National Research NRC Q4 2025 Earnings Transcript

Date

Tuesday, Feb. 3, 2026 at 4:30 p.m. ET

Call participants

• Chief Executive Officer — Trent Green
• Chief Financial Officer — Shane Harrison

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Takeaways

• Revenue -- $35.2 million, down 5% year over year but up 2% sequentially from the third quarter.
• Total recurring contract value (TRCV) -- $144.1 million, representing 8% year-over-year and 2% sequential growth, marking the fifth consecutive quarter of sequential TRCV growth.
• Adjusted EBITDA -- $8.7 million for the quarter; $40.2 million for the full year, equating to a 29% margin.
• Adjusted net income -- $3.4 million for the quarter and $20.7 million for the full year.
• Adjusted EPS -- $0.16 per share for the quarter and $0.93 per share for the full year.
• Dividends -- Quarterly dividend of $0.12 per share was paid during the quarter.
• Recurring revenue mix -- 99% of revenue was recurring, providing high predictability and revenue visibility.
• Sales growth -- Full-year new sales increased 86% year over year, attributed to a restructured sales approach aligned with customer structure.
• Customer retention -- Highest gross dollar retention rate in more than seven years was achieved.
• Segment penetration -- The company served 74% of the top 100 health systems in the United States.
• Net Promoter Score -- Net Promoter Score reached 68, cited as a reflection of customer trust and relationship loyalty.
• Rounding solution performance -- TRCV from the Rounding solution nearly doubled in 2025 after full integration into the platform.
• AI-driven product features -- New AI-powered listening capabilities entered beta in the Rounding solution, expanding real-time feedback capture.
• Leadership addition -- David Burik joined to lead strategic insights and governance, bringing more than 30 years of health care consulting experience.
• Capital allocation strategy -- Capital returned via dividends, opportunistic share repurchases, and ongoing flexibility for strategic, accretive acquisitions.

Summary

National Research Corporation (NASDAQ:NRC) reported sequential revenue and TRCV growth despite a challenging year-over-year comparison caused by elevated TRCV attrition in 2024. Management emphasized the persistence of recurring revenue, which comprises 99% of total sales, as foundational for financial predictability. The restructured go-to-market and sales strategies led to significant improvement in new sales activity. A record-high gross dollar retention rate and rising cross-sell from the enablement category, particularly the Rounding solution, contributed to ongoing momentum. Recent leadership appointments and accelerated investment in AI-powered features are positioned as levers for additional growth and market differentiation into 2026.

• Management said, "adjusted EBITDA margin is currently near 30%, and we see upside as revenue recovers," signaling expectations for margin expansion with growth.
• The platform's breadth, spanning experience, enablement, strategic insight, and governance, is positioned as a "continuous cycle of improvement" for clients based on direct user and management commentary.
• CFO Shane Harrison called the "predictability is rare and valuable," and highlighted efficient conversion of earnings to free cash flow.
• Expenses increased in the fourth quarter due to timing of the annual HUB Conference, not ongoing operational costs, as clarified during the call.

Industry glossary

• TRCV (Total recurring contract value): Aggregate annualized value of recurring contracts expected to be recognized as revenue in the coming 12 months.
• Rounding solution: Workflow-driven software module for guiding care teams, collecting real-time feedback, and operationalizing care improvements.
• Enablement solutions: NRC's product suite facilitating workflow automation, operational guidance, and actionable frontline insights in healthcare settings.
• Governance Institute: NRC's dedicated educational and advisory arm providing strategy and best practices to healthcare boards and executive leadership.

Full Conference Call Transcript

Trent Green: Good afternoon, everyone, and thank you for joining us for NRC Health's Fourth Quarter and Full Year 2025 Earnings Call. Today, we'll review our fourth quarter and full year results, highlight the progress we're seeing across the organization and outline our strategic priorities as we head into 2026. Starting with the fourth quarter. We delivered another strong period of execution, driven by deep engagement and alignment across our teams. Revenue for the quarter was $35 million, and adjusted EBITDA totaled $9 million. Importantly, total recurring contract value or TRCV, reached $144 million, up 8% year-over-year and marking our fifth consecutive quarter of sequential TRCV growth.

With 99% of our revenue recurring, TRCV continues to be a reliable and predictable indicator of the revenue we expect to recognize over the next 12 months. This sustained momentum underscores the effectiveness of our go-to-market strategy and the strength of our value proposition as health care providers navigate an increasingly complex operating environment. Let me unpack what's driving this TRCV growth. At a high level, it reflects strong execution across our sales, customer success and product teams. First, our sales team reorganization and refined coverage model are clearly delivering results. Full year new sales increased 86% year-over-year, driven by a selling approach that more closely mirrors how health care systems are structured and how decisions are made.

This realignment has enabled us to engage more effectively at multiple levels within customer organizations and drive larger, more strategic relationships. Second, our customer success teams have elevated the quality, depth and consistency of customer engagement. By strengthening relationships with key users and decision-makers we achieved the highest gross dollar retention rate we've seen in more than 7 years. Both new sales and retention have been further supported by continued investment in our product portfolio. Over the course of the year, we enhanced capabilities that directly address our customers' needs, whether that's enabling operational improvement through our enablement solutions or delivering deeper real-time insights that connect patient experience to health system outcomes.

In addition to the focus we've placed on our sales, customer success and product teams, we've also been intentional about strengthening our leadership team to support the next phase of growth. In early January, we welcomed David Burik to lead our strategic insights and governance strategy. With more than 30 years of experience in health care consulting, David brings deep expertise in governance, system transformation and strategic decision-making. He has advised integrated delivery networks, managed care organizations, physician groups and hospitals through complex change and previously led Guidehouse Center for Healthcare Insights. His experience and thought leadership uniquely position him to accelerate growth and innovation across our Market Insights platform and the Governance Institute.

David's addition is emblematic of our broader leadership build-out. Over the past years, we've intentionally recruited leaders who combine deep health care operations and solutions experience with strong subscription software and technology expertise. This blend is central to our strategy, pairing industry insight with the ability to scale technology-driven solutions so we can continue to deliver products that drive sustained results for our customers and the people they serve. As I mentioned on last quarter's call, our customer value proposition is built on 3 pillars: clear and actionable insights; deep partnership and engagement; and enablement tools that help health systems turn insight into action.

With that framework in mind, I'd like to highlight what differentiates NRC Health and why this value proposition continues to resonate in the market. First, trust. We served 74% of the top 100 health systems in the country, and that scale is a direct result of the trust health care leaders place in our brand. We've reinforced our position as a secure, reliable and defensible partner through continued investment in data security and compliance, including our high trust certification. That trust is further reflected in our customer relationships with a Net Promoter Score of 68, driven by our differentiated customer success model. Second, expertise. NRC Health was built specifically for health care.

For nearly 45 years, we've partnered with providers and helped define patient-centered care. Our solutions are grounded in deep health care operations knowledge and that expertise translates into solutions that leaders can effectively use to drive action in their organizations. Additionally, through the Governance Institute, we engage C-suite executives and boards with insights, best practices and peer connections that inform decision-making at the highest levels of health care organizations. And third, portfolio breadth, while market research and patient experience remain foundational, we built a broader and more powerful portfolio over time, now spanning 7 products across the following 4 solution categories.

Our experience solutions, including patient experience, employee experience, reputation management and care transitions deliver actionable insights in how organizations serve and connect with patients and employees. Our enablement solutions help operationalize those insights by structuring and automating workflows and delivering personalized real-time guidance to frontline teams in the path of care. Our strategic insight solutions, which include our market insights and community insights products provide health care leaders with intelligence on their competitive landscape by providing rich data on consumer preferences, brand perception and care delivery expectations that is continuously updated via our surveying of over 300,000 consumers annually.

And the fourth element of our portfolio, our governance solutions through the Governance Institute equip Boards and executive leadership teams with the frameworks, education and insights needed to strengthen organizational performance and long-term resilience. Together, these solutions create our differentiated insights, engagement, enablement flywheel. We capture insight into what patients, employees and communities expect and experience. We work with leaders to translate that insight into strategy, and we enable action through workflows, tools and best practices that deliver measurable, hard return on investment, creating a continuous cycle of improvement. Now let me return to what I see as our most compelling growth catalysts as we head into 2026.

First, our go-to-market restructure is already showing up in our sales activity and results. As this model continues to scale, I expect it to be a meaningful tailwind through 2026. Second, we see continued opportunity to deepen adoption of our enablement solutions. Rounding represents our first major investment in this area. Just over a year ago, we acquired a workflow-driven solution designed to guide care teams toward high-value actions using both historical and real-time feedback, now fully integrated into our platform, Rounding has gained strong momentum with TRCV nearly doubling in 2025. Importantly, the opportunity extends well beyond Rounding. Health care systems are actively seeking solutions to drive measurable operational improvement across quality, safety, discharge planning and other critical functions.

We believe enablement will be a meaningful and durable growth engine for NRC Health. Third, product innovation remains a strategic priority. We're investing in capabilities to deepen our differentiation, expand our addressable market and consistently deliver measurable ROI to our customers. AI is playing an increasingly important role in this work. We're using AI to drive greater depth and accuracy and sentiment analysis through comment summarization and our AI-enabled complement and service recovery capabilities. We've also announced a beta release of a new AI-powered listening capability within our Rounding solution, further enhancing the richness and timeliness of frontline feedback. Together, these innovations are helping our customers move faster from insight to action.

Fourth, cross-sell remains a meaningful growth opportunity. as we deepen relationships across our customers' organizations, we see clear potential to expand adoption of enablement, strategic insights and governance solutions. Fifth, retention upside. Although, we experienced a 7-year high with retention rate, we see opportunity to strengthen our retention efforts as we harden the customer success initiatives we deployed in 2025. And finally, new logo growth. Our differentiated data assets and insights open the door to new buyers, new use cases and new markets beyond our historical footprint. As awareness of our broader platform continues to expand we believe this represents a meaningful and long-term growth opportunity for NRC Health.

As I reflect on 2025, I'm proud of what our team has accomplished, driving strong TRCV growth, improving customer retention, strengthening our leadership team and maintaining disciplined expense management. The foundation is solid and the runway ahead is clear. The health care industry's need for what NRC Health delivers, turning Human Understanding into meaningful, measurable action has never been greater. Health care leaders are navigating unprecedented complexity, and they need partners they can trust, with the expertise to guide them and the technology to enable them. With that, let me turn it over to Shane to walk through our financial results.

Shane Harrison: Thank you, Trent. Today, I'll walk through our Q4 and full year 2025 results, then I'd like to touch on how our financial profile is distinctive as well as our strategy around capital allocation. Starting with the fourth quarter. Revenue was $35.2 million, down 5% year-over-year, but up 2% sequentially from Q3. The unusually heavy TRCV attrition we experienced in Q3 2024 continued to recognize revenue through Q4 of 2024, creating a difficult comparison for Q4 2025. Even against that headwind, our sequential revenue growth highlights the improving momentum in the business. TRCV reached $144.1 million, which was up 8% year-over-year and 2% sequentially.

This was our fifth consecutive quarter of sequential TRCV growth and reflects the strong execution across our sales and customer success teams. Fourth quarter adjusted EBITDA was $8.7 million. As mentioned on the Q3 call, our Q4 operating expenses came in higher than the prior year due to the timing of our annual customer conference, the Human Understanding Beyond or HUB Conference, which we held in Q4 this year versus Q3 last year. Adjusted net income for the quarter was $3.4 million and adjusted EPS was $0.16 per share. Additionally, during the quarter, we paid a quarterly dividend of $0.12 per share, consistent with our commitment to returning capital to shareholders. Now turning to the full year picture.

Revenue for 2025 was $137.4 million, down 4% from 2024. This decline was expected given our TRCV performance in 2024, where we saw elevated attrition in the second half of that year. However, with the TRCV growth of 8% in 2025, we are confident that revenue growth will follow in 2026. Adjusted EBITDA for full year 2025 was $40.2 million, representing a 29% margin. We held our margin profile even as revenue declined, underscoring our ability to fund the growth initiatives Trent outlined, while maintaining disciplined cost management. In other words, we're demonstrating that investing for growth and delivering strong profitability can go hand in hand.

Adjusted net income for 2025 was $20.7 million and adjusted EPS was $0.93 per share. These results showcase our compelling financial profile. This profile includes our highly predictable revenue streams. With 99% of our revenue being recurring, we have a very good revenue visibility. And our TRCV metric has proven to be a very strong leading indicator of how our top line will perform. This predictability is rare and valuable. Our financial profile also boasts strong profit margins. Our adjusted EBITDA margin is currently near 30%, and we see upside as revenue recovers. As we execute on those 6 growth catalysts, we will ensure NRC is positioned well for margin expansion.

Our free cash flow durability also adds to our unique financial profile. Our business converts earnings into free cash flow efficiently and our strong free cash flow margins allow us to fund growth investments and return capital to shareholders, which leads me to the final aspect of our financial profile, our thoughtful, impactful and diversified approach to capital allocation. We have a clear flexible framework for deploying capital. First, we're investing meaningfully in our business and technology, hiring talented people, innovating new capabilities and exploring Blue Water opportunities that can accelerate our growth and improve our competitive position. Second, we're returning capital to our shareholders.

We do so directly through our dividend, which reflects our confidence in this financial profile as well as returning capital indirectly through the opportunistic share repurchases that offset dilution and enhance per share returns. Third, we are maintaining the flexibility to pursue highly strategic, accretive acquisitions that expand our addressable market, reinforce our competitive position and create incremental value by leveraging NRC's operating model to drive cost efficiencies, sales expansion and integration synergies. As we move into 2026, we look forward to driving growth, profitability and long-term value creation for our shareholders. The foundation is solid. The trajectory is clear, and I'm excited about the opportunity ahead. With that, I'll turn it back to Trent.

Trent Green: Thank you, Shane. I want to emphasize one key point. NRC Health is uniquely positioned to thrive in the evolving health care landscape. Our mission to turn Human Understanding into meaningful, measurable action resonates deeply with health care leaders, navigating unprecedented complexity. The momentum we've built in customer growth, retention, team building and financial execution gives me tremendous confidence in our ability to create lasting value. I'm grateful to our incredible team of associates, our loyal customers and our supportive investors for the trust you place in NRC Health. As a reminder, if you have questions or want to engage further, please contact us at the e-mail address ir@nrchealth.com.

Operator: That concludes today's call. Thank you for your participation, and have a wonderful rest of your day.

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