HealthEquity (HQY) 7 Dec 202021 Q3 Earnings call transcript

Company Profile

Participants

Richard Putnam	Investor Relations
Jon Kessler	President & Chief Executive Officer
Steve Neeleman	Vice Chair & Founder
Tyson Murdock	Executive Vice President & Deputy Chief Financial Officer
Darcy Mott	Executive Vice President & Chief Financial Officer
Ted Bloomberg	Executive Vice President & Chief Operating Officer
Anne Samuel	JPMorgan
Greg Peters	Raymond James
Robert Jones	Goldman Sachs
George Hill	Deutsche Bank
Sean Dodge	RBC Capital Markets
Sandy Draper	Truist Securities
Stephanie Davis	SVB Leerink
Don Hooker	KeyBanc
Mark Marcon	Baird
Allen Lutz	Bank of America.

Call transcript

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Operator

Go ahead, Mr. Putnam.

Richard Putnam

Thank you. Good afternoon and welcome, everybody, to HealthEquity's Third quarter of Fiscal Year 2021 Earnings Conference Call. My name is Richard Putnam, Investor Relations for HealthEquity.

Jon and is Dr. today me Kessler, CEO; President Joining Deputy the and Mott, Tyson Steve Bloomberg, and Officer. Chair Chief of EVP Murdock, and company; and our EVP CFO; Neeleman, Vice and Founder Darcy Operating Ted EVP the our CFO; company's

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

of our including market earnings, that is release including be ir.healthequity.com. of today reference First, Relations closed we'll Investor measures GAAP certain afternoon. issued of with website, release, webcast on announcing found measures recording was press the today's definitions these non-GAAP third and which our quarter can after reconciliations of this Copy measures press non-GAAP comparable financial this a

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

host information of the our Kessler. Q&A. the that over XX-K prepared With our to I'll placing statements And mic turn these conclusion remarks, price report annual we'll and in over to affect provide As to to Jimmy, that, market we risks CEO, our with obligation in no these or also factors SEC. our our Form result, We review these assume our update or to the to and undue at encourage future detailed reports or of the caution a may Jon forward-looking subsequent the you filed forward-looking light events. new our we now other instructions on against and you on results future operator, reliance statements and stock turn discussion call periodic of latest revise of

Jon Kessler

got start is script is I've visible that but now from us. everyone. hi all just the a you and profitable saying growing but COVID Richard, the on firing and deliver and I'll right here, business whole cylinders really Thanks, to a all tough team expect backdrop, by

During our third backdrop the difficult of team sequentially quarter, and our strong delivered progress and total financial expectations more strategy. on fiscal pandemic, results solution the driven Purple by integration the sales exceeded given improved

fiscal look outgoing outlook and raising going consumers. integration. our We've results, got drivers key feel heading going on Ted and confident for going health XXXX the offer here is metrics, sales a with incoming to and discuss performance, our to administrations QX Steve's at a will perspective enough We revised Tyson to XXXX. FY and do full care perspective can for Darcy into then WageWorks very January, are support year what I'm Q&A. key Congress financial early detail to to cover in offer including on us guidance.

I'm plus full a -- expect. sixth team got the team of starting as kind might you we've So, basketball like full man,

care sequentially, was of XX% we beginning headwind EBITDA as $XX million yields ramp. margin WageWorks healthcare estimate metrics. custodial rates, health and of despite million created season benefits We during and excluding of $XX commuter key on reflecting continued that and the benefits growth year-over-year, on impact the Adjusted Let's start and member's utilization commuter spend enrollment EBITDA own, of steady was year-over-year, quarter. always the up always pandemic. adjusted during and about their of August, XX% cards million up lower lapping is do interest Revenue XX% the is of the in card $XXX organic which our pandemic's by use with of the tempered

newly but least, and As during accounts quarter up of believe, of XX% opened to more benefits assets eligibles hired HSA, the year-over-year year-over-year in reached accounts HSA X% HSAs commuter of last $X.X quarter, are suspense. sequentially. given $XX.X come million will the economy up in HSAs XXX,XXX quarter. time. over throughout we XX.X decline that year-over-year, that a total currently growth a is, plus moment, newly X.X migration-related at the discuss in million about definitely the the offsetting flat closures about not million million excluding with is Last, that FSA solid billion, dearth and $XXX I end were impact are is talked there believe plus we COBRA, in figure, XX% organically, we

asset in investment and what members believe, continued engagement some to really tailwind, education from this contribution response is drove we HealthEquity's efforts, provided values While growth.

we we been busiest many ever. new And QX for really provides HR will some initiatives, January And results of few here XXXX. in team departments growth, on crisis new work excitedly be off want FY of said, sales all know, pushed you our drags slow. mode, and of been course, account As are are believe truly January as having by base I That face, reveal have why is do particularly we and is reasons hiring additionally that excited. minimize the All home a a the us. normally our nearly preparing in will for the activity the growth that of clients, of remain having which challenges from what to

service wins. means logo cross-selling along Purple -- impressive clients, appears its win years, and rates team has clients because several platform what a I'm less to remarkable driven The largest action. have an a rate demonstrate to employer platform what existing too despite migration attrition First, in in strong opportunity FY remarkable mean sales performance sorry, best XXX that's migration relationship in purpose enterprise retention managing but in of some to and XX% more delivered to by be by source of XXXX new to and helped executives clients, HealthEquity's activity, proven achieved all our

open Thanksgiving so XXXX. what network support trend the we midsized And same course XX/X FY tools, with already more with tool began open And the of this members for Ted the and, over employers for good. members about signed. to March partner and course, previously summer with hope prospective week and total as already finally, than on since interactions enrollment translated sales average services social first HealthEquity employers the our And the the pipeline quarter. importantly, win. our XXXX. bundled open managed implement for strategy. in late, team to embraced members year-over-year, take new last in growth is wins having is years clients enrollment. and XXXX in to enterprise steady was XXXX mentioned prospective in didn't talked in their continues business clients. trend our extend FY FY team And commercial our added that The year, some and April fact, with content, a XXX% by smaller to during the have used in the of We've benefit of that and third number includes XX quarter solution to that the media virtual and of nice RFPs beginning so into HealthEquity enterprise our doubled It's already from members the shelf That's pretty services In have growth FY set interactive that's far appearing close live shape, live starting partners this on-demand have enrollment clients and already

and that's key metrics sales. So

continues. integration. about also on integration Progress talk Let's

million of the goal against end team end of is ongoing FY the against expense, $XXX $XX of had approximately third Indeed, ongoing that's reached of of expenses million As of $XX untapped integration a XXXX its $XX achieved quarter, onetime team on-track before achieve cumulative year-end. with annual good fiscal a And legacy more the cumulative synergies platforms pretty of of onetime XX million approximately the migrations are annual to fiscal of platform return. million synergies as HealthEquity total XXXX retired. the by

assets unified XX here Steve? to features to clients of portal HealthEquity is Washington, to now most pandemic HSAs really think we strength that. want then experience of the are practical the custodial fallout. the Americans So some its contribute With our next considering. new control a adds XX% first steps HealthEquity's opportunities portal in the Steve dozen months. CDS deliver manage on and platform. describe QX, that the indeed of Off-note, HealthEquity and Congress change to we'll for and all afoot major HSA to is and over installment and of In the help families HSAs that

Steve Neeleman

on-demand consumer-directed savings and Last XXX,XXX through administration think come solution with understand This of Jon. there benefit long-term other of are the accounts this HealthEquity and to year pandemic, and live beyond. Congress Americans to that are in-person have current and open And our evidence enrollment starting that including sessions. events, XX,XXX potential same pandemic incoming the to attended over HSAs part may approximately and conclusion. support. healthcare is live year, and our you, attended and affordability the the live online Thank members We before events

year-over-year. the been consumer billions of get to in under by For we is been during current This avoid cases, year or Many in provisions. the Consumers to pandemic. they have consumers example, most and FSAs use reporting dollars lose that use of have have forfeitures. funds with dollars. spending lose since or healthcare of system unable in rules billions could healthcare began their down And means unwilling care and the end pandemic must the the

emergency within in elsewhere and worsened sanitizers, this Also immediately view, their by have not use funds or while three without consumers Dr. services masks period we similar As for COVID-XX, was taxpayers qualified Republicans week but use during tax of pandemic access passed that these use need plans HSA improves, to advice return sponsored expiring apparently deadline childcare isn't FSAs and money. high been for for as not FSA period should care FSAs should lose their to a incredibly, unused the pandemic. prevent FSAs, have authorization. or to pandemic they to to apply in and through this. only be set more the extend Regulators have their and extension Because therefore, the funds sponsoring orders to healthcare for the that care FSAs would the also and emergency relaxed be and California childcare working or should cost telehealth treasury. lose the employers to for take aside lose The shelter how for in of rules used for around should our well. of problem. place Americans the will FSAs flexibility have no they to to or the revert pain period can Rules Extending the believe childcare. deductible not We not as during consumers allow man. keep to FSA and all kids. doctor's go work PPE change would can enough able three the to Fauchi's other must isn't XXXX, spread cost HR the little Democrats

need that We a for Americans is unable shouldn't this an until to common get However, healthcare Congress. work. help active premiums they're unemployed require to back sense measure their to pay

financial Congress During the We many affordable. more during the XXXX, support doing who in Congress, crisis premiums agree quickly acted signed period. emergency in COBRA pandemic global on with to have to so make

COBRA Congress to basis. solution Americans. expand permit catch has and for of But, should ability HSAs HSAs. a our use and of be of current contributions since or out XXXX, that costs the premiums emergency we qualifying money. HSAs crisis, extending act period. estimate for the by employer-sponsored tax for pandemic anticipated the the part American dropping the Now insurance, all at cost us to coverage under contribution Employer to are HSA start used this none regulators the until insurance premiums also requirement they the fund up and Institute the of the since pre-tax pandemic. stability to X.X Fund from on these Commonwealth affordability ACA pay Congress Research Coverage lost turning ACA run to to workers that know, The links the unemployment consumers' to eligibility as years exchanges the Benefits can which by XXXX deadline these XXXX end can

deductibles, Ministries include to VA are Health there higher or to pre-pandemic and HSA plan who Democrats make pocket any Without use are basis. now. of tax-free consumers HSA of continuing should plan qualifying a tribal an allowing Care qualified to any more a fix or across for plan should HSA HSA choose widening HSA many to weren't Medicaid, a a to the to Medicare, health proposed types, by allow all they issue use can't and Finally, receive on plan Medicare qualified generally Republicans make coverage HSA rise Advantage, in future an HSA. minimum Indian unable costs pay deductibles consumers expenses than healthcare have ACA for to their with health services permanently contributions Sharing this these TRICARE, out-of-pocket eligibility We plans. traditional and/or individuals coverage, or now because

believe but presidential Senate house, election November adoption. more the You that practical environment nearly results in can for sway chance in call a naïve, the greater the in and we create could where moderate voices have us and measures have an XX-XX

I Tyson? like walk teams this in make Our engaged through and are will now happen. working Washington hard numbers. the to Tyson us

Tyson Murdock

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

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

have we of quarter. while in results, this lapped keep mind last officially year for two that acquisition, while in results WageWorks had So year the the the full reflects QX combined months

quarter table quarter primarily growth total the grew Custodial to sales. in growth, in of and from in yield and was in grew with to a revenue yield decline with of each organically points including yield XX% yield This grew the XX investments provides the HSA XX% year-over-year The despite growth. is cash for is point quarter yield. X% three new assets grew the $XXX.X total categories. the WageWorks Service on accounts, release in press rate Average additional of on overall in the The XX% with year-over-year Third annualized cash revenue with acquisition HSA quarter. during XX% today's with assets. HSA grew million revenue XXX The million, a details. of revenue all yield representing XX% our basis annualized third yield increase HSA HSA $XX.X XX% those and representing cash attributable to average interest blended HSA cash year-over-year. rate in quarter, revenue and average basis yields

expenses of year. migrated or revenue, million per platform. $X.X in the to revenue a in assets share for custodial XX% the steady XX% revenue the $XX.X the Operating representing year. quarter growth expenses, together growth. As grew sequentially previously integration increase $X.X primarily $XX.X The were was GAAP to basis and of million, to prior have is the third $X.XX we compared at mentioned, year-over-year of attributable Interchange million loss million the XX% in $XX.X partially the Net revenue. reduced HealthEquity of our margin HSA reached XX% and XX% quarter assets prior in total offset per a EPS operations million, spend the more compared or share to of and of favorable quarter. $XX.X $XX of in million in Income last Gross average in which a million total $X.XX interchange quarter income on compared negotiated accounts XX% profit loss share, a $XXX.X the across by from platforms amortization or year. including third intangible Gross to was was merger million quarter. of represent acquired to

$X.XX net non-GAAP a income year impact Non-GAAP COVID. per was share increased through $XX.X at per million operating net the to quarter year. XX%, adjusted compared Adjusted margin ago, increase. million the to steady to was last Our was X% compared sequentially share a per of for the while $X.XX $XX.X and million EBITDA $XX.X EBITDA income quarter XX% for share

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

balance XXXX, credit. of now of $XXX line review no Term outstanding to the cash cash and to equivalents updated with on will of On $X our guidance. our we I as October sheet, drawn the Darcy XX, mic amounts Darcy? had pass outstanding billion A debt million of and

Darcy Mott

Tyson. you, Thank

sensitive you recovery. for timing COVID-XX of remains FY know, XXXX As pandemic our guidance to the and economic results and the

of see our remainder of we economic results to-date, guidance increasing full discussed, our As are and surge on performance to, members a the and we but use fiscal Based health but care our and quarter recovery parking, the XXXX, cities. through about open and limited The year spur of pace operating benefit commuter of the COVID Tyson cautious other will average spending for impact continuation products. negatively fiscal are just modest impact fiscal these not number and variables progress how of XXXX. especially the continue wide upon for and of improving XXXX. of uptake and third their remainder range will total large outcomes perhaps impact trends, year access may plausible benefits. the Specific to their employment the exists our there Across transit, remain include, to doors accounts a in variables, quickly and in other businesses, employers economic to other and conversely in COBRA

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

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

expect for between XXXX. and be $XXX adjusted to EBITDA million million HealthEquity's fiscal We $XXX

assumes the the weighted outlook approximately of approximately guidance rate of million estimate the having the includes for of annualized in $XX XXXX $XX tax expected of estimated XX%. rate of end XXXX. projected share statutory year. with approximately income outstanding quarter, XX net a based estimated synergies end as for achieved of per run effect synergies million average achieved income by diluted on Our Today's shares shares be The third non-GAAP is net million the fiscal of net diluted FY to an

recent Given year approximately guidance with we during the partners, XXXX. are X.XX% yield current HSA interest on maintaining rate of our with full yield discussions fiscal cash environment and our depository

rates, contracts for confident expiring HSA feel provide this new for yield also outlook for current be to yield at and and time market with Based X.XX% We between on rate X.XX% our HSA expect XXXX. to yield anticipated cash FY a cash, FY we XXXX.

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

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

Jon Kessler

Darcy. Thanks,

Before to tremendous doing business of so the sure, I at call case, to wealth, but who full take Q&A, been members our have also in our members we a continuing, my towards have think the corner of delivering shareholders at in as Christmas team thank months. as And the same like a I'd health foyers, want go said living and as from outset, kitchens just see us. to towards I members work rooms X,XXX-plus listening for bush. time, moment helping everyone and on our -- that collect in think, this are you and floor And the I as to months and behind towards -- to connect I'm delivering tree/Hanukkah kind the progress made,

take that, So again, away. And the to team. with thank you operator, it

Operator

question from with you. Thank Our comes Anne JPMorgan. [Operator Samuel first Instructions]

is line Your open. now

Jon Kessler

Hi, Anne.

Anne Samuel

question. the taking for Thanks

provide little overlap existing And hoping, about strong spoke a customers cross selling. color the wage was does customers? could I bit then between look like HealthEquity maybe more what you there? You and

Jon Kessler

we're well I why give a on All if on he’s color activity won't, little Ted, mute don't will. you if right, he and what Only the cross-sell not though. seeing?

hear still me, can't can You you Anne? though,

Ted Bloomberg

Jon, can you me? hear

Anne Samuel

hear you. can I

Jon Kessler

go. you There you. hear can we Now

Ted Bloomberg

But work right. All my – of is and one the I answer, got corner I which had practice. except Good. luckily, no where Anne to a I it great bedroom. my heard

Jon let of opportunities hear the with a what you go of isn't too I'll I I really and we're heard And enterprise Tyson, having pace the which a high-level clients. – services are are yes, we're higher sales they new if me But excited that that which So with probably by pleased kind more to cross-sold, of we And our kind zapped basically, from get about much some rate close are remarks detail. quality conversations buying into surprise. think much us. with seeing from is existing on

the were new they by we We're on math number think magnitude little our XXX and for can else, of hold of existing clients. products products surprised successful some will the clients of march we to kind size anything we quarter-over-quarter, opportunity upward. like there. think I products X,XXX persist kind a progress some adding done top the opportunity feel we and And our be than to importantly clients make the the quite at bit how again, time the I when more have to then we our used for enterprise today of continue seeing don't of average look us at of currently

in runway you punch line that’s see and little significant of a up, numbers, if specific, more is, but want opportunity going a I lot worth We see success. jump Tyson, to come. in the of products we our to penetration we to of give probably want think -- also years the the cross-sell see So I but

-- some meaning guys of think an both this legacy was of finding to fine as Jon In client a been yes, saved the people to come we I that rate, are like, alluded HealthEquity earlier legacy say, so. service specific problems is our this going going with terms to in anecdotal don't had we're long to little of having answer that, opportunity little be and probably share we've would to all under what and were we're us enterprise there is, if and address overlap we overlap, HealthEquity the places service a numbers, able think where WageWorks, but do helped thus far, you which retention kind inform as were wage because okay, model XX% that I

exact of for reveal but think, terms that enterprise don't us services in we I for think consolidating statistics, So overlap our been good the it's clients. a I guide

Anne Samuel

really helpful. That’s Thanks guys.

Jon Kessler

Anne. Thanks,

Operator

Thank question from you. Raymond And our next comes with James. Greg Peters

Your line open. is now

Greg Peters

Purple. Team afternoon, Good

Jon Kessler

Hello.

Greg Peters

I guess, I'll you guess, of don't I news. daily checked be performance. And in hourly down that market know after stock bearer movements. hours, the was I X%. or I Last about your aftermarket, get hung up on But

So of looking a that at I investors. least be at might aftermarket, guess, I'm couple some things spooking

follow-up in that's, cash just that account the I mean, I add all are don't that then, have million one they're the accounts, they I'll of And number dollar That I And that's number. TheStreet other quarter you First our quarter. the of of $XX year, to might can than a substantially – the does reconcile in like new little press understand are million when trying the added bit balances, It to maximum don't it, understand have fourth what? look higher. area and only $X secondly, arbiter final I guide is. about look that you quarter, TheStreet of guidance X.X And the if contributions release -- full not all, the HSA implied what where said the be then lighter we the the I think in at looks for that. I'm you with. estimates the – like. have

Jon Kessler

at that out, throw them so one you don't can same Why time? the Yeah. all we hit

Greg Peters

would And actual you And out previous account is your Then still throw Okay. accounts, numbers, be beginning would -- of to but it's moderate, account the that, the sequentially. the the suggestion numbers, net just but the numbers with in the we're CDB, numbers, or as that deceleration fourth the the quarter. seeing – rate obviously, take strong. the and in growth think sequentially CDB grow not the rate if guidance HSA decline stabilize then I is you

you're discussion is we accounts this seems age-old that the every just like That's same So the always closing opening accounts. have about – it that it. at new time quarter, you're the

Jon Kessler

and to after – take don't I'm going not try I throw me – as and not – don't Darcy. over about hours, But to look a then I of to I'll Yeah. imagine, you much let guidance I I'm couple less question at those, really kind the try might in gross whatever we look it direction going questions talk – – had approached growth to please your of me. I if miss beginning HSAs, at, just in I'm from – and tell accounts and to HSAs whether on XXX,XXX, goes. the But, in I take it, On end if news. net particular, something, – XXX,XXX

So sure, I'm quite there, are it but there. where up but wasn't XXX,XXX, you getting not was

hiring think later. month basically, happening a in any new third sort said accounts two and if one base the employment of we'll – in that's person our – becomes hiring is normally not obviously, grows, this So, quarter given that as that prepared for eligible people. quarter, us our about because I that's or And see issues because shabby. there's in clients you And a there of for benefits my of remarks, are of a the the then was that environment timing challenging is

it. did quarter period good. of represent that’s This lot not may know There a there a where I and know hiring been But have you on. rehiring, that, some was going

judge can – and number there difference think net is between isn't increase whether or you numbers. you open the but bad, that it's So, a huge good

primary the is CDBs, commuter. battling we're issue there that on addition, In

modest quarter commuter XXX,XXX that some was in accounts about last. this and had HSA elsewhere. made-up increases suspense roughly by And we So more than in more the increase

people and people during we With and and answer And where the end. is like. of given of, to would that's seems to But long-term, sticky $XXX-odd the really is so the into market that's tune anyone of want you because will the wasn't that the -- how things, grow go what account through timing of are. big investment reason the regard they helpful, So, investment do that's turn billion, quarter that's they the if and investments balances, it side beginning your actually $XXX okay, they and turned into we it math, asset become cash that that to kind the holders. how over took million Tyson growth deposited

what So, beginning, more by at a COVID can great us. But things not can control commented I our is it's -- we job the building as growing for again, a control business. and large backdrop is is and to -- and profitable control the we

that that tailwinds, So, turn as to we do more. can headwinds those

for implications get the Darcy and have might QX, mute a to will. now. if it. something Everyone's And going though. mute him one guidance on to as far As I start I'm on and I He that want on be throw add to

Darcy Mott

Can me? you hear

Jon Kessler

right. All

Now, we you. hear can

Darcy Mott

Yeah, mute or button. take button, the un-mute I tapped it didn't the but

guidance, That's up about the of midpoint for Steve that's so FSA our we kind relief possibly imply talked from the upside optimistic in there, we're we're there's some see midpoint spend and able Greg, how us but would $XXX comes and also their variable how cautiously people that of think this much quarter. a in did cautious. of that, to but comes -- gave. We'll about where being on dollars We getting guidance we from It's like So, million. back. our the spend what just

Jon Kessler

year think I That's just to the the we've and and same given add, do conservative. I to always Greg, where understand and this by so some we how we why kind they -- But like, be of That's I going want don't mean we dividing you quarter, were exact imagine that. question, we're people was roll. that's and our people of approach why forth. you the math that the -- uncertainties, guidance can discussion. last And rest doing rolled. to had I how would were the given of asked it how have to going you're but

-- own so our we able speaking to And to were to And we I for certainly, be expectation relative, areas analyst certain expectations, do to and do quarter, try think broadly to so, then the in relative but deliver. able certainly, so. over to

Greg Peters

revenue. for I a on maxed guidance out sincerely but and then one answers Got it. appreciate realize Well, I and follow-up, thanks question your custodial the my I

Jon Kessler

sir. Yes,

Operator

you. Thank

C. Robert Sachs. Goldman from comes with question Jones next Our

now Your line is open.

Robert Jones

the Thanks you, Great. Jon? how for questions. are Hey,

Jon Kessler

All right.

Robert Jones

answer, but bit for worth if driving you EBITDA you've been revenue be as question expecting. there the just It EBITDA down just what I the sequential guide out some XQ just on to least a similar little similar guidance. think compared curious or EBITDA to for what there were expectation looks touched lower know maybe be far be implied maybe on than to a guess anything calling the the but follow-up there's at as might doing. a bit might to be I side, the I on sequential

Jon Kessler

do Darcy, to one? this you want Yes. get

Darcy Mott

ready I our Sure. look of -- getting that premerger expenditures historically, go has enrollment for in. we've QX and always our you and and back a lot January merger, at mean, will even history, post come

on them. been delivery been those in hiring QX. we've been service We've expenses will expenses -- We've people. and hit so, some the training of getting And And our in them phones. in both in operating

through we've and that EBITDA argue we've COVID. gone we've of per got is done, quarter about, we actually, from the pleased And efficiencies what feel as synergies, we're so, pretty that and of that a you what despite, benefits revenue migration from good with could impact million the margin transition job maintaining $XX is, this most

that, that that's -- of so fact we've that maintain to shortfalls interchange, we've factored still and and we the to all to that in get respect striving line to the with can. efficient in to business notwithstanding the had get spend able through the to And revenue what's flows margin get out about it of be best and the these we're as commuter and EBITDA talked all down in also, into of margin more

Robert Jones

ask maybe, it. I clause follow-up. helpful. comments just Steve's curious of with super as can familiar of I lose kind being on some around that's And the one then, for or not was use if FSAs, it it potential the No, the with extending

the And fruition? Just with have going model than Does we if otherwise would into for an if need employers? to ourselves mean then to see? find that a active like expected probably, most of maybe happen for importantly, would FSA we to HealthEquity could next to larger it up share what actually was somehow you Congress? balances what it come to year bit more wondering that Is does little to need

Jon Kessler

if wants ask Well, that I'll Steve to and further. one take then comment

at end not approached still are. quarantine deadlines would the people the has be recall, you thinking as in being pandemic of most extend I'm period. here other they which the this had to yet emergency the As example authority to the But may end COBRA, that regulators point year, think people enroll deadline at period. in we the in an did now, I'm felt we time earlier some the to and year, sorry, the the the they extended had been of

to actively, requires extent, from that those think healthcare get So that practical the the of congress can act in the perspective, of dollars of effect together and about hands of them. this it -- But those out to their an out leaves something a otherwise is or do. whether I consumers' system pay in similar they I certainly to grade. together, other the really that's, it reason is it above from can that active their do system some some come is that's think perspective our get will being It's actions, talked something the come act leave to is, policy will otherwise our regulators public billions

So that's good us. for

don't occur. with there just the our to this are we're instead, the it's have think and and you going working for are that who people to But just know, sure that's spend spending and people off -- shutdowns, where Of assume make to forth. the new they particularly in know But those have so good sense course, And dollars don't that dollars can. and -- usefully. access it's people us to money spend more as we they butts

benefits a accounts common it's because terms money Of right they would of very course, can spend And to does there those the to there would more seems in like as hopeful so, done, this having thing And do. it whatnot? that in do. sense be to thing get people some be. We're get back outside,

Robert Jones

ton makes of sense. a That

Steve Neeleman

– only they the said will back right. the we spring, XXXX they thing the got language, of that’s Robert, think knows in it this mean, be issued is the But in cold. kind Jon's just this in notice -- he fall. to I add, everything normal when I'd

to we're but years spring, right? the They So we're have the because plan use -- grace and XXXX didn't going we give had deadline in extend going to to for the their issue period time the end same to back back to think go will back then. normal. going be we year, the to we through normal not it normal. we're the XXXX said, at we'll extend at otherwise Because of We're

they incoming on. we -- they helping consumer, we do about, so it's pro the very we all the is this administration both I that is regulators mean, this think And on what administration and that which think can will. outgoing act are the know and consumers

you, and like when we're things a There's for kinds wide extension. spot. the and and your on everyone can that like I on for things Education of this asking but only also momentum. use dollars Association that, of leniency all AFL-CIO Benefits like FSA and Council good So signing think it's sponsors National and bunch from and you people, been they're the have all things dollars a not HRA of I COVID the tell around to letters your can there's group a that American

we're So hard. pushing

Robert Jones

much. Yeah. Thanks Make sense. so

Steve Neeleman

you. Thank

Operator

Thank you.

next with George comes from Deutsche Our question Hill Bank.

Your line is now open.

Steve Neeleman

Hey, George.

George Hill

Steve. back -- them things are all my points. lump basis on rate the XXX as one three questions. I Darcy, same first time well. guidance XXX out of to team for No, good kind XXXX Good is; calendar guys. yet, I to the of not have evening at I'll evening, guess, hey, normal

towards do the As flat that do line then to guess, you expect kind progression we Steve, a we I go number be we And the to calendar of and as through linear a Or down the about questions we think guys. that kind expect year? year, of two be for low Jon end?

focus any On the you worth that season COVID, kind feel in of benefit most recent most of this one calling out? finance healthcare to as selling United other on strategic different stepping season? competitively or guys side, are recent is, then one up see a them Did of appears guys is of the selling out saw end do important in banking. you And trends like the their you anything the result be Thanks. new

Jon Kessler

Steve, Yes. the And back to throw terms I'll to employer of then, second in going take don't you you I'm if half. mind trends.

last about I or number they yes, it well business. competitive before asked the as First I it Investor see the since pleased in when really was They've year year recall the their And want said mention me side, talk of all, as if actually sell them if they somebody United's off. or -- this our in when was on to to Day, was they well, great. December it it someone said threw got George, didn't I

the and validates So opportunity -- given in the that a of United irons to it my segments of lot growth non-regulated the in here there's fire mind business. regulated for all the

And competitive I reported, been but example, is think always they've activity for forth, it try HRA-focused. so and widely little to where an called never as Care, they FSA, we way M&A on I but that main offering. that's probably it, – it's see although that's I've asset think seen in been So the that and release on platform broadening more Connector I press acquired different what has done think in we've a assets. occurred match a the the Depends a

no perspective, But So that -- competitor. seems with good from good. not in that's a you're my they're so like a if market competitors,

And seen. the main so that's we've thing

and want suppose, touch on touch about We in the haven't have you kind during really behavior on pricing anything, actual selling Ted, the like offering behavior or different if of of you Steve, thing. particularly seen to season? question the that I employer -- or question the any products of

Steve Neeleman

Yeah.

And lot question? I done question Or product And frankly, under first team. duress, and well, bundled finance so it less think Ted help but the has think a I employers had them the the less simplicity. What when of have to had we reasons of I one meetings, you of partners pricing – manage. question can your are because George out a put that's this, spoke generally, was then, a gives to just And just together. for? want to also a why we them all they on about on lot think

George Hill

Darcy. Yes,

Jon Kessler

Go ahead, Darcy.

Darcy Mott

Yeah.

get linear is it generally based the about to will get being start asked in In that the in we until then this QX delta And we're when and in won't build always when part good the this of The December did case, on We linearity yield. we a bit placements the late had January. as will we that prior that to in you would. started year more we on It and off in year of pretty starting of will normally year. the higher reset much capacity George, see kind for of you the in than the years, acquisition, QX So August, contracts is about little -- first that, Wage, some end occur year. true. that the the the we do we're earlier start that and the maybe as they usually,

resetting decrement and a of the will of then, a So, the fourth always little bit the there December, January kind quarter. happen we maybe half second And have that in a the year. in of

than little quarter-by-quarter throughout probably year, expect, it's kind if of sense. would less a going normally chunks but any that linear makes the So, we

George Hill

That the does, and I you. appreciate color. Thank

Operator

you. Thank

Markets. Our comes Capital next RBC question with from Dodge Sean

open. now is line Your

Sean Dodge

afternoon. Good Thanks.

your you in So Do the XXX% taken approach? how be that interactions far. year first place you've virtual of any in-person the have a that versus maybe in being kind effective on you traditional are now mentioned better people of Jon, or enrollment, approached open number those to this interactions virtually. is converting going thus doubling more have sense

Jon Kessler

to you start want one? Ted, that do on

Ted Bloomberg

mute Is off? my Everyone me? Sure. hear button

Jon Kessler

Yes.

Ted Bloomberg

not luckily management. button mute I'm on I'm evaluated excellent. Okay, being

share. a to OE bullish are like really I'd for that about of couple We virtual reasons

who've around just first that hit in conversation there, been a it to a a grinning have your you meaningful benefits is is for of colleagues. is The standing gripping know room with live you and one hard. through bunch doesn't OE there. benefits And those often people wander very of And Oftentimes, a difficult or get it. at

that virtual, model adds in value XX/X online a And year with but Our ways. support. is this of live couple

of And I my -- it one their watch that late that and the whole We've question, would funnel, it gotten to attend, -- one think other because various top Doctor thing our that? can But into you in The That have sure January. household. it's steps you I the But webinars think talented if chat accounts from benefit can now if I you for add know know spot. about in is, that not folks then unfortunately, agents funnel, mid new tell Purple to answer any I'm when couple to the model. decision-maker on employers she we we significantly. won't And have be up really are exactly anything how tremendous box first feedback engaged. don't until sites chat bullish of the more seeing to in the about able the if Bloomberg. is services, that the second, We're we can pretty Steve, are a And learn we're our visits into member on. we translates on positive virtual.

Steve Neeleman

some drives employers, It if them Ted, name -- for some totally the techie the of our cafeteria businesses and for that are doing engage our of to there limited last XX%, sit about, thing is higher able been tech little you was approaching think XX penetration this the out way, a more to been have and kind that proxy in going not more comes we for But been Well, talk would that years unfortunately, we've reasons that for this cases have say, me I I'm which inefficient. crazy. sector to last Ted, a and were us, people obvious when years within have in we doing years, it mean, years, of do those rates in of the in I ones previous more little bit populations, couple for the a because adoption less. the had have they've XX% couple generally, of whereas

but more an hope other could get broadband. I tend That's techie, what's Ted sectors in that I optimist. today. And to happened having of why they earlier faster they're and ran as be it that now they see would stuff, And so me be I selection have. sometimes is I stuff bias, more told this -- But all Yes, that's what out gas, right?

Sean Dodge

Sure.

Okay.

on you we this ahead know up. increased So, think look momentum how something do you to marketing a like cost maybe in to this year, efficiency works If you next this past? the year, little get just than efficiency, of your your and kind but done of closer point I the spend virtual, could of you not say, if saver had XXX% contributor kind be big or a

Ted Bloomberg

that. take I Sure, can

I answers. think a of different couple

massive seven-digit is, to mean show it's into and quality the we're savings. reinvest number, The interaction number. with a I a first But trying the alluded moderate a the one types experience that it's back hard seven-digit our Steve to to but of probably some of been to access employer and of at working just more so communicate prospective that's an One adopters the that not able we working really well. more the we've through existing And and other that. to been pretty account holders also and to be account example to get holders demonstrate clients early that effectiveness an able both of partnerships at employer. with thoughtfully is results

to drive with to our that So, we've partner employers further. been able

cost a efficiencies but so we're some is we're better that people take, there modest think And engage -- that reinvest so more we those to mostly to fully. are into experience what there can trying do excited is

Jon Kessler

that mean, what we're the it's is is really day, the think to towards business not point that's At end pushing grow of education virtual here, aiming and I important. really purpose to the Yes, I last of here. money save at the

Sean Dodge

Got it.

Understood. Okay. Thanks again.

Jon Kessler

you. Thank

Operator

Our Draper Truist with Sandy next Securities. question comes from

is now open. line Your

Jon Kessler

Draper? Mr.

Sandy Draper

about-- one; something correctly, make sure I'm quarter. I if Jon heard just think it I different about revenue think $XX I maybe maybe was I heard trying Thanks just heard thought at million mentioned million remember million look first to, I numbers. I say you last the of could this $XX that much. of two impact COVID; quarter, But from Darcy it sort I very one, And $XX about way.

Jon Kessler

million impact, million Yes, $XX is rate the That's all. is rate inclusive interest the ex-interest impact. $XX of

Sandy Draper

actually a is the Okay, reversal with Got spiking a may $XX there be and with million, may helps. we sequential there bit that? last -- guidance okay. $XX about we should comparable it. that the million And of That little of that was So may see improvement, but think quarter? reflect then some -- that

Jon Kessler

Yes, sure I want correctly. make to answer we that

you to one? take So that Darcy, want do

Darcy Mott

million correct. Yes, that's The $XX similar numbers, and the correct. $XX are million Sandy? That's

Sandy Draper

Okay. Great.

Jon Kessler

to. careful it some want it. about It's -- it a do of And like of, we either got and We're environment. the to sense accurate in kind difficult. has most can in far We most and we other that's Spend We of normal obviously, this is commuter to a be that give we've as bit, of as where of but detail would to want would we obviously, where little as spend. regard be not impact frankly, the you of back business we're to about is is. number with number, provided impact, benefits as when commuter that talking areas. sort more came trying be not a back -- Commuter, why

Sandy Draper

The -- it's then helpful. wind when think if remember the working. model integration That's my And expenses sort guidance Got working. is, follow-up it. is can't of I you've Obviously, on down. you given what

the You're platforms, it. technology the like converting customer on

that but when down? So, flow, just of trying it's cash think terms number longer-term in clearly money to well winds spent, about

Jon Kessler

can a this question. it’s important Yes, very take I one.

timing want statement. think down math sort starting the we in of on of can expenses get terms to that get be true one-time I fiscal in terms not, But to $XXX out timing million can that, that beginning, these been XXXX, of sort would We what's is wind of you'll but from through whereas the we hands. are think left though not from this Sandy, is that the think in are XXXX, of done the to XXXX. uncertain, with XXXX get XXXX. done about mean, along. have but litigation-related is those have thing operate -- than substantially fiscal around if expense we're kind is it we how of in going residual -- side, the you integration the But recall, expenses fiscal there's XXXX stuff also the to fiscal that Wage -- the a which that little the I up committed, to number we'll there's in that after migrations be be we're will going estate aggregate, we running really quoted actually, after down. said XXXX. a kind the included at income for fiscal and and I XXXX the our with it's we then a real remaining some to And shutting end going this we as of where shareholder synergies, of or talk to of going great, in of lower fiscal fiscal income acceleration that little in to confident platforms carve-out stuff the number the that the and do sort of bit are primary those all integration is of kind the actual And to we've cost if about And adjustment and on XXXX have in statement going

Sandy Draper

Thanks. helpful. Great. That’s really

Jon Kessler

Yes, sir.

Operator

next from our with And question Leerink. SVB comes you. Stephanie Thank Davis

open. Your line now is

Stephanie Davis

Hi my guys. you taking Congrats for the quarter questions. on and thank

Jon Kessler

Thank you.

Stephanie Davis

strategic I you. for So, a have Jon, question

Jon Kessler

Yes, ma’am.

Stephanie Davis

a We've about You in assets been out have raise. talking done guys the some market.

books of buying business narrowly your M&A to idea focused are how we platform. priorities? are maybe a you adjacencies? buying on And opposed competitor as the of about Where talked You've on

Jon Kessler

good for Thank a really asking. question. It's you

practices me we've first should things the the has gun in added or that occurred one quarter of metaphor right understand depot is. that investors the powder Let this whatever more say that to that

you about keep gun how show You powder, know right? gun much powder. know don't I I can where

Stephanie Davis

accept it. will I

Jon Kessler

gun am everyone's gun, I a anymore. had I got from a not anymore. Miami, not but once,

profits. We sheet. ratio, – the aren't there a there their under plan Obviously, out I rebated that the profit think body health is aware QX. in just adding surplus And I'm are nearly looking I I we're there I that income. delivering I'm on teammates cash with has ratio the at million QX. so blows many is we're know that importantly, debt do we good well, didn't is lot didn't of in – our employees, well got and a but not bit. that I And quarter. employees take some shouldn't little rifting cash -- of that. we're But some the that COVID businesses of these even into are We to like, $XXX and a taking our And balance that now And employees control. say mean, out of profits, mean, there of companies every

of to And primary our say on And that, say me powder ammo so that gun think is bottom line deployment whatever. that, The is remains assets. we competitive the substantial. I you're -- first question all have or thinking let that's opportunity asking that focus is how we're or about

looking at are We those carefully. very

what add to of opportunity at in terms being referenced asset alternative of business -- for at terms needed I in example, looking that and it does in we I they that's were have asset a to it build. differently bought. an the buy to UNH that look that about item the the had we growth a would So an of mean, question not asset a and earlier little an an to

that with works, and something it going have we not that's even do. it assets, So And a and we when it model to we're portfolio works. follow

channels -- employer where third we real say can particularly business So thing. that we those create we assets, focused can on is I there, where see with relationships remain growth business, that significant young of that there focused parties so remain there's for would relatively the guess, kind the generally, growing on competitive be I deployment that growth

right? we at adjacencies, looked the of way we but from perspective. at We same our core, following terms the are in adjacencies wealth. ultimately, everyone's So we looking what a high wage, our look is, that One in at commented, to a those got got call help of deductible, high kind Steve -- to is used consumers as mission now. and of connect health And everyone's strengthening one

any that serve really, it of so look we population terms well to at of how number in in And different ways.

there's some the we We're of adjacencies to leg comfortable of And of then a another with pretty the not well may So in one they're kind that these of we're secondly, about you not prices the particularly build out need there ton say, thinking well throwing elevated are. I They're the are those stool. because areas of know, some idea asset what items would in and be – and market then tuck-in as like, regard leg stool they're with while environments. sense. so private make we're option elevated, they that

shying – or not in So, the some partner these areas, away build we're opportunity not of to from too. certainly we're

partner, but as that. in we I way We're primary there feeds So, can purchase. then, say, looking shareholders model have And value just as areas. are adjacencies, we create those buy the think the well-developed at we competitive to or to And something competitive use long focus a assets to that we our a are with our core. to we really to guess that's where use build be And for it. remains adjacencies to happy going assets. we're It's are going

Stephanie Davis

view you have adjacencies we in a these those I than exploring probably better… a little bit. do mean, I'm better

Jon Kessler

was exploring. going I I to I about asked whatever said knew be

chocolate it's would I get thing. pudding, the So same a still

Stephanie Davis

Jon, you could…

Jon Kessler

I sorry. ahead. Go am

Stephanie Davis

…have done things for for a the while, I'd cool be all still right, like, adjacencies.

So, right? your you've selling talking a in mean managers, been the you're – I benefit but season.

So,…

Jon Kessler

ma’am. Yes,

Stephanie Davis

adjacencies …what they looking vendor? under one sort consolidate to of are

Jon Kessler

want that that some that, don't going obviously, is, completed Steve – It's employers is some a engagement effective bit want for expect place. we there's and remain expect employers think tell assistance a the ones findings people for really insurance okay, And financial employers hopeful their is they buying business that the provide they then one are I'm is, deliver. thing maybe I of we're it for to of a their the drive, the go proprietary. in I employers right? as think But, we're engagements, people research of interesting They to employers I One they drive in to is on they along that, me on beginning not And all what's And simplicity, side. financial of elsewhere And topic. – their And just the navigate us there's want engagement. side that, this from it's to will not there's the two expect to are health healthcare, see to lines talked say between on helping little addition stuff that the about. things. want about them interesting. just natural because employers. you stuff to We it. interesting what is And engagement discernment like, And really

there But comfortable, And to so, And trend. exposure, the yet. portion And that that being. they're recognize they between out-of-pocket the have their mustard. not an the of And more limited know distinction that kind fully importantly, the are PPO And really care. continue to a HSA begun not adjacencies is plan as not place and design. the the not where, want to Employers little this positive that thought at think where I out be plan interesting to maybe get see that It's they don't a know cost cut way a we responsibility And HSAs, to their bit maybe area. of to they different, people is right? plan for about are product that points there and point, in the want only managing are math, in do solutions – the little they people a they comparable to right?

Stephanie Davis

Jon. you, helpful. Understood. Super Thank

Jon Kessler

Yes, ma'am.

Stephanie Davis

team. you, Thank

Operator

you. Thank

question… next Our

Jon Kessler

shots, was Well, year yellow last and gone. year, this it's

So know? who trouble. be It could

Stephanie Davis

worst Jon. the thing, forgot I

Jon Kessler

be could troubled. That

Operator

you. Thank

Our Hooker with next from comes question KeyBanc. Don

now Your is open. line

Don Hooker

Great, Good afternoon. great.

Jon Kessler

Hey, Jon.

Don Hooker

– for I are good the up is investments just to the in obviously, I like help that afternoon. think the hurt think But look you're to you how Good know clearly, hard several obviously, now. the up row near-term, HSAs guys P&L. there shift to about as HSA certainly trend accounts on, you going sizably it us the way for touched near-term, percent positive very it make It's is investments. trying of to just your that how a think bit like about is your a Because might account trading hasn't maybe But negatively in the looks it Hey, guess, to long-term, near-term, Hey, it's off discern of you're because with empty quarters long-term, what to it forward? but you a and been little affect I kind would want base. helps to afternoon. in Thank I'm sure area But you. there. P&L question. in one that? and about cleaning trend -- your just does

Jon Kessler

a small to other the before, per total still it although and account And can't I'll Yes, frankly, I invest. holders. percentage holders XX% members I from invite Greg's very assets continue our Darcy exactly there's with and -- by mean, answer question have to one you or right. see grew Tyson Invested want whether But then of remember are to year-over-year, speak investments we and account further. grow, seeing, assets or or we it's

thinking spend impact short-term don't we a to the of that lot income statement. of the guess, time I So, about

great it. -- and no customers. are the options product, long-term time product and thing opportunities be preferences they're In forth, investors -- long-term they're given about with we for given have their we think long-term most people, shouldn't of they themselves. We great doing is some thinking nature fact, long-term for so be people who, the I'd by this There say, investing, and But should spend risk about and are investing. the the great them. the the right And product

anything mindset So, or about that's Tyson, add you Darcy overall kind our to that? it. of

Darcy Mott

that just but at much. of it you other X%, but investor, went the that are you're every they spending go, I and did month. into that statistic account people look we think actually what, may that the pretty close of I'd not thing of And efforts number. Yes, at well, to And as not like every When now savings I was number their an public, have over Tyson that and it that's retirement still single and then happen they that one When I investors for become to Once everybody look HSAs the is they I a this, the that grown out X%. us, first that there. attention investor. were account and long-term up was start savings you month, grows true And so paid think we actually that HealthEquity an But to add have we become treating in. thing that and for right, this that can then has was know an percentage account. industry-wide a only much and they HSA instead a books, jump

people their long we've -- for I and course and P&L to of times. $X,XXX. will healthcare we're your K. money able have when have of tax-free faster rest yes, pontificated They out in due. other they long way haul. continue time, So, that significant be a we'll than the it accordingly, But about $X,XXX numerous retirement, takes They but instead more it pulling cash that than those you do I've should life pay grow their this the mean, for they'll their and will And and that, follow and And expenses. should just much should of stick have expenses health pay more on will the that been balances in what it's going in assets accounts the the we're grow to and than care than because should to for more have for it should. HSA. the And

Tyson Murdock

and Yes. to cents investments, I do. utilize someone They we're The would really someone is get see was only this just you to talking to what when two start that. trying about add I morning

bit as think much is little I of so because background, a it on my about an this, investment, about don't based this. is And when earn this from I you think revenue

into someone And you when like are that of they offering So, by the know through -- they sort they've sort they're, But maybe right? that, that next or And this, get XX in here of, or a shipping to Prime. really it's people a do they're gone pandemic free then to it. tool hooked time dollars going of It's the financial great years in it way. savings the next life, for to be. create off fend might amount have stability of significant a their whatever

Don Hooker

Thank Super. you commentary for the

Operator

Thank you.

Marcon Our Mark with comes Baird. from next question

is line Your open. now

Mark Marcon

thanks taking questions. everybody Hey. Good for and afternoon, my

Jon Kessler

sir. Yes,

Mark Marcon

the in you're terms bit how I'm regards of to wondering, we're as sales can XXXX? what you cadence think season, normal just, rate the about things middle and of season that guidance are the going. little some general consider the and the of a is But in know is the should what calendar talk with giving about people thinking commentary. I appreciate about selling fully how

just like we would cash through well. we impacting up and some small opposed You as balances think and composition, trend asset the should mentioned we new employers out it How how the logos? cross the also, the more differences the to investments between year? shifting And as large we an there? of think are people of more should that selling cash. about that that assets How getting about enterprises are going the to How where should end go think versus is about from

Jon Kessler

take at was Darcy, to there a there. shot So one? this a you want in lot

Darcy Mott

things some to about talked and it’s I'll into then of some gear can those we've a thinking. what and with the we start what And, XXXX. expect calendar Jon, the little part relationships forth and last I list with of Tyson so a going we Yes. and bit on so things. up have know we're of respect about and talk maybe

that, this balance put balance. investors, than still investment cash investments. to to still the is respect spite Mark spend they with model cash of I whatever more there what by all certain it that note, then that get And about. rest they of balances they feel And cash. the People, growing. balances, And can even And cash. just want a continued in grow. fact they the to grow have to a our notwithstanding cash so, But would tribute maintain to maintain moving and into from of the People balances it are are money contributing like the that's a in they

much that we growth more our so, big to bit to generally, little opportunity a It that and we and positive aside into people getting they then -- very them moving from year, but are how moves putting forward throughout One, to amount comes comes to when it And starting have also of of take they their paycheck, their starting have we in And continue January. balances. money to still both invest, investment cash tell encouraged investments items. then from by are and employer the in And year. January go a it uplift see the out through in every open enrollment, contributions.

investments that's this grow predict can still the the balances bit So faster we to really how a movement from we view will investments. we grow. cash about cash little but cash, obviously, How movement. We, anticipate our accurately than always

Tyson Murdock

question, that direct I I just a didn't sure on? a want Is since I'm to there part there going that to give Mark, long make touch answer. Hey, -- a more you Darcy was second

Mark Marcon

that hit faster that he at I want we value. appreciate that and the the to the it, to continuing rate, No, obviously grow proves long-term cash because investments is and a fully grow

both So parts. fully appreciate

Darcy Mott

But talked at going bit see some grow Jon what think when. we that longer more, pandemic we to to right? we guidance, will normality start think and to grow accounts. a that people even question referring going other over, maybe assets, giving obviously. was We that, little call there XXXX the it does, term. we that work this you -- talk we're think And things this time, and to would about. back in know coming we're as we think about our don't be a business, I forward. still vaccine are want when FY and still that maybe we exactly to We're some I then We about little bit, But going the some that think not

Jon Kessler

for -- look, at we thing. mean we to pandemic, a what this were philosophically on, we've I had if is guess and are what you exactly same on focused look but I focused we be the where think, ago you it's And be Mark, exactly funny. in we look I of in it's in I mean, if this going year Yes. said the on focused matter, the the or we acquisition that's the business. the IPO. the what the long-term at we truth, we'd time It's at because And time same that opportunity the thing. of belief said, at WageWorks have same

you well, etcetera, with moment back should ready to to fine, we to thing work, the places come from one an as to we make X% we come to obviously to is actually business? of we have ready do well funny ready was the are others past been you it building as what we if what that, answer some could And and missing And the chase out on work. And money good, do when airline rates, brother can skyrocketing for can is, can can if -- kinds a maybe If airline back grow deal way with was then that, back trying with history should and relationships what breakeven a that; in real around come rather then, XX% you we margins be environment in we be Well, than last should million spending people in question, commuter be XX% do turned night effectively, out be that talked figure strong we we'll you anything. our to then And earlier them some the do could about a when work, the less when relationships ready is, are can model, that David of at of should feel know, that. you the doing. EBITDA that do right? David focused deliver turns a can And And trying if with okay, are end, you we -- are Steve customer $XX can is to not the metrics be rev. his those of an we've heard similarly But high-margin business. we things oil always the be are, there that's etcetera? is, we their can very profitable we if better to our those I in answer And and business and there really and discussion on -- quarter of change so maybe not. deploy they're business. lot are when that deposits, with despite in about And I've of diverse prices we an right? all know, well, this, really strong, Even is people kind they're there try and I'm environment. a in answer helping the improving The and things balances all great and of business like then result regard as day

will so And dig be know on or people I not some like going with a bet some want not that how that's the I -- will pandemic. making people is bet make, to it. regard to next quarter isn't to and I'm to what the

Mark Marcon

I appreciate that. Thank you.

Jon Kessler

Thank you.

Operator

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

Your open. line now is

Jon Kessler

Hey, Allen.

Allen Lutz

XQ lack year-to-date, FSA I years guide questions. a there the assume is spend the the guess, does for an lockdown? elevated thanks given versus spending from or expected of Hey taking Jon, normal headwind

Jon Kessler

Yeah.

answer. said, Steve may around area We're thrown Especially us doing to So I we this some are just I be but the I should just two, everybody. that in and I'll were State since as And have happens. of message -- somewhat going. relief hoping what anyway, but honestly, to cautious, casual seeing there, possibility we not. line those started, keep talked Normally, the use along as folks the talked waiting got perhaps expect best trips that's do not balances. get very recognize making we about doctor's -- Golden notwithstanding, activity not of an shouldn't elsewhere, and one, we we would elsewhere, today, the our is, we're And that And it the to to were about, just office. and of occurring as their the we just just We know whatnot, probably Tyson, shutdown and Allen. is don't people

And so, we've cautious somewhat been about in our that guidance.

appropriate. that's so And I think and --

So answer. of you that's want sorry, year. contribute They have are that throw contributions. and people's – beginning my end and the get January, And the me topped thing, guess available employers let to one do the obviously. say balances they it all? up the I'll balances just in Now, all will the I'm then like, the because I on kind are of Tyson, In at at at elaborate of of case that other FSAs the year.

trends January light of in people's accounts that? the but and so to forth. remaining spending increased relative to in and to anything anticipating to add surge of current somewhat we're current are we cases So Tyson, and nonetheless, year environment the in for light -- remaining relative typical cautious in in certainly, what's the

Tyson Murdock

that just when or is a get to was obviously, -- and because I January, last there's have they of of was course, lose I think amount about mean you up that spend it. people that, use going large the you add there. it's topped it point And occurs

that the historically. way but like little about still it that unprecedented has will it always and do there's given people bit of works this will nature play it muscle have year, the it, a So, there lose that, I used caution think built memory. there's the whether or They of in how look out, out, that

Allen Lutz

are of then, to million a it business of have type $XX What variable? Thanks, questions. margin know of Tyson. what it, costs would you're in comes percent commuter And And incremental then that just going but back? business when and the back not if headwind, obviously to couple I the that that conceptually, guiding

Jon Kessler

Yes.

for asking you thank So actually that. interesting. It's

it's So it. of co commuter million some biggest is pretty the is answer in average the where margins, of then material if – all, includes a but gross a the the first business this component say margins you high. And gross that component. are And there's relative surprisingly let's fixed cost $XX the incremental healthcare our that, just spend, and to commuter business

they're the and back, on dollars all? majority those do good And as mean, so, flows the as as quite majority I a flow certainly, custodial, down Tyson, – down at of it's high on come -- side to to bottom quite they you flip a that will elaborate not but want line.

Tyson Murdock

provide just sure, we by create want segment don't across for I a with gain to numbers business. that we teammates we those the Yeah. And and Board, is service efficiency the of to in the fact it make don't we want matter because definitely our that.

So, that's an important thing.

It business. out It we back, that Jon necessarily or that it. the were like out still generates there a and that decline. there this why business cash the that think employees. position is do the the declined. that's offering part we comes business it's to a And shared just little business significantly, of flow. that throw So people part revenue be aren't we've of as come And good need business relative the the I as though their XX% want another they even as positive come that down wouldn't But We as to we would haven't want said, utilizing bundle, say numbers, in a has on down to size to still I as from I And where of is to taken about give think it as take a costs this through. ready relative sell been market we've not that have when to able a the the ones to I Companies still is particularly perspective, for whatever. comes bit, to -- it's that. has it's think this to place

some we think of fact so potentially will have I customers there's when who this upside that. So, actually more back, some been that commuter there's selling success and in have people because the come

Allen Lutz

Great. both. Thank you

Operator

like the showing closing I'd questions the any remarks. further Thank queue turn in at call you. Kessler to time. Jon to And this for I'm no back

Jon Kessler

and but safe mostly happy, safe Have holidays. everyone. Thanks

Richard Putnam

Bye. you. See everybody. Thanks

Operator

this for your Ladies Thank and today. conference participation. gentlemen, today's you for concludes

now disconnect. You may

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