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    NRC
    Earnings call· Jun 2026(Q2 FY26)

    NRC HEALTH Q2 FY26 earnings call NRC

    Jul 28, 2026 Source

    Executive summary

    NRC Health Q2 FY26 — Strong TRCV Growth and Strategic Product Innovation

    NRC Health delivered strong Q2 FY26 results, marked by double-digit TRCV growth and strategic product innovation, particularly with the launch of ambient listening with agentic AI. The company is investing in delivery and product development to support recent large wins and future opportunities, expecting margin expansion in the second half of the year as revenue catches up to TRCV growth. Management remains confident in its differentiated position despite competitive market shifts.

    Highlights

    5

    • Total Recurring Contract Value (TRCV) increased 11% year-over-year to $151.9 million.

    • Experience TRCV grew mid-teens year-over-year, driven by strong bookings activity.

    • Governance Institute achieved its strongest bookings performance in 7 years and grew TRCV by nearly 10% year-over-year.

    • Q2 revenue increased approximately 4% year-over-year despite a 2-point accounting headwind.

    • Free cash flow was $62,000, up $4.2 million year-over-year.

    Concerns

    4

    • Q2 revenue growth impacted by an approximately 2-point headwind from an accounting change related to reputation monitoring solutions.

    • Adjusted EBITDA margin remained flat at 27% in Q2, consistent with Q1, due to investments ahead of revenue.

    • Average deal size in the sales pipeline is currently down, reflecting market uncertainty.

    • Q2 tax provision was not comparable to second-half due to non-deductible expenses from accelerated vesting of restricted shares.

    Guidance & targets

    7
    CategoryTargetConfidence
    Adjusted EBITDA margin
    expansion
    high materiality
    High
    Q3 FY26 Revenue
    increase sequentially
    medium materiality
    High
    Q3 FY26 Adjusted EBITDA margin
    approximately the same as the first half of the year
    medium materiality
    High
    Q4 FY26 Adjusted EBITDA margin
    upside
    medium materiality
    High
    Effective tax rate
    approximately 40%
    medium materiality
    High
    Normalized effective tax rate
    high 20s
    low materiality
    High
    Normalized cash tax rate
    lower to mid-20s
    low materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Experience
    Driven by strong bookings activity during the first half of this year.
    TRCV growth year-over-year: mid-teens
    		————
    Governance Institute
    Achieved its strongest bookings performance in 7 years and grew its TRCV by nearly 10% year-over-year.
    TRCV growth year-over-year: nearly 10%Bookings performance: strongest in 7 years
    		————

    Operational metrics

    15
    Total Recurring Contract Value
    $151.9 millionup 11% year-over-year
    Q2 FY26

    reflecting continued strength across our Experience, Market Insights and the Governance Institute portfolios.

    Revenue growth
    approximately 4%year-over-year
    Q2 FY26

    despite an approximately 2-point headwind from an accounting change related to certain reputation monitoring solutions

    Revenue growth
    2%sequentially
    Q2 FY26
    Adjusted EBITDA
    $9.4 million
    Q2 FY26
    Adjusted EBITDA margin
    27%consistent with the first quarter
    Q2 FY26

    as we continued investing ahead of revenue and implementation, customer success and product development

    Adjusted EBITDA change
    $900,000 lowerYear-over-year
    Q2 FY26

    primarily driven by higher operating expenses tied to expansion in our delivery teams, ongoing product and platform investments and the normalization of certain corporate expenses

    Adjusted Net Income
    $6.9 million
    Q2 FY26
    Adjusted EPS
    $0.31
    Q2 FY26

    The majority of the adjustments to arrive at adjusted net income in Q2 related to the previously announced acceleration of vesting of restricted shares and associated cash payments to offset personal taxes for 3 of our executives

    Effective Tax Rate
    —
    Q2 FY26

    our Q2 tax provision will not be comparable to our second half provision due to non-deductible expenses from accelerated vesting.

    Dividend per share
    $0.16regular quarterly dividend
    Q2 FY26
    Shares repurchased
    approximately 397,000
    Q2 FY26
    Sales pipeline growth
    60%higher than same quarter last year
    Q2 FY26
    Average deal size in pipeline
    down
    Q2 FY26

    reflective of the size of the organizations that are actively coming to market. We somewhat expected some of this given some of the near-term unknowns associated with the Qualtrics and Press Ganey acquisition.

    Sales activity (meetings)
    35%up
    Q2 FY26

    significant increase in the number of meetings that we're getting access to and in particular, on-site meetings.

    Customers buying only one product
    70%
    current

    So 70% of our customers only buy one product from NRC today or roughly, I think it might be 71 customers or something buy only one product.

    Industry KPIs

    1
    MetricValueDetails
    Adjusted EPS EBITDA leverage guidanceAdjusted EBITDA $9.4 million, 27% margin; Adjusted EPS $0.31 per diluted shareUSD, %

    Product announcements

    1
    ProductTypeDetails
    Ambient listening with agentic AIlaunch

    Deals & partnerships

    1
    Health Experience FoundationCollaboration to connect governance, leadership development, and frontline enablement to translate human understanding into practical operating disciplines and sustain improvement.

    This organization has been in operation since 2017 and is led by an individual with a historical connection to Quint Studer, a recognized name in healthcare.

    Risks & headwinds

    4
    Accounting change for reputation monitoring solutionsQ2, Q3, Q4 FY26

    approximately 2-point headwind to Q2 revenue growth; smaller headwind in Q3 and Q4.

    Mitigation: Strategic replacement of a third-party vendor led to net revenue accounting.

    Increased operating expenses due to investmentsQ2 FY26

    Adjusted EBITDA was 3 points or $900,000 lower year-over-year.

    Mitigation: These are intentional investments in delivery teams, product/platform, and corporate expenses to support long-term growth and large new implementations. Expected margin improvement in H2 FY26.

    Market uncertainty from Qualtrics/Press Ganey acquisitionnear-term

    average deal size is down in the pipeline; caused some customers who are in active RFP processes to pause and reassess.

    Mitigation: NRC focuses on its strategic differentiators (Governance Institute, rounding, Market Insights) and continues to build its pipeline (up 60% YoY).

    Unusual Q2 tax provisionQ2 FY26

    Q2 tax provision will not be comparable to our second half provision.

    Mitigation: Due to non-deductible expenses from accelerated vesting of restricted shares. Expected effective tax rate of approximately 40% for Q3 and Q4.

    What to watch in Q3 FY26

    5

    Revenue growth from landmark customer

    Q3 FY26
    CurrentRevenue recognition began this month (July)
    TargetNext tranche of facilities brought online in October

    Why it matters

    This large multi-year engagement is a key driver for future revenue growth and validates the company's investment strategy.

    We also began to recognize revenue associated with this customer this month. We'll bring on the next tranche of facilities in October and will be fully deployed by the end of the year.

    Q&A highlights

    7

    What's driving the strong TGI bookings, how does it translate to future revenue, what's its current scale, and is the nearly 10% TRCV growth the right near-term growth expectation?

    TGI is a unique asset with an existing client base, offering top-of-funnel access to CEOs and General Counsels. Its margin is strong, and there's significant growth opportunity, though it's currently only about 10% of the business, so not a major top-line mover. Dedicated sales teams and refreshed value proposition are driving growth, with members actively referring others.

    “This is only about 10% of our business. So I don't expect it to significantly move top line, although we have in -- this is a product offering we've owned for 20 years. It's been an offering in the market for over 40 years, and it has had double the membership that we presently enjoy.”

    asked by Constantine Davides · answered by Trent Green

    3 min read8 chapters

    Detailed Narrative

    01

    Strong TRCV and Revenue Performance

    NRC Health reported an 11% year-over-year increase in Total Recurring Contract Value (TRCV) to $151.9 million, with Experience TRCV growing mid-teens and Governance Institute TRCV up nearly 10%. Revenue increased approximately 4% year-over-year, despite a 2-point headwind from an accounting change related to reputation monitoring solutions. This performance reflects the effectiveness of their redesigned sales organization and continued product investments.

    02

    Strategic Investments and Margin Outlook

    The company maintained an Adjusted EBITDA margin of 27% in Q2, consistent with Q1, as it continued to invest in delivery, customer success, and product development. These investments are supporting a large Q1 multi-solution win and a growing pipeline. Management expects margin expansion in the second half of the year as revenue from TRCV growth materializes and operating expenses normalize.

    03

    Product Innovation and AI Strategy

    NRC Health is prioritizing product innovation, expanding Governance Institute capabilities and launching ambient listening with agentic AI in its rounding solution. This AI feature securely captures interactions, summarizes conversations, identifies themes, and surfaces service recovery opportunities, moving beyond post-fact measurement to real-time improvement. The company aims to apply AI to its differentiated healthcare experience dataset to identify patterns, predict improvements, and recommend actions.

    04

    Landmark Customer Implementation

    The landmark multi-solution agreement discussed last quarter is now live, with the first 25 hospitals and several ambulatory sites brought online earlier this month. Revenue recognition for this customer began in July, with the next tranche of facilities expected in October and full deployment by year-end. An additional rounding platform product for this customer is expected to kick off in H2 2027.

    05

    Sales Pipeline Dynamics

    While the overall sales pipeline generation has been strong, up 60% year-over-year, the average deal size within the pipeline is currently down. This is attributed to market uncertainty🌐 following the Qualtrics and Press Ganey acquisition, causing some customers to pause and reassess RFP processes. Despite this, sales activity, particularly on-site meetings, has significantly increased by 35%.

    06

    Competitive Landscape Post-Acquisition

    The recent acquisition of Press Ganey by Qualtrics has introduced uncertainty in the market, with some customers pausing RFP processes to evaluate unified proposals from the combined entity. NRC Health views this as a temporary situation, emphasizing its established platform and strategic differentiators like the Governance Institute, rounding solution, and consumer intelligence platform (Market Insights).

    07

    Capital Allocation Strategy

    NRC Health's capital allocation prioritizes internal investments in talent, innovation, and customer implementations. Alongside this, the company actively surveys markets for accretive M&A opportunities. It also returns capital to shareholders through a quarterly dividend of $0.16 per share and opportunistic share repurchases, having bought back approximately 397,000 shares under its existing $60 million authorization in Q2.

    08

    Cross-Sell Opportunity

    A significant opportunity for growth lies in cross-selling, as 70% of current customers currently utilize only one NRC Health product. The company is actively working to strengthen the connections between its product families to facilitate these opportunities, leveraging offerings like the Governance Institute and Market Insights to engage high-level organizational leaders and expose them to the full suite of capabilities.

    AI-generated summary of the company’s earnings call. Not investment advice.