Waystar Holding Corp.(US:WAY)2025-04-30 20:30Financial Data and Key Metrics Changes - Waystar reported Q1 2025 revenue of $256 million, reflecting a 14% year-over-year increase and an adjusted EBITDA of $108 million, which is a 16% increase year-over-year [8][26][29] - The adjusted EBITDA margin was 42%, aligning with the long-term target of approximately 40% [29][30] - The net leverage ratio at the end of Q1 was 2.5 times, indicating a decrease of approximately a quarter turn in the quarter [20][30] Business Line Data and Key Metrics Changes - Subscription revenue increased by 18% year-over-year and 3% sequentially, while volume-based revenue grew by 11% year-over-year, adjusted for a prior contract termination benefit [27][28] - The number of clients generating over $100,000 in trailing twelve-month revenue increased by 15% year-over-year to 1,244 [12][26] Market Data and Key Metrics Changes - Waystar serves over a million US-based providers across various care settings, indicating a broad market presence [9] - The company reported a 114% net revenue retention rate, which is above the typical range of 108% to 110% experienced over the past three years [26] Company Strategy and Development Direction - Waystar is focused on sustainable revenue growth, operational profitability, and innovation through its cloud-based software platform [8][11] - The company is pursuing a strategic software product roadmap that emphasizes scale, automation, and substantial ROI, including the launch of Altitude AI [14][70] - Waystar aims to leverage generative AI to enhance operational efficiency and reduce costs for clients, positioning itself as a leader in healthcare payments [16][89] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver strong performance despite macroeconomic volatility, citing the recession-resistant nature of its business model [9][30] - The company raised its full-year revenue guidance to a range of $1,060 million to $1,022 million, reflecting confidence in continued strong patient payment utilization [31][32] Other Important Information - Waystar's software platform is designed to help providers optimize cash flow and reduce administrative costs, which is critical in challenging economic conditions [9][10] - The company has maintained high cybersecurity standards and regularly audits its platform against industry-leading frameworks [19] Q&A Session Summary Question: Breakdown of Q1 outperformance and guidance components - Management indicated that strong patient payment utilization contributed to Q1 performance and guidance, with 98% of revenue coming from contracted solutions [35][36] Question: Drivers of net revenue retention rate - Management highlighted robust bookings from revenue cycle solutions and strong client advocacy as key factors driving the 114% net revenue retention rate [44][46] Question: Trends in utilization and seasonality - Management noted that utilization has trended above historical averages, benefiting the business model, with no changes in expectations for seasonality [50][53] Question: Impact of cybersecurity on sales cycles - Management confirmed that cybersecurity remains a critical factor in client decision-making, with strong demand for solutions that enhance cash flow [56][58] Question: RFP activity and tariff impact - Management observed strong demand for AI and automation solutions, with clients prioritizing efficiency amid economic challenges [68][70] Question: AI's impact on business model - Management believes that the trend of bringing outsourced RCM back in-house due to AI capabilities will benefit the business model and expand market opportunities [88][90] Question: M&A strategy post-leverage target achievement - Management expressed a disciplined approach to M&A, focusing on companies that align with Waystar's technology and client base [102][104]