Good evening, ladies and gentlemen. Welcome to the Freesia's Fiscal Fourth Quarter 2024 Earnings Conference Call. At this time, all participants are in listen-only mode. We will provide instructions for the question and answer session to follow. First, I would like to introduce Balaji Gandhi, Freesia's Chief Financial Officer. Mr. Gandhi, you may begin.

Thank you, Operator. Good evening and welcome to Freesia's Earnings Conference Call for the fiscal fourth quarter of 2024, which ended on January 31st of 2024. Joining me on today's call is Haim Indig, our Chief Executive Officer. A more complete discussion of our results can be found in our earnings press release and in our related Form 8K submission to the SEC, including our quarterly stakeholder letter, both issued after the markets closed today. These documents are available on the Investor Relations section of our website at ir.freesia.com. As a reminder, today's call is being recorded and a replay will be available on our Investor Relations website at ir.freesia.com following the conclusion of the call. During today's call, we may make forward-looking statements, including statements regarding trends, our anticipated growth, our strategies, predictions about our industry, and the anticipated performance of our business, including our outlook regarding future financial results. Forward-looking statements are subject to various risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to differ materially from those described in our forward-looking statements. Such risks are described more fully in our earnings press release, our stakeholder letter, and our risk factors included in our SEC filings, including in our annual report on Form 10-K that will be filed with the SEC tomorrow. The forward-looking statements made on this call will be based on our current views and expectations and speak only as of the date on which the statements are made. We undertake no obligation to update and expressly disclaim the obligation to update these forward-looking statements to reflect events or circumstances after the date of this call or to reflect new information or the occurrence of unanticipated events. We may also refer to certain financial measures not in accordance with generally accepted accounting principles in order to provide additional information to investors. These non-GAAP measures should be considered in addition to, and not as a substitute for, or in isolation from, our GAAP results. A reconciliation of GAAP to non-GAAP results may be found in our earnings release and stakeholder letter, which were furnished with our Form AK filed after the market closed today with the SEC and may also be found on our Investor Relations website at ir.freesia.com. I will now turn the call over to our CEO,

I'm ending. Thank you, Balaji, and good evening, everyone. Thank you for participating in our fourth quarter earnings call. Our stakeholder letter and earnings release were published about an hour ago. Let me start the call with a couple of highlights. I am very pleased with our fourth quarter and fiscal year performance, both financially and operationally. Freja is in a new era that extends our impact beyond patient intake. Our growing set of solutions expands our capabilities outside of the point of care, while still aligning with our mission to make care easier every day. In fiscal 2024, we facilitated more than 150 million patient visits, approximately 25% more than fiscal 2023. For the fourth quarter, total revenue was $95 million. up 24% year over year. Adjusted EBITDA was negative $3.5 million, a $14 million improvement year over year. Before I turn it to Balaji to discuss our fiscal 2025 outlook, I would like to thank my Frigia colleagues for their hard work and commitment to our mission. I'd also like to thank our clients and investors for their continued support. We are all very proud of the work we do and are excited to continue to deliver growth while returning to profitability in fiscal 2025.

Let me now hand it over to Balaji. Thanks, Haim, and good evening, everyone. We provided our initial outlook for fiscal 2025 when we released our fiscal third quarter results on December 5th of last year. today we are maintaining our revenue outlook for fiscal year 2025 at 424 million to 434 million dollars we are also updating our adjusted EBITDA outlook for fiscal year 2025 to a new range of 12 million to 20 million from a previous range of 10 million to 20 million our updated outlook reflects our ongoing focus on improving efficiency and operating mileage. We are also providing a forecast for the number of average healthcare services clients, or AHSCs, we expect to add in the first quarter of fiscal 2025. We expect to see AHSCs increase by at least 100 in the first quarter compared to the fourth quarter as we prioritize AHSC prospects that we believe can drive profitable revenue growth across subscription and related services, payment processing, and network solutions. It is worth noting that our forecast for AHSC growth in the first quarter was incorporated into our fiscal 2025 revenue outlook, which we provided back in December, and we are now maintaining. One final note, we believe that our current cash and cash equivalents balance, along with cash generated in the normal course of business, give us sufficient flexibility to reach our outlook for fiscal 2025 and to plan for continued profitable growth in fiscal 2026. Operator, I think we can now open it up to Q&A.

The floor is now open for your questions. So to ask a question this time, please press start and the number one on your telephone keypad. We're just going to pause for a few moments to compile the Q&A roster. The next question comes from the line of Ryan Daniels with William Blair.

peace go ahead Balaji want to ask you a quote in your language both can you yeah sure Ryan and yeah

apologize for the I think we had some technical difficulty on the first question so whoever that was dialing in maybe come back into the queue and Ryan on your question I think this goes back to some comments we made last quarter in our letter and I think it you're hitting on some of the points which is its revenue its profitability but it's also payback and the return we get so we feel really good about the clients that we're adding currently and expect to in the future in terms of the type of revenue and the type of profit we expect to generate off them and that's you know that's really probably all we'd say at this point okay and then a quick follow-up for you

anything we should consider number one some of them yeah so I think the the

event that we talked about was a Q4 event. So those costs were largely in the fourth quarter. In terms of change, you know, I think we can, you know, maybe talk a little bit more about that if anyone else has a question. But I think in terms of guidance or, you know, the outlook and the cadence, nothing really to call out, Ryan. I think we'd call out, though, there is seasonality around payments, which are stronger, which has an impact on margin. That's nothing new this year

versus previous years. Thank you. I'll hop back in the queue. Our next question comes to the line of Richard Close with Canikur Janicki. Please go ahead. Yeah, thanks for the question. Congratulations

on a strong year. Maybe just to go down the change path a little bit farther. I noticed in the letter you talked about security investments and just curious what you're doing there, how you're helping clients with security and maybe just to discuss your high-level thoughts on change the change hack and you know any impacts positive negative that you see

yeah so I think the thanks for the question Richard this is time I all try to break down the question a little bit and then we'll try to answer some of be some of the commentary around change. In the letter, we reference our investment in security, and I think that's really wanting to call out to all of our stakeholders that we, over the last couple of years, have been dramatically increasing our internal spend, both as an absolute dollar and as a percentage in security and compliance. And we think it is really important. We take our role as a steward of data and unbelievably seriously but also to be fair we know how much our clients depend on our service and we expect to keep increasing that investment and and it and it's baked into our R&D number and Balaji I'm sure can talk more about that but we just we did think it was really important as we as we have over the last couple years significantly increased that that investment level um and then in terms of change look let's start with it's been pretty terrible for a lot of our clients like there's really no sugarcoating that like a major part of the healthcare infrastructure was attacked and it's pretty terrible and we're doing everything we can to help our clients we're just collect dollars and making sure that they can they can keep running their businesses as they were. And from what we can tell, almost all of them still are, although it's really putting strain on them. And in terms of how we work with change, they were one of our clearinghouses. So we, as part of our service, provide eligibility and benefit checks as part of a lot of our services. And we've been working with change as one of our clearinghouses for years. And to call out our team, over the last couple of weeks, really quickly when they identified it, started moving to our backup and alternate clearinghouses to move the vast majority of our volume. They did that above and beyond normally what they do. It was a ton of work. I can't thank them enough. I know it made a big difference to our clients so that it really didn't disrupt their business. But look, this was a pretty big attack on the American and health care infrastructure, and I think it's pretty shitty.

Thank you.

Our next question comes from the line of Anne Samuel with J.P. Morgan. Please go ahead.

Hey, guys. Thanks for taking the question. You called out in your letter that payment processing was helped in some part by, you know, better utilization, and I was just wondering if maybe you could touch on what kind of utilization you're embedding within your full year forecast for the year.

Well, Annie, thanks for the question. I think this is something we've talked about a lot on these calls, is the swing factors, the biggest swing factors on payment processing is things like weather, you know, things like where different days on the calendar fall in a given quarter. And that's how we sort of model it. We model it with years of history on experience like that. You know, obviously weather can play a role which is not as predictable. But that's sort of it. I don't think we sort of talk about, like, specific patterns and usage, utilization of services as being its biggest main factor.

Great. Thanks. And then maybe just one more. I was hoping you could touch on your postscript engagement product, how that works. And is there – are you partnering with the pharmacies maybe to measure follow-through, or is there an opportunity to do that?

We'll not get through who are – so why don't I – I'm very excited about this product. sorry i was jumping right to the end annie this is a product that's been worked on for quite some time uh really excited about it i know the team is too and this is you know at its simplest form when you get a script from the provider it just makes so much sense to be able to get a reminder to fill it building your prescription is just so important at every stage right if you're If your doctor thinks that you need to be on a therapy, they should nudge you as much as possible to fill that therapy and answer any of your questions. And frankly, also know why and if you're not doing it so they could better inform you as to why it's important. And so we've been working on this product for some time. It was developed all in-house. Early indications are, you know, the response has been phenomenal. The impact of patients has been is looking very tremendous, and we're pretty excited about it. And early on, I don't think we're talking about who we're partnering with it, but I'm personally pretty excited about it. It's a nice, it's a really nice, valuable add-on to our patients and providers.

Sounds exciting.

Our next question comes from the line of John Radsen with Raymond James. Please go ahead.

Hey, good afternoon. So it looks like you guys are kind of settling into a nice groove, you know, with G&A leverage and the like. As we think about your company, let's just think five years out and assume, because it's easy math, that you can grow your top line 20% for the foreseeable future. How should we think about the concurrent growth in G&A and marketing and R&D that would accompany a theoretical kind of five-year 20%?

Yeah, John, this is Bellagio. So first of all, I mean, I know you're trying to project out, but, you know, we're really formally talking about fiscal 25. But let me, you know, we can try to be helpful. I think we made some pretty specific comments about G&A where we did a lot of analysis on public company costs. and we felt that to be a, you know, world-class public company and have all the right processes and procedures and people in place, we were going to have to make some investments. We could choose to delay them. We chose not to. So we feel pretty good about where we're running now to support a larger organization. But there's obviously, you know, the cost of things go up every year, but it's not like there's an order of magnitude increase in the resources we need. No, and I think you've seen that operating leverage happen for years now.

Yeah, as a dollar amount, it really hasn't changed.

Well, then let's give you a question that you might answer. The SD&R hiring season that's coming up, how do we think about – you've had some different thoughts about how quickly or how not quickly you grow that SD&R for, so maybe talk about your goals for hiring and kind of your learnings of productivity as you tried to ramp that up a couple years ago.

Well, I think there was a couple of things around the ramp up on our SDR team that were really important. One, we ramped it up a lot quicker, also acknowledging that we really had been out of the SDR market for about a year, because of COVID, for over a year. So some of it was just filling in a lot of hiring that we, because we really didn't hire any net new SDRs during COVID, just sort of during the peak pandemic period. So that was some of it, John. So we were really backfilling sort of the running season. But the productivity of our SDR team not only just keeps, like, frankly, we're liking the productivity improvement. It keeps improving. But I think how we hire and also how we qualify and drive opportunities into the provider organization, you know, now I think we have not just SDRs, but we have a lot of other tools at our disposal, which have been also proving to be very effective. Right now, we're pretty happy with the cadence that we see on the provider sales organization and the SDR organization on landing and expanding our provider footprint. And it's been – I've been really excited and proud of that team. They've been executing very well and driving really good returns for all of us.

Elijah, do you want to add a number to that thought answer or to keep it qualitative? I'll keep it qualitative. I think your dog liked it. That's my neighbor's dog. It's an annoying poodle, but that's okay. We'll forgive her. I'll let go.

Thanks for what we're saying.

Thank you. Our next question comes from the line of Jesse Chasson with Piper Sandler.

Hi. Thanks so much for taking the question. I was hoping you could maybe talk a little bit about what we see on MediFind.com today. We see, obviously, providers by specialty, clinical trials that are open for enrollment, and drugs suitable for a particular condition. I'm curious to know, you know, how much, how many of those items are you monetizing today, if any at all, and just the extent to which you've integrated the site with the intake management platform?

So, I, there's a great question, Jess, and thanks for asking about MediFind. The integration effort is very much well on its way. we're booking appointments, thousands of appointments every day now, and it's going very well, and they're being done in real time. So from a technology integration, I think that's on track. From a monetization effort, I think we've been very specific on that we're going to take it pretty slow on the monetization. We are monetizing. I'd say the vast majority of the traffic uh to the site still is not monetized but we expect that to change over the coming

sorry did you say you expect that to change over the coming years or is that an fy20 or fy25 event

over coming years so as he's nodding his head on years years yes okay cool my and my follow-up is

just um on postscript engagement is that the kind of first time that you all have monetized the i I guess, post-visit inventory, and I'm curious to know, I think you said it launched in the fourth quarter. Is that like revenue generating in the fourth quarter or just sales commenced

in 4 p.m.? Thanks. I'm pretty sure it was revenue generating in Q1. That sounds right. We can follow up with you on that if I don't get the note right now from the team who I'm sure someone's going to send me a note and we have had other products in the post script engagement area I think this is probably the most robust and this is built off the learnings of a lot of the previous products that we've had in the space in the end and to confirm that is correct it's a it's q1 it's really in q1 that we started to wrap it on it got it thank you thanks thanks

Our next question comes from the line of Daniel Crosslake, Good City. Please go ahead.

Hey, guys. Thanks for taking the question, and congrats on the quarter. I want to touch on Connect on Call a little bit. So you added, I believe, 120 clients from them through the acquisition. Have you been able to cross-sell some of the core freesia products to those clients? And then have you been able to make any of the cross-sells the other way? to your kind of core Frija clients on Connect On Call?

So, well, first, the core product, I think we've rebranded it as Frija On Call. So I think that's already happened. So expect us to keep referring to it as Frija On Call. I think it's so early. I don't know that I'd comment that I know the team is having early success with cross-sell upselling the old Connect On Call client base. But to be fair, we frankly shared a lot of clients, and that Delta was mostly clients that we didn't share, right? And so I'm sure that I know that the team is out there speaking with them and trying to cross off sale where possible, where it's the right fit. And I know we're still in the early days of rolling out free John Call to our client base. And the response from our clients, our provider clients on free trial and call has been, it's been amazing. If we add an expectation set on the value proposition, it's the early indications are this is, it's far exceeded even my expectations. And it's a beautiful product.

And then on cash flow, there was a bit of a step up in CapEx this quarter sequentially to around $7.9 million. Is that the right rate that we should be thinking about for 2025?

I mean, I think there is some fluctuation quarter to quarter. I don't think you'd be, you know, wrong if you just run rate of that number. But there will be quarters where it's a little less, a little higher. but in the high 20s, Daniel's won. Thank you. Our next question comes from the line of Glenn

Sankagella with Jeffries. Please go ahead. Oh, yeah. Thanks for taking my questions. Just two quick ones for me. You know, Haim, I appreciate the 1Q provider ad number that you gave us. And it's obvious that you're looking to add profitable growth. And so I'm kind of curious to get your take, you know, on where we are from a penetration perspective? And how incrementally harder is it getting to add these, you know, profitable providers? And so, you know, just for those, you know, for those that are trying to take a little bit of a longer term view, I just want to get a sense for where you think we're at. And then maybe I'll give you my follow up, you know, right now, you know, maybe just following up on John's question. You know, It's been an interesting two to three years at the company. You were very profitable, then you were very unprofitable, and now you're back to sort of profitability. As you look over the next couple few years, obviously you made great gains on the efficiency side. Do you see any major investments on the horizon, or do you feel like the infrastructure is at a pretty good place to continue to be able to leverage and grow? And I'll stop there. Thanks.

Whoa, Glenn, that was a lot of questions for my brain to process really quickly and I just wrote them down. It's okay. It's okay. I think that you, so all right, let me start and try to answer as many of these as I can. There's like seven questions. Balaji thinks it's funny. So let's start with, I still think we are making a lot of investments, right? you like and look we have we're spending a lot on r&d um we're spending a lot in our sales marketing organization what we're doing is we're spending less continuously as a percentage but i would say look even looking back to when we went public we spent significantly more today than we did then it's a dollar amount and we're able to put out phenomenal products that add a phenomenal amount of value to our clients of all different kinds of clients you know our life sciences clients on our provider clients and frankly more and more the consumer itself and so my view is yeah we we will keep making investments because ultimately we're a growth company and we have a growth mindset I think all we're excited to do is just return back to profitability it's it's frankly, a much more comfortable place for us. But we're still making investments. And to answer your first question, is it harder to win clients? I think it's always hard to win clients in an environment like healthcare, right? Like where margins are tight and expectations are high and And, you know, there's just a lot of noise. And, frankly, I think the reason we've been successful at it is the team. And the team builds great product and sells great product and does a phenomenal job of implementing and supporting our clients. Our customers, you know, appreciate the value we bring them. So I don't take the job lightly, but I think we've been pretty good at it for going on almost 19 years.

Yeah, and, you know, Glenn, I was just going to add, and I think this relates to John's question too. I think we've tried to be pretty consistent about growth and profitability mattering. They both go together. And, you know, just some numbers to throw out at you, you know, we actually have increased expenses, operating expenses by 13% if you look two years ago in the fourth quarter to So to Himes' point, we've invested a lot. But, you know, what's really important is that the revenue has grown 64% over that same So that's going to be important, continue to grow, but also getting operating leverage and being profitable in the future. So, hopefully that's helpful.

Thank you very much. Sorry, I have a long question.

Our next question comes from Shane Doubt with RBC Capital Market. Please go ahead.

Hey, good afternoon. This is Thomas Kellerman for Sean. Congrats on a nice quarter, and thanks for taking the question. Just a quick modeling one here and kind of a follow-up on an earlier question, But how should we think about the EBITDA cadence kind of heading into fiscal 25 and then over the course of the year? I know you mentioned a little seasonality on the payment side, but any other particular cost or efficiency actions creating some variability that we need to be thinking about? Or should we expect this to be pretty linear? Thanks.

Definitely not linear for one of the reasons I think you brought up, you know, the seasonality on payments. I think the other thing to keep in mind is, and we've mentioned this in the past too, but we've seen a lot of operating leverage over the past eight or nine quarters, and it's not going to be as much this year, just if you sort of look at the outlook we've provided for revenue in EBITDA. So it will improve throughout the year, but 1Q has lower margin associated with more payment revenue. And then you just start sort of dropping pretty good incremental margin down as revenue grows. So, look, we can – it's happy to talk to you about your model, but, you know, we're not providing quarterly guidance. But feel free to follow up.

All right. I'll leave it there. It comes from the line of Jack Wallace with Guggenheim Securities. Please, go ahead.

Hey, thanks for taking my questions. I wanted to ask about the growth algorithm going forward, particularly as you target more profitable customers, thinking about the growth in revenue per customer and how much of that should we be thinking about coming from legacy but maybe under-penetrated products versus some of the newer products you've rolled out, both in R&D as well as some of your tuck-in M&A deals. Thank you.

Maybe I can start and I can talk about the acquisitions a little bit more. You know, look, one number, Jack, to look at is for the full year, fiscal 24, total revenue per client was up kicked up a little bit um which was you know a sign of sort of things to come and i think what we could say is it should be up more in fiscal 25 over 24 than it was in 24 over 23 and that's a combination of everything i mean you know it's the base it's new clients that we think you know can be profitable as well and then i'm in terms of the products or the new the acquisition thing you want to add look i think the the adoption of

the different products we have has been going very well I think our CSM team has been doing a great job and a lot of that's the testament to these products adding a ton of value to our clients very very quickly and I think our go-to market which is fairly differentiated and being able to get them into the hands of clients very easily and a lot of that's a lot of that is based on the work of our technology organization just making the products very easy to turn on so thank you everyone but it's so far we see a lot of our products for all different clients being adopted new or newer acquisitions but also some of those are and some of the products that we've been working on for years and had in our bag for many many years so I think all all in all like the team's doing a very good job around adoption i'm pretty proud of them yes

i appreciate that and then as we're thinking about uh sources of gross margin expansion how should we think about uh mid shift versus some of those uh your products getting to scale um and then you know what last if i can speak a third in there uh wonder if we can get an sdr

account thank you yeah um so first of all on the uh on the gross margins um uh i think we've talked about this not a ton of opportunity there and relative the other three lines um we still see you know over time there may be a little bit of opportunity but if you were sort of modeling 2025 we feel really good about where those gross margins have gotten to and a lot of leverage we've gotten and i would focus more on the other three line items as a source of operating leverage for this year. And I will, Jack, I will come back with the SDR account for you. Let me just grab that number

for you. So we can go to the next question. I believe there's questions for me. I think we can

go to the next question. Yes. And our next question comes from the line of Joe Drewink with

Bayer. Please go ahead. Great. Thanks for taking my question. One on network solutions, just when When you look at maybe standing of later stage clinical activity at some of the customers that you help in that business or even just the propensity to spend here at year end with marketing decisions, are you starting to get maybe the sense that the backdrop for new campaigns and just the broader macro that business might face into fiscal 2025 and beyond? do you think that might actually be a better environment because it's obviously been a been pretty challenging here over the last 18 months or so I

don't think that that's a that's a fair question I think it's too early to tell how the year will play out but I think the team's doing a great job I feel really good about sort of the execution and the way the pipeline works looks but You know, generally speaking, I think, you know, there's a lot of months in a year. And I guess having done this for so many years now, I'd say whenever I've thought it's going to get easier, I'm usually wrong. And whenever I think it's going to get harder, you know, I'm often wrong on that, too. So I would say, like, look, we hire great people. We provide great returns on our network to our clients. And we try to make sure that the right patients see the right messages all the time that drive a phenomenal amount of value for those patients. And to keep doing that, I think we have the opportunities to keep growing our network solutions revenue for years to come.

Okay, that's great. And then I wanted to dig in a bit more to just what it means to prioritize customer prospects that drive profitable growth. I guess in practice, that kind of sounds to me like you're expecting your gross retention to move higher over time. Is that the right way to think of it? So as the average tenure in the installed base is maturing and moving higher, that obviously bears a favorable revenue mix implication. It definitely factors into things like customer acquisition costs. Is that kind of what you see happening for Freesia over the next few years at this point?

Yeah, sure. So, Joe, absolutely retention is something we are very religious about. So absolutely focusing on profitable growth and profitable customers, we expect to have an impact on retention. Number two, though, is payback. So I think that's really the thing. you underwrite a certain amount of time that you think you can get revenue and how much revenue you can get. And so that's the other thing that's sort of changed. But those two things influence revenue growth and profitability growth. Is that helpful? Yep. No, that's great. I'll leave it there. Thanks. Great. And the SDR count for January 31st was 107. We can go to the next question.

Yes, and the next question comes from Jalendra Singh with Drew Securities. Please go ahead.

Thanks for taking my questions. A few clarifications, if I can. With respect to the quarterly provider ads of at least 100 in Q1, is that a good quarterly run rate to use as we model the rest of the year, or especially to Q1?

Yeah, I mean, Jalendra, I know you're getting more familiar with us. we have in historical periods, given that next quarter number, we do have a decent amount of visibility, and we'll keep sharing that with you as the year goes out. So, you know, we don't want to be like, you know, give you a specific number. But I think it's a, you know, it's a fair, like, sort of watermark to think about. Just know that we've got revenue guidance. So whatever you sort of model in for client growth, you know, it's going to have a different revenue per client.

Okay. And I want to go back to change healthcare issues. I think thanks for all the color about that you guys were able to switch to the clearinghouses pretty quickly without much disruption for providers. But have you seen, in general, any impact on utilization trends at your providers, basically because your payment processing and your network solutions business is exposed to utilization trends? So any impact on that? And related to that, you know, a lot of providers across the country are kind of disrupted by this kind of, is that impacting in any way the sales cycle, like in terms of their willingness to work with you to roll out new solutions as they are dealing with this change healthcare issues? Just curious, like, maybe if you can go beyond just the clearinghouse switch impact from change healthcare.

So, from what we can say, we haven't seen providers not seeing any significant utilization changes at our provider groups, and, you know, I think I say this all the time. Most of our providers, you know, first and foremost, want to treat their patients. So we haven't seen any change in utilization patterns that I know of, and I would probably to hear about it if we did um from uh who was the other selling environment i think selling environment no i don't you've seen a material change the selling environment but obviously if this goes on for months and months and months it's just going to be pretty shitty yeah that's fair

and then a last one i know uh maybe but maybe you might not want to give any color there but just in terms of like as we think about pre-segment you know for modeling purpose any directional guidance you want to provide in terms of how should we think about the growth at for each segment in fiscal 25 compared to your overall purpose fiscal 25 comfort a year compared your overall the revenue guidance for the year any individual segment guidance yeah so and I want to

be clear about the terminology here to lender these are not segments the revenue lines, but I think that's the spirit of your question is more around the revenue lines, right? Yep. Yeah. So, you know, obviously there's costs that are spread across all different areas of the company and we're able to have three different revenue lines. And I think what we've been consistent about in the past in fiscal 2025 is no different is payment processing lags. So that will be the slowest growth rate of the three with an outlook range of 20 to 22%. I think it's safe to say that uh the subscription and related services and network solutions revenue lines

would outpace payment processing thanks guys our next question comes from the line of stephanie

davies with barclays please go ahead hey guys hello from miami thank you for taking my question i had more questions on the profitable client growth so when looking at the the 100 ads for one cue. Is that a question of you being choosier with the pipeline this quarter? You're only pursuing a subset of the opportunities historically cultivated. Then as you kind of refocus on this and rebuild the pipeline, your client growth can pick up to closer to prior levels? Or is this something where we should think or it takes more time to ramp up an AHSC that's more profitable?

Maybe there's more cross-outs. So first of all, I mean, I think one thing that's important to know is many of these clients, this is months in the making, right? And if you think about our go-to-market strategy, so this was something that we went about over the past couple of years and really starting to look at the returns, and obviously the environment changed last year, and look at the returns we're getting. So this is sort of now you're seeing the output of that shift. And, you know, I think we're constantly looking at that and looking at obviously cost of capital is different. I think to Jill Lender's question, we'll keep you updated as things go, but I don't think they're going to dramatically change. We feel pretty good about the decisions we made last year that led to the clients we added this past quarter and then the 100 plus that we expect to get in one queue. But I think in this relates to Joe's question earlier too. Think about it as we're trying to drive lots of good client retention. We're trying to drive revenue per client. We're trying to drive profitability. And so that's, you know, for the the next quarter, that's 100 plus. If it's higher or if it's lower, it will be through the lens of

those metrics that I just talked about. Helpful. And for the SDR count, just to clarify before I got my question, did you say 107? Correct. For provider? Yes. That's just on a provider organization that's right does that comp to the 175 last quarter so a 40 percent decline

he's looking in his notes yes hold on it costs to 100 it comes to 139 last quarter a lot of those which is the stout same number right so is there did this spur a layoff as you

had this new focus on on kind of a certain subset of your clients or is there any opportunity to remap your SDRs that maybe historically had a less profitable channel

assignment down market. Or those SDRs, you know, have graduated to other

roles in the organization. And there's general attrition in that role as well.

Okay. All right. Super helpful. Thank you.

Yep.

Our next question comes from the line of Scott Schoenhaus. The key back. Please go ahead.

Hey, Haim and Balaji, thanks for taking my question. So, Haim, you seem pretty happy, and you're executing on your go-to-market strategy. Your team's, you know, rapidly building out solutions, helping the needs of clients. Just want to follow up on the change healthcare. Over the last three weeks, have you guys been able to deploy new solutions for your clients to help mitigate the change health care issue. And then also on the payment side, wondering if you're seeing any unusual activity over the last three weeks.

So I don't think it, so to answer your question, Scott, around have we been able to play new solutions? I'd say they've mostly been new solutions to our clients, but some of our newer products have started to get more adoption. if and, you know, if they use some of the change products for payment collections on the back end. And we've just prioritized making sure those clients get access to those products as soon as possible just so they could keep operating their business. But all in all, I wouldn't say we've built new products just for helping these clients. It's mostly been accelerating rollout of certain products that have been built for – being built for often years. And what was the other question? Scott, what was the other question?

That change in payment volume? Just on the payment side, have you seen any behavior changes, I guess, over the last three weeks on the payment side? No.

No.

Nothing to call out. Okay.

Thanks very much, guys.

Yep. Our next question comes from the line of Jeff Garrow and Stevens. Please, go ahead.

Yeah, good afternoon. Thanks for taking my questions. I want to ask about network solutions revenue in that business. And my rough math says network solutions revenue per visit was up about 5% in FY24. So I want to see if you would call out any key driver among mixed pricing or adoption to drive that per-visit growth and also to put a strategic lens on it. Any comments on what the runway is for network solutions to continue to create additional value for your life science partners?

So we think it was a mixture of all, I would say probably a mixture of all of the above, Jeff, that drove continued success. and a lot of that was investment in product and execution of team and, you know, thoughtful use of the network. We do expect our life sciences clients to be the driver of our success,

moving growth, moving forward. Yeah, and Jeff, I think you could actually go back to one of your earlier questions. I wish I could remember who asked it, but I think I really talked about just the power of the network being bigger and thus providing the right relevant content to the right patient. And we have, you know, a lot more opportunities to do that and a lot more brands. And I think we put in our slide deck, you know, we're working with over 90, 90 brands today.

I appreciate that. You know, great to see the additional value being driven across a bigger base of visits on the network. And maybe to follow up a little further on this thread, you've given the SDR count and talked about the kind of priorities there, but maybe you could talk a little bit more about your investment in sales and marketing in network solutions is is there incremental investment there and you know how should we think about the ability to work with more brands and and create and drive cross-selling of more products um that our life sciences you

know go to market team is they're rock stars um and we expect to keep investing in them And they have, you know, frankly, they work hard, they're fun, and we expect them to continue to be a growing part of our organization. But we also expect to keep getting significant leverage off those organizations, both our provider and our life sciences teams.

You know, we're proud of them. They're doing really well. and and Jeff I mean let me just point out that that that you know team that the revenue associated with that area was you know sub twenty million dollars the first year when we went public and our entire sales and marketing expense that year was thirty two million dollars so I mean investments have been made to Himes point we'll continue to do that but significant ones have been made got

it thanks again for taking the questions our next question comes to the line of Ryan McDonough, a D-Dub company. Decent. Go ahead.

Thanks for taking my questions, and congrats on a nice quarter. As we think about the focus on more profitable prospects, is there any portfolio management going on where you're looking to proactively turn unprofitable customers? And as we think about the Freesia Fest sort of event, is this sort of like a – would you consider this kind of like a sales kickoff where you can kind of re-strategize the go-to-market motion to try to drive and deliver larger initial lands or better cross-sell motion in the effort to drive more profitable growth?

So I'll start with FreesiaFest, and then I'm going to ask you about the first question because I've already forgotten it. So FreesiaFest was into sales kickoff. it was our first all company meeting you know we've done in seven years and it was just really important to bring the team together just because the company has changed so much in the last seven years and a lot of teams that work collaboratively with each other didn't get a chance to meet each other uh very often as as we're as i should remind all of our stakeholders we are a fully virtual company. So this is, and it was a significant investment, but it also allowed us to really talk about our mission vision and what our values were, along with talking about moving beyond intake. And so, yeah, we talked about the go-to-market motion, but we also celebrate our engineering team, and we celebrate our network solutions organization, and we celebrate our support team that's on the front lines. So this isn't just about, you know, our go-to-market emotion this is about our organization and the people that make it make it valuable and make it all happen when your first question was well you know portfolio management I think we're always doing that we think about capital allocation regularly as an organization where we continue to invest and where we where we double down on that investment even or triple down and other areas where we pull back a little bit and try to drive better returns from the investments that we've already made. And I don't think our view is pruning clients. I think our view is, you know, really making sure that clients that we do have get the most value out of being appreciate clients.

And maybe just a follow-up, I wanted to ask about PAM. Obviously, it's a longer-term opportunity here, but, you know, given the inclusion of the MIPS calculation this year, just curious how you're going about, sort of trying to get that in the hands of more physicians to sort of really start to drive that greater usage to create more maybe opportunities for 2026 and beyond. Thanks.

So, just for everyone's edification, the PAM is the patient activation measure and it's a performance measure that, you know, we are the owner of the license. From a go-to-market motion, there's a whole team that's really working with our provider clients in getting it live and on. We're performing hundreds of thousands of PAMs on a regular basis. I think we have a lot of clients that have already put up their hands. We're always adding more. And, you know, that body of work is still in its early stages. And I'm getting a no now, we've already have over a million unique patients that have done a PAM. So we feel good that the body of work and the data that we're going to start producing will help help further you know the our view and and you know generally in the walk community view that driving activation drives

better outcomes all across the board yeah and Ryan in addition to the MIPS program that you mentioned you know we have spent a lot of time with the kidney care community the kidney care choices program and we're you know help them drive a lot of great results we think excellent thanks for the call our

Our next question comes from the line of Aaron Kimson, which is JMP. Please go ahead.

Thank you for the question. I'm sure you guys saw that General Catalyst announced the intent to buy Summa Health in Northeast Ohio early in January with the thesis of kind of building modern tech-enabled healthcare delivery platforms at scale. So, Haim, I'm wondering if you could share your thoughts on nonprofit networks slipping before profit over time and the opportunities and risk you see there for freesia and then secondly from a patient care perspective and as someone frankly who was born in that health care system and grew up in it um i'm curious how you think about the potential of these types of transactions

to drive better patient outcomes thank you um all right so i'm going to tread carefully on this because i tend not to publicly give a lot of these views but i would say that whether it's a health system is nonprofit by tax capture or for-profit I think they still have to be able to provide great care and they do often and not you know frankly do it at a loss make right so that they can keep operating the business and and what we're really talking about the difference between for-profit and nonprofit is their tax status but we have you know if you look at ambulatory care all across the country there's unbelievably dedicated professionals that operate in a for-profit manner that deliver care across the manner and there's nonprofits and I think you know America's healthcare system is able to support both nonprofit and for-profit care delivery systems and you know there's cases like I we have clients in the for-profit space that are just doing amazing work for their clients and for their patients. So I actually think it has more to do with the organization than it's taxed.

That's really helpful.

If there are no further questions, I will now turn the call back over to our team for closing remarks.

I want to thank everyone for listening and supporting Freesia, and we look forward to seeing all of you in the coming months. and I hope everyone has a really nice spring and I'll talk to you soon. Thank you.