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OptimizeRx Corp (OPRX)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered revenue of $32.3M (+14% y/y), gross margin of 68.2%, non-GAAP EPS of $0.30, and Adjusted EBITDA of $8.8M; management stated results surpassed internal expectations and consensus estimates .
  • Full-year 2024 revenue was $92.1M (+29% y/y) with Adjusted EBITDA of $11.7M; management highlighted broad KPI improvements and stronger contracted revenue visibility heading into 2025 .
  • Initial FY2025 guidance: revenue ≥ $100M and Adjusted EBITDA ≥ $12M; the strategic pivot to subscription-based DAAP data services aims to improve predictability and margin structure .
  • Narrative and potential stock catalyst: continued DAAP scale-up, recurring data subscriptions, and mixed improvement in gross margin profile (Q4 seasonal peak) with stronger contracted revenue visibility (low-60% of full-year) .

What Went Well and What Went Wrong

What Went Well

  • DAAP momentum and mix drove gross margin expansion to 68.2% in Q4; CFO: “Gross margin increased…to 68.2%…tied to a favorable solution and channel partner mix” .
  • Visibility improved: contracted revenue for 2025 now in the low-60% of total, up ~20% y/y, enhancing predictability .
  • KPIs strengthened: net revenue retention 121% (vs. 105%), average revenue per top-20 pharma $2.933M, top-5 accounts averaged ~$9.1M .
  • CEO: “we surpassed our expectations as well as consensus estimates” underscoring operational execution and commercial traction .

What Went Wrong

  • DTC managed services headwinds in 2H’24; industry migrated to self-serve, impacting near-term top line while audience subscriptions ramp—management expects continued transition in 2025 .
  • Gross margin sustainability caution: Q4 peak is seasonal; long-term expected range high-50s to mid-60%; management does not expect to sustain high-60s every quarter .
  • GAAP profitability remains a work-in-progress: FY2024 GAAP net loss of $(20.1)M (loss per share $(1.10)), despite strong non-GAAP and EBITDA trends .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$28.369 $18.812 $21.309 $32.317
Gross Profit ($USD Millions)$17.841 $11.704 $13.447 $22.024
Gross Margin (%)62.9% 62.2% 63.0% 68.2%
GAAP Diluted EPS ($)$(0.23) $(0.22) $(0.50) $0.00
Non-GAAP Diluted EPS ($)$0.26 $0.02 $0.12 $0.30
Adjusted EBITDA ($USD Millions)$5.800 $0.468 $2.690 $8.849
KPI (Annual)20232024
Avg. revenue per top 20 pharma ($USD Thousands)$2,399 $2,933
% of top 20 pharma that are customers100% 100%
% revenue from top 20 pharma67% 64%
Net revenue retention105% 121%
Revenue per average FTE ($USD Thousands)$586 $701
DAAP deals (count)24 48

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY2024≥ $100M $88M–$92M Lowered
Adjusted EBITDAFY2024≥ $11M $8M–$10M Lowered
ActualsFY2024N/ARevenue $92.1M; Adj. EBITDA $11.7M Beat EBITDA vs lowered guidance
RevenueFY2025N/A≥ $100M New
Adjusted EBITDAFY2025N/A≥ $12M New

Earnings Call Themes & Trends

TopicQ2 2024 (Previous Mentions)Q3 2024 (Previous Mentions)Q4 2024 (Current Period)Trend
DAAP scale-up8 deals closed; pricing and revenue recognition changes to reduce lumpiness 5 deals won; doubling y/y; renewals strong 48 DAAP deals in 2024; subscription data push Accelerating adoption
Gross margin62.2% (mix tailwinds) ~63% 68.2% (seasonal high; aspire high-50s–mid-60s) Improving but seasonal
Revenue modelEffort to smooth revenue/lumpiness DTC shift to self-service; DAAP renewals Transition DAAP data to subscriptions; more predictable More recurring, higher visibility
Visibility/backlog~80% full-year view; $15M “go get” High Q4 visibility; minimal “go-get” Contracted revenue low-60% of FY (up ~20% y/y) Strengthening
Regulatory/macroMacro stable; election not a major pharma headwind DTC privacy-led compliance positioning FDA approvals tracking better; watching DC Supportive backdrop
Competitive landscapeHCP+DTC integrated thesis building Unique HCP+DTC at scale; audience quality Only player claiming scaled HCP+DTC with proprietary network Moat widening
GLP-1—Pharma leaning into GLP-1; HCP timing/pricing dynamics —Sector demand supportive

Management Commentary

  • CEO (Silvestro): “we beat our guidance and Street expectations with revenue and adjusted EBITDA coming in at $92.1 million and $11.7 million, respectively” .
  • CFO: “Gross margin increased…to 68.2%…Year-over-year gross margin expansion is tied to a favorable solution and channel partner mix” .
  • CEO on strategy: “transitioning our DAAP customers to a more predictable subscription-based model for data services…improve margins, increase visibility…reduce the cyclical nature of our business” .
  • CFO on visibility: “we’re sitting here today at low 60s in terms of percentage of total revenue for the year. So up about 20% year-on-year” .

Q&A Highlights

  • Subscription model: Management emphasized moving DAAP data components to subscriptions to drive stickier, recurring revenue and margin visibility; sales motion and CAC unchanged as same teams sell both components .
  • Gross margin sustainability: Q4’s high-60s margin seen as seasonal peak; long-term target high-50s to mid-60s with mix shift (data-driven DAAP) supportive .
  • Backlog/visibility: Contracted revenue percentage improved to low-60s, and Q1 book of business up ~20% vs. prior year; tone is conservative (“underpromise and overdeliver”) .
  • DTC transition: Managed services moved to self-serve with compliant micro-neighborhood targeting; near-term top-line headwind, but higher margin and recurring potential (audiences, data subscriptions) .
  • Rule of 40 ambition: 3–5 year journey with EBITDA expansion as primary driver alongside top-line growth .

Estimates Context

  • S&P Global consensus estimates were unavailable due to request limit at the time of retrieval; therefore, comparisons to Street EPS/revenue consensus for Q4 2024 and forward quarters could not be validated. Values retrieved from S&P Global were unavailable at time of request.

Key Takeaways for Investors

  • DAAP adoption and data subscription pivot are the core drivers; expect increasing recurring revenue and margin resiliency as data components convert to subscriptions .
  • Q4 margin strength was mix-driven and seasonal; model gross margin in high-50s–mid-60s with potential upside as DAAP/data scale .
  • Contracted revenue visibility is materially improved (low-60% of full-year), reducing forecast risk and supporting guidance conservatism .
  • DTC self-serve transition is strategically positive for margins and compliance, but near-term offsets to managed services may temper top-line; watch audience subscription growth trend .
  • FY2025 guide (revenue ≥ $100M, Adj. EBITDA ≥ $12M) sets a conservative baseline given KPI momentum (NRR 121%, top-5 avg ~$9.1M) .
  • Management/leadership change: CEO transition to Steve Silvestro with heightened focus on operational excellence and customer-centricity; interim-to-permanent trajectory underscores strategic continuity .
  • Monitor catalysts: DAAP renewals/new logos, subscription penetration, margin trajectory vs seasonality, and regulatory tailwinds (FDA approvals, privacy compliance) .

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