Executive Summary

Q2 FY2025 revenue was $106.4M, above the top of guidance ($104–$106M), and adjusted EBITDA loss was $(2.8)M, significantly better than the $(8)M–$(10)M guided loss. Management cited early PG recognition and disciplined marketing spend as key drivers of the beat .
Usage-based revenue represented ~32% of total, with mix driven by EMO case rates, VPC visits, partner revenues, and D2C; EMO contracts continue shifting from PMPM to usage-based, expanding variable revenue contribution .
Free cash flow was positive at approximately $3.1M in the quarter; cash and marketable securities were $234.4M at quarter-end, leaving net cash “more than $23M” relative to convertible notes and supporting favorable refinancing or retirement options ahead of April 2026 maturity .
Guidance was reiterated: Q3 FY2025 revenue $104–$107M and adjusted EBITDA loss $(3)M–$(5)M (Q2’s early PG recognition primarily pulled from Q3), and FY2025 revenue $460–$475M with adjusted EBITDA $15–$20M .
S&P Global Wall Street consensus for Q2 FY2025 and Q3 FY2025 was unavailable via our tool at this time; comparisons are made versus company guidance. We will update with S&P data when available (consensus unavailable via S&P Global due to mapping issue).

What Went Well and What Went Wrong

What Went Well

“We had a solid second quarter, with revenue above our guided range and adjusted EBITDA well ahead of our forecast.” Management reaffirmed full-year guidance on strength of execution and pipeline .
Positive free cash flow (~$3.1M) and stronger balance sheet: cash and marketable securities >$234M; net cash >$23M relative to converts with multiple favorable debt retirement/refinancing options indicated .
Commercial momentum: “We won a significant new deal for 2nd.MD… notable competitive takeaway in EMO” with strong demand across enterprise, health plans, and government; bundling advocacy + EMO + primary care continues to improve win rates and wallet share .

What Went Wrong

Gross margin declined sequentially largely due to a Q1 PG pull-forward (~$6M, ~100% margin) that elevated Q1 margins; normalized mix in Q2 produced lower gross margin until Q4 PG seasonality .
Early PG recognition in Q2 primarily pulled from Q3, lowering Q3 revenue/EBITDA versus what would have otherwise been expected (though not affecting full-year outlook) .
GAAP profitability remains negative: Q2 net loss $(23.9)M and EPS $(0.30), despite significant year-over-year improvement versus $(32.8)M and $(0.43) in Q2 FY2024 .

Financial Results

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$124.8	$110.5	$106.4
GAAP Gross Margin (%)	46.5%	39.6%	38.8%
Adjusted Gross Margin (%)	54.2%	47.8%	47.3%
Adjusted EBITDA ($USD Millions)	$18.5	$(3.3)	$(2.8)
EPS ($USD, basic & diluted)	$(0.10)	$(0.35)	$(0.30)

Comparison vs guidance and surprise:

Metric	Q2 2025 Guidance (from Q1 call)	Q2 2025 Actual	Surprise
Revenue ($USD Millions)	$104–$106	$106.4	Above top of range
Adjusted EBITDA ($USD Millions)	$(8) to $(10)	$(2.8)	Better than guidance

Revenue mix and usage-based contribution:

Metric	FY 2024	Q2 2025
Usage-based Revenue (% of Total)	27%	32%

Key balance sheet and cash KPIs:

Metric	Q4 2024	Q1 2025	Q2 2025
Cash and Equivalents ($USD Millions)	$185.7	$188.7	$173.3
Marketable Securities ($USD Millions)	$51.3	$41.9	$61.0
Total Cash & Securities ($USD Millions)	$237.0	$230.6	$234.4
Loans Payable ($USD Millions)	$208.5	$208.8	$209.1

Operating metrics and drivers:

Metric	Q1 2025	Q2 2025
PG Pull-Forward ($USD Millions)	~$6.0 (mostly from Q4)	Early recognition (primarily from Q3)
Free Cash Flow ($USD Millions)	n/a	~$3.1

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	Q3 FY2025	n/a	$104–$107M	New
Adjusted EBITDA	Q3 FY2025	n/a	$(3)M to $(5)M	New
Revenue	FY2025	$460–$475M	$460–$475M	Maintained
Adjusted EBITDA	FY2025	$15–$20M	$15–$20M	Maintained

Notes: Management emphasized that early PG recognition in Q2 primarily came out of Q3, reducing Q3 revenue/EBITDA but leaving the full-year forecast unchanged .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024 and Q1 2025)	Current Period (Q2 2025)	Trend
Usage-based revenue mix	Usage-based grew from 15% (FY2022) to 27% (FY2024); expected 30–35% FY2025; platform-connected revenues doubled in FY2023 and FY2024	~32% of Q2 revenue; EMO shifting to usage-based; D2C managed for CAC/LTV discipline	Rising mix; continued shift to variable revenues
Health plan channel	Blue Shield CA “Virtual Blue” results (8–10% cost reduction, 11% ER claims down); new health plan partnerships expanding ARR	Strong demand across health plans; deployments often beyond Jan 1; robust opportunity across advocacy, EMO, VPC	Expanding partnerships; timing variability
ROI guarantees & pricing discipline	Emphasis on profitable growth, disciplined pricing, mid-teens revenue with EBITDA margin expansion	Employers pushing more rigorous ROI guarantees; Accolade comfortable leaning into actuarial rigor; disciplined on unit economics	Higher rigor; disciplined growth
Gross margin dynamics	Q4 adjusted GM 54.2%; FY adjusted GM 47.6%; PG seasonality drives Q4	Q2 GM declined sequentially due to Q1 ~$6M PG pull-forward; full-year ~50% GM expected	Seasonal; improves in Q4
Debt and liquidity	$237M cash+securities; plan to manage 2026 converts	$234.4M cash+securities; net cash >$23M vs converts; exploring favorable retirement/refi options	Strengthening net cash, optionality
GLP-1 demand	Noted cohort impacts and D2C growth drivers	GLP-1 steady demand; Accolade focuses on longitudinal primary care vs transactional models	Stable demand; care model differentiation
Trusted Partner Ecosystem	Accolade drives higher engagement and closed-loop reporting with partners (e.g., Virta)	New CKD partner (Renalogic) added in Oct; continued partner integration focus for ROI	Expanding categories; deeper integration
Commercial wins	$86M ARR bookings in FY2024; strong multi-channel sales	Competitive takeaway in EMO (2nd.MD); strong pipeline across segments	Healthy pipeline; selective pricing discipline

Management Commentary

“We had a solid second quarter, with revenue above our guided range and adjusted EBITDA well ahead of our forecast.”
“We generated a little bit more than $3 million of cash this quarter… Cash, cash equivalents and marketable securities totaled more than $234 million… net cash position of more than $23 million relative to our convertible notes, and we expect to generate positive cash flow on a full year basis.”
“The most exciting [win]… we won a significant new deal for 2nd.MD… notable competitive takeaway in the expert medical opinion space.”
“If you model the guidance we provided last quarter… you’ll see a business doubling adjusted EBITDA in each of the next 2 years.”
“Note that early PG recognition in Q2 primarily came out of Q3, impacting both revenue and adjusted EBITDA for Q3, while not impacting our full year forecast.”

Q&A Highlights

Selling season and health plan timing: demand strong across employers and health plans; many health plan launches occur outside Jan 1, creating timing variability but large populations and material revenue potential .
Usage-based revenue: ~32% of total in Q2; driven by EMO, VPC, partner revenues and D2C; ongoing shift of EMO contracts to usage-based .
Retention: typical 3-year B2B contracts; gross dollar retention expected ~90%+ this year; pruning of uneconomic contracts largely complete .
Gross margin: sequential decline due to Q1 ~$6M PG pull-forward; full-year gross margin expected near ~50%, with Q4 seasonality .
Marketing optimization: disciplined CAC/LTV on D2C; co-marketing with customers to drive platform-connected utilization; shared-cost campaigns where ROI warranted .

Estimates Context

S&P Global Wall Street consensus for Q2 FY2025 and Q3 FY2025 was unavailable via our tool due to a mapping issue; we compared actuals to company guidance instead. We will refresh once S&P mapping is resolved and update beat/miss commentary accordingly.
Based on company guidance, Q2 revenue was above the top of the guided range and adjusted EBITDA materially outperformed guidance .

Key Takeaways for Investors

Strong execution against derisked plan: Q2 revenue beat and EBITDA outperformance show discipline in marketing spend and the benefit of early PG recognition; full-year profitability on adjusted EBITDA remains on track .
Mix shift supports margin leverage: usage-based revenues (~32%) from EMO/VPC/partners/D2C are scaling, with EMO contracts moving to usage-based pricing—supporting variable revenue growth without incremental S&M .
Q3 setup: expect lower revenue/EBITDA due to Q2 early PG recognition shifting out of Q3, but no change to FY outlook—watch for Q4 PG seasonality as margin catalyst .
Balance sheet optionality: $234.4M cash & securities and >$23M net cash vs converts provide favorable refinancing/retirement paths into 2026 maturity; positive FCF in Q2 is a constructive signal .
Health plan channel momentum: partnerships (e.g., Blue Shield CA Virtual Blue) and co-branded launches can ramp over time; monitor announced wins and deployment schedules for intra-year variability .
Trusted Partner Ecosystem expansion: new CKD partner (Renalogic) adds cost containment and clinical depth; closed-loop integrations drive measurable ROI and platform-connected revenue growth .
Pricing and ROI discipline: management is prioritizing profitable growth and rigorous ROI guarantees; expect fewer “advocacy-only” deals and more bundled solutions to increase PMPM and usage revenues per account .

Appendix: Other Relevant Press Releases (Q2 FY2025 window)

Celeste partnership: integrated navigation, VPC, EMO, and point solutions; reinforces Accolade’s platform approach and employer value proposition (Aug 22, 2024) .
Renalogic joins Trusted Partner Ecosystem: CKD risk management and dialysis cost containment (Oct 15, 2024) .

Sources

Q2 FY2025 8-K and press release
Q2 FY2025 earnings call transcript
Q1 FY2025 8-K and press release
Q1 FY2025 earnings call transcript
Q4 FY2024 8-K and press release
Q4 FY2024 earnings call transcript

S&P Global consensus estimates were unavailable via our tool at this time; comparisons to estimates will be updated when accessible.

Accolade, Inc. (ACCD)·Q2 2025 Earnings Summary