• Revenue: $256 million, a 14% year-over-year increase.
• Adjusted EBITDA: $108 million, a 16% year-over-year increase.
• Adjusted EBITDA Margin: 42%, aligning with the long-term target of approximately 40%.
• Net Revenue Retention Rate: 114% over the last 12 months.
• Subscription Revenue Growth: 18% year-over-year and 3% sequentially.
• Volume-Based Revenue Growth: Approximately 15% year-over-year, adjusting for prior year benefits.
• Unlevered Free Cash Flow: $79 million with a conversion ratio of 73%.
• Cash Balance: $224 million as of March 31.
• Net Leverage Ratio: 2.5x at the end of Q1.
• Client Base: 1,244 clients generating more than $100,000 in trailing 12-month revenue, a 15% increase year-over-year.
• Raised Revenue Guidance: $1.006 billion to $1.022 billion for the full year.
• Raised Adjusted EBITDA Guidance: $406 million to $414 million for the full year.

• Warning! GuruFocus has detected 3 Warning Sign with SPOK.

Release Date: April 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Waystar Holding Corp (NASDAQ:WAY) reported a strong start to 2025 with Q1 revenue growth of 14% and adjusted EBITDA increase of 16% year-over-year.
• The company raised its full-year revenue guidance to a range of $1.006 billion to $1.022 billion, reflecting confidence in continued growth.
• Waystar's software platform is embedded in clients' workflows, playing a mission-critical role in helping providers get paid faster and more accurately while reducing administrative costs.
• The company has a high net revenue retention rate of 114%, indicating strong client satisfaction and expansion of existing client relationships.
• Waystar's AI-powered platform, AltitudeAI, is delivering significant ROI for clients, with early adopters seeing an 85% auto approval rate and a 70% reduction in time spent on authorizations.

Negative Points

• Despite strong performance, Waystar acknowledges the potential impact of macroeconomic volatility and recession risks on its business.
• The company faces competition from other vendors, with some clients temporarily switching back to competitors due to existing contracts.
• Waystar's growth is partly dependent on the continuation of strong patient payment utilization, which could be affected by changes in the economic environment.
• The company is exposed to potential challenges from new policy proposals in the US healthcare industry, although no major impact is anticipated in 2025.
• Waystar's business model, while recession-resistant, is not entirely insulated from economic cycles, which could affect future performance.

Q & A Highlights

Q: Can you provide a breakdown of the outperformance in Q1 and what's embedded in the guidance for growth? A: Steven Oreskovich, CFO, explained that the outperformance was primarily driven by strong patient payment utilization. For the full year guidance, 98% of revenue comes from contracted solutions at the start of the year. The company is insulated from specific specialty or reimbursement rate changes due to its diverse US-based client base. Continuation of strong patient utilization could lead to the upper end of guidance, while notable differences in utilization could affect the lower end.

Q: What products are driving the net revenue retention rate of 114%? A: Matthew Hawkins, CEO, highlighted robust bookings from revenue cycle solutions, claims management, and patient access solutions. The retention rate reflects strong ROI for clients and increased client advocacy. Steven Oreskovich added that the retention rate benefits from clients rapidly onboarded in early 2024, contributing to the above-normal range.

Q: How do utilization trends impact your business model, and what are your thoughts on 2025 seasonality? A: Matthew Hawkins noted that the business model benefits from utilization, typically modeling 1-2% annual increases. Utilization has trended above this, benefiting the business. Steven Oreskovich added that 70% of revenue from provider solutions shows little seasonality, while 30% from patient payments sees more activity in the first half as deductibles reset.

Q: How has security and time to implementation impacted sales cycles and customer conversations? A: Matthew Hawkins stated that cybersecurity, ROI, and rapid deployment are key factors in client decision-making. The company has seen strong demand and robust RFP activity, with providers prioritizing mission-critical solutions during economic uncertainty.

Q: How is AI impacting your business, and is it more of a market share gain or same-store growth opportunity? A: Matthew Hawkins explained that AI capabilities are infused into existing software to enhance client retention and drive ROI. Pricing is aligned with value, and new AI modules may be sold as new SKUs. Internally, AI is used to drive efficiency and train teams, impacting both market share and same-store growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.