Definitive Healthcare Corp. (NASDAQ:DH) Q4 2022 Earnings Call Transcript

Robert Musslewhite: Yes. Again, I hate to give you a math answer, but basically, Q4 looked a lot like Q3 just in terms of absolute performance. And so I guess you could say that Q3 was not a great quarter, Q4 was not a great quarter. But it wasn’t a much worse quarter than Q3. It just wasn’t a better quarter. I’m not going to comment on what we’ve seen so far this year. But in general, what we’ve modeled, we’ve modeled that, that Q4 — Q3, Q4 performance continues through this year. That’s what drives the model. And we don’t have any reason right now to believe that, that’s not the environment we’re operating in. We certainly hope that the operating environment improves. But what it tells us is you now have another period of results. And so our assumption, as we’ve planned out this year, is that it lasts longer than we might have thought before. So, it’s going to go through this year, and that’s at least where we’re looking at it right now.

Glen Santangelo: Okay. Thank you.

Robert Musslewhite: Sure.

Operator: Thank you. Our next question comes from the line of Brian Peterson from Raymond James. Please go ahead.

Brian Peterson: Hey gentlemen. Thanks for taking the question. And maybe another high level one on the macro in budgets. But as you went through 2022, I guess I’d just love to understand how budget trends progressed. I mean based on our work, it sounds like they’ve been down. But maybe as we go into 2023, they’ve been set. So, I guess I’m curious if in your customer conversations, I know maybe it wasn’t the close that you guys wanted in the back half of the year. But are we kind of through the worst of it in? And maybe customers with budgets and everything are a little bit more ready to play offense when they were playing defense in 2022. So, I know it’s a lot of questioning but any thoughts there? Thanks guys.

Robert Musslewhite: Sure. It’s a really good line of questioning and we’re hopeful that, that would be the case. We haven’t assumed it coming into the year. The experience we had with budgets is they got very tight and, in many cases, did not open up. The hope was that, okay, maybe this year, budgets will get better. We haven’t assumed that budgets are going to radically open up from what we saw at the end of last year. And I think that’s a prudent assumption to make just because we haven’t seen it. For every client that we got a deal closed at the end of the year, I saw another client that came in, was literally ready to sign and some got some spending mandate came in and said, we just can’t do it now. We’re going to have to reposition this for some time next year.

The pace and a number of those that happened was just markedly different in the second half of the year than it was across the first half of the year or really the year before this one. I don’t believe it’s an environment that lasts forever. But right now, it feels like coming into the year, it felt like we were still in the middle of it. And remember, we do serve some sectors that we’ve seen have a little more financial stress right now. I mean, certainly, small biopharma, small life sciences is not — there are a lot of companies that are really struggling there. So, they’re going to scrutinize every dollar, and a lot of them are pulling back on growth investments. Providers — a lot of segments of our provider vertical are having a tough go but right now, and you’ve seen the announcements.