HealthEquity (HQY) 9 Sep 202021 Q2 Earnings call transcript

Company Profile

Participants

Richard Putnam	IR
Jon Kessler	President & CEO
Steve Neeleman	Vice Chair & Founder
Darcy Mott	EVP & CFO
Ted Bloomberg	COO
Tyson Murdock	Deputy CFO
Anne Samuel	JPMorgan
Greg Peters	Raymond James
Bob Jones	Goldman Sachs
Donald Hooker	KeyBanc
George Hill	Deutsche Bank
Sandy Draper	Truist Securities
David Larsen	Verity
Stephanie Davis	SVB Leerink
Mark Marcon	Baird
Allen Lutz	Bank of America
Vikram Kesavabhotla	Guggenheim Securities

Call transcript

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Operator

Please go ahead.

Richard Putnam

Good afternoon and welcome to HealthEquity’s Second Quarter of Fiscal Year 2020 Earnings Conference Call. My name is Richard Putnam, I do Investor Relations for HealthEquity and joining me today is Jon Kessler, President and CEO; Dr. Steve Neeleman, Vice Chair and Founder of the Company; Darcy Mott, the Company's Executive Vice President and CFO; Tyson Murdock, Executive Vice President and Deputy CFO and Ted Bloomberg, our Chief Operating Officer.

Before I turn the call over to Jon, I have three important reminders to provide.

second after our this market reported afternoon. we quarter the earnings close First, that and website, press webcast copy today's A of release found our ir.healthequity.com. can on recording Investor is Relations which be this of

which uncertainties could that factors our include as today, today. results forward-looking important relating predictions, and view cause the statements expectations, and business, reflect will here from by defined information statements XXXX are to of to questions many statements estimates, September our your Second, today, might comments the forward-looking. materially the management's are as made today. affect our These subject There forward-looking and X to that actual be statements considered forward-looking differ made risk include responses to and SEC, other which may

statements information affect detailed As factors caution we forward-looking that to reports discussion and periodic light we reliance against review of other encourage Form on undue and XX-K SEC. and of stock the risks annual future these statements placing report new events. the in a subsequent our result, with to may results you or our also market these price on these you update forward-looking or assume of no in the revise or We obligation future filed our in are that

I'll provide regarding our find the measures operator disclosures prepared CEO, measures defined over of these over in conclusion are turn GAAP instructions additional Q&A. turn to measures. to to that call non-GAAP our reconciliations call, financial to our There Kessler. this our non-GAAP the and At during release. you reference comparable the Jon host Third, call will will we measures, with With that, we’ll the press of remarks, these including

Jon Kessler

teammates. a update who the you ongoing faster on and bit able QX and will their of full-year on is done. of integration season of pandemic. deliver everyone on to purple and recovering Ted performance profit normalcy cover deliver, selling detail able effort really I be will a integration, great financial first nicely join a results by the further discuss to Richard, in to WageWorks these key renewed versus making progress effort, metrics, his Steve expectations, and our financial you, Thank Tyson we're activity our and and will will will to calls today. results guidance. We're QX here off to our indications premiere Darcy Q&A. to thanks despite Hello, strong thanks sort exceeding margins

during up sequentially margin benefits revenue So, WageWorks XXX% underway that EBITDA EBITDA course during circumstances. adjusted the improvement XX% quarter We lower as the of million HSAs total rapid XXX% to speak and healthcare were efficiencies revenue and despite absent those as directly that Adjusted at spend days $XX Ted and growth up quarter's tempered by long-term results year-over-year. and cards enrollments addition XX.X slightly members a of We turning and would year-over-year commuter of limited of profit of will up reduced newly darkest the HealthEquity’s organic but accounts are HSAs sequential the as X.X year-over-year high that year-over-year, to opened that revenue pandemic. HSAs, is at risen estimate many do XXX,XXX XXX% strong our of pandemic. with the the midst XX% plus consolidation card platform a to change key revenue have potential, end team's figure plus is margin million XX% in utilization occurred reflects metrics, of really response commuter the loss custodial yields the $XX and margin million and of million is healthcare our impacts lower gets $XXX discuss, use of earnest, by and benefits million realization believe in the and reflecting

openings of business process custodians of platform, completion. commuters. WageWorks which Legacy partially COBRA HRAs context loss in nearing and the is Growth is offset migrating HSA X.X by qualifiers million HealthEquity’s to the closures from were New its near-term a offset FSAs, by million X.X of

organic year benefits commuters, Excluding sequentially both the QX X% growth consumer-directed and is to reflecting in year-over-year, over Last are the $X.X and benefit total of strong up the grace period WageWorks in up lost Legacy is in periods. of approximately process from HSA extension CDBs certainly million $XXX outside least, ever platforms. of a XX% largest billion QX HSA or HSA of sales growth enrollment accounts X% assets the also assets up start billion and are the $XX.X this the migration sequential a reached regulatory accounts and not net

engagement really far While spend lower for total invested and win efforts, from response remarkable include pipeline in and them cross strong asset Overall HealthEquity’s values employer with valuable. are provided increased a drove The in we solution combined associated to tailwind RFPs our more thus our opportunities, rates said, outcome members. as making education sell members robust. sales contributions remains this have

actually its getting HSA and bat, to batting HealthEquity good. As its it's percentage Team with last week, by market assets an average by outpace the that's accounts released sales to for June is I year-ended it's was baseball, the XX. it unique According XX% season. slugging XX%, mid-year and HSA continues at Devenir’s a competitors. also Purple market improving XX.X% as grew and think report whole

growth the account As and of fiscal asset I as year-over-year QX. we’re mentioned, end of XX% just reporting XX%

XX% and quota pace, resulting includes accounts Total culture course assets outperformance. heightened HealthEquity’s market. Purple on positive potential. is were that's in continued long-term metaphors the summer WageWorks that but XX% leadership profit organically, integration, with one in for Ted and market note here my On and sports of filled And Ted? are up its acquisition with and of its than detail status better reasons we the WageWorks the and Solution, the of that service Now

Ted Bloomberg

Thank you, Jon.

to remarkable pandemic team's QX. not entirely performance, today for accelerated their This and we of goals the could to excited raise synergies. is and during We’re to be efforts progress focus despite integration our our report merger prouder due and

with key QX achieved of update integration Recurring $XX of million. begin surpassed synergies the on me end Let an as metrics. fiscal net

a As promised reminder hit XX that number a year-ago, we to we XX within would months.

include of fees by and We migrated move as XXX,XXX migrations duplicate assets have X.X clients, completed platforms of members, billion X,XXX seven XX of against the year-end. QX retained. of end goal the migrations service fiscal The HSA XX% with of

achieve and complete of our already of synergies to integration. as total additional platform a million QX all one efficiencies excuse of the those achieved. yield Migrating invested have -- We $XX me to beyond forward business additional synergies operating end go of these will

said have integration not would separately been before $XX million We has on once efficiencies we target report net reached. that that synergy

to efficiencies. continues produce consolidation platform However,

our So synergies million $XX to million recurring we’re $XX the goal raising from acquisition. WageWorks today of from net

to will one-time achieve expect at We previously today XX of invest the the integration from to additional to our there, within million we months expense stated high-end and get million $XXX range. million $XX $XX

pipeline We today of to total solution line incurred achieved on recurring raised report as and is believe investment Jon continue our years top wins met. QX. sales our talked that have growth in drive and expenses one-time synergies also through until to integration will will the for regularly emergence come. I target done net We about

the integration can and themselves, value HealthEquity sales increases receive. Beyond deliver

give For enables and to $X legacy build proven example, in balances the HealthEquity overall employers HSA progress. people billion migration HSA member our from capabilities of assets to custodians engagement to more help than year-to-date deploy to us engagement visibility

QX members FSAs example on and have of we remarkable their QX engagement covered. completed scores choices Voice integration Purple As train for June, HealthEquity’s all our to mentioned means as in expansion for where commitment of unspent continues, the will on available staying to we Integration to and throughout we will promised clients of use to help onshore, WageWorks members consolidation Client drive service response resources to these COBRA program service delivering these our in the Jon understand the calls Loyalty everything balances, clients. risen in of as to and do.

platform, it to data faster capacity for Beyond engagement our in home security dramatically and enhanced we economic itself, are integration culture invest the capital of up is impact and members in the emerging happen. while we’re the These to engagement, have continue services to work keep first teammates who to year. our experience the meaningful continue innovation an a to through on and half micro increased continuing are Purple deeper business, client XX% have fiscal interface, energized to the threats. Despite and member kept pandemic's HealthEquity including keep of with leaders of fortunate of well. infrastructure, integration making helped as us near-term challenge from team for have driven future we invest Building course team future. everyday better the Measures decisions on

Speaking the of in newly hand-off the financial and calls fellow fellow father -- leaders, one Murdock, honor Deputy have of the three of quarter’s HealthEquity’s of will I of minted father on detail, three Tyson to these CFO, who first review Tyson? results

Tyson Murdock

measures Thank of results. to you, press A Ted. measures in financial release. non-GAAP GAAP I will reconciliation GAAP is quarter review our and second found non-GAAP today's

results QX was financial you year. the of quarter in know of operations second last fiscal as acquired which WageWorks, Our include

in of acquisitions, $XXX.X revenue our million XX% revenue The grew Service in total accounts quarter revenue growth total XXX% is average Second representing to XXX% and the quarter attributable in to Sales. including and WageWorks organically New each primarily of overall growth. year-over-year increase and three grew categories. from

a of down our U.S. service revenue by from As major last commuter offices was was quarter, as majority service members large in impacted revenue discussed working specifically shut home

investments which layoffs representing primarily second to benefit XXX a in COBRA see offset the with in rate in with provides of by blended shift table yield. attributable year-over-year HSA of of average the in revenue quarter cash growth. is yield with starting today's temporary year-over-year during with cash second yield rate to quarter HSA partially for As this $XX.X could and half expire year. headwinds more all we're eligible The basis partially quarter. on and the Custodial benefit additional offset grew of points qualifying interest revenue press HSA in X% to increase XX% workers, details. HSA to yield events, lower annualized XX% million and release assets extensions HSA yield XX% commuter growth growth The is This cash average the yield

to increase we by the total platforms the in mentioned, year. million fiscal representing HSA XX% assets migrations quarter quarter. revenue offset nearly previously accounts attributable grew primarily and growth. in growth by $XX.X to have revenue share additional the the Interchange negotiated total of migrating across interchange and completed As expect of The more end a to our is partially year-over-year favorable in spend and average reduced complete XX%

was million QX margin million believe we XX% their quarter quarter the in this of compared take FSAs before we for quarter and $XX.X commuter healthcare markets quarter the we’re XX% will second HRAs of accounts reopens. and in the year. accelerate our economy year. gross accounts, will $XXX.X reached reimbursement Gross it the stand in pre-merger Profit some more peak last first quarter members While of many seeing the as to second year, year's time XX% was provide the year. We reactivate of by a end the the margin for last access history. see for of consumers Last believe versus

margin expenses cash the acquired a the from yield, of margin Operating intangible million net Income had amortization or revenue. million was were of of was integration in and QX for from which gross represented acquisition, revenue second together loss to $XX.X on resulting GAAP revenue which mix in related high custodial operations the the by assets $X.XX EPS $X quarter share Beyond impacted and XX% of COVID-XX per including merger revenue, a $X.X of expenses. expenses million. basis. WageWorks loss declining We XX% interchange change equates

while was XX% from up the the for to million. per operating per the the Our non-GAAP COVID quarter adjusted Jon $XX $X.XX quarter. impacted through share per X% income quarter COVID to increased for second Adjusted million EBITDA share for of year. quarter, XX% so And we was quarter-over-quarter Non-GAAP in margin partially $XX.X impact million share to margin compared first increased XX%, $XX.X last net a the increase. revenue full net on income EBITDA $X.XX was as a mentioned, reported lower compared year-ago,

XXX% year, For resulting $XXX fiscal of was year. adjusted compared the Non-GAAP diluted this diluted the million $X.XX net income in last $X.XX first XX% months, million income half prior-year was from EBITDA the GAAP $XX.X six months XX% was margin first up per $X.X first revenue million the share, fiscal net or was up and for the million XXXX six $XXX.X or share. of to per

billion July XX allowed A on with sheet debt On the $XXX Term and the line July equivalents we rate review that cash repayment, resulting The debt cash and of Darcy as us in a had to pass we amounts $XXX balance guidance. drawn no of of mike XXXX, credit. completed our $XXX to lower $X lowering our outstanding ratio, interest of offering will million now our with to debt million a I equity in A million Darcy? reduce Term our updated debt-to-EBITDA share. outstanding

Darcy Mott

Tyson. you, Thank

quarter As only full-year fallout June, time XXXX. impact at fiscal economic the uncertain withdrew for and and fiscal guidance due you its know, of XXXX provided the to of for pandemic guidance second the in the we

pace economic of and on Second reopening the half will results recovery. depend

The operating However, reopen. and uptake full-year resulting the of accounts in a but XXXX. commuter year distancing partially Across economic fully range to the and fiscal transit, average and possible our second wider use will restrictions products members. based of include, benefit quarter not and or may guidance ease performance that would otherwise in as parking negatively date, progress current new and a of of benefits then and impact of for XXXX, recovery our there other we remainder Specific spur the year among other their COBRA the pace fiscal impact limited perhaps XXXX workplaces healthcare to total as guidance eligible in to through remainder the conversely fiscal resuming spending of results upon our these are associated other variables range employment and COBRA continuation on number provide. for exists outcomes variables, or members and wide modest we’re access

trends Under these revenue continue for generate XXXX across our HealthEquity $XXX million. $XXX in other and assumptions, fiscal for between current and remainder we XXXX expect fiscal these Importantly, however guidance the assumes that through variables the year. of range a will million

net expect per net We non-GAAP diluted million million $X.XX share our share. between $X.XX and between per income non-GAAP $XXX income resulting and $XXX in to be

to run fiscal increasing our between synergies and next line as to of XXXX. additive includes to and net rate adjusted HealthEquity’s goal top end $XX achieved guidance XX expect synergies Ted $XXX for having are be of $XXX $XX be XXXX discussed, second expected within annualized quarter. We in and months. to the we’re Today's bottom EBITDA in both net the million be as of fiscal achieved the million of synergies the for estimate effect year Realization of million the line million the expected beyond. And to

fiscal approximately yield X.XX% during on HSA with XXXX. We of cash full-year the expect yield a

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

provided a the and Our of of a included to is all release of GAAP metrics end such earnings release. earnings includes detailed at non-GAAP in reconciliation the items the definition guidance

being addition, for revenue assets the remarks. acquired that acquired In while assets is of Jon net intangible intangible to income, excluded from generated over from the amortization turn some the those not non-GAAP back call included. I'll closing With is

Jon Kessler

just rate can but Tyson and on again, nicely that his you, to the only you our our Darcy you debut want and and was for an teammates, and also done, obviously understand across professionals Ted, hundreds I the and one the country not our Tyson Tyson partner do thank and for With there. extremely call quarter. to focus HR Not Thank HealthEquity, help up open rooms Operator? their in that, let's what HR of resiliency professionals, Yelp questions. partners clients during unusual working and kitchens of thousands living

Operator

Instructions] from comes of JPMorgan. Our question the Samuel [Operator from first Anne line

line Your open. is now

Anne Samuel

Congrats quarter. nice guys. Hi, on a

Jon Kessler

you, Thank Anne.

Anne Samuel

at commuter COBRA how that's maybe the events was employment backdrop in that you're that I qualifying about to had more spoke means asset around, if a offsetting quarter, growth I about thinking all? the you impacting what and question and wondering

Jon Kessler

it. question. good a it's you, Thank well Yes, appreciate

Just employer COBRA as from premiums uptake and in the the contracts, by about and various I of premiums run backdrop, a $XX fees pre-COVID way and of a from then I generates XX% XX% million about annual from activity rate, XX% other COBRA of year and said like. from mean notices XX% come activities,

offer were short another a those with So when And spike X% businesses the not temporary total on benefits did lost less course, weren't in pandemic there and were have way saw April, of losses COBRA. required X, somewhat skews skews are material really affected also jobs that large benefit course, extensions. to accounts, of but industries We our many started is the of and in industries. not during or eligible March QEs which base and in around COBRA also only who our in to should towards that May job period lived I small exposed furloughs, client say say with of impact

So end a as to is different impact in starts have and a August really recession. the a commented, demand of bit what at a driven others the little more as of typical we've and resemble slowdown July seen little greater

late are lot amount percentage flexibility then QEs modest August that a COBRA a of also select time that offered those lastly, has it's sounds It bit roughly unemployment, of a the of muddies that benefits. material. you COBRA. in relative undetermined regulatory year-over-year. employees are kind the little state and waters deadlines And have QEs the of into have a July XXX% year-over-year terms qualified administration uptaking seen up an because to the we've lot. of like our to So It's rise And in but the in not

there not ultimately uptake have be who who who have may -- uptake, there people out uptake. not So will

So and help the lastly, behind at then they and the excellence stay wall make excellence have and also said to our and a looked provides simply covered. are wanted as compliance we our but comprehensive stay and employers sure that and get public efforts things then have covered COBRA our this administrative covered solution which like that members

We very full sales very, pipeline. COBRA have a

of So believe through haven't reasonable this and of it sort the to this in course where second but we incremental conservative over COBRA on our about of some will thinking perspective, somewhat we before, from benefit a year. side forecast been is COBRA the been since that's the of that we've kind is half really see

were where and the far about substantial produce in like on a that recession the it demand As for recession, the as obviously, offset of will and look this, into a in reductions our have June answer that a do picture of at is seeing provide those if account again, at not did that or that. on in this unemployment what employers says that I cutting terms below thinking of starting than now. recall could our year it topic, think some in businesses going we're of headwind that. normal to I at part wanted really reductions longer XX%, in conservatism mean, about you as that recession is says more of But getting X.X COBRA I and provides comment we regular with what I said we general I you that, impact a built said, quarter. employment, more some start the second And picture, beginning that employment our little think in a we're that's is this the to on than if and that rate out perhaps that demand big giving based of pretty business. But as was broadly I and are this forward business the guidance. think that a that I'm bit I cost to efforts the other a

normal positives about into ultimately recession, will turn continues that and have the thinking as to a recover. that economy some it I'm negatives as So will

Anne Samuel

early a season more comments just That's going? maybe with how the And Can maybe one, has how are you, been positive really selling helpful. you another Thank with the region? maybe going note. provide those around and combination conversations some

Jon Kessler

let like feel Ted Yes, generally I guess our it out, first pandemic. well, is, points is say me this first we as

where very forma make comparisons when But year-over-year to individuals experience or it's combined as very for to marketplace, comparisons. in realistic hard our pro either So the own we we about we’re. us that, nonetheless make the company feel ignore just and good

We values. solution to as to significant we to message elsewhere, perspective in we've of our are to or add cross played as has bring to get us, clients very, number total total both mentioned those products of well reason RFPs solution. that sell to our a the terms discussions, existing as add very And RFPs have from as for more be in well have higher

about COVID. to how good opportunities a feeling seeing valuable, been season. again, light we percentage, lot that where So, as see ultimately the a sort because of lot, sales are there because we're of ultimately winning And we'll when of in COVID, result benchmark into a fact But see the homestretch it's of optimistic this is a as because of are we're we’re a notwithstanding all pretty deferred a little it these is about we goes. the hard we as have third slugging mean about bit feeling I we're the and head win higher of and seeing we're that

Anne Samuel

guys. Thanks great. That's

Jon Kessler

Thanks Anne.

Operator

Thank you.

Greg question comes Raymond from Peters James. from next of line the Our

now Your line is open.

Jon Kessler

Hi, Greg.

Greg Peters

downwards X.XXX good The everyone. account to Hey going you X.XXX. help then wrote Tyson year-end the Yes, reconcile number X.XXX. to The the have X.XXX who the I from reading it? of is were end of quarter first at X.XXX And the flawless HSAs I can X.XXX did data? script. if to go job you CDB's sequentially question afternoon, Richard a only

on increasing accounts, but number I So that and of downward for it's CDB's, then new organic talk about success mean And the numbers, growth, HSA but you not talk you trend. is a the much. an actual about

get and what's just on there, sense trying directionally going that. to underneath So some

Tyson Murdock

then elaborate bit. going and why don't start little I Yes, to have Ted help a I'm me

the Let me CDB start side. with

adding main say, of you it look commuter accounts, our by offset well as we system new right for non-HSA given XXX,XXX at the we them works we way the given was not are The and basically say, a commuter had So they're I'm account in is -- a a I quarter-over-quarter. have had value, that accounts numbers. loss just about including month, to accounted, going in been if should then CDBs not

had lot of And of were value at But, doing so obviously, beginning you a clear people but that back in the April. once who was staying for so, Right it they added March home.

And what that so that's reflects.

commentary And if said quarter-over-quarter. in X% I commuter downs number. or were safe up that actually and so a number just people out, report better I We be whatnot, shut CDBs or rather take as control we'd don't the

that process So primarily kind migrations our of is And have to bulk quarter. well With completion. regard on elaborate reason a as the bit I'll what's on HSAs, thinking on that that's and occurred going for of there. a costs. the Ted quarter little that's have during closures numbers we this the maybe the his nearing did the more as And

Ted Bloomberg

is XX,XXX they while, we One onto on hadn't a book, against have With in platform. HSA’s migrate happened means it X.X% really factors. Sure. didn't year-to-date accounts, three years. balances, and them that's been they with the consistent which is Thanks, of close approximately and year-to-date, is respect that, combination rate pretty entire and around Then of that top migration for didn't that the there's closures low One things closures at make been two prior migrate, zero related to happening. and to the sense had of our is thanks, that standard a active there Jon kind Greg. very which

make don't accounts We is, spurred a about of migration, some consolidated and three about total, or expect there's meaning and second Wage an had The you into HSA the increase any were a duplicates, is then QX retention. a attrition HealthEquity to the year third Legacy was and their and life integration, factors with fair Legacy to And them that platform we their account. XXX% in platform had and date. easier, one XX,XXX migration on number someone XX,XXX by those convenience

kind of is than with a the migrations, kind we've line sort that relative So usual of to right say expectations. this of rate. our that, of our contributing sense I more in experienced would in what's gives But of you past sort attrition to

Greg Peters

for This second would Got cash balances. yield, around off the the the HSA it, question be thanks that of answer. you're revenue, just cash getting

I et that does cash XX cash your yield? banks you still the deposits, the that basis updated for rates, easily think an basis still by demand the expectation lessen get an points Tyson to give the CD the cetera. point, XXX you there can Are is this spot over we're three jumbo year recession on points said in just Can second given you us perspective you quarter. in a at XXX

Jon Kessler

you want start any to thoughts. I'll offer and one Darcy, that

Darcy Mott

when were gave at time, on QX quarter. we to we and in gave XXX yields Sure, for at were loan XXX so based know, we in came guidance what guidance the we getting seeing and we Greg for what point you on, that we,

at remainder we year, there Now that through, now the is a we little respect place. upon go we’re as more bit look for to what reliant out as to the it's uncertainty able of there, really the and with rates rates

December. in coming money New

yield, yield fairly would today. of migrate overall as better been the than kind Those rate a the on at rate of cash adding have still no as Wage of will come have we've on things remainder one impact which assets to the zero be, lower rates so and that be we our forecasting our And yield, so, assets onto conservative three with but down, that there's yield. today different our cash what HSA they're they're getting that

have continue, at would even always variable in in our that cash growth associated then HSA they if which quarter. in we've come said with which, again least the with rates then balances, down and that element rate means the has lower been more that placements, the variable Secondly, certain And yield quarter. cash slightly fairly there's robust, that a that has at And be a of rates. those

conservative wait with see between Premium about have the we're of being going now placement in There's lot December XXX to we'll and in So the we've things past, how respect XX a that to will to for on and play those. talked cycle itself out. that

to there's trying our conservative we're placed. ultimately also the and in That new uncertainty forecasting, money rates be those but be acknowledging when what will they So some is

Greg Peters

it. Got

Darcy Mott

want to add you do to that? anything Jon,

Darcy Mott

there. universe whole the covered he think I

Greg Peters

Thank you gentlemen. for your answers,

Greg Peters

Thanks Greg.

Jon Kessler

Thank you.

Operator

Thank you.

Bob Our next of question line Sachs. Goldman from the Jones comes from

open. now is line Your

Bob Jones

Thanks, net synergies like I had guidance, the calling to down front the ahead thanks if does maybe it's you in of versus schedule, maybe just just of in then be to have could it and half responses, of look the the for And one questions. there. and touching if so better ahead some maybe the highlighted what but both versus seem guys half. EBITDA EBITDA, the at you of for the expectations, maybe in well your the of the started share, midpoint million at kind just quarter then you're back guidance, schedule quarter, again looking of at Jon, there year-to-date quarter in I you clearly contribution than previous guess the kind this on $XX

kind front the think of versus drivers, you'd that's things about. Just half about out if the as specific half. if curious Or the you talked back other of there's call you some already

Jon Kessler

to guidance the revenue million mind the margin that if quarter, and $X we back talk the our half you of offered we high wouldn't don't as hit Tyson, revenue. had of the results, second quarter. And about relates I'll you the you guidance, but during then sort at why second more of look mean, And the year, I if about good. the Yes, not. why fairly that generally end was was QX, to relative at it

less synergies which therefore benefits So role played by it's in increased reflects that, obviously, of EBITDA then that of, and not, that accelerated more it's the the of beat really realization than and more synergies. reflects realization are EBITDA. we and margin a But or really permanent that really and

So, good those are things.

hopefully fact things come. one the to transaction time, we've our XX extraordinary those run and it platform that we’re we've say an thing bonus minute, will teammates have, our and if And and And lot I job reflect great related if doing. business. of certainly that and can doesn't Tyson synergy the especially that good part I the Now, was, difference really difference to like, a back like between you time COVID are tried do and the asked platform feel and as certainly of WageWorks view of one extraordinary like questions Bob like go starting mean, we a that's to look of is we're like be given And and you this profitable is was, and, is in to itself, instead still that The the our consolidation. a between what finishing accruals start like nonetheless, the the things think to expenses and but cognizant XX really effort. of there the XX on well in it

those net that CDB have I from when ancillary to indicative general we others that by clears so grow share quarter, take we a the that market and about the the more CDBRs, we commuter complete all the was at of to the which the the of the profitable were the HSA pretty took fact of said able that side dust I outset accounts, because offering. a mean we And business X% think and business done just is ultimately on when feel what opportunity side, of good all view

And about to seasonality? half that's talk want going we're you the Tyson, so to do. second

Tyson Murdock

Thanks question. the hey for Perfect, Bob.

really a we models all those lean one thinking the and able our we the and time business to in the customers, platforms, really towards had spend that good forward that. especially now one acquired make lot in I and put on new a new and with team, these on expenses in strong migration his and given to we and with together servicing being especially the enrollment investing with related we to platform, what being have them to servicing, the season, So Ted about of that the ours sure that you'll that season platforms and is from looking different see centralizing open businesses the one and we're and

you'll And And that see that so reasons the sales that's the in that's one why side. occurring. up of of cost

to of see virtual able is hiring we're have watch quite even investing to And this a to in see you'll another invest. going that that open home, actually few you XXX% thing item transition on enrollment down, we're year. really continue The that light that people, in, if from is people that what we're other season into as doing you'll we a the also business. we're well working and And COVID we're

we're in actually lot the as more going head And wanted a this virtually. have into offices the out started to of to course able to second selling we the that's saw make to so thing the things for we be not of that we here it a and that even And is, start, year, And to investment in people put kind do and so little and marketing. that, that leaned HSAs the and the this big lawyers to do of forward. pandemic of we about like then efficiencies this But We years early. virtual going across more make pretty half of investment to in field leads got concept a leading and successful. make

sure There's could guidance doing. put and doing team to we're really uncertainty kind you think that out. gave numbers were of roll together we more in lot really is of we So make were you, we our that what as that to our having putting to some just people coming panning the rolled different are out got of out that's I about kind know, when able calls. have forward spend year, you rate to to done in things, looking guidance so plays as we've and of that of open we the business and on provide. when well other want a course, off But April into trying line And run And all think some we're in what how there. and taken about where QX, guidance kind that we've guidance. thoughtful And we expense I'd land for things enrollment that how people second that of then marketing follow of successful the as half know, top we've to say heard we've areas. season now and we QX, of took with can these we're what probably that information out to forward you've

Bob Jones

No, from you. I the I Thank appreciate thoughts appreciate, both of you.

Tyson Murdock

Thanks, Bob.

Operator

you. Thank

Our from next the question KeyBanc. line from comes Hooker of Donald

is line open. Your now

Donald Hooker

Great, I you maybe little but bit, on just this. if wanted expand could I guys your a but to comment in referenced see this previous

as for last and is maybe there regards in to should concern a We’re referenced answer. forward, mind what adding But you're HSA? appropriately getting the HSAs little maybe use as comfort can in just this we us you but and bear aggressively to with environment look to enrollment your invest that give members them and enrolling engaging sentence a in you virtual people and members

Jon Kessler

have there's claim that I let's not is And we really to and mean that now experience looked way over of open to years things be our the do in able I and say, not more worst let to terms see for credit the okay I this that engagement Adam in virtually service to do of or pocket that's be wouldn't is the did the magic Marketing actually not we let at think I instead Yes, one year do doing was team say our service. on to two approached the that here and but to going some it, we enrollment Don, going and the done. us. they're for last to that more plan, going really, we in any mean, do going be been us work could savings terms some our are had the in of opportunity training so and have what of we put willing Hostetter that actually, a travel, as clients only do us experience good, answer it's an to let's,

we've what done. that's so And

but not opportunity also that opportunity only setting that standard great terms it accounts out driving to of figure learning see in and a what's doing both this clients virtual to well both that's of some and really effective well results delivered pre-recorded custom environment pre-recorded talk in year, as you a an multimedia at respect, we've would reaching how than in team it their be to a about the live enrollment use this looking them they members, as live, the of just as in packages thing, enroll, are somebody what's stuff members, as otherwise more is table around mix as freer team we be our for so that some kind that sort as not open and more people then for something as the that well both together So and nature, can themselves. truly little elements as of include much

you felt meetings so it like And there them and sort benefits necessarily kind to open of thrown it's looking loyalists who at decisions where We've show are lot call terms are isn't information more your But so They face one people thing. to present. for opportunity the who's the than moment. at at that of personality effective. thing, never And like being effective there's in terribly these parade often I spouse think primarily, another, be can of risk. and one we're enrollment face of for everyone's and making a

the to So for our as members themselves. have technology to for will learn use that both more effective for and effective the open as enrollment our will us, expectation is make about year our a partners clients we a experience lot ultimately hope we that possible anyway and and how is and

Donald Hooker

on for you elaborating thank Great, that.

Jon Kessler

Thanks, Don.

Operator

Thank you.

George of from Our Bank. next Deutsche comes Hill line question the from

is Your now line open.

George Hill

were and three of Good afternoon, sounded and that of synergies Tyson, question. like it synergies. as as well thanks guys for father cost the Ted you here. revenue And Jon, synergies taking discussed the some

about think be synergy? line the the most should business these pre-tax think there's or million versus you Is net? back top talk step-up to reinvested hit So in more is in I about goes any the will then, fund? the, it we guess this, I could to you $XX little a be there how bit that And that got than I of needs more tech gross guess guess the into component

Jon Kessler

for And may Yes, team. one. start help from some the ask then on this I I'll

components, The First which people lines, And line. of at you fact achieved we number was notwithstanding $XX had about $XX less. top near-term overachieved we then the things picks-up, actual therefore synergy about look one are entirely achieved included we'll rate as let's particular and the of predictable synergies. the really spending term like number not that it here selling the number on and kind say on of top have was of, if the kinds million mean in two all, synergies, benefit estimate on rate, that of more, continue using the to million in are our original interchange I'm obviously, revenue, second and kind with of the spending and have the that -- associated get but normally revenue to then interchange the

able partner migration where were earning interest to to on then. substantially in been the anticipated But from do in was we've obviously assets platform underlying little interest rate generate the platforms not the environment area, could they second where or that that relative and of it's has better. WageWorks HealthEquity what since the a optimal, in interest Legacy of we that a sub bit synergy little we custodial similar was deteriorated The area sense

not that you'd sort I'm as happy be, as with so I one expect And of that. would

for any interest course, more than the on cost and on improvements up the side side. there made some So shortfall have

to the custodial arrangement. yet the us assets are migrated, and for a lot earning not in be to go some nothing with have yet of the room done that still we're quite legacy we're we So migrations,

So is anything nothing. some, better than

question, the the about was half And way think second your kind and that's the which of so in incremental of reinvestment synergy that business. one, remaining the about I

use we on it. more question. and a comment say Well, general it question make me Let the let me

business difficult be decent clearly a generating profitability question is very I might the general of think revenue level more notwithstanding environment. a look,

in opportunities are to feel So, there. do like line invest spur And there top growth? to the of you business a thoughts couple order in

are and both picture others same and pieces the muddy reaction right so you bit cautious and have the since in is that little an First happening. our integration moving we anything and I'm It's COVID to do. with a once, to challenge, at be does there many that sure

an after of recognizing one out opportunity and side, that that. not is where the are that Just our signals the an imperfect, is will time items if these was business on quarter will next this something fact our kind the be and quarter work quarter, themselves and opportunity it

we to The in organic second That is grower, while that, that will that as terms option say point also platform perspective. it's opportunity think like go of be rates but Nonetheless, portfolio to perspective from feel is view, a built well our incredible with as short the from the a we can answer portfolio strong and I both like is product a both this also clears in business an yes. the up as things all reach expand like away. value

right as costs used they incurring we've hopefully distance travel will we're of there floor. this as to things repeat just that typical. you And beginning be repeat things no but that will I'm there again year That from fact say would would and to those the level that certain from But areas your are though perhaps at certain now that living But where that we’re room. little listening won't then And happening. won't those we’re the we costs of a room are I in in very Obviously, living things a bit initial true that from either. travel as not probably so would form, business. component and of from it's pandemic then have reinvest So be themselves lastly, also the the same return of we're the are be, explore you're themselves talking that bit And -- efficiency, there's distance not some produced my not little mindful are that either. costs efficiencies. and getting seriously. to integration identified we're

the trying that's guess sort long while signals it's profitable we're are lot cautious true very guess are and this there we that answer I of bit pace we it. a looking ahead business. think these way also we to are that long saying, picture the a as about little be built is I at of read, in will proving we're big a as So definitely terms of hey, -- as of that I as signals

repayment thinking about outstanding those thing. of kind will let's So beyond be debts and reinvested profits of pace of our how be that and ahead

George Hill

that’s Jon, great color.

Darcy Mott

does selling the those revenue, product before revenue a going were to we just versus not are synergies, synergy that when more bundled include George. to it you contractual and not to get that and selling and want now one those a numbers. interchange to from I moving nor we platforms. about that spoke in custodial uplift product real included speak that previously uplift synergies, to are was primarily things What revenue, revenue versus just mentioned from I continue is get when onto George, revenue synergies related are by cost synergy single and clarify cross add you they revenue

on be top of additive discussed would what here. So already we've that

Jon Kessler

would help, to for any fully us continues healthcare look continue met. going at don't the of needs being I I as opportunity that consumer be say us. mean, as there's And from and need my perspective, long the think to are to it consumers healthcare

George Hill

Thank you.

Darcy Mott

George. Thanks,

Operator

you. Thank

the of from line comes Draper Sandy Truist question next from Securities. Our

Your Truist Securities? line open. is now

Sandy Draper

getting of we father Truist the another in Securities. so, club as I'll three fellow, join Hey bigger. the guys, There go. is

just was be have economy turned get to be do the on reopens deactivated. XXX,XXX have the to to to commuter be At resell guess point or it question have don't they when actually been To they I the think first Those resold. you employer? said my you some on don't So just accounts, have I that (inaudible). clear, back

Jon Kessler

open, open employer. for No, for They remain open they're not resold to enrollment, are they they’re the and enrollment.

do it stuck work, people course, just to we But not not, getting obviously about the member return monthly then no, we're adding value, have employers accounts, like they're understandable. use. the can at can We will think fees enrollment It's that's that way employers. and to still even around use some these do as of the are And home. they and is and the messaging both when communications like they're they ways from

Sandy Draper

great. expected. you mentioned did helpful. job my better second nice Okay, before, on obviously as question, That's And margins, the very than a

much also million think should to of How revenue bringing what estimated to start you comes there's the a you You back $XX that, impact have back through on? think flow how we just about about on, mentioned from EBITDA that that that incremental is COVID. margins versus back of as on revenue costs from business comes degradation can to was

Jon Kessler

Darcy to hit you want or one. want that Tyson, to? Tyson you

Tyson Murdock

in of there that and high to business But commuter pretty some Sure, we've yet gone customers. a with of costs back drop there’s drop the longer revenue taken comes those margin. and and margin nice regards to business, so that and that found Sandy, will out revenue down those, that specifically that of it's particular the when relative variable high a servicing in that course, at that

people come that though thing that other still aren't too it small part as business bundle selling would using down, we've the The it that I it. shut is of even is part been mention does of When as well. back,

bank there you on too, the cost bottom is high think true margin. And just again That's about and by very the that'll spend falls so coming the of processing help putting as same clients processor that back and done relative well. the margin that is that's been we've the line. to the also So for issuing new when the that margin Ben to

will when an economy. we benefits. will get those that turned So Hopefully around as happen some be

Sandy Draper

really helpful. And maybe… Thanks, That's great. Okay, Tyson.

Darcy Mott

This is Darcy.

margin. just we by on good lost revenue. through we Just whole fairly And relative degree revenue to said, gained came process. (inaudible) a offset with so Tyson that the pretty this the to we to that efficiencies The through yes, related expectations, loss margin was that some significant

help about able that talking was were of revenue. how and of great a and get that acceleration much $XX Ted million synergies to just done, to loss were we when Tyson offset the So mitigate

Sandy Draper

the of of for sense. Darcy. within around atypical course HSA guess probably for when lot the my makes Thanks Jon, employee, I year. it's that contributions to I yes, of benefit a about consumer Okay, the that make lot think last And a question, pretty changes

a you do a to hold any in-recessionary change pretty enrollments, up year So do year, lot the seen the where good, balance. following periods didn't like tend pretty where well. going have any we've good year. this like numbers back people I've spend But from got benefit I'm it's I data in

So tend to people just going next they to, going year, in I'm environments, my to I'm of once or the reduce same. the set even recessionary number leave level it, contribution,

Jon Kessler

enough is that mean, general, generating means but that to I asked see this is But other actually Yes, their similar there. ton established that savings well this. I And a And recessions. bit behave very percentage HSA that some of short that was is counterintuitive that, that actually regard people and with that is the say manner me of income let work with is And a is mean is a their wasn't the in been you there's analytic yes. increase question of there there in ago that they recession do a what actually the data was the behave little out nature regard pattern savings. during on to their people HSAs long vehicles has last what answer it's

have you associated obviously one world, all with don't income. some who those So have in right. hand, our people But income, among they the obviously, who on employers, have are

that you the the I macro meaning July, February seen So about numbers fact they in go just they behavior. out spending up because didn't contributions the XX%. that in August pandemic which weren't we you came obviously the And And spending. to about the their X.X%, still that that and don't underlying contributions they look at in that that they was the since fact back have income and I haven't closer We so also you disposable rate I people course National started, figure didn't if weren't think was by yet, That stop X.X% of will was the increase that again, put quarter, in because to data, react them. saw of not, savings that reflects over fact, savings. can see if before

as going doing people But So of advantage try and not to we're now asking I that. well. that'll short wasn't And my time. sure is side this use us guess teachable so that's it you it that improves, as see if will answer as employer member expect a that moment that during the that economy I continue period keep about of benefit I the and won't take side you're hopefully the and for forever the long-term,

Sandy Draper

on really And was helpful, side. That member the Jon. focused they are thanks primarily

Jon Kessler

a think about we it's see far. thinking good case people and I based place it's are away. everyone's put fortunately, see how about put And so and what the pretty. I cents. on That's do it. their the But don't away thinking few we that think they're think a member mean, more I we're I like, activity that about not them they I thinking dollars said it, to

Sandy Draper

Thanks. Got it.

Jon Kessler

Thanks, Sandy.

Operator

you. Thank

the of next David question line comes Verity. Larsen from Our from

line Your now open. is

Jon Kessler

Hi, David.

David Larsen

guys the we you than interchange little traded back more to in a saying are pre-COVID Can had to tied at levels. publicly a you been how revenue severe up look sequentially? volumes you all Hi, medical my like when well. revenue charts, of are The that XX%, and XX% are about little like trend And medical of volume It's Hope talk you was they're you? these bit various bit interchange that's listen the modeling. in hospitals, understanding and visits. polling

or like we Are there Was revenue? how there like that? would reconcile lag do what's Just up very interchange pop that? back see Any I be in thoughts to -- helpful. a the going something XX-day a

Jon Kessler

Yes, is, happen. seen I you're more and had think those to have spend truly I seeing One think that things. some And really delayed I two of truly is pull through data. were among procedures that that

kind you little get So, the different the world, here. that is of not necessary spend a That's Medicare and definitely thing among and hospitalizations our for surgeries that population.

through kind a And helpful. So go this let few of is details. of me the hopefully

that done. return trailing is that particular for their year before into should got if those to at was points, a core And to also FSA, we're we're even I type done was a seasonally really visits a the two definite been the like but or most have leave end a still down lows going quarter-over-quarter. the on March, like reflection had in trends very down whole fact basis money and as normal it elective, year-over-year has as say as break decline slower into come that less a that's out. it of look procedure. call to interchange is right the their month, first that much been starts was true in you If necessary really there it FSA pretty were has of sort the than more, little interchange improved the where since million them FSA, to HSA down been going doctor's trailing of still they of I'm you who quarter solely million And which elect quicker dollars near procedure I'm elective-ish a that year HSA has let's in HRA quarter affected kind stuff from $X $X.X And from sequentially, fees. a call it's April. because was on HSA $X.X the the million, ago, is the of this on due much to about we I quarter limited in largest quarter. and spend where and about the folks January, steadily for about August, pretty strong basically, access. they're It's well although items, of are the February

back we not back year-over-year certainly, we're would we're have So, a on positive would basis. but be quite we thought where And to close. pretty

not has commuter been good. then and So

as But month. So quarter some And of X and spending commuter has sort their in work of begin sight per a down come balances people obviously, the at to like. about more ended was folks impacted we there interchange change going the so million until during back and is be to see quarter sorry interchange I'm negatively obviously with commuter really generally, point, the really this modest. cities, to the don't in

it. the seeing are the items sort that's their So that the is you're I from big But they're to word not where relative this involuntary. or for have what of use of the necessary voluntary, That's like, detail truly urgency lack picture the from not for part, a comes let's why it it. the high to hospitals not most say, are of seeing necessary degree. truly we're quite ticket or But trying spend not the that to so think but better, they and and same I'm some that's that's things fair

David Larsen

we within a a say be million Okay, that's $XX then month, April, one June within a service that of all as impact not in XQ, sort service sequentially. expected. May, fiscal one revenue was $X very assuming was service the million, revenue like was And line the million of $X understanding a commuter helpful. item. all which would I quick if was more It $X assume might million of commuter was was revenue, of severe it's just July, million month if then it And we my the maybe about in there hey, about $X there a have decline ding okay, and say, headwind

Just any would thoughts helpful. there be very

Jon Kessler

just talk But the Yes, commuter on $X a another month interchanges, Tyson fees I've in and where discussed. fee service a I'll or and service ask generates screwed side, then month in million elaborate I then about not. million to up

is was it than So on, legacy are because the the that is activity, there such But of does there cetera. bit some XX% nature gone, that some also than your And in question. of a et some the there's arrangement, the of people now. actual remains less of depending which cases, and but on cetera, that is just little more continuation premise passes platforms remain that et is ordering billing either

you at So to that's that want as Tyson, all? why it suggesting. bad isn't elaborate quite on you're as

Tyson Murdock

I'll just things. a few say

by seeing about much what gave XX largely trying forecast Jon in tune we looks looks month think, commuter percent. underlying And think us I that think is like plus helps point, that that like, that February pretty to kind I the going off platform to say a at of we numbers when that, and with you on It and forward. back time nailed go of and what as month the that's that basis, to fallen that. but

looked trend to July, So and trend the out in taken we've at that looked and at year. we've essentially the of end that the

Jon Kessler

think we didn't of commuter? in mean, right quarter, get is Lion's $XX the of the to the say I that share we million you're that

David Larsen

much. so thanks Okay,

Tyson Murdock

Thanks, Dave.

Operator

Thank you.

from Leerink. question comes line the SVB next Stephanie Our from of Davis

is line open. now Your

Jon Kessler

Steph. Hi,

Stephanie Davis

Tyson Hi, the feat a guys. double taking quarter Congrats on for congrats and the officially. to

Tyson Murdock

you. Thank

Stephanie Davis

quiet been call. Steve, For he has pretty this

going towards I'm the first my him. just to be So question have part of

So about up, with And administration? a we the is impact think the pivot Steve? of lobbying, you Election would in your change should coming how how any

Steve Neeleman

fray to here. Thanks bringing the Stephanie. me for in Thanks,

Stephanie Davis

so You quiet. were

Steve Neeleman

I'm you Well, did so fill. Jon waiting is this But the maestro place. for him here, just to in it

have you. these down Look bipartisan certainly acquisition mean, And the led you in and really span think this if offer, that but thank is this about we I news and of us for I the effort. predates the we products a road even acquisition, do example. think So HSAs of good the predates many

very nuanced save think aggressive election might they healthcare to you I election. protect the effort of goes, that avoid to we're employer the need what employee their a time. of for sponsored is pretax They and people had current is long But benefits we've spending. save our continue need products that. how employees depending just so And independent do for need the to honestly, sponsored very would help. benefits that. And happen going to a have lobbying to And retirement, need suite allows some for taxes, to that And in they us reality on approaches, for

in-house And needs. then we team that so look each we've of use these outsourced got great a after and of kind both team, to

I of week. mean, so the need this same. right guess short is And I is Congress the work now to we it's thankfully, definitely more answer back

COBRA should help they over is right COBRA subsidy, need with a thinking folks of out a there's X%, lot unemployment subsidies. now that be So if because about there

we we've have on is bone. that pleased think of the have things so with come there that more we number, the of the Act the some meat out increased And been CARES

nuances, really after to And different this administration stuff after like almost mean, I don't, so may I it's going we're think keep it. we're keep going said, and I to but going you I independent. have going

Stephanie Davis

that understood, makes sense. Okay,

revenue shifting gears could bit, looks it maybe Now new healthy revenue a performance, little organic reflect Tyson, things growth, growth decline I to in despite look a to what's considered. up a year-to-date guidance. all been relatively the It at marginal like

do of some as puts So assume is takes? pandemic this continuing opposed as conservatism guys other outlook the the how to and maybe you much

Tyson Murdock

as to be FSAs guidance have of before. As into massive and hold I comeback on way allowed we we kind with of it's to the that QX, the to this you then second and consistent looked things we're what to see we in the true have extending same thing in out out, to and there's that I forward. at those but annual The when just year that definitely that's each the we might that's this other money interchanges, completing, longer regards break is build see so putting about people, one little of we're And Stephanie, in items, pulled would there lot in of this of able on like. about to out which that to half that outlined on a until the and in the to some things line changes with than people work. focused going for want those to QX in looked place story is longer onto which in at a at the money kind the to some regards spend really with that a is is been before, shook pretty guidance we see for you look migrations about trends right talking look we’ve call, free potentially we got we're build think regulatory say comeback, quarter would order not the custodial, put April one area they the We've of a how that I period notice it, than looked time be that the to other

think comments revenue pretty releases and I been we of the transparent well. course, as then, fee service in just we've about that that answered the

Steve Neeleman

it if answers know, don't I that.

Stephanie Davis

slower same guys Is have target just lot well than you a what far. assumption it's that for synergy timeline, as so the given accomplished

some a Just of moving conservatism, pieces. lot

Jon Kessler

one. right. on, that Obviously, it can I to be do Yes, Ted, to And work later work. you a a speak you we can maybe stuff then The little more definition, find Ted, tends to elaborate. harder, have is when by little

extend legacy on, out load. And that that more what January whatever. to of is to that to of cases, okay. get in of the that timing way some going by virtue not try of business when front the at this about of to as be is which the market sense us fact our will one the entire that down process that to will January So, think the of convert timing completing but take make it that's that's operating it to this does that to really trying process done, But all in front it boils timing getting will we we is load, people timing no the we're platform the information we year-end, competitors next time the give amount and that out to use because course, choose found not out to but details we're against reflects really some through

Stephanie Davis

good, sounds guys. thank you it right, All

Jon Kessler

there I kind to, add anything so of than longer to Ted I thought it going on maybe He went was is, mute. to that? is

Ted Bloomberg

mixed possible many our a the order Purple Sorry, guys. a of accommodates gets that conservatism that the chance timing of of timeline. Thanks. I work have with with to as and clients dash said find as typical little that you a dose you trying of

Stephanie Davis

guys. you Thank good. That’s

Jon Kessler

throw done. the I like take the She's like I'm how to control to that. questions. Well of going me didn't like questions. screw trust Stephanie

Operator

Thank you.

the Our next line Mark of Marcon question from Baird. from comes

Your is now open. line

Mark Marcon

afternoon good Hey, everybody.

Jon Kessler

welcome. Mark,

Mark Marcon

well all job. great Tyson, and and you of course, are as Of

platform to Wage the accomplished of many Just with far regards out migrations, the been set? how have thus

Tyson Murdock

Yes, It's we're read it deliver correct year. but you press And the says track the which know is release, seven to if answer a least five, XX at of on seven. sure. the QX end through I

Mark Marcon

those $XX so is of or anything by platform in? terms in factored And great. incremental Okay, there year-end thinking about XX is from all be in to million going the that's savings migrations else

Jon Kessler

that? biggest want you Ted, the foresight. beyond to comment do That's

Ted Bloomberg

sure. it platform. few from Visa that This $XX not but just ones not biggest of that But deal the the will of is that that similar proportion Yes, payments those efficiencies of Thanks, big we're follow. the in is the contributor. XX. things There a remaining a the source, those in well, absolutely significant are we million Jon, consolidations. are through as realized platform ones scope to are from which nature, think we the working be other But

Mark Marcon

season how unemployment were of the employers tipping relates just past to you they're they talk this little being was in what year in aggressive be to adopting going terms then And where you consumer that budget benefits relative it savings a it potentially as to terms bit Fall directed can think about Great. of low more healthcare approach of is a as and selling going of attitude rate so the afraid years the to Applecart? this tool particularly

Jon Kessler

why this don't this Steve, off start on you one?

Steve Neeleman

do unhealthy that life if weird maybe the you the HSAs, this a senior had shift someone the for choices would line, or And is human and Yes, these in HealthEquity mean, is bit and Mark. that people little we But mean give love plan, risk right what can that. say, in team, resources where in this People I plans then the a easier traditional they offer you is cash. I in the say XXXX. go think lot pools Healthy choice, where oftentimes mean choices. People pretty problem I you sat and leads Sure, so look to I the like all they for hemorrhaging we stick have we'll with

And when this road around well, down there X%, was of talk we'll bit little so unemployment of keep was that they're going choice. a like, maybe

our more that heard last haven't We're land for the much do six best get benefit for We how to all the employees. hearing price HealthEquity and months. at or we teammates in continue the best

out term that can but taxes? of And the you ethical so when a and save on what for our you're loaded the fully sure, course, is on and and back the step the avoid and competitive gone solution. does employer HSA that money bottom hot, that short sense taxes target a and an while. term how how save for job there's help healthcare employee line the really for plan, we the that's market, when little employers to saying, the then maybe our take for choice, spend say, educated really inclined is for maybe side want That's save folks my and you're long-term, and on we short both can And racing just the no loaded, in I hire economy's better want is more a

it, I doing their put, it, And they in so do doing only than is doctors contribution them large their hospital very don't just have with call. system they appropriate no offered you to, more webinars, offer was asking if was appropriate comp can our higher offer, account, I the richest sense the now that realize this benefit they're an ever their and HSAs not richer can their employers employees there's plan benefit plan. us to HSA is in are really And an particular, people are design never that they with really XX remarkable on have ever before. like

And so because code, they're savings it of the it. pretty reason is is to tax the remarkable. And leads still why getting which

I know, remain it. on I don't bullish So

little decade every is a realize benefit. think kick a this to need us really the we that I remarkable in gut make truly

Mark Marcon

That's great.

Steve Neeleman

answers have lot the this the to the I mean I I focus in we the of the HSAs, to, economy. on side, a add CDB obviously, kind on question offer Yes, just think

script, a is as of with referred I -- even I That's these in said I start know script the Peters let's the idea. COBRA, things. piece which well one all, like of a Greg think first great employers, For to you could didn't

well they but And about literally people out roles. you about was important, compliance going new that are you're really talk it's how Sorry, not them. door serve their also talking employers what the extremely partners I'm you customers those are But to is to serve people scripting. in sure and potentially important your or

as really stuff And there, the good I also why a when we in think OTC So that's you're feels other to device really a the you like out flexible cycle about with it what take counting think trying and saving both now in for current there. over and the spending to a that more money take the there's to the CDB's if really care pipeline especially advantage time going that's we way at same of are penny thing for and are we're a offer people like, something available time. that's the accounts a look not, door pennies people lot the these robust I offering and is their well though, buy on have price and there on saving then of, can

this. have no we So benchmarks again, weird cycle It's for look, very markets. it's a

our As Ted this is first pandemic. says,

used take but about feel have that then play look environments, also not we years where next I which into demand about where we will on to the I really but of fellow, thing, pandemic. my sell I And following if and so at folks BXB I've type twist this think the out and to good have it, the line who see I start at and when a we're that consumers, into year talking about both will we year ultimately how this and were

Mark Marcon

last one competitive squeeze from one just a I perspective… can Terrific, in

Steve Neeleman

B, Peters time. there's a did of ton mean only I Since it

Mark Marcon

flexibility fees? you bit interest more level have much of just them to to dynamics offer how to expect therefore in a potential a competition having one B, and terms account terms clients capabilities lower about having being in of and little as they of you respond may to greater therefore talk the rates just two Can the not and you

Steve Neeleman

came pressure are, take beyond even market. questions, accelerates the that case look I I of damn whatever say number if industry based to figures are consolidation. that can a we’re on published here, And we're the reported few think league close today, in in the in Yes, publicly numbers you out that don't we're tables, let's step their specific accounts And we've economic but those in weeks, the often number I consolidating it's an assets. at one facts (inaudible) last downward mean that a one being we the they that and

on their But think most you know the is or own are there, won't net we so play games. it's mean of the opportunity about absolutely, for that that their folks doesn't case the that source if income hurt talk and folks But profit. And kind who there and an interest who and that. are have most of the competitors reliant we'll been margin that

from provider, XX% HSA than margin So net definition, margin, by revenue, nonprofit the net interest which comes revenue typical profit. of is XXX% interest its more

do So working the kind absence Madagascar I of a And sort perfectly vein executed, the of penguins of guess we plan problem. the net we're us of total with solution, on position interest less strategy with altered on to margin can like the pricing and we're, and other and put emphasis that's emphasis in be for employers the, us partnering a more or where all and don't balances our in don't something that of timed third-party. the flexibility well either because going are they have whatever the situation. and current Others and if just that's them, way to really they fees to products us that for they're have platforms out been other in to get the turns have working have those economics shift a now where competitive outsourced essentially kind this

by it's really hard margin selling not any so getting benefit to you're And them.

of kind that's dynamic. So the underlying

have that have are high what will think do that would we and were clear, plans, going gives us United them I their And game thing. we'll that's on to, know their own very Fidelity, to partners and And know, at As I focus effectiveness competitors That at I pretty where are. do the that and balanced be I some of lot to you accounts. That's solid a new that. game effective their if is other said, plan have with, great. work competitors as some of it's they're then you to they'll some Optim

this a So, that and market seven terms market have continue to will of themselves to ancillary offer provide the share benefit take will balance can is I that but grow intensity to just look the in growth and weaker market we to the maturing competitors, or really from over six, grow that course years at believe that a of will next in that steadily five, HSAs continued fundamentally share HealthEquity with capital a with service the both CDB we and us same members perspective, of side continuing clients. on market on from who cannot the side level the

rough my of one. kind that's So version of that

Mark Marcon

thanks. it, Appreciate

Steve Neeleman

you. Thank

Operator

you. Thank

comes from next from Allen Lutz the Our question of Bank America. of line

now is open. line Your

Allen Lutz

Thanks for taking the questions.

Jon Kessler

Lutz. Hi,

Allen Lutz

How you? are

Jon Kessler

the I stuck excellent probably strong. is living Excellent. air room my in outside, so. Well, is orange am and too

Allen Lutz

you wage, year. to talked before for by several fees So that years will guys service XX% X% decline about per

How year we're into now line about that we moving wage a So item forward? the acquisition. should about think

Jon Kessler

Darcy, hit one? this you want

Darcy Mott

Sure.

an when primarily XX% So that HSA per decrease, was on talked X% we the about basis. X to

had respect on and for volume And a still just that for HSAs and continues giving we out so, the for that's pure revenue, it that we the expect. time that actually issue it HSA played service would account be quite a but pricing to HSAs kind that we range some more were of with true probably that took into itself still discounts

looking so we're actually out they As tell to total acquisition, as now hard to accounts you we've that buy basis will that transitioned to and you co-brand, like, but price, bundle HSAs We Wage commuter, accounts if a of bundled a get model kind pricing and because go we total price. at of so together FSAs on made average service and services going bundle a them if up. well, we're kind think with we've over-time all our on is or revenue even offer It's actually basis, the you exactly, some this monitoring or go. the it will give blended and some this flatten standalone

don't looking over-time that to with Jon services because into we more that our that the we're flexibility but to competitively, any specific this all revenue really offering do as total we said, to a offering offering offer we we decrease, and So relate does guidance hits. have competitively a believe win you more we or service and to more these as of are at percentage have at-bats how increase so get lot respect hit extra-base

measure a of accounts kind we'll we and it basis at that's how it total how So look forward. going for

Allen Lutz

in from there XX out elaborate or that basically XX Is HSA Thanks talking of business out they in declined kind Darcy. was last on below seen you've vendors rates Article for you of basis and basis is that? that mid out custodial And holders is points. that that to mid then put something of can paying XX they what week for were up about your my to book follow points

Jon Kessler

I'm that in and perspective, now think our we've we of, I We unique are our has about approached function in that and not we this basis resulted a of reported are the to And down in and was this that. quarter, doing decline case that way to direction we've we're out quarter agreements a like our in they We it's we a in really the that's margin sorry, it that in our committing it that out members points largest and think a not committed XX that and follow pay a outlined importantly from a we think rates from and our our they're whatever will somewhat in custodial paid something and is a what in-market XXs, it options. we we means must perspective, but we depository our decline clients agreements, this approached low unusual certainly in are a offer bit or little I in say little -- a really down other helpful bit which the from our function in report of bit paid the reporting them our and I case they always regard members that be huge competitors a that's way take. useful it actually that

example, for basis, we then of conservatively does that reach is which it they fact per encourage margin the our and better and returns. it's notwithstanding certain call we for among relatively So coverage Plus, ultimately higher very, is product balance yield. come with But that very generate to and option, invested nonetheless, is because HSA that for Yield safe over way of a which to the works. members and the way a it's we invest members only cash once investing course on are, a a a we offers historically not the will because It is a dollar them long-term, high get not more providers a ones, non-FDIC few really FDIC

of approach kind way it. that's we So the

some have So some we hunting it we've other recover over-time continue is they you think market that to that are to about more seen but, but is regard. -- certainly margin -- aggressive this the of there competitors nonetheless, expect as been lost might follow will in we

Tyson Murdock

single Yes, mean, add would because few this, to agreement is Allen pricing and requires tiered every I interest everybody what us but exceptions the a at everybody most this surveys. month and that pays those conservative that we there doing, a in our might just on to most to look schedule. be I look at but market

on in grow account scale if of your less kind they low which that you up free thousand balance, the or have accounts you balance lowest get dollars and $XXXX, we your, but others couple cash do like may the a very bps for you a balances of as do. and than checking So

their pay, an we all of talk we rate but that's we're sometimes information when rate about the lowest And entry portfolio, HSA paying which blended so what not level that a our for survey for dictates. that

Allen Lutz

Thank you, both.

Jon Kessler

Thanks Allen.

Operator

you. Thank

of from Our Kesavabhotla line Vikram next from question Securities. comes the Guggenheim

line is open. Your now

Vikram Kesavabhotla

you thank question. the for Yes, taking

benefit. I in also consumer you've request the mix the sales HSA of past about directed opportunities talked think that

opportunities those particular. in throughout in curious update trended rates trended year just among us your give sales this can on that an I'm win how mix So and how if you particular, has have

Jon Kessler

I as commuter view deliver could, could even being way we one as was of commuter sort the markets right of aside our synergy all great we HSA changed that's of people with of the that year see I'm the did these in where and sort true all is can various is and from rate force all great, valuable going did the and but commented from that, leader move have just of percentages stuff, that's value customers a in not opportunities it to about just to strategic are ancillaries. sub categories about and the and to product numbers the perspective, those advantage was those the add it not I that or we more but the you by even why putting how still feel moving both HSA more we can take terms we substantially so across Tyson juiciest to that Yes, And that what you now, and and as think a that convenience. market tell the and thesis in of the a thinking benefits earlier active terribly don't win of well why feel we perspective opportunities. from you feel sales about for think pay of we synergy strategic kind that ancillary that it it that being -- as by to reported I thinking

real terms terms in also time COVID. a opportunity where and given solution when So are there great we cases of about to the and to a solution the total of on be is total in positioned our we feel customers obviously new and building it's relationships, existing cross-sell existing both good sale

substantially the across opportunity feel is good. were really the a the of have year and talk to all really, earlier in larger we where of same broader kinds base they sales a solution just are themselves So about as numbers on the these the

Vikram Kesavabhotla

Okay, Any that gave how activity take maybe just in theme some And which curious you the being color think can opportunities you I'm commentary you give those appreciate market. might color have on place or be helpful. there on will be and particular, time-frame us versus that you activity great. out just in the before the if over then a if sense consolidation over-time. in I you. will the maybe a an Thank near-term just play meaningful ongoing would follow-up.

Jon Kessler

mean, answering Yes, of talking a the think sure. in was I sort I about over period. multi-year I question

in that the answer. said I think I

for as But care different This get products the more reasons lot of league we're we think we're a to all I individually competing do. the not not most the folks, is the the at going the of and I the active, market see are all, these and environment, lead looking to number of tables, customers middle and is are take think it least the what them going lot really second to is of challenged what customers I modest opportunities my the not of most that -- sell is kind where specific but it's to that. tables of acquirer of in many of more they're So first other of that going And with these we their of like. primarily a top for at who that were. size. movement think market consolidated look M&A those a question view you're for really near-term part and is we're part a the current of them great your see areas not and context think comment when you so that's rate we really which don't We the movement was of I active in on and

they us we've are return. level So like ammo of profitability there, is high time of little And gives a those in investing the thing well completed very about have more we out the as business in as in when nice feel the stuff organically, kind is transactions a just quarter good the for for when right it that turning

Vikram Kesavabhotla

you. Thank Great.

Jon Kessler

Yes, sir.

Operator

closing At the showing management would further this over for Thank to remarks. I time, you. like I'm to questions. back no turn call

Jon Kessler

thank staying already with you thank somewhere good. Well, we've probably enough, you. patio and sounds there is is is imagining guys pretty us. now for and Thank job. everyone it and Nice Mark out I'm

sticking So, and investors whom but forward going same appreciate focused staying over few at next to the many look also on we you of of conferences. various all appreciate really from the that's the we and with days with us speaking world the despite in guys our course

So a again we'll with that, thank of again talk you in and couple months.

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