Phreesia Inc Q3 2025 Earnings Call Transcript

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

Question: Jailendra Singh - Truist Securities - Analyst : Congratulations on a strong quarter color and a very impressive margin guide for fiscal '26. Obviously, profitability and free cash flow are extremely important, we love that. But I'm just curious, how did you go about balancing between the goal of more than doubling our EBITDA margin in fiscal '26 and reinvesting some of the profitability back into the business to push top line growth higher?

Question: Jailendra Singh - Truist Securities - Analyst : So basically, I mean, your EBITDA margin outlook reflects like almost double the margin you're doing this year, which is pretty impressive. But just trying to understand how did you go about balancing between the goal of doubling your EBITDA margin and reinvesting some of the profitability back into the business to push top line higher? Just trying to understand that your thought process of revenue and profitability balancing for next year?

Question: Sean Dodge - RBC Capital Markets - Analyst : Maybe Balaji, just going back to the comments around continuing to drive higher revenue per AHSC. If we think about sales and marketing expense, is there any update you can give us on are you continuing to change the mix in how those dollars are being spent? Are you continuing to allocate more toward cross-selling and network solutions and away from new clients? And then any quantification you can give around how much reallocating or shifting you've done there over the last year so how much of each of those buckets changed?

Question: Scott Schoenhaus - KeyBanc Capital Markets - Analyst : Balaji, I guess this question is for you. The recent -- I guess, not recently, the acquisitions you did this past year access these forums, ConnectOnCall. Are you fully monetizing them now? Can you give us an update there? And then maybe your strategy on how you think of subscription revenue per provider client in the coming quarters?

Question: Jessica Tassan - Piper Sandler - Analyst : Congrats on the quarter and the strong guide. I was hoping you could talk a little bit just about the network solutions selling season in fiscal '25. Maybe what drove some of the strength in fiscal 3Q? Any specific tailwinds related to Part D? And then I'm hoping you can describe some of the feedback you've heard from your pharma customers regarding the appointment of RFK to lead HHS, how are you and your customers kind of thinking about and delineating between marketing and education because in our view, it's kind of an important distinction.

Question: Jessica Tassan - Piper Sandler - Analyst : Yes. Just how are you thinking about the appointment of RFK to lead HHS? And are you and your pharma customers kind of thinking about delineating between pharma marketing and pharma education. Thanks, appreciate you addressing.

Question: Matt Shea - Needham - Analyst : This is Matt Shea on for Ryan. Congrats on the nice quarter here. Wanted to double-click on MediFind. Good to hear about the traction with the number of manufacturing clients going live with campaign. Curious just about some of the mechanics around the campaigns. How long are these campaigns typically? And any color on the ROI of these campaigns or how that's trended so far versus expectations? And then how is that kind of building a pipeline for incremental partners from here?

Question: Jeff Garro - Stephens - Analyst : I wanted to ask a little bit more on the FY26 outlook and on the profitability there. It seems to imply a very strong incremental EBITDA margins equivalent, if not better, to your gross margin percentage. So I wanted to ask if strong incremental gross margins on roughly flat operating expenses as the right framework think about the FY26 EBITDA outlook? Or if you've identized some incremental operating expense efficiencies.

Question: Jeff Garro - Stephens - Analyst : Yes.

Question: Daniel Grosslight - Citi - Analyst : Congrats on the strong quarter here. I wanted to just ask about the pipeline again. I guess more broadly speaking, in terms of total LTVF customers. I think last quarter, you mentioned that in the first half, total transaction value was about 20% larger than the first half of last fiscal year. I was hoping you can provide an update now that we're a little bit later in the selling season on how things are trending for the second half of the year.

Question: Jared Haase - William Blair - Analyst : This is Jared on for Ryan Daniels. Balaji, maybe I just wanted to follow up from an earlier question on the Network Solutions side. And I think you mentioned having a little -- a little bit better visibility at this point with pharma customers on that network solutions business. Just wanted to clarify, I'm curious, is there anything in particular that's driving that? I assume that, that would mean sort of budgets are you're getting finalized a little bit earlier in the cycle. I'm wondering, do you think that's, I guess, a macro trend across the board for pharma? Or do you think there's something unique to Phreesia where maybe the platform is, I guess, moving up in priority relative to other tactics.

Question: Will Jellison - D.A. Davidson - Analyst : I wanted to ask specifically about the subscription business and just get an update from you on what we're seeing with respect to important drivers of that line, like gross retention, price cross-sell and volume on a per AHSC basis? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 09, 2024 / 10:00PM, PHR.N - Q3 2025 Phreesia Inc Earnings Call

Question: Richard Close - Canaccord Genuity - Analyst : Yes. Congratulations. Maybe a follow-up on the fiscal '25 guidance. It looks the midpoint came down a little bit. And I think last quarter, you had mentioned the wider range was based on just work to be done to close the year out on network solutions. So just maybe a little bit color on why the midpoint is moving down a little bit. I guess it's a little surprising since the EBITDA moved up so much and networks higher margins. So any help there would be great.