Model N, Inc.

Good afternoon and welcome to Model N's third quarter of fiscal 2022 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. With that, I would now like to turn the call over to Carolyn Bass of Investor Relations. Please go ahead.

Good afternoon. Welcome to Model N's third quarter of fiscal 2022 earnings call. This is Carolyn Bass, Investor Relations for Model N. With me on the line today are Jason Blessing, Model N's Chief Executive Officer, and John Ederer, Chief Financial Officer. Our earnings press release was issued at the close of market and is posted on our website. The primary purpose of today's call is to provide you with information regarding our third quarter of fiscal 2022 performance and offer a financial outlook for our fourth quarter and fiscal year ending September 30, 2022. The commentary made on this call may include forward-looking statements. These forward-looking statements are based on management's current views and expectations as of today and should not be relied upon as representing our views as of any subsequent date. We disclaim any obligation to update any forward-looking statements or outlook. Actual results may differ materially. Please refer to the risk factors in our most recent Form 10-Q filed with the SEC. In addition, during today's call, we will discuss non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to, not as a substitute for or in isolation from, GAAP results. Reconciliations of the non-GAAP metrics to the nearest GAAP metrics are included in the earnings press release issued today, which is available on our website. I encourage you to visit our IR website at investor.modeln.com to access our third quarter press release, periodic SEC reports, and the webcast replay of this call. Finally, unless otherwise stated, all financial comparisons in the call will be to our fiscal year 2021 results. And with that, I'll turn the call over to Jason.

Thanks, Carolyn, and good afternoon, everyone. Thank you for joining our call. Today, we posted outstanding third quarter results, one of our best quarters ever. We exceeded all key guidance metrics, including total revenue, subscription revenue, professional services revenue, and adjusted EBITDA. We also had another very strong bookings quarter with contributions from all growth levers. At the start of the fiscal year, we set a target to exit the year at a 20% ARR growth rate. Based on our solid execution, SAS ARR growth is now accelerating in excess of 20%, and we expect to be at or above this number over the long term. John will provide more color later in his remarks. In Q3, we also continued to cement Model N's position as the preferred life sciences revenue management provider. In the quarter, we closed SaaS transitions with Genentech, Synovian, and GSK, three of the largest pharma companies in the world. 2022 has been a pivotal year as the conversion of our remaining on-premise customers to the cloud continues to accelerate. We remain ahead of our internal plan for SaaS transitions, which is one of the growth levers driving upside this year. And perhaps even more importantly, we are seeing a meaningful amount of new sales coming from non-SaaS transition deals, which bodes well for the future. Given the success we are experiencing with SaaS transitions, we also continue to see our maintenance decline at an accelerating rate compared to recent levels. Declining maintenance is a seminal event in any on-premise to SaaS transition, and we view this as a very positive trend in the business. Next, I'd like to share some quarterly business highlights. During the quarter, we enjoyed strong momentum in Life Sciences bookings, which included the three new SaaS transitions that I already mentioned, and numerous other wins, including new logos and selling into our customer base. What is most encouraging to me is that the majority of our new bookings came from all other deals, which shows how we are well positioned for continued growth as SaaS transitions come to a conclusion. In the quarter, we signed multiple new life sciences customers, including GenMav and Moderna, one of the pioneers in COVID-19 vaccines. And as we have discussed on our previous calls, SaaS transitions have been a great catalyst to get back in front of our customers and tell the Model N story. As we continue to deliver on successful SaaS transitions, this is also driving accelerating cross-sell and up-sell. We saw this trend continue in Q3 with expansions at several marquee life sciences customers, including Genentech and Gilead. As we've talked about previously, complexities within the healthcare regulatory environment create an opportunity for Model M to innovate and help our customers more efficiently distribute their life-changing products to the world. One example is the federal 340 drug price control program that allows qualifying providers serving uninsured and low-income communities to purchase drugs from manufacturers at significantly reduced prices. However, this program creates complexity as manufacturers need to determine who is eligible to purchase under this program and who is not so they can prevent revenue leakage. Given the increasing utilization of the 340B purchase program under Obamacare, our new product has begun to resonate in the market. During Q3, we scored wins at Gilead and Astellas. 340B is another great example, like state price transparency management, where we are able to quickly bring products to market to help our customers address changing regulatory requirements. We're also seeing traction in EMEA, which is another long-term growth driver for us. During Q3, the team signed Galderma, a Swiss pharmaceutical company that specializes in dermatological treatments. Galderma signed an agreement to deploy our global price management, provider management, and deal management solutions to support their growing business. Galderma sought one solution to manage pricing across three divisions to enable them to standardize their practices around contracting and rebates company-wide. Model N was selected because of our strong products, referenceable customers, and our team's great domain expertise. all of which will support Galderma's growth over the next several years. We also saw strong performance from business services in the quarter. Mycovia Pharmaceuticals, an emerging biopharmaceutical company, is another great example of how the business services value proposition resonates with a pre-commercial company. Mycovia recently launched their first product, Vivjoya, a drug used to treat key women's health issues. Mycovia purchased government pricing, commercial contracting, and our cloud analytics suite to help scale their business. Mycovia selected Model N due to our deep expertise and track record of assisting emerging pharmaceutical companies with successful product launches. Business Services also closed expansion deals at several other customers, including Medexis. Medexis is notable because they became our newest state price transparency management customer. Turning to high tech, as I mentioned on our last earnings call, this segment has exceeded my expectations so far this year, as this vertical seems to be returning to a more normal buying pattern. We continue to see traction with both new logos and customer-based deals. During Q3, we won a highly competitive new logo deal at Analog Devices, the second largest semiconductor company in the world. If you recall, last year, Analog acquired Maxim Integrated in a $20.8 billion mega merger of the two semiconductor giants. After a thorough evaluation, Analog selected model and deal management and channel data management to support the combined company. We also saw high tech expansions during Q3 at both Soladyne and Targus. Soladyne is a great example of how our team has been successful at landing and expanding in a new account. During Q2, Soladyne added channel data management, or CDM, to provide better visibility into channel sales to ensure they are properly enforcing pricing agreements. The addition of CDM came on the heels of a successful project deployment earlier this year and is another example of happy customers buying more products. Turning to professional services, our services team continues to deliver the majority of projects on time, on budget, and at truly best-in-class services margins. This delivery excellence is also playing a key role in our sales cycles by providing proof points that we can help our customers rapidly realize value from their Model N investments, like the Soladyne example that I referenced earlier. We have also had several successful go-lives recently, and I'd like to highlight a few examples. Seqirus, one of the world's largest influenza vaccine companies, saw their business grow rapidly during the pandemic, and came to Model N to help manage that growth. Securus is now fully live on Model N and a great example of how our experienced services team can partner with a customer to rapidly deploy our products and deliver value. This project included the implementation of Model N to streamline compliance tracking and automate the exchange of data with Securus' ERP system. This new solution will allow Securus to review and modify contracts in real time to ensure commercial and regulatory compliance and reduce revenue leakage. Since going live, we estimate that this integrated solution has saved Securus millions of dollars in the form of more accurate payments of chargebacks and rebates. As previously reported, we have signed several large SaaS transitions over the last 18 months, and it is great to see many of these projects coming to successful conclusions. Novartis, a top five global pharma company, signed a SaaS transition in our Q2 fiscal 2021, and I am proud to report that they successfully went live on the Model N cloud during Q3. The Novartis SaaS transition was completed in just 13 months, which is truly remarkable given the size and complexity of their business. Novartis' SaaS transition is a critical project in their digital transformation, and it will allow them to more cost-effectively leverage modeling, innovation, and regulatory updates in the future. I am particularly proud of this project because we also partnered with Novartis to make several enhancements to global price management which were also implemented during this project. EMD Serrano is another large global pharmaceutical company that also went live during the quarter. EMD has a complex model and deployment and processes over $1 billion of payments through our platform. And what's even more impressive is the fact that they were able to complete their SaaS transition in just 17 weeks. With Model N SaaS platform, EMD is looking forward to remaining compliant with changing regulations and leveraging innovation delivered through Model N seasonal product releases. I'd like to close by saying that I am very proud of how our team has performed this year. We are capitalizing on all growth levers, including SaaS transition, customer sales, new logos, and EMEA expansion. I am also encouraged by our team's strong execution in a very dynamic global environment. The team's performance is driving tangible results in the form of accelerating SaaS ARR and improving profitability. Model N has truly hit an inflection point in our SaaS transition journey, but I still believe that the best is yet to come. Now let me turn the call over to John to discuss our Q3 financial results and provide an update on our guidance. John?