Waystar (WAY) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue reached $240.1 million, up 22% year-over-year, with net income of $5.4 million and adjusted EBITDA of $96.7 million at a 40% margin, driven by strong client retention, cross-selling, new client acquisitions, and platform innovation.

• Net revenue retention was 109% for Q3, with 1,173 clients generating over $100,000 in trailing 12-month revenue, up 14% year-over-year.

• Over 30,000 new providers were rapidly onboarded following a competitor's cyber event, with many signing multi-year agreements and expanding platform use.

• Paid down over $1 billion in debt year-to-date, reducing annual interest expense by more than $100 million and improving credit ratings.

• Completed an IPO in June 2024, raising over $1 billion in net proceeds, which were used to repay debt and strengthen liquidity.

Financial highlights

• Subscription revenue grew 16% year-over-year to $118.0 million; volume-based revenue rose 28% to $120.7 million in Q3.

• Adjusted EBITDA for Q3 2024 was $96.7 million, up 19% year-over-year, with a 40% margin and 92% EBITDA to free cash flow conversion.

• Unlevered free cash flow was $89 million in Q3; cash flow from operations was $79 million.

• GAAP net income for Q3 was $5.4 million, compared to a net loss of $16 million in the prior year, including $16 million in non-cash relocation expenses.

• Net leverage ratio improved to 3.0x as of September 30, 2024, down from 3.7x in Q2 and 6.8x a year earlier.

Outlook and guidance

• Full-year 2024 revenue guidance raised to $926–$934 million, representing 17–18% growth over 2023 and 12% growth for Q4.

• Adjusted EBITDA guidance for 2024 increased to $374–$378 million, with a 40% margin.

• Non-GAAP net income projected between $47 million and $50 million; diluted non-GAAP EPS expected between $0.30 and $0.32.

• Preliminary 2025 revenue expected to approach $1 billion, implying high single-digit as-reported growth and normalized low double-digit growth.