Definitive Healthcare Corp.

Greetings and welcome to the Definitive Healthcare first quarter 2023 earnings call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, press star then zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Matt Rudiman. Thank you, Matt. You may begin.

Good afternoon, and thank you for joining us today to review Definitive Healthcare's quarterly financial results. Joining me on the call today are Robert Musselwhite, CEO, Jason Krantz, founder and executive chairman, and Rick Booth, CFO. During this call, we will make forward-looking statements, including but not limited to statements related to our market and future performance and growth opportunities, the benefits of our healthcare commercial intelligence solutions, our competitive position, customer behaviors, our financial guidance, our planned investments, and the anticipated impacts of global macroeconomic conditions on our business, results, and clients, and on the healthcare industry generally. Any forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve a number of risks and uncertainties, including those discussed in the risk factor sections and elsewhere in our filings with the SEC. Actual results may differ materially from any forward-looking statements. The company undertakes no obligation to revise or update any forward-looking statements to reflect events that may arise after this conference call, except as required by law. For more information, please refer to the cautionary statement included in the earnings release that we have just posted to the investor relations portion of our website. Additionally, we will discuss non-GAAP financial measures on this conference call. Please refer to the tables in our earnings release on the investor relations portion of our website for reconciliation of these measures to their most directly comparable GAAP financial measure. With that, I'd like to turn the call over to Robert.

Thanks, Matt. I appreciate you all joining us this afternoon to discuss definitive healthcare's first quarter results. On today's call, I'll provide an overview of our first quarter results, provide some perspective on business trends and what we're seeing in the market, review some of our key wins from the first quarter, and then turn it over to Jason to highlight some of our latest product innovations. Let's begin by reviewing our first quarter financial results. Revenue exceeded the high end of our guidance range while adjusted EBITDA was in line as we continued to deliver on our goal of balanced growth and profitability. Our total revenue was $59.2 million, which represents 18% year-over-year growth, and our adjusted EBITDA was $15.7 million, which translates into 26.5% margin. Overall, we got off to a solid start to the year, given the context of the ongoing macroeconomic challenges. We continue to have strong demand generation and customer interest in our commercial intelligence platform. Our customers recognize that the definitive healthcare platform has a strategic role in their go-to-market and product development efforts, and that our solutions will be critical in accelerating their business performance as market conditions improve. The continued strength of our demand generation efforts is great validation that the fundamental value proposition of the definitive healthcare platform is resonating with customers. While I'm generally pleased with how we executed in the quarter, the business environment remains difficult. Just as we saw in recent quarters, we continue to see a number of organizations follow more comprehensive deal review processes as companies continue to closely scrutinize their budgets. The net result continues to be an elevated level of deferred purchasing decisions across all markets due to the difficult economic environment. We are working hard to do an effective job of managing through these challenges, and we have put in place several changes that should help us perform in this environment. But until we see a strengthening macro, we do not expect to see meaningful improvement from current dynamics. From a sales perspective, we signed important wins in all of our target markets with both new and existing customers. As I mentioned, our top of funnel and pipeline generation activity has been strong, and our commercial teams are doing a good job adapting to the longer sales cycles and more comprehensive approval processes required to get transactions through the finish line. As I mentioned on our last call, we've made moves to more vertically align our sales teams and institute more in-depth account plans. And as these changes mature through our teams and sales cycles, we will be in an even better position to engage with customers on the full value proposition of our platform. The increasingly strategic conversations we are having with customers reflects the important role the definitive healthcare platform can play in their day-to-day operations. As we mentioned last quarter, recent independent market research ranked the Atlas dataset as first or second in each of the top 10 use cases for healthcare reference and affiliation data. We believe the success is due to our ability to provide proprietary, actionable data in a cloud environment that enables thousands of customers to generate better returns on their sales and marketing investments and increase the probability of successful and profitable product launches. Finding the right physicians, physician groups, and hospitals, and then understanding how they all work together, is critical for the success of any life science, medical device, provider, or diversified company targeting the $4 trillion U.S. healthcare market. Our customers consistently tell us that the definitive healthcare platform delivers unique insights across numerous use cases that other vendors simply cannot match. The breadth, depth, and accuracy of our data, together with the speed at which business users can leverage that data to positively impact their business, is a compelling competitive advantage, and we continue to invest in our platform to create and deliver new insights for these customers. Jason will talk about some of our most recent innovations in a moment. Now I'd like to spend a few minutes highlighting some exciting customer wins from Q1 that demonstrate the numerous ways customers are generating business value from the definitive healthcare platform. Before I jump into specific customers, I want to note that the Staffing Industry Analysts Trade Group recently published their annual ranking of top healthcare staffing agencies, and I was pleased to see that all of the top 11 firms were definitive healthcare customers, as were 18 of the top 20 firms and 24 of the top 30 firms in their rankings. I think we're all aware of the ongoing labor shortage in the healthcare sector, and staffing agencies play a crucial role in filling those job openings. We're thrilled to provide them with access to our more than 2 million medical professionals and more than 1 million executives through our Atlas data set. We profiled one of these customers on our website recently. Thanks to our data, this interim leadership and locum tenens consulting company more than doubled its funnel of potential executives and doctors that they could recruit, and then improved email response rate by 4x by leveraging our highly accurate contact information. Turning now to deals that closed in the first quarter, we saw solid performance in both new business and upsells. In a Q4 2022 deal that pushed to Q1 2023, the world's leading mRNA therapeutic company expanded its relationship with us by adding a six-figure enterprise deal to add our monocle expert insight product so they could better identify clinical experts around the globe who could accelerate their R&D. Also, in our life science business, we had a significant deal that not only reversed customer churn from 2022, but also expanded our presence at a multinational pharmaceutical and biotechnology company. This highly competitive win included a multi-year platform commitment through 2025 to our Passport Analytics Suite. This company plans to use the Passport Analytics Suite to optimize its global marketing spend and reallocate precious investment dollars to the sales and marketing channels that are delivering the highest return. In the provider market, The Atlas data set also played a big role in our win at a leading children's hospital in the western region of the United States. As part of an enterprise deal, this hospital purchased access to our Atlas all-payer claims data set, our Atlas reference and affiliation data set, and our executive contact data, along with our Latitude analytics suite, to help it understand the pediatric market in its region, including market share, patient flow, network leakage, and competitive analysis. Moving to our diversified market, the Atlas dataset also played an important role in a Q1 upsell win. A nonprofit humanitarian organization that provides emergency assistance, disaster relief, and disaster preparedness education across the United States signed an upsell enterprise agreement that more than doubled the size of our relationship. A longtime user of our HospitalView product and internal champion at this customer reached out to us following our Atlas dataset launch. In the first quarter, this organization purchased Atlas All-Payer Claims dataset, which it will use to transform its sales strategy and identify the US hospitals and departments offering the most opportunity for growth. Finally, I want to highlight one last new customer in our software and IT market that selected us based on the strength of our new data integration capabilities. This customer is the largest virtual musculoskeletal clinic in the United States. This customer will be using our new Definitive Connect products to directly import data from our Atlas dataset into their Salesforce instance to drive their business development strategy. In addition, this company's strategy team will use our Connected CareView products to get better insurance coverage in their core markets of hospitals and long-term care facilities. As we look ahead to the remainder of the year, we are highly focused on execution and hitting our targets for the full year. We are at the early stages of penetrating our $10 billion plus market, and there are tremendous opportunities to add thousands of new logos and greatly increase our ARR per customer over time. To that end, we continue to focus on customer success, operational excellence, and ongoing investment in our platform and go-to-market initiatives to keep us moving forward. We made great progress in Q1 on our product roadmap, and investments in our verticalization and global account team strategies, and we'll continue to invest throughout the year. We're making these investments while remaining vigilant in managing our expense structure. We've built definitive healthcare from day one to be highly scalable and efficient, which has been the foundation for our consistently strong track record of profitability. We are proud of the scalable business model we have built and believe it will support both faster growth and expanded margins over time as the economy improves. I'd now like to turn it over to Jason to discuss our product innovation.