NRC Health's Q3 2025 Earnings Call: Contradictions Emerge on Capital Allocation, Sales Strategy, and Blackwell Production Timelines

Date of Call: October 28, 2025

Financials Results

• Revenue: $34.6M, up 2% sequentially
• EPS: $0.23 per fully diluted share (adjusted net income)

Business Commentary:

* Strong Financial Performance and Revenue Growth: - National Research (NRC) reported revenue of $34.6 million for the third quarter of 2025, growing 2% sequentially and 8% year-over-year in TRCV to $141.7 million. - This growth was driven by strong sales momentum in both new logos and cross-sell, upsell, and improved gross dollar retention.

• Customer Success and Retention:
• NRC experienced a significant improvement in customer retention, achieving the highest net retention rate since 2020.

• This success was due to a strong focus on reducing TRCV losses and downsells by nearly 50%, as well as expanding with existing customers through cross-sell and upsells.

• Dividend Increase and Capital Allocation:

• The company announced a 33% increase in its quarterly dividend to $0.16 per share, payable in January.

• This move reflects NRC's commitment to a disciplined approach to capital allocation, balancing dividends, share repurchases, and strategic investments to deliver compelling ROI.

• Executive Appointments and Management Team Enhancement:

• NRC appointed Shane Harrison as the new CFO, bringing over 25 years of experience in finance, strategy, M&A, and investor relations from leading SaaS and technology companies.
• This appointment indicates a strategic focus on building a strong management team to support NRC's growth and value creation opportunities.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted momentum: “Revenue reached nearly $35 million” and TRCV rose 8% YOY to $141.7M. Adjusted EBITDA was $10.9M, up 11% YOY with a 31% margin, and leadership cited strengthened retention, strong cross-sell wins and improved gross dollar retention as drivers of confidence and growth.

Contradiction Point 1

Capital Allocation and Share Repurchases

It highlights differing statements about the company's capital allocation strategy, particularly regarding share repurchases, which directly impacts investor expectations and shareholder value.

How do you plan to allocate capital given strong cash flow conversion? - Tricia Byrd (Citigroup)

2025Q3: Share repurchases are off to a strong start this year. Year-to-date, we have repurchased over $600 million of shares. - Trent Green(CEO)

What is your capital allocation and dividend policy? - Trent Green(NRC Health)

2025Q2: We had a tremendous year of 2024 in the buyback, and we are going to continue to do the buyback. - Trent Green(CEO)

Contradiction Point 2

Sales Organization and Strategy

It highlights differing statements about the company's sales organization and strategy, which directly impacts business operations and growth prospects.

How did the company perform in Q2 2025? - Trent Green(NRC Health)

2025Q3: We continue to solidify our sales organization under the leadership of Jason Rau, who was an executive turned brand back to NRC. - Trent Green(CEO)

What are the future plans for the sales organization? - Trent Green(NRC Health)

2025Q2: We have made another key addition to our sales leadership team with the hiring of a highly experienced industry veteran. - Trent Green(CEO)

Contradiction Point 3

Blackwell Production Status

It impacts expectations regarding the production timeline and delivery capabilities of a key product, potentially influencing company revenue and investor expectations.

How will you execute the roadmap with Ultra's 2024 launch and the Rubin transition in 2026, given supply constraints? - Toshiya Hari (Goldman Sachs)

2025Q3: Blackwell production is in full steam, and more Blackwells will be delivered this quarter than previously estimated. - Jensen Huang(CEO)

What are the incremental changes in Blackwell GPU and how do they impact revenue and customer reactions? - Vivek Arya (Bank of America Securities)

2024Q1: The change to the Blackwell GPU mask is complete without functional changes. Production is expected in Q4. - Jensen Huang(CEO)

Contradiction Point 4

Gross Margin Expectations

It involves changes in financial forecasts, specifically regarding gross margin expectations, which are critical indicators for investors.

What is the trajectory for Blackwell's ramp this year and its impact on gross margins? - Timothy Arcuri (UBS)

2025Q3: Gross margins may initially dip to low 70s due to the Blackwell ramp but are expected to recover to mid-70s quickly. - Jensen Huang(CEO), Colette M. Kress(CFO)

Will Q4 revenue from Blackwell be additive, and what is the expected gross margin exit rate? - Stacy Rasgon (Bernstein Research)

2024Q1: Gross margins for Q3 are expected around 75%, with full-year guidance in the mid-70s. - Colette M. Kress(CFO)