Financial Data and Key Metrics Changes - Adjusted EBITDA for Q1 2025 was $2,800,000, exceeding expectations, with an adjusted EBITDA margin of 10%, up from 4% in the same period last year [7][8] - Total revenue for Q1 2025 was $27,500,000, above the forecast of $26,000,000 to $27,000,000, but $4,000,000 lower compared to the prior year due to divestitures [23][24] - Annual recurring revenue (ARR) was $88,000,000, down from $94,000,000 in 2024 on a pro forma basis [24][25] - Net revenue retention was 93%, down from 96% in the prior year [25] Business Line Data and Key Metrics Changes - Subscription revenue accounted for 92% of total revenue, consistent with historical trends [24] - Principal operating expenses decreased by $2,300,000 or 5% year-over-year, with significant reductions in R&D and sales and marketing expenses [26][27] - Gross margins for Q1 2025 were 75%, down 200 basis points from the prior year, while adjusted gross margins improved to 87% [27] Market Data and Key Metrics Changes - Inbound pipeline rose 20% compared to the same period last year, driven by regulatory complexity and interest in PolicyNotes [12] - Strong traction in Europe, with pipeline creation doubling in Q1 compared to the same period in 2024 [12] Company Strategy and Development Direction - The company is focused on three key objectives: expanding adjusted EBITDA margins, managing debt, and building a foundation for durable growth [6][22] - The launch of PolicyNotes is expected to have a meaningful positive impact on 2025, with a commitment to product-led growth [13][24] - The company is committed to deleveraging, having reduced its senior term loan by $96,000,000 since December 31, 2023 [8][28] Management's Comments on Operating Environment and Future Outlook - Management reaffirmed full-year revenue guidance despite challenges, indicating confidence in execution and progress [22][29] - The company is optimistic about future growth, citing strong demand and engagement metrics [20][22] Other Important Information - Cash and cash equivalents at the end of Q1 2025 were $46,900,000, an increase driven by divestiture cash inflows [28] - The company plans to further reduce its senior term loan with the sale of its Australian subsidiary [28] Q&A Session Summary Question: Sales force and market execution - Management acknowledged previous execution issues and noted improvements in sales force effectiveness and pipeline development [32][33] Question: PolicyNotes migration timeline - Management expects to migrate all core customers to the new platform by next year, with accelerated migration efforts underway [35][36] Question: Revenue guidance for Q2 - The decline in revenue guidance for Q2 is attributed to revenue recognized from divested businesses in Q1 [42][44] Question: Balance sheet and cash from transactions - The sale of a division in Australia is expected to generate approximately $6.5 million, with half allocated to debt reduction [47] Question: Federal vertical health - Management noted volatility in the federal market but sees opportunities for efficiency and value creation [58][59] Question: New adviser from Palantir - The adviser was engaged to focus on federal government opportunities and provide insights to the commercial teams [60]