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Waystar (WAY) is trading modestly lower after wrapping up FY24 with a solid Q4 report this morning. This is just the third earnings report for this provider of healthcare payment software since it made its IPO in June 2024. This was by far its largest EPS beat since coming public. Revenue rose 18.1% yr/yr to $244.1 mln, nicely above analyst expectations, which has been the case in all three earnings reports.

• What really jumped off the page was its FY25 guidance with adjusted EPS at $1.29-1.32, which was well ahead of analyst expectations. The revenue guidance of $1.000-1.016 bln was still upside, but more modest. In 2024, Waystar achieved a record number of implementation activations. In 2025, it starts off with a strong pipeline of projects ready for implementation. Additionally, Waystar says recent activations are ramping as expected, reinforcing its view into 2025 outlook.
• The operating metrics were also quite good as 1,203 clients contributed over $100,000 in LTM revenue, up 15% yr/yr. Also, net revenue retention (NRR) rate came in at 110%, at the high end of its historical range of 108-110%. Subscription revenue rose 18% yr/yr to $121.6 mln.
• Revenue growth in Q4 was driven by the strength of its software business model, which includes an ability to drive cross-sell and upsell with existing clients. Waystar explained on the call that administrative waste costs more than $350 bln annually, which creates extra work and stress for health care providers. The Waystar software platform is purpose-built to reduce administrative waste, manual work, and errors.
• Waystar talked about its recent launch of AltitudeAI, its AI platform to simplify healthcare payments and transform revenue cycle processes for healthcare organizations. Its AltitudeCreate product accelerates denial recovery by autonomously drafting appeal letters across multiple denial types, improving efficiency and reimbursement speed. In its first month, early access clients are already seeing meaningful results.
• The EPS upside in Q4 appears to have been driven by robust margins. In Q4, adjusted EBITDA grew 16% yr/yr to $100 mln for a 41% margin. For FY24, Waystar delivered on its target of 40% adjusted EBITDA margins with full year margins of 40.6%, although that was down slightly from 42.2% in 2023. Waystar argues that its robust margin demonstrates its operating leverage as it scales up.

Overall, Waystar is really showing the way for investors since its IPO debut in June. It has now reported three consecutive impressive quarters with a huge EPS beat in Q4. Also, as providers prioritize ways to get paid faster and more efficiently, WAY is smartly investing in AI-driven automation. Impressive operating metrics and very robust adjusted EBITDA margins have allowed Waystar to stand out during its first few months as a public company.