Good morning, ladies and gentlemen, and welcome to the Freesia First Quarter Fiscal 2026 Earnings Conference Call. At this time, all participants are in a 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 morning and welcome to Freesia's Earnings Conference Call. for the first quarter of fiscal 2026, which ended on April 30th of 2025. 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 before the markets opened 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 quarterly report on Form 10-Q that will be filed with the SEC later today. 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, such as adjusted EBITDA and free cash flows, 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 8K filed before the markets opened 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, Jaime Indig.

Thank you, Balaji, and good morning, everyone. Thank you for joining our first quarter fiscal 2026 earnings call. I'd like to thank and congratulate all my Freesia colleagues for a strong start to the fiscal year. The lawsuit will cover the results and update outlook. First, I'd like to provide a few insights into where we are in our positioning for the future. Our focus remains to continuously deliver valuable and scalable products that drive meaningful outcomes for patients and providers. Products such as appointment readiness, postscript engagement, and enhanced bill pay were developed and introduced with long-term value in mind and are already showing measurable impact across the network. AI is being integrated across all aspects of our organization and our current and future products. We believe we are well positioned to continue to grow our network through product-led growth. Through our strong balance sheet and growing free cash flow, we are also well positioned to allocate capital in ways that drive long-term shareholder value. I'll now turn it over to Balaji to review our results and updated outlook.

Thank you, Haim. Let me begin with a review of our first quarter financial performance and we'll then dive into our outlook for fiscal year 2026. Revenue was $115.9 million, an increase of 15% year over year. We ended the quarter with average healthcare services clients of $4,411, an increase of $70 from the prior quarter and $346 from the prior year. Total revenue per average health care services clients was $26,283, up 6% year-over-year and up 4% quarter-over-quarter. Moving on to profitability, adjusted EBITDA was $20.8 million, dollars, an increase of 16.7 percent year over year, with an adjusted EBITDA margin of 18 percent. Now turning to the balance sheet and cash flow. We ended the quarter with 90.9 million dollars in cash and cash equivalents. This compares to 84.2 million dollars in the prior quarter. We maintained positive operating cash flow and positive free cash flow for the fourth consecutive quarter. Operating cash flow remained positive at $14.9 million, up $15.6 million year over year. Free cash flow remains positive at $7.5 million in the quarter, up $13.7 million year over year. We expect that the magnitude of improvement on a quarter-to-quarter basis to vary based on specific timing of invoicing and payments, which you can see in the working capital along with capital expenditures. Our first quarter results demonstrate our team's focus on growing our network, expanding our offerings, and driving operating leverage. As our cash position continues to grow, we will remain opportunistic and flexible in our approach to deploying cash to profitable growth and value-enhancing opportunities as they arise. I would like to thank all of my Freja teammates for their contributions. Transitioning to our financial outlook for fiscal 2026. We are maintaining our revenue outlook for the fiscal year 2026 at a range of $472 million to $482 million. We are updating our adjusted EBITDA outlook for fiscal year 2026 to a range of $85 million to $90 million from a previous range of $78 million to $88 million. That's a $4.5 million increase from the prior guidance midpoint. The revenue range provided for fiscal 2026 assumes no additional revenue from potential future acquisitions completed between now and January 31st, 2026. We are reiterating our outlook on AHSCs to reach approximately $4,500 in fiscal 2026 and for total revenue per AHSE to increase in fiscal 2026 compared to fiscal 2025. Operator, I think we can now open up the lines for the Q&A session.

At this time, if you would like to ask a question, press star, then the number one on your telephone keypad. We ask that participants limit themselves to one question and return to the queue for one follow-up if necessary. We will pause for just a moment to compile the Q&A roster. Your first question comes from Anne Samuel with JPMorgan. Please go ahead.

Hi, guys. Congrats on the terrific quarter. You know, maybe just starting with network solutions, you know, you continue to see really, really nice growth there. And I was hoping maybe you could just speak to what your conversations with customers have been like in the current environment.

And is there just any hesitancy around decision making like we've heard from others you know realizing that you've been more resilient i would say than others you know could through some of the prior macro volatility that we've seen so just curious to hear any thoughts on how you're thinking about this line in the current environment thanks yeah annie um thanks for the question i think you know this is probably something we've talked about the entire time we've been public i mean it's really just a testament to the team we have um we have a great team from you know all aspects of of the life sciences and i think the other thing is if you think about Haim's opening remarks, us being a product-led company, it really does also start with the product development end. And so having those products and then having the network solutions team that can go out and deliver the product and sell it is really what's driving that result. So nothing really new to report, but yeah, nice to see those results in the quarter.

That's really helpful. Thank you.

Your next question comes from Halandra Singh with Truist Securities. Please go ahead.

This is Halandra Singh from Truist. Thanks, and good morning, everyone. So congrats on a strong quarter. I want to stay on the macro topic. You touched on pharma solutions and network solutions business, but also any thoughts on the providers market? I mean, clearly those guys are also immune to all the recent developments. Keeping that in mind, how have your conversations evolved with these clients over the past couple of months? And are you capturing any incremental uncertainty in your outlook in any way?

So, yeah, just so I make sure we understand the question, Jolinder, you're asking about the provider in market and just how the conversations have been? Yeah. Yeah. I'll start to make, you know, if I want to say anything, Ken. Again, probably not a whole lot new there. I mean, really, you know, driving the product. And I think, you know, Freesia, you know, over at history has always had, you know, a focus on trying to build and deliver products that are driving a lot of value. And that's usually where, you know, a lot of the conversations are anchored around. I don't think things are, you know, easier, harder. I mean, it's always been a competitive market. All the, you know, opportunities are competitive for us and that continues. But I think, you know, the thing we'd want you to take away is just the products we have and the value they bring. And I think you can see in our results that we're still, you know, adding a lot of new clients and generating a lot of revenue off of existing ones. Thank you.

Your next question comes from Jessica Tassan with Piper Sandler. Please go ahead.

Hi, guys. Thanks so much for taking the question. So, can you maybe talk about just the visibility that your network solutions customers have into ROI, campaign success, how much flexibility they kind of have to titrate up or down campaigns, or maybe switch types of media. Just interested in, like, what data they have on what time frame, and then sort of, you know, to what degree are they able to amend or modify campaigns in real time? Thanks.

Hey, Jess, it's time. time, almost all of our campaigns with life sciences clients have to go through an MLR process or medical legal review, and it's like that for everyone in the industry. And then those get submitted with FDA. So all of our programs, yes, they can titrate up and down depending on the different streams, and we run thousands of streams of different programs throughout a year. And, you know, we pace them based on both the appropriate patient and the needs of the pharmaceutical or biotech company or life sciences company that we work with. And often throughout the year, you know, as dollars become available, they'll often titrate them higher. and we're more often than not the platform that is the receiver of dollars throughout the year just because of our very strong ROI and our ability to deliver results and, frankly, the fact that our scale keeps growing.

Awesome. Thank you.

Your next question. Glad you made me speak. He says I never speak anymore on any calls.

Your next question comes from Richard Close with Canaccord Genuity. please go ahead.

Yeah, thanks. Congratulations on a great quarter. Maybe talk a little bit about sales and marketing and the GNA lines. Obviously, great performance there in the first quarter. I was curious if there's anything specific to call out, and then as we think about the rest of the year? Maybe anything to keep in mind as we progress through the remaining quarters?

Yeah. Thanks, Richard. You know, I think you were probably one of the people, maybe if you go back three or four years, when we made the big upfront investment, Richard, you remember a lot of the sort of math, sort of thinking around returns that we would get on all those investments and payback periods and how, you know, our view was we could grow into them over time. I think what you're seeing is just that. And I think you're seeing it in the numbers. I think it's a testament again to the team because we made a lot of those upfront investments. We've obviously, you know, continuously made changes to how the team is composed and how the go-to-market is and introduced some new products along the way. But I think it really does just go back to getting a really good return on that. I think our revenue and EBITDA, adjusted EBITDA outlook for the year, you can, you know, back into what the expense trend is going to be. I don't think it's going to be particularly different within any of these line items, you know, sort of flattish. Okay, thank you.

Your next question comes from John Ransom with RJF. Please go ahead.

Hey, good morning, everybody. Just wondering, as your financial position is getting a little better day by day, are there any kind of potential capital deployments that might make the bar today that maybe wouldn't have been there a year ago or so? And also, just like, are there any end markets that you think are kind of, if we want to get into this end market, it's more of a buy versus build? Thank you.

Yeah, that's a good question, John. And, yeah, you see the cash balance continuing to grow now. I think philosophically, you know, if you're talking about inorganic opportunities, nothing's really changed. We evaluate lots of opportunities. We do it as a team. There's lots of different people at Freesia who, you know, bring up different ideas that we evaluate. We've done a few of them, as you've seen over the years. I think, you know, it's all sort of through the lens of buy, build, or rent. And so there's things that we do in our business that we rent. Obviously, you know, we've built a lot, but the acquisitions we've made, it's just sort of, you know, there's an equation you've got to run through. How long would it take to build it? How much would it cost? And those are the kind of things that we've pursued and will continue to. I think, you know, we obviously have more capital to deploy, but that doesn't mean, you know, the way we look at opportunities is going to be any different. We'll continue to look at them, but, you know, don't feel the need to do anything differently just because we have more capital.

And if you had to go back and look at your acquisitions to date, which one would kind of stand out as a star and which one would say maybe that those did not meet our expectations?

You know, it's like a portfolio, John, and we like them all, but they definitely all have different time horizons. and, you know, when we thought they would contribute. So every, you know, if you just think about it as a portfolio, everything is contributing in the way we wanted it to. You know, obviously we talked about publicly, you know, the last setback we had with the acquisition we did on Connect on Call, but it's really, you know, team did a great job getting that restored and back out in the market. So that probably cost us, you know, some time. And that's probably the only one I call out.

Thank you, sir. I'm sad that Haim didn't say anything, but I'll get over it.

Well, I was excited to answer that question. You did a great job.

I agree.

Your next question comes from Daniel Groslite with Citi. Please go ahead.

Hi, guys. Thanks for taking the question. I'm going to focus on the pavement segment. You know, volume was particularly strong this quarter. I was curious if the later flu season had any kind of outsized impact this quarter, or if there were any other tailwinds this quarter to call out.

Probably just first thing, Daniel, on that, just repeat what we probably said the last multiple calls, which is there's not a lot of fluctuation from things that are other than weather or just sort of the way the days fall on a calendar based on utilization in an office, you know, the days in the calendar, those are really it. The one thing that you should be aware of is we did introduce our bill pay product, our patient bill pay product last year. And so that continues to get traction in the market. And the way that works is, you know, providers, you know, utilizing that product, we believe the way, you know, drives to our businesses is more volume. So we expect that to contribute. I don't think in the first quarter that was anything material to call out.

Your next question comes from William Jellison with D.A. Davidson. Please go ahead.

Good morning, and thanks for taking my question. Pressing rewind real quick, if we look at the fiscal 25-10K, and I've actually showed Freesia adding quite a bit of net new talent to the organization last year, most of which was international. As we sit here today, I was wondering if you could help us understand a bit better Frisia's labor strategy moving forward and how we connect those dots to the kind of expense trajectory we've seen over the last several quarters.

Yeah, William, you may have been newer to the story at that time, but the language in the 10K you're referencing, was a consolidation, really, that we did at the very beginning of the fiscal year. We had always had folks we work with in India, and we consolidated that as freesia India. So, you saw them drop into the headcount number as a consolidation. Understood. Thank you.

Your next question comes from Ryan McDonald with Needham & Company. Please go ahead.

All right. Thanks for taking my questions, and congrats on a great quarter. I wanted to get your thoughts on the proposed No Handouts for Drug Advertisements Act. It aims to eliminate the tax deduction that pharma companies can claim on direct-to-consumer advertising. I'm just curious if one, if the proposed legislation is coming up in conversations with your pharma customers at all, is it resulting in any sort of incremental review on the ROI that freesia would generate if sort of the tax deduction for them is eliminated? And, you know, do you think that this, you know, is troublesome for the business or does it create incremental opportunity that maybe pharma companies move from lower ROI direct-to-consumer channels into freesia, as you think about later this year and into next year?

Yeah, thanks, Ryan. Look, you know, as you know, there's always, you know, legislation floating around topics like this. You know, there's bills that have been introduced this year, including the one you referred to. there's really nothing new to update there. And we would, you know, always take the practice of waiting until something happened. But I think what's probably more important to your question is just thinking about our platform and the value we bring to clients, which is very differentiated. Our platform delivers personalized health content on principles of privacy and consent. And so we feel really good about that value proposition. And there's, you know, really nothing new to report on that for the legislation.

Your next question comes from Jeff Garrow with Stevens. Please go ahead.

Yeah, good morning, guys, and thanks for taking the question. Wanted to return to the network solutions business and talk about the seasonality of that business. Maybe you could remind us what you typically see from Q4 to Q1 in a year and and how that played out this year? And then is there any expectation that the rest of the year network solutions revenue plays out at a different seasonality cadence than what you've seen historically? Thanks.

Yeah, thanks, Jeff. So I think the first thing, just to make sure we bring up, is the visibility we have into the year is the same as it was last year at this time. I think we wouldn't think about it as seasonality so much as if you think about Himes' answer to an earlier question around, you know, value and how we work with our life sciences clients. It's really, you know, there's pacing of certain programs that can cause fluctuations month to month or quarter to quarter. And I think that's, you know, some of what you see, especially as the numbers get bigger for us, the revenue gets a lot larger. But, no, nothing really to call out beyond that.

Thanks for taking the question.

Your next question comes from Scott Schuenhaus with KeyBank. Please go ahead.

Close enough. I'm Balaji, great quarter. I guess my question, I want to steer away from network solutions and focus in on subscription. You know, even if we back out that one-time $1 million benefit from the extra services for one client, we get to a pretty healthy 3.5% growth rate on the revenue per provider-client stat. And that's the best growth rate we've seen since, you know, 2021. Maybe talk about, this is either for Haim or Balaji, maybe talk about how you're seeing the ramp on your modules. You announced last quarter some modules. You're finally monetizing the free on-call this year, which you weren't able to do last year. Maybe can you talk about the ramp in the modules and what you're seeing in terms of client traction?

I mean, Scott, you see it in the numbers, and I think that's how we've always tried to articulate it. And when you look at the total revenue per client, as you pointed out, it's now started to kick up. It's a reflection of exactly that, all those products that have been introduced. causing you know some lift there's still expansion happening within base clients as well and then you know our focus on net new being um clients with with where there's more dollars associated with those clients when we land um with a shorter payback period so it's really all the all the above and i think if you just look at the flow of products it would be unfair to really call out one i think you know in the letters in the last couple of quarters we've highlighted you know three products. And it's really, you know, all those three, if you wanted to ask about new products.

Great. Thanks.

Yep.

Your next question comes from Jared Haas with William Blair. Please go ahead.

Hey, guys. Thanks for taking the questions. Maybe we'll circle back to AI. And I think this has come up on some of the recent calls as well. But number one, just curious if there's any, I guess, incremental to your thinking about the competitive landscape, especially thinking about the potential for new entrants, raising venture capital or things like that. And then I'm also curious, are you seeing any changes in customer behavior around AI? So thinking, is AI maybe becoming a bigger part of RFP processes, or are you even seeing incremental dollars or budget capacity available for AI use cases? Just would love to unpack that a little bit more.

Thanks. yeah um so what i would say is that ai is allowing people to do things that weren't we weren't able to do before and we're seeing the same thing in our products so we're seeing ai be input like just both change how we run our business but also in the products we roll out allowing us to do things that you know 20 years ago emin and i could barely even dream about being able to deploy. And so I think it's giving us a new tool in the toolbox, but clients don't buy AI, right? What they buy is solutions to really complex problems. And what we're seeing, frankly, I think what we're seeing a lot of is really a derivation to more trusted partner, right? So I don't, I think after sort of the COVID boom, a lot of, a lot of provider groups got really burned by smaller VC-backed businesses that really pivoted strategies a couple dozen times and often just didn't have the capital to invest appropriately. And we're seeing a lot of those customers really come back to us and say, we don't really want to bet on a 10-person company that promises us the world. But AI is enabling us to do things within the Frisia platform and across our network that we are very excited for and is driving massive value for our clients. And we think over a very near term, a return for our investors.

That's really helpful. Thank you.

Your next question comes from Aaron Kimson with Citizens JMP. Please go ahead.

Thanks for the question. You disclosed on the subsequent events section of the 10K that on March 13th, the board approved a share repurchase plan for up to 2.5 million shares of common stock. Can you talk about the motivation for the repurchase authorization, the dynamics, whether it's 10B51 or you have a higher degree of discretion, and how you're thinking about utilizing repurchases now that you're consistently generating cash?

Yeah, thanks, Aaron. And that was right after we reported last, so that is a new event. And really, you should just think about it as being opportunistic. Our share price has been very volatile over the time we've been public. And I think as a cash-generating company with a lot of capital, we just thought it was sort of, you know, good housekeeping to have that in place to be opportunistic around the ability to do that if there was some real market dislocation, the share price got to a level where we wanted to step in. But I don't think there's anything to read into it in terms of some, you know, regular sort of change to how we think about capital allocation. That's helpful.

Thank you. your next question comes from gene manheimer with freedom capital markets please go ahead thanks good morning nice quarter great i wanted to just comment on your improvement in free cash flow last few quarters um really positive how do how should we think about cash conversion rates going forward uh and and follow-up is um with respect to payment processing revenue We saw that typical seasonality in Q1 due to more out-of-pockets. How should we think about the cadence of that revenue for the rest of the year? Would it be similar to prior?

Yeah, Gene, can you repeat the second question again?

Yes. Payment processing revenue, we saw a nice seasonal bump up, I guess, due to deductible resets and more out-of-pockets. Is that kind of the right cadence to think about the rest of the year? Would it track similar to prior years?

Yeah. Okay, great. So on your first question, I think it's a bit of a transitional year with the ramp in cash flow with CapEx not ramping as much. So there's a little bit of distortion there. What we can tell you is, if you think about conversion of operating cash flow to free cash flow in fiscal 26, it should resemble what you saw in the first quarter for the rest of the year. I think that conversion starts as the operating cash flow gets higher. There's more flow through in fiscal 27. So hopefully that's helpful. And then on your second question, it's, yeah, I mean, there's, look, there's some noise around the pandemic years, and then, you know, outside of that, there's a step up in the beginning of the calendar year, which for us includes one month of our previous fiscal year in January. There's a bump there, and then it sort of flattens out if you look at the trend in payments over previous years, and that should continue again this year.

Perfect. Thanks a lot.

Yep.

Your next question comes from Richard Close with Canaccord Genuity. Please go ahead.

Yes, thanks for the follow-up. Just on Metafine, it was good to see that get called out here. I'm curious your thoughts in terms of where you think you are in terms of monetizing the offering and then the visits that you talk about in terms of, you know, the people that click on the ads are, you know, uh, actually going and visiting, scheduling a visit. Um, I'm curious, are those scheduled, those visits scheduled with like freesia customers or how should we think about that?

Yeah. So, um, so on the first question, it's think about it as the first inning, Richard. And so I think we have been clear that Medifine is contributing revenue and additional revenue from when we acquired it, which is nice to see. So it's headed in the right direction and we've invested some capital into it, but it's still very early. And yeah, I mean, one of the reasons we were excited about the opportunity to acquire it was that with the the size of our network growing, it does enable patients to schedule visits with providers when they find one on the MediFind platform.

People, look, it's a problem throughout the country. People need help finding the right type of providers to deliver the right type of care. And we think MediFind is a key solution to that problem across the continuum of care. and the feedback we get from patients and providers has been overwhelmingly strong. We think this is a very, very big problem, one where we think we're, frankly, we're halfway through the first inning. So we expect to continue to invest in this over the coming years, but also to become a contributor over the coming years to our business. And I'm sure we'll talk more about it in the coming years. Great.

Thanks.

Your final question comes from Joe Brewink with Baird. Please go ahead.

Great, thanks. Not to make too much out of the non-recurring revenue bump to 1Q, but to the extent you took on some extra work, maybe in support of a unique client opportunity, I wanted to ask if the nature of engagements are maybe changing for Freesia where you start to rethink about supporting customer success.

And really, I guess the heart of the question is with the type of opportunity that is higher ROI and quicker payback, does that account demand something differently from freesia or just generally speaking as part of the planning and go live event? yeah no thanks joe and and look i think the way you should read into this is that's actually and it's disclosed in all of our 10ks over the years that is the related services you know component of that revenue line and it's always been there i we just think it's good practice when you know you you have a quarter to just call something that like that out to be helpful to people to really unpack what's going on in the business but there's no there's not like a shift happening underneath. And it's really, I mean, again, consistent with just trying to add a lot of value to clients. That was an existing client. And we were able to, you know, get that done quickly in the quarter. So, kudos to the team for moving quickly around that. But nothing to call out. We just, again, just trying to be helpful. Okay. Thank you. Yep.

That will conclude our question and answer session. And I will now turn the call back over to Hyman Digg for closing remarks.

Thank you everyone for joining our Q1 earnings call. I hope everyone is doing well and we'll see hopefully most of you in the coming months and we'll talk to you again in about 90 days. Cheers.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.