Waystar Holding Corp Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Adam Hotchkiss - Goldman Sachs - Analyst : Great. I guess just to start, I would love to get a breakdown on the outperformance in the quarter. I know, historically, we've talked about outperformance from change. We've talked about patient payments being elevated relative to historical norms. And I know you've guided to that normalizing this year. I'm just curious what happened in Q1 and sort of what's embedded in the guidance from a component perspective as we think about growth.

Question: Saket Kalia - Barclays - Analyst : Okay. Great. And nice start to the year. Matt, maybe for you. The number that jumped out to me the most in the press release was the net revenue retention at about 114%. Could you just maybe dig into what products are maybe driving that cross-sell success? And what do you think is driving that?

Question: Brian Peterson - Raymond James - Analyst : Congrats for a really strong quarter. So I know you mentioned the $10 million in revenue impact from change this quarter. But I'm curious, how big of a factor is the security and really the time to implementation that you guys are referencing in terms of moving deals through sales cycles. And I'd love to understand maybe the nature of these customer conversations and how those have changed over the last 30 days. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2025 / 8:30PM, WAY.OQ - Q1 2025 Waystar Holding Corp Earnings Call

Question: Allen Lutz - Bank of America - Analyst : Just one for Matt, really a follow-up on the last question. around RFP activity. I guess, Matt, you mentioned you talked about really strong RFP activity in the second half of last year with prospects like hospitals and health systems. I guess, has anything changed more recently due to tariffs? Can you talk about your recent conversations that you're having as part of these prospect meetings? Has anything changed at all? And then you mentioned conversations around new AI buckets or new areas of spend there that are outside of the traditional health IT buckets, how big in terms of dollars relative to the traditional health IT buckets, is that spend? And then -- has that unlocked at all? Or is that something that's sort of on the come?

Question: Allen Lutz - Bank of America - Analyst : No problem at all. So a two-part question. So really a follow-up to the last question. Can you talk about the recent RFP activity with prospective hospitals and health systems. And have those conversations changed at all as it relates to the prospect of tariffs? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2025 / 8:30PM, WAY.OQ - Q1 2025 Waystar Holding Corp Earnings Call Have those conversations been pushed out? Or is it really the same conversation that you're having with those prospective customers? And then second, Matt, you mentioned new AI buckets of potential spend there is outside of the traditional health IT allocation. My question is how big is the allocation to that? And has any of that spend been deployed? Or is that all prospective and forward-looking?

Question: Jailendra Singh - Truist Securities - Analyst : Congrats on a strong quarter. I was wondering if you could provide any update on 30% of your change related customers pursuing cross-sell opportunities you flagged on the last call. Is there any change to that figure? And do you see any of that benefit flowing through this year? And related to that, we have been hearing is that several providers who temporarily switched to other vendors last year went back to chain because of the existing contracts with change. And now as these contracts are coming up a renewal, these providers have been more actively evaluating other alternatives. Have you seen any of that playing out yet? And would you consider something like that as incremental to your low double-digit long-term growth rate? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2025 / 8:30PM, WAY.OQ - Q1 2025 Waystar Holding Corp Earnings Call

Question: George Hill - Deutsche Bank - Analyst : Yes. I've got a quick 2-parter here. I get that everything is going right and well with the business, but you guys have kind of called out recession risk a couple of times in prepared commentary. I wanted to ask, are you seeing anything that kind of makes you bring up the risk -- like are you seeing any type of lengthening sales cycles? And kind of has anything in the macro changed what clients are demanding have you guys from a product or functionality perspective? I know that you guys brought up AI. But is there -- like has the macro like made clients pivot from like maybe stronger solutions around patient self-pay or ability to pay tools? Like I'd just be interesting if the macro has changed like which widgets clients are looking at and kind of what you guys are seeing on sales cycles.

Question: Ryan Daniels - William Blair - Analyst : I wanted to ask another follow-up on artificial intelligence. Matt, you mentioned Black Book earlier and also saw a recent survey they had out talking about providers moving a lot more of the outsourced RCM back in-house. And it seems like I is the driver for that because some of the BPO operations where maybe you needed big OUS staff of billers and coders are really becoming obsolete with artificial intelligence. So I'm curious if you think either in the near-term pipeline over the long term, that's a trend that could benefit you by kind of bringing some of that business back to the client base and then you selling a software solution to address that.

Question: Richard Close - Canaccord Genuity - Analyst : Congratulations on the strong start to the year. Just on -- staying on the AI. I'm curious how you're thinking about it. Is this really a maybe a market share gain, new client win opportunity or a same-store growth, more same-store growth opportunity. And I'm curious as people use these products, are you -- are you just letting the clients use them get a feel of the capabilities and the improvement in ROI as you're talking about and then you come back behind and reprice -- reprice their contracts? Or are these add-ons to existing contracts? Just trying to get a better feel of it.

Question: Anne Samuel - JPMorgan - Analyst : Congrats on the great results. You guys see your leverage target a lot sooner than we were anticipating. And now that you're there, I was wondering if maybe you could just talk about how you're thinking about adding to your existing portfolio through M&A.