Executive Summary

Q4 revenue $62.3M declined 6% YoY but came in above the high end of guidance; adjusted EBITDA was $17.5M (28% margin) and adjusted EPS was $0.08, while GAAP EPS was $(0.51) due to a $97.1M goodwill impairment .
Management guided Q1 2025 revenue to $55.5–$57.0M and FY 2025 to $230–$240M (down 5–9% YoY), citing continued renewal pressure (especially in Life Sciences), a partial-quarter revenue contribution from a new data partnership in Q1, and higher seasonal payroll taxes; non-GAAP profitability is expected to trough in Q1 and improve through the year .
Key operating KPIs softened: enterprise customers fell to 519 (down 21 YoY and 11 QoQ), overall NDR was 85% (enterprise NDR 90%), and deferred revenue fell 4% YoY; CRPO was $188M (flat YoY) and total RPO up 6% YoY; DH repurchased ~1.6M shares for $7.3M in Q4 .
Stock reaction catalysts: initial 2025 guide-down and visibility that Q1 is the low point; execution on MDM/data partnership and digital activation expansion; capital returns (buyback authorization ~$98M remaining) and amended/extended credit facility with an interest rate cap (SOFR > 4.5%) .

What Went Well and What Went Wrong

What Went Well
- Revenue and adjusted EBITDA exceeded the high end of guidance for both Q4 and FY 2024; management highlighted new logo wins and cross-sell/upsell traction despite headwinds: “Revenue and adjusted EBITDA were above the high end of our guided ranges despite challenging commercial conditions” .
- Solid cash generation: TTM operating cash flow $58.2M (+41% YoY); TTM unlevered FCF $72.5M (+6% YoY); Q4 UFCF was negative due to a one-time ~$10M capex tied to a strategic data partnership .
- Strategic progress on partnerships and MDM to make DH’s data more actionable and “stickier,” including a large data/MDM partnership and plans to scale digital activation beyond providers in 2025 .
What Went Wrong
- Renewals/churn remain the core issue: Q4 churn was similar to Q3 but worse vs prior year; overall NDR 85% (enterprise 90%); management assumes NDR in the low–mid 80s for 2025 .
- Life Sciences exposure: downsells (not outright churn) are concentrated in Life Sciences; pricing pressure weighed on upsells, though average contract size increased; DH is not competing on price .
- GAAP results remain impacted by non-cash impairments: Q4 goodwill impairment $97.1M (GAAP EPS $(0.51)); impairment triggered a ~$11M TRA remeasurement gain and ~$6M deferred tax benefit but does not affect covenants .

Financial Results

Metric	Q4 2023	Q3 2024	Q4 2024
Revenue ($M)	$65.932	$62.697	$62.288
GAAP Diluted EPS ($)	$(0.09)	$(1.12)	$(0.51)
Adjusted Net Income ($M)	$10.649	$15.393	$12.551
Adjusted EPS ($)	$0.07	$0.10	$0.08
Adjusted EBITDA ($M)	$19.801	$20.615	$17.518
Adjusted EBITDA Margin (%)	30%	33%	28%
Reported Gross Margin (%)	81%	78%	76%
Adjusted Gross Margin (%)	85%	82%	81%
Cash from Operations ($M)	$4.709	$19.432	$8.135
Unlevered Free Cash Flow ($M)	$11.123	$24.299	$(1.584)

Notes: Q4 2024 revenue declined 6% YoY on renewal pressure (esp. Life Sciences); adjusted EBITDA margin compressed on lower revenue and largely fixed costs; Q4 UFCF was negative due to one-time ~$10M capex for a new data partnership .

Actual vs Q4 2024 Guidance (issued Nov 7, 2024)

Metric	Guidance (Q4 2024)	Actual (Q4 2024)	Surprise
Revenue ($M)	$60.0 – $61.0	$62.288	Beat
Adjusted Operating Income ($M)	$14.0 – $15.0	$15.756	Beat
Adjusted EBITDA ($M)	$16.0 – $17.0	$17.518	Beat
Adjusted Net Income ($M)	$10.5 – $11.5	$12.551	Beat
Adjusted EPS ($)	~$0.07	$0.08	Beat

Why: Above-guide revenue and profitability driven by new logos and upsell/cross-sell execution and tight cost control; GAAP results reflect non-cash goodwill impairments .

KPIs

KPI	Q2 2024	Q3 2024	Q4 2024
Enterprise Customers (>$100k ARR)	537	530	519
Total Customers (~)	N/A	~2,570	~2,500
Net Dollar Retention (Overall)	N/A	N/A	85% (2024)
Net Dollar Retention (Enterprise)	N/A	N/A	90% (2024)
CRPO ($M)	N/A	$164 (down 4% YoY)	$188 (flat YoY)
Total RPO YoY	N/A	Down 3% YoY	Up 6% YoY
Deferred Revenue ($M)	$97.062	$86.219	$93.344
Share Repurchases	$7.0M Q2	$8.0M Q3	$7.3M (~1.6M sh, $4.46 avg)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($M)	Q1 2025	N/A	$55.5 – $57.0	New
Adjusted Operating Income ($M)	Q1 2025	N/A	$7.5 – $8.5	New
Adjusted EBITDA ($M, %)	Q1 2025	N/A	$10.5 – $11.5 (19–20%)	New
Adjusted Net Income ($M)	Q1 2025	N/A	$3.0 – $4.0	New
Adjusted EPS ($)	Q1 2025	N/A	~$0.02 (153.3M diluted)	New
Revenue ($M)	FY 2025	N/A	$230 – $240	New
Adjusted Operating Income ($M)	FY 2025	N/A	$49 – $53	New
Adjusted EBITDA ($M, %)	FY 2025	N/A	$61 – $65 (26–28%)	New
Adjusted Net Income ($M)	FY 2025	N/A	$30 – $34	New
Adjusted EPS ($)	FY 2025	N/A	$0.19 – $0.22 (153.9M diluted)	New

Management flagged Q1 as the low point for profitability given a full quarter of partnership costs but only partial revenue, plus seasonal payroll taxes; revenue expected to improve sequentially in Q2 as partnership revenue annualizes .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3 2024)	Current Period (Q4 2024)	Trend
Renewals/Churn	Q3: elevated churn but modest YoY improvement; expected sequential revenue declines into early 2025; 2024 NDR 85–87% guide . Q2: operational efficiency, but impairments and macro noted .	Q4 churn similar to Q3 but worse YoY; 2024 NDR 85% overall/90% enterprise; 2025 assumes NDR low–mid 80s .	Negative → stabilization targeted
Life Sciences pressure	Q3: pressures persist; DH more of a Stage 2+ exposure, delayed recovery .	Downsells concentrated in Life Sciences; pricing pressure on upsells, avg deal sizes up; not competing on price .	Mixed headwind
Data partnerships & MDM	Q3: partnership strategy as a growth pillar .	Large data/MDM partnership (identity graph, consumer data, matching), ~90-day sales cycle example; expected to drive stickiness and revenue .	Building positive
Digital activation (Populi)	Q3: platform unification and product simplification .	Expand digital activation across business in 2025 to make platform more actionable and reduce churn .	Building positive
Org changes & customer success	Q3: forecasting rigor; 2025 planned investments .	Combined MedTech/Biopharma sales, integrated CS/value delivery, comp aligned to retention; added Chief Customer Officer; CFO transition to Casey Heller 6/2/25 .	In-flight execution
Capital allocation & balance sheet	Q3: $100M buyback authorized; Q3 repurchases ~$8M; strong cash/investments vs debt .	Q4 repurchase ~$7.3M; amended/extended credit facilities to 2030; interest rate cap on ~80% of term loan .	Supportive
Goodwill/TRA impacts	Q2: $363.6M impairment; Q3: $228.2M impairment; TRA gains .	Q4: $97.1M impairment; ~$11M TRA gain; ~$6M DTL benefit (all non-cash) .	Diminishing but persistent

Management Commentary

“We executed on delivering new business growth, securing new logos and expanding relationships with existing customers through upsell and cross-sell opportunities” .
“We believe having a robust MDM capability that enables customers to integrate both first‑party and third‑party data with the Definitive platform…makes our solution stickier” .
“Churn remained elevated and was unfavorable compared to Q4 2023…much of the churn we experienced are downsells not lost clients” .
“We assume an NDR in the low to mid 80s in 2025…we expect Q1 to be the low point of the year [for margins]” .
“We are not…a low price leader. We are not competing on price, we’re competing on quality” .

Q&A Highlights

Renewal/churn dynamics: Life Sciences remains the pressure point; Q4 churn similar to Q3 but worse YoY; 2025 plan assumes NDR low–mid 80s to be conservative .
Sales cycles and 2025 seasonality: elongated cycles persist; Q1 revenue/margins trough; sequential revenue improvement expected in Q2 as partnership revenue annualizes and fewer contracts mature mid-year .
Pricing/upsell: pricing pressure mainly on upsell; DH emphasizes quality, not price leadership; average contract sizes increased .
Demand ex‑Pharma: provider/diversified demand characterized as robust; initiatives (MDM, digital activation) apply beyond Life Sciences (e.g., Databricks example) .
Capital structure: amended/extended credit facilities, interest rate cap on 80% of term loan exposure to SOFR>4.5%; healthy cash/investments vs debt .

Estimates Context

S&P Global consensus estimates (revenue/EPS/EBITDA) were not available at time of analysis due to data access limitations. By company guidance and results, Q4 revenue/adjusted EBITDA exceeded management’s prior guidance ranges; use S&P Global data when available for consensus benchmarking .
Where estimates are included in future updates, they will be sourced from S&P Global; if shown, values will include an asterisk with the note “Values retrieved from S&P Global”.

Key Takeaways for Investors

Retention is the swing factor: 2025 revenue guide embeds NDR in the low–mid 80s; any early improvement in renewals (especially in Life Sciences) is upside to the top line and operating leverage trajectory .
Q1 2025 is the trough: expect sequential revenue/margin improvement from Q2 as the new data partnership contributes a full quarter and seasonal payroll cost headwinds fade .
Strategic pivot to MDM/partnerships and digital activation aims to make DH “stickier” and reduce churn; monitor attach of MDM and digital activation across segments for leading indicators .
Non-GAAP profitability remains disciplined despite revenue pressure; FY25 adjusted EBITDA margin 26–28% guide signals continued cost control even as revenue declines YoY .
Balance sheet/returns: repurchase authorization (~$98M remaining) and reduced/extended credit facilities with an interest rate cap provide flexibility; watch for incremental buybacks as a support for EPS and sentiment .
Leadership transition: Casey Heller to CFO on 6/2/25; continuity expected with current CFO through early June; added Chief Customer Officer underscores retention focus .
Trading lens: Near-term sentiment hinges on confirmation that Q1 is the bottom and that Q2 sequential growth materializes; beats vs tempered FY25 guidance (and tangible retention gains) would be catalysts for multiple stabilization .

Definitive Healthcare Corp. (DH)·Q4 2024 Earnings Summary