Q3 2025: Contradictions Emerge on RFP Trends, Margins, and Revenue Recognition

Date of Call: November 6, 2025

Financials Results

• Revenue: $26.1M in Q3, up 22% year-over-year (from $21.3M in Q3 2024)
• EPS: GAAP $0.04 per share (Q3 2025) vs GAAP $(0.50) prior year; non-GAAP $0.20 per diluted share vs $0.12 prior year
• Gross Margin: 67.2%, up from 63.1% in the prior-year quarter

Guidance:

• 2025 revenue now expected $105M–$109M; adjusted EBITDA $16M–$19M
• Initial 2026 guidance: revenue $118M–$124M; adjusted EBITDA $19M–$22M
• Will continue accelerated term‑loan paydown; do not expect to access equity markets in foreseeable future
• Guidance based on contracted visibility; company emphasizes conservative/phased assumptions

Business Commentary:

* Revenue Growth and Gross Margin Expansion: - OptimizeRx Corp reported revenue of $26.1 million for Q3 2025, up 22% year-over-year. - Gross margin increased from 63.1% in Q3 2024 to 67.2% in Q3 2025. - Growth was driven by a favorable product mix, economies of scale, and a favorable channel partner mix.

• Adjusted EBITDA Improvement:
• OptimizeRx's adjusted EBITDA for Q3 2025 was $5.1 million, compared to $2.7 million in the same quarter last year.

• This improvement was primarily due to a decrease in operating expenses and higher bonus and commission payouts, reflecting strong year-to-date performance.

• RFP Trends and Contracted Revenue:

• The company reported strong RFP trends for 2026, with increased visibility leading to initial fiscal year guidance for 2026.
• This was attributed to more investments from clients in the digital space and equal interest in HCP and DTC channels.

* Operational and Financial Momentum: - OptimizeRx increased its guidance for fiscal year 2025, with expected revenue between $105 million and $109 million and adjusted EBITDA between $16 million and $19 million. - The company's success was supported by operational excellence, delighting customers, and strategic partnerships, particularly with the Lamar Advertising partnership.

Sentiment Analysis:

Overall Tone: Positive

• Management: "We had a strong third quarter with results ahead of both consensus estimates and our internal expectations." Q3 revenue +22% to $26.1M; raised 2025 guidance and issued initial 2026 guidance; emphasized accelerating debt paydown and improving KPIs (net revenue retention 120%).

Q&A:

• Question from Ryan Daniels (William Blair & Company L.L.C., Research Division): Can you provide more color on why you're issuing 2026 guidance now and what in the RFP activity is driving that visibility (new clients vs. shift to digital/omnichannel/HCP vs DTC)?
  Response: Early 2026 guidance reflects improved forward visibility from a shift to more predictive/subscription-like products (DAAP/MNT) and a strong RFP season; management sees healthy interest across both HCP and DTC channels.

• Question from Richard Baldry (ROTH Capital Partners, LLC, Research Division): Q4 implied revenue could be slightly down YoY at the top end — are there one‑time year‑ago items or drivers behind that, and why might adjusted EBITDA not expand sequentially?
  Response: Guidance is conservative and based on contracted revenue visibility and smoother phasing; no material one‑time operating expenses expected—management used conservative gross‑margin assumptions which explain EBITDA phasing.

• Question from David Grossman (Stifel, Nicolaus & Company, Incorporated, Research Division): What fundamental changes are smoothing quarters and improving visibility; how much managed‑services was in Q3 and are you excluding pipeline for Q4/2026; what baseline retention underlies the 2026 range?
  Response: Audience products (DAAP and MNT) are becoming renewable/subscription‑like, providing smoothing and earlier contract visibility; managed services normalized in Q3 and only won/contracted managed services are included in forecasts; historically 5–15% of revenue from new logos, with the remainder driven by retention.

• Question from Eric Martinuzzi (Lake Street Capital Markets, LLC, Research Division): On RFP trends, are you seeing more RFPs or an improving win rate; and please explain how DAAP/MNA (audience products) differ from transactional execution in timing and revenue recognition.
  Response: Both—more RFPs and improving win rates as RFPs better align with OptimizeRx offerings and stronger commercial engagement; DAAP/MNA are audience/data products that behave like renewable software/planning contracts (earlier, smoother revenue), while transactional execution (message distribution) is performance‑driven and budgeted more quarter‑to‑quarter.

• Question from Anderson Schock (B. Riley Securities, Inc., Research Division): Can you describe the Lamar Advertising partnership, rollout and opportunity size, and is any contribution assumed in 2026 guidance; additionally, what drove Q3 gross margin expansion and how should we think about margins going forward?
  Response: Lamar partnership is an early pilot with large potential and rapid regional rollouts possible, but it's too early to quantify and nothing from Lamar is included in 2026 guidance; Q3 margin expansion driven by favorable product and channel mix (growth in DAAP/DTC and better channel negotiations) and lower share of low‑margin managed services—management expects upper‑50s to low‑60s gross margin range with upside.

• Question from Jeffrey Garro (Stephens Inc., Research Division): For the 2026 midpoint EBITDA expansion, how much is from gross‑margin mix versus operating leverage, and what visibility do you have to sustain OpEx leverage given recent cash OpEx increases?
  Response: Margin expansion is primarily mix‑driven (audience products and channel optimization) with operating leverage available; cash OpEx rose due to higher bonus/variable comp tied to outperformance, but management expects a stable cash OpEx run rate going forward and continued leverage as revenue scales.

Contradiction Point 1

Revenue Cadence and Growth Expectations

It involves differing explanations for revenue growth and cadence expectations, which could impact investor perceptions of the company's financial performance and strategic direction.

Why are you providing 2026 guidance now, and what's driving the strong RFP trends? - Ryan Daniels(William Blair & Company L.L.C.)

2025Q3: We're transitioning to a more predictive model, which means we're seeing more visibility into future years. The RFP season has been strong with increased interest from both HCP and DTC areas. - Stephen Silvestro(CEO)

Given your typical revenue cadence of 15%-20% in Q1 and 23% in Q2, and the recent revenue outperformance, are there any one-time items in Q2 we should adjust for to normalize the cadence? - Richard Baldry(ROTH Capital Partners, LLC)

2025Q2: First half definitely had a little bit of managed service revenue that was above our expectation. - Edward Stelmakh(CFO)

Contradiction Point 2

RFP Trends and Win Rates

It pertains to differing statements about the improvement in RFP trends and win rates, which are essential for understanding the company's sales strategy and market position.

What's driving the improvement in RFP trends, and are win rates and RFP numbers rising? - Eric Martinuzzi(Lake Street Capital Markets, LLC)

2025Q3: We're seeing more RFPs and better alignment with our offerings. The win rate is improving due to better engagement with clients. - Stephen Silvestro(CEO)

What types of contracted revenue contributed to the 30% year-on-year growth? What customer segments (B2C, practitioners) and campaign durations (e.g., 60-day vs. 6-month) are driving this growth? - Eric Martinuzzi(Lake Street)

2025Q2: Contracted revenue right now is following the exact same product mix that it has in the past. It's a blend of HCP and DTC business, both businesses growing at really solid rates. - Stephen Silvestro(CEO)

Contradiction Point 3

Gross Margin and Revenue Mix

It involves changes in the explanation for gross margin and revenue mix, which are crucial components of the company's financial health and strategic direction.

What factors are driving margin expansion, and how should we model it for Q4 and 2026? - Jeffrey Garro(Stephens Inc., Research Division)

2025Q3: Margin expansion is driven by product and channel mix. We're in the process of stabilizing gross margin in the upper 50s to low 60s range, but there's room for upside. - Edward Stelmakh(CFO)

Last quarter, you outlined a typical revenue cadence of 15-20% in Q1 and 23% in Q2. Given the unexpected revenue upside, can you clarify if there's a one-time item in Q2 we should adjust for to normalize the cadence? - Richard Baldry(ROTH Capital Partners, LLC)

2025Q2: We did have in the first half of 2025 a little bit of managed service revenue still in the revenues, which we think was above our expectation. - Edward Stelmakh(CFO)

Contradiction Point 4

RFP Trends and Win Rates

It highlights differing perspectives on the trends in RFP activity and win rates, which are critical for understanding the company's growth trajectory and pipeline health.

What's driving the improvement in RFP trends, and are win rates improving? - Eric Martinuzzi (Lake Street Capital Markets, LLC)

2025Q3: We're seeing more RFPs and better alignment with our offerings. The win rate is improving due to better engagement with clients. - Stephen Silvestro(CEO)

What trends are in the pipeline, win rates, and deal sizes? - Constantine Davides (Citizen)

2025Q1: Pipeline is growing steadily, with better conversion rates. Data and subscription components are driving wins. No specific deal size information disclosed. - Steve Silvestro(CEO)

Contradiction Point 5

Revenue Recognition and Margin Expansion

It involves differing explanations for the revenue recognition model and margin expansion strategies, which impact financial forecasting and shareholder expectations.

Why are you providing 2026 fiscal year guidance so early, and what's driving the strong RFP trends? - Ryan Daniels (William Blair & Company L.L.C.)

2025Q3: We're transitioning to a more predictive model, which means we're seeing more visibility into future years. The RFP season has been strong with increased interest from both HCP and DTC areas. We're seeing clients make investments in the digital space, and we believe our solutions will benefit disproportionately from linear TV ban or reduction. - Stephen Silvestro(CEO)

How does shifting to a subscription model impact revenue recognition and margins? - David Grossman (Stifel, Nicolaus & Company, Incorporated)

2025Q1: Revenue is spread over time, which is accretive. Subscription revenue model keeps most of the revenue, with low cost of sales. - Edward Stelmakh(CFO)