Definitive Healthcare Corp.

Turning to the operational update. I'd now like to provide an update on our four strategic pillars, which continue to guide our operational focus and investment priorities. As you'll recall, these pillars are differentiated data, data management and seamless integrations, customer success, and digital partnerships and innovation. Starting with differentiated data, which is the foundation of our value proposition. We continue to see validation of our data quality advantage in competitive situations. We are making good progress expanding and deepening our datasets with new sources, including bringing on a new claims data source in Q3 that addresses the data disruption in that market segment over the past year. But we are not satisfied with just returning to previous levels, so we are on track to add another new data source later this quarter that will return DH to above historical data levels. Again, strengthening our data assets are foundational to our business, and will be a continued area of investment and focus, including how we expand and enhance our core reference and affiliation data assets. Some wins in the quarter that were driven by our differentiated data include a large multinational biopharma chose Definitive Healthcare to support their medical affairs team. Historically, their research to identify key opinion leaders in support of multiple product lines was performed manually. They recognize the value leveraging our solutions and data sets would enable them to more quickly and efficiently identify the right key opinion leaders with which to partner. This is a solid example of how our data solves tangible business challenges and builds a strong position for upselling and cross-selling as we support a future customer need. In another example, a medical device company chose Definitive because their current data provider was lacking critical insights on affiliation hierarchies within integrated delivery networks, which are critical to the effective identification of the correct buying decision makers. Our ability to master complex hospital affiliation data, claims data, contact info, and payer mix were key to securing this win. Core to this win was Definitive's ability to leverage and master both our differentiated data with that of third-party data so that the customer could generate highly accurate insights in support of their medical device marketing needs. Turning to our second pillar, that of seamless integrations, we continue to focus on making our data sets, proprietary software, and analytical capabilities available to customers in whatever way is most effective and efficient for their business needs. By meeting our customers' needs in the most efficient and effective manner, we enable our customers to more easily leverage our differentiated data through the systems of record and systems of insight of their choice. At the same time, we are making it easier for our commercial teams to win new customers. The easier and simpler we make it to embed definitive into their workflows and processes, the more this will ultimately improve retention. We know that those customers that have integrated our data directly into their systems renew at significantly higher rates. I would like to add a specific highlight example where we are benefiting from this strategy. We recently signed a six-figure expansion with a longtime customer who has become a million-dollar-plus logo in the diversified market. This customer has steadily expanded their use of Definitive based on our consistent ability to improve the effectiveness of their go-to-market efforts across several of their business units. Our API integration feeds definitive data directly into their Salesforce deployment, and this tight integration enables their sales teams to efficiently create hierarchies and effectively manage customer contacts. This tight integration has made DH essential to their corporate strategy to leverage data, intelligence, and automation to accelerate their revenue growth. Turning to our third pillar, customer success, we continue to receive positive feedback on the steps we've taken in recent quarters to develop a consistent, repeatable, and proactive customer engagement process. Our goal is to ensure customers are easily able to generate value from their investments in our solutions as rapidly as possible, and this required us to revisit the entire process starting from the point we initially engaged with a prospective customer, how we ensure maximum value is provided through the sales process, And finally, how we onboard and service their solution. It is critical that we ensure the customer receives great experience at integration and ultimately we maintain this positive relationship throughout the entire customer journey. This is an iterative process and we will continue to refine and improve our approach going forward as exceptional customer experience requires continuous focus. As mentioned earlier, We are seeing improvement in retention rates, but we have more objectives to meet before reaching the retention rates we are confident are achievable that will enable us to return to generation of consistent top-line growth. The initiatives highlighted earlier all support and contribute to our customer success goals and include a cross-functional effort that spans all functional areas, including sales, support, product, and the relentless pursuit of continuous improvement in our core data assets. Looking at our last pillar, innovation and our focus on digital engagement, we are making substantive progress in multiple areas. For example, as part of our efforts to support customers' ad tech efforts, we recently launched our first syndicated always-on go-to-market partnership with LiveRamp, where our data will be available in the LiveRamp Marketplace. This will enable marketers to self-serve using pre-built audience segments or request custom healthcare audiences from us in support of customers activating verified HCP and consumer data across digital channels in a privacy-safe manner. We also secured another relationship with a significant new strategic partner that is slated to go live at the end of the quarter. While it takes time for these partnerships to begin generating revenue, we are pleased with the progress we are making in building out a broad ecosystem of partners and the validation that their decision to partner with us, Definitive, reinforces in the competence we have in our approach. We are also seeing good momentum in expanding our agency presence. In Q3, we signed up another eight agencies. As discussed last quarter, Partnering with agencies to ensure we have the opportunity for DH data to power marketing campaigns they run on behalf of our clients is an important part of our digital strategy. Leveraging the most accurate data drives better business performance for customers and makes Definitive an increasingly strategic vendor. So getting our data available to those agencies that support digital engagement is critical. Agency support is only one channel, with another priority focusing on direct sales support. Our commercial teams work directly with customers to support activation campaigns and see some very encouraging results. For example, a large teaching hospital in New England recently expanded from a five-figure test to a mid-six-figure activation campaign commitment. We believe this is a powerful example of the increased value Definitive can deliver when we give our customers the ability to take our data and close the loop to create augmented, targeted, effective, and profitable customer outreach programs. We believe this is a significant opportunity and remains a core area of investment as DH demonstrates we can augment and activate their digital campaigns in a highly effective and seamless manner. Let me wrap up by saying that I am proud of the definitive team for all the work they're doing to strengthen the value of our data and the solutions they deliver and improve the way we engage with our customers in all phases of our relationships. and we will continue to ensure we maintain vigilance on capital allocation and operational efficiency. As we approach the end of 2025, we are confident that the investments and the changes we are making in the business will position us to deliver improved top-line and bottom-line performance over time and create value for our shareholders. Now, I would like to turn the call over to Casey to walk you through the numbers. With that, Casey?

Thank you, Kevin. In all my remarks, I will be discussing our results on a non-GAAP basis, unless otherwise noted. Before turning to the specifics, I'd like to step back and provide some context on our quarter. We continue to operate in a dynamic macro environment, and our ability to stay disciplined and make progress against our four strategic pillars remains central to our success. This alignment and prudent approach are reflected in our Q3 performance, where we again delivered results at or above the high end of guidance on both the top and bottom line. In the third quarter, we delivered revenue of $60 million, down 4% year-over-year, adjusted EBITDA of $18.9 million, reflecting a 32% margin, and adjusted net income was $9.7 million, resulting in 7 cents of non-GAAP earnings per share in the period, all of which were at or above the high end of our guidance for the quarter. We also delivered $17.9 million of unlevered free cash flow in the quarter, and nearly $51 million on a trailing 12-month basis. Turning to our results in more detail, revenue of $60 million was at the high end of our guidance range and represents a 4% decline year over year. Q3 revenue shows a sequential improvement in growth trajectory on total and subscription revenues and is indicative of the progress we are making. Subscription revenues of $58.2 million declined 4% year over year, and reflects stabilization in absolute dollars quarter over quarter, along with a two-point trajectory improvement over the subscription growth rate in the prior quarter. And we again are encouraged by the improvement we're seeing on renewal rates. While Q3 is a smaller renewal period in terms of volume of renewals, our renewal rates in Q3 were largely consistent with Q2 and reflect solid improvement year over year. Professional services revenue in the quarter showed modest growth and was largely in line with our expectations. Adjusted gross profit in the third quarter was $49.4 million, which was down 4% from Q3 2024, reflecting the revenue decline. As a percentage of revenue, the adjusted gross profit margin of 82% was roughly flat from Q3 2024. Gross margin in the quarter benefited from our ongoing efforts to improve the efficiency of our cost of goods sold. We experienced approximately $2.5 million in cost savings in the third quarter. The first is an approximate $1.5 million one-time benefit due to a data contract renegotiation. The second is a net cost reduction of approximately $1 million due to replacing an existing data source that was significantly impacted by the disruption in the claims market with another higher volume data source. This represents run rate savings, a portion of which we will be reinvesting starting in the fourth quarter when we bring another new claims data source online. and will add significant value to our customers. Adjusted EBITDA was $18.9 million and reflects a 32% margin, well above the high end of our guidance for the third quarter. As expected, this is down year over year, reflecting the flow through from lower revenue, but we're maintaining disciplined expense management and continuing to prioritize key strategic investments to position us for an eventual return to growth. Turning to cash flow, Our business continues to generate strong free cash flow due to our high margin model, upfront billing, and low capex requirements. Operating cash flows were $59.2 million on a trailing 12-month basis, up 8% from the comparable period a year ago, as we benefited from strong collections and a higher deferred revenue related to data partnership entered into at the end of Q4. On a trailing 12-month basis, we generated nearly $51 million of unlevered free cash flow. Also on a trailing 12-month basis, our conversion rate of adjusted EBITDA to unlevered free cash flow was 73%, which is down about 30 points year over year. This decline reflects higher than normal capex related to one-time investments largely incurred in Q4 of 2024 and Q1 of 2025. Excluding one-time capex investments, the conversion rate is above 95% over the last 12 months. This cash generation provides flexibility to continue investing in growth while returning capital to shareholders as evidenced by our repurchase of approximately 2 million shares in the quarter for a total of about $9 million, with about $49 million remaining under our authorization. At the end of Q3, deferred revenue of $92 million was up 7% year-over-year and total remaining performance obligations were up 1% year-over-year. Current remaining performance obligations of $165 million were up about 1% year-over-year as reported as well. As mentioned last quarter, both our revenue results and current remaining performance obligations include the benefit from our data partnership signed late last year. We will anniversary the initial contributions of the multi-year agreement on CRPO at the end of Q4. Q3's CRPO growth rate declined mid-single digits, excluding the data partnership contributions. Our performance in the third quarter reflects continued progress against our key initiatives and delivered another solid quarter while we prudently managed the business. As we look ahead, we continue to be impacted by pressures on renewals and remain cautious on the macro environments. For the fourth quarter, we expect to deliver $59 to $60 million in revenue, a decrease of 4% to 5% compared to the fourth quarter of 2024. From a non-GAAP profitability perspective for the fourth quarter, we expect to deliver adjusted operating income of $13.5 to $14.5 million, adjusted EBITDA of $16 to $17 million, reflecting a 27% to 29% adjusted EBITDA margin. At the high end of the guide, adjusted EBITDA margins modestly expand year over year in the quarter. In terms of dollars, Q4's adjusted EBITDA is pretty consistent with Q3, adjusting for the one-time credits and factoring in planned investments. Adjusted net income of $8 to $9 million, or approximately $0.05 to $0.06 per diluted share, on 145.8 million weighted average shares. Given we exceeded our expectations in the third quarter, paired with our outlook on Q4, we are again able to raise the midpoint of our full year guide on both revenue and non-GAAP profit. We now expect to deliver revenue of $239 to $240 million for a 5% decline year over year. This raises the bottom end of our prior range by $2 million while holding the upper end of the prior guide. And we're in a position to take up the non-GAAP profit guidance for the year. We now expect adjusted operating income of $57.5 to $58.5 million, adjusted EBITDA of $68 to $69 million for a full year margin of 28 to 29%. This is a $3 million increase to the midpoint of the guided range. Adjusted net income is expected to be between $34 to $35 million, and earnings per share are now expected to be 23 to 24 cents on a basis of 146.8 million weighted average shares outstanding, which incorporates the share repurchase activity through the third quarter. As we wrap up, I want to highlight that we're encouraged by our results through the first nine months of the year and remain squarely focused on what matters most, improving customer retention, returning definitive to growth, and driving long-term shareholder value. And with that, I would like to open it up for questions.

If you would like to ask a question, please press star 1 on your telephone keypad now and you will be placed into the queue in the order received. Please be prepared to ask your question when prompted. Please keep yourself to one question and one follow-up question. Once again, if you would like to ask a question, please press star one on your phone now. And our first question comes from Jared Haas from William Blair. Please go ahead, Jared.