Welcome to Definitive Healthcare's Q3 2025 Earnings Call. I would now like to turn the call over to your host. You may begin.

Good afternoon. Thank you for joining us today to review Definitive Healthcare's financial results. Joining me on the call today are Kevin Coop, Chief Executive Officer; and Casey Heller, CFO. During this call, we will make forward-looking statements, including, but not limited to, statements related to our market and future performance and growth opportunities, the benefits of our differentiated data and healthcare commercial intelligence solutions, our competitive position, customer behaviors and use of our solutions, customer growth, renewals and retention, our financial guidance, our planned investments and operational strategy, generating value for our customers and shareholders and the anticipated impacts of global macroeconomic conditions on our business, results and customers on the healthcare industry generally. Any forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve a number of risks and uncertainties, including those discussed in the Risk Factors sections and elsewhere in our filings with the SEC. Actual results may differ materially from any forward-looking statements. The company undertakes no obligation to revise or update any forward-looking statements to reflect events that may arise after this conference call, except as required by law. For more information, please refer to the cautionary statement included in the earnings release that we just posted to our Investor Relations portion of our website. We will discuss non-GAAP financial measures on this conference call. Please refer to the tables in our earnings release and investor presentation on the Investor Relations portion of our website for a reconciliation of these measures to their most directly comparable GAAP financial measure. With that, I'd like to turn the call over to Kevin.

Thank you, Jonathan, and thanks to all of you for joining us this afternoon to review Definitive Healthcare's third quarter 2025 financial results. On today's call, I'll provide highlights from our third quarter performance and an update on our progress against our key strategic priorities for the year. Let me begin by reviewing our financial results for the third quarter, which were at or above the high end of our guidance ranges on both the top and bottom line. Total revenue was $60 million, down 4% year-over-year. This was driven by another quarter of modest year-over-year improvement in renewal rates. Adjusted EBITDA was $18.9 million, representing a margin of 32%, which was $2 million above the high end of our guidance. This reflects continued operational improvements with our focus on maintaining solid expense discipline. There were also some in-quarter benefits that Casey will review in her detailed remarks shortly. We continue to generate solid cash flow, delivering approximately $51 million in unlevered free cash flow for the trailing 12 months. From an operational perspective, Q3 represents another quarter of steady progress. I am pleased to report that we are driving incremental improvement across each of our key strategic pillars and I am encouraged by the improvements we are seeing in the data across all of these focus areas. Our new logo production continues to respond the fastest to this attention. Total customer count in Q3 held steady at approximately 2,400. More importantly, our enterprise customer count grew by 10 since last quarter to 520 enterprise customers. This is the highest level we've achieved since Q3 of last year. We believe the improvement in new logos is benefiting from our increased focus on the quality and depth of our differentiated data as well as the intensity we brought to our go-to-market strategy targeting end markets with use cases showing the greatest propensity to invest. Retention rates also had another quarter of year-over-year improvement. While it remains too early to call this trend durable and we still need to get through our large renewal cohort in December and January, we are pleased to see this metric moving in the right direction. This is an encouraging early sign our customers are responding to this attention and we will continue our efforts that will drive continued improvement going forward. Turning to the operational update. I'd now like to provide an update on our 4 strategic pillars, which continue to guide our operational focus and investment priorities. As you'll recall, these pillars are differentiated data, data management and seamless integrations, customer success and digital partnerships and innovation. Starting with differentiated data, which is the foundation of our value proposition. We continue to see validation of our data quality advantage in competitive situations. We are making good progress expanding and deepening our data sets with new sources, including bringing on a new claims data source in Q3 that addresses the data disruption in that market segment over the past year. But we are not satisfied with just returning to previous levels, so we are on track to add another new data source later this quarter that will return Definitive Healthcare to above historical data levels. Again, strengthening our data assets is foundational to our business and will be a continued area of investment and focus, including how we expand and enhance our core reference and affiliation data assets. Some wins in the quarter that were driven by our differentiated data include a large multinational biopharma that chose Definitive Healthcare to support their Medical Affairs team. Historically, their research to identify key opinion leaders in support of multiple product lines was performed manually. They recognized the value of leveraging our solutions and data sets that would enable them to more quickly and efficiently identify the right key opinion leaders with which to partner. This is a solid example of how our data solves tangible business challenges and builds a strong position for upselling and cross-selling as we support a future customer need. In another example, a medical device company chose Definitive because their current data provider was lacking critical insights on affiliation hierarchies within integrated delivery networks, which are critical to the effective identification of the correct buying decision makers. Our ability to master complex hospital affiliation data, claims data, contact info, and payer mix were key to securing this win. Core to this win was Definitive's ability to leverage and master both our differentiated data with that of third-party data so that the customer could generate highly accurate insights in support of their medical device marketing needs. Turning to our second pillar, that of seamless integrations. We continue to focus on making our data sets, proprietary software and analytical capabilities available to customers in whatever way is most effective and efficient for their business needs. By meeting our customers' needs in the most efficient and effective manner, we enable our customers to more easily leverage our differentiated data through the systems of record and systems of insight of their choice. At the same time, we are making it easier for our commercial teams to win new customers. The easier and simpler we make it to embed Definitive into their workflows and processes, the more this will ultimately improve retention. We know that those customers that have integrated our data directly into their systems renew at significantly higher rates. I would like to add a specific highlight example where we are benefiting from this strategy. We recently signed a six-figure expansion with a long-time customer who has become a million-plus logo in the diversified market. This customer has steadily expanded their use of Definitive based on our consistent ability to improve the effectiveness of their go-to-market efforts across several of their business units. Our API integration feeds Definitive data directly into their Salesforce deployment, and this tight integration enables their sales teams to efficiently create hierarchies and effectively manage customer contacts. This tight integration has made Definitive Healthcare essential to their corporate strategy to leverage data, intelligence, and automation to accelerate their revenue growth. Turning to our third pillar, customer success. We continue to receive positive feedback on the steps we've taken in recent quarters to develop a consistent, repeatable, and proactive customer engagement process. Our goal is to ensure customers are easily able to generate value from their investments in our solutions as rapidly as possible, and this required us to revisit the entire process starting from the point we initially engage with a prospective customer, how we ensure maximum value is provided through the sales process, and finally, how we onboard and service their solution. It is critical that we ensure the customer receives a great experience at integration, and ultimately, we maintain this positive relationship throughout the entire customer journey. This is an iterative process, and we will continue to refine and improve our approach going forward as exceptional customer experience requires continuous focus. As mentioned earlier, we are seeing improvement in retention rates, but we have more objectives to meet before reaching the retention rates we are confident are achievable that will enable us to return to generation of consistent top-line growth. The initiatives highlighted earlier all support and contribute to our customer success goals and include a cross-functional effort that spans all functional areas, including sales, support, product, and the relentless pursuit of continuous improvement in our core data assets. Looking at our last pillar, innovation and our focus on digital engagement. We are making substantive progress in multiple areas. For example, as part of our efforts to support customers' ad tech efforts, we recently launched our first syndicated, always-on go-to-market partnership with LiveRamp, where our data will be available in the LiveRamp marketplace. This will enable marketers to self-serve using prebuilt audience segments or request custom healthcare audiences from us in support of customers activating verified health care professional and consumer data across digital channels in a privacy-safe manner. We also secured another relationship with a significant new strategic partner that is slated to go live at the end of the quarter. While it takes time for these partnerships to begin generating revenue, we are pleased with the progress we are making in building out a broad ecosystem of partners and the validation that their decision to partner with us, Definitive, reinforces in the confidence we have in our approach. We are also seeing good momentum in expanding our agency presence. In Q3, we signed up another eight agencies. As discussed last quarter, partnering with agencies to ensure we have the opportunity for Definitive Healthcare data to power marketing campaigns they run on behalf of our clients is an important part of our digital strategy. Leveraging the most accurate data drives better business performance for customers and makes Definitive an increasingly strategic vendor. So getting our data available to those agencies that support digital engagement is critical. Agency support is only one channel, with another priority focusing on direct sales support. Our commercial teams work directly with customers to support activation campaigns and see some very encouraging results. For example, a large teaching hospital in New England recently expanded from a five-figure test to a mid-six-figure activation campaign commitment. We believe this is a powerful example of the increased value Definitive can deliver when we give our customers the ability to take our data and close the loop to create augmented, targeted, effective, and profitable customer outreach programs. We believe this is a significant opportunity and remains a core area of investment as Definitive Healthcare demonstrates we can augment and activate their digital campaigns in a highly effective and seamless manner. Let me wrap up by saying that I am proud of the Definitive team for all the work they are doing to strengthen the value of our data and the solutions they deliver and improve the way we engage with our customers in all phases of our relationship. And we will continue to ensure we maintain vigilance on capital allocation and operational efficiency. As we approach the end of 2025, we are confident that the investments and the changes we are making in the business will position us to deliver improved top-line and bottom-line performance over time and create value for our shareholders. Now, I would like to turn the call over to Casey to walk you through the numbers. With that, Casey?

Thank you, Kevin. In all my remarks, I will be discussing our results on a non-GAAP basis, unless otherwise noted. Before turning to the specifics, I'd like to step back and provide some context on our quarter. We continue to operate in a dynamic macro environment and our ability to stay disciplined and make progress against our four strategic pillars remain central to our success. This alignment and prudent approach are reflected in our Q3 performance, where we again delivered results at or above the high end of guidance on both the top and bottom line. In the third quarter, we delivered revenue of $60 million, down 4% year-over-year, adjusted EBITDA of $18.9 million, reflecting a 32% margin, and adjusted net income was $9.7 million, resulting in $0.07 of non-GAAP earnings per share in the period, all of which were at or above the high end of our guidance for the quarter. We also delivered $17.9 million of unlevered free cash flow in the quarter and nearly $51 million on a trailing 12-month basis. Turning to our results in more detail. Revenue of $60 million was at the high end of our guidance range and represents a 4% decline year-over-year. Q3 revenue shows a sequential improvement in growth trajectory on total and subscription revenues and is indicative of the progress we are making. Subscription revenues of $58.2 million declined 4% year-over-year and reflects stabilization in absolute dollars quarter-over-quarter, along with a 2-point trajectory improvement over the subscription growth rate in the prior quarter. And we again are encouraged by the improvement we're seeing on renewal rates. While Q3 is a smaller renewal period in terms of volume of renewals, our renewal rates in Q3 were largely consistent with Q2 and reflects solid improvement year-over-year. Professional services revenue in the quarter showed modest growth and was largely in line with our expectations. Adjusted gross profit in the third quarter was $49.4 million, which was down 4% from Q3 2024, reflecting the revenue decline. As a percentage of revenue, the adjusted gross profit margin of 82% was roughly flat from Q3 '24. Gross margin in the quarter benefited from our ongoing efforts to improve the efficiency of our cost of goods sold. We experienced approximately $2.5 million in cost savings in the third quarter. The first is an approximate $1.5 million one-time benefit due to a data contract renegotiation. The second is a net cost reduction of approximately $1 million due to replacing an existing data source that was significantly impacted by the disruption in the claims market with another higher volume data source. This represents run rate savings, a portion of which we will be reinvesting starting in the fourth quarter when we bring another new claims data source online and will add significant value to our customers. Adjusted EBITDA was $18.9 million and reflects a 32% margin, well above the high end of our guidance for the third quarter. As expected, this is down year-over-year, reflecting the flow-through from lower revenue. But we're maintaining disciplined expense management and continuing to prioritize key strategic investments to position us for an eventual return to growth. Turning to cash flow. Our business continues to generate strong free cash flow due to our high-margin model, upfront billing, and low CapEx requirements. Operating cash flows were $59.2 million on a trailing 12-month basis, up 8% from the comparable period a year ago as we benefited from strong collections and a higher deferred revenue related to data partnership entered into at the end of Q4. On a trailing 12-month basis, we generated nearly $51 million of unlevered free cash flow. Also on a trailing 12-month basis, our conversion rate of adjusted EBITDA to unlevered free cash flow was 73%, which is down about 30 points year-over-year. This decline reflects higher-than-normal CapEx related to one-time investments largely incurred in Q4 of 2024 and Q1 of 2025. Excluding one-time CapEx investments, the conversion rate is above 95% over the last 12 months. This cash generation provides flexibility to continue investing in growth while returning capital to shareholders as evidenced by our repurchase of approximately 2 million shares in the quarter for a total of about $9 million with about $49 million remaining under our authorization. At the end of Q3, deferred revenue of $92 million was up 7% year-over-year and total remaining performance obligations were up 1% year-over-year. Current remaining performance obligations of $165 million were up about 1% year-over-year as reported as well. As mentioned last quarter, both our revenue results and current remaining performance obligations include the benefit from our data partnership signed late last year. We will anniversary the initial contributions of the multiyear agreement on at the end of Q4. Q3's cRPO growth rate declined mid-single digits, excluding the data partnership contributions. Our performance in the third quarter reflects continued progress against our key initiatives and delivered another solid quarter while we prudently manage the business. As we look ahead, we continue to be impacted by pressures on renewals and remain cautious on the macro environment. For the fourth quarter, we expect to deliver $59 million to $60 million in revenue, a decrease of 4% to 5% compared to the fourth quarter of 2024. From a non-GAAP profitability perspective, for the fourth quarter, we expect to deliver adjusted operating income of $13.5 million to $14.5 million, adjusted EBITDA of $16 million to $17 million, reflecting a 27% to 29% adjusted EBITDA margin. At the high end of the guide, adjusted EBITDA margins modestly expand year-over-year in the quarter. In terms of dollars, Q4's adjusted EBITDA is pretty consistent with Q3, adjusting for the one-time credits and factoring in planned investments. Adjusted net income of $8 million to $9 million or approximately $0.05 to $0.06 per diluted share on 145.8 million weighted average shares. Given we exceeded our expectations in the third quarter, paired with our outlook on Q4, we are again able to raise the midpoint of our full-year guide on both revenue and non-GAAP profit. We now expect to deliver revenue of $239 million to $240 million for a 5% decline year-over-year. This raises the bottom end of our prior range by $2 million while holding the upper end of the prior guide. And we're in a position to take up the non-GAAP profit guidance for the year. We now expect adjusted operating income of $57.5 million to $58.5 million, adjusted EBITDA of $68 million to $69 million for a full-year margin of 28% to 29%. This is a $3 million increase to the midpoint of the guided range. Adjusted net income is expected to be between $34 million and $35 million, and earnings per share are now expected to be $0.23 to $0.24 on the basis of 146.8 million weighted average shares outstanding, which incorporates the share repurchase activity through the third quarter. As we wrap up, I want to highlight that we're encouraged by our results through the first nine months of the year and remain squarely focused on what matters most, improving customer retention, returning Definitive to growth and driving long-term shareholder value. And with that, I would like to open it up for questions.

And our first question comes from Jared Haase from William Blair.

Maybe for my first one, I wanted to double-click on the competitive takeaway that you mentioned with the med device company. I'm curious, is that typically more common that you're seeing those opportunities for competitive wins? Or are new logos these days kind of more white space opportunity? And then I guess related to that, when you do have a competitive win like in this situation, is there anything you can share in terms of what you typically see as sort of the biggest reasons or maybe the most common gap in the market that's leading a client to make that change to a different vendor?

This is Kevin. We're continuing to see strength in our new logo area as one of the areas that's responding the quickest to our efforts here. We've exceeded our internal expectations across all end markets. And I think that a big component of that is we are still very confident in the broad use case needs for our data. We are really leaning into the integrations component, which we believe is not only a key focus area for us, but that is also going to help alleviate some of the pressures that we saw on the upsell market. And at the end of the day, it's really how easy can you ingest, leverage and gain insights from the use of the data, does it integrate well and easily into the systems of insight and systems of record, and then ultimately, how accurate is the data, especially as we've rotated our focus on those use cases in areas that we believe are most responsive to the value that we bring in those types of either therapies or purpose-built solutions that we bring into market. So I'd say it's kind of a combination of the integrations component and the quality of the data.

Okay. Great. That makes sense. And then for the follow-up, I wanted to ask on the new claims data that you're bringing online here in the near future. Can you just talk a little bit about, I guess, how strategically important do you think about claims data in terms of the broader product positioning and what you're hearing in terms of what customers need in the market? And I guess, specific to my question, I'm thinking about how much of an incremental lift could some of those new claims data sources have in the near-term growth rate?

It's a good question, Jared. There are two main aspects to consider. Firstly, we've had great success in selling claims data as an upsell and cross-sell alongside our unique reference and affiliation data for several years. However, recent market disruptions led to a significant decrease in available data. This was an industry-wide issue that affected us as well. To move forward, we needed to replace that data and meet our commitments because our customers are primarily concerned with their contractual agreements. We are pleased to report that we have now returned to parity. To exceed historical data levels, it is crucial to integrate the data effectively and reliably. Our customers utilize this data to efficiently map and match it, linking it with accounts, contacts, and individuals. They manage this data through master files to differentiate between first-party, third-party, and their own unique identifiers, creating complex data relationships that facilitate sharing across various systems of records and insights. The volume of data we provide is something our customers are already contracting for, as it addresses the use cases we aim to solve. The integration of this data involves strong relationships with our customers, which underscores the importance of having a comprehensive view that encompasses various relationships, including claims and reference data. We believe this is critical and have been successful in this area over the years. We are confident that the demand remains strong in the current market, and we are pleased to be back in what we view as a competitive position as we address these challenges.

And our next question comes from Craig Hettenbach from Morgan Stanley.

This is Jayjin on for Craig Hettenbach. For first question, I was wondering with greater certainty on MFN and tariff policies, have you observed any changes in how pharma clients are allocating budget or approaching spend?

We haven't seen any changes. Again, I think as we've given color previously, our biopharma customers over the last year plus, I think, have seen just tighter budget constraints. And that has kind of shown up in some of the pressures across the life sciences space that we operate in. But no notable changes or tariff-specific impacts at this point in time.

It was very encouraging to see the total customer count holding steady and enterprise customers growing. I am curious if you have any updates regarding improvements in the downsell pressure you've been experiencing, and if you could highlight what aspects are resonating with these clients.

Yes, absolutely. Thanks for noticing. Certainly, the stabilization of the total client count and the tick-up in the enterprise customer counts were encouraging to us from second quarter into the third quarter. That downsell pressure for us, again, remains pretty isolated into the life sciences space and touches exactly on kind of your initial question around what we're seeing within the biopharma. So no real notable kind of changes there. But as we talked about a bit last quarter, that kind of goes into and flows through the life sciences space in terms of what we're seeing on the other side of it in terms of the upsell and being able to increase footprints within the life sciences space, and that also continues to remain challenged. So last quarter, I did mention that our net dollar retention expectations for 2025 were that we would expect net dollar retention to modestly decline year-over-year compared to 2024. That still remains the case. But again, we are happy that the underlying improvement we're seeing in our renewal rates is going to drive our gross dollar retention to be up year-over-year. And again, that's consistent with what we had said 90 days ago.

I want to add that it's reassuring to see that in our diversified and life sciences end markets, which account for nearly 90% of our annual recurring revenue, the renewal rates compared to Q3 of last year were very positive. It's encouraging because our focus in these core areas is beginning to show results, giving us cautious optimism. Even though Q3 typically has lower renewal volume, it's a positive sign that our operational changes are making a difference.

And our next question comes from Nishad Patwardhan from Goldman Sachs.

This is Nishad. I'm on for Kash. I would like to just double-click on the agency part. You spoke about several agencies beginning to activate campaigns and you also spoke about one of your plans, the New England Hospital going beyond pilot activations. I would like to ask what are the driving factors for these end market customers to expand from testing to actual activation campaigns using Definitive data?

Thank you for the question. The progress we're making with digital activations is a logical step for our business as it utilizes our data's strength, enabling customers to create more targeted and effective marketing campaigns. This enhances their audience campaigns, allowing us to demonstrate the return on investment and the benefits gained from these augmented audiences. We connect our data directly to their ad tech efforts, and by incorporating Definitive Healthcare data into their marketing technology stack, we create a straightforward link to a consistent partnership. We mentioned LiveRamp, which enables marketers, particularly direct customers of Definitive Healthcare, to self-serve always-on data packages or audiences targeting specific healthcare sectors. The agencies we’ve partnered with are expanding this channel, which we view as a long-term revenue opportunity. Additionally, we’re collaborating with Bombora, which has launched a curated marketplace with initial partners including Definitive, Crunchbase, G2, and HDInsight. Through this partnership, we can match our proprietary reference and affiliation data with other activity signals to establish a unique healthcare ecosystem for audiences, further broadening our reach in the B2B digital sector. To summarize, our data's accuracy and reliability enhance targeting capabilities, which is crucial for maximizing advertising spend to reach the right audiences. We've established relationships through pilot programs, where initial tests led to significantly increased commitments due to the substantial returns on their investments.

Yes. That sounds good. I have a small follow-up on that. Do you have any visibility into which specific verticals are moving faster towards production and activation from pilots in terms of agencies?

I don't think we're seeing much differentiation across the verticals at this point. We are aiming to make an impact in each of our end markets. We've had a decent amount of success in the diversified space so far, but there is also significant opportunity within the life sciences space.

And our next question comes from Brian Peterson from Raymond James.

This is Johnathan McCary on for Brian. So I wanted to double-click on the net new motion you talked about, kind of some modest improvements or stabilization in NRR. It also sounded like you guys upticked on tone on the net new side. So I'm just curious like how did that perform versus your expectations? And then I'd be curious where you're seeing more strength as it relates to the partner or the agency ecosystem versus kind of your direct motion, or maybe it's across both. But would be curious, any delineation there?

Yes, certainly. As we evaluate the business, our new logo performance has actually surpassed our internal expectations for the quarter, which is encouraging. This trend has remained strong for several quarters, and we are seeing consistent results across various end markets. We're also pleased with the improvements in our renewal rates. However, it's important to note that upsell and downsell pressures within the life sciences sector are creating some overall drag on our results. Regarding the digital activation space, we are currently experiencing some acceleration in the direct sector. While we have around 20 agencies under contract, not all of them are fully activated yet, as building these relationships takes time. However, we believe that as these relationships develop, our audiences will become accessible to many firms over time. This represents an exciting new revenue stream for us that we expect to scale in the future.

Okay. Great. I have a follow-up question regarding model housekeeping. In the past, when we discussed adding new data sources, it has led to some temporary pressure on gross margins. As we think about our model for next year, do you expect the gross margin to stay in the current range? Or should we anticipate some near-term pressure from the new data sources?

Yes. There are a few dynamics within the data sources. From a year-over-year perspective, while we are not providing guidance for '26 at this time, we have mentioned in the second quarter and again now regarding the third quarter what we observed. Our negotiations regarding existing data agreements have led to a couple of one-time credits. In the second quarter, we recorded approximately $2 million in credits, and in the third quarter, around $1.5 million. These credits will not be recurring, which may create some year-over-year margin pressure. Simultaneously, as we onboard data sources, we are trying our best to manage this balance, though one data source was taken offline. We can discuss margins and the profile further in February, as the revenue profile will also influence that. In my prepared remarks, I indicated that if we assess our current remaining performance obligations from the third quarter, adjusted for the data partnership which is contributing positively at the moment, it suggests a mid-single-digit decline. Consequently, we do anticipate top-line pressure that will undoubtedly affect gross margins next year.

And our next question comes from David Larsen from BTIG.

So it's great to hear that retention rates are improving. Can you elaborate on the upsell versus downsell dynamic? Are customers still staying on, but spending less, given that the overall customer count appears solid? As a quick follow-up, I appreciated all the information about the new wins and contract expansions. What are your thoughts on the future growth strategy, particularly the balance between acquiring new customers and expanding within existing ones? Do you anticipate that to be a balanced mix or skewed towards one approach for driving future growth?

Thank you for your question. To address a few points you raised, let’s start with the dynamics between upsell and downsell. Overall, we're seeing a healthy flow in our diversified and provider markets. However, the challenges with upsell and downsell are primarily coming from the life sciences sector. This year, we’re experiencing year-over-year pressure on upsell, as last year we had more expansion within existing accounts than we do now in this sector. On the downsell side, it's the same customers facing budget constraints or increased scrutiny on their internal teams that we are noticing. On a positive note, our customer count has remained stable quarter-over-quarter, which is encouraging. These are long-term relationships where customers find value in our offerings and we believe that once their budgets improve, they will re-engage with us. This stability is crucial as we manage these relationships. As for your question about future growth regarding new customer acquisition and expansion within existing accounts, the answer is both. It's too early to provide guidance for 2026 in terms of the mix between the two. Currently, we see strong new logo generation, which we expect to continue. We believe that expansion within existing accounts will also rebound over time as we keep focusing on our core strategies, which are all linked to improving renewal rates and creating additional value for our customers. Thus, we anticipate that our future growth will reflect both aspects.

Yes. I believe that our confidence stems from five or six key points. Firstly, we have highly differentiated and valuable data that enhances our customers' business performance. We are increasing our investment and quickly unifying our front-end solutions to make access to that data easier for them. The changes we've made in our go-to-market and customer success teams are beginning to show the positive effects we anticipated, evident in our rising enterprise count in Q3, and we expect ongoing benefits from this. We're also seeing the benefits of the time and effort invested in personnel, processes, and strategies discussed last quarter relating to both go-to-market and success. Furthermore, our integration strategy is poised to create a significantly larger impact by engaging more customers not only through our SaaS products but also via integrated data science platforms, connectors, APIs, and more. Lastly, we are expanding our AI investments into product data and end-user development as part of our roadmap for 2026, which we believe will further advance our progress. We have many focused initiatives that align with the four pillars mentioned by Casey, addressing existing upsell and cross-sell challenges while also fueling new logo acquisition and expansion. I feel very optimistic about this outlook.

Congrats on the quarter.

And our next question comes from David Grossman from Stifel.

I believe most of my questions have been answered. I joined the call a little late, so I apologize if this has already been discussed. At this point in the year, a significant portion of your business renews in December and January. You've mentioned some positive improvements in the fundamentals of your offering and your go-to-market strategy, along with other aspects of your business. However, there are still some cyclical challenges we need to consider. I'm trying to understand the potential range of outcomes for the upcoming renewals over the next three months, as this will greatly affect what 2026 looks like and will influence our situation for the next year. I realize this may not be the most fair question, but I'm hoping you can provide some context given the various factors in your business right now.

Yes, it's a tough question, but it's a very important one. We recognize that December and January are critical months for renewals, which we are closely monitoring. While we haven't noticed significant changes in the macro and competitive landscape over the past quarter that would shift our perspective, we remain cautious. The current funding environment, interest rates, and some regulatory uncertainties do have an impact. Nonetheless, we’re focusing on what we can control, such as improving the quality of our data, enhancing our integration strategy, and ensuring our master data management efforts are progressing. We have integrated our sales motion with the activation and measurement capabilities that create a comprehensive system. Our sales and support teams are now better aligned, which should enhance our customers' experience compared to a year ago. However, changes take time to fully embed. Your focus on the fourth quarter, especially January and December, aligns with our own, and we are very focused on that timeframe. We are confident that our efforts will lead to long-term growth, while also ensuring we optimize our current customer relationships. The next two months will be crucial, and I’d be interested in any thoughts Casey may have on this. We are concentrating on aspects within our control, but there are certainly variables at play.

Of course. So as Kevin mentioned and as you well know, our December and January renewals make up over 30% of the renewals that we have over the course of the year. So a super critical period for us and will certainly shape the trajectory of 2026. But as we talked about, cRPO is our best kind of forward-looking indicator. But it's not perfect and needs to be looked at in context of the other kind of commentary we give on the business. So in my prepared remarks, we shared that cRPO, excluding the lift from the data partnership, is declining mid-single digits. That's certainly a lot closer to our current trajectory and certainly the numbers that we're looking at for Q4. And I think that, that's the right lens to be looking at in terms of the near term as well. One dynamic to kind of point out is that given the heavy mix of renewals into December and January, if you look back over the last two years, we saw a step down in subscription revenues from Q4 to Q1. I think it's very reasonable to expect kind of a similar approach going from Q4 to Q1 as we head into 2026. So hopefully, that gives you kind of a little bit of color as kind of starting to think about the shape of '26. And of course, we'll give more color when we touch base again in February.

That was really helpful. Can I ask one follow-up? If we normalize cRPO for the large partnership deal from last year, how does it compare in the fourth quarter? Is it difficult to turn that positive at the beginning of next year in the first quarter if we have a strong renewal period or NRR going into next year?

Yes, I believe there's still a significant amount of work ahead of us, and it's somewhat challenging to identify specific areas, particularly with the cRPO base at approximately $165 million. We're observing a mid-single-digit decline, and when excluding the data partnership, it indicates that there's about $7 million that needs to be addressed in order to return to flat or low single-digit growth. Our team is actively taking various steps to optimize the renewal period. However, we anticipate that by the end of 2025, net dollar retention will decrease year-over-year, which will have an effect.

And our next question comes from George Hill from Deutsche Bank.

This is Liz for George. I appreciate the insights on the preliminary thoughts for next year regarding renewals and contract cycles. As we approach the important months of December and January, how should we consider the timing? Can you elaborate on the timing for Q4 and Q1, where we usually experience a more active sales season? Are you planning any measures to reduce churn? What should we expect regarding the customer accounts? Additionally, from a pricing standpoint, are you considering any changes in the coming quarters?

I think there was quite a bit to unpack there. So let us try and do our best on this one. I think that kind of the normal sales seasonality for us, there shouldn't be any kind of change. Again, there's a lot tied toward these renewal periods. So December and January are super important for us. And that's where we remain really focused on having an impact. Second quarter and third quarter were encouraging. We made a lot of progress on renewals there. Those are certainly smaller renewal periods, but we're hopeful. We've got the team really focused around delivering the best possible outcome for Q4. But there certainly the range of outcomes as far as what that means for 2026 at this point in time. Related to pricing, I don't think there's any like specific pricing action. I think that in general, we do have modest step-ups and just normal pricing increases built into our agreements as well as built into any of our multiyear agreements as well. So that's kind of normal course in business for us. There's nothing really, I think, unique to touch on from that standpoint. Yes. We have projected a revenue decline for 2025, and early indications for 2026 also suggest some top-line pressure. Our primary focus is on taking the necessary actions to return to revenue growth. Once we achieve that, we will reassess our strategy for gaining market share. At this stage, it’s crucial for us to concentrate on our fundamentals and the foundations of our business, executing well on our four strategic pillars. These efforts will enhance our renewal base and ultimately lead us back to revenue growth.

At this time, we have no further questions. This now concludes today's conference call. We would like to thank everyone for attending. You may now disconnect.