Definitive's Q3 2025 Earnings Call: Contradictions Emerge on Competitive Strategy, Macroeconomic Impact, and Agency Strategy

Date of Call: November 6, 2025

Financials Results

• Revenue: $60.0M, down 4% year-over-year
• EPS: $0.07 non-GAAP per diluted share, at or above the high end of guidance
• Gross Margin: 82%, roughly flat vs Q3 2024 (adjusted gross profit $49.4M, down 4% YOY)

Guidance:

• Q4 revenue expected $59M–$60M, down ~4%–5% YOY.
• Q4 adjusted operating income $13.5M–$14.5M; adjusted EBITDA $16M–$17M (27%–29% margin); adjusted net income $8M–$9M (~$0.05–$0.06/sh).
• Full-year revenue now $239M–$240M (≈5% decline YOY); adjusted operating income $57.5M–$58.5M; adjusted EBITDA $68M–$69M (28%–29% margin).
• Full-year adjusted net income $34M–$35M; EPS $0.23–$0.24; repurchased ~2M shares for ~$9M with ~$49M buyback capacity remaining.

Business Commentary:

* Revenue and Subscription Trends: - Definitive Healthcare reported revenue of $60 million for Q3 2025, down 4% year-over-year. - Subscription revenues of $58.2 million declined 4% year-over-year, but showed stabilization in absolute dollars and a 2-point trajectory improvement over the prior quarter. - The decline was attributed to pressures on renewals and cautious macroeconomic conditions.

• Data Quality and Integration:
• Definitive Healthcare's data quality and integration strategies were highlighted as key strengths, with a focus on enhancing its data assets and seamless integrations with customer systems.
• The company added a new claims data source, returning to historical levels, and is poised to surpass these levels with another new source later in the quarter.

• This focus on data quality and integration is aimed at improving customer engagement and retention.

  

• Enterprise Customer Growth:

• The company's enterprise customer count grew by 10 to reach 520, with the highest level since Q3 2024.
• This growth was driven by improved data quality and targeted go-to-market strategies, focusing on end markets showing the greatest propensity to invest.

• Retention rates also improved, though it is too early to call the trend durable, suggesting positive customer responses to recent operational changes.

• Digital Activation and Partnerships:

• Definitive Healthcare expanded its presence in digital activation, signing new agency partnerships and launching syndicated go-to-market partnerships with LiveRamp and Bombora.
• Agency expansion is viewed as a long-term opportunity to drive revenue growth, with direct sales support also showing encouraging results.
• The move into digital activation leverages the strength of Definitive's data to enhance customer targeting and marketing effectiveness.

Sentiment Analysis:

Overall Tone: Neutral

• Management reported results "at or above the high end of our guidance" (CEO) and highlighted operational progress (enterprise customers +10) while revenue was "$60M, down 4% YOY" and CFO cautioned on renewals and mid-single-digit cRPO declines excluding a large partnership, reflecting cautious optimism rather than full recovery.

Q&A:

• Question from Jared Haase (William Blair & Company L.L.C., Research Division): You highlighted a med-device competitive win — is that becoming more common versus white-space new logos, and what are the biggest reasons clients switch vendors?
  Response: New-logo wins are improving faster than expected; switches are driven primarily by superior data accuracy combined with easier integrations into customers' systems.

• Question from Jared Haase (William Blair & Company L.L.C., Research Division): How strategically important is the new claims data and what near-term incremental lift might additional claims sources provide?
  Response: Claims data is strategic; they've restored parity after disruptions and plan additional sources to exceed historical coverage, which should materially strengthen product positioning and customer use cases.

• Question from Jayjin (Morgan Stanley): With greater certainty on MFN and tariff policies, have you observed changes in how pharma clients allocate budget or approach spend?
  Response: No tariff-specific impact observed; biopharma faces tighter budgets generally but no notable policy-driven changes.

• Question from Jayjin (Morgan Stanley): Any update on downselling pressure and what's resonating with clients given customer count stability and enterprise growth?
  Response: Downsell pressure remains concentrated in life sciences; total customer count is stable and enterprise customers increased, renewal rates are improving but net dollar retention is still expected to modestly decline.

• Question from Nishad Patwardhan (Goldman Sachs Group, Inc., Research Division): What drives customers to expand from pilots to full activation campaigns using Definitive data (agencies and direct clients)?
  Response: High data veracity and measurable ROI via integrations (e.g., LiveRamp) enable effective targeting and clear lift, prompting customers to scale pilots into larger activations.

• Question from Nishad Patwardhan (Goldman Sachs Group, Inc., Research Division): Do you see specific verticals moving faster from pilot to production with agencies?
  Response: No strong vertical differentiation yet; diversified markets have seen traction and life sciences presents further opportunity.

• Question from Johnathan McCary (Raymond James & Associates, Inc., Research Division): How did the net-new motion perform versus expectations and where is strength versus partners/agency versus direct?
  Response: New-logo performance exceeded internal expectations across end markets; direct digital activations are accelerating while the agency channel is ramping and will scale over time.

• Question from Johnathan McCary (Raymond James & Associates, Inc., Research Division): When adding data sources, should we expect near-term gross margin pressure?
  Response: Q2/Q3 included one-time data-contract credits that won't repeat, creating YOY margin headwinds; onboarding and revenue mix will dictate near-term gross-margin impact.

• Question from Jenny Shen (BTIG, LLC, Research Division): Are customers staying but spending less (upsell vs downsell), and how do you see future growth split between new logos and expansion?
  Response: Upsell/downsells are primarily in life sciences while diversified/provider spaces are healthier; customer counts are stable and future growth will come from both new logos and account expansion, but no 2026 mix guide today.

• Question from David Grossman (Stifel, Nicolaus & Company, Incorporated, Research Division): Given December and January renewal cohorts, what's the range of possible renewal outcomes and how should we think about their impact on 2026?
  Response: Dec/Jan comprise over 30% of renewals; management is cautiously optimistic due to operational improvements but acknowledges those months will materially shape 2026 outcomes.

• Question from David Grossman (Stifel, Nicolaus & Company, Incorporated, Research Division): If cRPO is normalized excluding the large partnership, is it arithmetically feasible to turn positive early next year with strong renewals?
  Response: CFO noted cRPO (≈$165M) is declining mid-single digits excluding the partnership, implying roughly a ~$7M gap to reach flat—net dollar retention is still expected to be down Y/Y.

• Question from Liz (Deutsche Bank): How should we think about cadence across Q4 and Q1, actions to mitigate churn, and any near-term pricing moves?
  Response: Seasonality unchanged; focus is on maximizing Dec/Jan renewals to mitigate churn; no special pricing actions planned beyond normal contractual step-ups.

• Question from Liz (Deutsche Bank): Are you targeting steady or expanding market share over the next year?
  Response: Priority is returning to revenue growth first; once growth is reestablished, they'll pursue market-share expansion.

Contradiction Point 1

Competitive Situation and Customer Retention

It directly impacts expectations regarding the company's competitive positioning and customer retention strategies, which can influence revenue and market share.

Can you discuss the competitive landscape with the medical device company and the reason for their vendor switch? - Jared Haase (William Blair & Company L.L.C.)

2025Q3: Competitive wins like this are more common lately, driven by the integration component and quality of data. - Kevin Coop(CEO)

Are boomerang customers becoming a broader trend, and have there been any changes in the competitive environment or what the company is displacing? - Johnathan M. McCary (Raymond James & Associates, Inc., Research Division)

2025Q2: We're seeing more competition from integrated software platforms and point solutions. - Kevin D. Coop(CEO)

Contradiction Point 2

Impact of Macroeconomic Conditions on Sales Cycles

It involves differing views on how macroeconomic conditions affect sales cycles, which can influence revenue projections and strategic focus.

Have pharma clients changed their budget allocation or spending approaches due to the MFN and tariff policies? - [ Jayjin ] (Morgan Stanley)

2025Q3: No notable changes observed. Biopharma clients face tighter budget constraints, impacting pressures across the life sciences space but no tariff-specific impacts. - Casey Heller(CFO)

What changes, if any, have occurred in the sales cycles for your biopharma or healthcare provider clients compared to earlier in the year, and are there signs of improvement or lengthening? - David Michael Grossman (Stifel, Nicolaus & Company, Incorporated, Research Division)

2025Q2: We are seeing some latency in life sciences, with a longer time to decision. - Kevin D. Coop(CEO)

Contradiction Point 3

Impact of Agency Strategy on Growth

It highlights the role of the agency strategy in contributing to growth, which is an important aspect of the company's go-to-market approach.

How did New Motion perform against expectations, and where is the strength coming from: agencies or direct? - Johnathan McCary (Raymond James & Associates)

2025Q3: New logo performance exceeded expectations, and direct sales are showing initial momentum in digital activation, while agency relationships are building over time. - Casey Heller(CFO)

How does the agency strategy impact the go-to-market approach? Does the agency channel play a significant role in the 2025 forward guidance? - Jared Haase (William Blair)

2025Q1: The agency strategy is a straightforward solution, providing data and helping customers activate it directly or through agencies. Definitive can leverage existing customer relationships for agencies as a go-forward transactional basis. The direct channel is expected to see quicker returns, while agencies may take longer but represent a bigger long-term opportunity. - Kevin Coop(CEO)

Contradiction Point 4

Churn Dynamics and Customer Retention

It involves changes in the company's explanation of churn dynamics and customer retention, which are critical for understanding the stability of its revenue and customer base.

Has downward pressure improved, and what is working with clients? - Casey Heller(CFO)

2025Q3: Our churn dynamics were relatively stable at about 10%. Churn in life sciences continues to be higher than healthcare. - Casey Heller(CFO)

Can you provide insights into year-end churn dynamics and the expected trend magnitude? What factors are driving downsells, and are they concentrated in life sciences? - Jared Haase(William Blair & Company L.L.C.)

2024Q4: 85% NDR reflects challenging conditions, but we're not assuming their improvement in our guide. - Richard Booth(CFO)

Contradiction Point 5

G&A Expense and Operational Changes

It involves changes in the company's approach to G&A expenses and operational changes, which are critical for understanding its cost management and strategic focus.

Are customers staying due to better retention or reduced spending? Thoughts on future growth algorithm? - Jenny Shen(BTIG, LLC)

2025Q3: OpEx for the year will increase modestly, mainly due to the planned expansion of our senior leadership team, which we discussed previously. - Casey Heller(CFO)

Will G&A as a percentage of revenue rise more than product development and sales and marketing expenses? What drives this? - David Grossman(Stifel, Nicolaus & Company, Incorporated)

2024Q4: An increase in G&A is due to expanding the senior leadership team, with more planned expansions later in the year. The focus remains on profitability, with OpEx expected to remain flat year-over-year. - Richard Booth(CFO)