HealthEquity (HQY) 16 Mar 212021 Q4 Earnings call transcript

Company Profile

Participants

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

Call transcript

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Operator

Please go ahead, Mr. Putnam.

Richard Putnam

Good afternoon, and welcome to HealthEquity's Fiscal 2021 Earnings Conference Call. My name is Richard Putnam, Investor Relations for HealthEquity. And joining me today is Jon Kessler, President and CEO; Dr. and and Vice the Murdock, Operating President President Deputy Chair the Darcy Executive Officer. Vice Executive and Executive our company's and CFO; Neeleman, Founder and company; of Mott, Vice Vice Steve President Bloomberg, Chief Ted CFO; Tyson

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

reference wholly this and include announcing reported of in including A metrics it release press site, which was certain the a our press includes non-GAAP measures The and from financial measures financial these webcast ir.healthequity.com. results of is of of release WageWorks issued that and release, the at press afternoon. release we'll owned after administers. The can press recording First, definitions Relations our GAAP found the measures today. accounts a contributions Investor today's our market subsidiary Web non-GAAP comparable close copy reconciliations our also the be

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

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

Jon Kessler

Richard, providing you, fiscal details TV full for guidance the everyone mother's reporting today. results, deference Hello, Steve results, year. will and year-over-year a and touch for join do XXXX, My us on You Luum WageWorks the of touching 'XX largely acquisition is guidance record revenue quarter and and on XX% tag which Idol. joining results for acquisition. Tyson in will briefly fiscal Fiscal based HealthEquity's Thank of EBITDA due ended XXst fiscal thank Darcy And 'XX the to is to our us After strong for for you fiscal and Today, fiscal to afternoon. favorite my American 'XX. operations and that, this fourth the on 'XX are review show, Ted announcing for we're we January I fiscal Are last on million $XXX financial 'XX $XXX is along and up fiscal and with team recent million both of adjusted results we're our here Q&A. after

XXXX HSA with the market. to market here pleased January to XX% in how ended way, beating good, and billion FY'XX our the X.X in we organic market wide our assets. organic compared XX% the HSAs As Note of losses accounts HSA attendance growth were wide are We numbers that market FY'XX reported XX% end growth results organic exclude and report our the reported either compared X% we’re we year but growth. hadn't WageWorks asset XX.X estimates total XX.X ended HealthEquity migration, as acquisition scorekeeper and and growth those year-over-year to last growth of sorts Devin those month, our with we million yet promised to to compared a its HSA members million but from asset with that seen do. HSA

We place continue to HSA hold we're market of at assets number HSAs with and XX%. XX% one in share second and

Now let's look forward.

our to While I've us conditions strategy. month, HealthEquity Last not total committed headwinds could we talked just on but fiscal we're And are tell result value well. fiscal that that in about the reviewed, with which felt are pandemic ‘XX. in remains results demonstrating see example far in also such results, tailwind XXXX might sales an sales be 'XX the teams Ted on so and year, our we which to of as starting beating to touching evidence strategic we turning anticipating, of fiscal for other our this that solution tailwind think addition into results,

this much also opportunities yield to and next year's year for a does we'll both we seeing serve don't an beyond. see to and to moving to five well example, positioned bond start correlation, from around directly our in With but between are curve impact this steepening above long capabilities jumbo expect by X.X% members. a we and the Well, opportunistically There's treasury we've to year partners, portfolio our related reversal we're yields well year this more bode particularly yields of we think For think week. treasury indicated five our provide. CDs. XX HSA cash acquisitions our clients yields And a seen attract 'XX, our partners fiscal already our high year term for January placed and not for XX-year expand X.X% yields, in assets of depository that treasuries that M&A. as and We're

reduce platform a doubles and we're our For thoughtfully these impacted example, relief to finally, of we excited months, 'XX from We for FSA passes initiatives helps among flexible our and six Luum's in based work. post and return they teammates their solution as headwinds for our passed employers footprint to tailored to work dependent also the third returning regulators spending commute. need increases of members access COBRA healthcare, about announced Seattle, indicates is so last the workplace listening in And benefits or subsidies limits beyond I'll the pandemic how more who policy families as a say approach the technology the opportunities perspective, supports the our for will green that the are provides have will Luum Luum last provide calendar employers partners, to they incentives help commuter week. turn legislators that Both of care welcome for Ted when SaaS luminaries provides acquisition stimulus to company Ted? and by government carbon review that teams that safely. help week a monthly on new to pandemic to the been its clients, to hybrid for talk operations. and do the are bill about over Ted year. and thing. we precisely call the now right the effect to and other to looking

Ted Bloomberg

everybody. Hello, Jon. Thanks,

delivered challenging operating are of We with 'XX, fiscal the the circumstances for and very all pleased results given in that we QX presented. especially COVID very

platform clients, million integrated and We're found phone onshored year, released platform to did completed we 'XX. our targeting done and and run improve. that FY commitments iteration the member migrations the There's first from to reviews another with on of to rate million our integrating make strong out newest to that brand, met work million. progress achieved our see. work to along more acquisition We both portal to our We of end WageWorks service six this support as to our experience our Luum. partners synergy however. of mobile us and excited and $XX of allowed We scores are XX year, with efficiencies version $XX raise features synergies of that We able the during we next $XX on integration tremendous focus heavy roll we With to the member saw level on be with are our calls, our migrations this members about. you intend client integrated unified HAS, target

where As and our can did see this attributed to clients purple work work of we teams benefits love year. and this be last positive the ahead to the have with February, The clients I unemployment solution. year-to-date their distribution solutions. done and return bottoms building were incredible onboarding total new work as members We mentioned making January. results get of feel receptiveness our in and believe performance our December this remain market vaccinated partnerships, hope continue out, Americans to re-engage We trend in sales they strong

our share me a Speaking or of returning to luminaries Seattle. little newest about teammates work, in bit let

back help commute will employee clients. help to Luum transit require benefits to parking for better to and work commuter excited our challenges to wanting solutions and beyond environment and use very drive so behaviors make employers real monthly in small. COVID passes, post benefit believe manage help a to drive proven that reducing flexible we of incent are We services transit. evolving to believe continuously with deliver us and different, our that tight solve and look ESG have alternative lowering car also track Luum clients, commitment meet mission our of to We can they needs of basic the our will take large companies record our fulfill Luum trips. alone steps, and innovate rates The

as opportunity and regulatory covered. and XXX% extended help legislative that members stay clients American relief see is will COBRA our the We through subsidy also of passing to

help our them. obligations for We the will shortly roll out plans find their members clients and is fulfill our coverage that right help to

say operational on above to thank I our it on. referenced to members circumstances. behalf to purple I our in so capacity. of working over to the While There fashion and hard would clients in undertaking teammates, there you deliver And significant our X,XXX a pull partners off, and going challenging our who members, in all serve lot to work is is clients are obligation a like this this is

Now Darcy to I over about will turn results. our talk it to

Darcy Mott

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

average quarter. yield the in the in $XX.X in due HSA on year. XX% decline of of of $XXX.X release year-over-year accounts provides fourth This each quarter. growth million full point cash Service decreased this revenue you HSA during three The quarter, The while as quarter representing and offset representing yield to additional is including details. yield. with XX% total rate in assets fiscal revenue HSA was of over at the quarter revenue decline remain impacted X% assets, results fourth with partially revenue cash and WageWorks yield of fourth CDB our declined Fourth Asia the all total average effects is X% average during annualized rate categories. an basis cash The XXXX yield annualized XX% The year-over-year. HSA with helped include the accounts interest with The table flat XXXX. with year-end, decline XX% of commuter, included for million, in in the the in X% of XX quarter primarily HSA Our attributable growth decrease was which pandemic X.XX% months, yield on to to year the in XX% blended know yield in quarter quarter. operations in year fiscal as press X% yield economic acquired growth HSA decrease August fourth revenue primarily of investments the declined of by to a the cash the including today's was full five financial

to the mentioned, representing in in previously due million, XX% $XX.X XX% to HSA spend interchange of revenue margin XX% of of were quarter $X.XX compared our million on the to platform. which prior The assets compared profit or XX% HealthEquity zero million the revenue the from fourth Operating Gross we million to acquired in operations a X% in the $X.X decline together quarter the share across million revenue. $X.X share prior was of GAAP merger integration of intangible and expenses, per $XXX.X the the quarter. to declined fourth migrated total loss represented million loss As revenue, of XX% of $X.X was Interchange primarily including assets cents the EPS revenue to $XX.X have was amortization last income for $XXX.X in year. of expenses year. quarter. a in Gross Net was $XXX.X or reduced a million million year. basis per or platforms compared quarter. was custodial Income

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

$XXX.X profit was the Income million was of gross $XXX.X million. full resulting or was margin EBITDA in profit million million, For year, gross fiscal $XX.X revenue of from a and XX%. $XXX.X operations adjusted

to balance Turning the sheet.

had over for cost, drawn him equity of line guidance As debt first will a of amounts cash million with the Since be we $XXX reigns cash Tyson to of include does the used not I turning in issuance his nor roughly provide $XXX million time January outflow equivalent of the course in year from couple XX, ago, offering cash The our acquisition. our turn $XXX and I XXXX, few of fiscal a the of to of balance on of outstanding, funds to responsibility. net outstanding weeks weeks, with of credit. no million the CFO will cash of additional over the Luum

Tyson Murdock

to better It's serving he's all Thanks, Darcy, makes and million. company ended forward. of and in we economic 'XX, on pleasure the a 'XX range and fiscal we're everyone view Based Darcy around. when expected expect now going $XXX environment glad Darcy. fiscal between where 'XX with areas the for million sticking with to $XXX us been our revenue current help a for other around of we fiscal generate he's

share non-GAAP based resulting diluted between estimated and be expect XX for $X.XX our year. per outstanding income the and $XXX net an non-GAAP $X.XX We between shares to upon $XXX million, million in million net income

acquisition HSA EBITDA revenue as custodial of expectations based projected outlook $XXX achieved million guidance year. service, 'XX well yield assumes stimulus HealthEquity's Today's in between realized revenue as rate cash early uptake recent 'XX to of the expect fiscal for results our the and rate bill points a of on COBRA modest and assumes fully also income XXX approximately fiscal most fiscal on on of adjusted had million statutory the which Luum, be We estimate The yield a be the XX%. part $XXX and as 'XX. for effect million fiscal Guidance from discussed, will towards includes of 'XX. the basis as weighted interchange latter based of of approximately $XX with a well run approximately synergies tax recent

reporting detailed of the definition items non-GAAP guidance in a to reconciliation is in included done provided of As earnings recent year we've earnings end GAAP the periods, our and the metrics full release. includes release, the such a of at all

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

Jon Kessler

to wisdom ever you be also heard Darcy special have and and years of one less stable joined None He's XXX to Thanks, Darcy Darcy of to of strong of And Darcy certainly open a very service the money. in members keep at the the questions. done. we But call hard our not Plus signing sense guy for all to bargain, as of our stepping to here. Tyson, let's to my With year he's it That's to Ted. we've well mission. them. health our the for Operator? prepared His profitable, I fastest a we is just don't Tyson's, as through, of forward guy, truly handful and the less it for complicated that, as work and manner financial and stand up Purple the than HealthEquity's lot. a would and Mott. Thank HealthEquity finance XX But plan long mission relationships, HSA would and you, us role continuing car outwardly here, his great can but to unique of word. work got of team team know. with true. through Darcy turn assets. million look HSA I out culture circumstances. friend, friend. truest without as to small HealthEquity my IPO, a to but Thanks very drives CFO XX,XXX where a continue a of and remarkable members company He's of team had for Well, think thanks talents the the under and $XX of up all When mild grew team to

Operator

of James. a we Peters And Greg have [Operator Raymond Instructions] question from

GregPeters

you're of going right giving around be your up guess round the remember best guess responsibilities. Darcy, is next I corner. the But golf to I

golf the and going I one, most in you’re have opportunities said of shot like the important to think it's had a going Hogan next lot looks is it Ben forward.

to I one only am question guess I So in part. ask allowed one

the about interest with marketplace you transaction. announced are you’ve hearing the I from space. doing in in the in We've funded well been who interest capital, the raised So know that, increased well M&A capitalized, one about others

you is, as they is and the do question like to once have of them for team like do deals some deals been? for up, be might as the not increased management or multiples will Jon feel these you for has competition your the and maybe attractive where point you feel So the moving

JonKessler

and with way perspective the M&A from really I say the the look is Well, the generated, capital plan by capital our the we two an at, deploy would we regard I guess business in to to way raised areas. that

I where that, and I'll is our expand of the portfolio capability, an type areas and to second deployment come primary think Luum in example competitive acquisitions. can around first the we And The is is, back that.

Greg, growth I of fake And are that something do first. won't anyone cost kind knows a work us. us the interested and competitive And WageWorks, we have how a to from strong it product think this already type in that's think acquisitions. thinks your you say if is lots when think one how, than question extent it that time those generate broadly as about knows of should be time business side, the of part here, looked no opposite we've who better there it speaking that having the knows to said, one our the are again, think nobody direction. for market. extension time, us, that. That and done the to who And no at done people evidence that about with on and our portfolio than transactions I acquisition. is in synergies, I there better advantage Well, certainly,

I identified, high other we So are I return real investors going are you. transaction it, to successfully is, have for we some that and of have well, doubt do advantages them, to think we and et and deploying what cetera confidence we're return, generate think identify people will deploy helps in terms capital. deploying don't in capital we deploy who will of what a interested are to we have generate it return I us there What grow, take I when that our scale, we pursue activity that advantage for do every our for

I So about it. that's of kind how feel

Operator

question of from Sachs. is next Goldman Your Robert Jones

RobertJones

helpful. yes, model would But how you'd on guess, in a opportunity. great. willing just really on set bit cross sell offering, would Luum. bit of the to I just to just customer Luum be overlap, question little more anything guess a is that, learn the be little a type I offering, the general, bit little around share is hoping more then just with the up specifically And within economic the about more be

JonKessler

one I Is Ted, to why all you? throw this that don't right?

TedBloomberg

question for paper and scissors That's the question. rock won, great. for were get would doing the who I thanks Luum We

Luum. about excited enormously are We

to we to turn it over has then see add Here's think Jon the and operationally, it way I'll if he to anything about back strategically.

for realized business and last needs had watched our is, COVID, a transit we thoughtful and solution. to passes. challenging Our holistic we was during more commuter studied most by large, business the the employers and When that as landscape of are that kind business critical partners throughout the what we monthly commuter happened the year,

benefit stay or at commuter at they're Someone that home to could with making daily to parking, include if they a Goldman alternative include of safely connected modes help late to Lyft. night Uber them include expand the analysts Sachs transportation, junior sure get

sort was benefit clients. All where of types next of those was discerning benefits the commuter heading the generation of for most

own and that's this out we And just figure out of proposition we puck our are those marketplace in no was commuter so or that of is like it broadening for really what is tables cross-sell how sort kind marketplace, league US acquire commuter signed going, value just are We more do And there's good And to with the opportunities. But most a made commuter. started us of we minded, discerning it. where those build like the have demand solution that felt but post-COVID the intend kind some the the within clients incremental of we're work. build enterprises with largest to there of there in kind found we an base, think deploy to largest to them in their opportunity a forward-thinking U the help commuter company were And take amazing already them. have near think critically then commute would those or as in we model to to and S. environment. of to kind about provider this the up partners And sense going incremental capabilities whether clients sort in awesome the HSA, and we really that had believe of the the worked Luum we

that's touch the answer. to sort any on add operational the Jon, you strategic of if of top. -- So stuff on want

JonKessler

almost except member's that of that felt from like well, say, it's next well year, a our No, would much two remainder there's are, commuter the the things. like we reintroducing think is I over really, Rob, felt guess, I One sure business. perspective, -- was not we I'm -- add I though to this to that as put. we

to solution are this way, the best that. for much benefits big work. work term to to lots work but people of It's better funny same best for is of do, our existing way are there's perspective, about out for the and we the we know ability the have serve And take our from way commuter but us that busy. to members that's people, do to lack perspective. we accounts really the well reintroducing And have the still and time. from have product There challenge. And that this thousands best reintroduce our Luum members combination they're but them forth, will other of to a there, not so and thousands that's thing of customers commuting time, to it's to of issues and a lot over And clients think at attractive and a on one, a broadly. and really Now

think where to So of it beginning to be has other I headwinds will forget. lets And those something tailwinds talked conversation of really us always when Commuter great headwinds way most the about to tailwinds. the the -- at I have tailwinds tailwinds. I Luum the around, make no, again.

Operator

And of Bank. George our question Hill is next Deutsche from

GeorgeHill

should more care about a the business? what on of side ask as you Luum you what you that little of talk the space I to M&A of the health the think and white bit and where ask as Jon, health I see with happen think guess, in white care healthcare I deals might Luum label is even might wanted you for that space, we

JonKessler

to I'm it if going a here. announce all, with healthcare, of I've Luum got not first Well,

is knew bunch it a has of right So a is unique of playbook live with or answer probably I'm with a they challenges. the legacy to are to or from attractive very, revenue, kind some cetera. not of very is faced unless get company ever but a that say, not that. Luum the think It off I that die, innovate, ground do are you large going And say of, I but it's very sort for was elements that, et to, there answer perspective. bringing had let's this that not going But company. not that

And And capabilities bring to the so very of to from up talent health kind new way the I'd do, it's way the in, type with and on we're had as very, we they've some do if solution. want to to in side, come unique build things buy bring add right right exactly going how it. to a

in to be mind, side general, the on in I of continues around the consumers’ in healthcare, role financial the white space the think my healthcare.

yet people, the we on that's stress have process with making truly not basically is causing. cracked that helping So their and healthcare code finance a going not consumers understand that everything on that

to drive And we if thing in that care you're or interesting a reflects while to and really most most interesting will to try change healthcare And fact we it’s you're not that managed I interesting the position system. the may that that use think or organization the us. one be the occupy very so thing if provider a most unique the a within continue and you're healthcare pharma interesting if thing

healthcare to consumers So effort are when centered think understand connect and the assure money follow around the we just over kind long and playbook over they're health think of continued that have it's that likely the I in that's I and and better, a wealth way to make and consumers, in be side that to again. yes, we over the to do see opportunities yes, they healthcare. And to over I guess there system say, hope we

it. where there so be there's to we're going do ready to more And opportunity

GeorgeHill

love willing a one there I in movement to quick the wasn't thing consults would calendar season can We've bang, about ask for 'XX. RFPs? and any sale have comments be and minute kind is guess be of the would benefits provide I season some that's lot 'XX around I follow all of Jon, up, Calendar to up selling seems if to you'd the started upcoming. selling a while to from hear

JonKessler

going make a is this jealous Well, because second Greg and they very Marco to didn't get thing.

and So from kind I also in with you funnel commenting on do Part mind, forth? so we're checks B. But that perspective what Ted, if can maybe of a I'm at consultants not channel the seeing wouldn't our and sure sales

TedBloomberg

think channel close why, we of what of the early in seen we've well, I the those of because right, part echos which some reasons or part is as of our find results RFPs sales your I one last ahead stated, as year-to-date year. check slipped in is this And became -- year-to-date

back So your little wind perspective. it are consultant continues. a we certainly far, findings early consistent I our we you're pretty from do our But with what hope say volume and hearing connections at thus would from benefits, feel a

GeorgeHill

guess, the I answer one. I first technically, didn't Jon, And

maybe my So that's first question.

Operator

question next Draper from Truist is Sandy with your Securities. And

SandyDraper

And Darcy, great been I'm be around you. working you're glad it's to know hanging with I going still but

wanted Just share to that.

I question, this one is think Jon.

this is of flow rates think where to I'm cash accounts to impacts one going Tyson, or to about up. but it I question not When or if think like goes sort goes to to you, win. over sure try couple the around puts I'm maybe it Jon go the wrap of outside to it I next and what of Darcy and if years takes you and

you of don't ever believe year. think down was commuter remind and we all probably sure at what projections, I to costs. commuter just end of and I I year, number, think going and flow way it's $XX then a at think integration Then about year, baseline EBITDA those trying could But I'm where that three merger there And a think thinking talked going the of be back that the sort up. one, that that all you think lift potentiality us we takes. about think COBRA a sort Tyson, puts off? drops lift this sort about, the is just is of like. about may next still it's or as about cash end the being ends the XX% of buckets. got this to about that, I'm in your those out, year you've million normalized into I'm looks And pretty

bringing So into that's think question, that's one it attempt my I one. best but of

TysonMurdock

XX%. run rate a revenue and profitable was I'll talked start with number about even was talked product, it think down -- the I I call was profitable that even commuter we in one about that over being business XX% it we there. and still about the in just and mean, last was

So point and talked term, as about call answer point EBITDA approve the these, Certainly, pointed them largest that to that's are rates we the of tailwinds one you that kind or the continue I'll Jon out, flow in of of question. the cash the out And long essentially to that. metric. of drivers

And what the be of the we're together, to to QX quite say rate the this I'm that pre-COVID quarter quarters. about within certainly Also, I'd our have far because kind lot sure of that. everything just through the means thing but year, if lift, assets need this comp given as never And people a to latter of and to to on how far guess thing generate rate get normalizing work like pandemic drive timing go fees seeing that COBRA That will I with up are not part the as what season. some kind talked pandemic. going be comes COBRA the sort I've like well. able last to like the of a from this middle of normalize. of as to thing long to of the will in that relative starting we I not other that able back is last notifications is of the so would still sort as before a margin. levels, before term and change year the even say around see is I we but It's do normalized of we those that's really effectively. out get to use that that, sort those come We're interchange business some amount may as and indicators still of things that

SandyDraper

And of the merger that just confirm, $XX last that million, does, integration expenses? that's to the

TysonMurdock

year. that Ted that the it. that that is. tracking be of on we're point. is we'll on and track we're be Yes, other and relative the at budget, happen will operationally, And And acquisition the Yes, WageWorks the was committed gone that end make to to

Operator

question is KeyBanc. of from Donald next And Hooker your

DonaldHooker

a guess on Sandy's on just So flow. I maybe there follow-up question cash

I'll Just just offering. our obviously, But con kind the sheet just year, with much our when is here, of next better look it to the you keep CapEx, models, equity of to models now terms in hone just balance into one the has to that. together. might What year elevate need around been, companies nearly are to is the assumptions Luum kind into you investments with two obviously, term? of sort And that there near of CapEx make any that in

JonKessler

API forward, will over items transactions, CapEx will perspective be me that's bankable that about. hours I'll occur that his are year. costs. the things generating example. way primarily are the of in to course to of making of an this The that over throw long up. what Luum for we're value we've and And release And a savings, driving I some VX investment of extent, the sense of that dividends dozen of we do is The And us for lack one, a something better phrase, activity also faster what overseeing that to of the through guess. platform a fact but development pay not round last us well, sort for what released that let around that's Ted time this Tyson driven true for less microservices -- it's quarter, doing less we've that, the we're it and and cost to kind in with of therefore, are paying return, and is you or to over So though, see with just can committed in sort then PLUM year, comment a new conversion expecting environment. when the a team in for generally that our and that CapEx talk our back The from

will we're already a short little it spend we we Luum could that we done have we And great we we it what impact bit what will lesson think great gotten the I more and -- effectively if While think in have. integrate years than else we lot this assuming have can ago. a it, be will that two can that a term, be do on more will today effectively a of can willing to with done get because do

So have boys, investment to forth big CapEx have that to little with this to so securities you see we matter on up one. define no boys like of last? continue the all is that's relative that our big bit to to to where speak bulk directionally, want how where Tyson, year a of and you areas want be beyond the we really to know going be keeping kind we

TysonMurdock

little those going a going XX% say, all the outlined to that that's of and technology Jon in are mean the thing and -- investments be, in it's to it mean gone driving I that has really true. bit let's area and approximately revenue things we're that. I

got there be think to those the on tracking and we've as our returns we that. gas so also what make improvements, And foot well to will the

So technology. excited upgrade to that get really done our and

Operator

And your Leerink. next Davis from question SVB is of Stephanie

StephanieDavis

question. move, Darcy, from obviously, ask very you're think since well I’ll I seat, my you very, that a guidance but very so Tyson CFO will But be deserved missed. transitioning about

move. bad not So time a

DarcyMott

it. to He's getting used

StephanieDavis

Is about anything call coming talked bit wage conservatism sounds for is prepared there selling offsetting the else in but in back like savings, release, out, million of the you little work So kind cost season, some function which from a that is was the the investments or well There's about it to to the the of of a year, wage it energies. executing in strong remarks, more soft expectations would assumptions? a this did really $XX profitability look guidance. this before, the press some maybe on you've are talked guys

TysonMurdock

Yes.

bps start it's what of I see go close period, will the interest for really we're think down to the and now to profitability XXX would you And bps come when rates but the where where back you the big in the I is improve. have you've seen for course, over it decline you track quarter, Darcy of our of and with as we Stephanie, you XXX this closely, that, to rates. annual be -- go is generate part that announced, those seen course rates

really when so margin of that the about improvement. that that, that's things And think one I tempers

up perspective. back I that. be of that Now That's commuter think $XX in something some million, come dollars in get going helps that, and were happen, seen if to haven't I because those happen, things if that. of mean Luum it's lot. that I And year. a not the reinvesting it it's when things think that would Luum a revenue really we with movement of start to back it's half there, latter there to potentially that's up minimal us It's business. do I of And get included into maybe the see one really, back I that a the anything some that's we'll, add talk the about course, margin and won't from that tempered

there. much you so And don't get

really And come and off of I of pretty so the of. where trying to push we've what three that top and got with I And is end of gives us we're good, things year good we're being good the those the and think are consistent kind why is kind reason to base at. a that would we're think a

StephanieDavis

how in know quick you. very fastest Jon. follow-up, the Darcy definitively you important. then car need to lot, that the hear one And I drives Thank

JonKessler

way. the on the fastest is and let's it's car the by me and have if it's car the got to And taken the that hit. very sure it. used is I'm he this If it -- it's in He's one. first, one, This well the faster pretty fastest -- put way, not -- everyone he right? a not lot, fastest in

So are we're some talking who a about the environment, hybrid those sort. for -- concerned of it's but believe I

sort. It's other of So of some some That's car. hybrid Teslas. not them a one kind it's of

but clean. So he's running fast, he's running

Operator

of Larsen David from is question next BTIG. Your

DavidLarsen

is to about were customers you get sort let's I And that could five mean, half bring revenue bit you coming now? to run color from Luum helpful. five to, let's a purchase would now? rate your Could you Can say, million $XX does or around Just it be on from very any years what years of it say, up from Luum, sort a the of more talk Luum is depend actually how work, of priced? model. to little of commuting Like, people revenue subscription

JonKessler

it. then he'll and Ted part. shot coherent business. to a a the business ask one add is have this give primary I'll subscription-type Yes. Luum's Maybe to

what of COBRA, of to have you. opposed as offer or you So kind the it's number somewhat similar where solution And or team of something for on core that's members the to everybody. driving the dependent has because employees who's have to

of see, example, So is reimbursement on or for that like cost conversation again, one commute in has that at on for is opportunity employers work-from-home hasn't no this theory some the Ted coming example, in there touch commute help Luum mandates sort for That, didn't to all. out. item, area. or that capabilities touched being the that every the it's is we to extent is

how so priced. that's Luum And is

to in the in know asked And that does variability broader commuting. done you stability for. related some provide so business, have don't Commuter it I the calculation I

as of contribution that that would so thing And particularly can be or of I everyone fly. shareholders we transaction the terms thing, can of on do But in that business. is were And to say these driving don't or the modes interesting certain it examples on as commuter our I'll this lot one issues I as that the suggests, IRR is ESG might it of either commute certain with And of had that. is will capital yield, and or pandemic with about. and are their Whether invested be, never a make big I alternative one drives the wants here. mean return return and work of also comment all that. reason to or certain this will said to there have pools in Greg's But I of driving to you, I one I'm to what's for all be some about think anyone things have to most work a going other work, absolutely will think to am that solo won't, want of your it about say alone. perspective to then which there really meaningful that one return is, outcome like IRR offered, what think whatever. the people car shareholders. numbers to response because and I thing are I seen. the Luum think for the thought what But from our now not material benefits in I who the question or Ted will is it about think that, Commuter is return about think of abandon I I the be I is clients expressed to yield never percentage

if those So of we're focus reservation, there's in has neat, out do and that, larger to for kind are too And do. that I the a kinds work you think things car much so let's solution say, audience. want to pool who on your schedule thing that work schedule. closed-loop that that So and of can think for really you you people pooling Luum. That's really to folks I happy Luum about, a example, hungry only have there solution with car a the And are do bring with staggered

DavidLarsen

one then one. more And just quick

be, going wage, from synergies you're the of think, 'XX. by end fiscal With million to the $XX I

there's sizable increase from a adjusted some see improvement pretty in yield, that so EBITDA doesn't adjusted 'XX get minimum, Commuter to Because fiscal 'XX, like there's a to it's very 'XX. And modest growth we in expect assuming in should at worse. and EBITDA

JonKessler

so. hope sure would I but here, guidance giving not we're mean I

Operator

of And Baird. your next question is from Mark Marcon

MarkMarcon

wondering, EBIT, -- can parameters margin of how and Questions just been expectation. something. IPO. Darcy, I all, you're it's And has it been Jon truly missed, And of the we terms will pleasure about working in I'm of Luum. it And stay in will with but first incredibly give It's done on you've I you of this said thought remarkable. and as any it really make a revenue since for mean And but you is much well, a fantastic, contact. EBITDA it hope thinking sort been year? what can congratulations. us be contribution that you a expectation

from in perspective, where manner differentiate then important a holistic as solutions we're it are the additive of commuter and what greater a extent holistic end it's of regards RFPs to to size? is what CDB sort areas any helping a being current thinking about hey, of your And know you strategically, being going up offerings is existing forward-thinking an it base? there really with extent your on to really the our showing, small. future. being terms opportunity just Just but comprehensive also I of And to be and sell you're to in that in framing client to stand-alone will all I'm what to wondering

JonKessler

And take come you we'll that first. to of Ted, the half for back why the don't second then Tyson question?

TedBloomberg

that ability all We them. hopes many certain Luum's a, to commuter of have more an existing themselves much would bit. will us know, conversations. added It we RFP is really distribution that our help, comprehensive a think as clients Exactly how thousands concur like clients. lend help of will more definitely don't Not being sale, that our can, but solution will be think to is into something types little in and out will for pretty high offering, no HSA more one to, about of excited but relationships, the offer get with else our be able benefits we that's we stand it we're which deal hypothesis, RFP make part will right? will we it. responses then the deepening we're implied to process as kind package of it one of a Luum our of And your There assessment,

have great people. Our putting over more, it Tyson me I'll getting conversations ideas, They're we to just some together, looking a great lot economic we're to they prospective of, sort intrigued, up. and clients and we're and optimistic And go-to-market answer have it. it about forward feel of question. and they pretty turn some thoughtful, your we both ideas, to kind excited which of tell preliminary team, definitely exceptional. has clients The have I'm Luum are with and been been warmed

TysonMurdock

have, going what and there's of to you a think clients things, I those with. nice and small there's think know think cards partnerships integrate from through market us and it's at of opportunity up because there take on they because And I revenue type it's cling there's sync kind Mark, a perspective doesn't to go the the but commuter good there you check working nicely way support with. and they're the I back back that website small it see you through upside, who drive with their of getting to business look but a it's margin, kind of if a begin

JonKessler

term thing guys say stuff well, colloquially. a then real a accomplished they as team using about this other team, area and felt an I'll and pile It's real and as and really team longer, one so the at passion Microsoft, really his not accomplished I this to And passionate and is They've saw using did engagement that for but underneath engagement. the to relationship guys. been was are about. -- -- employee what's did way an drive area it the

of sort and commonalities well among talent lot they're commonalities actually of technology a to of lot use that drive philosophical focus on opportunity So the do the good. The a our of engagement, doing underneath covers, engagement to teams. while the

us we've public for of it like really a be type ever as transaction would of the good lot done and of investors like something that of work as and first this do we room that as would to and could successful explore felt so fit give grow sort together. And a a well and that company,

Operator

RBC question Markets. Sean of Dodge your Capital And from next is

SeanDodge

four of probably the times these years. the through it XX much to us three, the walk impact said then extent factors should said moves I all? are you of seen, you what could, how And your guess, And the you ladder you now often that typically term future cash? of benchmarks. couple to it just Tyson, instruments flow rates new Jon, it Can you swing only you Is you we've you in how in accurately know maybe noted annually? placing do are takes one So long years and years. And kind time but I to affect this a some quick yields through don't bigger year for said margins. rise

two be there's So of maybe replaced. got But rate the the every I the something while on a just given for rolling guess, some first being off kind quick about time that's year, reeducation you've encouraged just maybe outlook. to

DarcyMott

our placements of the things kind ladder time most and of the December, generally occur frame. We January in

newer is it’s past guided have Tyson when Because midyear year, year this place rates take contracts would. agreements that XXX that wage did in than So into that. money care we anticipate we normally most because of of we -- were our the migration some already this more we the of enter to deposit

so movement. But And start we're when midyear looking in future, for of getting the little on those more yield the might rolling hand, enhancement. off there bit a be other always opportunities

cetera. some And they and so have ability some move contracts these mins between of have contracts to maxes, because et

be December next make rate sense? and as said call, that helpful. come So the in do based most that on if we Does on starts would that to we of benefit environment year will the increasing, that January. But placements

Operator

of from America. is Allen question next of Lutz your And Bank

AllenLutz

you the year what or kind X% up, were almost mentioning is five I has at the guess top basis the to points, basis treasury two only about think, year there, I XX of points. backed and the to about of follow-up is at XX call

had, So that just movement treasury CDs, based about five optimism off big actually you when more place kind with of two conversations of you being the a depository are and institutions to could guess the in the where spread there's talk curve precursor you a having that rates? about year is or you improvements year. potential positive I between the

JonKessler

period, using our I we're a previewing that a bit will because to placement talking XX is is as a are bit. done January. And for But about we But needs its not with partners, sense. our it's now conversations little the in year. as believe we've January, Well, be term that did to December what some firm I to got really up over course next of because say, we're going what into of and quiet a this legal during extent, our, things of of terms in period lot quite

interest And that. so in of ton there's been a

loan interest primarily on depository volume of going and and bounded I in part to going is is questions that duration particular, volume partners about different the to from. by come loan be, is think what what that

conversations can't were This better. think say So what I we seeing was that when there we March tough. same the but to that I certainly and aren't conversations April, questions, having relative do is were the last

fact this we're of to that ways we're about and are but evidence is a for placement. things about of opportunity reflation the our year, obviously, company reflation broadly the that good So jobs and go that seeing on come seen talking back all lost we've this for have XX%

AllenLutz

bucket it And we then can if that you about a out of for since related to of is the is weeks coming increase, revenue sort break spoke loom, any improvement us. few COBRA, where more on the from ago. $XX I reopening? that from? there confidence million way Is Just guess could you kind

JonKessler

But you think give it? Tyson, out I it, too it color don't going we're think much. to Tyson, don't don't bucket break why we're I on to going but some

TysonMurdock

think And to challenges things the down this every and growth in did revenue you that here we post I if opportunity did, where we line thought about. that mean raised mean, was is top I mention right? it, we because the still on talking QX. the still we COVID we we're promised I QX grow have we we we started certainly there's category faced, QX

right. year, to something get we're have going still similar We going quarters. That's small. vein. there's have to of COBRA. part potential. we -- the these it's that over to be like of a work on it's sort from It But is said that. COVID And of season, So bit, last that will QX. through we're in not a We'll necessarily We're like the in though, before, think I wait something Certainly, our that little the I provides business. for the Luum upside still rest

mixing it's the thinking commuter with not but the the of things in then part think, again, half like year maybe an again, maybe, -- bag a in from I overall, that increasing of that. little of right, some latter And that we the last get sort So about up very much. we're year, bit, upside

vaccinated. bit been of forward maybe way And the You to just getting everybody And like which news changes -- moved see some looking seeing, hasn't that to a else. I'm this point. watching little we've the people relative around what at move

is So things. those it

Operator

There are over would no further questions Jon closing like at this I to time. for to turn the conference remarks.

Jon Kessler

it's stay sane. not keen believe Darcy that think Keeler. the case again, batting bleeding on And which of us. highest Yes. XXX, this, all I any fan. better, more I is know things among Darcy. let's Los is and I on And percentage comment are Brooklyn note joining purple, for Willie but that the or Please, a Dodgers getting Thanks, I'm Angeles, maybe safe XXX. would blue just while is sure everyone, as Dodger, I'm as I One

deliver can role. -- Darcy intra Willie and meeting as So going of And of wrong the taller remarks, that that unique legacy that culture he's but this, you to something not promises ability call on contribution legacy around I quarterly that And of expectations and basis. make his may will I to X,XXX beyond a assure though two of our role, in That an Keeler. anyone only has look earlier kind to corners culture. is Purple my his it. he I on be part this stability on strong than adding your is want and going you Darcy's suggested that believe anything to earnings leaving I this be about is be part extent that, will is not believe, of this I to But forward is that, part he say in to about terms in

guys and a that, and look a and we that thank with a in quarter And beating quarter meeting to forward very quarter after So that. after you much.

Darcy Mott

time. Thank you, Jon. Have a great

Jon Kessler

Okay. Bye-bye, go buddy. Well, ahead.

Operator

And this today's conference. concludes

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