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OptimizeRx Corp (OPRX)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered a clean beat: revenue $21.9M (+11% YoY) vs Wall Street consensus ~$18.7M; non-GAAP diluted EPS $0.08 vs consensus -$0.12, and adjusted EBITDA $1.5M; full-year guidance raised to revenue $101–$106M and adjusted EBITDA $13–$15M . Results were supported by stronger DTC activity and disciplined OpEx, with gross margin at 60.9% given mix .
  • Backlog visibility improved meaningfully: committed contracted revenue exceeded $70M at quarter-end, with current-year contracted revenue now “north of 80%,” strengthening H2 setup .
  • Strategic shift to subscription data is gaining traction: >5% of expected 2025 sales already converted to subscription; management expects smoother revenue recognition and accretive margins over time .
  • Guidance raised from “at least” $100M revenue/$12M adj. EBITDA (3/12/25) to $101–$106M revenue/$13–$15M adj. EBITDA (5/12/25), signaling stronger demand and execution; seasonality implies a small Q2 sequential step-up and a second-half weighted year .
  • Stock narrative catalysts: subscription transition, improved visibility and guidance raise, and DTC recovery momentum; watch mix-driven gross margin variability and macro policy noise—management sees no client pullback and potential digital tailwinds if budgets tighten .

What Went Well and What Went Wrong

What Went Well

  • Outperformed Street and internal expectations; revenue +11% YoY to $21.9M and adj. EBITDA $1.5M in seasonally weakest quarter; full-year guidance raised on strength and visibility .
  • Backlog/visibility strengthened: >$70M committed revenue at Q1-end; current visibility >80% of full-year, underpinning H2 confidence .
  • Subscription push advancing: “over 5%” of expected 2025 sales converted to subscription; management: “puts us on a strong path toward achieving Rule of 40” .
    • Quote: “We’ve already converted over 5% of our expected 2025 sales into subscription-based revenue streams…improving operating leverage…” — CEO Stephen Silvestro .

What Went Wrong

  • Gross margin down YoY to 60.9% (from ~62% in Q1’24) on higher DTC managed services mix; management targets improving above low 60% but acknowledges portfolio mix sensitivity .
  • Ongoing KPI normalization: net revenue retention stepped down to 114% (TTM to Mar-31) as Medicx acquisition laps through comps; management expects NRR to be ~100% by year-end given new-logo contribution .
  • Transcript inconsistency: CFO remarks referenced “non-GAAP net loss” in Q1 while the press release shows non-GAAP net income of $1.539M ($0.08 diluted EPS); use press release/8-K tables as authoritative .

Financial Results

MetricQ3 2024Q4 2024Q1 2025Q1 2025 Consensus
Revenue ($USD)$21.309M $32.317M $21.928M $18.686M*
Gross Profit ($USD)$13.447M $22.024M $13.344M —
Gross Margin %63.0% 68.0% 60.9% —
GAAP Diluted EPS ($)$(0.50) $0.00 $(0.12) —
Non-GAAP Diluted EPS ($)$0.12 $0.30 $0.08 $(0.12)*
Adjusted EBITDA ($USD)$2.690M $8.849M $1.489M —
  • Q1 vs estimates: Revenue beat by ~$3.24M; EPS beat by ~$0.20; both significant. Values retrieved from S&P Global.*
  • Q/Q: Q1 revenue down from seasonal Q4 high; margin retraced on DTC mix; OpEx remained disciplined .
  • Y/Y: Revenue +11%; large improvement in GAAP loss and swing to non-GAAP profitability .

KPIs (Rolling 12 Months)

KPI (LTM)Q3 2024Q4 2024Q1 2025
Avg. revenue per top 20 pharma manufacturer ($)$2.824M $2.933M $2.960M
% of total revenue from top 20 pharma64% 64% 63%
Net revenue retention (%)127% 121% 114%
Revenue per average FTE ($)$630k $701k $710k

Guidance Changes

MetricPeriodPrevious Guidance (3/12/25)Current Guidance (5/12/25)Change
RevenueFY 2025≥$100M $101M–$106M Raised
Adjusted EBITDAFY 2025≥$12M $13M–$15M Raised
Seasonality/Quarterly cadenceFY 2025Not specifiedH1 is ~35%–45% of full-year; small Q2 step-up sequentially Clarified
Gross MarginFY 2025Not guidedLow-to-mid 60% typical; mix may vary Commentary only

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Subscription model (DAAP/data)Migration outlined; DAAP adoption doubled; push to recurring data fees >5% of 2025 expected sales converted; accretive margins; smoother rev rec Accelerating
Gross margin mixQ3: 63% with DAAP/channel mix; Q4: 68% seasonal high 60.9% with more DTC managed services; aim above low 60% Mixed; improving later in year
Pipeline/visibilityQ3: high Q4 visibility; Q4: contracted revenue low-60% of year >$70M committed at Q1-end; >80% current-year contracted now Improving
DTC managed services → self-serviceHeadwind/shift described; compliance advantage (MNT) DTC recovery in Q4/Q1; TV/CTV activation partnership (Simulmedia) Recovery, expanding channels
Macro/policy (tariffs, pricing)Watching FDA approvals; conservative baseline No client pullback; digital may benefit if costs tighten Benign-to-supportive
AI/DAAP outcomesROI >10:1; script lift ~25% in 6-month programs Continued emphasis; omni-channel scaling Consistent strength

Management Commentary

  • “We are increasing our guidance for the year… revenue between $101 million and $106 million, and adjusted EBITDA between $13 million and $15 million.” — CEO Stephen Silvestro .
  • “Gross margin… decreased… to 60.9%… primarily due to product and channel partner mix… increase in DTC related managed service revenue.” — CFO Ed Stelmakh .
  • “Committed contracted revenue… exceeded $70 million… greater than 25% improvement over last year… visibility now north of 80%.” — CFO/CEO .
  • On subscription accounting and margins: “Spreads your revenue over the 12-month period… accretive… cost of sales is pretty low.” — CFO .
  • Macro: “We’ve not seen really any pullback… people leaning in to leverage digital… more acceleration in our favor if they go down that road.” — CEO .

Q&A Highlights

  • Macro headwinds and client behavior: Management reports no pullback; digital’s cost-effectiveness could benefit if budgets tighten .
  • Subscription specifics: Revenue recognized ratably; accretive margins; currently 1-year evergreen, multiyear is a future goal given annual marketing cycles .
  • Gross margin outlook: Portfolio mix may dilute; target above low-60% over time; historical range high-50s to low/mid-60s .
  • Visibility/backlog: >$70M committed at Q1-end; current visibility >80% of full-year; focus on pipeline conversion for remaining ~20% .
  • Seasonality: Expect small Q2 sequential step-up; H1 usually 35%–45% of full-year .
  • DTC recovery: Not breaking out counts; noted recovery in Q4 and continued acceleration into Q1 .

Estimates Context

  • Q1 2025 comparison: Revenue $21.928M vs consensus ~$18.686M (beat); non-GAAP diluted EPS $0.08 vs consensus -$0.12 (beat). Values retrieved from S&P Global.*
  • FY 2025 consensus (pre-guidance raise): Revenue ~$108.109M; Primary EPS consensus mean ~$0.746. Values retrieved from S&P Global.*
  • Implications: Consensus likely to revise upward on revenue/EBITDA; margin commentary suggests caution on gross margin trajectory due to mix, but subscription shift should underpin medium-term improvement .

Key Takeaways for Investors

  • The raise to FY25 guidance plus >80% contracted visibility de-risks near-term execution; watch H2 acceleration consistent with historical seasonality .
  • Subscription data momentum (>5% of 2025 sales) should improve margin quality and cash flow predictability; expect continued narrative support as mix shifts .
  • Gross margin variability will hinge on DTC managed services vs subscription/data mix; management targets improvements above low-60% over time .
  • KPI normalization (NRR 114%) reflects Medicx acquisition anniversary; management flagged NRR near ~100% by year-end as new logos contribute 5–15% of business .
  • Tactical catalyst: DTC recovery and TV/CTV channel expansion via Simulmedia partnership could broaden demand and support omnichannel differentiation .
  • Discrepancy note: Use press release/8-K figures for non-GAAP net income/EPS; transcript had a wording inconsistency on non-GAAP net loss .
  • Trading setup: Positive estimate revisions and a raised guide against improving backlog visibility frame a constructive H2, offset by margin mix risk; monitor Q2 sequential step-up and any macro policy developments .

Footnote: Values marked with * were retrieved from S&P Global (Capital IQ) via our estimates feed.