National Research (US:NRC)2019-05-13 15:03Financial Data and Key Metrics Changes - Total contract value at the end of Q1 2019 was $130.1 million, representing a 7% growth year-over-year [5] - Q1 2019 revenue was $31.5 million, an increase of 1.5% compared to Q1 2018 [5] - Net income for Q1 2019 was $8.2 million, up from $7.3 million in Q1 2018 [9] Business Line Data and Key Metrics Changes - Total contract value for the digital Voice of the Customer platform solutions increased to $79.1 million from $59.4 million year-over-year [5] - Revenue from the digital Voice of the Customer platform solutions accounted for 58% of total revenue in Q1 2019, up from 45% in Q1 2018 [5] Market Data and Key Metrics Changes - Healthcare systems with agreements for multiple solutions represented 25% of the client base at the end of Q1 2019, up from 23% the previous year [5] - The 650+ core client organizations accounted for $101 million or 78% of the total contract value, showing significant growth from $53 million in 2015 [12] Company Strategy and Development Direction - The company is focusing on transitioning from legacy solutions to the Voice of the Customer platform, which is gaining traction in the market [3][11] - The strategy includes reallocating healthcare system spending towards higher value offerings, which is attracting attention from C-suite executives [3] Management's Comments on Operating Environment and Future Outlook - Management noted that the underlying double-digit growth among core clients has been masked during the transition, but growth rates will become more visible in reported revenue [13] - The company anticipates that a small percentage of clients (around 10%) may remain with legacy systems, but they will continue to provide value to these clients [16] Other Important Information - Consolidated operating income for Q1 2019 was $10.7 million, or 34% of revenue, compared to $9 million or 29% of revenue in the same period last year [6] - Direct expenses decreased by 10% to $11.7 million, contributing to significant cash flow for reinvestment [7] Q&A Session Summary Question: What percentage of legacy clients will ultimately convert? - Management indicated that approximately 10% of the business may remain with paper and pencil methods, but they will continue to offer value to these clients [16] Question: What is driving the 20% CAGR among core clients? - The growth is attributed to increased contract value from converting legacy systems to digital platforms, as well as significant increases in market insights and other service offerings [18]