I'd say that's 6 to 18 months is still generally how we're thinking about it. We're certainly working to pull that in as tight as we can.

Speaker #5: We have a proven track record in how we go and discover opportunities in accounts. We're able to sell the full platform. But we're also able to go to where the clients need help the most.

Speaker #2: We see once in a while people moving much faster, and we're always grateful for that as we position ourselves to win. But most often, it's a very deliberate, thoughtful process that provider decision-makers go through.

Speaker #5: And so sometimes the variability there is if the client wants help or the prospect wants help in one particular area, that might be more 6 to 9 to 12 months.

Speaker #5: If they want the full platform or multiple solutions on the platform, like what we're seeing, the traditional average for us of 6 to 18 tends to hold true.

Speaker #2: And it tends to be that 6 to 18 months, especially for the larger deals where we've highlighted some examples. The good news is we have a robust growth team.

Speaker #5: So it's a proven method and we're always working to compress it because we know that benefits of doing so on our P&L. But we've got a great team pursuing it.

Speaker #2: We have a proven track record in how we go and discover opportunities in accounts. We're able to sell the full platform, but we're also able to go to where the clients need help the most.

Speaker #7: Thank you.

Speaker #3: Thank you. Our next question comes from Ryan Halstead with RBC Capital Markets. Your line is open.

Speaker #2: And so sometimes the variability there is, if the client wants help or the prospect wants help in one particular area, that might be more six to nine to twelve months.

Speaker #8: Good afternoon. Thanks for taking the question. I thought maybe you could comment just on the NRR, which has been kind of steadily stepping down.

Speaker #2: If they want the full platform or multiple solutions on the platform, like what we're seeing, the traditional average for us of 6 to 18 tends to hold true.

Speaker #8: Appreciating kind of all the color you've offered so far on the business, it'd be helpful just to kind of hear it in the context of NRR in terms of the moving parts.

Speaker #2: So it's a proven method, and we're always working to compress it because we know that benefits of doing so on our P&L, but we've got a great team pursuing it.

Speaker #8: Should we be reading into it some impact of the volume-based business, or is it sort of a lack of upsell? Or is there even some attrition?

Speaker #6: Thank you.

Speaker #3: Thank you. Our next question comes from Ryan Halstead ad with RBC Capital Markets. Your line is open.

Speaker #8: Any sort of color on the inputs that go into the NRR would be helpful. Thanks.

Speaker #7: Good afternoon. Thanks for taking the question. I thought maybe you could comment just on the NRR, which has been kind of steadily stepping down.

Speaker #5: Yeah, certainly, Ryan. This is Steve. So first off, I'd say we view the NRR, the LTM view. This quarter. It's very healthy in alignment with our long-term historical sort of NRR rate.

Speaker #7: Appreciating kind of all the color you've offered so far on the business, it'd be helpful just to kind of hear it in the context of NRR in terms of the moving parts.

Speaker #5: We talked about before in obviously, there's a slide that we include in our investor deck that shows the bridge from gross revenue retention to NRR.

Speaker #7: Should we be reading into it some impact of the volume-based business, or is it sort of a lack of upsell? Or is there even some attrition?

Speaker #5: And if you look at those components, gross revenue retention continues to remain very strong at 97%. The sort of the trend that you're noticing is a factor primarily of two things.

Speaker #7: Any sort of color on the inputs that go into the NRR would be helpful. Thanks.

Speaker #2: Yeah, certainly, Ryan. This is Steve. So, first off, I'd say we view the NRR, the LTM view of 108 for this quarter, as very healthy and in alignment with our long-term historical sort of NRR rate.

Speaker #5: One, it's the clients and their time to wrap it revenue that Matt had mentioned earlier, how they benefited NRR for the quarterly period. I think around Q2 of '25 through Q1 of '26.

Speaker #2: We've talked about before in obviously, there's a slide that we include in our investor deck that shows the bridge from gross revenue retention to NRR.

Speaker #5: So that added to what historically we had seen. And then the fact that we had higher utilization rates through the middle to about the, I'll call it, midway through the second half of 2025 also had a positive benefit and impact on that.

Speaker #2: And if you look at those components, gross revenue retention continues to remain very strong at 97%. The sort of the trend that you're noticing is a factor primarily of two things.

Speaker #5: So if you look at that slide in the, again, in our IR deck, you'd see that historically it's been about 108 to 110. And the components that lead from gross to net are all in about those same ranges that are indicated on that slide.

Speaker #2: One, it's the clients and their time to wrap it revenue that Matt had mentioned earlier, how they benefited NRR for the quarterly period. I think around Q2 of '25 through Q1 of '26.

Speaker #5: So very comfortable with the 108 and I wouldn't read more into it than we've just had some tailwind items the past few quarters that have allowed it to be beneficial and above that historical 108 to 110 range.

Speaker #2: So, that added to what we had seen historically. And then the fact that we had higher utilization rates through the middle to about, I'll call it, midway through the second half of 2025, also had a positive benefit and impact on that.

Speaker #8: Got it. Okay. Helpful. Thanks.

Speaker #3: Thank you. Our next question comes from Richard Clos with Cannock Originality. Your line is open.

Speaker #2: So if you look at that slide in the, again, in our IR deck, you'd see that historically it's been about 108 to 110. And the components that lead from gross to net are all in about those same ranges that are indicated on that slide.

Speaker #8: Yes. Thanks for the question. Steve, enjoyed working with you over the last several years. With respect to you have a strong partnership with Google.

Speaker #2: So, very comfortable with the 108, and I wouldn't read more into it than we've just had some tailwind items the past few quarters that have allowed it to be beneficial and above that historical 108 to 110 range.

Speaker #8: On the AI front, I'm just Steve curious, maybe what you're seeing in terms of cost to compute as AI is integrated into your platform.

Speaker #8: And how that gets baked into your guidance, how you think about cost of compute.

Speaker #7: Got it. Okay. Helpful. Thanks.

Speaker #5: Yeah. Thanks, Richard, for the kind words. And I'd say as Matt talked earlier on the call about the internal initiatives that we have that are always ongoing that are looking to add scalability to our overall operating profile.

Speaker #3: Thank you. Our next question comes from Richard Clos with Cannock Originity. Your line is open.

Speaker #8: Yeah, thanks for the question, Steve. I've enjoyed working with you over the last several years. With respect to your question, we have a strong partnership with Google on the AI front.

Speaker #5: One of the things that we know that and the reinvestments areas that we've talked about previously. One of those areas that we know will utilize from the benefits of those operational activities is to cover things like cost to compute without impacting our overall margin profile.

Speaker #8: I'm just, Steve, curious—maybe what you're seeing in terms of cost to compute as AI is integrated into your platform, and how that gets baked into your guidance, how you think about cost of compute.

Speaker #5: And you could probably see that in the first couple of quarters here with not only a calculable gross margin, remaining at about 70%, which is in line with where we were in the back half of '25.

Speaker #2: Yeah. Thanks, Richard, for the kind words. And I'd say as Matt talked earlier on the call about the internal initiatives that we have that are always ongoing that are looking to add scalability to our overall operating profile.

Speaker #5: But the overall adjusted EBITDA margin as well as we look all the way through the P&L. So I think we feel really good about how we've set the contracts with Google and sort of the cost structure that we have in with that without going into too much detail.

Speaker #2: One of the things that we know that and the reinvestments areas that we've talked about previously. One of those areas that we know will utilize from the benefits of those operational activities is to cover things like cost to compute without impacting our overall margin profile.

Speaker #5: And feel like the other areas where we would expect cost to compute just to normally and appropriately increase as we continue to sell more and more AI and AI solutions or AI-enabled solutions into our client base, we feel very good about the other areas that we have ongoing that will allow us to absorb those for lack of a better phrasing.

Speaker #2: And you could probably see that in the first couple of quarters here, with not only a calculable gross margin remaining at about 70%, which is in line with where we were in the back half of '25.

Speaker #2: But the overall adjusted EBITDA margin, as well, as we look all the way through the P&L. So I think we feel really good about how we've set the contracts with Google and sort of the cost structure that we have in with that, without going into too much detail.

Speaker #5: Matt, anything else you'd add to that? Yeah, I had a couple of things. Thanks, Steve. So first, token expense is all the region that broader market discussion isn't it?

Speaker #5: And people are worried about the use or consumption of tokens and trying to manage and govern those broadly. And it's interesting to follow the broader industry conversation, which I'm sure you're all following.

Speaker #2: And we feel like the other areas, where we would expect costs to continue to just normally and appropriately increase as we continue to sell more and more AI and AI solutions, or AI-enabled solutions, into our client base—we feel very good about the other areas that we have ongoing, that will allow us to absorb those, for lack of a better phrasing.

Speaker #5: What we do at Wavestar, we have an internal governance model and AI governance approach that really could be exportable. And we could help our clients manage the way they think about AI.

Speaker #5: As we create this operating system approach for the autonomous revenue cycle, we expect to deliver foundation model capability, agentic capability while carefully and thoughtfully managing token expense and use of foundation model expense on behalf of the clients that we serve.

Speaker #2: Matt, anything else you'd add to that? Yeah, I had a couple of things. Thanks, Steve. So first, token expense is all the region of that broader market discussion, isn't it?

Speaker #2: And people are worried about the use or consumption of tokens, and trying to manage and govern those broadly. It's interesting to follow the broader industry conversation, which I'm sure you're all following.

Speaker #5: And we've got a unique approach. I appreciate you highlighting the relationship that we have with Google. It's a very constructive relationship. Again, we like the fact that they're a hyperscaler and doing some very progressive things.

Speaker #2: What we do at Waystar, we have an internal governance model and AI governance approach that really could be exportable. And we could help our clients manage the way they think about AI.

Speaker #5: We're getting the benefit of that as our teams are spending time co-developing on site together and there's some really breakthrough things that we're focused on.

Speaker #5: But amongst those is the importance of getting a grasp on governing the use of those models. So while we've trained 100% of our internal team and given 100% of our internal team access to various foundation models to do real work, we're also taking approach thoughtfully to how to govern expense internally and also on behalf of the clients.

Speaker #2: As we create this operating system approach for the autonomous revenue cycle, we expect to deliver foundation model capability and agentic capability, while carefully and thoughtfully managing token expense and use of foundation model expense on behalf of the clients that we serve.

Speaker #2: And we've got a unique approach. I appreciate you highlighting the relationship that we have with Google. It's a very constructive relationship. Again, we like the fact that they're a hyperscaler and doing some very progressive things.

Speaker #5: And I think we'll see a steady long-term view that we can do so effectively.

Speaker #8: Thank you.

Speaker #2: We're getting the benefit of that, as our teams are spending time co-developing on-site together, and there are some really breakthrough things that we're focused on.

Speaker #3: Thank you. Our next question comes from George Hill with DB. Your line is open.

Speaker #7: Hey, good evening, guys. And thanks for taking the questions. And I've got kind of two quick ones. I guess, Steve, can you talk about given the slowdown in the volume-based growth, kind of what's embedded in the guidance for the back half of the year?

Speaker #2: But amongst those is the importance of getting a grasp on governing the use of those models. So while we've trained 100% of our internal team and given 100% of our internal team access to various foundation models to do real work, we're also taking an approach thoughtfully to how to govern expense internally and also on behalf of the clients.

Speaker #7: And if that's like a number that continues to grow in a 3% range or if we should expect to see a continued deceleration there.

Speaker #7: And then my other kind of follow-up is like, can you talk a little bit where the leverage in the model is coming in? Because the revenue guide for the year is up modestly while the EBITDA guide is up significantly more than the revenue guide.

Speaker #2: And I think we'll see a steady, long-term view that we can do so effectively.

Speaker #8: Thank you.

Speaker #7: So I'd say from a margin perspective, that math doesn't perfectly match. But clearly there's cost coming out faster than revenue is rolling along or we're just kind of love to understand the dynamics between the revenue guide and the increase in the EBITDA guide.

Speaker #3: Thank you. Our next question comes from George Hill with DB. Your line is open.

Speaker #5: Hey, good evening, guys, and thanks for taking the questions. And I've got kind of two quick ones. I guess, Steve, can you talk about, given the slowdown in the volume-based growth, kind of what's embedded in the guidance for the back half of the year?

Speaker #7: Thank you.

Speaker #5: Yeah, certainly, George. Just a couple of things as you think about volume-based revenue for the rest of the year. The baseline for that is patient utilization of the healthcare system.

Speaker #5: And if that's like a number that continues to grow in a 3% range or if we should expect to see a continued deceleration there.

Speaker #5: And then my other kind of follow-up is, can you talk a little bit about where the leverage in the model is coming in? Because the revenue guide for the year is up modestly, while the EBITDA guide is up significantly more than the revenue guide.

Speaker #5: And we've ve talked our original guidance was for the impact for us, which is generally about a 1 to 2% uplift annually, year over year.

Speaker #5: That was our expectation going into the year. That expectation hasn't changed. If you think about the 3% year over year, increase on the volume-based side for the second quarter, I'd ask you to think about it in terms of the guidance for the full year, that normalized organic rate of 8% that I had mentioned earlier in the call.

Speaker #5: So I'd say, from a margin perspective, that math doesn't perfectly match. But clearly there's cost coming out faster than revenue is rolling along, or—we'd just kind of love to understand the dynamics between the revenue guide and the increase in the EBITDA guide.

Speaker #5: Thank you.

Speaker #2: Yeah, certainly, George. Just say a couple of things as you think about volume-based revenue for the rest of the year. The baseline for that is patient utilization of the healthcare system.

Speaker #5: So if you're looking at sort of how to impact that from a year over year perspective, and then I'd say as you think about and your question about the revenue range and the uplift in the midpoint of guidance of a million dollars versus the adjusted EBITDA uplift at the midpoint arranging guidance of 5 million dollars.

Speaker #2: And we've talked, our original guidance was for the impact for us, which is generally about a 1% to 2% uplift annually, year over year.

Speaker #2: That was our expectation going into the year. That expectation hasn't changed. If you think about the 3% year over year, increase on the volume-based side for the second quarter, I'd ask you to think about it in terms of the guidance for the full year that normalized organic rate of 8% that I had mentioned earlier in the call.

Speaker #5: It's a factor of a couple of things. It's a reflection of where we've run the business for the first half of the year. And specifically from an adjusted EBITDA perspective there at 43%, while we still expect 42% for the full year partially want to be able to recognize that we've run the business a little above our full year expectation at the beginning of the year.

Speaker #2: So if you're looking at sort of how to impact that from a year-over-year perspective, and then I'd say, as you think about and your question about the revenue range and the uplift in the midpoint of guidance of a million dollars versus the adjusted EBITDA uplift at the midpoint of range in guidance of five million dollars, it's a factor of a couple of things that it's a reflection of where we've run the business for the first half of the year.

Speaker #5: And Matt and I talked about a little earlier in the call just as a reminder the areas of where we're looking to invest in AI and how we expect that to impact the back half of the year.

Speaker #5: The other piece to that is we've made the comment in not only on this call, but in the last call in our prepared comments about the revenue mix and how we're continuing to see the revenue and sorry, the bookings and then how it's translating into revenue.

Speaker #2: And specifically, from an adjusted EBITDA perspective, they're at 43%, while we still expect 42% for the full year. I partially want to be able to recognize that we've run the business a little above our full-year expectation at the beginning of the year.

Speaker #5: From higher margin deals and it's a reflection of that factor as well that we continue to see the margin profile from the bookings side of things and how some of those are up the shorter timeline being reflected in the P&L and feel really good about that factor as well.

Speaker #2: And Matt and I talked about a little earlier in the call just as a reminder the areas of where we're looking to invest in AI and how we expect that to impact the back half of the year.

Speaker #2: The other piece to that is we've made the comments in not only on this call, but in the last call in our prepared comments about the revenue mix and how we continue to see the revenue and the sorry, the bookings and then how it's translating into revenue.

Speaker #5: And obviously that's good for the business. That gives us additional ability to look at how we want to utilize those funds investing in or otherwise throughout the business.

Speaker #7: Thank you.

Speaker #5: You're welcome.

Speaker #3: Thank you. Our next question comes from Alan Lutz with Bank of America. Your line is open.

Speaker #2: From higher margin deals and it's a reflection of that factor as well that we continue to see the margin profile from the bookings side of things and how some of those are up the shorter timeline being reflected in the P&L and feel really good about that factor as well.

Speaker #6: Good afternoon. Thanks for taking the questions. First, Steve, it was great working with you. Best wishes moving forward. I have two questions in one here.

Speaker #6: Last quarter AI was 40% of bookings. I don't know if you provided what it was this quarter, but if you are going to provide it, can you let us know what that was?

Speaker #6: And then Steve, as we think about the level of capitalized software, as you talked about earlier in the call, it's gone up over the past year and over the past couple of quarters.

Speaker #2: And obviously, that's good for the business. That gives us additional ability to look at how we want to utilize those funds—investing in or otherwise—throughout the business.

Speaker #6: Can you talk about this level of capitalized software? Is this the right run rate? And then as we think about the duration of the higher capitalized software spend, is there any timeframe that you can give for us there?

Speaker #5: Thank you.

Speaker #2: You're welcome.

Speaker #3: Thank you. Our next question comes from Alan Lutz with Bank of America. Your line is open.

Speaker #6: Thanks.

Speaker #6: Good afternoon. Thanks for taking the questions. First, Steve, it was great working with you. Best wishes moving forward. I have two questions in one here.

Speaker #5: Yeah, certainly, Alan. I'll start with the first one. We saw again a very good composition and mix. This quarter from a bookings perspective of AI enabled solutions.

Speaker #6: Last quarter, AI was 40% of bookings. I don't know if you provided what it was this quarter, but if you are going to provide it, can you let us know what that was?

Speaker #5: To answer your question specifically, that was approximately 40% again in this quarter. So feel really good about where we sit, not only for the quarter, but for the year to date.

Speaker #6: And then, Steve, as we think about the level of capitalized software, as you talked about earlier in the call, it's gone up over the past year and over the past couple of quarters.

Speaker #5: On the capitalized software development cost front, I think that if we're looking at a very near-term run rate and our expectation through the rest of 2026, sorry, I would think that what we've seen the first couple of quarters here in 2025 are a good indication of what we'd see for the rest of the year.

Speaker #6: Can you talk about this level of capitalized software? Is this the right run rate? And then as we think about the duration of the higher capitalized software spend, is there any timeframe that you can give for us there?

Speaker #6: Thanks.

Speaker #2: Yeah, certainly, Alan. I'll start with the first one. We saw again a very good composition and mix this quarter from a bookings perspective of AI enabled solutions.

Speaker #5: Absent our we'll reserve the right, if I can use that phrase, to as we continue to understand where our opportunities are to rapidly bring new solutions to market and continue to differentiate ourselves versus the competition, we may go a little higher than what we've seen for the first couple of quarters from a run rate perspective.

Speaker #2: To answer your question specifically, that was approximately 40% again in this quarter. So feel really good about where we sit not only for the quarter, but for the year to date.

Speaker #2: On the capitalized software development cost front, I think that if we're looking at a very near-term run rate and our expectation through the rest of 2026, sorry, I would think that what we've seen the first couple of quarters here in 2025 are a good indication of what we'd see for the rest of the year.

Speaker #5: But I think we feel really good about our capabilities today and reserve the right to increase a little bit more. Obviously, keeping in tune with our and conscious of our unlevered free cash flow conversion rate I don't think you'd see us do something like some of the hyperscalers have done in which would mean looking at going negative from a cash flow perspective, not at all.

Speaker #2: Absent our—we'll reserve the right, if I can use that phrase, to, as we continue to understand where our opportunities are to rapidly bring new solutions to market and continue to differentiate ourselves versus the competition, we may go a little higher than what we've seen for the first couple of quarters from a run rate perspective.

Speaker #5: Matt, I don't know what else you had. I mean, I would say it's a great question. I'd say we're working to meet this unique moment in time.

Speaker #5: We feel like we've got a great position to be a category leader to build the markets first and most robust autonomous revenue cycle platform.

Speaker #2: But I think we feel really good about our capabilities today and reserve the right to increase a little bit more. Obviously, keeping in tune with and conscious of our unlevered free cash flow conversion rate, I don't think you'd see us do something like some of the hyperscalers have done, which would mean looking at going negative from a cash flow perspective—not at all.

Speaker #5: And so you have seen us step up our cap software spend. We're doing a number of things internally that are allowing us to accelerate the ability to deliver AI-powered solutions models deployed to do specific work that we know based on some testing that we're doing with clients that these are things that are going to produce good outcomes.

Speaker #2: Matt, I don't know what else you had to add.

Speaker #4: I mean, I would say it's a great question. I'd say we're working to meet this unique moment in time. We feel like we've got a great position to be a category leader to build the markets first and most robust autonomous revenue cycle platform.

Speaker #5: And so you'll see us be disciplined, but at the same time want to meet this unique moment in time which is why we've doubled the cap software spend thus far and we'll continue to track and report to the group.

Speaker #4: And so you have seen us step up our cap software spend. We're doing a number of things internally that are allowing us to accelerate the ability to deliver AI-powered solutions models deployed to do specific work that we know based on some testing that we're doing with clients that these are things that are going to produce good outcomes.

Speaker #5: The nice setup for us is that we have a strong P&L that produces growth, compounding growth, and good free cash flow conversion from strong EBITDA performance.

Speaker #5: And it gives us optionality to do the right thing for the business that will create long-term shareholder benefit and client benefit just given our position in the market.

Speaker #4: And so you'll see us be disciplined, but at the same time want to meet this unique moment in time which is why we've doubled the cap software spend thus far and we'll continue to track and report to the group.

Speaker #6: Great. Thank you both.

Speaker #5: Thank you.

Speaker #3: Thank you. Our next question comes from Craig Hettenbach with Morgan Stanley. Your line is open.

Speaker #7: Yes, thank you. Question on just 2026 guidance. So kind of implied for the back half is roughly in change anything you would call out between Q3 and Q4.

Speaker #4: The nice setup for us is that we have a strong P&L that produces compounding growth and good free cash flow conversion from strong EBITDA performance.

Speaker #7: And then as you think through the larger deal sizes, some that are extending out to 18 months for ramp-up, how do you think about the visibility as you head into next year?

Speaker #4: And it gives us optionality to do the right thing for the business that will create long-term shareholder benefit and client benefit just given our position in the market.

Speaker #5: Yes, Craig, this is Steve. So we would expect from a second half of the year dynamic to your question specifically on Q3 and Q4 in that portion of the volume-based business that we have that are surrounding the patient the collections from the patients that's about the 15% of overall revenue.

Speaker #6: Great. Thank you both.

Speaker #2: Thank you.

Speaker #3: Thank you. Our next question comes from Craig Hettenbach with Morgan Stanley. Your line is open.

Speaker #5: Yes, thank you. Question on just 2026 guidance—so, kind of implied for the back half is roughly in. Is there any change you would call out between Q3 and Q4?

Speaker #5: It typically has a dynamic whereas those patients that are on high deductible plans meet those deductible plans. They would have slightly lower revenue in the fourth quarter versus the third quarter.

Speaker #5: And then as you think through the larger deal sizes, some that are extending out to 18 months for ramp up, how do you think about the visibility as you head into next year?

Speaker #5: We would still expect that seasonality component to exist similar to prior years. As we think about these large deals that we've talked about, the million-dollar-plus signings, I think it gives us really good visibility and confidence as we look out into the future and specifically we've talked in the past about and we mentioned earlier on the call about the iodine solutions that we're seeing cross-sell from.

Speaker #2: Yes, Craig, this is Steve. So we would expect from a second half of the year dynamic to your question specifically on Q3 and Q4 in that portion of the volume-based business that we have that are surrounding the patient the collections from the patients.

Speaker #2: That's about the 15% of overall revenue. It typically has a dynamic whereas those patients that are on high deductible plans meet those deductible plans.

Speaker #5: It gives us real good encouragement and confidence in the comments we've made historically about the time to revenue from those cross-sell items and impact in 2027 and feel highly confident that that opportunity still as obviously the overall visibility from those million-dollar-plus agreements.

Speaker #2: They would have slightly lower revenue in the fourth quarter versus the third quarter. We would still expect that seasonality component to exist similar to prior years.

Speaker #2: As we think about these large deals that we've talked about, the million-dollar plus signings, I think it gives us really good visibility and confidence as we look out into the future and specifically we've talked in the past about and we mentioned earlier on the call about the iodine solutions that we're seeing cross-sell from.

Speaker #5: Yeah, I think that's right. I mean, I think '26 feels like it's about sales execution, and setting up implementations, we expect revenue contribution and platform benefits to become increasingly visible through '27.

Speaker #5: And as Steve said, it does give us added confidence and conviction that the long term is forming well.

Speaker #2: It gives us real good encouragement and confidence in the comments we've made historically about the time to revenue from those cross-sell items and impact in 2027 and feel highly confident that that opportunity still exists out here today as well as obviously the overall visibility from those million-dollar plus agreements.

Speaker #7: Helpful. Thank you.

Speaker #3: Thank you. And our final question comes from Charles Reed with TD Callan. Your line is open.

Speaker #8: Oh, yeah. Thanks for squeezing me in. And Steve, nice working with you. Good luck in the future. I guess maybe I want to follow up on an earlier question that Matt and Steve you kind of responded to when we think about competition and obviously the concerns are there's some concerns here that big health systems can leverage sort of added services from their EHR vendor who are trying to move into rev cycle.

Speaker #4: Yeah, I think that's right. I mean, I think '26 feels like it's about sales execution and setting up implementations we expect revenue contribution and platform benefits to become increasingly visible through '27.

Speaker #4: And as Steve said, it does give us added confidence and conviction that the long term is forming well.

Speaker #5: Helpful. Thank you.

Speaker #8: And I understand the value proposition that you guys are presenting and sort of the greater ROI that you would that customers can expect from the point Waste Are.

Speaker #3: Thank you. And our final question comes from Charles Reed with TD Cowan. Your line is open.

Speaker #2: Oh, yeah. Thanks for squeezing me in. And And Steve, nice working with you. Good luck in the future. I guess maybe I want to follow up on an earlier question that Matt and Steve, you kind of responded to when we think about competition and obviously the concerns are there's some concerns here that big health systems can leverage sort of added services from their EHR vendor who are trying to move into rev cycle.

Speaker #8: But can you talk a little bit about then when you're in these questions in the pipeline, do you run into situation where customers say, "Well, we can just try this first and then see how that goes and then we'll come back?" Or is there an understanding that rev cycle being as mission-critical it is, it's there's no maybe there's just not that value to try something that's maybe not as good.

Speaker #2: And I understand the value proposition that you guys are presenting, and sort of the greater ROI that customers can expect from deploying Waystar.

Speaker #8: But just trying to understand a little bit the decision tree that clients could be going through or are going through and sort of how that fits into your discussions.

Speaker #8: Thanks.

Speaker #5: Yeah. Thanks, Charles. This is a good question for us to address. Speaking of the large EHR systems, what I'd say is revenue cycle management isn't simply an extension of the EHR.

Speaker #2: But can you talk a little bit about then, when you're in these questions in the pipeline, do you run into situations where customers are saying, "Well, we can just try this first and then see how that goes, and then we'll come back?"

Speaker #2: Or is there a understanding that rev cycle being as mission critical it is, it's there's no maybe there's just not that value to try something that's maybe not as good.

Speaker #5: It's not a natural extension to the EHR because it's a different development cycle. It requires different connection to payers. It's a different cadence, etc.

Speaker #2: I'm just trying to better understand the decision tree that clients could be going through, or are going through, and sort of how that fits into your discussions.

Speaker #5: And I'd say the large EHR vendors, they're important partners to us. We're grateful for their partnership. We work with nearly 2,000 hospitals and many of them use these large EHR solutions.

Speaker #2: Thanks.

Speaker #4: Yeah, thanks, Charles. This is a good question for us to address. Speaking of the large EHR systems, what I'd say is, revenue cycle management isn't simply an extension of the EHR.

Speaker #5: I think where we see the decision tree is and by the way, we haven't really noted a change in the competitive environment. So I think that's a really important to establish here.

Speaker #4: It's not a natural extension to the EHR because it's a different development cycle. It requires different connection to payers. It's a different cadence, etc.

Speaker #5: The decision tree is first and foremost clients want outcomes. They prioritize outcomes and ROI more than they do novelty, point solution, and free. Or built-in cost.

Speaker #4: And I'd say the large EHR vendors are important partners to us. We're grateful for their partnership. We work with nearly 2,000 hospitals, and many of them use these large EHR solutions.

Speaker #5: So they really want outcomes because if you don't change outcomes, then you could have a free or included solution that becomes very expensive because if your denial rate stays at 15%, that's a very expensive solution.

Speaker #4: I think where we see the decision tree is and by the way, we haven't really noted a change in the competitive environment. So I think that's a really important to establish here.

Speaker #5: The second point is in the prioritization or decision tree of things is not only do they want outcomes, they want to see it from one end to the other.

Speaker #4: The decision tree is first and foremost clients want outcomes. They prioritize outcomes and ROI more than they do novelty, point solution, and free. Or built-in cost.

Speaker #5: So you think about some of these large EHR systems like an Epic. Epic is the EHR system of record in many of these hospitals.

Speaker #5: Cerner's another one. Meditech's another one. We're grateful to work with each of them. But where they are the system of record, WasteAre is the system of action.

Speaker #4: So they really want outcomes, because if you don't change outcomes, then you could have a free or included solution that becomes very expensive. If your denial rate stays at 15%, that's a very expensive solution.

Speaker #5: And our only focus is to build the best solutions that create the best outcomes in the revenue cycle for our clients. That's all we do.

Speaker #5: So we think that as much as you hear about an EHR-first approach, you could we think that there's a WasteAre-first approach and we work well in many places with EHR systems of record where WasteAre is a system of action.

Speaker #4: The second point is in the prioritization or decision tree of things is not only do they want outcomes, they want to see it from one end to the other.

Speaker #4: So you think about some of these large EHR systems, like an Epic. Epic is the EHR system of record in many of these hospitals.

Speaker #5: And we have many evidences of where we're winning in securing business where a minimum viable product or an announced solution isn't showing up in the market and achieving the goal that that provider is looking to achieve.

Speaker #4: Cerner's another one. Meditech's another one. We're grateful to work with each of them. But where they are the system of record, Waystar is the system of action.

Speaker #4: And our only focus is to build the best solutions that create the best outcomes in the revenue cycle for our clients. That's all we do.

Speaker #5: They're looking for benefit today and we're giving them benefit today. So that's kind of how I'd respond to that. And again, grateful for the partners that we have.

Speaker #4: So, we think that as much as you hear about an EHR-first approach, there could—we think that there's a Waystar-first approach, and we work well in many places with EHR systems of record where Waystar is a system of action.

Speaker #5: We serve over and work with integrate with over 500 different EHR vendors. And over 200 active channel partners. And we're grateful to be that system of action and that WasteAre-first approach to so many.

Speaker #5: So as we wrap up today, let me thank everybody for the time. And the call and we look forward to I'd like to also thank our team for helping us produce these results.

Speaker #4: And we have many evidences of where we're winning in securing business where a minimum viable product or an announced solution isn't showing up in the market and achieving the goal that that provider is looking to achieve.

Speaker #5: We feel so grateful to serve the clients that we do. And we're grateful for your thoughtful questions today. So thanks, everybody.

Speaker #4: They're looking for benefit today and we're giving them benefit today. So that's kind of how I'd respond to that. And again, grateful for the partners that we have.

Speaker #4: We serve and integrate with over 500 different EHR vendors, and have over 200 active channel partners. We're grateful to be that system of action and to bring a Waystar-first approach to so many.

Speaker #4: So, as we wrap up today, let me thank everybody for their time and for joining the call. We look forward to connecting again soon. I'd also like to thank our team for helping us produce these results.

Speaker #4: We feel so grateful to serve the clients that we do, and we're grateful for your thoughtful questions today. So, thanks, everybody.

Operator: Good day. Thank you for standing by. Welcome to the Waystar Q2 2026 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. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Edward Parker, Head of Investor Relations. Please go ahead.

Operator: Good day. Thank you for standing by. Welcome to the Waystar Q2 2026 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. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Edward Parker, Head of Investor Relations. Please go ahead.

Edward Parker: Thank you, operator. Good afternoon, everyone. Thank you for joining Waystar's Q2 2026 earnings call. Joining me today are Matt Hawkins, Waystar's Chief Executive Officer, and Steve Oreskovich, Waystar's Chief Financial Officer. This afternoon, we issued a press release announcing our financial results and published an accompanying presentation deck. You can find these materials at investors.waystar.com. Before we begin, I would like to remind you that this call contains forward-looking statements, which are predictions or beliefs about future events or performance. Examples of these statements include expectations of future financial results, growth, and margins. These statements involve a number of risks and uncertainties that may cause actual results to differ materially from those expressed in these statements.

Edward Parker: Thank you, operator. Good afternoon, everyone. Thank you for joining Waystar's Q2 2026 earnings call. Joining me today are Matt Hawkins, Waystar's Chief Executive Officer, and Steve Oreskovich, Waystar's Chief Financial Officer. This afternoon, we issued a press release announcing our financial results and published an accompanying presentation deck. You can find these materials at investors.waystar.com. Before we begin, I would like to remind you that this call contains forward-looking statements, which are predictions or beliefs about future events or performance. Examples of these statements include expectations of future financial results, growth, and margins. These statements involve a number of risks and uncertainties that may cause actual results to differ materially from those expressed in these statements.

Edward Parker: For a full discussion of the risks and other factors that may impact these forward-looking statements, please refer to this afternoon's press release, and the reports we file with the SEC, all of which are available on the Investor Relations page of our website. Any forward-looking statements made on this call are only as of today and will not be updated unless required by law. We will also discuss certain non-GAAP financial measures. These measures are intended to provide additional insight into our performance and should not be considered in isolation or as a substitute for financial information prepared in accordance with GAAP. We have provided reconciliations of the non-GAAP financial measures included in our remarks to the most directly comparable GAAP measures, together with explanations of these measures in the appendix of the presentation slide deck, and our earnings release.

Edward Parker: For a full discussion of the risks and other factors that may impact these forward-looking statements, please refer to this afternoon's press release, and the reports we file with the SEC, all of which are available on the Investor Relations page of our website. Any forward-looking statements made on this call are only as of today and will not be updated unless required by law. We will also discuss certain non-GAAP financial measures. These measures are intended to provide additional insight into our performance and should not be considered in isolation or as a substitute for financial information prepared in accordance with GAAP. We have provided reconciliations of the non-GAAP financial measures included in our remarks to the most directly comparable GAAP measures, together with explanations of these measures in the appendix of the presentation slide deck, and our earnings release.

Edward Parker: With that, I'd like to turn the call over to Matt.

Edward Parker: With that, I'd like to turn the call over to Matt.

Matt Hawkins: Thank you, Edward, and good afternoon, everyone. Thank you for joining our Q2 2026 earnings call. We delivered another solid quarter as we executed our strategy, supported our clients, and advanced the Waystar platform toward a more autonomous revenue cycle. During the quarter, we delivered revenue of $320 million, representing 18% year-over-year growth and adjusted EBITDA of $137 million, resulting in an adjusted EBITDA margin of 43%, which exceeded consensus expectations for the quarter. We also delivered another strong quarter of bookings, supported by ongoing momentum with larger provider organizations, expansion across our client base, and sustained demand for Waystar's AI-powered solutions. While the operating environment continues to evolve, the breadth of our platform, the diversity of our client base, and the mission-critical nature of our solutions support healthy demand across the business.

Matt Hawkins: Thank you, Edward, and good afternoon, everyone. Thank you for joining our Q2 2026 earnings call. We delivered another solid quarter as we executed our strategy, supported our clients, and advanced the Waystar platform toward a more autonomous revenue cycle. During the quarter, we delivered revenue of $320 million, representing 18% year-over-year growth and adjusted EBITDA of $137 million, resulting in an adjusted EBITDA margin of 43%, which exceeded consensus expectations for the quarter. We also delivered another strong quarter of bookings, supported by ongoing momentum with larger provider organizations, expansion across our client base, and sustained demand for Waystar's AI-powered solutions. While the operating environment continues to evolve, the breadth of our platform, the diversity of our client base, and the mission-critical nature of our solutions support healthy demand across the business.

Matt Hawkins: At Waystar, our focus is to help providers lower the cost to collect, accelerate reimbursement, and improve payment accuracy across the revenue cycle. In Q2, we saw healthy demand across the business, ongoing client expansion, and broader adoption of Waystar solutions. Large platform deployments drove strong bookings during the quarter, including a double-digit number of $1 million-plus ACV bookings, reinforcing the trend we have discussed over the past several quarters and our view that providers increasingly value a connected platform approach. Larger client relationships also continue to grow. Clients generating more than $100,000 of trailing 12-month revenue grew to 1,453, up 15% year over year. Within this cohort, clients have expanded their use of Waystar solutions over the past several years, demonstrating the compounding value clients realize as they adopt additional Waystar capabilities over time.

Matt Hawkins: At Waystar, our focus is to help providers lower the cost to collect, accelerate reimbursement, and improve payment accuracy across the revenue cycle. In Q2, we saw healthy demand across the business, ongoing client expansion, and broader adoption of Waystar solutions. Large platform deployments drove strong bookings during the quarter, including a double-digit number of $1 million-plus ACV bookings, reinforcing the trend we have discussed over the past several quarters and our view that providers increasingly value a connected platform approach. Larger client relationships also continue to grow. Clients generating more than $100,000 of trailing 12-month revenue grew to 1,453, up 15% year over year. Within this cohort, clients have expanded their use of Waystar solutions over the past several years, demonstrating the compounding value clients realize as they adopt additional Waystar capabilities over time.

Matt Hawkins: Net revenue retention was 108%, within our historical range, demonstrating continued expansion within our existing client base. At the same time, new clients are increasingly selecting multiple Waystar solutions as part of their initial purchase decision. Platform consolidation continues to accelerate as providers move away from fragmented point solutions in favor of a single connected software platform. KLAS Research's inaugural Revenue Cycle Management Suites report reflects that shift. Among providers using multiple solutions from a single vendor, the study found that Waystar clients reported some of the strongest improvements in collections performance and cost to collect, providing independent validation of the operational and financial benefits providers can achieve when more of the revenue cycle is managed on a single platform. One of our million-dollar-plus ACV bookings is a nonprofit health system serving central New Jersey and southeastern Pennsylvania.

Matt Hawkins: Net revenue retention was 108%, within our historical range, demonstrating continued expansion within our existing client base. At the same time, new clients are increasingly selecting multiple Waystar solutions as part of their initial purchase decision. Platform consolidation continues to accelerate as providers move away from fragmented point solutions in favor of a single connected software platform. KLAS Research's inaugural Revenue Cycle Management Suites report reflects that shift. Among providers using multiple solutions from a single vendor, the study found that Waystar clients reported some of the strongest improvements in collections performance and cost to collect, providing independent validation of the operational and financial benefits providers can achieve when more of the revenue cycle is managed on a single platform. One of our million-dollar-plus ACV bookings is a nonprofit health system serving central New Jersey and southeastern Pennsylvania.

Matt Hawkins: The win reflects the value of Waystar's platform, with the provider selecting Waystar to replace three separate vendors across claims management, patient financial care, clinical documentation integrity, and revenue capture. We also continue to see existing clients expand their relationships with Waystar. This quarter, one of the largest nonprofit health systems in the country began implementing an expanded partnership across eligibility verification and insurance coverage detection. Already a seven-figure Waystar client, the added solutions are expected to generate more than $1 million in incremental annual revenue, reinforcing the advantage of a single connected platform over a patchwork of point solutions. Another established client and multibillion-dollar academic health system with more than 3,000 beds and 9,000 physicians also recently went live with additional Waystar Altitude AI capabilities designed to prevent denials as part of its strategy to centralize revenue cycle operations.

Matt Hawkins: The win reflects the value of Waystar's platform, with the provider selecting Waystar to replace three separate vendors across claims management, patient financial care, clinical documentation integrity, and revenue capture. We also continue to see existing clients expand their relationships with Waystar. This quarter, one of the largest nonprofit health systems in the country began implementing an expanded partnership across eligibility verification and insurance coverage detection. Already a seven-figure Waystar client, the added solutions are expected to generate more than $1 million in incremental annual revenue, reinforcing the advantage of a single connected platform over a patchwork of point solutions. Another established client and multibillion-dollar academic health system with more than 3,000 beds and 9,000 physicians also recently went live with additional Waystar Altitude AI capabilities designed to prevent denials as part of its strategy to centralize revenue cycle operations.

Matt Hawkins: The go-live increases the client's annual investment in Waystar by an incremental seven figures while helping lower its cost to collect, reduce manual follow-up, and operate more efficiently at enterprise scale. During the quarter, we also saw encouraging adoption of Iodine solutions within the existing Waystar client base. More than $6 million of bookings came from existing Waystar clients purchasing Iodine capabilities, an early proof point of our expanding cross-sell opportunity as clients bring together financial and clinical data to improve outcomes. As coverage dynamics evolve and self-pay populations grow, providers need stronger capabilities to identify available coverage and protect reimbursement. In a newly published success story, ProMedica, a hospital and physician network serving 4.7 million patients annually, leveraged Waystar's patient insurance coverage solution to uncover nearly $10 million in previously unidentified billing opportunities that may have otherwise been missed.

Matt Hawkins: The go-live increases the client's annual investment in Waystar by an incremental seven figures while helping lower its cost to collect, reduce manual follow-up, and operate more efficiently at enterprise scale. During the quarter, we also saw encouraging adoption of Iodine solutions within the existing Waystar client base. More than $6 million of bookings came from existing Waystar clients purchasing Iodine capabilities, an early proof point of our expanding cross-sell opportunity as clients bring together financial and clinical data to improve outcomes. As coverage dynamics evolve and self-pay populations grow, providers need stronger capabilities to identify available coverage and protect reimbursement. In a newly published success story, ProMedica, a hospital and physician network serving 4.7 million patients annually, leveraged Waystar's patient insurance coverage solution to uncover nearly $10 million in previously unidentified billing opportunities that may have otherwise been missed.

Matt Hawkins: This quarter, we published an in-depth analysis of data from hundreds of hospitals using Waystar's clinical integrity and revenue capture capabilities. The analysis showed clients experienced outsized returns, including three times greater financial impact from integrated clinical documentation workflows, generating $2.17 million in incremental reimbursement for 10,000 discharges and a 90% year-over-year increase in pre-bill dollars caught by our revenue leakage protection capabilities. Collectively, these examples demonstrate the value of the Waystar platform. As clients adopt more capabilities, they reduce complexity, improve performance, and drive stronger financial outcomes. The momentum we're seeing across the business reflects more than strong execution. It reflects the position Waystar occupies within the healthcare payment ecosystem and the advantages that position creates for our clients.

Matt Hawkins: This quarter, we published an in-depth analysis of data from hundreds of hospitals using Waystar's clinical integrity and revenue capture capabilities. The analysis showed clients experienced outsized returns, including three times greater financial impact from integrated clinical documentation workflows, generating $2.17 million in incremental reimbursement for 10,000 discharges and a 90% year-over-year increase in pre-bill dollars caught by our revenue leakage protection capabilities. Collectively, these examples demonstrate the value of the Waystar platform. As clients adopt more capabilities, they reduce complexity, improve performance, and drive stronger financial outcomes. The momentum we're seeing across the business reflects more than strong execution. It reflects the position Waystar occupies within the healthcare payment ecosystem and the advantages that position creates for our clients.

Matt Hawkins: Waystar sits at the center of the healthcare payment ecosystem, connecting providers and payers through critical workflows that span the payment life cycle from authorization and claims submission through adjudication, payment, and reimbursement. Providers see their workflows. Payers see their workflows. Waystar connects and acts autonomously across both. Operating at that intersection gives us insight into the interactions, dependencies, and friction points between providers and payers. That perspective enables us to improve performance across the revenue cycle and deliver better payment outcomes. Every transaction provides intelligence about how payments move through the system. As payer requirements change, Waystar helps identify friction, adapt quickly, and continuously improve performance across the network. The result is stronger operational and financial performance for clients, including faster payment decisions, accelerated time to payment, fewer errors, and less rework across the revenue cycle. Waystar processes more than 7.5 billion transactions annually.

Matt Hawkins: Waystar sits at the center of the healthcare payment ecosystem, connecting providers and payers through critical workflows that span the payment life cycle from authorization and claims submission through adjudication, payment, and reimbursement. Providers see their workflows. Payers see their workflows. Waystar connects and acts autonomously across both. Operating at that intersection gives us insight into the interactions, dependencies, and friction points between providers and payers. That perspective enables us to improve performance across the revenue cycle and deliver better payment outcomes. Every transaction provides intelligence about how payments move through the system. As payer requirements change, Waystar helps identify friction, adapt quickly, and continuously improve performance across the network. The result is stronger operational and financial performance for clients, including faster payment decisions, accelerated time to payment, fewer errors, and less rework across the revenue cycle. Waystar processes more than 7.5 billion transactions annually.

Matt Hawkins: The scale of that network creates a unique combination of connectivity, data, workflow intelligence, and payment intelligence that strengthens the value of the platform, supports innovation across the business, and increasingly enables the application of AI across the revenue cycle. These advantages are reinforced by the four structural foundations you've heard me discuss previously: mission-critical infrastructure, proprietary data, an extensively deployed network, and deep domain expertise. We believe these advantages contribute to the strong win rates we achieve and support our ability to compete successfully against point solutions, broader software platforms, end-to-end service providers, and newer market entrants. Taken together, these strengths create a durable advantage that is difficult to replicate and increasingly valuable as providers look to reduce administrative burden, improve efficiency, and drive better financial outcomes. As we've discussed over the last several quarters, we continue advancing our vision of creating the industry's first autonomous revenue cycle.

Matt Hawkins: The scale of that network creates a unique combination of connectivity, data, workflow intelligence, and payment intelligence that strengthens the value of the platform, supports innovation across the business, and increasingly enables the application of AI across the revenue cycle. These advantages are reinforced by the four structural foundations you've heard me discuss previously: mission-critical infrastructure, proprietary data, an extensively deployed network, and deep domain expertise. We believe these advantages contribute to the strong win rates we achieve and support our ability to compete successfully against point solutions, broader software platforms, end-to-end service providers, and newer market entrants. Taken together, these strengths create a durable advantage that is difficult to replicate and increasingly valuable as providers look to reduce administrative burden, improve efficiency, and drive better financial outcomes. As we've discussed over the last several quarters, we continue advancing our vision of creating the industry's first autonomous revenue cycle.

Matt Hawkins: Our goal is not simply to deploy AI, it is to orchestrate the right AI at the right moment across the revenue cycle to reduce administrative burden, improve performance, and deliver better outcomes for providers. Our AI deployment is not experimental. It is embedded and monetized, and it delivers meaningful outcomes inside the mission-critical workflows our clients rely on every day. External recognition during the quarter provided additional validation of these efforts, with Waystar named to the TIME100 Most Influential Companies list and earning the TIME Impact in AI Award. More than a dozen clients have committed to our next generation anomaly detection solution during the H1 of the year. This solution represents an important step forward because it combines Iodine's clinical documentation capabilities with Waystar's revenue capture engine. We are encouraged by the interest it is generating from large hospitals and health systems.

Matt Hawkins: Our goal is not simply to deploy AI, it is to orchestrate the right AI at the right moment across the revenue cycle to reduce administrative burden, improve performance, and deliver better outcomes for providers. Our AI deployment is not experimental. It is embedded and monetized, and it delivers meaningful outcomes inside the mission-critical workflows our clients rely on every day. External recognition during the quarter provided additional validation of these efforts, with Waystar named to the TIME100 Most Influential Companies list and earning the TIME Impact in AI Award. More than a dozen clients have committed to our next generation anomaly detection solution during the H1 of the year. This solution represents an important step forward because it combines Iodine's clinical documentation capabilities with Waystar's revenue capture engine. We are encouraged by the interest it is generating from large hospitals and health systems.

Matt Hawkins: Early adopters are seeing approximately $3 million in incremental revenue recovered per 10,000 admissions through automated revenue leakage detection. We are also seeing promising results from our newest Waystar AltitudeAI-powered solution focused on payer takebacks. U.S. Renal Care, a dialysis provider with more than 500 centers across 32 states, achieved an 88% autonomous match rate between recoupments and original claims, reducing the time spent managing recoupments by approximately 80%. As we look ahead, we are focused on the same priorities that have guided us over the last several quarters: simplifying healthcare payments, driving innovation, and delivering meaningful value for our clients, our team members, and our shareholders. The fundamentals of the business are strong. Client partnerships are healthy. Our long-term opportunity is significant. We look forward to sharing more about our strategy, client adoption trends, and long-term vision at the Investor Day in August.

Matt Hawkins: Early adopters are seeing approximately $3 million in incremental revenue recovered per 10,000 admissions through automated revenue leakage detection. We are also seeing promising results from our newest Waystar AltitudeAI-powered solution focused on payer takebacks. U.S. Renal Care, a dialysis provider with more than 500 centers across 32 states, achieved an 88% autonomous match rate between recoupments and original claims, reducing the time spent managing recoupments by approximately 80%. As we look ahead, we are focused on the same priorities that have guided us over the last several quarters: simplifying healthcare payments, driving innovation, and delivering meaningful value for our clients, our team members, and our shareholders. The fundamentals of the business are strong. Client partnerships are healthy. Our long-term opportunity is significant. We look forward to sharing more about our strategy, client adoption trends, and long-term vision at the Investor Day in August.

Matt Hawkins: Before I turn the call over to Steve, I want to take a moment to recognize him and thank him for everything he has done for Waystar. As we announced earlier today, Steve will be transitioning from the chief financial officer role after 8 years with the company. Steve has been a tremendous leader, trusted advisor, and great friend. He has played a critical role in helping build Waystar into the company we are today. Helping us scale the business, build a world-class finance organization, navigate our IPO, and establish the strong financial foundation that supports our continued growth today. More importantly, Steve has been an invaluable partner to me and our leadership team. His judgment, integrity, and steady leadership have had a lasting impact on this company, and we are all better because of his contributions.

Matt Hawkins: Before I turn the call over to Steve, I want to take a moment to recognize him and thank him for everything he has done for Waystar. As we announced earlier today, Steve will be transitioning from the chief financial officer role after 8 years with the company. Steve has been a tremendous leader, trusted advisor, and great friend. He has played a critical role in helping build Waystar into the company we are today. Helping us scale the business, build a world-class finance organization, navigate our IPO, and establish the strong financial foundation that supports our continued growth today. More importantly, Steve has been an invaluable partner to me and our leadership team. His judgment, integrity, and steady leadership have had a lasting impact on this company, and we are all better because of his contributions.

Matt Hawkins: While Steve will be transitioning from the CFO role, he will remain with Waystar as an advisor over the coming months to help ensure a smooth transition. We are pleased to welcome Alpana Wegner, who joined Waystar this week as our next CFO. Alpana brings extensive public company finance and software industry leadership experience, having served as CFO at several public software companies and held a variety of senior finance and operating leadership roles throughout her career. I look forward to introducing her to you in the coming weeks. Steve, thank you again. You've been a great partner and a great friend. On behalf of all of us at Waystar, thank you for your leadership, your friendship, and everything you've done for this company. We wish you and your family the very best. With that, I'll turn it over to you.

Matt Hawkins: While Steve will be transitioning from the CFO role, he will remain with Waystar as an advisor over the coming months to help ensure a smooth transition. We are pleased to welcome Alpana Wegner, who joined Waystar this week as our next CFO. Alpana brings extensive public company finance and software industry leadership experience, having served as CFO at several public software companies and held a variety of senior finance and operating leadership roles throughout her career. I look forward to introducing her to you in the coming weeks. Steve, thank you again. You've been a great partner and a great friend. On behalf of all of us at Waystar, thank you for your leadership, your friendship, and everything you've done for this company. We wish you and your family the very best. With that, I'll turn it over to you.

Steve Oreskovich: Thanks, Matt, and thank you for the kind words. Serving as CFO of Waystar over the past eight years has been one of the greatest privileges of my professional career. I have had the opportunity to work alongside an exceptional team, support incredible clients, and be part of a remarkable journey. I am incredibly proud of what we have built together and even more confident in where the company is headed. I want to thank our team members, clients, shareholders, and the many friends I have made along the way for their trust, support, and partnership. I am grateful for the opportunity to have been part of this team and this company. With that, let me turn to the quarter. Revenue increased 18% year over year in Q2 to $320 million, and organic revenue grew 7% year over year.

Steve Oreskovich: Thanks, Matt, and thank you for the kind words. Serving as CFO of Waystar over the past eight years has been one of the greatest privileges of my professional career. I have had the opportunity to work alongside an exceptional team, support incredible clients, and be part of a remarkable journey. I am incredibly proud of what we have built together and even more confident in where the company is headed. I want to thank our team members, clients, shareholders, and the many friends I have made along the way for their trust, support, and partnership. I am grateful for the opportunity to have been part of this team and this company. With that, let me turn to the quarter. Revenue increased 18% year over year in Q2 to $320 million, and organic revenue grew 7% year over year.

Steve Oreskovich: Excluding previously discussed items affecting comparability, normalized organic growth was approximately 10% in the quarter. Performance in the quarter reflects expansion across the client base, healthy adoption of high-value solutions, and continued strong execution. Total booking value and expected margin composition again exceeded internal expectations. Bookings also include a double-digit count of $1 million-plus annual contract value engagements, with activity continuing to skew towards larger platform deployments and new solutions, such as the pre-bill demand Matt discussed. Clients generating more than $100,000 of revenue in the last 12 months increased by 20 in Q2 to 1,453 at quarter end, an increase of 15% year over year. Our net revenue retention rate, also viewed on a last 12-month basis, was 108% at the end of Q2, within our historical range of 108% to 110%.

Steve Oreskovich: Excluding previously discussed items affecting comparability, normalized organic growth was approximately 10% in the quarter. Performance in the quarter reflects expansion across the client base, healthy adoption of high-value solutions, and continued strong execution. Total booking value and expected margin composition again exceeded internal expectations. Bookings also include a double-digit count of $1 million-plus annual contract value engagements, with activity continuing to skew towards larger platform deployments and new solutions, such as the pre-bill demand Matt discussed. Clients generating more than $100,000 of revenue in the last 12 months increased by 20 in Q2 to 1,453 at quarter end, an increase of 15% year over year. Our net revenue retention rate, also viewed on a last 12-month basis, was 108% at the end of Q2, within our historical range of 108% to 110%.

Steve Oreskovich: Subscription revenue of $176 million for Q2 increased 34% year over year, 2% sequentially, and was 55% of total revenue. On an organic basis, subscription revenue grew 12% year over year, continuing to grow at a double-digit rate and reinforcing the health of the core Waystar business. Volume-based revenue of $142 million for Q2 increased 3% year over year and 2% sequentially. Please recall the items impacting Q2 year over year comparability are volume-based. We are pleased that both subscription and volume-based revenue performance align with expectations indicated on our prior earnings call. Adjusted EBITDA of $137 million for Q2 increased 21.5% year over year.

Steve Oreskovich: Subscription revenue of $176 million for Q2 increased 34% year over year, 2% sequentially, and was 55% of total revenue. On an organic basis, subscription revenue grew 12% year over year, continuing to grow at a double-digit rate and reinforcing the health of the core Waystar business. Volume-based revenue of $142 million for Q2 increased 3% year over year and 2% sequentially. Please recall the items impacting Q2 year over year comparability are volume-based. We are pleased that both subscription and volume-based revenue performance align with expectations indicated on our prior earnings call. Adjusted EBITDA of $137 million for Q2 increased 21.5% year over year.

Steve Oreskovich: The adjusted EBITDA margin of 43% was consistent with the prior quarter and is indicative of the scalable nature of our platform model, disciplined cost management, and the favorable margin profile of the solutions driving growth across the business. Our capital position remains strong with healthy cash flows as we ended the quarter with $192 million in cash equivalents and short-term investments and $1.5 billion in gross debt. In May, our board of directors authorized a stock repurchase plan for up to $200 million, and during Q2, we repurchased $13 million worth of Waystar stock at an average price of $19.24 per share. Unlevered free cash flow was $64 million in Q2, and we converted 47% of adjusted EBITDA to unlevered free cash flow. Cash flow and the conversion ratio reflect the typical timing of estimated federal tax payments in the quarter.

Steve Oreskovich: The adjusted EBITDA margin of 43% was consistent with the prior quarter and is indicative of the scalable nature of our platform model, disciplined cost management, and the favorable margin profile of the solutions driving growth across the business. Our capital position remains strong with healthy cash flows as we ended the quarter with $192 million in cash equivalents and short-term investments and $1.5 billion in gross debt. In May, our board of directors authorized a stock repurchase plan for up to $200 million, and during Q2, we repurchased $13 million worth of Waystar stock at an average price of $19.24 per share. Unlevered free cash flow was $64 million in Q2, and we converted 47% of adjusted EBITDA to unlevered free cash flow. Cash flow and the conversion ratio reflect the typical timing of estimated federal tax payments in the quarter.

Steve Oreskovich: Additionally, capital expenditures, including capitalized software development, increased year over year as we continue investing in AI platform capabilities that we believe will support future growth, drive greater automation, and advance our vision for the autonomous revenue cycle over time. As of 30 June, net leverage was two and a half times compared to 2.7 times at the end of last quarter, which aligns with our historical ability to and cadence of delevering and is well below our goal of running the business at or below a 3 times leverage ratio. Based on our performance through the H1 2026 and current expectations for the rest of the year, we are raising the low end of our revenue guidance range by $2 million, resulting in a revised guidance range of $1.276 billion to $1.294 billion and a midpoint of $1.285 billion, representing 17% year over year growth.

Steve Oreskovich: Additionally, capital expenditures, including capitalized software development, increased year over year as we continue investing in AI platform capabilities that we believe will support future growth, drive greater automation, and advance our vision for the autonomous revenue cycle over time. As of 30 June, net leverage was two and a half times compared to 2.7 times at the end of last quarter, which aligns with our historical ability to and cadence of delevering and is well below our goal of running the business at or below a 3 times leverage ratio. Based on our performance through the H1 2026 and current expectations for the rest of the year, we are raising the low end of our revenue guidance range by $2 million, resulting in a revised guidance range of $1.276 billion to $1.294 billion and a midpoint of $1.285 billion, representing 17% year over year growth.

Steve Oreskovich: We are also raising our adjusted EBITDA guidance to a range of $535 million to $545 million, with a midpoint of $540 million, an increase of $5 million versus prior guidance midpoint. This concludes our opening remarks. With that, we are ready for your questions. Operator, please open the call.

Steve Oreskovich: We are also raising our adjusted EBITDA guidance to a range of $535 million to $545 million, with a midpoint of $540 million, an increase of $5 million versus prior guidance midpoint. This concludes our opening remarks. With that, we are ready for your questions. Operator, please open the call.

Operator: To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. In the interest of time, we ask that you please limit yourself to one question. Please stand by while we compile the Q&A roster. Our first question comes from Ryan Daniels with William Blair. Your line is open.

Operator: To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. In the interest of time, we ask that you please limit yourself to one question. Please stand by while we compile the Q&A roster. Our first question comes from Ryan Daniels with William Blair. Your line is open.

Ryan Daniels: Matt, quick question for you and congratulations to Steve on the announcement. Best wishes to you. I was hoping you could go into a little bit of detail about what you're hearing in the end market with kind of all the noise that's going on in healthcare with the ACA exchange lives rolling off into uninsured with Medicaid lives going down and with OBRA likely to continue to push that down. I guess the question is: what are you seeing in regards to transaction volume or patient pay because of that, and what are you hearing from your customers about demand for different solutions to help them combat some of those changes in the market? Thanks.

Ryan Daniels: Matt, quick question for you and congratulations to Steve on the announcement. Best wishes to you. I was hoping you could go into a little bit of detail about what you're hearing in the end market with kind of all the noise that's going on in healthcare with the ACA exchange lives rolling off into uninsured with Medicaid lives going down and with OBRA likely to continue to push that down. I guess the question is: what are you seeing in regards to transaction volume or patient pay because of that, and what are you hearing from your customers about demand for different solutions to help them combat some of those changes in the market? Thanks.

Steve Oreskovich: Thank you, Ryan. Appreciate your thoughtful question and your well wishes for Steve. We are seeing the demand environment, from a transaction utilization perspective, return to the long-term average of that 1% to 2%. We know that the long-term secular trend is that 1% to 2%. In recent years, it has been higher based on probably a little bit of COVID catch-up, maybe higher as 3% or 4%. There are some trends that you rightly highlighted, whether it is a little bit of regulatory uncertainty around certain uninsured populations or things like that, the decrease in Medicaid lives covered, that does create uninsurance. That really does create demand for Waystar solutions. When you think about what providers are most focused on, it is lowering the cost to collect, optimizing payment yield, whether from an insurance reimbursement or from a patient, and reducing time to collect.

Matt Hawkins: Thank you, Ryan. Appreciate your thoughtful question and your well wishes for Steve. We are seeing the demand environment, from a transaction utilization perspective, return to the long-term average of that 1% to 2%. We know that the long-term secular trend is that 1% to 2%. In recent years, it has been higher based on probably a little bit of COVID catch-up, maybe higher as 3% or 4%. There are some trends that you rightly highlighted, whether it is a little bit of regulatory uncertainty around certain uninsured populations or things like that, the decrease in Medicaid lives covered, that does create uninsurance. That really does create demand for Waystar solutions. When you think about what providers are most focused on, it is lowering the cost to collect, optimizing payment yield, whether from an insurance reimbursement or from a patient, and reducing time to collect.

Steve Oreskovich: We know that they want to use a platform approach versus a point solution because there is this point solution fatigue where many of them are using well over 12 point solutions in a patchwork way to try to figure out how they can optimize their collections and address their patient population. We think that that setup is squarely within the line of what the value proposition is for Waystar solutions. We know that our solutions are mission-critical, that they can be very helpful to providers in addressing the utilization environment, helping them do more with less, helping them have optionality to address the self-pay population or the uninsured population with many of the software modules and capabilities that we have on Waystar's platform. Certainly to continue to optimize and detect coverage where a patient may be eligible for coverage. Our solutions use AI to detect that coverage.

Matt Hawkins: We know that they want to use a platform approach versus a point solution because there is this point solution fatigue where many of them are using well over 12 point solutions in a patchwork way to try to figure out how they can optimize their collections and address their patient population. We think that that setup is squarely within the line of what the value proposition is for Waystar solutions. We know that our solutions are mission-critical, that they can be very helpful to providers in addressing the utilization environment, helping them do more with less, helping them have optionality to address the self-pay population or the uninsured population with many of the software modules and capabilities that we have on Waystar's platform. Certainly to continue to optimize and detect coverage where a patient may be eligible for coverage. Our solutions use AI to detect that coverage.

Steve Oreskovich: We think those factors all contribute to a strong demand environment that we see at Waystar and have contributed to strong bookings momentum and a robust pipeline as we address the H2 of the year.

Matt Hawkins: We think those factors all contribute to a strong demand environment that we see at Waystar and have contributed to strong bookings momentum and a robust pipeline as we address the H2 of the year.

Ryan Daniels: Perfect. Thank you so much. Appreciate all the color.

Ryan Daniels: Perfect. Thank you so much. Appreciate all the color.

Operator: Thank you. Our next question comes from Michael Cherny with Leerink Partners. Your line is open.

Operator: Thank you. Our next question comes from Michael Cherny with Leerink Partners. Your line is open.

Michael Cherny: Good afternoon, thanks for taking the question. Maybe if I can build a little bit on Ryan's question, thinking about the end market. As you go into RFPs, really nice to see some of these business wins, but especially now as you go in with Iodine, what is the pitch that you're making, and are you seeing any different responses, either against module components or potentially embedded EHR players as you drive towards your NRR levels and other new wins that you saw in the quarter? Thank you.

Michael Cherny: Good afternoon, thanks for taking the question. Maybe if I can build a little bit on Ryan's question, thinking about the end market. As you go into RFPs, really nice to see some of these business wins, but especially now as you go in with Iodine, what is the pitch that you're making, and are you seeing any different responses, either against module components or potentially embedded EHR players as you drive towards your NRR levels and other new wins that you saw in the quarter? Thank you.

Steve Oreskovich: Thank you, Michael. We are seeing client interest in combining clinical and financial intelligence, that's exactly the opportunity that we saw when we acquired Iodine. We know that in doing so, what we're doing is effectively reaching further upstream into the clinical workflows and beginning there, working to prevent denials from occurring in the first place, which really helps providers. Working to detect anomalies, where as they begin to form a claim, we want that claim to be highly accurate, so we're deploying AI to help them. We've seen some really nice wins, as we called out in our prepared remarks in the quarter. More than $6 million of some of the Prebill Anomaly Detection capabilities that really come about because now Iodine and Waystar are one company. We see strong pipeline and momentum in that regard.

Matt Hawkins: Thank you, Michael. We are seeing client interest in combining clinical and financial intelligence, that's exactly the opportunity that we saw when we acquired Iodine. We know that in doing so, what we're doing is effectively reaching further upstream into the clinical workflows and beginning there, working to prevent denials from occurring in the first place, which really helps providers. Working to detect anomalies, where as they begin to form a claim, we want that claim to be highly accurate, so we're deploying AI to help them. We've seen some really nice wins, as we called out in our prepared remarks in the quarter. More than $6 million of some of the Prebill Anomaly Detection capabilities that really come about because now Iodine and Waystar are one company. We see strong pipeline and momentum in that regard.

Steve Oreskovich: Again, all of it is oriented toward what our vision was at the outset of acquiring Iodine, which was to use Iodine as the AI engine to help form new solutions that are AI-based that can dramatically prevent denials from occurring and create that perfect, undeniable claim that will lead to accurate and timely payment. We do like the setup, we feel good about the strategy. We believe it's intact.

Matt Hawkins: Again, all of it is oriented toward what our vision was at the outset of acquiring Iodine, which was to use Iodine as the AI engine to help form new solutions that are AI-based that can dramatically prevent denials from occurring and create that perfect, undeniable claim that will lead to accurate and timely payment. We do like the setup, we feel good about the strategy. We believe it's intact.

Operator: Thank you. Our next question comes from Steven Valiquette with Mizuho Securities. Your line is open.

Operator: Thank you. Our next question comes from Steven Valiquette with Mizuho Securities. Your line is open.

Steven Valiquette: Yeah, thanks. Good afternoon. Just a high-level question. Just curious about just the overall RCM platform approach. Obviously, now you have Iodine with CDI software. A lot of vendors sell medical coding software and CDI together. Just curious about your appetite for other vertical solutions within RCM to round things out, does medical coding software make sense tied into CDI? Thanks.

Steven Valiquette: Yeah, thanks. Good afternoon. Just a high-level question. Just curious about just the overall RCM platform approach. Obviously, now you have Iodine with CDI software. A lot of vendors sell medical coding software and CDI together. Just curious about your appetite for other vertical solutions within RCM to round things out, does medical coding software make sense tied into CDI? Thanks.

Matt Hawkins: Thanks, Steven. Yeah, we're absolutely focused on building toward the robust autonomous revenue cycle solution. Again, the acquisition and the strategic logic of why Iodine is very much a part of that vision, because we're uniting the front end of our platform with the middle part, that perfect puzzle piece that you've heard me describe in quarters past, with the back-end clearinghouse capabilities. Which as you all know, the clearinghouse is the heart and soul of the revenue cycle because that's where all the things that you do building up to payment, that's where the action, the rubber hits the road, so to speak, and where the action occurs. Really, our platform is a system of action, and it's driving real benefit.

Matt Hawkins: Thanks, Steven. Yeah, we're absolutely focused on building toward the robust autonomous revenue cycle solution. Again, the acquisition and the strategic logic of why Iodine is very much a part of that vision, because we're uniting the front end of our platform with the middle part, that perfect puzzle piece that you've heard me describe in quarters past, with the back-end clearinghouse capabilities. Which as you all know, the clearinghouse is the heart and soul of the revenue cycle because that's where all the things that you do building up to payment, that's where the action, the rubber hits the road, so to speak, and where the action occurs. Really, our platform is a system of action, and it's driving real benefit.

Matt Hawkins: Within the mid-cycle, you highlight some important things that we believe that we have the right to do or the right to partner with others in the space. On the one end of the clinical documentation improvement capability, where, again, Iodine is deploying over 150 AI models and delivering more and more all the time. There is the ambient listening category. We know those players and there's opportunity for us to partner there. On the other end, you highlighted coding and in particular, there's the autonomous coding category or the auto coding category. With all the work that we're doing, we believe that we have the right to explore that area and expand our addressable market opportunity. We certainly are studying that space carefully, and I won't say more than that at this point in time.

Matt Hawkins: Within the mid-cycle, you highlight some important things that we believe that we have the right to do or the right to partner with others in the space. On the one end of the clinical documentation improvement capability, where, again, Iodine is deploying over 150 AI models and delivering more and more all the time. There is the ambient listening category. We know those players and there's opportunity for us to partner there. On the other end, you highlighted coding and in particular, there's the autonomous coding category or the auto coding category. With all the work that we're doing, we believe that we have the right to explore that area and expand our addressable market opportunity. We certainly are studying that space carefully, and I won't say more than that at this point in time.

Matt Hawkins: When you look long-term at what we're building toward, envision this autonomously acting revenue cycle platform where a lot of work is shifting from automated work to orchestrated work by agents acting on behalf of revenue cycle experts to create that perfect round-the-clock behaving solution that benefits providers and creates a highly informed patient who can engage in their financial responsibility where we seek payments as well. That's where we're headed, and I hope my answer helps address some of the ways we're thinking about added opportunity in the middle part of the revenue cycle.

Matt Hawkins: When you look long-term at what we're building toward, envision this autonomously acting revenue cycle platform where a lot of work is shifting from automated work to orchestrated work by agents acting on behalf of revenue cycle experts to create that perfect round-the-clock behaving solution that benefits providers and creates a highly informed patient who can engage in their financial responsibility where we seek payments as well. That's where we're headed, and I hope my answer helps address some of the ways we're thinking about added opportunity in the middle part of the revenue cycle.

Steven Valiquette: Yep, that's great. Thank you.

Steven Valiquette: Yep, that's great. Thank you.

Matt Hawkins: Thank you.

Matt Hawkins: Thank you.

Operator: Thank you. Our next question comes from Scott Schoenhaus with KeyBanc. Your line is open.

Operator: Thank you. Our next question comes from Scott Schoenhaus with KeyBanc. Your line is open.

Scott Schoenhaus: Thanks, guys, for taking my question. You noted the strength in the large provider clients, and you talked about bookings. I'm just wondering on the RFP process, specifically, on the pipeline there. Are you seeing more large provider clients this year versus last year in your RFP process? What are they coming specifically for? Is Iodine the lead catalyst for that? I'm just trying to get a better sense of the RFP process, given all the concern around large hospital systems contemplating whether in-house or other third-party AI platforms here. Thank you.

Scott Schoenhaus: Thanks, guys, for taking my question. You noted the strength in the large provider clients, and you talked about bookings. I'm just wondering on the RFP process, specifically, on the pipeline there. Are you seeing more large provider clients this year versus last year in your RFP process? What are they coming specifically for? Is Iodine the lead catalyst for that? I'm just trying to get a better sense of the RFP process, given all the concern around large hospital systems contemplating whether in-house or other third-party AI platforms here. Thank you.

Matt Hawkins: Yeah. Thank you, Scott. We are seeing an uptick in RFPs, we're participating in more RFPs, and that is leading to the types of strong bookings results that we see. Because these are larger wins, recent wins, and as we look ahead at our robust pipeline, there are RFP activities going on within our bookings pipeline. Some of these are taking slightly longer to implement, and it's not just one solution, it's multiple solutions, front, middle, or back, and often all. That's thrilling for us to be able to participate in those things. We're creating delighted clients as we take them live.

Matt Hawkins: Yeah. Thank you, Scott. We are seeing an uptick in RFPs, we're participating in more RFPs, and that is leading to the types of strong bookings results that we see. Because these are larger wins, recent wins, and as we look ahead at our robust pipeline, there are RFP activities going on within our bookings pipeline. Some of these are taking slightly longer to implement, and it's not just one solution, it's multiple solutions, front, middle, or back, and often all. That's thrilling for us to be able to participate in those things. We're creating delighted clients as we take them live.

Matt Hawkins: When I step back, Scott, this is what we were alluding to all the way back in 2024 when we were working to rapidly address not only the phase I, as you may have heard me talk about it, clients that needed rescuing when a competitor of ours was cyber attacked and their network was taken down. We alluded to a phase II, what we saw was going to be a longer tail of phase II. We didn't know how to time box it at the time. We didn't know how big it was going to be, but we had a sense that this was going to be a longer phase II. We're living in that now, and we have seen an uptick.

Matt Hawkins: When I step back, Scott, this is what we were alluding to all the way back in 2024 when we were working to rapidly address not only the phase I, as you may have heard me talk about it, clients that needed rescuing when a competitor of ours was cyber attacked and their network was taken down. We alluded to a phase II, what we saw was going to be a longer tail of phase II. We didn't know how to time box it at the time. We didn't know how big it was going to be, but we had a sense that this was going to be a longer phase II. We're living in that now, and we have seen an uptick.

Matt Hawkins: Some of that uptick has already resulted in bookings, we don't see that diminishing, and we believe that Waystar is well-positioned to continue to participate and to win given the strength of our win rates. I highlight in our prepared remarks that KLAS report that named us a top platform solution. It's an inaugural report in this topic. We were thrilled with that, I think that's an evidence point for how we're positioning Waystar to be successful in this exciting phase II that you've heard us talk about.

Matt Hawkins: Some of that uptick has already resulted in bookings, we don't see that diminishing, and we believe that Waystar is well-positioned to continue to participate and to win given the strength of our win rates. I highlight in our prepared remarks that KLAS report that named us a top platform solution. It's an inaugural report in this topic. We were thrilled with that, I think that's an evidence point for how we're positioning Waystar to be successful in this exciting phase II that you've heard us talk about.

[Analyst]: Thank you.

Scott Schoenhaus: Thank you.

Operator: Thank you. Our next question comes from Brian Peterson with Raymond James. Your line is open.

Operator: Thank you. Our next question comes from Brian Peterson with Raymond James. Your line is open.

Brian Peterson: Hey, guys. Thanks for taking the question, and congrats on the strong booking. I wanted to unpack the transaction component a bit. How did that trend versus your internal expectations in the quarter? It looks like the patient volume was up a bit, but the provider was down. Is there anything that you can share that gives us more context on that? Thank you.

Brian Peterson: Hey, guys. Thanks for taking the question, and congrats on the strong booking. I wanted to unpack the transaction component a bit. How did that trend versus your internal expectations in the quarter? It looks like the patient volume was up a bit, but the provider was down. Is there anything that you can share that gives us more context on that? Thank you.

Steve Oreskovich: Yeah. Thanks, Brian. This is Steve. I'll take that. I'd say for the quarter, the patient utilization aligns with both our expectations and with overall guidance for the year. As Matt alluded to earlier, it's in line with what we've seen from a long-term historical annual uplift year over year, recognizing that we're looking at a tough comp when we're looking at 2026 versus 2025, because that utilization was elevated in 2025. To your question, I'll probably specify a little more on the volume-based revenue. We talked about that in the past being about 45% of revenue, $142 million in the quarter. That is up 3% year over year. If you were to normalize the items that we talked about on prior calls, whether they were specific to 2025 or earlier in 2026, that volume-based revenue on a normalized basis is more like 8% year over year.

Steve Oreskovich: Yeah. Thanks, Brian. This is Steve. I'll take that. I'd say for the quarter, the patient utilization aligns with both our expectations and with overall guidance for the year. As Matt alluded to earlier, it's in line with what we've seen from a long-term historical annual uplift year over year, recognizing that we're looking at a tough comp when we're looking at 2026 versus 2025, because that utilization was elevated in 2025. To your question, I'll probably specify a little more on the volume-based revenue. We talked about that in the past being about 45% of revenue, $142 million in the quarter. That is up 3% year over year. If you were to normalize the items that we talked about on prior calls, whether they were specific to 2025 or earlier in 2026, that volume-based revenue on a normalized basis is more like 8% year over year.

Matt Hawkins: Feel really good about, again, where it is for the quarter, then where we've seen it so far year-to-date versus our expectations from a guidance perspective, recognizing that it is in line with the long-term historical trends versus what we've experienced or seen in the last couple of years. Yeah, I'd say, Brian, really quickly adding on to what Steve just highlighted. Speaking specifically, we called out those three large client implementations a year ago in 2025 that we were able to take live on a very compressed timeline. As we noted then, they were larger, and the nature of the agreements we had with them were transactional volume-based. That's part of what leads to the year-over-year comp that awkwardly looks the way it does. We feel good about the volume-based aspect of our business and the growth opportunity there.

Steve Oreskovich: Feel really good about, again, where it is for the quarter, then where we've seen it so far year-to-date versus our expectations from a guidance perspective, recognizing that it is in line with the long-term historical trends versus what we've experienced or seen in the last couple of years.

Matt Hawkins: Yeah, I'd say, Brian, really quickly adding on to what Steve just highlighted. Speaking specifically, we called out those three large client implementations a year ago in 2025 that we were able to take live on a very compressed timeline. As we noted then, they were larger, and the nature of the agreements we had with them were transactional volume-based. That's part of what leads to the year-over-year comp that awkwardly looks the way it does. We feel good about the volume-based aspect of our business and the growth opportunity there.

Operator: Thank you. Our next question comes from Brian Tanquilut with Jefferies. Your line is open.

Operator: Thank you. Our next question comes from Brian Tanquilut with Jefferies. Your line is open.

Brian Tanquilut: Hey, good afternoon. Steve, thank you, and good luck with the move. Maybe just my question, as I think about guidance and the move on the EBITDA range, you beat by $7 million Q1, $6 million Q2, roughly. Just curious, is there anything we should be thinking about in the back half of the year that's kind of preventing you from guiding, at least by the beats that you've seen this year?

Brian Tanquilut: Hey, good afternoon. Steve, thank you, and good luck with the move. Maybe just my question, as I think about guidance and the move on the EBITDA range, you beat by $7 million Q1, $6 million Q2, roughly. Just curious, is there anything we should be thinking about in the back half of the year that's kind of preventing you from guiding, at least by the beats that you've seen this year?

Steve Oreskovich: Well, Brian, thank you. First, we're pleased with the performance of the business. This is the ninth consecutive quarter of beating analysts' expectations and consensus on both revenue and EBITDA. We have confidence in our full-year outlook. What I'd say is that a couple thoughts on EBITDA production in particular. We have a number of internal initiatives that you've heard us talk about in the past. Some of those are AI operating leverage type initiatives that create improvement in gross margin, which I think you see show up in our P&L. Also, continued expansion of our adjusted EBITDA margin, as noted in the quarter. We're balancing that with the tremendous opportunity we see to continue to invest for the long-term growth of the business.

Steve Oreskovich: Well, Brian, thank you. First, we're pleased with the performance of the business. This is the ninth consecutive quarter of beating analysts' expectations and consensus on both revenue and EBITDA. We have confidence in our full-year outlook. What I'd say is that a couple thoughts on EBITDA production in particular. We have a number of internal initiatives that you've heard us talk about in the past. Some of those are AI operating leverage type initiatives that create improvement in gross margin, which I think you see show up in our P&L. Also, continued expansion of our adjusted EBITDA margin, as noted in the quarter. We're balancing that with the tremendous opportunity we see to continue to invest for the long-term growth of the business.

Steve Oreskovich: That is additional growth investments in AI and continuing to position Waystar to be the category leader of this AI-first autonomous revenue cycle platform. We are certainly confident in our full-year guide on revenue and EBITDA, but we want to reserve a little bit of room for us to invest as appropriate. By the way, we think that the 40+% adjusted EBITDA margins that we're delivering are great because it is putting us in a strong capital position as you see us driving free cash flow. Steve, would you highlight anything incrementally? Yeah. Just to tie out what Matt has said, as you look through the entirety of the financials, Brian, you saw it in my prepared remarks call out the capitalized software spend where it's capitalized.

Steve Oreskovich: That is additional growth investments in AI and continuing to position Waystar to be the category leader of this AI-first autonomous revenue cycle platform. We are certainly confident in our full-year guide on revenue and EBITDA, but we want to reserve a little bit of room for us to invest as appropriate. By the way, we think that the 40+% adjusted EBITDA margins that we're delivering are great because it is putting us in a strong capital position as you see us driving free cash flow. Steve, would you highlight anything incrementally? Yeah. Just to tie out what Matt has said, as you look through the entirety of the financials, Brian, you saw it in my prepared remarks call out the capitalized software spend where it's capitalized.

Steve Oreskovich: Sorry, software spend, where it ties directly into what Matt said about how we're focused on driving new solutions and implementing and inserting AI into our existing platform to round out the capabilities and drive an already impressive ROI for our clients even higher. If you looked at the capitalized software spend in the H1 of the year, you'd see it's roughly double what it was in 2025. That is a reflection of how we're investing, as Matt said, into the products today to drive revenue growth for the future. I'd say we're doing it in a very thoughtful manner as well, as you could see that from the unlevered free cash flow conversion of adjusted EBITDA being 47% in the quarter. I mentioned a couple other items out there, we're looking to invest in and spend it in prudent manners.

Steve Oreskovich: Sorry, software spend, where it ties directly into what Matt said about how we're focused on driving new solutions and implementing and inserting AI into our existing platform to round out the capabilities and drive an already impressive ROI for our clients even higher. If you looked at the capitalized software spend in the H1 of the year, you'd see it's roughly double what it was in 2025. That is a reflection of how we're investing, as Matt said, into the products today to drive revenue growth for the future. I'd say we're doing it in a very thoughtful manner as well, as you could see that from the unlevered free cash flow conversion of adjusted EBITDA being 47% in the quarter. I mentioned a couple other items out there, we're looking to invest in and spend it in prudent manners.

Steve Oreskovich: To Matt's point, just to circle back to it, we would expect some of that to be flowing through to the P&L in the H2 of the year and really, as we look at the full-year guide of 42% adjusted EBITDA margin, think that's phenomenal based upon how we're looking to invest for the future while being stewards of the business today.

Steve Oreskovich: To Matt's point, just to circle back to it, we would expect some of that to be flowing through to the P&L in the H2 of the year and really, as we look at the full-year guide of 42% adjusted EBITDA margin, think that's phenomenal based upon how we're looking to invest for the future while being stewards of the business today.

Brian Tanquilut: I appreciate that. Thank you.

Brian Tanquilut: I appreciate that. Thank you.

Operator: Thank you. Our next question comes from Elizabeth Anderson with Evercore ISI. Your line is open.

Operator: Thank you. Our next question comes from Elizabeth Anderson with Evercore ISI. Your line is open.

[Analyst] (Evercore ISI): Hi, guys. This is Eshan for Elizabeth. Thanks for taking my question. You've talked about the 6 to 18 month lead time for larger bookings a couple quarters ago. As you scale this number of $1 million contracts, as you mentioned in the prepared remarks, are you seeing that range tighten closer to 0 to 12 months now, or is 6 to 18 months the right way to still think about it?

[Analyst] (Evercore ISI): Hi, guys. This is Eshan for Elizabeth. Thanks for taking my question. You've talked about the 6 to 18 month lead time for larger bookings a couple quarters ago. As you scale this number of $1 million contracts, as you mentioned in the prepared remarks, are you seeing that range tighten closer to 0 to 12 months now, or is 6 to 18 months the right way to still think about it?

Steve Oreskovich: Thank you, Eshan, and give Elizabeth our best. I'd say that 6 to 18 months is still generally how we're thinking about it. We're certainly working to pull that in as tight as we can. We see once in a while people moving much faster, and we're always grateful for that as we position ourselves to win. Most often it's a very deliberate, thoughtful process that provider decision-makers go through, and it tends to be that 6 to 18 months, especially for the larger deals where we've highlighted some examples. The good news is we have a robust growth team. We have a proven track record in how we go and discover opportunities and accounts. We're able to sell the full platform, but we're also able to go to where the clients need help the most.

Steve Oreskovich: Thank you, Eshan, and give Elizabeth our best. I'd say that 6 to 18 months is still generally how we're thinking about it. We're certainly working to pull that in as tight as we can. We see once in a while people moving much faster, and we're always grateful for that as we position ourselves to win. Most often it's a very deliberate, thoughtful process that provider decision-makers go through, and it tends to be that 6 to 18 months, especially for the larger deals where we've highlighted some examples. The good news is we have a robust growth team. We have a proven track record in how we go and discover opportunities and accounts. We're able to sell the full platform, but we're also able to go to where the clients need help the most.

Steve Oreskovich: Sometimes the variability there is if the client wants help or the prospect wants help in one particular area, that might be more 6 to 9 to 12 months. If they want the full platform or multiple solutions on the platform, like what we're seeing, the traditional average for us of 6 to 18 tends to hold true. It's a proven method, and we're always working to compress it because we know the benefits of doing so on our P&L, but we've got a great team pursuing it.

Steve Oreskovich: Sometimes the variability there is if the client wants help or the prospect wants help in one particular area, that might be more 6 to 9 to 12 months. If they want the full platform or multiple solutions on the platform, like what we're seeing, the traditional average for us of 6 to 18 tends to hold true. It's a proven method, and we're always working to compress it because we know the benefits of doing so on our P&L, but we've got a great team pursuing it.

[Analyst] (Evercore ISI): Thank you.

[Analyst] (Evercore ISI): Thank you.

Operator: Thank you. Our next question comes from Ryan Halsted with RBC Capital Markets. Your line is open.

Operator: Thank you. Our next question comes from Ryan Halsted with RBC Capital Markets. Your line is open.

Ryan Halsted: Good afternoon. Thanks for taking the question. I thought maybe you could comment just on the NRR, which has been steadily stepping down. Appreciating all the color you've offered so far on the business, it would be helpful just to hear it in the context of NRR in terms of the moving parts. Should we be reading into it some impact of the volume-based business, or is it sort of a lack of upsell, or is there even some attrition? Any sort of color on the inputs that go into the NRR would be helpful. Thanks.

Ryan Halsted: Good afternoon. Thanks for taking the question. I thought maybe you could comment just on the NRR, which has been steadily stepping down. Appreciating all the color you've offered so far on the business, it would be helpful just to hear it in the context of NRR in terms of the moving parts. Should we be reading into it some impact of the volume-based business, or is it sort of a lack of upsell, or is there even some attrition? Any sort of color on the inputs that go into the NRR would be helpful. Thanks.

Steve Oreskovich: Yeah. Certainly, Ryan. This is Steve. First off, I'd say we view the NRR, the LTM view of 108 for this quarter, is very healthy and in alignment with our long-term historical NRR rate. We've talked about before, and obviously there's a slide that we include in our investor deck that shows the bridge from gross revenue retention to NRR. If you look at those components, gross revenue retention continues to remain very strong at 97%. The trend that you're noticing is a factor primarily of two things. One is the clients and their time to rapid revenue that Matt had mentioned earlier, how they benefited NRR for the quarterly period, I think around Q2 of 2025 through Q1 of 2026. That added to what historically we had seen.

Steve Oreskovich: Yeah. Certainly, Ryan. This is Steve. First off, I'd say we view the NRR, the LTM view of 108 for this quarter, is very healthy and in alignment with our long-term historical NRR rate. We've talked about before, and obviously there's a slide that we include in our investor deck that shows the bridge from gross revenue retention to NRR. If you look at those components, gross revenue retention continues to remain very strong at 97%. The trend that you're noticing is a factor primarily of two things. One is the clients and their time to rapid revenue that Matt had mentioned earlier, how they benefited NRR for the quarterly period, I think around Q2 of 2025 through Q1 of 2026. That added to what historically we had seen.

Steve Oreskovich: The fact that we had higher utilization rates through the middle to about the midway through H2 2025, also had a positive benefit and impact on that. If you look at that slide, again, in our IR deck, you'd see that historically it's been about 108 to 110, and the components that lead from gross to net are all in about those same ranges that are indicated on that slide. Very comfortable with the 108, I wouldn't read more into it than we've just had some tailwind items the past few quarters that have allowed it to be beneficial and above that historical 108 to 110 range.

Steve Oreskovich: The fact that we had higher utilization rates through the middle to about the midway through H2 2025, also had a positive benefit and impact on that. If you look at that slide, again, in our IR deck, you'd see that historically it's been about 108 to 110, and the components that lead from gross to net are all in about those same ranges that are indicated on that slide. Very comfortable with the 108, I wouldn't read more into it than we've just had some tailwind items the past few quarters that have allowed it to be beneficial and above that historical 108 to 110 range.

Ryan Halsted: Got it. Okay. Helpful. Thanks.

Ryan Halsted: Got it. Okay. Helpful. Thanks.

Operator: Thank you. Our next question comes from Richard Close with Canaccord Genuity. Your line is open.

Operator: Thank you. Our next question comes from Richard Close with Canaccord Genuity. Your line is open.

Richard Close: Yes. Thanks for the question. Steve, enjoyed working with you over the last several years. You have a strong partnership with Google on the AI front. Steve, curious, maybe what you're seeing in terms of cost of compute as AI's integrated into your platform, and how that gets baked into your guidance, how you think about cost of compute.

Richard Close: Yes. Thanks for the question. Steve, enjoyed working with you over the last several years. You have a strong partnership with Google on the AI front. Steve, curious, maybe what you're seeing in terms of cost of compute as AI's integrated into your platform, and how that gets baked into your guidance, how you think about cost of compute.

Steve Oreskovich: Thanks, Richard, for the kind words. I'd say, as Matt talked earlier on the call about the internal initiatives that we have that are always ongoing, that are looking to add scalability to our overall operating profile. One of the things that we know in the reinvestment areas that we've talked about previously, one of those areas that we know we will utilize from the benefits of those operational activities is to cover things like cost of compute without impacting our overall margin profile. You could probably see that in the first couple of quarters here with not only a calculable gross margin remaining at about 70%, which is in line with where we were in the back half of 2025, but the overall adjusted EBITDA margin as well as we look all the way through the P&L.

Steve Oreskovich: Thanks, Richard, for the kind words. I'd say, as Matt talked earlier on the call about the internal initiatives that we have that are always ongoing, that are looking to add scalability to our overall operating profile. One of the things that we know in the reinvestment areas that we've talked about previously, one of those areas that we know we will utilize from the benefits of those operational activities is to cover things like cost of compute without impacting our overall margin profile. You could probably see that in the first couple of quarters here with not only a calculable gross margin remaining at about 70%, which is in line with where we were in the back half of 2025, but the overall adjusted EBITDA margin as well as we look all the way through the P&L.

Steve Oreskovich: I think we feel really good about how we've set the contracts with Google and the cost structure that we have in with that, without going into too much detail. Feel like the other areas where we would expect cost of compute just to normally, and appropriately, increase as we continue to sell more and more AI solutions or AI-enabled solutions into our client base. We feel very good about the other areas that we have ongoing that will allow us to absorb those for lack of a better phrasing. Matt, anything else you'd add to that?

Steve Oreskovich: I think we feel really good about how we've set the contracts with Google and the cost structure that we have in with that, without going into too much detail. Feel like the other areas where we would expect cost of compute just to normally, and appropriately, increase as we continue to sell more and more AI solutions or AI-enabled solutions into our client base. We feel very good about the other areas that we have ongoing that will allow us to absorb those for lack of a better phrasing. Matt, anything else you'd add to that?

Matt Hawkins: I'd add a couple things. Thanks, Steve. First, token cost is all the rage in the broader market discussion, isn't it?

Matt Hawkins: I'd add a couple things. Thanks, Steve. First, token cost is all the rage in the broader market discussion, isn't it?

Matt Hawkins: It is.

Steve Oreskovich: It is.

Matt Hawkins: People are worried about the use or consumption of tokens and trying to manage and govern those broadly. It's interesting to follow the broader industry conversation, which I'm sure you're all following. What we do at Waystar, we have an internal governance model, an AI governance approach that really could be exportable, and we could help our clients manage the way they think about AI. As we create this operating system approach for the autonomous revenue cycle, we expect to deliver foundation model capability, agentic capability, while carefully and thoughtfully managing token cost and use of foundation model expense on behalf of the clients that we serve. We've got a unique approach. I appreciate you highlighting the relationship that we have with Google. It's a very constructive relationship. Again, we like the fact that they're a hyperscaler and doing some very progressive things.

Matt Hawkins: People are worried about the use or consumption of tokens and trying to manage and govern those broadly. It's interesting to follow the broader industry conversation, which I'm sure you're all following. What we do at Waystar, we have an internal governance model, an AI governance approach that really could be exportable, and we could help our clients manage the way they think about AI. As we create this operating system approach for the autonomous revenue cycle, we expect to deliver foundation model capability, agentic capability, while carefully and thoughtfully managing token cost and use of foundation model expense on behalf of the clients that we serve. We've got a unique approach. I appreciate you highlighting the relationship that we have with Google. It's a very constructive relationship. Again, we like the fact that they're a hyperscaler and doing some very progressive things.

Matt Hawkins: We're getting the benefit of that as our teams are spending time co-developing on site together, and there's some really breakthrough things that we're focused on. Amongst those is the importance of getting a grasp on governing the use of those models. While we've trained 100% of our internal team and given 100% of our internal team access to various foundation models to do real work, we're also taking approach thoughtfully to how to govern expense internally and also on behalf of the clients. I think we'll see a steady long-term view that we can do so effectively.

Matt Hawkins: We're getting the benefit of that as our teams are spending time co-developing on site together, and there's some really breakthrough things that we're focused on. Amongst those is the importance of getting a grasp on governing the use of those models. While we've trained 100% of our internal team and given 100% of our internal team access to various foundation models to do real work, we're also taking approach thoughtfully to how to govern expense internally and also on behalf of the clients. I think we'll see a steady long-term view that we can do so effectively.

Steve Oreskovich: Thank you.

Richard Close: Thank you.

Operator: Thank you. Our next question comes from George Hill with DB. Your line is open.

Operator: Thank you. Our next question comes from George Hill with DB. Your line is open.

George Hill: Hey, good evening, guys, and thanks for taking the questions. I've got two quick ones. I guess, Steve, can you talk about, given the slowdown in the volume-based growth, what's embedded in the guidance for the H2 of the year, and if that's a number that continues to grow in the 3% range, or if we should expect to see a continued deceleration there? My other follow-up is, can you talk a little bit where the leverage in the model's coming in? Because the revenue guide for the year is up modestly while the EBITDA guide is up significantly more than the revenue guide. I'd say from a margin perspective, that math doesn't perfectly math. Clearly, there's costs coming out faster than revenues rolling along, or would just love to understand the dynamics between the revenue guide and the increase in the EBITDA guide.

George Hill: Hey, good evening, guys, and thanks for taking the questions. I've got two quick ones. I guess, Steve, can you talk about, given the slowdown in the volume-based growth, what's embedded in the guidance for the H2 of the year, and if that's a number that continues to grow in the 3% range, or if we should expect to see a continued deceleration there? My other follow-up is, can you talk a little bit where the leverage in the model's coming in? Because the revenue guide for the year is up modestly while the EBITDA guide is up significantly more than the revenue guide. I'd say from a margin perspective, that math doesn't perfectly math. Clearly, there's costs coming out faster than revenues rolling along, or would just love to understand the dynamics between the revenue guide and the increase in the EBITDA guide. Thank you.

George Hill: Thank you.

Steve Oreskovich: Yeah, certainly, George. I'd say a couple of things. As you think about volume-based revenue for the rest of the year, the baseline for that is patient utilization of the healthcare system. We thought our original guidance was for the impact for us, which is generally about a 1% to 2% uplift annually year over year. That was our expectation going into the year. That expectation hasn't changed. If you think about the 3% year over year increase on the volume-based side for the Q2, I'd ask you to think about it in terms of the guidance for the full year, that normalized organic rate of 8% that I had mentioned earlier in the call. If you're looking at how to impact that from a year over year perspective.

Steve Oreskovich: Yeah, certainly, George. I'd say a couple of things. As you think about volume-based revenue for the rest of the year, the baseline for that is patient utilization of the healthcare system. We thought our original guidance was for the impact for us, which is generally about a 1% to 2% uplift annually year over year. That was our expectation going into the year. That expectation hasn't changed. If you think about the 3% year over year increase on the volume-based side for the Q2, I'd ask you to think about it in terms of the guidance for the full year, that normalized organic rate of 8% that I had mentioned earlier in the call. If you're looking at how to impact that from a year over year perspective.

Steve Oreskovich: I'd say as you think about, in your question about the revenue range and the uplift in the midpoint of guidance of $1 million versus the adjusted EBITDA uplift at the midpoint range in guidance of $5 million, it's a factor of a couple of things. It's a reflection of where we've run the business for the H1 of the year, and specifically from an adjusted EBITDA perspective there at 43%. While we still expect 42% for the full year, partially want to be able to recognize that we've run the business a little above our full year expectation at the beginning of the year. Matt and I talked about a little earlier in the call, just as a reminder the areas of where we're looking to invest in AI and how we expect that to impact the H2 of the year.

Steve Oreskovich: I'd say as you think about, in your question about the revenue range and the uplift in the midpoint of guidance of $1 million versus the adjusted EBITDA uplift at the midpoint range in guidance of $5 million, it's a factor of a couple of things. It's a reflection of where we've run the business for the H1 of the year, and specifically from an adjusted EBITDA perspective there at 43%. While we still expect 42% for the full year, partially want to be able to recognize that we've run the business a little above our full year expectation at the beginning of the year. Matt and I talked about a little earlier in the call, just as a reminder the areas of where we're looking to invest in AI and how we expect that to impact the H2 of the year.

Steve Oreskovich: The other piece to that is, we've made the comment not only on this call but in the last call in our prepared comments about the revenue mix and how we continue to see the revenue in the, or sorry, the bookings, and then how it's translating into revenue from higher margin deals. It's a reflection of that factor as well that we continue to see the margin profile from the booking side of things, and how some of those are of the shorter timeline being reflected in the P&L, and feel really good about that factor as well. Obviously, that's good for the business. That gives us additional ability to look at how we want to utilize those funds investing in or otherwise throughout the business.

Steve Oreskovich: The other piece to that is, we've made the comment not only on this call but in the last call in our prepared comments about the revenue mix and how we continue to see the revenue in the, or sorry, the bookings, and then how it's translating into revenue from higher margin deals. It's a reflection of that factor as well that we continue to see the margin profile from the booking side of things, and how some of those are of the shorter timeline being reflected in the P&L, and feel really good about that factor as well. Obviously, that's good for the business. That gives us additional ability to look at how we want to utilize those funds investing in or otherwise throughout the business.

George Hill: Thank you.

George Hill: Thank you.

Steve Oreskovich: You're welcome.

Steve Oreskovich: You're welcome.

Operator: Thank you. Our next question comes from Allen Lutz with Bank of America. Your line is open.

Operator: Thank you. Our next question comes from Allen Lutz with Bank of America. Your line is open.

Allen Lutz: Good afternoon, thanks for taking the questions. First, Steve, it was great working with you. Best wishes moving forward. I have two questions in one here. Last quarter, AI was 40% of bookings. I don't know if you provided what it was this quarter. If you are going to provide it, can you let us know what that was? Steve, as we think about the level of capitalized software, as you talked about earlier in the call, it's gone up over the past year and over the past couple quarters. Can you talk about this level of capitalized software? Is this the right run rate? As we think about the duration of the higher capitalized software spend, is there any timeframe that you can give for us there? Thanks.

Allen Lutz: Good afternoon, thanks for taking the questions. First, Steve, it was great working with you. Best wishes moving forward. I have two questions in one here. Last quarter, AI was 40% of bookings. I don't know if you provided what it was this quarter. If you are going to provide it, can you let us know what that was? Steve, as we think about the level of capitalized software, as you talked about earlier in the call, it's gone up over the past year and over the past couple quarters. Can you talk about this level of capitalized software? Is this the right run rate? As we think about the duration of the higher capitalized software spend, is there any timeframe that you can give for us there? Thanks.

Steve Oreskovich: Yeah, certainly, Allen. I'll start with the first one. We saw again, a very good composition and mix this quarter from a bookings perspective of AI-enabled solutions. To answer your question specifically, that was approximately 40% again in this quarter. We feel really good about where we sit, not only for the quarter, but for the year to date. On the capitalized software development cost front, I think that if we're looking at a very near-term run rate and our expectation through the rest of 2026, I would think that what we've seen the first couple of quarters here in 2025 are a good indication of what we'd see for the rest of the year.

Steve Oreskovich: Yeah, certainly, Allen. I'll start with the first one. We saw again, a very good composition and mix this quarter from a bookings perspective of AI-enabled solutions. To answer your question specifically, that was approximately 40% again in this quarter. We feel really good about where we sit, not only for the quarter, but for the year to date. On the capitalized software development cost front, I think that if we're looking at a very near-term run rate and our expectation through the rest of 2026, I would think that what we've seen the first couple of quarters here in 2025 are a good indication of what we'd see for the rest of the year.

Steve Oreskovich: We'll reserve the right, if I can use that phrase, as we continue to understand where our opportunities are to rapidly bring new solutions to market and continue to differentiate ourselves versus the competition. We may go a little higher than what we've seen for the first couple of quarters from a run rate perspective. I think we feel really good about our capabilities today and reserve the right to increase a little bit more. Obviously, keeping in tune with our, and conscious of our unlevered free cash flow conversion rate. I don't think you'd see us do something like some of the hyperscalers have done, which would mean looking at going negative from a cash flow perspective. Not at all. Matt, I don't know what else you'd add to that.

Steve Oreskovich: We'll reserve the right, if I can use that phrase, as we continue to understand where our opportunities are to rapidly bring new solutions to market and continue to differentiate ourselves versus the competition. We may go a little higher than what we've seen for the first couple of quarters from a run rate perspective. I think we feel really good about our capabilities today and reserve the right to increase a little bit more. Obviously, keeping in tune with our, and conscious of our unlevered free cash flow conversion rate. I don't think you'd see us do something like some of the hyperscalers have done, which would mean looking at going negative from a cash flow perspective. Not at all. Matt, I don't know what else you'd add to that.

Matt Hawkins: Yeah, I would say it's a great question. I'd say we're working to meet this unique moment in time. We feel like we've got a great position to be a category leader, to build the market's first and most robust autonomous revenue cycle platform. You have seen us step up our cap software spend. We're doing a number of things internally that are allowing us to accelerate the ability to deliver AI-powered solutions, models deployed to do specific work that we know based on some testing that we're doing with clients, that these are things that are going to produce good outcomes. You'll see us be disciplined. We at the same time want to meet this unique moment in time, which is why we've doubled the cap software spend thus far. We'll continue to track and report to the group.

Matt Hawkins: Yeah, I would say it's a great question. I'd say we're working to meet this unique moment in time. We feel like we've got a great position to be a category leader, to build the market's first and most robust autonomous revenue cycle platform. You have seen us step up our cap software spend. We're doing a number of things internally that are allowing us to accelerate the ability to deliver AI-powered solutions, models deployed to do specific work that we know based on some testing that we're doing with clients, that these are things that are going to produce good outcomes. You'll see us be disciplined. We at the same time want to meet this unique moment in time, which is why we've doubled the cap software spend thus far. We'll continue to track and report to the group.

Matt Hawkins: The nice setup for us is that we have a strong P&L that produces growth, compounding growth, and good free cash flow conversion from strong EBITDA performance. It gives us optionality to do the right thing for the business that will create long-term shareholder benefit, and client benefit, just given our position in the market.

Matt Hawkins: The nice setup for us is that we have a strong P&L that produces growth, compounding growth, and good free cash flow conversion from strong EBITDA performance. It gives us optionality to do the right thing for the business that will create long-term shareholder benefit, and client benefit, just given our position in the market.

Allen Lutz: Great. Thank you both.

Allen Lutz: Great. Thank you both.

Matt Hawkins: Thank you.

Matt Hawkins: Thank you.

Operator: Thank you. Our next question comes from Craig Hettenbach with Morgan Stanley. Your line is open.

Operator: Thank you. Our next question comes from Craig Hettenbach with Morgan Stanley. Your line is open.

Craig Hettenbach: Yes, thank you. Question on just 2026 guidance. Kind of implied for the H2 is roughly in change. Anything you would call out between Q3 and Q4? As you think through the larger deal sizes, some that are extending out to 18 months for ramp up, how do you think about the visibility as you head into next year?

Craig Hettenbach: Yes, thank you. Question on just 2026 guidance. Kind of implied for the H2 is roughly in change. Anything you would call out between Q3 and Q4? As you think through the larger deal sizes, some that are extending out to 18 months for ramp up, how do you think about the visibility as you head into next year?

Steve Oreskovich: Yes, Craig, this is Steve. We would expect from a H2 dynamic to your question specifically on Q3 and Q4 in that portion of the volume-based business that we have that are surrounding the collections from the patients, that's about 15% of overall revenue. It typically has a dynamic whereas those patients that are on high deductible plans meet those deductible plans, they would have slightly lower revenue in Q4 versus Q3. We would still expect that seasonality component to exist similar to prior years. As we think about these large deals that we've talked about, the $1 million plus signings, I think it gives us really good visibility and confidence as we look out into the future.

Steve Oreskovich: Yes, Craig, this is Steve. We would expect from a H2 dynamic to your question specifically on Q3 and Q4 in that portion of the volume-based business that we have that are surrounding the collections from the patients, that's about 15% of overall revenue. It typically has a dynamic whereas those patients that are on high deductible plans meet those deductible plans, they would have slightly lower revenue in Q4 versus Q3. We would still expect that seasonality component to exist similar to prior years. As we think about these large deals that we've talked about, the $1 million plus signings, I think it gives us really good visibility and confidence as we look out into the future.

Steve Oreskovich: Specifically, we've talked in the past about, and we mentioned early on the call about the Iodine Software solutions that we're seeing cross-sell from. It gives us real good encouragement and confidence in the comments we've made historically about the time to revenue from those cross-sell items and impact in 2027, and feel highly confident that that opportunity still exists out here today, as well as, obviously, the overall visibility from those $1 million plus agreements.

Steve Oreskovich: Specifically, we've talked in the past about, and we mentioned early on the call about the Iodine Software solutions that we're seeing cross-sell from. It gives us real good encouragement and confidence in the comments we've made historically about the time to revenue from those cross-sell items and impact in 2027, and feel highly confident that that opportunity still exists out here today, as well as, obviously, the overall visibility from those $1 million plus agreements.

Matt Hawkins: I think that's right. I think 2026 feels like it's about sales execution and setting up implementations. We expect revenue contribution and platform benefits to become increasingly visible through 2027. As Steve said, it does give us added confidence and conviction that the long term is forming well.

Matt Hawkins: I think that's right. I think 2026 feels like it's about sales execution and setting up implementations. We expect revenue contribution and platform benefits to become increasingly visible through 2027. As Steve said, it does give us added confidence and conviction that the long term is forming well.

Craig Hettenbach: Helpful. Thank you.

Craig Hettenbach: Helpful. Thank you.

Operator: Thank you. Our final question comes from Charles Rhyee with TD Cowen. Your line is open.

Operator: Thank you. Our final question comes from Charles Rhyee with TD Cowen. Your line is open.

Charles Rhyee: Yeah, thanks for squeezing me in. Steve, nice working with you. Good luck in the future. I guess maybe I want to follow up on an earlier question that Matt and ZZ kind of responded to. When we think about competition, obviously there's some concerns here that big health systems can leverage added services from their EHR vendor who are trying to move into rev cycle. I understand the value proposition that you guys are presenting and sort of the greater ROI that customers can expect from deploying Waystar.

Charles Rhyee: Yeah, thanks for squeezing me in. Steve, nice working with you. Good luck in the future. I guess maybe I want to follow up on an earlier question that Matt and ZZ kind of responded to. When we think about competition, obviously there's some concerns here that big health systems can leverage added services from their EHR vendor who are trying to move into rev cycle. I understand the value proposition that you guys are presenting and sort of the greater ROI that customers can expect from deploying Waystar.

Charles Rhyee: Can you talk a little bit about then when you're in discussion in the pipeline, do you run into situation where a customer's saying, Well, we can just try this first, and then see how that goes, and then we'll come back? Or is there an understanding that rev cycle being as mission critical it is, maybe there's just not that value to try something that's maybe not as good. Just trying to understand a little bit the decision tree that clients could be going through, or are going through and sort of how that fits into your discussions. Thanks.

Charles Rhyee: Can you talk a little bit about then when you're in discussion in the pipeline, do you run into situation where a customer's saying, Well, we can just try this first, and then see how that goes, and then we'll come back? Or is there an understanding that rev cycle being as mission critical it is, maybe there's just not that value to try something that's maybe not as good. Just trying to understand a little bit the decision tree that clients could be going through, or are going through and sort of how that fits into your discussions. Thanks.

Matt Hawkins: Yeah. Thanks, Charles. This is a good question for us to address. Speaking of the large EHR systems, what I'd say is revenue cycle management isn't simply an extension of the EHR. It's not a natural extension to the EHR because it's a different development cycle. It requires different connection to payers. It's a different cadence, et cetera. I'd say the large EHR vendors, they're important partners to us. We're grateful for their partnership. We work with nearly 2,000 hospitals, and many of them use these large EHR solutions. I think where we see the decision tree is, and by the way, we haven't really noted a change in the competitive environment. I think that's been really important to establish here. That the decision tree is first and foremost, clients want outcomes.

Matt Hawkins: Yeah. Thanks, Charles. This is a good question for us to address. Speaking of the large EHR systems, what I'd say is revenue cycle management isn't simply an extension of the EHR. It's not a natural extension to the EHR because it's a different development cycle. It requires different connection to payers. It's a different cadence, et cetera. I'd say the large EHR vendors, they're important partners to us. We're grateful for their partnership. We work with nearly 2,000 hospitals, and many of them use these large EHR solutions. I think where we see the decision tree is, and by the way, we haven't really noted a change in the competitive environment. I think that's been really important to establish here. That the decision tree is first and foremost, clients want outcomes.

Matt Hawkins: They prioritize outcomes and ROI more than they do novelty, point solution, and free or built-in cost. They really want outcomes because if you don't change outcomes, then you could have a free or included solution that becomes very expensive because if your denial rate stays at 15%, that's a very expensive solution. The second point is in the prioritization or decision tree of things is not only do they want outcomes, they want to see it from one end to the other. You think about some of these large EHR systems like an Epic. Epic is the EHR system of record in many of these hospitals. Cerner's another one. MEDITECH's another one. We're grateful to work with each of them.

Matt Hawkins: They prioritize outcomes and ROI more than they do novelty, point solution, and free or built-in cost. They really want outcomes because if you don't change outcomes, then you could have a free or included solution that becomes very expensive because if your denial rate stays at 15%, that's a very expensive solution. The second point is in the prioritization or decision tree of things is not only do they want outcomes, they want to see it from one end to the other. You think about some of these large EHR systems like an Epic. Epic is the EHR system of record in many of these hospitals. Cerner's another one. MEDITECH's another one. We're grateful to work with each of them.

Matt Hawkins: Where they are the system of record, Waystar is the system of action, and our only focus is to build the best solutions that create the best outcomes in the revenue cycle for our clients. That's all we do. We think that as much as you hear about an EHR first approach, we think that there's a Waystar first approach, and we work well in many places with EHR systems of record where Waystar is a system of action. We have many evidences of where we're winning and securing business where a minimum viable product or an announced solution isn't showing up in the market and achieving the goal that that provider's looking to achieve. They're looking for benefit today, and we're giving them benefit today. That's kind of how I'd respond to that. Again, grateful for the partners that we have.

Matt Hawkins: Where they are the system of record, Waystar is the system of action, and our only focus is to build the best solutions that create the best outcomes in the revenue cycle for our clients. That's all we do. We think that as much as you hear about an EHR first approach, we think that there's a Waystar first approach, and we work well in many places with EHR systems of record where Waystar is a system of action. We have many evidences of where we're winning and securing business where a minimum viable product or an announced solution isn't showing up in the market and achieving the goal that that provider's looking to achieve. They're looking for benefit today, and we're giving them benefit today. That's kind of how I'd respond to that. Again, grateful for the partners that we have.

Matt Hawkins: We serve over and work with, integrate with over 500 different EHR vendors and over 200 active channel partners, and we're grateful to be that system of action and that Waystar first approach with so many. As we wrap up today, let me thank everybody for the time and the call, and we look forward to. I'd like to also thank our team for helping us produce these results. We feel so grateful to serve the clients that we do, and we're grateful for your thoughtful questions today. Thanks, everybody.

Matt Hawkins: We serve over and work with, integrate with over 500 different EHR vendors and over 200 active channel partners, and we're grateful to be that system of action and that Waystar first approach with so many. As we wrap up today, let me thank everybody for the time and the call, and we look forward to. I'd like to also thank our team for helping us produce these results. We feel so grateful to serve the clients that we do, and we're grateful for your thoughtful questions today. Thanks, everybody.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.