Earnings Call Transcript
Phreesia, Inc. (PHR)
Earnings Call Transcript - PHR Q1 2023
Operator, Operator
Good afternoon. My name is Emma, and I will be your conference operator today. At this time, I would like to welcome everyone to the Phreesia Fiscal First Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. Balaji Gandhi, you may begin your conference.
Balaji Gandhi, Moderator
Thank you, operator. Welcome to Phreesia’s earnings conference call for the fiscal first quarter of 2023, which ended on April 30th of 2022. Joining me on today's call are Chaim Indig, our Chief Executive Officer and Co-Founder and Randy Rasmussen, our Chief Financial Officer. A complete discussion of our results can be found in our earnings press release and in our related Form 8-K 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.phreesia.com. As a reminder, today's call is being recorded and a replay will be available on our Investor Relations website at ir.phreesia.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 and SEC filings, including in our quarterly report on Form 10-Q 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 8-K after the market closed today with the SEC and may also be found on our Investor Relations website at ir.phreesia.com. With that overlay, let me hit a couple of highlights from the quarter in case you have not had a chance to review the earnings release in the quarterly letter. First, our investments continue to drive strong growth in our network and the first quarter average healthcare services clients increased by 33% year-over-year. Second, payment processing revenue in the quarter reflected patient utilization trends that were slightly below our expectations based on our prior experience. We think this trend could persist in the remainder of the year, which is the main reason we're maintaining our revenue outlook for the year at $271 million to $275 million; this range implies growth of 27% to 29% year-over-year. Third, life sciences growth was up a strong 51% year-over-year and revenue was down by a slight $563,000 sequentially from Q4. This sequential trend is consistent with historical periods where you see Q4 to Q1 being flat to down due to seasonality. We continue to be pleased with our team's performance in this area and expect this team's continued performance to contribute to our overall growth in fiscal ‘23. Lastly, we began to see strong operating leverage across all of our investments over the past year, which is why we've taken up the adjusted EBITDA outlook for the year to a range of negative $126 million to negative $122 million, which is up from our prior outlook of negative $154 million to negative $149 million. And before jumping into the Q&A session, let me hand it over to our CEO, Chaim Indig.
Chaim Indig, CEO
Thank you, Balaji, and good evening, everyone. Thanks for participating in our fiscal first quarter earnings call. I'm very proud of our team for their commitment to our clients and their mission. Internally, we think of ourselves as operators who provide an amazing experience across over 100 million patient visits a year that impacts the entire healthcare ecosystem. We're able to do this because of our outstanding and committed product and engineering organization. I want to thank all of them. For 17 years, we have felt strongly that if we build great products and put them in the hands of our clients, we will produce great returns and they will remain happy clients. It's been wonderful to see the net effect of our product and engineering tools working with our go-to-market teams, and we know it will continue to pay dividends for all of our stakeholders in the years to come. I'm sure we'll get deeper into the highlights Balaji touched on, as well as other topics. But let me add, it's been great to be out there meeting in person again, participating with future colleagues, clients, and shareholders in person over the past few months, and it makes a real difference. We look forward to seeing many of you over the summer and the months that follow. Operator, if we could open it up for Q&A now.
Operator, Operator
Thank you. Your first question today comes from the line of Anne Samuel with JPMorgan. Your line is now open.
Anne Samuel, Analyst
Hi, guys. Thanks for the question and congrats on the strong local growth this quarter. I was hoping maybe you could touch on some of the dynamics around revenue per provider client and what caused the decline there?
Chaim Indig, CEO
So are you historically talking about total healthcare services revenue?
Anne Samuel, Analyst
Yes.
Randy Rasmussen, CFO
So the revenue per client you're talking about is $19.2?
Anne Samuel, Analyst
Yes, so the revenue per provider client?
Randy Rasmussen, CFO
Yes. So I would say year-over-year, if you look at the revenue per client, there was nice expansion in revenue per client. And if you look at the subscription per provider client, it's been consistent at $11,500 for several quarters now. So, you know, we see that continuing at that level or higher as we move into the future quarters.
Anne Samuel, Analyst
Okay.
Chaim Indig, CEO
Anne, I was just going to add, Randy brought up a good point, which is we talked to a lot of people about those two lines independently. So if you actually look at subscription per client and payments per client, you sort of see the story that Randy discussed a little clearer.
Anne Samuel, Analyst
Okay. Very helpful. And, you know, is there something maybe you could touch on EBITDA? You raised your EBITDA outlook by more than you beat today, and you've now got an improved timeline for profitability. I was hoping maybe you could talk about what some of those profitability levers are coming in better than you expected?
Randy Rasmussen, CFO
Yes. I think we made some significant investments in fiscal ‘22, and I think G&A is a really good example, where we made some investments. We went live with a new ERP system last year, and we're seeing the benefits of that this year. I think the leverage on those investments has accelerated versus what our expectations were. And also, when we did guidance for the year a couple months ago, there were still questions about Ukraine and some of our third-party providers, and I think we have more clarity there. So, you know, that's also helped us revise our expectations for the year.
Anne Samuel, Analyst
Great. And then just one housekeeping question, I didn't see it in the letter. I was hoping you could provide how many SDRs you have now?
Randy Rasmussen, CFO
It's the same as it was at year-end, that’s 232.
Anne Samuel, Analyst
Great. Thanks very much guys.
Operator, Operator
Your next question comes from the line of Ryan Daniels with William Blair. Your line is now open.
Ryan Daniels, Analyst
Yes, guys. Congrats on the strong start to the fiscal year. Thanks for the questions. Curious, what you're seeing in regard to patient utilization trends? I know you mentioned in your prepared comments it was lower than anticipated. Is that more a dynamic of COVID-related issues with patients coming in? Or is it some of the challenges your client base is seeing in workforce and just retaining or maintaining productivity of the healthcare workers?
Chaim Indig, CEO
Hey, Ryan. This is Chaim. I think we're hearing it's a mixture of COVID hitting their staff and obviously their patients, but also just staffing levels. I think we're seeing that as a combination throughout; I don't think there's any one answer. We’ve seen it fluctuate throughout the entire healthcare ecosystem.
Ryan Daniels, Analyst
Okay, that’s helpful. And I guess my follow-up, I'd love to get an update on your offering for social determinants of health. You specifically called that out in some detail in your stakeholder letter; it’s a topic we focused on a lot lately. And I think regulators and payers and providers are all focused on it. So I'm curious what kind of traction you're seeing there and what maybe future investments or growth outlook for that specific product offering is? Thank you.
Chaim Indig, CEO
Yes, well, you know, Ryan, I just brought that up. The social determinants of health are not just impacting people's health and their wellness and how they get treated, but there are also things that people we found working for us are often having a hard time bringing up that they want to address, whether it's food insecurity or domestic violence or having a safe place to sleep. What we really focus on is not monetizing social determinants of health, but empowering our providers to figure out who needs help and how they need help, and making sure we do it at scale in a non-judgmental way. That’s just an important part of doing the right thing. I don’t know what the economic benefit of social determinants is aligned, but I know it's just the right thing to do. People go with the healthcare to do the right thing, and we will keep doing that as an organization.
Ryan Daniels, Analyst
Okay. Appreciate that. And Chaim, congrats on the announcements about your best places to work. I know culture is important for you, so kudos on that. Thanks.
Chaim Indig, CEO
It is. This is the only reason we have this amazing company, because of this amazing group of people that are committed. I’m really proud to work with them.
Operator, Operator
Your next question comes from the line of Jessica Tassan with Piper Sandler. Your line is now open.
Jessica Tassan, Analyst
Hi, thank you so much for taking the question and congrats on the strong EBITDA. I just had a couple of questions on the Connects offering. First off, I think we know patients are typically engaging with the intake management interface and self-scheduling, but just curious if Phreesia is primarily interfacing with Connect. Is it the patient, a practice admin, or the provider themselves? And then just if it's the provider, where does Connect kind of sit in the context of the EHR and the provider's practice management interface?
Chaim Indig, CEO
Well, Jess, that was like a very long question, but I think I got it. So you think Connect is awesome like we do, okay, that’s sort of what I've heard.
Jessica Tassan, Analyst
That’s right, I mean, yes.
Chaim Indig, CEO
Alright, so let me see if I can. So you think Connect is awesome like we do, okay? That's sort of what I've heard. Alright, and you're trying to figure out who uses Connect. So for a very long period of time, we do envision Connect relating to the patient, right? Because it’s how they book their appointment, but right now, the vast majority of the connections with Connect are between the provider staff and other provider staff; does that answer the question? Very rarely is it the actual provider themselves.
Jessica Tassan, Analyst
Got it. And so the vision is eventually, though, the patient might be able to access that through the self-scheduling or intake management interface?
Chaim Indig, CEO
You still cannot hear me clearly, but we are a focused company.
Jessica Tassan, Analyst
Okay, got it. And then just are the provider clients who are potentially exclusively participating in the Connect referral network included in the total provider count? Or does the provider have to be a Phreesia intake management and scheduling customer in order to have access?
Chaim Indig, CEO
For a client to be counted, you've got to pay us money. So if they're a client, they're a client.
Randy Rasmussen, CFO
Yes, we count them as soon as the first dollar comes in.
Jessica Tassan, Analyst
That's helpful. And then just finally, in terms of revenue recognition and seasonality of the Connect offering, where is that revenue recognized? I would imagine expenses correlated to the sequential recovery in payment volumes, but just wanted to confirm that that's true?
Chaim Indig, CEO
Yes. I don't think there's a correlation between adding payment volume right now. From the revenue perspective, it's in the subscription number.
Jessica Tassan, Analyst
Got it. Alright, thanks. That's helpful.
Operator, Operator
Your next question comes from the line of John Ransom with Raymond James. Your line is now open.
John Ransom, Analyst
Good afternoon team. I have a couple of questions. First, is there anything to mention regarding the growth trends of smaller clients compared to larger clients year-over-year? Secondly, as we look at the rest of the fiscal year, how should we evaluate the three components of revenue? I know you mentioned that Life Science is seasonal, but is there any insight on how these three components interact, and whether it follows the same pattern or a different format? Thank you.
Chaim Indig, CEO
I think I'll answer the first part, which is that we think beyond just our larger clients. I've mentioned this before, but I appreciate the opportunity to reiterate. We value all clients, big and small. We still have some challenges, but as long as you need assistance, we'll be ready to provide it. Historically, we've seen this commitment reflected in our network's growth. Now, what was the other question?
John Ransom, Analyst
Time and revenue.
Chaim Indig, CEO
I don't know how that's going to be.
Randy Rasmussen, CFO
I mean, I think, you know, I mentioned in the letter, the Life Science business typically trends because of the way that the advertising budgets roll year-over-year. Moving from Q4 to Q1 is typically flat or slightly down, and then that builds during the year. I think payments also have some seasonality to it based on patient responsibility, which is typically paid earlier in our year. But I think the patterns are similar to what we've seen in other years.
Balaji Gandhi, Moderator
And John, you know, just I think in terms of what we communicated back at the end of March for the year, the only thing to consider is that the reason we're keeping the guidance where it is, is because of the payment trends that we saw in the first quarter. But otherwise, nothing different from what we saw 60 days ago.
John Ransom, Analyst
If I could clarify that first question, I wasn't asking about who is key to see. I was simply inquiring whether there was anything noteworthy regarding the mix of larger versus smaller clients in that change based on the customer ads you mentioned. I apologize for any confusion.
Chaim Indig, CEO
Yes, okay. Good, I thought you were trying to keep like one more than the other, right? But the answer is no, John, we're not seeing any internal shift in the mix.
John Ransom, Analyst
Okay. Thank you.
Chaim Indig, CEO
Thank you. The answer is the second thing?
John Ransom, Analyst
Much better.
Chaim Indig, CEO
I'm really trying hard here. It's been almost three years, and maybe one day I'll get the hang of this.
John Ransom, Analyst
I know you are. That nobody questions that. Thank you.
Operator, Operator
Your next question comes from the line of Joe Vruwink with Baird. Your line is now open.
Joe Vruwink, Analyst
Great. Hi, everyone. A question on going back to the subscription revenue per client and the trend there; it makes sense given the magnitude that's been onboarded new over the past really five quarters now that you kind of expect a sequentially stable trend. I guess it also follows that we'll reach a point where we should start to expect some expansions out of this cohort. Any updated guidance? Yes, I think it's been a couple of years maybe since dollar-based net retention figures were provided, but maybe how that should look as we think about kind of a mature customer base that is looking to grow?
Randy Rasmussen, CFO
I mean, I think last quarter we talked about the low levels of churn that our customer base is very sticky. I think we continue to have success in upselling and cross-selling. We haven't given net revenue retention numbers since the IPO, but you know, our strategy is still to land and expand, and we still feel good about that.
Balaji Gandhi, Moderator
And you know, I think the other thing, Joe, is you could look at where we were when we went public three years ago on subscription revenue per client and look at where we are this quarter; it's grown meaningfully—it’s just sort of that step function aspect to it. In terms of the opportunity, we still think the TAM is 126,000 per client on average across all types of clients. And so, you know, that's I think it's close to three times in terms of the opportunity, we still feel good about that.
Joe Vruwink, Analyst
Okay. Thanks. That helps. And then last one for me, in terms of the sequencing of maybe quarterly investments for the remainder of the year. Obviously, the guidance kind of entails just annualizing the 1Q EBITDA. Is the right way to think of it, you know, kind of stable with 1Q, OpEx stable with 1Q cost of sales? Or is there anything timing-related where things are maybe a bit lower here in 1Q? And so sequentially, there's still a bit of a step up to go?
Balaji Gandhi, Moderator
Yes. You know, maybe Randy, you want to talk about the gross margins? How do we think about that aspect?
Randy Rasmussen, CFO
Yes, I think if you look at the gross margins, we expect those to expand in the second half of the year. And then I think there are certain expenditures that do have timing, such as corporate events or marketing. Also, you know, we have internally capitalized software, so sometimes that fluctuates from quarter to quarter. So those things all affect the timing.
Joe Vruwink, Analyst
Okay. Thanks, guys. Thank you.
Operator, Operator
Your next question comes from the line of Glen Santangelo with Jefferies. Your line is now open.
Glen Santangelo, Analyst
Hi, yes, thanks and good evening, guys. I just want to follow-up on that sequential EBITDA question previously. If we take your annual revenue guidance, it kind of implies about 6% sequential growth here for the remaining three quarters? So I guess the assumption is that your OpEx is going to grow maybe even faster than that if you're talking about some gross margin expansion in the back half of the year. It was my understanding, and I just want to get an update on the hiring needs of the business. It sounds like we were largely through the investment phase that we talked about on the previous two or three calls. I was wondering if you could update us on that investment phase and how we should think about the operating expenses on a sequential basis from here relative to revenue growth.
Chaim Indig, CEO
Alright, there's a lot. Let me try to unpack that. So are we through the investment phase? The answer is no. We're continuing to invest; we're just now starting to see really good leverage from these amazing people that we've brought on board, and they're doing amazing work. We expect we're continually investing in them and our clients. But will we see the ramp of the number of people that we bring into the organization in the near term at the same pace that we had? I don't think that's the plan. Did I answer the question?
Glen Santangelo, Analyst
Yes. I mean, I guess you did, right? I mean, but, you know, what we're looking at is a loss this quarter of about $31 million in EBITDA, right? And you're guiding basically as a previous question kind of implied, right, $125 million for the year. So that would imply a negative $30 million in EBITDA each in the next three quarters, roughly speaking. So it kind of suggests that expenses are growing essentially in line with revenue. You know, and I get it, we don't have all the details. I just want to make sure we're sort of thinking about that right?
Chaim Indig, CEO
Yes.
Balaji Gandhi, Moderator
Yes. I think Randy talked quite a bit about timing of certain things. So maybe we could try to be helpful in following up in terms of the cadence of this. But it's a pretty tight range as it is. We obviously expect to get better as time goes on.
Randy Rasmussen, CFO
Yes. And so like for example, but, I mean, capitalized software is just, you know, the location of cash flows; is it investing or is it in operating, and that can affect the EBITDA number. So I think we're just, you know, thoughtful about how do we forecast that? Because it’s somewhat based on the investments and what the engineering teams are working on.
Glen Santangelo, Analyst
Yes, perfect. The last question, a lot of people are always asking about the balance sheet and the cash needs of the business. If you look at your cash balance now, you have around $269 million, right? And considering your EBITDA guidance of about minus $125 million, that's close to half of your cash. Based on your fiscal ’25 guidance, it seems you are indicating that you will achieve profitability in fiscal ‘25; is that expected in one specific quarter of fiscal ‘25? How should we consider the cash needs of the business in relation to the three-year fiscal plan you’ve outlined in terms of revenue and profitability in fiscal ‘25? Thanks.
Randy Rasmussen, CFO
That’s a good question. And, you know, we feel confident that the current cash balance and the line of credit is sufficient to finance our plan to achieve successful 2025 targets. If you look at the goal being profitable in 2025, that implies that revenues grow at a CAGR of 28% and then our expenses will grow somewhere 10% to 11% or less to achieve that profitability.
Glen Santangelo, Analyst
Okay. Very helpful. Thank you.
Operator, Operator
Your next question comes from the line of Richard Close with Canaccord Genuity. Your line is now open.
Richard Close, Analyst
Thank you for taking the questions. Congratulations. I wanted to follow up on a recent HFMA survey that indicated around 35% of health systems have front staff and scheduling vacancies. I'm curious how much you believe this is influencing demand for your products. Additionally, when you market your offerings, how significant is it to demonstrate that Phreesia boosts productivity, potentially reducing the need to fill those vacancies in the future? Any insights on this would be appreciated.
Chaim Indig, CEO
Alright, Richard, I don't know whose question you're following up on. But why don't I give, like, a random statistic, like, shot. I think Kharen told me, who runs our marketing organization, that our SDRs last year made 2 million phone calls into healthcare organizations. I think the reason we saw the uptick in clients is not just because they have a need, but we got in front of them and we had a proposition, we had a great product that provided a phenomenal amount of value. But, whether it's the changing nature of the healthcare ecosystem or demand changes, you know, the reason I think we're doing well is that we have a great product and we get it in front of prospects in a very thoughtful and efficient way, and we do it with an amazing group of people. But I don't think, you know, Evan often says, like, fish aren't jumping in our boat, right? We know where to fish.
Richard Close, Analyst
Okay. That's helpful. And then Randy, maybe with respect to fiscal ‘25, I think you said you have multiple levers there to reach the targets. I'm wondering if you could just dive in a little bit deeper and specifically what you're meaning there?
Randy Rasmussen, CFO
Yes, I mean, I think I've talked about the investments that we made. I think G&A is a good example where, you know, we grew that organization to support being a public company, and we're at that level now. As we continue to become more productive, we realize the benefits of that. I think also from a multi-year perspective, we haven't invested – we’re a remote organization. We haven't invested in corporate headquarters. We haven't done any really large transformation or acquisition. So, you know, that enables us to be flexible and not have huge fixed costs in our cost structure. All of that helps us, you know, be levered towards profitability in 2025.
Richard Close, Analyst
Okay. And then final question would be on payment facilitation that ticked up a little bit. Can you just go over that number in terms of how we should think about that for the rest of the year? Is that just basically the mix of new clients that have come on over the last several quarters that drove that up? Just thoughts around that would be helpful.
Randy Rasmussen, CFO
And then you're talking about the pay fac percentage, the 80%?
Richard Close, Analyst
Yes, correct.
Randy Rasmussen, CFO
And I mean, I think if you look at the last couple of quarters, it’s actually been fairly stable. I think, you know, it depends on client mix and if they take our payments or not. You know, of course, some of the larger health systems may have treasury functions where, you know, we're unlikely to win that business, but we try with every new client to win that business, and it's been fairly stable. So I don't expect that number to move a whole lot, you know, in the next couple of quarters.
Richard Close, Analyst
Okay. Thanks.
Operator, Operator
Your next question comes from the line of Ryan MacDonald with Needham. Your line is now open.
Ryan MacDonald, Analyst
Hi, thanks for taking my questions and congrats on the great quarter. Chaim maybe the first one for you; in the stakeholder letter, you talked about the research you're doing in class, and the report really focusing on sort of the misalignment between what patients want and what vendors currently have. And I think one of the examples was around self-scheduling. Just curious, as you kind of have the reporting go out to existing customers, how do you try to drive greater adoption of those additional modules around the self-scheduling to expand, sort of, your penetration or wallet share with those customers and maybe close that gap of misalignment?
Chaim Indig, CEO
Yes. I think what was very telling about this, and we were pretty excited about what you were talking, I’m sorry, I heard the shuffling; I was looking around the paper so I could look at the report, which is on here. It’s a great report, by the way. This is sort of a lens into how we think about building and where we make investments in product. When we talk to clients, we also explain to them what their patients are telling them, right? Sometimes I think there is a push-pull with what people think that they want based on what vendors are telling them versus what patients are saying is important to them. What we found is that having data has been very, very powerful in being able to best represent the needs of their organizations and how we fit into that. It's worked really well for us over the last 17 years, and we continue to invest in that. We hope this gives insight into how we think about our product roadmap and our investments long-term.
Ryan MacDonald, Analyst
That's really helpful. Maybe in terms of my follow-up on the Life Sciences business. I understand sort of a return to normal sequential seasonality before the fourth quarter and first quarter. But as we think about your conversations with customers and what digital marketing budgets look like for this year, are you seeing any changes or maybe a sort of comeback down to normal marketing, sort of, campaign trends post-pandemic as you think about this year? And I think you used the term in the stakeholder letter that you continue to refine your campaigns. Are you seeing any increased scrutiny around, sort of, the efficacy of some of the campaigns that you're pursuing with your customers? Thanks.
Chaim Indig, CEO
Yes, that's a tough question. I think we always assume that there should be a ton of scrutiny around things we do and the value they provide. That’s why we almost all have third-party ROI analysis, why we provide regular reporting to our clients, and why we work with them closely. I would say I'm, you know, and I don't want to speak for all of our clients, but I think there is no rush to return back to paper and pamphlets. I think everyone's questioning how many more ads you could put on network TV. Most people are now just streaming, so I do think we've seen a real change in behavior. Now that we’ve gotten a lot of these clients using us at scale, we're starting to see the net effects of them and their results, and it’s been very promising.
Operator, Operator
Your next question comes from the line of Stephanie Davis with SVB. Your line is now open.
Stephanie Davis, Analyst
Hey, guys. Thank you for taking my questions. Congrats on the client ads. Do you guys have exposure to the overall patient visit market? How should we think about your volume exposure to more discretionary areas in medical, such as dermal, dental? That could be impacted by a potential recession or inflationary pressures?
Chaim Indig, CEO
I don't really have too much data. I don't think we have that much discretionary exposure. Most of our large derm groups are more focused on medical derm than they are on cosmetic. I'd say our dental footprint is almost non-existent outside health systems and larger clients that have some dental practices. We're nominally focused in things that are elective at this point. If that changes, we'll probably communicate that to our investors.
Stephanie Davis, Analyst
Helpful, thank you. And you guys touched on this a little bit on the margin outlook. But I was surprised to see that your adjusted sales and marketing was flattish quarter-over-quarter. Could you help us tease out how much of that was efficiencies, or how much of that was an end to the sales force build-out?
Chaim Indig, CEO
I think most of it was just efficiencies. Like, I don't think we're communicating the end of our salesforce build-out. I think it's more along the lines of, you know, we have a phenomenal group of operators who are shareholders and pay attention to where they spend money. I trust them, and they look at how we spend money. They spend it where it's the best place to allocate for return. That happens when you hire amazing people and empower them to make the right decisions.
Stephanie Davis, Analyst
So is it wrong to assume we flatlined that number for the rest of the year?
Chaim Indig, CEO
I don't think we're saying whether we flatline it or not. But we’re fairly comfortable with our EBITDA guidance and our revenue guidance. So eventually, something's got to give. You can't make just a pie in a pie, and we can only try it so many ways.
Balaji Gandhi, Moderator
Yes, I think Randy's coming around; you know, expenses growing.
Randy Rasmussen, CFO
Yes, I think longer term, they have to grow in the 10% to 11% range.
Stephanie Davis, Analyst
Okay, that’s helpful. Thank you, guys.
Operator, Operator
Your next question comes from the line of Joe Goodwin with JMP Securities. Your line is now open.
Joe Goodwin, Analyst
Great. Thank you so much for taking my questions. Can you just talk about the pipeline for your enterprise clients or your larger health systems? And if you've been making any adjustments to your go-to-market motion for these larger customers?
Chaim Indig, CEO
We don't tend to comment on the pipeline. I think our go-to-market motion for the enterprise has been fairly consistent, Joe, for quite some time, which is build amazing products, show that it works, land them, and then continuously add value, grow the account, and then do it again over and over again. Never stop. Treat all clients, large and small, with the way they should be treated, which is unbelievably well because they take care of our families. That’s how we think about all of our enterprise clients and our small clients.
Joe Goodwin, Analyst
Got it. Okay, thank you for that. And then, I guess, Chaim, are you seeing clients land with more solutions from the get-go, and are you seeing any changes in what solutions these new clients are actually landing with?
Chaim Indig, CEO
Yes. What I am hearing a lot from our team is that we're getting more clients landing with different things as opposed to just intake, right? So, like, we're landing with different products and our clients. That's great to see, especially as our sales organization has gotten more comfortable and has had more reference accounts and more success with different product offerings. Yes, we’re seeing that flat throughout and I always still think, like, you know, we're generally known for intake, you know, because that’s what we've been doing for so long. So it’s still the vast majority will be anyone. And it’s a great product, so that’s good to see.
Operator, Operator
Your next question comes from the line of Jack Wallace with Guggenheim. Your line is now open.
Jack Wallace, Analyst
Hey, thanks for taking my questions and great job in the quarter. Just furthering the analogy from earlier, are there any ponds that are more well-stocked than others where you've had more or less success fishing, you know, and that not necessarily the client size but in some of the specialty areas or geographic regions? Thanks.
Chaim Indig, CEO
Yes. No, I don't think there has been any area. It really comes down to just work, right? We just need a lot of phone calls and send a lot of emails to try to find people who have problems and we could help solve. What we continuously find is that people are so busy, you know, trying to take care of their patients and run their ERs. They’re stat like that. We’re not necessarily looking for solutions. We’re getting out in front of them, ensuring we can deliver solutions that just add tremendous value. It’s been working. This past quarter is yet another testament, as we've had for many years. It usually comes down to just hard work.
Jack Wallace, Analyst
Got it. That's helpful. And in that front, the efficiencies of the sales and marketing team, is there a pullback in some of the travel, you know, in entertainment that would be considered pre-COVID level? Obviously, we hired a ton of people over the last year plus. Now as we're seeing the expense line level add a little bit more efficiency on a, let's call it a per rep basis, is there a baseline level of teeny required to go make the incremental sale, so that's going to carryover going forward? Are we still seeing some of that potentially coming back in the back half of the year?
Chaim Indig, CEO
Yes. I think what our people decide is best travel, you know, say we're big on the entertainment front. So it's one just that’s a fair idea.
Randy Rasmussen, CFO
Yes, we have spent a lot on the entertainment.
Chaim Indig, CEO
No, so it's mostly about travel and making sure we can see each other, because I think that’s important. You don't realize as much as we can; we try to make sure that we can get together in person where it's cost-effective and reasonable. But, you know, I think we're, I think it mostly has to do with, like I said earlier to Stephanie’s question, which is just making sure that we empower our team to make smart decisions. When you hire very good people and empower them to make smart decisions, it works out well for everyone.
Jack Wallace, Analyst
Got you. That's helpful. Thank you.
Chaim Indig, CEO
Cheers.
Operator, Operator
There are no further questions at this time. I would like to turn the call back over to Chaim Indig.
Chaim Indig, CEO
Alright. I would just like to thank everyone for participating, and we look forward to talking to everyone in a couple of months. If you have any questions or comments, please reach out to investors@phreesia.com, it’s a great place to reach us. You don't know Balaji's note.
Balaji Gandhi, Moderator
Alright. Have a great one, everyone.
Operator, Operator
This concludes today's conference call. Thank you for attending. You may now disconnect.