HealthEquity (HQY) 5 Jun 182019 Q1 Earnings call transcript

Company Profile

Participants

Richard Putnam	Investor Relations
Jon Kessler	President and Chief Executive Officer
Dr. Steve Neeleman	Founder and Vice Chairman
Darcy Mott	Executive Vice President and Chief Financial Officer
Bill Otten	Executive Vice President, Sales
Greg Peters	Raymond James
Anne Samuel	JP Morgan
Jamie Stockton	Wells Fargo
Mark Marcon	R.W. Baird
Stephanie Demko	Citi
Steve Halper	Cantor Fitzgerald
Donald Hooker	KeyBanc
Sandy Draper	SunTrust
Mohan Naidu	Oppenheimer
Allen Lutz	Bank of America
Steven Wardell	Chardan Capital Markets

Call transcript

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Operator

Welcome to HealthEquity’s First Quarter 2019 Earnings Conference Call. Please note that this event is being recorded. I would now like to turn the conference over to Richard Putnam, Investor Relations. Go ahead, Mr. Putnam.

Richard Putnam

Mark. you, Thank everyone. to Good afternoon Welcome to call. earnings first quarter conference HealthEquity’s President have Dr. With we Kessler, and me today, Jon CEO; Steve Neeleman, CFO; our Company; our Darcy Founder Vice and Vice our Executive Vice Chair Executive President of and President and Otten, Mott, Bill Sales. of the

the earnings turn Jon, to financial our posted release those and over to is a investor I that on at with accompanying us call there like ir.healthequity.com. relations copy remind I Before would participating of website today’s information

usual be Safe expectations, included with the statements this We concerning release might statements also relating These business, forward-looking materially you include today. that estimates refer to forward-looking. affect those call forward-looking from Harbor in that information and statements could forward-looking be may the to predictions, to conference other results They made you. that our made considered risks earnings Throughout we and cause today’s important today’s will also discussion, and statements. which differ statements subject will are to present actual uncertainties our factors some on

with future we encourage caution We Form stock SEC. our reliance or detailed filed price March these market that our of with Annual undue on you other of XX-K affect placing factors against Report the statements. risks may our result, the the XXXX and to with the forward-looking in these or any reports periodic review you current a on along filed XX, on SEC discussion other results As subsequent

Jon will of to events. I turn that light new future of are way, revise With to call update over in statements out of information not or Mr. the We obligating these Kessler. ourselves forward-looking out or the

Jon Kessler

this our key quarter a joining QX spring going and to more and the everyone two Darcy remarks. performance XXXX. for provide beautiful President prepared be us, Executive of first against will review of some QX for the results beginning financial doing year remarks. fiscal speak our operating Steve here focus discussion of market and the Well thank a of Richard. I Neeleman us done to HealthEquity’s you, our the will outpace of prepared Bill join between Vice growth sales is the our are cycle that and Otten, to annual this and commitment late and we guidance, Q&A will marks describe of to of results Thank things our future. the of a keep will new the of afternoon detailed you our on us during into following results Sales is in metrics,

larger an EBITDA XX% $XX.X even billion, assets up the million million, to on year of quarters $X.X up Looking and our HSA at Similarly, from a XX% drive $XX.X year-over-year custodial were first and on HSA four of measures profitability year-over-year robust assets the adjusted year-over-year, XX% up key metrics Revenues $X.X of outperformance business, larger end ago. grew top million year-over-year. revenue members of that quarters member reached XX% an growth. continued HealthEquity of even trend up custodial to at was end and

equity million do These in and were and include somewhat a opened ever team previous it period. any most year. XX% set over in Turning QX to quarter, up the activity. acquisition got figures the assets the to bond fast in the opened by the period last sales, the HSAs $XX values HealthEquity same new has not grew off and XX,XXX during Custodial start. portfolio hampered declining by record

to unions cash grew HealthEquity’s to increased and This be to genuinely partner quarter. convert $X.X billion is and leverage in be and months results. XX% depository an custodial indices platform movement partnership year-over-year track XX%, will participate supporting again During were pleased a Custodial and between fiscal on we the into the the and have quarter able enter mutually included are we and to to program the to X% from in even quarter X% recent to next broader in we investments and way. in union market that transaction first small that’s to steps an agreement acquire additional during portfolio however, quarter’s taken to the a enable that faster declined beneficial our an that acquisition this credit despite credit union during credit is

think to of Sales. on the new and outpace selling sales is the to good early Last to with we believe really competitors first strategy substantially continue to ‘XX. our and Otten, start provide Bill update our year, call, sales that grow largest outpace some fiscal on on we outlined us the our you he market our EVP Bill for off we So, and a here initiatives quarter Mr. our insight we that to to and continue an are market, introduced today and last Otten. again year season.

Bill Otten

you, to those year’s information continue in time the earnings quarter and can the wealth. of conference and bigger at deliver our to number share them It’s portion messaging number quarter uptake field; plan right HSA each the report years progress three-pronged I two, and record market outlined health efforts. and a strategy to this within and Thank our partners; right one, results employer health last Jon. help call, on gains. effort: show play to of three, In existing significant to over of I connect a first increase rates HealthEquity’s past HealthEquity’s Today, the on members

[ph] or compete a can force focused on of infrastructure First, out that this to support the we offering and segment. required sales to mid-market building field our HSAs other and employers that benefit reach broader a that solution footprint through building increase to more compete on help us effectively channels portion efforts the would HSA for

team, targeted field throughout busy. grown to and digital them up back operating responds one come under refine up year we generation Today, segment, by those the the model. that it needs. in marketing when ago, broader lead we country was to where we force the a to which are started with and sales has standing reps representatives more in Our experienced We first a spinning XX% leaders a dedicated I includes solution have from connecting as banner unique its of lead health this wealth, HealthEquity, the for set and keep a

wealth to HSA, not. other regional to addition course, about regional services are advisors whole HRA among a plan In a to XXX(k) how employers. for gives expect employers new and administration health HealthEquity new or administrative audience plan plan and we partner consultants, of whole through an learning quickly offers our and a this employers add for of audience services, manager HealthEquity now health year, FSA HealthEquity And whether and retirement retirement reach. Later to way launch talk to the we regional

than So, broader history. time we are field in any with playing message HealthEquity’s at on other a a bigger

HSA partners, enrollment XX% to is on you team XXX delivered increase uptake of uptake dedicated that front is best executives, to of and In open Our to focused the in on growing partners. roughly within account rates employer during partner XX% relationships largest second on our FY stood – largest rates up ’XX, our or attack base. market a from penetration as existing team drive We reported within group and this largest cycle. practices HealthEquity previously focused throughout our an circulating the

During effort partners include our account with well. our largest XXX experts this they and selling as partners, so knowledge health expanding new to teams that sharing are about the we of of cycle, be plan employer can

employees believe that we promise do of and cannot impact, HSA same opt will their enjoy tune benefits fine as education, to dramatic more the the HSAs. we and in While to continue employers value offerings

costs. makes and use was select HealthEquity, of a expert HSAs. When recent to education institutions that they message the sharpen drive and learning. premier higher how ongoing from their example help Our third increases can drive meaningfully of HSA we One are choosing mandate employers one healthcare that employees members public with knows to impact of nation’s their to to engagement deep, our comes on impact their optimally an have partnership the the meaningful wealth

their we effort We help members plan personalized better plan tool provide enrollment build they and than doubled more guidance of In less understand grown design comparison and deployed The enhancements. to Specifically, than accounts. number contribution has and health assets savings their XXX%. impressive. custodial a investors year, within the collaborated year-round invested results a several total suggested growing savings our were XX% long-term to and on the

reduced has providers wealth impact and HealthEquity employers’ this their in to connecting more members point This We example, but HSA are payroll payroll, and its before. One because make say employers. as uniquely do it plan health tax a base. final very accounts is positioned to their they health their to members, positive contribution on contribute about so never when employers, the

reward great was still market build in a are for as with immediately we So, Jon efforts. broadening its to do engagement this helping the on to the materially our start. said, and savings, employer of our coverage, of case We number rates and deepening but penetration have health partners, work and our lot off a

over for outlook. financial Darcy? results our will I Now, on and to turn the Darcy call comments quarter’s the

Darcy Mott

results will provided and and see three Service $XX.X review XX% that earlier stream offset in during release behalf year-over-year year-over-year custodial results HSA the to into their quarter. our on was X average discuss Service down XX% their an then first I our by XX% service have ‘XX. published of in total paid last revenue year-over-year decrease I by it fees discussed of quarter. first growth will ‘XX in average our more the continue for service as of update to quarter the growth a employers I the basis. in GAAP revenue to quarter total million represented a declined to press will the we each year quarter Revenue the guidance the years, for to Consistent year measurement has the HSA. a A on first the both GAAP HSAs XX% FY quarter, a grew financial from is of million. quarter $XX.X results Breaking interchange outlined custodial of non-GAAP are down reconciliation to with Thanks, grew predominant. become primarily last the nearest strategy, of that Bill. in employees. fiscal attributable percent service, in our in full an here provide per that we non-GAAP and revenue service first the XX% revenue revenue categories, partially revenue to over revenue the as Remember, first revenue revenue XX% during was increase we today.

deliver customers. It’s their more to we these keep help network our over going value by so deliver value doing working more and to we And bringing it. time, and down partners are

revenue service increase to ‘XX. in a As year-over-year. we for growth XX% quarter we decrease first quarter. quarter, Driving indicated the X.XX% compared XX% HSA total revenue Interchange for in towards guidance this quarter, last to higher $XX.X of our million margin and the the $XX.X the during million of were to yield revenue. gross with assets factors XX% profit prior rate $XX.X in in was be a last was revenue last XX% to cash an per quarter average high-end compared custodial year. higher on revenue mix representing Gross X% grew in to per the historical quarter the custodial expect to compared spend the for year. custodial growth the interest the FY increasing year average Custodial year the of XX% to million level annualized quarter of increasing in the first assets The in last was decrease increase $XX.X in slight first a first first a HSAs million first the in million the in margin gross XX% XX% from result quarter benefited Interchange the $XX.X from to HSA. in quarter year-over-year quarter

first revenue $XX.X that mature the time or continue Operating or margin will of expansion $XX.X last continue gross shift quarter expenses drive as mix will XX% to XX% of compared the and million expect their year. in were We and revenue million over grow. accounts to balances

income to million expect FY FY ‘XX prior quarter, an and from quarter. Income income ‘XX. of to operations margin $XX throughout net the XX% to in We $XX.X the from We in the technology in the increase generated was of of first $XX.X continue operations compared XX% an of for generated year. quarter million million year-over-year invest during first sales and

for compared EPS the FY ‘XX diluted to share of was prior year. Our per GAAP first per $X.XX for share quarter the $X.XX

first and exercises, net Excluding and of net quarter share. income income for $XX of stock tax million $X.XX compensation tax non-GAAP per net share and per of the the stock were FY impact option our ‘XX

compared the increased the to prior EBITDA $XX.X Adjusted $XX.X Our margin EBITDA in million the non-GAAP year. XX% quarter XX%. for million for was to adjusted quarter

we equivalents balance the of outstanding $XXX sheet, no had to and of Turning debt. XX, securities marketable XXXX, million as April with cash, cash

guidance to on are we for for Turning ‘XX FY between ended a revenue based and we the where guidance of million FY ‘XX FY ‘XX to million. raising quarter first range $XXX our $XXX

net net between Non-cash $XX $XXX $X diluted million to income million EBITDA per and adjusted and million. expect non-GAAP $XXX We per share between be and and income $X.XX share between million. $XX

XX%. assumes share estimate estimated year. XX based statutory diluted shares for shares projected is Our rate FY million outlook an non-GAAP diluted outstanding the a weighted net of tax on income per income for approximately The ‘XX average of approximately

reflected two to our guidance. Jon, would call the to highlight items like turn in I Before I back

custodial the assets at for custodial to completed, X.XX% we transfers First, now this all the interest ‘XX. on that cash or are FY of be reported quarter expect the of our rest the new in near rate

we as capital expenses, for over full will I done estimates and Second year. Jon stock for prior anticipated reconciliation of fiscal not but of that, GAAP and the and back includes forecast to expenditures this our a reporting remainder have some call year the exercises does guidance This depreciation of in detailed option include metrics. management’s a recent non-GAAP of includes closing compensation stock for remarks. amortization With periods, turn the

Jon Kessler

Nailed it. Darcy, you. thank

close on by of network thank team to HealthEquity as I like the our focused representing have in members teams as us thanking and the today would field and remarks to management account Our well field sales partners.

executives is it us, it account to Steve that’s sporting if the we smartest, be as the at at I, all should experienced purple thankful sphere. investors are ups their us up be business emotional workday, in work at they point it a what all longest up with Darcy, every right every and vicissitudes, our believe not of we fortunate to day tenured look we of how tremendously genuinely up. us, downs, to Our off tails are difficult that’s job be have but I vicissitudes, and to blazers to most huge were team and would the certainly had and

open questions, of we up dry, everyone questions. boneheaded those, long who as But with and that in the is with the to say they So I boring call in to your for field, not or boring, event, you thank that will none don’t those so operator, I reference, are take it. out, uncool get maybe Google any

Operator

our And Greg Raymond James. of the question Instructions] Peters [Operator comes from first line of

now Your line open. is

Greg Peters

Team Can you afternoon, Good me? Purple. hear

Jon Kessler

when and else are Everyone thing heard can. boring dropped you the We off here. they

Greg Peters

I the kick I intimidated So, about comment, a will here. of boneheaded off well, and the well, I hopefully I uncool so kind dry shot alright, able can kick it to your – be to – am give am hopefully, going off

one Q&A. I will I you over minute just your that thought adjusted the spend to and know seems that would there be the headwinds about maybe other Can a walk know you pressure that of of ask and good in through follow-up, is this create issues? it a operational path year there a and big will be EBITDA because some on of nice one is I making margin, talk a of investments a minute are to and there pressures issues guys upwards, some that I linear those you line have want because this opportunity, course I us So, spend question and

Jon Kessler

Darcy?

Darcy Mott

does quarter a commission and It se, the on the really accounts doesn’t had basis as X have year. they we have talked accrue come marketing it’s when the that companies and sales past, fiscal most a so on paid door In come in, cash sales. about expense we it XXX of of a commissions on as it’s arrive, commission have an we particularly we increase have big ASC annual in of fourth in in little per the come expense of on accounts our because thing bit and and have a revenue current recognized any of that and our impact beginning most do it year expenses, we recognition revenues our to this, when One but our this the our impact as our expense people large the door. our standard, sales have that’s had has have adopted particularly in when in as sales unevenness kind -- the we to February portion Sure. accounts when in

the year, did quarter. included of least small those Along and stable and relative life year, increase amortized or our we and pickup sales is about expenses has we pretty that asset that capitalized $X will do at bit of is have came it’s be expense marketing that the it that, that out will commissions other number we throughout will from That it practical get implementation board, that be of over will to in level which in of life. spread first the now those and year, what $XX.X EBITDA What so other normally expenses went balance but current a we in it $X XX-year the fourth commission in the that year then will our portion spread as in With assets time the will current recorded upward ASC be a put stay about million HSAs won’t through see when with that the and million you million the little would we on you we amortization the the go have out will future quarter, in million assets, will will – in big of and an grow is less reasonably bend a paid will $X.X other they current sales capitalized we of that sheet as current it and to that at the periods. and on had XXX, in the that now we into back the be a tendency over see for with cash we XXX in smooth that commission the expenses in it but get is and probably of assets.

a we to previously have as we in that, pickup expenditures remarks independent our has there, and we have the to so, to addition And the base in and have only we but determined our throughout expand his able to employers sales that more that mentioned that be HSA get doing – of marketing not our sales grown to go Bill and but also to more to are directly marketplace. team, -- our and

And are even determined from adoption so, though in opportunities we going to expand XXX think the we we’ve that some uplift invest independently we that, it. ASC that our from that got and also sales have

speak of to that’s area our self-imposed EBITDA So think pressure on one I so margins.

on and only tools As invest even future. efforts, it not able have you that time to always will in are that become the in and health differentiate have the if now platform members we spend is we in platform money, and better help only managing helping some our but become to on them for accounts, our a to platform, but long-term continued will more the to we navigate know, bit to healthier savings also to savers they to the a technology that also industry be marketing better technology have our best healthy and little sales think very not our take they

Jon Kessler

a where have will said we is particularly comment returns we we attractive -- which to have Greg, margins, add but always generate just we to spend to this that, case in to for felt I is we you can. increase can that and shareholders, opportunity sales profit willing where where to are and want we one marketing – the

we the get fact activities. excited we can get current cash spending incrementally ASC of we really we the increased And that margins, result the on And feel and about of last – headcount pipeline year, far other with that’s customers sales that out has we marketing expertise result of worlds, new on and is this and we latter that, that point have fortunate bet that it’s with results. in the field. that so QX feel what are and and year, increase prospects the uptake. the like reflected sort in doing what about side have to seen we are And saw we good pretty some we in that Bill working the coincident best with XXX existing in both the of the drive is with both a what And the so as then our account share to our also we increase talked to things executive

this of where worth So, others case to and and it’s we ahead spend, worth it’s you and think think you it. us if as it, a is go said

So view that’s that that’s that our a reflects opportunity there get go are really incremental shareholders. doing. in what there get out a again go valuable to part way to we and for is on And

Greg Peters

you thinking than investment an budgeting about I the lot together return just on obviously how investment initiative, that and over think a just I plan how X-year appropriate you about or and obviously going have sales regarding years? to imagine more are over sales a on that include you there? am you of the marketing are follow-up you sure are business is Just And outlook, that wondering a point, getting but several of your build-out especially put that making your the next X-year

Jon Kessler

happens points of and the you it question is until then recurring side made of is The recurs. it revenue that your think happens is none good it flipside I sale the that challenge to one say will I Well, even have that small in that amounts.

lot year on that get spending presumably some as revenues. be have current So, we the later impact next the most doing for year. impact year but not part, we in current There ramp the are a an year incremental of will the really that will come will in

what from ramping dollars year this But mind. So at these year you seeing we looking to as have sort sure we Ultimately, that’s so are to reasonable an context, that over dollars, perspective. we our that we truly something are are what’s last in period is at look within how these you result IRR of sales and of activities we a manage so we say return mixing a not the make time, similarly we the inadvertently do are in incremental do of business, with keep service will began part activities.

So, to and really little payback with have that analysis well, but is of that to same our soon result. for payback you but expense, less know the It’s incremental a have and and really meet are have want investors – we see little how in context we this careful certainly clarity it, say are a sales to those know don’t at want we try point, your more. the it thresholds some that year do their the M&A that about. pretty not look to of we suppose, what less the for profitability we I marketing see capital we things at kind that’s about we always and But we

it. look how of So, that’s kind at we

Greg Peters

custodial was that revenue you custodial there competitors in It your be like that marketplace. any you bank earned about for I on from And would that And aspect might think and or of briefly etcetera seems competitive the of you that partners we you Thank conditions are continuing Okay. wanted your this the your the a designation. business growing pressure I one have forward? have be getting to am growth your that the just second thinking the that in if just comment topic rates curious number non-bank your of answer. as there the are about around context on going

Jon Kessler

it’s in rates I say months will for this question see XX I forth. and here think so the and a by kind say for and have had number but good has the then. of was views right the of now we I healthy time, we coming are model that’s the been your Well, period know over people to generally way you deposits doing. know like and around, you custodial competitors that It’s and sitting that guess is pioneered it than sitting years extraordinarily our industry. last over we that we I different this being around think adopted that but more a Greg, the are of certainly We gotten X been model. in haven’t as thought dozen seems time, Yes. you this demand it around Others getting about now

can of built depository which end. on includes upfront comments, longer around this, and I account includes as are asset on rely We And goal well ecosystem the partners, unions – which security built certainty to my partnerships business to as as mentioned technology in that portfolios and members. now I for is an And proprietary precision their think our banks. really have and in importantly, build sophisticated these relationships institutions both our and the all deliver it and have most process. Really, of depository we clarity to credit regulators involved these

have tried convenience that for We sort members rates, course liquid with want know swipe have and have created exemptions HSA really to that. while for would screen lead that kind rules cost higher fees, industry to products side, fund we adopting the others transparent members of I low in think of interest focused on the bringing of but about lineups absolutely of investment the as being required you from card advice investment

done successfully looking much depository to carefully get have our other. partners as can. it that partners guy are Greg, keep looking next for we So than the ecosystem ways on is members to that to-date. end or at look we the we I that we I them We our will more our our depository entire very to we would to to as value listened what think that’s to bring guess we of whether on and And it, one what for the add relationships try

I that’s to our kind So competitive there going of advantage be continue to think.

Greg Peters

you the the Can just first at you update partners quarter? number what of was end of depository the Excellent. had

Darcy Mott

It’s in either XX there. or XX right

Greg Peters

much Okay, perfect. very your Thank you answers. for

Jon Kessler

Thanks Greg.

Operator

of Thank question comes next from you. JPMorgan. And from Anne line Samuel the our

Your line is now open.

Jon Kessler

Hey, Anne.

Anne Samuel

guys. taking Hi, question. Thanks for my

You the incremental as spoke thinking of opportunities we that the looks? move about are how small market credit how you union year, throughout for M&A acquisition and a to portfolio

Darcy Mott

are to do a now it an service to portfolio pipeline of times to also we we innovation we have those and we mean have anything puts but of and some have of don’t it of we As because we how and have all we the quota choice in active said this, because a the record both acquirer members our the about perspective or ability this, of be that an opportunistic along along, believe tends from are seller employers we kind kind a just know genuinely favorable that lines, of our and number the to do of like light. done deliver and

to their noted that partner have a The ability I that might can other of portfolios of better thing many so participants that partners business granular added program deposit of HSA little it’s with pun regard no that than can more of ways to become these some needs our program, we be kind in here interest and is in that that intended, depository the our have sellers our have. if meet

do continue are certainly try They these We of kind to we it. at looking portfolio how acquisitions. great. work like and So that’s will

this people one we people like our and to way Anne savings shareholders, like grow nice base, returns leverage we they that technology very, help serving very operational our and think the all have more footprint. know deliver and you footprint We to and is expand more them. build already we As there,

a and certainly but like acquisition will we keep So or guidance don’t the activity. reflect we have incremental doing quota it, our doesn’t

Anne Samuel

Great. That my question. next was giving

So, thanks very much guys.

Jon Kessler

Yes, ma’am.

Operator

And from you. Thank the Fargo. next Stockton question our Wells line of of comes Jamie

is line open. Your now

Jon Kessler

Hi, Jamie.

Jamie Stockton

Thanks Hey, taking good for evening. question. my

Jon Kessler

evening. Good

Jamie Stockton

evening. Good

hey, initial have I am is that to really starting the this a part are services. what heard no and on, hear disproportionately the time more guys? that and other have could of of maybe it than become a overt think stuff in business today, potential little is, So to to our I you this maybe curious some one that you of Bill’s was we think made part previously. bigger And reference we first hints FSAs just but It you color grow – any a seemed other to I HRAs add comments, from our if like

Jon Kessler

Bill?

Bill Otten

where Sure. of starting large specifically Really to down are mid-market we bring Jamie. focused smaller the have of was upper on comments traditionally the Yes, we of my have thanks the referencing some that we services. clients what clients I services our end of set on is more to offered market, to

tell right it’s now. So, to too early

as and started mentioned have certainly We just doing some it the I market down services but interest HRA to bring FSA there the those recently, of is product. the

Jon Kessler

to we question and employers mean, research is this been partly to Yes. think doing your view benefits an And is we going for where area and I certainly Jamie, we what do is I want job of the that really are delivering market – have sometime can just have the necessarily employers as have a where a of part not we we full HSA on for this and to in those great like that. trajectory see particularly the replace go think a and advisors

the continuum it meet sort savers health nice allows of is of savings. health that at to it places things of One different on us about

on account for help can to that person consumer using as and health So just saver, product. advice office is who investment are focus the we same and someone in bring earlier a them help might the that some a we just is flex looking of they

but So the of tell now that that’s long not there. are a other into they what suggested are Bill not end pipe, you we we high but done the it’s because that to at going are in market. we for as some have do the don’t we middle our have hit bringing Apples. want I And then today, it’s think is one to things RWWDC, something business, time We

Jamie Stockton

for think There on other might are accountholders to you the to and how that about same you fair time? that you obviously go. you that And on pay the can a going evolve to one about the how through over we up revenue talk just guys have rate flipside cash COGS the on line go maybe with question think just custodial rates the if amount, revenue

Jon Kessler

less Remember out of little actively. account. we more a want these like think way have if it, how the be we see get balances they of paying and then $XXXX goes. bit, that will cash kind this our a Yes, might schedule become bills be they using rate of of a are on do view a average of in it keep somebody and little that that note they their do are so competitors cash, market-driven. but this it than will on yield who that a medical is a whereas all checking it’s interest HSA and what for more They an is have to Most rate They saver in will their it. of would building tiered we bit you that savings pay

a when closely it in rates as guess. ago X% people years or And are pay that rate down, these rate. will marketplace. there was for been years watching we it this XX I the we inelastic, to Fed pay. learn of But have which XX fairly relates demand will interest be in higher any interest space We but came attention cognizant that think to There ago I very as before interest the rates, was when over

Jamie Stockton

Okay, that’s Thank great. you.

Operator

our comes Marcon of R.W. Thank you. question And next Baird. the Mark from line from

is line Your open. now

Mark Marcon

How with employer year. the and wins the wondering I congratulations accounts like provide and of adoption, the that was to big basically you quarters much there do more us partners was had regards they prior the existing think was a give the to that record that what start you of first a anything on does quarter. bit selling this that from next account to you little versus terrific on source could Good portend for few new season? color a afternoon as came could broader fall

Jon Kessler

second from to that comes access accounts Yes. us growth occurs our first, in third smaller the are know the partners and or Mark, our you Normally, of quarters, most as in that our our employers. health bringing channels plan

generally that for January enrollment about came December, one cycle the got so board accounts that did the and we be. have in employer on XX,XXX normally that’s in And get timeframe. We would in They would what the who quarter. we

of it probably all of So if normal but that health was still from you then pretty the smaller our out healthy, came took plans. rest employers our and

we Bill the I smaller end of this probably over with employer year as employer will type expect those that year noteworthy we regard came seen but to don’t always on the that start at than that time that we have enrollment, a think anything throughout just more did probably continue we we employers, as end in year, but one work said to Now getting that see board. was have more of year these

Mark Marcon

is with the be regards force in after with the that How and we sales later. the initiatives, you should of be will of reaching? term can terms to addressable regards that to opportunity a and providing of from that in to capable named of you perspective little more market the sales immediately some what other about talk that scope then services a and HRAs including the FSAs the nearer And terms go there think that bit employers services are broadening of seems small in administrative to can terms broadening

Jon Kessler

of I of and couple out commented will we on about portion reaching thoughts. all an on ago. this it, first even this of just a the is Bill on weren’t mean, year and as said a where point field I market put Yes, Bill finer a

Mark Marcon

field How big is Jon? that

Jon Kessler

been be it’s the told what mean been up it’s but channels thought enough. these was is start huge soaked just from to answer it we there, have plan we of that by that market the the be accounts is Yes. data these fair would to I obviously health us the Well, if or being had outset, otherwise. up the parts as soaked grow, going were

so make. first so to think terms And again, have kind And and that’s forth. so I see that’s – size we of in the of point I will

been the isn’t believe TAM. core when we The is though – can have really to We greater relatively second in our expand frankly It’s about true as diversity just and enter business services purpose what providing it’s other are its true. market. we to no very is other to is in you of market our from what point providing, I opportunities that those core our more early terms growth always core perspective want make still same driving the other innings you market cognizant of our But helpful that we realize are is the I’d market as in services the of offer and we think are segments. with find some services of we that’s

has have is the core you the to of the it we related maybe most the potential it’s with and quickest largest is think think think I comes the bit established company fair put service forth services TAM a to growing that objective market, about the consumers. position an which all durable win or fees these the stuff and to impact relationships terms is when So has really HSA on few over so to little the of in some what the of you, a but next years is in

Even to business. into all not is positioning core XXX(k) getting the all business about way when think So XXX(k) for are the about we example of to grow are what think that’s plan doing in about that the of it’s space, record-keeping. this we we

to as going and use use complete We the to in know an and are so case, HSA managing are members health going the to more XXX(k) members, to because we if they savings business be trying of products can retirement those that’s picture used. to it a the and of be intended be it that are employer’s HSA presented

we even revenue what complete is know the the picture consumer present on you there consumer, our does. side, that know there absolutely if So we some other the while is the there goal produced to real

that’s and So presence are market core about anybody the commitment better growing we business, we make. everything growing doing think core within else our the I is than the and our really

need brand. isn’t for a a not I confident is are in So core there who additive of good for extremely bunch news for bad oh, suppose is those TAM, the additive news of say the as the TAM, I suggesting prospects market the I long-term might we think bunch am

Mark Marcon

was I because HSA? of going appreciate you that the are additional along the When do more the on lines type you was accounts smaller getting I that TAM after, to the and weren’t core previously the focused

Jon Kessler

employer not to area case your them with have think sticky to that provider know, just now your in unless the There where of and long And in of from you that shop in that’s that able doing is that a that that Mark, if terms as carrier, we time or to an partnered every employer we the done be want were know HSAs we And are that’s is as or you as I can think were health that this I doing you get and ago what just because And plan relationship that part say year. period an a benefits proprietary we move way particular one small pretty to mechanics even the and are you. X out that years it. employer say be X it over of provider a research thought enough receptive turns ago how is advisor have we you we couldn’t you years it of right. this might to

have through it, at plan. the the look actually they the their likely are you an health if purchased fact is, in less so to employer smaller And HSA

investment very us, this Now but our it’s really counterintuitive for triggered that result a in area.

so the markets a to brokers So fully offering of much half issue, are the now the have toward are not as are products penetration nonetheless, employer rates these well, where relative part it’s penetration, segment keep of etcetera, least these that bit remains in of there isn’t fixing of which there is that but whatnot less are certainly so them, the carriers, on people an in least still barriers low, to here and interest case the here there the opportunity little etcetera, say is they an there at enterprise very a large the little extent, hear where we your start to about and and premiums is some HSA and that about is are mind selling insured bit that as true lower in you on the that growing. still group Greenfield,

is if the than And – of are so also is enterprise often the we bigger. what’s HSA market they think HSA. certainly penetrated that the is therefore Greenfield that smaller last more though groups and this – the nice with end than opportunities And not everyone going

replaced. And getting full you so are

pretty for And too. valuable that’s so us

ball We it have. from of can talked the work and it with Bill health from – the is direct have perspective retirement with an plans three can really a like doing think by are answer for in the delighted are the opportunities we providing – directions partnership But So, about advisors terms and attack because services attack and that don’t from certainly segment. there advisors. and result it will from opportunity look, have a I not we don’t pace always through about bundle as I just actual of we crystal attack increasingly we what directly attack the can you in We of be, of the we by can that now. financial from the that a that this the and penetration now we

pretty see that’s we cool and think we So, goes. will how it

Mark Marcon

you bit you should early that? in can a of One talk on over. one about unions, terms portfolio a That’s of I cost great. when just the portfolio know think about last credit about think it’s How buying little we Congratulations. the like, or but transitioned getting a

Jon Kessler

a of the smooth. transaction regard as and to about transactions these service these implementation lot teams our portfolios And team. well as process of great credit is over one things is in goes extremely our This The moving for this is.

to a selling a feel they decisions are number in able disruption or certainly them of make disruptive in to quarters are can We the to and do way is no the good cost it and about that provides not making. minimally provider member months

the are So, modest. really costs

sort cost some to of specific how deposits world NCUA with the communicate also making what things they making to think comfortable that understand kinds people program of we of making and and and of NCUA are the needs is haven’t costs I accommodate the kind we one-time works our that heard way union those maybe some very to adjustments But similar. we their that sure credit insured sure incurred, doing, those things. what that are cash with

all in true tremendous think particularly thing tremendous I they that of different pride they not businesses. I institutions, take but with about local these, only relationships think CUs take this but tremendous, – is individuals, that mean, the I their with is is

And very, we large and in to state footprint. so fortunate taught a everyday. that And a are be we very see you has that

both credit will acquirer a how real it And and leverage but in being of so we a are also proud of well. position we position be think the the there unions see being supplier of we the in to to opportunity as that goes, lending but there, cash is for

still And so that’s something new for our industry and for certainly us it’s accretive.

Mark Marcon

Great. Thank you.

Jon Kessler

you See Thanks tomorrow. Mark.

Mark Marcon

See tomorrow. you

Operator

Thank And you. line the from Demko from of next question comes our Stephanie Citi.

open. Your line is now

Jon Kessler

Hi, Stephanie.

Stephanie Demko

quarter on you taking there. Congrats guys. questions, and thank for especially my another Kessler over Hi, Jon

build shrinking portfolios would you that available in I are of the ask out acquiring sheet the of ever platform if versus outsource that So feel their if given kind an kind just HSA about you of your wanted competitor size lot and think have balance solely in-house you so for given your to how of platform? leverage cash for HSA other just consider could purchase. a and players synergies the our portfolios these going up we platform guys

Jon Kessler

Stephanie. And who genius now, evil the is

maybe As sure from the the bring at genius the way on and have activities and dad, specific of incremental am at think perhaps think you that’s I and of my not we I going is M&A the to news hole evil course, listening, the in of look of something, evil are customers it’s comment reach that doesn’t because been customers certainly the to are kinds evil. mean not firm existing But we the by way anyone our that just can I he mean referencing functionality I businesses a that would of on the that digging transaction. new some at but answer – these of you look is he I center is can suppose as we platforms earth a he case block just a kid by there say, an reports is of or he is competitors so is kind we am one of I used result that our what

allow talk that really of we do the you up products amount balance significant that be sellers certainly out provide an channels and interest, cost be side. on to as if still side, did to lines example, for do would of of we types about HSA that to valuable a because more think So there shareholders, you transaction we likely or synergies didn’t private to those And if they would be companies to certainly have where our be a in that I we something pursue maybe might that along plans importantly that certainly perhaps of us our look that’s thought have an of the something employers sheet to aggressively. deliver on as A of the there that, able revenue in particularly position value reach to economics partner health at definitely tremendous see lot more anyone full think kind would-be these like or pursue taken would the but good that, advantage – we thing. to value and haven’t the would to better new I

we time that just If the better again, that great argue in to to a else great the that be logic are it’s thought as business would of purposes they the for purpose stuff at would without be customers, the of can’t who look solely at, that getting be you platform, the that’s more is if interesting something value, we customers more with but someone that platform anything would imagine pay us for that of to would on kind buying acquirers probably that there particular. certainly certainly business to wouldn’t adding I willing just because enter there was added So, for would be and I circumstance. the thought for commenting a a and in, be now

Stephanie Demko

Understood.

interesting will there get be think particular specific are capabilities you? to I would into you So, that more any could of

Jon Kessler

question, a next. bonehead is That

of things. competition perspective. is guess are lot say think would do off it aspects some this. I of in that only of specialize this be always software does and at well. there services particular really who find I me things people am that I a let’s would competitors quasi going that ultimately, in service business to to because the better, surprise I need say on things sort we of valuable call will will it folks a apply platform that. more have I really that mean, so had there that’s sort the of I from and mean of either they our wouldn’t And on those the it some really looking the to of are things nature and hold are that’s I focus that does beauty competitors

the haul the perspective. over platform we earlier, said over helping purposes today advance the a course, content to is but what have is level. benefits require of real and I time to – to the or that that. thing. ability table them make some the And is what get about investment for side really, their to use or consumers, around a also the that data that’s consumer long said infrastructure at over that the to that of is know happen of is a are information long point to going analytics you stay all message, of the the What’s spend period is the the before are on Bill administrative lot valuable kind everything we right value savings of valuable a in fullest healthier, to to, side less they and to really right from right the health this build even Another and infrastructure doing retirement that’s as expect of whether this in health – those stakes And information use valuable or really that the do time,

player. over innovation our we that for we And valuable, on ability but a to use quite really wire game, to breadth something the takes so our push – a we not do From just push ability their we of of ways, business of better sort own is are as off friend, we When lack have that would term is certainly a our innovation, perspective, as in because along this they is what found base as with innovating it aren’t are competitors focused the the in are. specialized they consider industry industry. that their to not innovation

valuable to things across ability innovate we are those looking kind of wire base, the all for. are the So, things always

feature So list. that are not one I kinds play a would all those the but of am give things in, going to you

Stephanie Demko

the strategy the obvious just but Thank on quick the do kind we is new early either then way. quarter? have wins the And given of possible in to because it’s the line, one discounting understood. help how just Alright, recent for days, follow-up update Bill you color again it as

Bill Otten

Well, the for systems. thanks tell Price question. what Sure. will I Stephanie, you,

First a value-add service. all, are of we product and

We are not out looking be to expensive. least the

it when competing, However, on to deals down to lose price. comes also we want don’t

as where in team. herself needed pricing So employers we will we get increase and Darcy to looking with are AUM competitive bring the more in the

it lowest but provider. be go always expecting help, absolutely don’t yes, to the in So, we priced

Stephanie Demko

Appreciate you it. Alright. much Team so Thank Purple.

Jon Kessler

Thank you.

Operator

Halper Cantor And comes of from Fitzgerald. Thank you. question our next Steve

now is line Your open.

Steve Halper

Hi.

year, a fair? Is higher rate rest a for assuming for tax drove so you that? what am I XX% Just the assuming am of benefit quarters? the in quarter, effective said I And had that the three item, remaining tax the housekeeping you

Darcy Mott

to Well, answer answer that result question stock help in will for we then of on second exercises occurred question. is first and the quarter. a the quarter got first option credit Yes. tax first the the The that that a

XX. just go would used through balance benefit rules, of And to goes our into X sheet February take the provision be our the that now through to accounting April under new from the provision. we that So, that

the what And – exercises I forward. and not they that so pre-tax that, forecast then took exercises in to benefit extent the people the stock stock option credit gains stock option going we we the of got for those our got income, do as comments do those said exceeded those We be my that. will

So, if they were and QX on tax were XX% expect that. the zero we and is our rate pre-tax income then from be whatever to QX normal QX, it would

are virtually we impossible to predict necessity kind how that’s so our that’s because calculation, be, out non-GAAP what the And it’s predict. going to why it, it because that’s of EPS we modeling of do trying to backs

Steve Halper

Right.

it’s So, quarter, if or… for XX% a so zero assume do we

Darcy Mott

Yes, blended. but will be it

So, it how got will the tax you the later are quarter, week, future that tax that this reconciliation a in look Q That’s first correct. a – quarter-by-quarter we whatever in the assuming did we for for of and benefit see will will XX% of will but quarters. be on the that we rest that was rate and there be you if so year, result much that basis would at filed our the

Steve Halper

Okay, I Thank needed. great. That’s what you.

Jon Kessler

we so… clear of guidance and be Would is tax inclusive just full on the that that the it XX%, effect say, it Darcy, year QX the ignoring guidance to options, for this of be stock of when give to fair is

Darcy Mott

stock Not stock option, a option exercise.

Jon Kessler

correct. exercise, option Stock

Darcy Mott

correct. That’s

Jon Kessler

but it’s this for rest year, it’s the effect. XX% So, the the of it’s year, ignoring that for not full XX%

Steve Halper

Right.

the a So, get of at XX%, net anyway. we year you assume have the forecast XX% assume credit the – and normalized back would been that year in as can so quarter end since we just you

because So, you can’t get just it wind it. forecast it. will being up less, I

Darcy Mott

right. exactly that’s Yes,

Jon Kessler

another opaque for It’s victory accounting.

Operator

from of line And from comes Thank question you. our Hooker Donald the KeyBanc. next

now is line Your open.

Donald Hooker

afternoon. Good

boneheaded that a you asking acquisition? but risk here, about may guys question big did I So talk how

Jon Kessler

short sellers, Out one we there so good. so him, you is of those got all are through

Donald Hooker

Alright.

your supplied it’s guidance? were a that did I So around you tuck-in understand small, you mentioned you acquisition, any but small that’s what there numbers adding mean, to I

Jon Kessler

No, we haven’t, go ahead.

Darcy Mott

about It’s purchase will AUM of $XX it around million price $X be of million. a and

Donald Hooker

I as a you about would more are But for are interest that there potential cause – money scenarios then creeping gone of placed what up are rates got rates what not of there current enrollment come those can look, year I what the you prior I year. are interest kind that’s the where higher some scenarios it. during already but up of understand And of are your have in year? on that trend drive and that are normal, scenarios and think the can yields for custodial the creeping things Okay, during lot upward of kind year, rates know sometimes the I during fiscal up this cash years this

Jon Kessler

pretty might what an up another have had got year, bit we amongst go see current in issue got we money into we typically contract steady decided circumstance or the a of come uplift to prevailing out a case, December of I the a of unusual rebalancing rates the one rate time our could it primarily as so of but of in little of us our definitely got which whatever we got unusual if contracts agreements don’t Generally, we we of not last now do. that mean, most the in our year entered favor timeframe. it that’s January the benefit up to contract, of We more result elsewhere a where that. capacity Yes. The kind Thanks, who you she kind variable of new end an money Don. rate point and you enter when Last so the placed we and will have will at towards go at goes. into and had right increases did depository that that come uptick of midyear midyear pull new year see, as we who it and at than an that’s depositories more

will there Most in, of it looked coming in during that end we not So with of of at or off new maybe haven’t but just occur get and money the contracts they money contracts getting significant. roll new newly. and couple for placed it’s I turn the up there whatever may portion it pick the itself at smaller year, recently, of get and replaced will year. are of a the hugely

Donald Hooker

it. got Okay,

Jon Kessler

this an to the the to the the this total the just is in of try whatever, quarter in years point, Granted I mean it’s want to number on generally given over before last, because course of variability pretty this year. something put We we steady the was course small bigger, emphasis but that year of being guidance where steadiness of call year. it over amounts X.X the remainder were of the we essentially for it. of of and we in first kind the have so around manage

and to someone lessons attention would list pay why Darcy’s from significant these we to there say were have want again things. and something draw about to who we up on we to and reasons keep of year have would definitely encourage is calls midyear there why talked in in reasons kind these last So mind comments this

would that, expecting we prepared again, Now, forecasting. to are these are it’s for we or something but have We not have that. circumstances love

our word our that’s hey, of will where current So be. on assessment rates

Donald Hooker

good Okay, much. you thank night. Have very a

Jon Kessler

Thanks Don.

Operator

you. Thank And Draper the question from Sandy line our next from of comes SunTrust.

is line now open. Your

Sandy Draper

I into here. the queue getting Great, boneheaded some I guess with fingers slow thanks very was in guys.

would I and trend, some is margin is there would fee term if account terms maybe is where declines fees, the there for the thoughts service decline longer makes quick levels of just of you is of margin place sort expect term to the that answered, gross you it gross per see sense the most been that out? continue asked questions So that and but down have one service discounting assume Darcy, longer on a my one you in but the in see just to your think

Darcy Mott

fee, is and look look an example always what your talked and help Yes. platform as The on to interchange. and of fund an have adopt contribution some am actually train really money savings all putting that significantly, I am spending I these day accounts them looks employees job up those and like am accounts, how margin I for margin and going to yet out of I comes employer think existing the employer we make revenue, have actually HSAs used just long. HAS I before we that a this I I at to my if more it into going employer about am dollars sources components, goes I and long-term means for went that of them but should and have accounts across going revenue my are I accounts the these one account at going retirement, not my good really way that if lower custodial, do help be those and to to a am says are custodial know remove we they me to and my we give “service figure a just you they service to as heavy that there. all that evaluated, will that down, I And custodial do these this profitability HSA

at And revenue the so totality. we of cost just the at and try account appears in to evaluate service service it as look the it looking not component and it

center have it to our are continue By to over what it to X% a cost out been bill. ways And for for accounts, time. said are time. going service them call can going their there design, emergency room pay to to night that to target cost within will some period service go and being XX/X looking We how it better to they try Now come because that these long revenues to need to if our so down you seems accounts, being but – and view service fall employers will the always to that’s to doing. we offered health are we to this does do to a XX% fee. of more our have band more money beneficial with because incentive are much is touch effective a and of on figure getting do way account get they that high – our our be at trading they marketplace there, it’s priced not Saturday And employers is the we and plans you that the as are if going we partners, product to and away and are we in lower our we bring you our in us a

the We them. phone will answer for somebody have

if because to that better, continue costs be are little their will that. service margin savings and we are do We with to that a sacrifices, are there bit we bit but a so helping little try always that. health associated people of smarter do build And and

Jon Kessler

and have the but in experience people kind – has of when bodies best, than that field nice we bodies your meant we of was on keep Sandy, the maybe certainly sequential we keeping with sort add – just And of had really people talked pleased there, team we COGS. performance that service of sell. of quite terms mean, also just needed just had I fees not basis probably I with in you but service January, the they It’s I Bill, about a the service a job in always that good levels to we been to year start keep January, really good the And at and with more around. early helped, off in we I regard levels that’s were a good got point did felt good around we really service outstanding. that’s probably that during think were something

where a reflected is first the same itself at on going in a basis that unit in a look time, revenue holistically, cost. at in revenues on this service total second up. row – quarter you So is natural if And totality the

and a unit you, number have what per like seems look or And is EBITDA that that all wire at that good so, result and is the if of you thing. getting wire

So, to that. we too noting get worth over hyped or it cost, revenue up going of not component is but one are

control January performance of quarter to this cost excellent but quarter service on followed One contributed the first service an the that margin a was perspective. team side that really the strong up things also with perspective, from a from

Sandy Draper

lot certainly a makes basis. it. That’s a sense and Got helpful totality really account looking that of at on the

are Bill, less is other broader one groups it’s like payers landscape change standalone about competing of who maybe significant buckets, more you you change of out you terms is call of players, final terms the effectively? just their broad when who don’t been own you in and benefits the for terms to competitive or there back more one in in providers, when you competitors, different or of more HSA for I but about any when any the with sort the know of seeing less Jon think there think office, specifically has So, maybe in or

Jon Kessler

buckets? to want You hit the

Bill Otten

Sure.

area before. we say but we anything would expertise seeing depending approach I any in seeing no, see they the doing were We not what past competitor I of are different different that on So, haven’t is, come say we that their year. a competitors are can’t from that’s doing last seen that that additional do anybody out

Sandy Draper

Thanks. it. Got

Jon Kessler

You bet.

Operator

comes question Oppenheimer. Thank you. line next And of of Mohan Naidu our from the

Your line is now open.

Mohan Naidu

questions. my I for will Jon. dry Hi, Thanks here. Maybe one taking add a

happen? For there are seem bills Steve, DC silent, you supposed from are is total happen, to awfully the never to to from anything but that expect

Steve Neeleman

both Mohan, the [indiscernible] bills we pleased of dozen of question. sides accounts. in isle that that now of savings I the are thanks say there for supportive health will with least coming the a these from are at discussion couple are

know it to we being So, that savings seems Democrat came I of said, kind there for be beyond accounts. kind supporting what late seeing end the It of a And Republican are and think this we we of but lot kind to the things health there comes, the are of versus when be timeline. can’t reform one if talked it’s sort I of that out-of-pocket up we division then will HSAs. still ACA guarantee are the and then also even did the HSAs through, is amount for more, that contribute we push which way last allowing those seniors people long they which weeks to can talked increasing working or into up that the X that their too kind and and opportunities max working of time about chronic double really put HSAs for their these seniors. expansion focus is been for long can’t to on can of what mean, that a care now if provisions

piece we getting that’s just that are out positive bill that significant it’s love every a has fact the gone, out we – there And every so where expansion. of – gets look

it are for to occur. Now, we just waiting

have more So, any but closely. following it us are if insight got you know, let we

Mohan Naidu

all Steve. Thanks have. That’s a lot, I

Steve Neeleman

Mohan. you, Thank

Operator

Thank of America. Bank next you. of Allen from our question And comes of line Lutz

line is now Your open.

Allen Lutz

congrats Thanks for the guys. questions the on and quarter

Jon Kessler

Welcome. Allen. Thanks,

Allen Lutz

you. Thank

rate growth So is taking a the at growing than are to question, question share your and that you custodial for market Jon cash market more the it basically Bill, guys last year. but was is last year, expected a this same is slow

where the slowing, So I guess acquisitions growing if you portfolio last guys than faster case are that and you are b) were a) is year?

Jon Kessler

One at billion quickly are is like I the at billion looking to billion or using short it share billion our the the competitor And them assets part don’t it and or I $X.X year, looked you look year. $X.X the we we is, so yes. that $X.X it data and So added of first added think way take for something and is from we this is what there. and calendar or at added mean that nearest that I but your taking last according to $X.X question down went answer is know, if pretty roughly,

try and not So acquisitive, thing. are said going pace quota don’t I or think the that’s to accretive or things clearly, are on meet to basis we kind organic out either taking share an to in of we assets terms but whether expressed of we good the regard. that’s slow that that in there or into just and that acquisition price accounts business some going is of a acquisition

So, want I where I we share leave is am I’d guess to to… you Bill take on everybody. try from except hoping Bill, comment the to answer

Bill Otten

a absolutely are fight to right, have to employers increase but Thanks, able and employers spend we everyday, them existing we we the rollout we before the is those Jon. the able education said programs good have to as areas we have that get adoption. time growth also now account Jon get been with fighting large are with more of one and Allen great it’s question is

sure we clients spending they time get the getting of with make they fighting for new And business so while want. want are we everyday that we existing are all that are and to can levels also the adoption out we there

Allen Lutz

think Got front have I of X-year follow-up end the average it. And to moved rising duration you could rates, you quickly. year-to-date this these started you that are from as at interest when Have curve I guys shorter yet? about you contracts duration that you if ballpark, you a contracts up since to the thought and into rates That’s benefit helpful. do is guys really have then renewing said X-year the interest in more rates guess getting quickly and rising had, have on

Darcy Mott

deliver we in little a trying sporadically But so don’t do the predictable, to of to one have to of and really the steady at One – it these that we also depositories results to so point going the benefit since out, consistent won’t ladder that us they in more that somewhat get short-term. help throughout is is tried Yes. that are some only had difficult. bit be was and are that a lot we are from to short-term and spikes time it we a thing not marketplace used get-go to in fewer but we kinds it going year take come to

out it continually when generally going X-year we So are a ladder it period. over we ladder to out,

view duration quarter or one we like that one a and hit of we to time of or particular duration and period don’t duration out a funds to any or a of with in it. how this place short a just think the long we so And at get period, how look steadiness over that’s healthy

but money new it the ladder rises, we it will but think out and that what is best will deliver to revenue for when the on take we also do So we we business, when will advantage we it line. placed of try consistency

Jon Kessler

mean, you I make thinking I about this one to sure Yes. right. are just want

around have that course duration be a shorter X latter this may of average tends a around funds our Our right in even X the shortest on of year. deployed average of the of just that aren’t time that while because we X term fact of and years. little policy go that fact than to an practice, investment duration that far, the could the better in that be over for the years lack evenly is between could end and depending out of average regard In year

last have we about done more really job stability in to think want can. looking there say else we other don’t extent not, that of of the ways in so that to points And certainly could I of lots X you this is that for than It’s volatility to kind regard. coming we us than is we more are anything something one basis to deliver that that There think deliver for in that exchange and play are this.

served we goal kind policy and of where and it about short terms average So is our have coming about doing investment duration we the amend is certainly needs even kind it. we in at depending we all the be if to of looked probably we our we and stability of terms think but and that what is were stuff, in under on of the can are that. further, we current kind policy that the way in tell But think are mostly by our that was liquidity you end of way

Darcy Mott

go as as that the so up as when on through we money. into duration that said of by And we X-year shortened through X-year year year as definition through we a us gets you automatically a and we the Yes. just the account becomes take go and go replaced that then Jon

Jon Kessler

is partners. level we of to are deposit really implicitly more and sort sort uniquely is the are able stable relationships trying thing like deliver this to precision to thing other we duration The our do large affect of one depository as is does of we among sticky of feel

you say end close really that’s our we what it’s partners and think on existing needs be say, also want makes that generate that we you ourselves really where few actually is they with discussion are that kind listen can listening our and think talking something that, it’s bank what with what and and get the May, listen have very there can there pride what I well, think where to we of they could matching have being have what as here do a team and for now to would-be know we both think of depository And So, durations one year, a kind etcetera both here can very the and out already to It’s a an we be does we we asset discussion depositors and that says able about way. leverage. June to is maybe to try really unusual is flexible can parties. the that valuable to one out that’s go team generate and sense as to they they able of about say

sort another term over for more get you is basically of that opportunity go alpha spin time that’s little on better out as a a bit of deposits. So point on lack to this an

Allen Lutz

Thanks guys. Congrats again.

Jon Kessler

you. Thank

Operator

Chardan line Thank our And from you. Markets. next question comes the from Capital of Steven Wardell

line open. Your is now

Jon Kessler

Steve. Hi,

Steven Wardell

you showing? how selling now for great. buyers selling questions. from to – are and marketplace year’s guys. you prior I season what Thanks. different taking in give of a this guys what a am you the from are months and preferences of Hi, you Thanks can few are Can sense season years kind product the us my buyers’ hearing is

Jon Kessler

Bill?

Bill Otten

of Sure. many are over the most to to can’t that the again that of us mentioned a of got we best have salesperson to with as client want looking prices kind one give those. are thing buy want prior going Jon but service them speak telling to and they that provider hear buyers they that they years that’s stop But the a is here, Well before, are shop always important a very over is and I before deal service, have happy the part ever fortunate equation. high level and we will of to we I

things. extremely important, the we of that Bundled before mentioned is are and down-market that also segments service high important. all we Purple are services across several level So, hearing up-market,

Jon Kessler

I and mean, accountability education. really I that think mind the to words come are two

for is please you And I So Key think think are this free customers regard like employers to I Bill ago, in stuff and talking to I more last do call enrollment can of I about. of want Bill I way university decisions mean, optimize idea do know an they provider grand calls retirement, in, that’s system, to to if flexible do over week, the so am with employees of for Partner educate think works year, value their that but what handles that and HSA of the value people now needs, being so feel or years that part open that’s yes, platform a of the partners trust for with of are that weeks handles calls whole our year-round actually the help another things my our And from – now you enrollment can and how about terms the can thinking part what the really for that. and but make HSA people with it. people we provide the deposit on outsouced this are don’t is are very is dealing education really accountability like was an are or year X idea they yes, and example isn’t to kind get can’t Summit but the that then Bill to think XX also that we say putting days as building talking can appealing. I referenced the comment that and of absolutely the we new sophisticated what savings, about think that’s sufficiently I then during is apart critical away they round team, are team XX and I attorneys and coming members is from long-term. the trying end. are center during to accountability your you year a quite actually maybe spell emergency when works there that organization using part who for practical there the if millennials of X you Y this, and to acceptable, sort They either and/or rapidly think also or an And

a that energy our little the to can clients? maybe So, from bit you speak of

Bill Otten

that is this No, and it’s have today, connecting Steve. Jon say as not us just here about the in groups health to really prior been out the has a people everyone they is Really there things understand what XXX(k) what concept many right you rate HSA long like IRR the need saying of for of retirement. call exactly for point some heard your because together, but help it, it’s on time, look wealth is but Jon are for a at only to employer a good times and the retirement a talking and starting two few linking XXX(k) your this calls been these recently

rate, plan employers clients connected our Key strategically to at have with to we the and so their them have so increase looking them looking for that further still in employees. many and from they place group contribution come for can with Summit, for Jon Partner levels And are are gone us that of clients able be increase adoption help we as to help largest have several mentioned and we asked to they a even there education and existing their

the So Jon. you hit I think it on head,

Jon Kessler

I I are we mean financial is planning members to but like for don’t looking through they dealing understanding budgeting is that individualized kind mean, and level. looking to of some you and it, not And us that stocks about and like your to for see have one on we plenty make mean, exciting that’s members for much crazy to incredible come of what’s do for reach and than XXX is the It’s is and interesting financial front, approach budgeting. Steven, with real that XX/X, highfalutin I to though consumerism this trying that improve radio way advisor talking the around an there. is past. this to out some telling family to people your in what where kind people budget that’s who market pretty pie we and advice HSA And the would actually I nuts and are so we are think our and of how in with this thing so employers just really more some year together for in it’s looking at snowball less more kind forth, of expenses where how are hear and what it’s healthcare all about that and frankly guys, call and nuts interesting out bills more that, their product of debt really understanding creating use it’s the it’s and members bolts that ever are our and members talk this charts in bonds to help. about bolts of us much really of the with scalable, for at healthcare those so tool And to looking quota of and level what go the are all it’s the people of if we that looking investment

Steven Wardell

go because were of thank building been to and about selling, them talk potentially Great, a to prior ago have out consolidation figure at on bucked if much spotlight HSA reluctant, ago talk more of that lot for the in X year the year you. questions and just back have held past would a so them in on one they out organizations highest years HSAs would trend asset to so you and on held that they And for today’s them call, to the the the try hold of to sector. price or how the were longer would a

you consolidation? of has would and you of would that the And so sold a ago year sense not are selling, who these say to we now, of faded the holder where say are assets, might back you have that area an of

Jon Kessler

a On thought. little offsetting net, are There bit a factors. been there has of Steve, two

I the more deposits the valuable flipside As view kind been and the when thing. definitely replaced the think news a of extent than that reluctance lot it you become demand I deposits much little that on beginning It’s to all hear I a there, the I say current at the administration of away. for bit but in net, not think understand are more some, that so sure this, the I our is am some there of have if. was of conversations faded a now that, is of about by rather That’s but

And are so will transactions there. I we going be but those to think patient, be

Steven Wardell

Great. Well, thank you.

Jon Kessler

Thank Steve. you,

Operator

no at to I over would call Jon to now you. the this back turn Kessler Thank I for And am further closing questions like showing remarks. time.

Jon Kessler

I will very closing care. Thank except not the any remarks if see you. see after all Bye-bye. thank have Labor Alright. over Day. and we Take and summer you we much everyone will everyone don’t

Operator

great Ladies and program all in today’s gentlemen, may thank and the participating conclude Everyone does you This you conference. a day. disconnect. for have

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