Executive Summary

Q1 2025 delivered modest topline growth and substantial profitability improvements: revenue $27.6M (+6% y/y), GAAP net income $1.9M, adjusted EBITDA $5.6M (≈20% margin), and free cash flow $3.6M .
Relative to Wall Street, CareCloud beat S&P Global consensus on revenue ($27.6M vs $25.9M*) and “Primary EPS” ($0.05 vs -$0.05*), aided by cost discipline and a one-time MedSR project; management reaffirmed full-year guidance (revenue $111–$114M, adj. EBITDA $26–$28M, GAAP EPS $0.10–$0.13) . Values retrieved from S&P Global.
Capital structure materially improved: conversion of 3.5M Series A preferred into 26M common reduced dividend burden by ≈$7.7M annually and satisfied $11.4M of accrued dividends; preferred dividends resumed and are being paid from operating cash flow .
Strategic catalysts: launch of an AI Center of Excellence (50+ hires, targeting 500 by 4Q25, self-funded), re-entry to M&A with MesaBilling and RevNu (both expected accretive within ~90 days), and ongoing RPM/CCM momentum (+25–30% y/y in Q1) .

What Went Well and What Went Wrong

What Went Well
- Cost structure driving margin expansion: GAAP operating margin 7.3% (vs 0.5% y/y) and adj. EBITDA up 52% y/y to $5.6M (≈20% margin) .
- Capital structure reset: “Following the Series A conversion, our dividend obligation has decreased from $3.9 million to approximately $1.5 million per quarter, while our free cash flow…increased to $3.6 million” (Co-CEO Snyder) .
- AI execution and visibility: “We launched our AI Center of Excellence…scaling to 500 AI professionals by year-end…fully self-funded through operating cash flow” (Co-CEO Chaudhry) .
What Went Wrong
- Seasonality and mix: Q1 typically a lower-revenue quarter due to deductibles; Q1 revenue benefited from a one-off MedSR project and management does not expect sustained y/y growth from MedSR (modeling flat) .
- Sales and marketing leverage reflects acquisitive strategy (not classic S&M-led growth); management highlighted that growth may not track S&M expense line as tuck-in M&A is a key driver .
- GAAP EPS to common remains negative due to preferred dividends (-$0.04) despite positive GAAP net income, underscoring the residual dividend impact on common EPS until dividends normalize/are reduced further .

Financial Results

Metric	Q1 2024	Q4 2024	Q1 2025
Revenue ($M)	$26.0	$28.2	$27.6
GAAP Net Income ($M)	($0.2)	$3.3	$1.9
GAAP EPS to Common ($)	($0.10)	$0.00	($0.04)
Adjusted EBITDA ($M)	$3.7	$7.1	$5.6
GAAP Operating Income ($M)	$0.1	$3.5	$2.0
GAAP Operating Margin (%)	0.5%	12.2%	7.3%
Adjusted Operating Margin (%)	2.3%	14.0%	8.5%
Free Cash Flow ($M)	$2.2	$3.0	$3.6

Consensus vs. Actual (S&P Global; Q1 2025)

Metric	Consensus	Actual	Surprise
Revenue ($M)	$25.9*	$27.6*	+$1.7 (≈+6.6%)*
Primary EPS ($)	-$0.05*	$0.05*	+$0.10*
EBITDA ($M)	$5.48*	$5.54*	+$0.06*
Values retrieved from S&P Global.

Revenue Mix (Q1 2025)

Component	Q1 2025
Recurring technology-enabled revenue ($M)	$17.7
Nonrecurring professional services (MedSR) – derived ($M)	≈$9.9 (=$27.6–$17.7)

Key KPIs and Balance Sheet

KPI	Q1 2024	Q4 2024	Q1 2025
Cash ($M)	$4.1	$5.1	$6.8
Net Working Capital ($M)	n/a	$5.2	$11.7
Operating Cash Flow ($M)	$4.1	$5.2	$5.1
Preferred Dividends Paid ($M)	$0.0	$0.0	$1.7

Guidance Changes

Metric	Period	Previous Guidance (Mar 13, 2025)	Current Guidance (May 6, 2025)	Change
Revenue	FY 2025	$111–$114M	$111–$114M	Maintained
Adjusted EBITDA	FY 2025	$26–$28M	$26–$28M	Maintained
GAAP EPS	FY 2025	$0.10–$0.13	$0.10–$0.13	Maintained

Earnings Call Themes & Trends

Topic	Q3 2024 (two quarters ago)	Q4 2024 (prior quarter)	Q1 2025 (current)	Trend
AI/Technology initiatives	Emphasized gen-AI to drive efficiency/profitability; record FCF; plans to resume dividends	CirrusAI expansions; AI-driven efficiency across EHR/RCM; specialty EHRs near launch	AI CoE launched; 50+ hires, target 500 by 4Q25; self-funded; progress on Cirrus AI Notes/Voice/Assist	Accelerating scope, resourcing, and productization
Capital structure	Paid off credit line; planned preferred dividend resumption	Record profitability; positive EPS targeted for 2025; Series A conversion plan discussed	3.5M Series A converted to 26M common; dividend burden down to ≈$1.5M/qtr; $11.4M accrued dividends satisfied	Improved flexibility; cash savings redeployed
M&A	No deals in ~4 years; M&A engine expected to restart	Re-entry signaled; disciplined, accretive focus	MesaBilling (Feb) and RevNu (Apr) closed; both expected accretive within ~90 days	Pipeline reactivated; targeted tuck-ins
RPM/CCM	Not highlighted	Early momentum noted	RPM/CCM +25–30% y/y; still <5% of revenue	Growing upsell vector
Macro/Tariffs	n/a	n/a	Services model insulated from tariffs; minimal macro sensitivity cited	Neutral macro exposure

Management Commentary

“The launch of our AI Center of Excellence marks a pivotal moment…building one of the largest dedicated healthcare AI teams globally…fully self-funded through operating cash flows.” — Co-CEO A. Hadi Chaudhry .
“Following the Series A conversion, our dividend obligation has decreased…to approximately $1.5 million per quarter, while our free cash flow…increased to $3.6 million during the same quarter.” — Co-CEO Stephen Snyder .
“This is our fourth consecutive quarter of positive GAAP net income…We have resumed paying our Preferred Stock dividends monthly out of internally-generated free cash flow.” — Interim CFO Norman Roth .

Q&A Highlights

Revenue drivers and sustainability: Q1 y/y growth aided by a large MedSR project (one-off); management models MedSR flat going forward; growth focus is upsell (including specialty EHRs) and tuck-in M&A .
AI deliverables and cadence: 50+ AI hires already; quarterly updates planned on projects, adoption, and performance; back-end RCM automation and front-end EHR features progressing .
Seasonality: Q1 usually lower due to deductibles; FY view centers on $111–$114M revenue, implying modest y/y growth after years of declines .
Capital allocation: Priority to reinvest in AI and pursue disciplined, accretive tuck-ins; lower dividend burden creates headroom .
Efficiency/COGS: Cost of revenue improvement seen as sustainable; S&M leverage tied to M&A-led growth; tax rate expected to remain low due to NOLs .

Estimates Context

Q1 2025 vs S&P Global consensus: revenue $27.6M vs $25.9M*, Primary EPS $0.05 vs -$0.05*, EBITDA $5.54M vs $5.48M* (beats across the board). Values retrieved from S&P Global.
Forward (S&P Global): Near-term quarterly consensus implies continued profitability (e.g., Q2 2025 Primary EPS $0.02*, revenue $27.2M*), suggesting modest growth in line with reaffirmed FY guide. Values retrieved from S&P Global.

Key Takeaways for Investors

Cost-driven turnaround intact: four straight quarters of GAAP profitability, ~20% adj. EBITDA margin in Q1, and positive FCF support the valuation and provide dry powder for reinvestment .
Clear beat/raise setup without the “raise”: strong beats vs consensus and reaffirmed FY guidance hint at potential estimate upward bias if AI/M&A execution sustains. Values retrieved from S&P Global.
Capital structure de-risked: preferred conversion lowers cash outflows and supports growth investments; continued preferred dividend payments from operating cash flow reduce risk perception .
AI commercialization is the narrative: tangible progress (Cirrus AI Notes/Voice/Assist) and a scaled AI CoE can expand margins and cross-sell opportunity; watch adoption KPIs and monetization milestones .
M&A is back: two tuck-ins closed and accretive within ~90 days; disciplined, retained-revenue structures mitigate integration risk and support roll-up economics .
Mix watch item: MedSR one-time project boosted Q1; absent repeats, core growth should come from RPM/CCM, specialty EHR upsell, and tuck-ins—monitor recurring revenue trajectory .
Tax and macro benign: NOLs keep effective tax rate low; services exposure limits tariff/macro shocks—supportive for earnings quality durability .

Notes on non-GAAP: Adjusted EBITDA, adjusted operating income/margin, and adjusted EPS exclude stock-based comp (benefit), amortization of purchased intangibles, transaction/integration and restructuring costs; reconciliations provided by the company .

Values retrieved from S&P Global: All figures marked with an asterisk (*) are from S&P Global consensus/actuals (Primary EPS, Revenue, EBITDA) obtained via GetEstimates.

CareCloud, Inc. (CCLD)·Q1 2025 Earnings Summary