Executive Summary

Strong Q3 topline and profitability with continued mix-driven margin expansion; FY25 guidance raised and FY26 introduced. Q3 revenue $26.07M (+22% y/y) and non-GAAP EPS $0.20; GAAP EPS $0.04. Gross margin reached 67.2% vs 63.1% y/y, aided by product/channel mix and lower managed services contribution .
Material beats vs S&P Global consensus: revenue by ~10% and EPS by ~$0.16; management emphasized conservatism and visibility built on contracted revenue (less reliance on pipeline) * * .
Guidance: FY25 raised to revenue $105–$109M (from $104–$108M) and Adjusted EBITDA $16–$19M (from $14.5–$17.5M); FY26 introduced at revenue $118–$124M and Adjusted EBITDA $19–$22M .
Mix shift to DAAP and Micro‑Neighborhood Targeting (MNT) continues to smooth revenue and improve visibility; management reiterated gross margin framework “upper-50s to low‑60s” with upside potential, and paid down an additional $2M of term loan post‑Q3 (effective rate 15.9% in Q3) .

What Went Well and What Went Wrong

What Went Well
- Beat on revenue and normalized EPS vs S&P Global: $26.07M vs ~$23.69M est.; Primary EPS $0.20 vs ~$0.04 est., reflecting strong execution and favorable mix * *.
- Gross margin expanded to 67.2% (from 63.1% y/y) driven by solution/channel mix and lower managed services; CFO framework “upper 50s to low 60s,” with upside as mix improves .
- Visibility improved with increased contracted revenue, enabling raised FY25 guide and initial FY26 guide; CEO: guidance reflects “true visibility… very conservative… look to beat the numbers” .
What Went Wrong
- Sequential revenue declined vs Q2 ($26.07M vs $29.20M) as managed services normalized; adjusted EBITDA stepped down sequentially ($5.09M vs $5.75M) .
- Q4 commentary implies cautious phasing; at the top end, Q4 revenue could be slightly down y/y due to smoothing and conservative assumptions (no “buy-up” baked in) .
- Interest burden remains elevated (term loan 12.9% stated rate; 15.9% effective in Q3), though company continues to prepay ($2M post‑quarter) .

Financial Results

Metric	Q3 2024	Q2 2025	Q3 2025
Revenue ($USD Millions)	$21.31	$29.20	$26.07
GAAP Diluted EPS ($)	$(0.50)	$0.08	$0.04
Non-GAAP Diluted EPS ($)	$0.12	$0.24	$0.20
Gross Margin (%)	63.1%	63.8%	67.2%
Adjusted EBITDA ($USD Millions)	$2.69	$5.75	$5.09

Actual vs S&P Global Consensus (Q3 2025)

Metric	Consensus	Actual	Surprise
Revenue ($USD Millions)	$23.69*	$26.07	+$2.38 (beat)*
Primary EPS ($)	$0.04*	$0.20 (normalized)	+$0.16 (beat)*

Values with asterisk retrieved from S&P Global. Primary EPS reflects S&P’s normalized methodology, comparable to the company’s non-GAAP diluted EPS .

Balance Sheet/Liquidity highlights

Cash and equivalents: $19.52M at 9/30/25; Operating cash flow YTD $11.63M .
Term loan principal $28.79M at 9/30/25; prepaid ~$2.0M on 10/29/25 to $26.79M .

KPIs (Rolling 12 Months; $ in thousands where noted)

KPI	R12M Mar 31, 2025	R12M Jun 30, 2025	R12M Sep 30, 2025
Avg. revenue per top 20 pharma ($)	$2,960	$3,082	$3,073
% revenue from top 20 pharma	63%	59%	56%
Net revenue retention	114%	121%	120%
Revenue per average FTE ($)	$710	$767	$820

Segment: OptimizeRx operates as a single reporting segment .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY2025	$104–$108M	$105–$109M	Raised
Adjusted EBITDA	FY2025	$14.5–$17.5M	$16–$19M	Raised
Revenue	FY2026	—	$118–$124M	Introduced
Adjusted EBITDA	FY2026	—	$19–$22M	Introduced

Management added that Q4 phasing is conservative, with smoothing effects and no “buy‑up” seasonality assumed .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2025)	Current Period (Q3 2025)	Trend
Subscription/DAAP mix	Q1: “converted over 5% of 2025 sales into subscription” . Q2: 5% now, line‑of‑sight to ~10% for the year .	DAAP and MNT are smoothing revenue; subscriptive nature and renewals improving visibility .	Increasing mix/visibility
Gross margin expansion	Q2 GM 63.8% on favorable solution/channel mix .	GM 67.2%; mix (DAAP/MNT) and channel terms; less managed services in Q3; outlook “upper‑50s to low‑60s” with upside .	Improving
Contracted revenue/visibility	Q2: contracted revenue up >30% y/y; guidance raised .	Guidance built on contracted revenue; “very conservative… look to beat” .	Visibility up; conservative guide
Mid‑tier pharma demand	Q2: mid‑tier logos growing faster; lowers top‑20 concentration .	Continued mid‑tier growth; commercial team shaping RFPs; win rates improving .	Broadening customer base
New channels/partnerships	—	Lamar pilot underway; not included in FY26 guide .	Optionality (early)
Capital/debt	Q2: prepaid $4.5M principal; plan to accelerate deleveraging .	Prepaid another $2M post‑Q3; term loan 12.9% (15.9% effective in Q3) .	Deleveraging vs high cost

Management Commentary

Strategy and visibility: “We moved away from quoting pipeline… guidance… is reflective of our true visibility… very conservative… look to beat the numbers” — Steve Silvestro (CEO) .
Smoothing and mix: DAAP and MNT “lend themselves to becoming more subscriptive in nature” and renew earlier; this “transform[s] the profile of the business” and visibility into 2026 .
Gross margin framework: “Driven by… solution mix and channel partner mix… stabilizing in upper‑50s to low‑60s… upside as the year progresses” — Ed Stelmakh (CFO) .
Q4 phasing: “Look at it on a full year basis… Q1, Q2, and Q3 have been extremely strong… smoother phasing this year” — CFO .
Partnerships optionality: Lamar partnership “early stages… not included” in 2026 guidance .

Q&A Highlights

Q4 implied trajectory: Management emphasized full‑year lens and conservative assumptions; smoothing from business model changes; no “buy‑ups” embedded .
Gross margin drivers: Mix shift (DAAP/MNT), better channel terms, and lower managed services mix; framework “upper‑50s to low‑60s” with upside .
Managed services: Normalized in Q3; only already‑won activity included in outlook .
FY26: Early visibility supports initial guide; excludes Lamar contributions .
Operating leverage: OpEx run‑rate relatively stable; variable comp tracks outperformance; leverage expected as scale increases .

Estimates Context

Q3 2025 results beat S&P Global consensus: revenue $26.07M vs $23.69M est.; Primary (normalized) EPS $0.20 vs $0.04 est. Potential estimate revisions likely to move FY25/FY26 revenue and EPS higher given raised FY25 guide and initial FY26 guide * * .
Forward consensus markers: Q4 2025 revenue ~$30.91M and Primary EPS ~$0.22; Q1 2026 revenue ~$23.03M and Primary EPS ~$0.04 (for context; company guides on FY, not quarter) [GetEstimates]*.
Values with asterisk retrieved from S&P Global.

Key Takeaways for Investors

Clear beats vs consensus on revenue and normalized EPS; mix‑driven margin expansion above framework underscores pricing/channel leverage and DAAP/MNT traction * * .
FY25 raised and FY26 introduced; guidance rooted in contracted revenue improves credibility; management tone is conservative with intent to outperform .
Sequential revenue/EBITDA step‑down reflects normalization of managed services; smoothing should reduce Q4 seasonality volatility, but limits near‑term upside from “buy‑ups” .
KPI trajectory supportive: rising revenue per FTE, stable‑high NRR, and declining top‑20 concentration as mid‑tier adoption accelerates .
Deleveraging continues, but cost of debt remains high (12.9% stated; 15.9% effective) — continued prepayments are a lever for EPS/cash flow accretion .
Watch items: term loan covenants/rate sensitivity, sustained mix toward higher‑margin DAAP/MNT, Lamar/CTV optionality, and remediation of previously identified material weakness in controls (data from third parties) .
Trading implications: Beat‑and‑raise plus FY26 bookends are positive catalysts; any conservative Q4 phasing could temper near‑term sequential optics, but mix and visibility support estimate revisions and multiple expansion narratives .

Citations:

Q3 press release and financials (Form 8‑K/Ex.99.1): .
Q3 10‑Q: gross margin table, debt terms, subsequent $2M prepayment, internal control status: .
Q3 earnings call transcript: guidance philosophy, smoothing/mix, gross margin framework, Lamar: .
Q2 press release/8‑K and transcript: revenue/GM, guidance, KPIs, managed services context: .
Q1 press release: revenue, KPIs, subscription mix: .
S&P Global estimates: Q3 actual vs est., Q4 and Q1 forward markers (asterisked).*

Disclaimer: All values marked with an asterisk (*) are retrieved from S&P Global.

OptimizeRx Corp (OPRX)·Q3 2025 Earnings Summary