Waystar Holding Corp. Q1 FY2025 earnings call

• Waystar had strong Q1 2025 results with 14% revenue growth and 16% adjusted EBITDA increase. - The company is recession resistant due to its broad presence and business model. - Sustainable growth is driven by 114% net revenue retention rate and 1,244 clients with over $100k in trailing 12-month revenue. - Platform innovation includes AI-powered capabilities like AltitudeAI, with new solutions like Auth Accelerate and AltitudeCreate for prior authorization and denied claim appeal. - Profitability: Adjusted EBITDA margin was 42%, aligned with long-term target of ~40%. Unlevered free cash flow was $79 million with a 73% conversion ratio. - Client and team successes: Multiple industry rankings, expanded Waystar Advisory Board by over 30%.

Waystar delivered Q1 revenue of $256 million, a 14% year-over-year increase. Adjusted EBITDA was $108 million, up 16% year-over-year. The net revenue retention rate was 114%. There were 1,244 clients generating more than $100,000 in trailing 12-month revenue, a 15% year-over-year increase. Subscription revenue grew 18% year-over-year and 3% sequentially. Volume-based revenue grew 11% year-over-year, with adjusted year-over-year growth rate of 12% when accounting for various factors.

• Raised full-year revenue guidance to a range of $1.006 billion to $1.022 billion, with the midpoint at $1.014 billion. - Raised adjusted EBITDA guidance to a range of $406 million to $414 million, with the midpoint at $410 million, an increase of $7 million above prior guidance midpoint. - Expect modest sequential quarterly growth in subscription revenue for the remainder of fiscal year 2025.

• Macro economic volatility and potential impact on the health care industry. - Potential tariff impact, though Waystar has limited direct exposure but is mindful of such headwinds.

Q: Hi, thanks for the question and congrats on the great results. You guys see your leverage target a lot sooner than we were anticipating. And now that you’re there, I was wondering if maybe you could just talk about how you’re thinking about adding to your existing portfolio through M&A.

A: Matt Hawkins said Waystar has a history of successful M&A, looks for companies with technology, people, and clients that fit, has a dedicated corporate development team with a robust pipeline, and is actively in the market with a disciplined approach.