Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Forian Inc (FORA, Financial) managed to maintain a positive adjusted EBITDA despite challenging market conditions.
- The company successfully renewed several key contracts with existing clients, indicating strong client retention.
- Forian Inc (FORA) added a new large data source, enhancing its data capabilities.
- The company completed the license of approximately 1 billion additional claims annually, fortifying its information products.
- Forian Inc (FORA) has a strong balance sheet with $48 million in cash and marketable securities, providing flexibility for growth opportunities.
Negative Points
- Revenue for the second quarter was approximately flat at $4.8 million, compared to $4.9 million year over year.
- Net loss from continuing operations increased to $2.5 million, compared to $1.2 million year over year.
- Two early-stage clients are experiencing challenges in raising external capital, increasing the risk of non-payment.
- The industry faced unanticipated disruptions in the data supply chain, affecting short-term sales efforts.
- Forian Inc (FORA) incurred one-time advisory fees of $0.4 million in connection with a strategic review of the business.
Q & A Highlights
Q: When you have data feed disruptions across the industry, do partners reimburse you for any of those costs, or are those fixed costs ongoing?
A: It depends on the circumstance. Many contracts have volume metrics with measurement periods, allowing for discussions if the flow decreases or isn't restored. Vendors may also acquire other sources to offset disruptions. We don't feel at risk of falling below a threshold where we can't conduct business and grow.
Q: You've had over $40 million in cash for about a year and a half. Can you discuss the M&A environment and your approach to potential acquisitions?
A: We are actively reviewing the M&A environment. Public company expectations and private market multiples are becoming more aligned, making acquisitions more attainable and accretive. We have been prudent not to spend unwisely, but we see changing conditions, especially as larger VC-backed companies face challenges in raising funds.
Q: Can you elaborate on the top-of-the-funnel activities and prospects for long-term growth drivers?
A: Long-term growth drivers remain unchanged. We are focusing on strategic accounts, pharmaceuticals, emerging pharma, and MedTech. We are receiving more RFPs from larger pharmaceutical companies, indicating growing pipeline and better relationships with senior people. The process to secure initial contracts takes time, but once obtained, it becomes easier to add additional contracts.
Q: How are you managing the impact of customer attrition and challenges faced by early-stage customers?
A: We are addressing sales productivity and expect more from our efforts. Despite market disruptions, we renewed several key contracts, reflecting our clients' recognition of Forian's industry leadership. We are also diversifying data sources and enhancing our information products to mitigate the impact of customer attrition.
Q: What steps are you taking to address the market-wide disruptions in data flows?
A: We are proactively diversifying our data sources and using data science to enhance our products. We completed the license of approximately 1 billion claims annually to fortify our information products. We believe these additions empower us to compete effectively and restore growth cost-effectively.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
