NRC Health (NRC) Q2 FY26 earnings call: guidance and Q&A

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

Update on the landmark customer implementation and commentary on the sales pipeline, including demand for solutions, average deal size, and overall characterization.

The landmark customer is now live with the first 25 hospitals and ambulatory sites, revenue recognition has begun, and full deployment is expected by year-end. Pipeline generation is strong, up 60% YoY, but average deal size is down due to market uncertainty post-Qualtrics/Press Ganey acquisition. Sales activity (meetings) is up 35%.

“So we are now live with this landmark customer. We brought on the first 25 hospitals and a number of ambulatory sites earlier this month. So data is flowing through the pipe, so to speak. We also began to recognize revenue associated with this customer this month.”

asked by Constantine Davides · answered by Trent Green

How will agentic AI features be monetized (premium add-ons, subscription, retention tool)? And will AI lead to cost efficiencies in customer success or data processing, improving long-term margins?

Currently, AI is embedded in the rounding product as a feature, not a separate SKU, primarily for differentiation and retention. They are evaluating future monetization opportunities like premium add-ons. AI is expected to make customer success and implementation teams more efficient, potentially improving cost-to-serve over time, though not necessarily reducing headcount as they aim for business growth.

“So we don't presently have an AI SKU for our agentic tool that's embedded in our rounding product. So you subscribe to rounding and it is part of the offering. So we see -- presently, we see our AI innovations as more powerful features that we've added to our solutions to further differentiate NRC and improve our win rates and retention.”

asked by Jeffrey Wilson · answered by Trent Green

How does NRC's competitive moat stand in this new environment, and are there shifts in customer sentiment or RFP requirements?

NRC feels well-positioned and differentiated. The acquisition has caused market uncertainty, with some customers pausing RFPs to reassess. The combined entity's value proposition is still unclear, leading to a temporary period of buyer uncertainty. NRC focuses on its differentiators like Governance Institute, rounding, and Market Insights.

“The early effect is this has caused some customers who are in active RFP processes to pause and reassess. And specifically, we've been engaged in 2 processes where prior to closing, it was NRC, Qualtrics, Press Ganey who had proposed. Post closing, they've created an opportunity for Press Ganey and Qualtrics to submit a unified proposal.”

asked by Jeffrey Wilson · answered by Trent Green

Any color on what Qualtrics and Press Ganey are communicating to customers about potential platform changes or systems integration, and how NRC offers certainty?

Communication from the combined entity is ambiguous. Some Press Ganey customers interested in Qualtrics have no clear indication of a platform migration plan. In some paused deals, Press Ganey customers were given a Qualtrics transition plan, but there's no overarching communication on their platform strategy. NRC offers certainty with its fully stood-up platform.

“It's interesting, [ Josh ], it's ambiguous. We've heard of customers who are on Press Ganey that have some interest in Qualtrics, but they're not being given any indication as to whether there's a -- or what the platform migration plan is.”

asked by Unknown Analyst · answered by Trent Green

How do new service offerings like the rounding platform allow NRC to access customers more and impact TRCV growth?

The rounding offering and other tools help customers move from insights to improving experience, becoming embedded in daily workflows for frontline leaders. This expands the number of active NRC tool users, making the company stickier. The partnership with Health Experience Foundation further reinforces engagement and enablement, aiming to translate human understanding into practical operating disciplines and sustained improvement.

“So we start to become, in my view, even stickier with organizations. So irrespective of capturing the insights, although the insights that is doing the surveys is still important to us. Where we really become sticky with organizations is when we can get more embedded in their daily operations and workflows.”

asked by John Lewis · answered by Trent Green

Where does NRC stand on customers buying multiple solutions, and how are new offerings facilitating this?

Cross-sell is a big opportunity, with 70% of customers currently buying only one product. The large Q1 deal was a cross-sell. NRC is strengthening connections between product families. Governance Institute and Market Insights are key leaders for opening doors at high organizational levels, exposing them to the full suite of products, even if CEOs don't directly purchase patient experience solutions.

“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. So we have a lot of opportunity to grow there.”

asked by John Lewis · answered by Trent Green