So very excited. And I think that will be kind of the second priority is to — we won’t force anything. As demonstrated last year, we did no acquisitions last year. But we’re constantly looking and expect to continue an active M&A program, especially the kinds that kind of leverage our platform technologies and where we’re going the 3 primary application areas where we are. So anything that strengthens those 3 areas or enhances our infrastructure, our targets for us for this. So that would be the second. And then I would say, we executed a really good buyback program. I think we’ve done 3 in our 20-plus years, 24 years being public. Actually, all 3 of those buyback programs are in the money, which I think would be a typical of a lot of management buybacks, management and board-driven buybacks.
So, all of our buybacks have been good deployments of capital, knock-on wood so far. And so that maybe the third priority. And that program does lapse in March and no visibility on whether it’s time for our board to put another one in place. But right now, we have an active program that expires in March. And then lastly, the dividend, I think it’s a very small dividend, but it sends the message of capital discipline. I think taking a little bit of money off the top for shareholders and then applying the balance of it to all the things I just talked about, I think puts a little bit of capital discipline and it says, look, first order to remember is to make money for shareholders. And we put a small dividend in place to send a very clear message that we can manage our free cash flows, build new products, enter new markets, do small acquisitions that fit, while also paying out a little sharing the profits along the journey.
It is a journey, I’ve been doing this a long time. And I think it just brings shareholders more on to the journey to share a little bit as the journey evolves. So, those would be our 4 priorities, 1, 2, 3, 4, the way I articulate them.
Operator: Our next question comes from Richard Close with Canaccord Genuity.
Richard Close : Congratulations on steady 2023. Scotty, I was curious on modeling revenue with 8 streams subscribers going away. Just wondering what the best way to forecast going forward? And how we track the company’s progress of penetrating the $12.3 million employee TAM and increased wallet share that you’re talking about? I guess, pulling back on the hStream, the model is sort of evolve into a black box. And — are you considering providing any other metrics like ARR growth or net revenue retention or anything to help us out?
Robert Frist : Yes, we’re studying that now. So a couple of things there. First is just a reminder. And I think in spite of our best efforts to explain where we are in the journey. I want to remind you the first thing is that the metrics that we had out there that we just retired was for subscriptions not subscribers. And so it really was intended to show the platform kind of expansion, but not as an infrastructure for calculating ARPU or revenue per employee because we haven’t yet gotten to the place and we fully intended to over time, get to the place where we could convert and talk about subscribers, like the number of unique health care persons in our network. And we — and so we’re just not — it was a great metric, almost like for a single product to talk about its expansion.
But it was not correlated to revenues for the reasons Scotty mentioned and it was not — it doesn’t correlate to subscribers, and we saw some potential misapplication of it to calculate revenue per subscriber. And so — we think it served its purpose. We’re getting our technologies out into the market and almost we report subscriptions sold, our regulatory course where it gave us a sense for that but it is not a proxy for subscribers. And it can’t be related to revenues yet because it’s not fully deployed, meaning there are several products that drive revenues that don’t add to the subscription number. So for that reason not subscriptions, aren’t subscribers and it’s not fully deployed. It can’t be used as a denominator in a revenue per employee model.
So we are going to look to this year, add additional both financial metrics to focus on. We already report full GAAP, of course. But — and one of those we’re studying is ARR. So we’ll look towards the middle of the year to see if we can get to that kind of metric, which I think would help all of the analysts and everyone understand the recurring revenue nature of the business and the growth trajectory. So yes, Richard, we’re working on that. But I think it’s time to take this metric, as we mentioned, kind of off the table because it was symbolic of the growth of the platform extension but not relatable to people yet and not relatable to revenue and we saw some of that starting to happen. So we just think we need to move our focus probably towards something like ARR.
That was the discussion in the last quarter, and we’ve got a test to back test and see how that metric — how we’re going to measure it. But that would be a goal would be to add some new metrics by the middle of the year.
Richard Close : And then on ANSOS, I had I guess a couple of follow-up questions on that. Is the remaining $14 million is that just maintenance and support revenue? That’s the first question. And then if there’s any detail in terms of the success rate of converting to the ShiftWizard product would be helpful? And then finally, the average term, I guess, length the time on the remaining contracts?
Robert Frist : Sure. A couple of things there. The contracts have a lot of essentially — a lot of them are old installed and they have a maintenance fee it’s non-SaaS, but there’s some recurring nature to it and they have auto renewals, unless they cancel. And so there is a recurring nature to it. And it does include some of those maintenance fees basically. So the second is on the conversion rate. I’d say, to date, obviously, unfortunately, not very successful at all of that but a renewed focus by our teams. Also, as we’ve talked about in prior calls, we’re enhancing ShiftWizard to better meet the needs of these enterprise customers of ANSOS. And so — and I think every single quarter now and actually every month on ShiftWizard, there’s a new software release and it’s moving us ever closer to full enterprise capability.
So I think it will be a better opportunity to transition. So again, not very successful in the migration today, as you hear from the loss that we’ve been reporting, we do expect and we have full energy on stabilizing that $14 million, and we’re going to try to reduce the attrition rate and also succeed better this year in the conversion rate. So this isn’t a story of I don’t think going to 0. It’s an effort to stabilize and stem the loss, while also transitioning them to the newer exciting technologies of ShiftWizard. And ShiftWizard is very well received in the market for its current capabilities, it’s just winning share. We just need to enhance some of its core functionality and we’ve made a lot of progress on that enhancing core functionality around kind of enterprise level data analysis.
And so, I think we look forward to by the middle of the year having great progress on that. So there’ll be a better destination to migrate everybody to. I’ll turn it over to Scotty in case you want to add anything.
Scotty Roberts : Yes, I’ll just make a comment or 2, Richard. I mean, I think I tried to address with Matt earlier in the call kind of the nature of the contract length that kind of vary from auto renewals to some that have signed multiyear contracts. I don’t have the duration run out in front of me, but there is a good mix of auto renewals plus customers under term. I would say, too, that our objective is to continue to support the customers. We do want to migrate them to ShiftWizard, but we also want to acknowledge that there are still customers on that application and we’re still there to support their use of it. And so that’s another consideration. And I think as we talked about the $14 million it’s — we wanted to just provide that number to provide context as Bobby said, I don’t expect it to go to 0. I just wanted to size it up for our investors to understand the magnitude of it.
Richard Close : And then under the direct-to-consumer, just on that portion of revenue, I know it’s small, but it’s a different sale. How are you thinking about customer acquisition costs on the direct-to-consumer market, maybe it’s a little less than a typical direct-to-consumer because they — if they’re in between jobs, they already have exposure to you. Just trying to get your thoughts on that.
Robert Frist : Yes. I would say for the next couple of years, our thoughts are really just to try to keep the people that I would call in network to stay in the network when they’re between jobs. And as I mentioned, pick up this new audience of students, before they become professionals. And so it really isn’t too broadly openly market to people to self-register. It’s to capture using existing data from the customers that have been in network to find them between jobs or when they leave a job, they can now leave and carry their HealthStream transcript with them and that’s different. And so they kind of — if they work somewhere for a couple of years and they leave they can still log back in using their HStream ID and see that they had 10 courses or — and so now all we’re doing is saying, you can log and can then carry your transcript with you like a portfolio or a wallet, you can take it with you.
But you can also say well might as well click at the bottom here to keep my license current and take an additional course. And that’s happening right now with doctors, on that DEA course that we mentioned and it’s happening with nurses, when they take a little bit of CE or even when they’re about to take a new job, they refresh on something before they go back into the new job. So really, we are — it’s more of a gap filler than it is a broad consumer — you said consumer, I call it direct to professional D2P. And it’s really just trying to keep people in network all the time as opposed to just kind of broadly marketing out into the wild open right now. Now maybe we get there someday, but really, the job right now is just to make that transcript portable make them lifetime kind of — lifetime engaging with HealthStream instead of just engaging with us when they’re in their job.
Richard Close : And if I could slip one more in. I thought on CredentialStream, it was interesting you announced Alira Health, a digital health company that seemed a little bit different. Are you seeing an uptick in opportunities in that segment on the direct-to-employer benefits area?
Robert Frist : We are seeing at least with the insurers. We’re seeing some opportunity there. And so I would say, yes, kind of categorically we — there’s interest in a couple of areas that maybe are not just purely the acute care hospitals. And so there are a lot of — I guess I’d characterize them as new, but I just say we’re getting better at pursuing a broader opportunity and not just the acute care hospital market. So the answer is yes.
Operator: Our next question comes from Constantine Davides with Citizens JMP Securities.
Constantine Davides : Just a couple of follow-ups here on scheduling. Can you just maybe characterize where you’re seeing growth with ShiftWizard, because it’s been pretty impressive in ’23? And I guess just a little further on that, is it sort of large IDNs, complex academic medical center type installations or smaller hospitals? And then are you typically replacing a manual kind of homegrown scheduling system or some other standalone technology solution?
Robert Frist : Well, a couple of really interesting things in that space for us. One, I would just describe it if there’s kind of such thing as the very large enterprises. And then there’s the middle market and then there’s a small urban or rural hospitals and community hospitals. It’s kind of the middle there that we’re getting really strong on. You probably call them regional health systems. The other thing is that we have this great relationship that’s growing with Workday, where they’re bringing us in to help kind of them have a complete offering, and we turned out to be really good partners in supporting customers’ needs. And so we’re getting brought into Workday accounts to — with them to round out services and we just found that to be a great partnership.
So kind of a good referral — almost a referral program for us, a good source of leads and compatibility. We just work really well with that team and our applications work together well and present well together. So that’s been really exciting and fun. Usually, we’re taking out competitors in the market that have aging technology, and we’ve got this emerging new good paradigm, great user interface with ShiftWizard. So organizations like UKG and API where we compete, we generally are replacing something. And so I hope that answers your questions. And in general, we’re trying to expand the capabilities of ShiftWizard to handle ever larger and larger systems. We do have some large systems, as customers and we just need a more robust — basically reporting a data analytics suite, which we have in learning, which is great.
So we’re going to use a lot of that infrastructure to launch a better class of data analytics and learning around scheduling, which we think will meet the needs of even the larger health systems. So we’re excited about that. And that should be a this year event. We’re making good progress on that as well. Again, as I mentioned with monthly releases of ShiftWizard, very exciting. We have a webinar and hundreds of people will attend for each monthly release to see what’s coming on ShiftWizard. And it’s just gaining traction and momentum and excitement as we add enterprise class features so we can go after even larger customers.
Constantine Davides : And then just a follow-up, I guess, to Richard’s question around metrics. Have you — or can you talk about just how many hStream IDs have been claimed at this point? Is that something you can provide?
Robert Frist : It’s interesting. It’s over 1 million, but we’ve got a lot of work to do. There’s a lot of — and we’ve been building tools for a long time now, deduping tools. We’ve been building tools to let people, if they worked at one health system, they can claim their records another and combine them, so they have this unified transcript as an individual. So it is really exciting, but it’s kind of still nascent. I mean, there are several steps in the process. First, we have to wire the application, we have dozens of applications to the hStream architecture, using — so it uses the hStream ID. And then we have to get the professionals to kind of claim any other uses like we call it putting keys on key chains. So once you have an hStream ID, you’re able to then go and say, I also use this application and so kind of merge that information, almost the way you do at Google or you get universal access to all their apps.
But for us, it’s a limited set of apps now. So we have over 1 million, what I’ll call reconciled IDs and there’s going to be millions more over time but that is going to take time and that’s — until we can get to that pure subscriber count. Historically, you think of us as B2B software, 3 separate tech stacks. But increasingly, the tech stacks are interrelated through the hStream platform and the hStream ID. And we’re kind of mid-stages maybe deploying both the technology and the reconciliation of ID. So over 1 million unique hStream IDs have been issued, which is really exciting, but there’s millions more to go and we expect steady quarterly progress on that. And of course, when we get to some place we’re excited, where we have enough momentum that can become a metric.
And that could be the basis for some kind of ARPU. But there are 2 things have to happen. One, more of our applications have to connect to it. And then more of the users have to reconcile. And we’ve been building — this is a very complex topic and we’ve been working on it for years. You have to have the reconciliation tools, the account joining tools, the keys on key chains, the management tool sets and we’re actually getting very good at those in the HealthStream ID deployment models. We’re getting very good at all of that. And so we expect it to kind of continue to spool up.
Constantine Davides : And I guess just last question along those lines. Where do you think you are in the journey, Bobby? Whether it’s in baseball terms or some other language. But just having all the apps on the platform common architecture, making them all interoperable and seamless. Just how far along you think you are?
Robert Frist : On the baseball analog, and I’m not a huge baseball person but I’d say third inning, but it’s going faster. So it’s one of those things that’s not linear, like each inning isn’t the same length. I think it’s the kind of thing that can kind of be — maybe geometric or maybe exponential but definitely geometric where it should go faster than linear. And so while we’re in maybe 3 out of 9 innings, the fourth should be faster than the third and so on. So I think it can continue to spool up.
