Definitive Healthcare Corp. · NASDAQ:DH
Definitive Healthcare — Q3 2023 Earnings Presentation
30 slides from Definitive Healthcare's earnings presentation, Nov 2, 2023
Slide 1: Third quarter 2023 earnings presentation
Third quarter 2023 earnings presentation November 2, 2023
Slide 2: Cautionary statement regarding forward-looking statements
Cautionary statement regarding forward-looking statements This presentation includes forward-looking statements that reflect our current views with respect to future events statements may emerge from time to time, and it is not possible for us to predict all of them. Should one or more and financial
Slide 3: Company overview
—— Company overview
Slide 4: Investment highlights
Investment highlights Category-defining software platform 1 for healthcare commercial intelligence 4 Delivered via mission-critical SaaS platform deeply embedded into customer workflow and analytics Large and growing $10B+ TAM in Demonstrated combination of high 2 healthcare market with significant
Slide 5: Rapidly growing market driven by strong healthcare tailwinds
Rapidly growing market driven by strong healthcare tailwinds ESTIMATED GLOBAL HEALTHCARE Healthcare is over 18% of U.S. GDP in 2021 and growing Growth in U.S. ANALYTICS MARKET ($B) 1 healthcare Research suggests overall spend driven by an aging population and the emphasis on healthcare spurred b
Slide 6: Large and underpenetrated market opportunity
Large and underpenetrated market opportunity Life $10B+ sciences HCIT Providers Diversified TAM1 Existing X X X X customer ARR Top Quartile Top Half Top Half All by segment 2.9K+ 100K+ 3.0% Customers today Potential customers Penetrated 1 TAM or “Total Addressable Market” refers to the revenue oppor
Slide 7: Multiple drivers of future growth
Multiple drivers of future growth Acquire new Expand with existing Innovate to strengthen Selective strategic customers customers our platform acquisitions Multiple levers to drive long-term sustainable growth 7
Slide 8: The Atlas Dataset delivers a true picture of your target market
The Atlas Dataset delivers a true picture of your target market At one midwestern IDN in 2021… Adding analysis based on organization- Mapping DH reference and Physician-level claims lens alone dramatically level claims refines the number of affiliation data with claims provides overstates the number
Slide 9: The Atlas Dataset gets your sales team to the right locations
The Atlas Dataset gets your sales team to the right locations where the buyers are A pharmaceutical firm wanted to find the doctors who could Due to centralized billing, 72% of Using claims data alone, sales reps claims flowed through one NPI -- would have gone to a billing office prescribe their dr
Slide 10: Experienced and innovative management team
Experienced and innovative management team CEO Robert Musslewhite Jason Krantz Jon Maack Rick Booth with extensive experience CEO Founder & Exec. Chairman President Chief Financial Officer leading healthcare SaaS companies at-scale FOUNDER & CHAIRMAN with bold vision; named Entrepreneur of the Year,
Slide 11: Selected videos about Definitive Healthcare
Selected videos about Definitive Healthcare Definitive Healthcare Definitive Healthcare Definitive Healthcare corporate “explainer” video product demonstration video introduction (2 MINUTES) (10 MINUTES) (30 MINUTES) Populi product demo Passport Planning & Performance Passport Planning & Performance
Slide 12: Financial highlights
Financial highlights 12
Slide 13: Financial highlights
Financial highlights HIGH AND SUSTAINABLE GROWTH EXCEPTIONAL PROFITABILITY VISIBILITY AND CONSISTENCY INTO LARGE MARKET Platform scale High gross margin SaaS business model $261M 34% 88% 98% Q3’23 Revenue 2022 Subscription Revenue 2022 Adj. Gross Margin1 Run Rate Revenue Growth (2022) Strong land an
Slide 14: Strong and durable revenue growth
Strong and durable revenue growth Annual and LTM revenue ($M) Enterprise customers (# CUSTOMERS >$100K ARR) 538 555 $246 504 $223 $194 $246 417 $223 $208 $166 $166 2021 2022 LTM Q3'22 LTM Q3'23 2021 2022 Q3'22 Q3'23 Total customers 2,800+ 3,000+ 3,000+ 2,900+ 14
Slide 15: Net dollar retention
Net dollar retention All customers 105% NDR 108% NDR 102% NDR Customers 108% NDR 111% NDR 103% NDR 94% of ARR 96% of ARR 97% of ARR >$17,500 ARR 124% NDR 120% NDR 110% NDR 53% of ARR 57% of ARR 61% of ARR Enterprise Customers >$100,000 ARR 2020 2021 2022 Note: See Basis of Presentation for definitio
Slide 16: Growth and profitability
Growth and profitability Historical framework Confidence in drivers Culture of measurement Profitability drivers High gross margins Attractive PROFITABILITY profitability Economies of scale with G&A after absorbing public company costs Investing in sales capacity and product development Growth
Slide 17: Q3 results
Q3 results 17
Slide 18: Q3 performance
Q3 performance $ MILLIONS, except per share info Third Quarter 2023 Guidance Range Comments Revenue - 2% or $1.6 million beat Revenue $65.3 $63.0 - 64.5 14% 10% - 12% Adj. Operating profit – 24% or $3.9 million beat % growth $20.4 $16.0 - 17.0 vs. midpoint Adjusted Operating Profit % of revenue
Slide 19: Key shareholder statistics
Key shareholder statistics Minority Public Shares Interest Combined Comments Key shareholder statistics as of 9/30/2023 3.1M class B shares were exchanged into (Class A Shares) (Class B Shares) class A public shares in the quarter Vested shares 0.1M class A shares issued from RSU vesting Spons
Slide 20: Balance sheet highlights
Balance sheet highlights Comments Cash & Debt – Strong balance sheet positions us to move quickly to seize opportunities Revenue visibility – Subscription revenue model provides excellent forward visibility and predictability cRPO up 7% vs. 14% revenue growth 20
Slide 21: Guidance
Guidance 21
Slide 22: Q4 and FY Guidance
Q4 and FY Guidance (as of November 2023) $ MILLIONS, except per share info Fourth Quarter 2023 Full Year 2023 Revenue $65.5 - 66.5 $251.0 - 252.0 % growth 8% - 10% 12% - 13% Adjusted Operating Profit $17.5 - 18.5 $68.0 - 69.0 % of revenue 27% - 28% 27% - 28% Adjusted EBITDA $19.0 - 20.0 $73.7 - 74.7
Slide 23: Non-GAAP reconciliations & basis of presentation
Non-GAAP reconciliations & basis of presentation 23
Slide 24: Non-GAAP Financial Measures
Non-GAAP Financial Measures We define Unlevered Free Cash Flow as net cash provided from operating activities less purchases of property, equipment and other assets, plus cash interest expense, and cash payments related to transaction, integration, and restructuring related expenses, earnouts, and o
Slide 25: Reconciliation from GAAP gross profit and margin to adjusted gross profit and margin
Reconciliation from GAAP gross profit and margin to adjusted gross profit and margin THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, $ THOUSANDS 2023 2022 $ % 2023 2022 $ % GAAP Gross Profit $53,430 $47,658 $5,772 12% $150,514 $129,224 $21,290 16% Amortization of intangible assets a
Slide 26: Reconciliation from GAAP to non-GAAP operating expenses
Reconciliation from GAAP to non-GAAP operating expenses THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, $ THOUSANDS 2023 2022 $ % 2023 2022 $ % GAAP Sales & Marketing $22,804 $21,184 $1,620 8% $70,929 $66,062 $4,867 7% Equity-based compensation (2,727) (2,260) ($467) 21% (8,297) (11
Slide 27: Reconciliation from net income (loss) to adjusted operating income and adjusted net income
Reconciliation from net income (loss) to adjusted operating income and adjusted net income THREE MONTHS ENDED SEPTEMBER 30, % of Revenue NINE MONTHS ENDED SEPTEMBER 30, % of Revenue $ THOUSANDS 2023 2022 $ % 2023 2022 2023 2022 $ % 2023 2022 Net income (loss) ($248,688) ($6,885) ($241,803) >100% (38
Slide 28: Reconciliation from net income (loss) to adjusted EBITDA
Reconciliation from net income (loss) to adjusted EBITDA THREE MONTHS ENDED SEPTEMBER 30, % of Revenue NINE MONTHS ENDED SEPTEMBER 30, % of Revenue $ THOUSANDS 2023 2022 $ % 2023 2022 2023 2022 $ % 2023 2022 Net income (loss) ($248,688) ($6,885) ($241,803) >100% (381%) (12%) ($276,265) ($30,066) ($2
Slide 29: Reconciliation from cash flow from operations to unlevered free cash flow
Reconciliation from cash flow from operations to unlevered free cash flow THREE MONTHS ENDED SEPTEMBER 30, % of Revenue NINE MONTHS ENDED SEPTEMBER 30, % of Revenue $ THOUSANDS 2023 2022 $ % 2023 2022 2023 2022 $ % 2023 2022 Cash Flow from Operations $9,487 $10,685 ($1,198) (11%) 15% 19% $36,481 $39
Slide 30: Basis of presentation
Basis of presentation TAM: TAM or “Total Addressable Market” refers to the revenue opportunity that we believe is available for Goodwill Impairment: Represents a non-cash, pretax, impairment charge of goodwill due to a decline in our healthcare commercial intelligence platform, a subset of the Globa
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