National Research Corp. Q3 FY2023 earnings call

• New sales: NRC Health's Human Understanding Program has 91 health care provider systems adopting it, with 18% from new logos, and contract value growth for existing clients averaging 13%. Sales force size increased by 19% since the beginning of the year.
• Margin expansion: Reduced non-sales personnel by 11% on a net basis from end of third quarter 2022 to end of third quarter 2023, expecting results in revenue per associate and operating margin.
• Product expansion: Expanding product offerings through continued product development and partner alliances to tap into a larger total addressable market and gain market share in core patient experience market.

Revenue for the third quarter of 2023 increased slightly compared to the third quarter of 2022, ending with $144.3 million in TRCV. Operating income decreased by 10% for the third quarter of 2023 compared to the third quarter of 2022, primarily due to growth in certain costs exceeding revenue growth. The TRCV metric represents the total revenue projected under all renewable contracts for their expected next annual renewal periods. Operating margin grew by 8.3% over the second quarter of 2023 due to revenue growth outpacing operating expense growth.

Expect to see results of increased sales force flow through to revenue and TRCV in future periods. Anticipate margin improvement in future quarters due to workforce reductions and cost alignment changes. Continue to expand product offerings to take advantage of larger total addressable market.