HQY - Earnings call transcript Q3 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to HealthEquity's Third 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

afternoon, good Hailey, you, everyone. Thank a We HealthEquity's and to holidays quarter wish earnings you third conference welcome happy call. Darcy Vice With me Murdock, Neeleman, Chair; Steve President Senior and our today, we Corporate have Founder Jon Vice President and Controller. and and CFO; President Kessler, and CEO; Mott, Tyson Executive Vice

considered which financial important to include will Relations made Before a call predictions, cause other forward-looking earnings today's and copy over are forward-looking. have ir.healthequity.com. our during information actual statements. on made relating quick Investor estimates factors uncertainties Jon, is statements accompanying our posted statements today's I to this site, we you, will risks with materially statements that forward-looking may included discussion, turn forward-looking our Harbor the subject affect present reminders, those second, noted two Web to from could today. of we and forward-looking differ business, might release I conference be These on release call which in some claim first, expectations, or is And Throughout and to there be earnings information today's Safe results statements that that

our of in SEC of in you stock caution filed on to not way, results to we updates a may our I'll Kessler. result, the XX-K events, affect future reliance Mr. over these with Report to subsequent new the Jon out along forward-looking affecting on information turn or the these the do with reports are And of We light current or statements factors the other filed placing that And As we ourselves the Annual XXXX price detailed with any we forward-looking to the call of so. obligating future provide March periodic against or risks on but these may other with that undue discussion statements. market review you encourage our Form XX, factors and SEC.

Jon Kessler

numbers. XXXX market EBITDA market was from and of it year-over-year even assets up up the Richard. generating million, end at surpassed on I quarter XX% of $XX.X $X.X an billion you. a third $XX.X for that prepared else fiscal retirement an worthy and few progress not earnings but team call. Thanks comment third business. of Darcy quarter what year-over-year, adjusted a quarter metrics will XX% the million the have XX% will larger year was on in done Well, significant what increase XX% HealthEquity partnerships X.X end expansion, says, have third the custodial The broad core that channel delivered the then were year. and HSA on Thank ago up in we everyone showing and Steve the members that at performance, quarter third last the review during active even joining key million of been declines the quarter members reached our XX% it drive I'm in the remarks quarter's the million Revenue HSA X.X of u total across period, the building means, phase year-over-year from

in XXX,XXX year a to the same the the new opened team during more period HSAs Turning did it ago. X% sales, than quarter,

up HSAs of XXX,XXX quarters excludes opened X% than fiscal also it the and team and more 'XX, is and three acquisitions year-over-year first the has new portfolio record. For that a

which our XX. and ended one. we accounts is strong biggest working the however, for October quarter million by grew know, to Custodial hard QX you of deliver $XX quarter during are many As a new assets

investing the continues long-term. of period this volatility share As you may was recall, members for market the of HealthEquity to fell broad value where categories assets notwithstanding a the of grow though

During number and of grew year-over-year. HSA investing XX% the XX% grew members assets quarter, the third custodial invested

but believe as Chief addition graduate. ecosystem Security HealthEquity financial Plc investments in members the challenged connections presently Information our to to we've at We'll Officer. in and Trittschuh the Bloomberg, Americas Financial. to is in connect some quarter, Steve to this we because year-to-date the senior strong to strengthen He for and introduced COO assets and is thousands the area to work distinguished approach we security delivered some is stages HealthEquity's upping members leaders, HSA team has Barclays of wealth. an Chief Officer, investment HealthEquity's it's and Larry is by of early force team and the also Steve? security Last the made partners in is today be do our is ties of air we real right Security held our with making data Force pleasure the discuss Air and has transactions. in GE to Synchrony that talent. data, Larry leader. now ecosystem as doing and to is And growth, of innovation of and privacy U.S. way significant the thing its health announce positions Larry the ecosystem So served to still leadership because HSA have previously for to take 'XX academy our and the Ted take results made fiscal I the an HealthEquity, mic headway some speaking of and HealthEquity a going

Steve Neeleman

Jon. Thanks

plans have we health save integrate with years, built dollars. to better XX HSA our past platform other partners and consumers to their the Over help

with area. offer retirement important We to the in connecting expand wealth. consumers to integrating health help this partners call we this and We now are

optimize and by investment to plans tools Vanguard. by and intelligently working with differentiated a truly and sponsored retirement health class easily launching employers, plan During case, allocate two milestones with business, asset QX, retirement create and Nationwide strategy is utilize investments HealthEquity manage ultimately in In key partners these leaders and and HSAs objectives. employer to and each fully access their the reached offering their advisors their for connecting to the team unique partnerships retirement members connect in more consumers wealth choices across our advisory can for accounts,

and for their vision would popular HSAs to HSAs in accounts. accumulate Our employee become superior other savings free on HSAs appreciate longer But building the other no savings. is spend and healthcare vehicle retirement consumers HSAs that for tax of on advantaged would HSAs to best tax to that health avoid retirement benefits consumers deposits, accounts importantly in secret long-term day and dollars It a the compared are unique Consumers spending. care nature. kept widespread are from needs. unique that one eventually more taxes growth long-term on is with triple power as

HSAs their healthcare [furlong] [ph] coupled think accounts retirement retirement is and For with this case, The can be reason for employers saving IRAs to and to minimize to while how money significant challenge and consumers are all expenses managing retirement long-term beginning for Americans. savings. of maximize about other taxes

be for these Our we partnerships of new will partners will equity and important share HSAs. sources about growth expect retirement help of so and educate consumers health our vision the power

marketing Darcy with millions sales, hard be operations new HSAs product, these of sell now baton pass wealth are to implement to partnerships employers more thousands can will to and connected now to employees working solution. health I so of and and and teams our collectively we numbers. Our discuss the offer that

Darcy Mott

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

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

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

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

We generated million income increase increase and of of margin third in quarter the during XX%. and in the expect the quarter during FY'XX increase in from we of as quarter of of a into a will little FY'XX. some initiatives investments in percentage net discuss FY'XX quarter. an FY'XX of operations operating in $XX.X an XX% last $XX $XX.X in the a generated of the was these additional operations detail the minute. million to fourth for year-over-year more to I expenses million an initiatives income quarter We from compared year, key strategic revenue Income third XX% prior initiate as of

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

of Excluding per stock non-GAAP tax net our income per option the the quarter $X.XX was $X.XX the of of share prior per for compared and impact share for year. share third tax FY'XX to compensation, stock exercises, net

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

the FY'XX, or share. year. was $XX.X from was nine $X.XX the up Non-GAAP For and months million $XX.X $XXX.X diluted $X.XX million last per EBITDA $XX.X GAAP adjusted prior revenue of was the year. share nine first income income million up diluted first XX% or million to of was net XX% per months net compared

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

for to Turning fiscal XXXX. year guidance

assets of earlier, aforementioned the architecture in technology mentioned make to Security for in to between $XX his the million, Trittschuh us our $XXX health net of guidance Officer FY'XX million partners new as with we security guide in of will personal as our the as information on support investment has expectations for and per HSA first $X.XX including support a continued our share adjusted and net and EBITDA a channel our FY'XX Chief Based expect the million. our additional per $XXX and three Larry's and team's highlighted as share million, between and plus million revenue joined is Jon investment diluted be investments, FY'XX efforts well million Vanguard. we our remainder top and income guidance to Nationwide $XXX we help Included non-GAAP to grow $X.XX quarters security between non-GAAP priority. income Larry and members, additional ended raising of efforts and are and range $XX XXXk such investments recently to between the where As and $XXX our a

income average for shares million the per year. shares approximately net diluted share estimate of diluted weighted Our is non-GAAP estimated an based XX on outstanding

credits to rate higher of is our previously also guidance FY'XX only, income we R&D fiscal projected be we This this Our down in approximately from in to anticipated. that provided outlook FY'XX effective for for XX% realize year XX% reduce year. tax we this are than assumes will able tax quarters which previous the

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

First, year-to-date interest assets increase we slightly cash of the of rate our on or expect X.XX% FY'XX. sustain year to for yield full custodial

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

Jon Kessler

Darcy. Thanks

roll markets cause tomorrow you're us and without two-year-old his like loves you a service be remember of is HealthEquity you every is members President when cause a made with the and advanced my a Bush's making will direct that steer every young the be the independents particular had in for end Disabilities an Sally everybody. it final for team I tomorrow yellow Dog of shot through universal it one be did respect health his of of but among America hour beneficiary. for But his that. our to a day to working made War which contributions and Bush Once along service a a for President season, as and this and of many end As busy of know hard will administration civil our into a understated our we making connect socialists more inclusive dead, what disabled and as honor everyone access better kind way with I son's George is dog and should very society is lab president to of example will wealth. what to the Democrats, In Bush. things. the Bush economist will and I and record President am the those of said which President And Americans place, Act. it's of H.W. financial to Republicans all as his a be more we much open meanwhile much help months, taking pause the Cold worked more of in

have and As we one to to know one the research since keep going long at thank succinct management we the question the pretty with our and trying more assets last everyone quarter to House question We're one also in don't can I go as quarter. White they do, to do their to time prepared session Q&A for but Q&A, least concisely rule acknowledge want gets dramatic at answer as all continue control keep under we each the to all a as and community to stick seen question. Q&A we've last effort tools you

So that'll living talk will. appreciate and to we you everyone allow with all that

So operator do it. with let's that

Operator

and Anne gentlemen. first ladies JPMorgan. from our of question you, comes [Operator Samuel And Thank Instructions]

is now open. Your line

Anne Samuel

about Nationwide? bundling there many think market how there health the how wealth the strategy out and and and we Hi. My question Vanguard are is Thanks. Thanks. should opportunity like of opportunities

Jon Kessler

to and to Ann you. Thanks. talk great

it's different Both and to a of excites talking what second this your a I that the very to think others -- of really is question let me organizations topic, market. approach that on -- these it's us part first. answer the we're

non-group that only with. of one out haven't employer that on. has a opportunities sure to as particular carved we own have opportunities, its long of companies for is have but clients existed so and very of part on have both bringing education which potentially areas going Nationwide substance focused on And for both that example, set they're work obviously large us. to group interesting numbers focused investors side delivering not some And yet very know a dislodge organizations heavily plans. of big really and of marketplace. on then the I'm these those Both Vanguard heavily incremental they very into in annuity that is on expertise. focused innovation heavily that -- the this you Both capitalized value for time

historically than one able here you been really with to unique do XXX deliver see you what we to guess more makes these I each get health we analog our do that to odd with to to two partners. can partners plus products and have anything add an and plan So other one of partners hope where that? we Steve

Steve Neeleman

Just plans. reminds selling HSA when early were PPO have get we law. me They I the health effort monumental not selling plans. and were started a has became first a mean plan after to selling traditional HMO of it in would health them health with trained. of early significant accustomed this days kind They and more right to plans been XXXX took

And so you're something this of sudden is switch. flip not to a a going all that

accounts help fees the with then, they that. other and is like their the out Employers asking goal plans. market. we we've news out our solutions that However, in to folks as for to mentioned sales savings to is, early my we're We're marriage are unique answer reach comments is, each partners going for so truly December, and got that other a deliver things can in them of of And and good continue market great here as to one the of I and deals get these. is couple customizing health in retirement in this compete we are them the

my ago I a now years going the I going we to to retirement what plan solution have I HSA know I collectively and but happen hey, operations so market provide they what the when our up do to are with became teams in forward. it just what great, sales saw to we lead like on bar new together but that I'm teams thrilled as go have, case, now that this. to kind think benefit then this that step of and and know I work partner to partner up our great employees as They're going used these partners. and going build important law to all employers just Can say similar are as need XX you and say, to make want will And to

Anne Samuel

Great. Very helpful. Thank you.

Jon Kessler

you. Thank

Operator

Thank you.

Our next question of Allen Bank Lutz of Merrill Lynch. comes from America

open. now is line Your

Allen Lutz

the you on for on do could changes Thanks with on and the and so, think view house change Steve you could taking the it the legislation What's then, the shed those you if says. what some think be? components questions. flipping, could that your comment can just pending timing what you bill of light

Jon Kessler

didn't this what's D.C. I of there's since administration call comment been over on that and formative I we the many didn't decade point going don't a changed with over of what HSAs. that Well, get Washington a they the control clearly it's we sides would on and both legislation even and I coming up have that been in a things years like. know done lot Congress mean now on past out will mean we I

six literally. term I right out literally was being that said, D.C. the is use that of in days Now the

Steve Neeleman

is more and needs is, done he news with said without means folks help through literally. I six regulatory or is, time actions. word days the What actions there completely either after what Americans spending what the that was to understand and good they to but the be election legislative he

seniors. [indiscernible] we the are many deductible kind people Services seniors every out working House for working a changed contribution came focused be of that in now Department that really presented single in this. recently Similarly contributions really to was plans to They certain that there to can't of they're work that There's are they've and high too for so there report specifically Human from that Labor employers not the to for Medicare. think folks going that their HSA. are the need offering qualified. take Health is thinking HSA HSA these on are their about and HSAs in that there's them are People And and right reasons White issues many too was and that and of day out

that ability they're high the And leads HSAs. in a though prevent really to care. think contributions make so -- deductible can't of even they provide their already preventive And expanded an to kind we into

it time legislation well been So you the there. take these these you to look to They're where of year has competition yet And to it's that. since benefit if D.C. to than XX report but that. sometimes bills it's to pretty and in is thoughts, you a being it, to kind XX continue going on grow, have I mandate And recently been them fact are at in passed. continue years do up employees HSA things hasn't this other done continue issued. some could choice Jon despite from. case split embrace years this and thoughts employers all better they that not enhance spent on the legislation Congress, firm and of kind make that over whether every the we're than are there's having passed opine last single was Jon going all was more

Jon Kessler

No, Steve.

Operator

Our comes Greg Peters next from question James. Raymond of

open. Your line now is

Greg Peters

Good afternoon everyone.

Jon Kessler

Greg. Hi

Greg Peters

so to try label, want [ph] avoid to I'll the I [Acosta] behave.

Jon Kessler

Greg. late too It's

Greg Peters

This admit know. is have as a challenge to I you

Jon Kessler

intern have we have Greg an we standing by.

Greg Peters

easy eject to call button on sure. my hit the conference I'm quite line it's Well,

you an put doing your season, how up in there one I are about to providing through can was a then was was network critical update a your question on of network season. wondering recently us partners. network And and I just a have point partners, your I'll the first two last the out And network solution give selling presentation snapshot XXX white the be so your this follow label they're would wondering I enrollment as providing partnerships actually partners. around of just noise know your So of your you approach competitors season we year

Jon Kessler

something. looks the like I but chomping wants say Darcy he to was want something? to you with Yes. at that bit, say

Darcy Mott

mean I the we've When have January. established traditionally relationships. year we this in No. and we finished those announced

Jon Kessler

Greg are we about we here. where good pretty But feel feel honestly we --

enough, your a these partner. marketplace about now word get fair and it's of been years this noise say to you've areas to we you. really think firms health plans talking opportunities the really presenting lot spending the vice that That's that something that But your to have have to are we're and isn't. it's or don't item out to what talking you're all people long and I and honest with out that seen working I there feel Not particular when I others really under are be throw to trying of you number business what it with really there -- or strong know. of some is do in is as time with about really the there versa. not you belt interesting water partners some But may other interesting you around have not be flying, are opportunity when say that things routine a some

that that's been and one obviously of far partner very and I are so sales that's of product quality are in And a relationships. And ways that get it on whole nature terms But there added. of so one continue I for terms people's retirement season to get have the once our but wait opportunities looked a other interesting -- market in actually smooth about thus in we'll think explore and this of interesting in the And one help we'll of at grows. and this feel and both HSA areas are -- been to to addition, as it's like too what really hands an an set new useful to been the here till about. the partnerships we sort side, about make it variety January. talked make different Steve the these talk easy we've it won't of There is. we it's partners has

Greg Peters

number this for and you follow something Great. know release, you quarter's last press Thank that difference to just just versus a revisit good different it's Thank in I is, around was HSA you. faster those touch answer. your two on the the disclosed HSA of views. Maybe numbers going members up active it than and members commentary but you in could that's other. your ones the time My and

Jon Kessler

at Yes. an attempt reminder created the we're metric to that a it's the to because read not as position do. we which a trying they're measure the it as the we members I time And matter, It's fact plan you what that's are practical mean a it active HSA to we we're metric which bounces around see interesting. going a a and and isolate new to a said not qualified there -- called members are as everyone can and really account back in to bit. stands that watch contribute get how who to but this to precise little definition,

has I for it we're is, I doing people really do spent it so so has we to one I we appropriately some to trying private use a account we've for But that what -- us caused starts and with the what is to really feel us really and that think contribute some everything number contributing and as learn can purpose. same emphasis using it. around and mean the done precisely something is, from years who that big metric -- really four a members the before to company some as a bump we want data on key kind account better we introducing put keep it are can metrics additional like time and and on understand new and that so can using public that's mean a deal of using to And emphasis where give

one an to we're to just And anything and or way put that beyond doing bouncing of I quarter-over-quarter had into not I to until a ? effort we've want would that generically, where some work. But you number time add understand this into around so wouldn't it. Darcy certainly area we're other say ton the that's really

Darcy Mott

No.

Greg Peters

Thank your for you answers.

Jon Kessler

Thank you.

Operator

Thank you.

Our Stockton next question comes from of Fargo. Jamie Wells

is line open. Your now

Jon Kessler

Hi, Jamie.

Jamie Stockton

experience Thanks to about be evening. taking also maybe FY'XX? relationships health you fully on to the Nationwide how just of Vanguard. I then, good add what's you season? guess Can up question. your and these plan some for talk accounts toward be geared in of user Hey, Will productive more going can potentially running selling you and think my maybe maybe the XXXX kind compared like to And relationships? be and

Jon Kessler

the on the comment first to Steve and on comment I'll if second. part you'd So like

Steve Neeleman

Sure.

Jon Kessler

first and the for products that both factor forces appropriate. so is on get in the we're with it's sales spending products being year, these a important sales the they're There's it are to educating of be relationships selling time fiscal spent with that's that On highly our right. regulated needs to sides. not part that current These

believe be as there and impact we XX think do our so as fiscal in that and saw -- I And we to rolled we will partners out we're partnership some you cautious like. the think appropriate a right. have nothing and well it's rollout. appropriate time a initial get that partners more There's and to up There ramp than kill than it plan it's can is health always faster as bad

side. so on the -- negative on And the

needle. it some strategic being tell of about we we call use metaphor talked let's we told terms think one in been time be able really said to that day of you, the whatever a So part one That additional branch important a having take that it -- I on began your… Steve and you'd of and ago information we to the to are are -- that's members we additional really thing and on wants these think you are. experience year move is now see whatever it'll before of But articulate they where to ready experience a the for so one sort value to little that

Steve Neeleman

Thanks the for of users question. So speak Jamie first. the

right health on logs mentioned day the to of was getting the one user savings of kind we right, was somebody Jon it their so reasons experience health the As account. importance that integrated one, with from why get into plans it of

like your and ultimately account right payments into You investments. can see can your that, only go and claims your make you manage not things then

to does thousands and again of times have we've this it to basics, integrations we has do in we we time, appealing log money we on one we now. the right and integrations how be available these user will the many experience able think the see need why pipes account take plans want is the so solution adequately because with to have in, of our they most is people to claims all The be build the these all about some claim we And health what there. their think reasons at have is of done I about the talked when retirement ability know funded past right the that integration, of of companies have for like so

Jon Kessler

either In that not an regard important it's point or. an

as offer piece puzzle. and get to that integration a towards way of such So neat both the going this we've and you're you're wealth to side built the able towards really a that's employer the side health an in

Steve Neeleman

this of retirement on start you then, certain some and of your And retirement be that them ability the that Health they Web matching and to now balance my XXXk, site. to claims about to that they the pay in out right. come thinking in site. mindshare People We the balance, maybe same HSA and and come more employers folks and say message -- called of captured that a can a messaging, to about -- view your information XXXk your claim they'll account like kind the health is consumer have because messaging so there it, and one in don't aren't Connecting or cases see get paying guess I we their would need will then because HSA thing Web and employer's Wealth that talk the can that. are and of see things they are out either Yes. the the match have wealth your yet haven't can but you which we see people all log get

to what's thinking XXXb we don't funded to and kind they're of about oftentimes just start the two more think bring it of the And can that then, make care the to and best the or a something provides take that accounts so the XXXk the is year for manage And forefront or needs. to sure you way about these mind. ability of

to so the for and I thing seamless us user retirement thoughts they Jon, experience our you about two is make HSA file cabinet works on And UI, have drawers. to holistically sure in and most UV. this But don't important it's that think separate but whole know well think it versus if the you I start nailed

Jon Kessler

if That is the it keeping I this where to last about I'm savings, for these more bucket, going end mean and back save. point consumers savings what products you of consumers we result is pong is, here forth, that Jamie really try same is power more of we do because of not sort can ping think the faster help and in the but

really that we from advantaged And of is as of and trying these as with two the thing see this up power the the and products it down call get see of put in. And is where cost the how be that think on expense. to for really of on in and point really next are think around you partners about a we're so the both or much about the responsive that's of of next very optimizing every in everyone to next you basis others tax the can leg well. this retirement knows We as terms you what partners other substantial you connecting side to like and investing need these Well, products. it the our leg leg some example our K perspective HAS, as keep our working

and that investors think to we results appreciation extent goal as be think the And user to as that experience products way is that's a for will the higher and bottom help greater drops the that well more about balances, about consumer line. education the really know the in more of the right ultimately consumers and our so that's it a sense benefit we to

way that's about. we think So the

Jamie Stockton

Thank you.

Operator

you. Thank

Our Citi. of Demko next question comes from Stephanie

now open. line is Your

Stephanie Demko

Darcy question. my for congrats team on the taking and Jon, quarter. you Steve, Hey, Thank

get So in Jon the trying consumers you the initial where of just it's awareness for? Does about a think no to and you're mean kind mentioned that to same trying consumer has XXXks HSAs bucket. that solve point longer barrier to you're now to progressed

Jon Kessler

that of keep a Stephanie folks of is some come money they're instead really where who as is, way a be HSA what health not their properly this within can't plans group and an forth have to see education bills extremely stuff groups of increments. if that if question, function what from the still barrier is bad been there's regard. a this I forth I through for finance they just if of kind initial people that point account line do think to about and and like hadn't two educated benefits. our costs and typically finance to that that HSA to that it's background possible system And they and are sort that is and people of feeling to. a exists right. wouldn't Steve do the number one hard have think be the folks costs aren't there's fault and and medical the as think paying can benefits extent team about not et way offered that about this wages plan professionals separately thing who things a properly that an has And cetera perhaps needs In they're so that's those a And these get so K for of that other trying year The But used what a benefits and thinking in to ability begun that that controlling understanding shift of progress I importantly do is, job now. in well valuable. things bringing a together. at lastly, HR of some funny this most I one fact real you to and your mean mentioned the of talk And looked years confident done their at look basic

is going So the stream, any I other are happens to mainstream. become saying as of have out. yes, of to starting it. something want brand knew happen new dull this When it messaging are to starts figuring blocks how But you're yes, fast means that building be that. a knew may from with would nothing get there things The as connects almost lot us that finally you think like that main when I I things people other it

that's we so I And mean I think of about guess where kind it.

Stephanie Demko

that's hear this that I saw that. I definitely and election.

so quick he initiative up one you health diving he that with is into But guys Is follow level one lake? or going before of deeper hired and kick So part good this me be to wealth this Ted off. education. you consumer just

Jon Kessler

suggests, and question kind that engines an interesting. prior I most Ameritrade his recent as in think Ted's also education. TD at mean I I it's place your financial to and of mean was investor background

and more. talked of kind as possible. that's every he's engagement is fashion using about this this and it way as about much total with business that a have He's we've data And of do. how is of long calls as a we scalably that as a applied and trying what that what I driven to to figure is of he kind is, them opportunity is, do so, the we time think do for trying little see out approaching something really member do to interesting to in And educate to our it Ted a we kind it's

to As of retirement benefit interesting their is other and any here almost the relative people that than HSA interaction of with Steve their sort that certainly mentioned with plan. one more facts really have

you not that's just too, reverse sucker educate to opportunity hey to works you to going side, it K HSA get have employer your match but haven't gotten going messaging other and you on. that it's or So full in that you let's on go have individual, right. the We're say, members haven't, the about

from some this. direction every in benefits like are there think I so And

Steve Neeleman

And he engaged. totally is

Jon Kessler

Ted's now he's really That is in done. perhaps right perhaps or work case. getting listening

Stephanie Demko

me on. [MILE] in Here Thank work for done so to He [ph]. I ramble taking see not guys you is go. question. we getting much you my listening

Jon Kessler

you. Thank

Operator

Thank you.

Draper from of comes Sandy Our next SunTrust. question

now is open. line Your

Sandy Draper

taking over sort got question. well. as the market bit We for maybe also some conflicting a Thanks very Jon little much two. commentary the or for of of a Probably Steve question week past and

But health they and positive I plateauing HSAs. and employers think and really push still talked this in term about came deductible Mercer was high about they a the benefits. reasonably was deductible much didn't looking plans. There Report growth a see and plans out longer Investor at that Healthcare high was to Day it about but United drive

so on Now of Thanks. what you're curious HSAs? high and back, not seen seeing the looking anecdotally in I'm right are going in you're thoughts here selling just comment terms have season, your how going how obviously what at deductible now to employers on health you plans

Jon Kessler

the very don't you I from these individual produce inflation like is providing -- care are difficult an others, more us it's what to but They as balances. at referencing mean United eating do cost it's year take effectively taking benefit. In a that they inflation point really likely well every that's why going of am actually aren't aren't I season. -- wages if a effective the more be you who products from which a that what's would number and work is like, it's in of them I that everything normally you as off Wichmann, know on see care, it market that that result really if retirement making like way that used went understand I you first as regular to I think level, here look that K they plan going just else products is, individuals we're or and they're And that. employers there a they then, And Mercer what way valuable look it. no to at so XXX, Look way to the I'm the supposed I useful. getting during is don't give if listening now. today their going -- to or comment what so these make number but the piece offer or hands. how do activity, people offer think because the both Yes. I'll product about interesting don't I the that's and perspective will the you to bullets to save to like and to reasonable you do. is somewhere mean, use control is where why who penetrate little have acquisition would a once you're of have very continue my terms for But and sort make they The we have that you're and health to bank. know is get their XXXb would that think dispute to that's is heard they're of And number. magic theory don't a it's this bit employers therefore this, as it didn't not them. health what you

the basic my view market. macro that's So of

of knows of labor are labor in know when extraordinarily here they is bit tight couple labor get I we're this won't own tight there aside well, [indiscernible]. that think some market that markets, and that markets of information, conflicting this that whatever and the truth view tight from maybe the say to don't see when that haven't sort I as period been I a since, there people reasons everyone their you do a is objectives little are a first

any not sure what happens. when any that has I'm the way. rock -- do this a might anything to not not a to to true desire anyone it So happens good that of is But there that boat do is in real view do

when people. we real sure and folks I'm talk. with something of level there is always it because product of some feeling this are out so that There's affects there you conservatism deal that kind it's And conservatism a

So maybe it's that we're used to talking about that.

But I whether this. sale to effect suspect contributes it that that's an the I have And ultimately don't season really factor know. will on so one

not volatility that here think years much where we've amount is significant the recognize specific broader this and in been a the six months is volatility five, had and last has had last of little a eight The obviously but we we've don’t there and health the really know four, hours. this of a I is more market is, do bit second three, to maybe market to I have number equity to

know saying mean and people have. that a don't the effect reasons really that of all had do note when happen and I of so a and may accounts, they our feel perspective, just real of people I don't How the that, but accounts I either put of on last regard assets I those of that's more one terms And to but so. drawing I forth. the perspective or to an we amount in they think result, possibility that's again so give we would psychologically is caution. in and in source lines an extraordinary really not we -- This even going guidance the And a money on that oh, I our I be can see from extraordinary as it's things. mean January we kind from definitely year. know mean well but answer that have may

like argument the little really conditions the is, a a But are that big be ideal there that bit look periods this trying I wandered understand these answering to they're condition in I where So understand products are understand going data picture ideal. plateauing I growing good for think popularity. going don't where I people periods question, your to less the absolutely do be is are any right, I in are market, at. market conditions to

you're so to But growth years to have is variation come. I going strong mean around mean. And think for the

Steve Neeleman

be instruments. around the and thought. XX thanks mentioned to of I we years. we've than continue value to always iPhone these Sandy earlier now think years I over HSA fairly not. for people an the three longer why help question complex for of one And understand one It's have innovator I tried reasons Jon, have been the actually were

you care, If can at tax you then health them fairly think because out it Mercer is got of growth And you about to mentioned and while. a story free it's Report once nature you retirement positive. them the came that all that the for the refresh use use and the how we and that Sandy

in health yet tell, of in care even started One yes Report traditionally will that telling were people story looking telling taken the of started best Mercer that than taken telling the story free We I so about is -- don't the and story, think to that tax out an last a it shows think tax refresh these that your have then are think I I this of at if and I story. long-term the don't that I that if XXXk really years pay to spend. free for are -- $XX,XXX for savings. people believe die as no retirement the you it one's things HR are spend free Mercer you we mean tax you're continue HSA to six a retirement $XXXX and slide your spend accounts longer that until out need to year that today, you but

Jon Kessler

after Not you die.

Steve Neeleman

expenses you After die can die. you you funeral pay really. Until your

Jon Kessler

some learned have Yes. new. I

Steve Neeleman

you expense. Tax free go. There

refresh So story the to we Jon. just

Sandy Draper

helpful Great. guys. Actually

Jon Kessler

family sorry. I'm I'm with some this, just Anyway monument want grandiose. I going to big stick my too,

Operator

Marcon Mark from Baird. R.W. comes question next Our of

now is line Your open.

Mark Marcon

rates up news And questions sort have was I've that in specifically that the going rate you of the would pipeline. been have curve. afternoon. kept thinking decline are worked. about to declines are books do starting thing good shape One impact been players what have was be today have of got related the because up. and to Hey that interest service that some rates they've that if about have opportunities? flatten think rates players their the fee curve, basically other the the out? How space purposeful how M&A HSA There Does of are would in the on couple then One fact you in secondly, the a in free that. the been of marginal

Jon Kessler

Well, right, stick it. I'm not Darcy trying I with to only answer

metaphor an done us bit. Darcy, goal of said incredible to then job that allows thought to my about little M&A beginning is, And say question. the less more might the me thinking use, there Darcy there about out this window, And asked come on helps story our time We whatever year interesting, have anything Let question. say is do impact agreements. end is us, say are this you'd we pull were of things which how I'll it a making dependent the in curve a been about finalize. look first weeks That us. if guess again you year back to and of on trigger towards to out it's inversion actually like of his and please sort that stability. to a spread wants process of when That lock team few really one the having rate our I to

Darcy Mott

we're we've playing in to not down -- three in that our five curve, space seen low the a probably increases kind years, over yes, And we to to space. with going then, steady And out latter we went yields I'm and to Yes. of the sustained Mark, we some in for yield the a five gross on few year into three generally past got as as XXXs we period, through yield comment custodial year assets a pretty rates. the down that. but

two to relationships. the or when go two we're any down one our depository a up of So year to three don't in haven't just with mindful funds a slacking demand years we XX-year seen from But whatever. goes we year for end and -- we out contract

doesn't it to near curve concern us with term is to of with whatever doing. a give lot so, And respect yield the respect -- the

Jon Kessler

are think wisdom see, wisdom is of remains That's would sense wisdom the think presented sometimes far that themselves. rise to thus right. to sellers my -- of the us. M&A among here, to I that rates going from is guess prevailing be that the they are on isn't, continue which prevailing they how I And is front, let's deposits But

do kinds things on when works, it and to it return again. increase there's we're other of quite on ultimately ways the whatever price market. And is a to same And that courtesy that we've mind. again others good market it correctly when we're doesn't going of deals really As the up plan the have health the goal it. at tied one point in not not Because of going activities be. particular changes And without to And these to be said sense what as to always works. acquirers is we time, of But no is return acquirer -- that reason to wisdom about transaction this you a open good here extent these the where been any will out be commenting or these really our to We're we're might of the team, entities be competing great with of a relationships. not rate to strong into that you, we a one Darcy's to steward customer shareholders. that

Darcy Mott

first go That respect reduction of I'd is the by there's design always conditions service by your question rates between said, being -- for driving fees revenue. with the said we factor revenue market that Mark an interplay the HSA. and and service believe in part goes the back We've service Then to to that for on an interest that more

Mark Marcon

Yes. terms of participants. of the increasing in Volume number

Jon Kessler

and volume say Let's underwriting.

Darcy Mott

Correct.

rates there your pricing that of interest way but by notion would the mitigated, just impact service But as service -- the were revenues somewhat see mean are so was be you the would really partners that decrease. question not long- that fees. more on to I in So that has term, to if that just a our we're much seeing that the been rise for enough high we reason our it, aspect was the

Mark Marcon

Okay, the a to is there. Larry's you end, great. had just expand to And little the chance then, haven't talk given the role a on close call investments about or and getting

thought It's an not there. want official great. that up follow to if I'd comment you throw out but that just So be

Jon Kessler

See got Greg and got we now the bandwagon started it.

Now you I'm really this. excited an for it's We're coming look issue. Acosta. But about

relatively have and our partners fortunate that the very feel in where been make way they're have in we to hard worked cyber and very had of. We they've a have members well recently been our issues including team modest like taken care

earlier do is very we much as than can't fortunate, is so every in You in here I else. But case. said not And that what been the I opportunity not see particular say but have in an security better to we've enough. anyone fortune comments,

I would industry If security. have use these and prepared there said outstanding control care and employers, that to ecosystem privacy to of to to as network whether the in our an the give with and there think steps I opportunity, are is two, about me say up you are really our and do clients, address think relationships to users privacy I to comment our were to partners, right is data, the one, on is together. our more everyone really partners with an take we on of opportunity a they our in way issues way strengthen topic and because as security

to so signed maybe for some mean ask point. he not and I issues opportunity kind could he's I already now his to bona suppose, want not. am I you But actually regard -- but data industry, industry an about some we Larry whatever in ecosystem. an more -- really brings how addition money biggest about listening so our and the But and all approach in and that he's fides the say of organization, security ecosystem thing can't a as just in contract, seriousness, And as Larry with but of to to privacy our I at the discussion excited really what probably this can about have I these running actually us I as

opportunities it day ecosystem, area. there it's we really done invest say aren't members we're in feels highly not, like it's that everybody definition we then some that and in. things willing exciting our really That if that really and to for I well we're well end of benefits often do mean interesting that'll and it's to our all at of not anywhere it well and think say almost it's avoiding it can the is something doing we be for are it's so we're members to we by the there the scalable. it is it's do ecosystem As avoid. I costs something do really And the if

the an of here because we think of convenience think highlighted not on area of because worth it a of offense XX but as feel different perspective going that this customers. just fiscal to kind not we on we So bringing announcement, the timing, like spending into it's the from I but a defensively, dialogue issue it's also and just our about of really

Mark Marcon

the really you. I Thank answer. appreciate

Operator

you. Thank

question from next Our comes Paris Alex Barrington of Research.

is line Your open.

Jon Kessler

Hey Alex.

Chris Howe

This is in Chris for sitting Alex. Howe

Jon Kessler

Hey Chris.

Chris Howe

promise. do the have some you ups, for I won't a questions guys? too I in have getting But afternoon. How are I late here It's you. little many follow

we Vanguard there in XX opposed fiscal fiscal versus and every of expanding corner partnerships How out we balance new in health wealth? as between look How maybe Nationwide existing? the XX. two within partnerships year to should look future partnerships finding should we employee reaching the So as at partnerships these year towards participation at your and goal look

Jon Kessler

building of as who to lot to health trusting We just we us we've more those have do a care on and early partnership take have done side. are the

guess opportunity to So from perspective way all returns. and above capital high likely I is my deploy is our that in to produce that's the answer a an of too

I I both. think is answer the really mean So

Chris Howe

all you. Okay. That's have. Thank I

Jon Kessler

you. Thank

Operator

session. question-and-answer this remarks. gentlemen, Kessler turn to any and for over today's to concludes back Jon I call like would Ladies closing the

Jon Kessler

a some day you're us. thank like to you, hope who talk I And that… so don't those you coming of than know just up tomorrow. to not off -- tomorrow, hope but because you are with getting show I us can by visit to not some a get going off of honor other But you day

Steve Neeleman

one can make comment? I last Jon,

Jon Kessler

Yes, sir.

Steve Neeleman

it I looked up.

expenses. the right. so of life are expenses, No You funeral monument, no toward end

bills pay the after No right. come for you you're you can but sorry. die, can those, monument, So

Jon Kessler

the look HSA book? in it Did guide up you

Steve Neeleman

it up. looked I

normally as that's You record. are to sure on make you are. Want right, the

Jon Kessler

jovial today. we've day been us. All that I for don't mind a been travel a hope you long It's little

that us. with you you. trust us. hanging you appreciate we to place So the And Thank again, on of investors and continue all

Steve Neeleman

you. Thank

Operator

for Thank you Everyone in all and concludes Thank day. gentlemen. you, And conference. disconnect. may great program. today's you This today's have participating a ladies

HealthEquity (HQY) 4 Dec 182019 Q3 Earnings call transcript