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DH

Definitive Healthcare Corp. (DH)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue and adjusted EPS exceeded both company guidance and Street consensus; revenue was $59.19M and adjusted EPS $0.05, reflecting stronger professional services and in‑period subscription timing while retention remained pressured . Street consensus for Q1 was revenue $56.20M* and EPS $0.0248*, implying clear beats.
  • Management raised the bottom end of FY 2025 revenue guidance to $234–$240M (from $230–$240M) and increased adjusted EPS guidance to $0.20–$0.23; Q2 2025 guidance embeds revenue $58.5–$60.0M and adjusted EBITDA $15–$16M (25–27% margin) .
  • Non‑cash goodwill impairment of $176.5M drove a GAAP net loss; management attributed impairments to sustained stock price declines and reiterated that all impacts are excluded from adjusted results .
  • Strategic execution themes: double‑digit growth in data integrations (MDM), ramping digital activation via agency partnerships for H2, and stabilization of renewal rates at late‑2024 levels; management emphasized churn reduction as the top priority .

What Went Well and What Went Wrong

What Went Well

  • Beat on revenue and adjusted profitability versus guidance; “First Quarter Revenue Exceeded Guidance” with adjusted EBITDA of $14.7M (25% margin) and adjusted EPS $0.05 .
  • Strong traction in integrations: “we saw strong double‑digit growth in the number of engagements where we work with clients to integrate our data... retention rates be approximately 10 points higher when customers... integrate” .
  • Digital activation ramp: signed two leading healthcare advertising agencies and a direct provider deal; momentum expected to build in H2’25 .

What Went Wrong

  • Renewal rates stabilized but remained below desired levels; subscription revenue declined ~7% YoY while professional services grew 9% .
  • Continued non‑cash goodwill impairment ($176.5M) driving GAAP losses; impairment linked to sustained stock price declines .
  • Life sciences demand still pressured by funding/decision cycle elongation; management expects improvement to take time despite operational changes .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$62.70 $62.29 $59.19
Adjusted EPS ($)$0.10 $0.08 $0.05
Adjusted EBITDA ($USD Millions)$20.62 $17.52 $14.71
Adjusted EBITDA Margin (%)33% 28% 25%
Adjusted Gross Margin (%)82% 81% 80%
GAAP Net Loss ($USD Millions)$(187.82) $(84.72) $(155.09)
Q1 2025 vs EstimatesConsensus*ActualSurprise
Revenue ($USD Millions)$56.20$59.19 +$2.99M (beat)
Primary EPS ($)$0.0248$0.05 +$0.0252 (beat)
EBITDA ($USD Millions)$10.80$14.71 (Adjusted) +$3.91M (beat; measure basis differs)

Values retrieved from S&P Global*.

Segment/KPI highlights:

  • Subscription and Services mix: Subscription revenue declined ~7% YoY; professional services grew ~9% YoY .
  • cRPO ($USD Millions): Q3’24 $164 → Q4’24 $188 → Q1’25 $182 .
  • Deferred Revenue ($USD Millions): Q3’24 $86.2 → Q4’24 $93.34 → Q1’25 $113 .
  • Cash from Operations ($USD Millions): Q3’24 $19.43 → Q4’24 $8.14 → Q1’25 $26.07 .
  • Unlevered Free Cash Flow ($USD Millions): Q4’24 $(1.58) → Q1’25 $22.93 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY 2025$230.0 – $240.0 $234.0 – $240.0 Raised bottom by $4.0M
Adjusted EPS ($)FY 2025$0.19 – $0.22 $0.20 – $0.23 Raised
Adjusted EBITDA ($USD Millions)FY 2025$61.0 – $65.0 $61.0 – $65.0 Maintained
Adjusted Operating Income ($USD Millions)FY 2025$49.0 – $53.0 $49.0 – $53.0 Maintained
Adjusted Net Income ($USD Millions)FY 2025$30.0 – $34.0 $30.0 – $34.0 Maintained
Revenue ($USD Millions)Q2 2025N/A$58.5 – $60.0 New
Adjusted EBITDA ($USD Millions; Margin %)Q2 2025N/A$15.0 – $16.0; 25–27% New
Adjusted Net Income ($)Q2 2025N/A$6.5 – $7.5 New
Adjusted Diluted EPS ($)Q2 2025N/A$0.04 – $0.05 (≈147.9M shares) New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Data integration / MDMAnnounced strategic data partnership; platform unification and MDM strategy emphasized Double‑digit growth in integration engagements; retention ~10 pts higher with integrated customers Strengthening adoption
Churn and retentionElevated churn; NDR 85–87% outlook; life sciences disproportionately affected Renewal rates stabilized at H2’24 levels; improving churn remains top priority Stabilizing but still pressured
Digital activation / agenciesPlan to expand Populi and digital activation across business Signed two agencies; expect ramp H2’25; direct provider activation deal Building toward H2 ramp
Macro / regulatory (LS)Elongated sales cycles; IRA/regulatory uncertainties; stage‑2 exposure creates lag Macro uncertainty persists; tariffs de minimis impact to DH Persistent headwinds; limited tariff impact
cRPO / deferred revenuecRPO $164M; deferred revenue $86.2M cRPO $182M; deferred revenue $113M Solid forward indicators
Goodwill impairment$228.2M in Q3’24 ; $97.1M in Q4’24 $176.5M in Q1’25; non‑cash, linked to stock price Continued, non‑cash

Management Commentary

  • “We delivered first quarter results above the high end of our guidance for both revenue and earnings, reflecting solid new logo momentum across markets, and our continued focus on operational efficiency.” — CEO Kevin Coop .
  • “Adjusted EBITDA was $14.7 million which was well ahead of expectations… This performance illustrates our commitment to controlling costs and the scalable nature of our business model.” — CEO Kevin Coop .
  • “In Q1, we saw strong double‑digit growth in the number of engagements where we work with clients to integrate our data… retention rates be approximately 10 points higher when customers… integrate definitive into their other data sources.” — CEO Kevin Coop .
  • “Improving churn remains our highest priority… each of our strategic priorities for 2025 are expected to benefit renewal rates over time.” — CEO Kevin Coop .

Q&A Highlights

  • Integrations as retention lever: DH is deploying connectors, APIs, and advanced analytics to ease integration; management sees higher retention in integrated accounts and is willing to incent adoption through delivery models rather than price concessions .
  • Agency channel strategy: Two agencies signed; near‑term direct channel contribution expected, with agency distribution building over time; potential applicability across customer sizes .
  • Guidance cadence: Q1 beat partly due to professional services and subscription timing; Q2 guide prudently assumes similar growth rate with modest subscription step‑up; H2 offers opportunity at high end .
  • Tariffs/macro: Tariff exposure de minimis; broader LS demand affected more by funding/decision cycles than DH‑specific factors .
  • Renewal composition: Declines reflect mix of losses and downsell; enterprise logos being added even as some large customers spend less .

Estimates Context

  • Q1 2025 delivered against Street: Revenue $59.19M vs consensus $56.20M*; adjusted EPS $0.05 vs consensus $0.0248* — both beats, driven by professional services outperformance and intra‑quarter subscription timing .
  • EBITDA comparison: S&P Global EBITDA consensus was $10.80M*, while DH reported adjusted EBITDA of $14.71M; note consensus basis may reflect standardized EBITDA, whereas company highlights adjusted EBITDA . Values retrieved from S&P Global*.

Key Takeaways for Investors

  • Clear operational beat: Revenue and adjusted EPS exceeded guidance and consensus, validating integration, services, and cost discipline execution .
  • Guidance constructive: FY 2025 revenue bottom raised and adjusted EPS increased; Q2 set up for sequential improvement with full run‑rate from data partnership .
  • Retention stabilizing: Renewal rates flat vs H2’24 but still below target; integration and segmented delivery models are the main levers to improve churn through 2025 .
  • Forward indicators healthy: cRPO ($182M) and deferred revenue ($113M) support visibility; cash generation improved in Q1 (CFO $26.07M; UFCF $22.93M) .
  • Non‑cash headwinds: Goodwill impairment continues to cloud GAAP optics but has no covenant impact; focus should remain on non‑GAAP profitability and cash .
  • H2 ramp catalysts: Digital activation and agency channel ramp, plus ongoing MDM integrations, can aid retention and upsell in the back half .
  • Risk monitor: Life sciences funding/decision cycles and upsell pricing pressure; management is prioritizing customer success, segmented pricing/packaging to mitigate .

Footnote: Values retrieved from S&P Global*.