Definitive Healthcare raises 2025 revenue and profit guidance as enterprise customer growth hits new high

Earnings Call Insights: Definitive Healthcare Corp. (DH) Q3 2025

MANAGEMENT VIEW

* CEO Kevin Coop reported, "our financial results for the third quarter...were at or above the high end of our guidance ranges on both the top and bottom line. Total revenue was $60 million, down 4% year-over-year." Coop emphasized improvements in renewal rates and operational discipline, supporting an adjusted EBITDA of $18.9 million with a 32% margin.
* Enterprise customer count grew by 10 to 520, which Coop described as "the highest level we've achieved since Q3 of last year." He attributed this to a focus on differentiated data and an intensified go-to-market strategy.
* Coop highlighted the addition of a new claims data source in Q3 and plans to add another later in the quarter, aiming to surpass historical data levels. He cited a "large multinational biopharma" and a "medical device company" as key customer wins, both choosing Definitive for data quality and integration capabilities.
* Partnerships and digital engagement advanced, including a "first syndicated always-on go-to-market partnership with LiveRamp" and the signing of eight new agencies in Q3. Coop noted a direct sales win with a large teaching hospital expanding its commitment from a test to a mid-six-figure campaign.
* CFO Casey Heller stated, "In the third quarter, we delivered revenue of $60 million, down 4% year-over-year, adjusted EBITDA of $18.9 million, reflecting a 32% margin, and adjusted net income was $9.7 million, resulting in $0.07 of non-GAAP earnings per share in the period, all of which were at or above the high end of our guidance for the quarter."

OUTLOOK

* Heller reported, "For the fourth quarter, we expect to deliver $59 million to $60 million in revenue, a decrease of 4% to 5% compared to the fourth quarter of 2024."
* For Q4, the company expects adjusted operating income of $13.5 million to $14.5 million, adjusted EBITDA of $16 million to $17 million, and adjusted net income of $8 million to $9 million. EPS guidance stands at $0.05 to $0.06 per share.
* Full-year 2025 guidance was raised. Heller said, "We now expect to deliver revenue of $239 million to $240 million for a 5% decline year-over-year."
* Adjusted operating income is expected to be $57.5 million to $58.5 million, adjusted EBITDA $68 million to $69 million, and adjusted net income $34 million to $35 million. Full-year EPS guidance is $0.23 to $0.24.

FINANCIAL RESULTS

* Subscription revenue was $58.2 million, down 4% year-over-year but stable in absolute dollars quarter-over-quarter, with a 2-point improvement in growth trajectory over the prior quarter.
* Professional services revenue showed modest growth and was in line with expectations.
* Adjusted gross profit was $49.4 million, with an 82% margin, described as "roughly flat from Q3 '24."
* Cost savings of approximately $2.5 million were realized, including a $1.5 million one-time benefit from a data contract renegotiation and $1 million in net cost reduction from replacing a data source.
* Deferred revenue at the end of Q3 was $92 million, up 7% year-over-year, and total remaining performance obligations increased 1% year-over-year.
* The company repurchased approximately 2 million shares for $9 million in the quarter, with $49 million remaining under authorization.

Q&A

* Jared Haase, William Blair: Asked about competitive wins and the importance of claims data. Coop responded, "We're continuing to see strength in our new logo area...a big component of that is...the integrations component...and the quality of the data."
* Haase followed up on claims data, and Coop explained, "We have now reached that threshold where we are currently back to parity. But bringing on the additional data to go above historical levels is especially important."
* Unknown Analyst, Morgan Stanley: Asked about budget allocations and downselling. Heller said, "downsells...remains pretty isolated into the life sciences space...But as we talked about a bit last quarter...upsell and being able to increase footprints within the life sciences space...remains challenged."
* Nishad Patwardhan, Goldman Sachs: Asked about agency activations. Coop said, "the progress that we're making around digital activations is a logical next step for our business...we are able to very effectively show the return on investment and the lift that they get from those augmented audiences."
* Johnathan McCary, Raymond James: Inquired on NRR and digital activation. Heller said, "new logo performance actually exceeded our internal expectations...that's been a pretty solid motion for us...we've been making in the renewal rates."
* Jenny Shen, BTIG: Asked about upsell versus downsell and future growth mix. Heller responded, "we've got solid new logo generation. I would expect that to continue. And then again, the expansion within existing accounts...will come back over time..."
* David Grossman, Stifel: Asked about the renewal cohort. Coop stated, "December and January, those are significant cohorts of renewals for us, and we're very focused on that."

SENTIMENT ANALYSIS

* Analysts' tone was largely neutral to slightly positive, with interest in competitive wins, agency expansion, and retention dynamics. Several questions on renewals and data integration indicated cautious optimism.
* Management maintained a confident but measured tone, highlighting operational improvements, customer wins, and prudent expense management. Phrases such as "we are confident" and "we are very pleased" were balanced by "we remain cautious on the macro environment."
* Compared to the previous quarter, sentiment is more visibly optimistic regarding operational progress and customer expansion, though caution persists about renewal headwinds.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for full-year revenue and non-GAAP profit was raised, compared to incremental increases last quarter.
* Enterprise customer count increased after a period of stability, and improvements in renewal rates continued.
* Management tone shifted from cautious optimism to increased confidence, specifically emphasizing positive trends in enterprise wins and digital partnerships.
* Analysts' questions reflected ongoing concerns about renewal rates and upsell pressures, similar to last quarter, but with more focus on the impact of recent strategic initiatives.
* Strategic priorities remain centered on data quality, integration, customer retention, and digital engagement, with tangible progress reported in each area.

RISKS AND CONCERNS

* Pressures on renewals, particularly in the life sciences sector, remain a key challenge.
* Heller stated, "net dollar retention will be down year-over-year, and that's going to have an impact."
* Macro environment uncertainty, including funding, interest rates, and regulatory factors, continues to affect client budgets and renewal cycles.
* Management acknowledged the critical importance of the December and January renewal period for shaping 2026 performance.

FINAL TAKEAWAY

Definitive Healthcare's Q3 2025 call highlighted strong enterprise customer growth, solid cash generation, and operational discipline, supporting a raised full-year outlook for both revenue and profit. Management underscored progress in customer retention, digital partnerships, and data asset expansion, while maintaining a watchful stance on macroeconomic challenges and renewal headwinds—especially in the life sciences segment. The company remains focused on executing strategic initiatives to build long-term shareholder value and return to consistent top-line growth.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/dh/earnings/transcripts]

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