WAY Q1 2025: Revenue beats by $10M as NRR hits 114%
- Robust Pipeline and Client Demand: Management emphasized a strong pipeline with robust RFP activity and continued high demand driven by rapid implementation and cybersecurity advantages, supporting near-term revenue momentum.
- High Net Revenue Retention and Cross-Sell Potential: The discussion highlighted a 114% net revenue retention and active cross-sell opportunities—approximately 30% of recently onboarded customers pursuing additional solutions—indicating strong client loyalty and revenue expansion.
- AI-Driven Operational Efficiency and ROI: Executives underscored the impact of generative AI (e.g., AltitudeAI), which accelerates workflows, improves claim overturn rates, and delivers tangible ROI. This innovation is expected to drive both organic client growth and enhanced operational efficiency.
- Macroeconomic uncertainty could extend sales cycles and pressure pricing: Some analysts raised concerns that recession risks and potential macro headwinds might slow down client decision-making and lengthen sales cycles, potentially affecting growth timing.
- Vulnerability at contract renewal with cross-sell challenges: There is risk that clients, especially those initially acquired during unusual market conditions, may re-evaluate alternatives at renewal, which could negatively impact the anticipated 30% cross-sell opportunity.
- Risks surrounding AI integration and execution: While AI capabilities are being introduced to drive ROI, uncertainties remain regarding the pace of customer adoption and the potential for pricing pressures or implementation challenges, which may affect margin expansion.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue | FY 2025 | $1.000B to $1.016B (midpoint ≈$1.008B) | $1.006B to $1.022B (midpoint $1.014B) | raised |
Adjusted EBITDA | FY 2025 | $399M to $407M (midpoint ≈$403M) | $406M to $414M (midpoint $410M) | raised |
Revenue Seasonality | FY 2025 | Expected first-half revenue slightly above 49% | Expected first-half revenue slightly above 50% | raised |
Cost of Revenue | FY 2025 | Expected to remain consistent as a percentage of revenue | Expected to remain unchanged from original guidance | no change |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Pipeline and Client Demand | Q4 2024 calls highlighted a robust pipeline with strong RFP activity, rising demand from providers anticipating increased utilization and accelerated cross‐sell opportunities ( ). Q3 2024 emphasized pipeline growth with rapid onboarding following a competitor cyber event ( ). Q2 2024 discussed a robust pipeline driven by increased RFP invitations and accelerated client engagements ( ). | Q1 2025 continues to report strong pipeline activity with robust RFP participation, a focus on deploying AI‐enabled cloud software for enhanced ROI, and continued cross‐sell opportunities from clients impacted by prior cyber incidents ( ). | Recurring strength with consistently positive sentiment. The focus remains on maintaining a robust funnel with enhanced AI integration. |
Net Revenue Retention and Cross-Sell Potential | Q4 2024 reported net revenue retention at 110% driven by higher volumes and a 30% rate of cross‐sell among new clients ( ). Q3 2024 cited a 109% retention rate with active cross‐sell discussions structured by dedicated teams ( ). Q2 2024 noted a historical retention range of 108%–110% and significant cross‐sell opportunities post-cyber attack ( ). | Q1 2025 reported an improved net revenue retention rate of 114% along with robust cross-sell activities among the 30% of providers impacted by previous cyber events, reflecting a stronger revenue expansion from existing clients ( ). | Improved performance and sentiment with rising retention figures and active cross-sell, suggesting an increasingly positive impact on long-term revenue. |
AI-Driven Operational Efficiency and Digital Transformation | Q4 2024 discussed the launch of AI-driven initiatives with Waystar Altitude and Altitude Create to accelerate denial recovery and improve operational efficiency ( ). Q3 2024 focused on multiple generative AI use cases to drive automation and faster payment cycles ( ). Q2 2024 outlined several long-term generative AI products and digital engagement initiatives, including investments in cybersecurity and cost improvements ( ). | Q1 2025 introduced AltitudeAI showcasing specific features like Auth Accelerate (85% auto-approval) and AltitudeCreate (three times faster appeal generation), further integrating AI to streamline workflows and deliver tangible ROI, while also using AI internally for enhanced productivity ( ). | New and progressively deepening AI integrations with broader digital transformation; sentiment has evolved from exploratory initiatives to robust, measurable efficiencies. |
Sales Cycle and Revenue Growth Normalization Risks | Q4 2024 noted rapid onboarding following competitor issues with contrasting longer sales cycles for larger clients ( ). Q3 2024 highlighted that sales cycles, although complex, had normalized from earlier accelerated phases and that revenue growth had temporarily exceeded long‑term targets ( ). Q2 2024 described accelerated implementations due to a cyberattack but expected a reversion to normal timelines ( ). | Q1 2025 reported stable decision-making timeframes with clients prioritizing essential solutions; while patient payment volumes remain strong, there is an acknowledgement that revenue growth normalization risks continue to be monitored ( ). | A stabilization phase where the initial acceleration due to external shocks has normalized; sentiment is cautiously optimistic with steady sales cycle durations. |
Patient Payment, Credit Quality, and Collection Risks | Q4 2024 highlighted the seasonality inherent in patient payments (30% of revenue) without detailed commentary on credit quality ( ). Q3 2024 discussed seasonal trends, increased volume, and notable upsell opportunities in patient payment modules ( ). Q2 2024 provided detailed discussion on integrating patient payment estimates and noted strong collection rates with no significant consumer credit concerns ( ). | Q1 2025 maintained that patient payment utilization remains strong with no observed degradation in patient payment abilities, supporting consistent collections despite broader economic challenges ( ). | Consistent and positive trend; seasonal patterns continue but without any new credit or collection risks emerging, which suggests stability for a revenue segment critical to the business. |
Integration and Execution Risks | Q4 2024 detailed ongoing acquisitions integration (e.g. Health Pay and Olive AI) and rapid client onboarding due to a competitor cyber event, alongside early adoption of AI capabilities ( ). Q3 2024 emphasized generative AI demos and the modest contributions from acquisitions, with disciplined M&A as part of broader growth ( ). Q2 2024 focused on deploying AI use cases and integrating recent acquisitions to drive synergies and improved margins ( ). | Q1 2025 continued to highlight disciplined integration strategies with enhanced AI integrations through AltitudeAI and careful execution of acquisition integrations, reinforcing their strategic posture for further technological and market advancement ( ). | Continued positive execution with new AI integration enhancements; the focus remains on disciplined M&A and AI deployment as key drivers of future performance. |
Competitive Cyber Events and Cybersecurity Dynamics | Q4 2024 stressed the impact of competitor cyber events by rapidly onboarding over 30,000 providers and achieving significant revenue uplifts, while reinforcing their market-leading cybersecurity measures ( ). Q3 2024 reiterated a strong response to a competitor incident, with increased RFP activity and emphasis on cybersecurity as critical in decision-making ( ). Q2 2024 detailed the substantial revenue boost and long-term client retention following a competitor cyberattack, alongside comprehensive cybersecurity protocols ( ). | Q1 2025 continued to leverage the legacy of previous cyber events with a phased market response, emphasizing a secure deployment strategy that has built strong trust among providers, while noting that this was the last quarter showing notable cyber event impact on YoY comparisons ( ). | Consistent reliance on competitive cyber events as a catalyst, with a shift toward emphasizing trust and robust cybersecurity measures; the narrative has matured from reactive onboarding to sustained market confidence. |
Macroeconomic Uncertainty and Recession Risks | Q2 2024 provided an outlook on macroeconomic uncertainty by noting that healthcare is recession-resistant and highlighting efficiency gains that mitigate broader economic risks ( ). Q3 2024 and Q4 2024 did not include specific commentary on these topics. | Q1 2025 featured a detailed discussion on macroeconomic uncertainty with executives expressing confidence in the platform’s resilience, acknowledging economic volatility while emphasizing mission-critical software and AI-driven efficiencies to counter recession risks ( ). | Newer emphasis in Q1 2025 with a more detailed and confident discussion on economic challenges, reflecting an evolved narrative that balances caution with the reassurance of mission-critical offerings. |
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Revenue Outperformance
Q: What drove Q1 revenue outperformance?
A: Management explained that strong patient payment utilization and accelerated implementations added about $10 million in extra revenue, underpinning the quarter’s robust top-line growth. -
High NRR
Q: Why is 114% net revenue retention achieved?
A: They attributed the 114% NRR to robust bookings in revenue cycle solutions, enhanced claims management, and rapid onboarding of new clients, which boosted cross-sell and overall revenue. -
Utilization Trends
Q: What about 2025 seasonality trends?
A: Management noted that while 70% of revenue comes from stable provider solutions, the 30% patient payments segment shows seasonal upticks early in the year due to deductible resets, aligning overall performance expectations. -
RFP Activity
Q: How active are RFPs in Q1?
A: They observed strong RFP activity driven by providers needing fast, secure solutions following market disruptions, supporting a robust pipeline and high win rates. -
Tariff & AI
Q: Impact of tariffs and AI spending?
A: Management confirmed U.S.-based clients remain unaffected by tariffs while emphasizing that AI initiatives like AltitudeAI are moving from hype to real ROI, though specific spend figures were not disclosed. -
Client Cross-sell
Q: Progress on 30% cross-sell targets?
A: They highlighted active dialogues with new cohorts, with many clients rapidly expanding their software usage, indicating healthy cross-sell momentum in line with long-term growth. -
Macro Impact
Q: Any macro changes in sales cycles?
A: Despite recession concerns, management reported no significant lengthening of sales cycles or shifts in product demand, with clients remaining focused on essential, ROI-driven solutions. -
AI Outsourcing
Q: Will AI bring work in-house from outsourcing?
A: They believe generative AI will enable clients to perform tasks internally that were previously outsourced, which could improve efficiency and enhance market share. -
AI Pricing
Q: How will AI affect contract pricing?
A: Management indicated that AI capabilities might be introduced as add-ons or integrated into existing contracts with modest annual price adjustments based on demonstrable value. -
M&A Plans
Q: What’s your M&A strategy moving forward?
A: They emphasized a disciplined approach, looking for targets with complementary technology and client bases to integrate onto the Waystar platform, supporting organic growth and deleveraging efforts.
Research analysts covering Waystar Holding.