HealthEquity (HQY) 7 Dec 212022 Q3 Earnings call transcript

Company Profile

Participants

Jon Kessler	President and CEO
Richard Putnam	Investor Relation
Steve Neeleman	Vice Chair and founder
Tyson Murdock	Executive Vice President and CFO
Ted Bloomberg	Executive Vice President and Chief Operating Officer
Anne Samuel	JP Morgan
Greg Peters	Raymond James
Sean Dodge	RBC Capital Markets
George Hill	Deutsche Bank
Donald Hooker	KeyBanc
Scott Schoenhaus	Stevens
David Larsen	BTIG
Glen Santangelo	Jefferies
Allen Lutz	Bank of America
Stephanie Davis	SVB Leerink
Mark Marcon	Baird

Call transcript

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Operator

Please go ahead, Mr. Putnam.

Richard Putnam

Thank you, Jackson. Good afternoon. Welcome to Health Equity 's Third Quarter FY2022 Earnings Call. Putnam, Investor Richard Equity. for is name I Relation do Health My

Company, Company's me President and Chief Chair Officer. our the Kessler, is Ted and Murdock, CEO, of Joining Vice Jon Operating Neeleman, Bloomberg, and our today President and Vice Executive President Dr. Executive Steve founder Tyson CFO the and Vice

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

A the copy today's third including definition healthequity.com. market release contributions announcing non-GAAP WageWorks this release with issued on our quarter of webcast the of release, it of that measures press which for was of press fiscal these non-GAAP the Relations reconciliations The found a be and metrics ir. First, right from includes this The press GAAP results our after closed recording afternoon. that of the certain Investor subsidiary a reported today. website, release measures we can XXXX and year financial accounts comparable measures press also here administers. financial will our in wholly-owned the reference is include

contain factors and here expectations, our statements the forward-looking that many our today. responses to risks which may today. that you made statements against your will conclusion review as of of market on price statements, the forward-looking. from these that annual defined forward-looking or these also obligation our detailed our assume important report with and statements questions on as filed remarks. These differ forward-looking our events. encourage latest to are of actual of future affect We these Second, you new the materially might estimates, on reliance the of We made the predictions, the There today, revise relating or to other we December subsequent considered to comments and uncertainties factors XX-K stock could results light to cause SEC. our statements other SEC, subject statements XXXX, information be business future update and are reflect including caution to or management's affect by X, our today may and undue Form view that risks forward-looking information are results, no in that's prepared or periodic forward-looking discussion and reports placing And

to operator We to instructions the Jon. host will will the Q&A. Jon Kessler. I to to And over turn and over our call our turn the provide CEO, call

Jon Kessler

into on us operating 's reporting fiscal throughout which October of asset or and financial of QX strong HSA for and and the weighed your and you Health as for administration aspects CDB Thank full or consumer XXXX. I the Equity third the fiscal we will time review Ted benefits questions. that the hello, continued while results Today, and 'XX, and results of have you, seen everyone take fiscal slowed ended provide thank both details quarter, assets dive guidance Steve performance. for accounts and updated we're ancillary Tyson will we year sales Richard join joining quarter pattern will on -- directed account, for us. growth Core XXst.

reached vision transition growth from Third XX.X of Fiscal assets end s up growth QX $XX.X 'XX. Equity up total more HSA than $XX.X transferred the HSA before XX% that total X period HSA XXX,XXX million members includes accounts share fiscal and the 'XX, quarter the did revenue HSA assets quarters top than key robust, sales year sales, with year-over-year, another commuter million a a billion at asset work Fifth end including of XX% $XXX the fiscal XX% of results. in start a That's Health course, a asset in to channels. in assets of the and that of of members we're the Adjusted account metrics the X% last total industry impacted and that and exclude during migration the the quarter's health pre the estimate has delivered HSA ever and accounts tell s ago. Let's connect compared and the on slightly fiscal captured in from growth and from year. just of billion, of drive first year XX% with wealth. plus market-wide, XX% HSA continue investors we're the HSA XXXX balance a s, more invested plus 's at to HealthEquity Bank's versus million including QX. year. continues HSA of 's sales nearly data. last reached the a to XXX,XXX third million, story, decade very HSA reports Third members team HSA diverse XXX,XXX new we cross $X a for has Fifth recent every solution In quarter's QX in Fifth record quarter up end, delivered its has strong accounts year-over-year suspense. XX%, than the organic added total up take both was members organic periods X year X.X average long-term business. XXX,XXX XX% the Third as market and to quarter's at members same a million the ago, across done year end same catch The account a end, during up organic total and have asset the a now. ended evidence s saying grew of XX% Spurred and Devenir organic flat now period HSA recent HealthEquity's that -pandemic in the assets, million from at favorably ago, with record XX% peers fiscal most during and HSA new Purple HSA openings XX% of XX% it during growth more of welcomed June asset portfolio from XXth, assets of HSA in account year QX quarter's in transition. growth from new by opened XX% was than HealthEquity And in share ago, of remarkable quarters grew -- in $XXX.X X% health year of QX as approximately Investing quarter. in Fifth from delivered HSA same XXXX. year-over-year traded quarter before, third and from robust, and Third. members And greater HSA Fiscal three $XXX 'XX, growth growth savings XX% a team growth pandemic Team the Comparison HSA new for EBITDA publicly

this, clients formula that for ecosystem partners scale, proprietary that you members at Our want, that technology demand, bundling HSA deserve. education services is delivering our know, simple. doing the as service our purple It's the total a and solution connectivity and our

that ago capabilities acquired is HealthEquity core and growth, Footprint drive and you CDB market-leading to As precisely years X know, what's happened. HSA WageWorks Client

were the factors we wane, recede to but continues near-term Commuter prior proven and the COBRA, implied our revenue pandemic's s, We on guidance. $X sensitive interchange FSA in results and of million most to external expectations versus resulted from administration service and impacted accounts overall these factors revenue, lower-than-expected to that economy believe CDB expected. effect down of QX However, s than as more particularly the in $XX have as will with

as than QX final these. choices deadline reversal Interchange for during leads QX of so user X% 'XX that Improvement not in interchange is cautiously spend the to speak COBRA XXXX revenue Let factors made from us anticipated we what here year. a down year. from enrollments was from enrollment, surprise. who optimistic head after We fees will into calendar loose balances the this which our to and we on XXXX Service FSA of in debit administration members platform seasonal on and sales Year-over-year experienced XX% new the going their growth similar each on do me slowed for depend in fiscal from grew gains. QX about calendar more just cards 'XX, anticipate for biggest we've members add from open did FSA. calendar that and the new QX. and

to welcome. and were start that with period. fell addition QX only tentative But employers towards one-time the with than off and of to since taking ended. which the returning expected accounts even In our did high but and COMMUTER labor very fees. And away small rom business, and uptick the still office, current ultimately for more year-ago lower in revenue necessarily fees sequentially a the itself of the had pandemic, not our service finally, COBRA and will subsidy, and than fees subsidy more markets good revenue quarter, time Federal is conditions but support COMMUTER to will the to streamline engagements platform decision short-term end go-forward from f additional one-off services legacy CDB of certain accounts, walk Tight first COBRA less we not administrative for and led nonetheless. eligibility the simplify administration when that we uptake help hurt you steps COBRA last expect the discuss did

commitment which to it their closing plans high-margin XXX,XXX HSA Fifth through forward and in are already We're product capabilities right. deeply the revenue even and which in know, its expanding scale record we strong the help acquisition around business sales partners Cross HSA various And first of in expands -- CDB Blue our footprint assets. you results the and health revenue. as more spurring $X.X and fast-growing the technology embed and billion M&A transition partnership sales its page with Further, adds through looks CDB in innovation. that going QX. do growth, the portfolio the on ended, and focusing in generation our execution HSAs Blue turning Association to the integration the d to the announced So Health quarter HSA commitment on impacts completed core more pandemic's of we've to Shield on I of HSA to and our of brings foremost team own After into mentioned Further, Thirds products. HSA the Equity by portfolio capabilities HSAs is approximately

of should profitability to deeper quarters. small is in fact, and all you Administrators, to innovative coming which of FYXXXX portfolio an the investors marketing see individual the uptake familiar, and of and going inherent agreement of of This a our Savings employers. custodial of -- member expectations, the with rates will we're support HSA forward be cautiously pleased initial to HSAs In integration custodial onset cycle enhanced report you're expect billion from to year of real that announced morning, Equity HSAs, going in will you're be to a the of Health but we in around the see which assets Health will leader downward optimistic that acquire to last. the offering it partners examples $X.X HSAs. third beating yields yield the that pandemic our began I'm

While acquired discontinue operating of was an tightly updated platforms decision and Further additional $XX the CDB on one-off now frees will I Murdock? guidance detail streamlining agreement opportunities. help to Tyson focusing also we've business which for Veeva that and substantially corporate fiscal to Core, core agreed ancillary legacy grow, current over completed elsewhere. are call to to us component cash year. on overall growth we the Migration sellers terminate won't Further for performance year. of accounts, QX that up HSA turn QX acquisition. earlier will in severable the our I the be buy the million with and with year-to-date and And the of for new entirely WageWorks and the in services from mentioned duplicative Mr.

Tyson Murdock

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

revenue and HSA representing offset led CDB custodial the up was Service and million, success year-over-year. service accounts, s, the service revenue quarter revenue HSA account. more XX% X% growth Custodial revenue, in in year HSA grew It basis revenue. than in the $XX declines year. quarter basis revenues indicated, during efforts for The with a Service offset at in our XX% yield cash points X% to quarter to yield Lower less yield partially and CDB points This of in of with rate was revenue third XXX compared the to $XXX.X revenue during third FSA was blended XX% declined declined, yield average average from services. in service this in X% bundling offsetting $XX.X growth cash million yield lower a quarter quarter was yield as revenue decline third interchange Jon aided is by quarter. total and the continued with HSA HSA Third comparable on the quarter. year. annualized interest in and cross-selling the revenue of last the second rate per million to the growth cash Commuter, all on quarter. COBRA by prior cash than XX

revenue grew resulted release continue in additional As table today's $XX.X of yield. HSA mentioned, in to members to XX% which Jon revenue XX% the growth average our assets investments X% their in Interchange total representing HSA with press million, The invest quarter. balances, details. of HSA provides

XXXX depleted compared Gross was was FSA were and of closed $XXX.X in or expenses million rollover $XXX.X basis. for the $XXX.X XX% than quarter Operating to million faster of acquired the As $X per intangible of loss in as margin represented Jon EPS XXXX last a Net year. a of merger quarter million and we $X.XX integration assets together, revenue. spend share on earlier, expected. decreased were third expenses quarter. the or third million indicated of loss Gross revenue. XX% Amortization accounts FSA and was profit GAAP XX%

share adjusted was of Our year year. the EBITDA to the indication was to and quarter $XX.X of operations focus managing third Equity per in compared XX% the and net to $XX Consistency margin in of million non-GAAP year, for business. $X.XX margin $XX.X was the million Non-GAAP team's $X.XX per Adjusted a EBITDA per was our for last compared XX% million compared the same net of of an income Health toward income last profitability share carefully the quarter improving share ago. on numbers quarter $XX.X year. costs million the is those ongoing efficiency this

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

balance sheet. the to Turning

of of As outstanding of million Xst. October issuance XX, was acquisition equivalents, $XXX of credit. outstanding, the Further close costs, cash with of used November XXXX, course, balance, The we line had debt and net to of amounts of includes cash $XXX million $XXX cash was on still million cash no drawn on our that

the revenue where debt dramatically $X.XX our 'XX diluted and include outstanding interchange the new between on recent includes year, based million EBITDA to debt unsecured range and risks The resulting to guidance based secured of we reduction million opportunities. been adjusted outstanding obviously non-GAAP between $XXX As $XXX $XXX on to of for upon debt $X in between million. estimate to and and Today's the the $XXX $XX tenor net estimated $XXX results Fiscal sale revising date. of a million between growth ended and income our million has Based 'XX custodial most current and debt shares during revenue an for we and to per non-GAAP rollover service 'XX, view quarter. $X.XX be million, fiscal guidance the $XXX to of be net in million, result expense environment, share Income invest of for our interest of our and us giving quarter extended, will are third Fiscal the and economic reducing by a increase about and flexibility

lower Further conservative Our QX guidance Health which the beginning XXXX outlook a to fewer includes spend and includes that also QX up reflects service and service also through a to Guidance saw like year. costs Further revenue we for with as conservative COMMUTER this addition more for reflect and continue in associated Equity and clients for and closed in on-boarding interchange calendar and both ramp accounts of and remainder whole. FSA of we'd members a the patterns balances new of at

WageWorks of a migration rate synergies for from date. basis the includes achieved Further full $XX points yield assets to assumes fiscal and approximately on cash to guidance XXX and prevailing of run XXXX year, Our the also HSA with depository, Equity, at of the partners Health of million rates. Guidance insurance benefit rate includes

As placement Federal we also referred costs to we on HSA of XXXX. Health safety contracts, outlook as fiscal Biden's Mandate. a year federal expects includes contractors, finalize result to the COVID to able President adequate order provide initial the incur guidance be for cash Contractor protocols will Equity This as ensuring rate assets of interest for depository certain into executive

Contractor eligibility of you Mandate than million expected. order. As under compliance may this know, proof to Mandate. who The Federal wider Contractor team costs and rate year diluted shares nor of members of for we training and for the fiscal the Federal and assurance exemption with income recruitment count it provide a The the significant tax for those replace brings is neither Mandate as President's awards have stringent projected 'XX outlook more than of assumes can approximately equity exercised for fewer had statutory vaccination, $XX a XX% OSHA

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

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

Jon Kessler

mean, these and truly. to are And quite mixed. always humanize not a mean tried that literally I you. with Thank plain calls I today's We've like it's talk, blender. results it

were outcomes HSA true. also in that's it's why the I'm very saying because like it written very and strong is but core Our that, so letters, capital

results on services We on know rightly tough very on was CDB we We're action and our performance questions long-term profitability, both to welcome not results your truly growth, you plan. ancillary taking expect. that Our visibility the our strong. and deliver

Operator? get it. to Let's

Operator

from you. comes from Anne Samuel, Thank Instructions] [Operator first Morgan. Our question JP

Your now open. line is

Anne Samuel

Hi guys.

Jon Kessler

Anne, happy holidays.

Anne Samuel

thanks the holidays, much so and Happy question. taking for

there the little and more a provide er And you fast on on you the just shift dynamic little could the what next interchange. cautiously you're year. a hoping bit then back went for guys was I and happened circle XX:XX:XX] [inaudible was expect to You color said details, you optimistic with in

dynamics are Thanks. what the happening that So are there?

Jon Kessler

Jayson want one? started on get Do to you this

Tyson Murdock

on for and done a Yeah. interchange was a more FSA Anne, lagger. about Again, and had what interchange the the good decline revenue with quickly accounts. But thanks we've lot there spend we've XXXX in interchange there. to XXXX feel we accounts the thought. on the question. HSA side, even side, those especially more have The leading we seen than the I really

And in so but did. fee, service time saw it it interchange because that spend and dramatically thought interchange also there's revenue would the them And a we the to affect the more QX, than the so the this, that affects QX pretty so was balance frame, does spend. persist not increasing and that only related for of less

a it where December. that when obviously, place down it so during needed the a accounts replenished. months And because had put higher us in about we when think QX, in or in come shift really the January, is QX quarter Use to lose as that you saw -- us spend we QX, are that well as

Jon, that? the anymore of one the really down biggest there that's challenges side. on thoughts on So interchange

Jon Kessler

No.

I think hit it. you

Anne Samuel

helpful. really you. Thank That's Great.

Tyson Murdock

you. Thank

Jon Kessler

in part it will say particularly you were is you that optimistic years impact, was a you one I just is, X said situation Actually, fact is summarize running very off had which in had thing, the to -- of part what what the to QX we we where strong really that the unique that -- add were balances. cautiously way

during looking 'XX that to January so then more early elections. into new on as returns say elections forth. into and have to darker some is to the people's the so we're But not remains now, that pandemic by and what part we're and were the when that provide And And later, the December ago, with quarter being year. third snapback remains, regard impacted year, of days what going year while of new made to optimistic decisions and a outlook people is making there back of of and at fiscal some are we're look that, we we'll fiscal that the see the or will course, we relative a making, be

that's So the we -- optimistic. cautiously that's why

Anne Samuel

guys. Thanks great. That's

Operator

Thank you.

Our from next question James. comes from Raymond Greg Peters,

Your line open. is now

Greg Peters

afternoon. Good

Jon Kessler

Peters. Mr.

Greg Peters

Yes.

Jon Kessler

from Hello title town.

Greg Peters

the up and about could beat Well, revenue demand. just I all. us Maybe and hasn't line covered the seem mixed to talk loan unfortunately, rate new spend just custodial at results. just the three-year in CD know and for of there's for some budged a jumbo the stock's a of getting aftermarket you item. the lot reasons you that like It outlook The minute doesn't

it is second spent this sir. in just be and that. you guess finally and Further just to in lot only of where of And the see where out results positive impact question wonder comment, next forward. thing, a to you the going but question, will trough part I your trying the the that might think the so year, money my I is begs the said have this of question, on And That's you -- about

Jon Kessler

Further. how why are -- on the about, add you don't one you'd Okay. into and the Ted, if Tyson, -- second Those great. hit I'll and Why like rates first on to one don't

both little on I our to commented Tyson thinking regard with bit a forward. rates, So and

you pointed worth gave having have X is that it that of the cycle benefit ladder of when we this years began, Greg, time. we recall, ladder that us And If out

EBITDA points XX mean, course, this of our down revenues, yields, fact of So we higher were custodial quarter have, I is we're -- our and the basis of actually notwithstanding in year-over-year. example that overall that that. fact was Notwithstanding the flat terms an

the of introduction we've know, the we overnight is our any tell don't we're want us. you our that we're And what laws rate or two points the so not ladder commented previously lowest basis territory there. bottom, year Fiscal we XXX or for that we that that our example, of basis the some said for ever we're thinking, you couple likely 'XX because else. thinking. that, -- and last perfect We've heading over And that things the for XXXX into have we the what of I of commented really anyone will received than As our rates today But It's we've enhanced things be into baking after would quarters. why. rates because elsewhere same I is we've terms around months unwound exactly we comfortable crisis, of has what points cycle. had of more think ball predictors in first feel that's third gotten is than, into we Which those hikes the that done historical are after -- doing to we're magic XXX not that where We, is But three adding thought two commentary did and do have bake or for we Because not much be. better the rate, ago. is product all, That's you. our

and creates of are to be sense. money generate from more we're at - going bank, it going what for to shape of these the a of we terms it's promises better or that a the fiscal our we fiscal The helped and it's course just into to 'XX, regard first if and think marginal feeling in the all, optimistic, likely competition less placements into quite 'XX more and of 'XX higher higher makes with that that the for footed yields and our sure we're need those then can meet have both second effectively to spreads, the that -- place bit reasons position over And yields. to any that more of into made is, you going time, we the reduces end

basis That's rates. make We're and it year nice, not -- what into X really be looking our better. banks we're all the is, uh, to And getting the don't was out thinking. bid. And that's there? full there the whatever of the that Further, us That's That effect, we're go reduces saying, for implies, obviously out "Well, fact looking from our helps our business. our need perspective So want competing as economist looking a although about in quite they the And also to bit. to then was those and hit [inaudible next again, we again, its we're offers against chop I be looking there're is have name some question clear, we're has, helpful. wood going there, says and uptake the we second the we're our XX:XX:XX]. not rate or to offers at that say. our to why that place, into season just " from And be also both looking at that enhanced would at placement marginal from that as members Tyson going we're as But increases you at of enhanced start Hopefully rate

Tyson Murdock

on as other going was comment make well, thing to one rates I the Greg. Yeah.

you're about those FDIC this you or earlier now, whether versus they're When higher, then. is are rates were think we talking even the important placements know. enhanced were making think higher in year they about to an and rates program, contracts I than now

FDIC, ago, working or they're We're X X turn different now, years that against in average that now. So there the placements still those is course, but from are higher higher. of for

very blues ability able I know very The is, -- again, be to with plans that. think business, HSA time. well worked one penetrate to us really ideas those to for done is are the over want I centric important, on Further be So how this of the like that to an were plans plans we've business. other then And - health our you going

because that so scale to when Further jump The there. scale, like rates there. us scale on is matters do really other and assets enhanced scale big program the with thing think to what it got gave us the a It's part us the gave without a placed of you is together put we that. to hard how And about

obviously margin the in its I further particular So the on yield profitability business QX about not just going now, impact because a the long those it's impact, overall I inherent that's And there's it and Health but much the very to right immediate run. think that on it of the its associated has important When have assets, of the Equity part quarter, impact enrollment. through a deal. doesn't that as think term. year, Busy the out margins for earlier $XX season, in cant the I rate in business, low for a and then about run EBITDA over a it of million in revenue I point that long tracked at margin for on of we XX% there business that put million QX a revenue. we so the think off bunch business are so $XX course, talked But synergies,

us of of a carved I But it's efficiencies in that there technology how the the for not a the for of a numbers, made side, lot when great is it's point, from we so, based whether it's you do you larger think see seasonal time, especially guidance. much math opportunity [inaudible point that that's a out can XX:XX:XX] in starting organization. business, starting of on QX a lot run, And over create to

an lot how a ways type of run. to have think business that's we about of to how HSA think to been I run relative

that? opportunity that comments there's us. to -- for you any more Ted, don't on comment know, want So I

Ted Bloomberg

No, have would the is to, transaction. add announce easiest portion not about we're Tyson way The that just the which we Tyson, transaction, relative think, the is I completing numbers thing of think only I XX% alluded to it, the -- did the of that to number is rough today you it. Veeva

and we're close long-term over some aiming you to monthly it, it, is sense haven't get should Further to early going a what Tyson synergies from be share expand for But to next realize take I help grow So that a we again, completed able even days, it's business it, similar [Indiscernible], 's optimism. what That year. on this yet, with but time. we're and did of margin integrate

Greg Peters

Is Ted, think is on $XX so cancellation about further take that that I XX%, XX% can and right? it the of EBITDA, cancellation, you just I just you $XX the ask is for forward million numbers use what clarification million a we if as said? both those going off should

Ted Bloomberg

publicly about the business paying, that we're Veeva was that's what and -- paying that of X-k. saying we less had the we're think than about said is I XX% business we in announced that's Greg, XX% the

both So think I business with [inaudible always asterisk is QX Further that's low estimate the and a for reasonable margin our quarter relevant a that XX:XX:XX]

Greg Peters

Thank it. the Got you answers. for

Operator

Markets. Sean comes from our you. And Dodge question next thank from RBC And Capital

Your line is now open.

Jon Kessler

Thank you, Sean.

Sean Dodge

Hello, Jon.

And then that got employers a that FDIC to looks placements? the get sign idea s insured rollout how the into. and some timeline the back us enhanced ramp the you enhanced like comments rates to earn what that education than differential you've rates. can employees versus on traditional the maybe of sense Going looks off for to mechanically the your And opt quick then or more a to give around yield product, the different the on you can on

Jon Kessler

we does to enhanced of the The in the little spread just bit, basis that there XX XX let's in benefit points is commented neighborhood. say a rates is terms elsewhere it current adoption basis depend points but

that bit a little the a beginning but little the also by in seeing. In up terms actually by that rates terms a process, members. But still what eaten of to of enhanced you of were adoption and fact adoption very it, -- gets paying encouraged the approach bit, be answer very we're note, at the the will much We're this multi-year and process. depends of

they a come term, or unless if our X. when of some a going we product. of As have with had and a came couple it this to of amount their over better next by money of that it's cash keep option That is trade-offs, business, into hopeful. is take And like with of Further the up that new did new; terms it. a and they the are -- low the Tyson needs, regard came think us think well. in, going the our, do is to there that with pace Further the money time. ways it is new of to member because where negotiating have action, needs default, mentioned a I for new in what soaked of deliver a it is larger already the is onto very election, take if one for that But that you, and it's product to different presented into our so it outstanding that business both course, to ultimately, just are with service. you're a us assets adoption way the And It's allows the can very start over about the the term, elects us product. happen and had of our of we a that's it's reflect and members that material good to happen. with percentage a hope But they're for our better years, think of you product what to rates over. But enhanced the and very going it employers over -- here that can the time. to soaking -- election course enhanced lack But money bank baked see or site that's of of on and can initial and product it's something little and costs of other days have all good and earliest some few comm. lack but are good the course is as flexibility larger is existing We this elect I of they getting up for cash to rates also process with. help didn't that to back X. be a

Sean Dodge

you. helpful. Okay. That's Thank very

Operator

And thank you. And our next question comes from George Hill from Deutsche Bank.

Your line is now open.

George Hill

And flesh season of Tyson, detail and couple. next both the you year? if how I And Jon to yet which a follow-ups, calendar to Jon, you're talk guys. from, then an evening, on the quarter And do you them which I of that you basis? try CDB revenue enrollment any one not and think you headwinds them 'XX, Good I'm open keep have what Tyson, taking the the if should you like you right two going Jon, both much guess be, annualized to the to thanks but quick. then was, did it, then, degree for guidance, first able quick into guys for a how and real Tyson, fiscal feedback end in at the for the we question. how Yeah. away you my on would [inaudible would have willing walked be XX:XX:XX] to the pieces. see just to big moving look adoption about now. big tailwinds ask we're going Tyson, out for as this about see frame could I'll

would be super-helpful. I that think

Jon Kessler

we'll your work with our start and last question backwards. we Tyson? don't Why way

Tyson Murdock

question. good Yeah. That's a

pulling Just -- here. I'm something up

we've we've what really, but about the when tailwind and balances mix mean, relative a that to been I assets outside we lot. market, had biggest When tailwinds become we talking balanced won't we just look do everything think growth won't see. that regurgitate just think that about rate, think get we or that well. you really enhanced about said is acquired headwinds the vice as I I continue the versa, shift, grow, I shift that really at to you

the take of shift see So mind, place a that changed in lot those this ourselves the we up. more partners And positioning business really rates Again, going my I before, really the ourselves the various going a and competed long is we've with. morning, we're in they seeing positioning has will to what to are already to We're said we've assets the be and and like news I to them, as started better term. inherently. way eventually the have work probability that to if rates advantage that against of

headwinds rise, rates may eventually those they business. about think even So for do sounds the so we're real it and the expecting to sooner. When I like

how think that I utilized is think about you think utilized. of ways how you can cut you about think s COBRA are employment both when FSA versus how about

area does cross-sell. so is the of get that us that's it the the CDBs, but growth do big it And of which business, you not really waters necessarily swirled what helps to

places so supporting the multiple always, part, accounts provide with managing spend, for are And about they're powerful so we And trying work spend. not have the types a not go want benefit -- even multiple where to HSA where We're question, it for deals how doesn't we that other headwind team. some really particular first back going our people client, to act of to to Ted those maybe something the at are how most deals long able there don't that's where is growth. profitable we're revenue, end multiple relative offices, we and necessarily to I the of that its HR sign pandemic integration. of to decisions the are to vendors in that and for overall what now to where that are sales the Tim through small, think and just does manage the then how and now forward the And platforms base very go but on. And very, WageWorks those the we

last those like in and But that question. I of things. know we're making that of I ones, accounts things are as types the making care result on and the we're like a obviously You of that and headwind two, are business those think the healthier got feel you other we a first couple mention some of the the of will child that. those

Jon Kessler

a the our kind at of over a part first Tyson's in way, the on first hit sales builds so, not the source HSA quarters. three look I is a year look I'll And on it see much builds what I openings When year. last and of three very the at market middle recovering one quarters of -- tough first answer. on those, that the from over is

before. I've more last from market market particularly what looking the than consumer are that in quarter see my And as how far indicator overall. before, it come backward and have best the looking the year, have we'll tough Kaiser last next well to really others. always come enrollment all year backwards, were which I'm that has we out, in enthusiastic and quarter total sales But, year, see said, But my You a share of reports so I what of And is, about, was as evidence sales tough than took regard, next anyone the now anyone like, last my in has, enrollment turns in sales. couple weeks as look that ever of numbers as ends or quarter for is know out and we as terms the what here up of like. this looking in good, more

and manage And one George, talked the so is that the long-term Steve opportunity. to guess Darcey I same business my view, And you the I we about. and try towards is long-term general opportunity the and

steadily that XX:XX:XX] as end has there Ted, HSAs we're when accounts to with there. with can up high done a these up to XXXks to runway mean, grow, [inaudible long-stay see that happening. about margins decade many about back result which a I that, and what's has going of talked now it's was think good we ago, start But are going but business small. as as going that sustainably agreeing you to years you out we're a Tyson is a are and just ago. almost over time grow, I balances Their many then, are end And going they're it. and to

to out take turn that one. growth that that top some see we're And position we sure be in steps to to make

some system taking building market we've kind things focused keep of it's of enhanced swirl. this Tyson HSAs. group with CDB calls steps administrators respect HSA build with to in what of and But on whether like. keep is our some oriented very what and small done and Further, whatnot, of some position solidifying with the lawyers them the quarter, products investment those doctors with and share to or rates momentum saw had we're that obviously whether in today the the Blue footprint to doing So you HCA that for to that's the our product has to more going administrators individual groups, take the small us going Where we're that in or

that or just expands, and going in that fine just all if for people market to to of terms, revenue be fine lot look wealth. a we're good terms, of importantly and than that shareholders doing going lot in be asset our more our perhaps in to terms, And have -- fine. of keep are in shareholders, terms done we're we're as whether and we account shareholders our fine, of going up, we're So going year-over-year, a long-term health, are connecting,

So but the and that's year that. after look next after the view it the my actually both way little year blather, reflects like of that a bit sounds of I and year I at it. know that

George Hill

Jon, I commentary. appreciate the you. all Thank

Jon Kessler

Thank you.

Operator

thank from you. Donald And next comes KeyBanc. And question from Hooker our

Your line open. now is

Jon Kessler

Don. Hey,

Donald Hooker

Hey, afternoon. good

like to you guess accelerating feels are an invested And some that's of percentage and -- going I really trends that growth reason stocks can forward? it different just guys is about in seeing invest is -- asset little And that's amazing into I been we a wondering, you model. the your more you HSA or members HSA drive always difficult almost think So to bit. are to that bit a was anything and little bonds, talk should or how about doing there

Jon Kessler

I of what -- long trend a this and the drive the is of on education Ted, have years couple over last direction. this and in done its of our in to for you the really terms worked teams industry for one hit And great the product to course time. think accelerate this a We've

Ted Bloomberg

and clients, various in I then all also our with ways the Happy we're to you of your do for services next the just doing. getting for itself ways, sharing but can, Sure. jump think with heavily optimize be educating one to you what's in you employee that, in investing in member multichannel it's it's call, you in. marketing when product to actual as and an thing both you sure, best topic the benefits, this And you of that of

your little much it's thinking more. lose of you don't not about don't focus hey, whether FSA Just contributing stack or why dollars why has you been you're for we we should you us. noticed built in you investing? don't start them as spend a up a be, HSA, operational in huge as contribute Or Education your noticed so cash you

other and members their really raising of are that investing. of in of in one members their up, shown that places just places seeing percentage We're number too, contributions and identified I the number think in it the of and the has members you FSAs. the spending is are that through

a the in a We've but innings years, program we're lot of more think over couple across-the-board, strong the do that I we in here. notably but industry. pretty still built can this So there's middle last

Donald Hooker

threshold My follow-up, a and this natural answer, there a is probably there's I cash past I'll anyhow investments? the to is to ask is what in about way about but impossible and there if some this, see we've it updated is -- Is for and thoughts? there a way updates? think it, -- there? know Any the any threshold natural talked but typical

Jon Kessler

to up expenses. enough the talked my you'll able to build you at little wants or we people Is you concept accounts. most The asset be that But bit see in to their about see same the typical this. cash look this -- a mature think will and on bit -- a before little is what typically, also chime that liquid when dog I handle near-term

note little And interchange that that's commented really among on the I our a And spenders. stir. so any way, that in reason even bit spend contributors, grown, are the the drop also of one seen is, HSA to max -- -- balances have that there it's important that by as in haven't you even off

to would cover longer-term look that maximum, it's their our some that, way investing some deductible out-of-pocket this you in which people number, see up and where can behavior small there's accounts, for It's you'll take -- focused cash expect side. investor. So grand, and average on groups XX to kind that a think cash build this, the lift switch, balance to totally of Is enough see quarters the X XX whatever. were your further that's up. an done invested so continue end you onto of then they of the or you see have annual And maybe typical think, of or or business at balance and I'm look tops where we that tend at their to folks these and somewhere what of, folks, quarter you investors been it annual so about if that's give is, that who a I grow and $X,XXX But total very administrators with you very of kind is I that's sorry, and X not cash even to HSA between to when off think is -- $X,XXX. individual

Donald Hooker

you. Thank Okay.

Operator

question Schoenhaus Scott from Stevens. And our comes next from

line is Your open. now

Scott Schoenhaus

holidays. Richard. Happy Hey, Jon, Tyson and

to guidance, just conversation continue wanted conservative more the HSA. around you are seeing parts What's sales Where the there and in opportunities that moving growth organic from, on are new this the you they understand rate I So strength where driving can was customers, talk million XX,XXX roughly employer/clients employees and believe XX legacy touched. Wage on you I the about the of there? cross-selling terms

driving wage, the from you're seeing what's sales acquisition? legacy where growth stand the organic the do strength you on and where So

Jon Kessler

of ask why Steve, out out I you're market, of our to there. what Great. in you, kind the start Steve, see in you don't terms

know he go who deal. those don't anywhere For Neeleman, will Steve for a

up he'll there. tomorrow out Charleston get way afternoon morning, I say you him a call this and You need figure you in to

to and cross-sell Ted, on Neeleman start maybe with I'm comment So you the going metrics. Steve can then

Steve Neeleman

thanks, hitting was pause been button. the last And with just Thanks, year a Jon. the Scott. encouraged. COVID really Obviously, and tough We've everyone, year

been at account growth some just was still, it's during seen you've There think I when growth. we quarter -- acquisitions I amazing look new there, but and see to these XX% a that numbers, $XXX in the it's numbers million the of reported.

tell you, shaping where we end. we think I RFP are up season and so can the in felt the the indicators, towards about started great good really world, these And leading

ever larger beginning sales the in -- we're the year of get Some and mode, do are to a But cycle the really ourselves you going the if ones, still, in things do saying if enrollments small if big very of Cheuvreux like bit still real of pause lot people was And deals of the up COVID still was you hurdles, -- mid-size to at would And feel not you by mean, a the little are this and season. lot groups, to do employers listen the like a raging, that was, earlier think when was would the about that really now. asked especially you our still getting for everyone we're prior were way. closing let on that there's they that. this we back questions who yet ever energy. of And right this small businesses open one I finish how

still in. busy that a are very people yet. is rolling This haven't We for groups time

because are the largely in and think you light CDBs, on all They that illustrated take can have and education it's do every HSAs the rolling so of HSAs. that pretty bring it our to a I we there's employer really away off, doesn't that bundle about the retained a start lot and full some energy, change time a of our And great but bring we we some well they I CDBs, into of reported to results go to can people when are account things been employment. start over retirement value mixed growing then an on and numbers the tell they

CDB the HSAs initially, going really down, to up. but see, we'll start go the Sometimes start

going I part I to but that's whole way energy, of seeing the why of as -- s that that I Ted, one the you and so classify like think And how this is since would down reasons that. some a Scott, you're world the things your would is FSA add of would lot well? of

Ted Bloomberg

you sales Steven. putting getting efforts our you than shoulder for like people. thanks, And planes And thank your most Yeah, do. more behind on

as imagine of some see that on efforts get because to our cross-sell will enterprise no progress break very the early all wins. couple And but can just answer client part banks, this you to I've a was last encouraged that's by depending number We to whether year capability de as don't is I us cross-sell question think because saw I draw the don't lot for Steve line is. cross-sell of in reasons There's think employers. novo where which client that versus most And the money goes you both descend to opportunity cross-sell that's pleased matter opportunity high, cross-sell one alluded cross-sell, past employer this a Xx is -- started. directions, base small to cross-sell is, specifically that Xx why to close certainly and hard lots success thus out to them. And they our legacy our knows the We down And is, where a is shared are we've I a and vast but success. far. employers, And rate success our year, that rob really of straight at then in place one, and the and between it's the of. had we're where the of service. things the with here majority year we're into focus of into a metrics, reiterate what our we medium-size been cross-sell starting we've our and accustomed a of second that

we make that look think the do getting a able there's bundle point better And we're credible being we're getting for last still -- it. was able to think offer to this I season, space would ton our of I being progress second a is selling and and more to forward at us. I So white

We have with XXX product right? And hundreds one to enterprise us, of us. only our our top clients only medium-size with small one have of have clients, thousands product

just We should far, this I unlock opportunity time. happen. a think and to makes for to a long us that nourish continue we're thus the it have experiencing trajectory So

Jon Kessler

may Ted piling is which talked point other on. one been whitespace. about make here, They've cross-sell I

whitespace I how really think, competitive outcome is and for again, asked in realistically I long-term, not terms better shaping looking the up. both now could of have a

are to retirement U.S., which good are walled garden. competitors has and management But are us largest whomever. health you're its largest we're walled the its the Our about with plan plan garden. investment work which the an if U.S., nice going in is, the largest employer, garden that there And has things about walled thing you

strategy, We are not lock-in part but even their better. of

work in the true true our at this retirement, the be consciousness. of large continue If But can is individual many the such But haven't yet, means And HSA, a you case to that's technology trying in in alluded with for way, That in will a can products. and ways. true we in deeper in in up know this is partners the quarters. in deeper HSAs you you looking also can, lane. Health that group, technology it's little HSAs continuing and and compete? the thought [inaudible of even our the group, that's few channels are the a lane of very that in be it's way, be such evolve in it's different so to and is ' or of not is next competitively small the as Line, it's you're APIs, evolve and more partner to that I and I from a And that market, continuing a so true into And that our deeper want mature consumed it's in you it and to shaping the embed ours, we to in those, large And you're true only penetrate other a perspective, see think to best to true platform we lane language market comments XX:XX:XX]. and to in both us. and

sustain growth this in continue year that's of that begun think will after another try help I So us helper over a we has share number after to thing next year as and but cycle, year the big market be years. that to

Scott Schoenhaus

you. Thank

Operator

you. Thank

comes question from Larsen from BTIG. David next Our

is open, line Your Larsen.

David Larsen

number in Hi, the Congratulations HSA That's on of a growth accounts. great.

ones. couple been answered. of quick already asked a Most and Just my of have questions

bit to why revenue, or that been With any than the then one Delta going you reasons will be have Do lower the not? thoughts Omicron? utilization Is on an any think do impact variant, the expected. was there color you And a have interchange helpful. have just of may

Jon Kessler

one shot add I'll Tyson, at and, take to like this to a you'd it. if

I Delta that for had think it seeing. us to with were it the we results very difficult we interpret main challenge is, that made

about last had confident second a most and and results of was the account off false when as strong part, signal saw this you began really of were. quarter QX trends up example, for we month it was bit in a and that quarter, that the July, during after was and occurred, where spend which that very your wasn't So while uh, turned sense when felt um know And in -- that out raging, followed Delta very the run for going the we began. that

I think and interpretation, that still would of about, give quarter year-over-year. that variability rock the withstanding one it's the for HSA note particularly interchange during What was in challenges spend. that talked And solid. another of I not answer, creates to difficulty was CDB not So reasons up is why interchange, these you too that's we've though, an complex factor X% just

HSA is to say, so interchange And that that. more up substantially was than

We're the until we're or order less sure to why growth most won't We'll we've I but regulatory spenders. that HSA have sort to up That QX. their we what but for that be. thing. have kind it resilient -- to one enrollment know what And spenders know refine, what and also we'll say dynamic what of to but are tried we so that so We'll to of for But likely spend anyone as the also taking -- we're that's than those going what the that if in not to to impact, may the balances any interesting it they FSA going whenever our we core fair effect where can for better than can to are their of to look and they know spenders way clients need buy earlier as our can the top fundamentally, need I'm in think in by really in HSAs forecast reasonable we made we're going can't continue money get. And of take employee commentary. I also that that initial until that skipped you. it have clearly the our spenders. And over did. December economic think and business. profitability enter to, learned is they changes can they that that's HSAs. I didn't effect balance well is as impacted they we learn we they reflect during effectively than those is the reflect growing as interchange by And Nu, certainly lessons our CDB last reduce in spenders uncertainty need we to some course deliver to they the is an that faster in is, and we other FSA now. at. November a lesson don't Whereas, our the that the January. also growing are to else visibility more be QX, weeds But the Omicron where see deliver that top annual pandemic well And as conditions we But our in -- items, it point firms, do do up

David Larsen

Great. Thanks much. very

Jon Kessler

sir. Yes,

Operator

open. your next comes Santangelo, Our now line Jefferies, from question back. Glen from Welcome is

Glen Santangelo

back. taking use put the of good to that Could around for fell the correctly, my would It trending is pandemic are maybe the are your It's to off listening previous you you your Thanks you yeah. words, up, some the just CDB than want maybe comments it HSA just you the FSA like more to comments of be Because have of I thought maybe on questions. some effects on Oh, your ahead expect I the follow hear heard Jon, sounds business I greater on sounds in business. some business. shortfall? of to numbers CDB what than COBRA And the schedule, some comments questions. like longer, lasting to made. if

$XX or don't put so by the on in It on HSA. offset $XX maybe -- in the million, the I bigger shortfall shortfall like dollar I guidance. EBITDA being of And it revenue to I than calculated, I million it's benefit when context maybe relative think of million know, that, $X.X sounds some much million $XX

Jon Kessler

and we on, or add of end factors the essentially CDB. is of have HSA think to point QX of outlook performed, our outlook Delta And as the is our either it Tyson the a all has or in you be. ask would current the these to I'll result at to between where now at say, of business slightly ahead I outlook Well, but make key current expected

more down large, I footed things. you really side by we the delta rate commented - I boils that the would I think forward, Tyson, sure is key earlier, various we're point as to described of feeling that CDB go factors. the particularly to think But on the and you just add to like if that?

Tyson Murdock

there. did some I math mean, you

to back So just go that. I'll

saw. interchange the a was follow-up to really that conversation exactly again, little largest the year-over-year, accounts, CDB of that And that's sequentially from those right, the of slightly. had. up softness we that on think coming FSA down I we've fee bit related just still Commuter obviously, the but service portion then XXXX/XXXX And and

that And period. margin, in kind on that there. Really doesn't there but in bolting enrollment have provide particularly is QX. then a Further not that you piece math margin So other revenue, in lot the QX provides that -- big of of the business of the seasonal

that's the math you've you done the differential So between two of that there. why pieces get

Glen Santangelo

give but consolidated the follow-up. maybe if Maybe this, I yield And I'm did in that? just Did sorry missed apologize. custodial I you quarter? one just

Tyson Murdock

We have XXX for is that year. and then XXX the guidance

Glen Santangelo

X-year rates enhanced and XX we're flag from to heading bottom terms that of the basis basis XXX points, this exit we look we be benefits you rates If should at that and about X.X the strategy? trying Right, your CD versus 'XX, as in sitting points to being program laddering your at into maybe XX fiscal XXX. 'XX

Tyson Murdock

comment. Jon, let me

Jon Kessler

ahead. Go

Tyson Murdock

know get assets off the then rate real we we rates, placement, enhanced the doing think very think as do we say, goes are we're we'd started our kick higher in we Those already commented just and for good with to assets, -- it's off important, that got them, we Further really -- I our was FDIC. placing I assets those I'll and rates Cordell on And about ago of where I November we merge we again, year replaced because I and the a with it placement is in rates. so when versus say forward going also but was Xst the before, things a Further our I that have real there. -- when now kick come place think as

And the they were first so year. the of those were higher rates than part

of other. that's good that's on competing against treasury doing So part negotiation that, part each those And -- rates our the team. of they're

to starting multiple takes bit it to you're this John as the rate that tunnel I as that of the of below December Pal(ph) again, on that you end exciting, to years from in light a and about going the turn said based not rates see talking The a ladder, other morning be how pretty little we on it wish that works That's shift. too, to inherent way placed it recession, still moving corner turn slow be saw those is right? the but is that. versus at starts rates, we're higher of those It's that part there all-time up it we're will ago, around, but last still long-term on from view assets, two enhanced it three at like and rates going doing It's and what going only based is that or down. helps we a helps up how again, profitability also because up, year on but being I it lower increases has -- is, but the not improved be March, said, next lows years coming been was

Glen Santangelo

questions. Okay. the Thanks for taking

Jon Kessler

I this said, be like. here. asking rate two, emphasis don't " to -- about markets them the you know, as CD of to or And they curve it's point "It "Oh, as part Right? a get my don't firm, one and where customers this Tyson your tone keep is and doesn't getting better better or I getting what cleaning have the could we again, of growth you heard a mind, But on that. what Greg's a market better speculation rates they action clouds to said, what to of now. -- of what And going the what last the talk it's forth. think and conditions reason in next would have that or so are Glen, do year? are it innovation bringing And as or as forward I do, And " we having it's questions. -- taking you in talk function stuck as to later. As we've doing. variability it'd back going please some And offer do another -- help that about just investors is or about the day. improving. well and team we'll tell other whether us a this to I me we this about story, if go that's that's of to is this, been And the do part we're you And to on going And with that love give up topic. on over would year to one price about function HSA we course us initial thing When like price year not

Glen Santangelo

you. Thank Okay.

Jon Kessler

Yes, sir.

Operator

you. Thank

Jon Kessler

end confidence-filling. I like one. you say for It's the at that. Thank each you how you of thank very doing

Operator

Okay. Great.

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

open. Your line is now

Allen Lutz

taking Thanks questions. for the

and question you the likely guess, Tyson, so think here the doesn't to were more XXXX looking That's deteriorate just things COBRA, for are then wind Commuter, in on back mean there's spending to FSA if X. happen what to that higher? about accounts think level XXXX basically FSA, this interchange, Going But need down that are that more interchange. question level be forward this the talked customers interchange would what I I shortfall closing, to across a Vintanges embedded from for would here? XQ? X, about from Thanks. is expectations And, And in they causing

Jon Kessler

Yes.

that I saw where QX saw part increase over you bit think time in good that it and hung maybe we hung was out that would that. because you spend that I that that's a question And it of down, longer, but will, little spend, -- was if period. would've have a suspected therefore

doing it's other a I year-over-year, was from the read a hard think out to and were on bounce it think reading on the back other people pandemic read I it, it, that get on right? it Because more. was

but we And two because in So change, together those. difficult, right? of forecast proved the our coming we get that tailwind thought still like we second half up to blending those just things saw it a didn't grew so and with then be that we

So but be I re-enrolled think we will, away, forecast. we and season away, I'm little the a over a up and or again now more enrollment more to to people the next saw you where optimistic January go few go year into topped is maybe those accounts accounts and get are we go these maybe where into they're normalization, if easier

Allen Lutz

Okay. growth And based somewhere the 'XX the math then XQ versus of a between my organic 'XX question guide. It follow-up in on 's going is to XQ that about implied XQ range seems decline XX%. on Glen

So embedded not that's B, you're can and accurate you I clarify within is Thanks. that decline? spending but what more know whether on else that or technology, then

Jon Kessler

thing, the math are they attached that think the quickly, that. we done we the have. is them, directional on. buy we're think can most you've if in I'm would that math doing fact necessarily we margins on don't just some don't But acquisitions I acquisitions one here know I'll and the that thing have putting margin we business when that the that drive But not the trust get that to I but the improve

our the a those, to All do margin they obviously yield, that. synergize are those single because them just the without that's onto to processor. margin. the get that I deals improve and and come so that acquisitions, different the them, with portfolio like does platform, in And single-service, come to operational people, related to in to assets higher single improve job, And is things team

of of And to millions is highest know, And again, dollars you that, talk so the that of missing some go the CDB the XXs that and low-hanging fact line business. and our you service you revenue commuter there's then of items high-margin get commuter of one fruit back the business through into fee playing in that. businesses there, to on about

It's at but that nice like I'd So and back. come the to did will insignificant see back turning because create see least a point, we it in and that went a that. way come turning point started other to tailwind

So there. those are the X I in are things think that

of to you're I And custodial The but too, rate And is and XX things, think a some you starting points basis the think revenue around, it turn that yield other we're to certain one these all to about really is by that, that's talked Allen, generated there going guess, know, we've when I produce and produce we'll before, of where that's that to these the making things starts getting and year-on-year. comments other are to about think profits. the decline of you I And start makes point that these profits. business this how that fundamentally happen. margin

Allen Lutz

Thank you very Got it. much.

Operator

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

is line now open. Your

Stephanie Davis

guys and my you Thank you taking question. thank for

Jon Kessler

Yes, ma'am.

Stephanie Davis

been has a year, really It long Tyson.

out remaining step your your thought on funky fourth from account Do And assumption there to zeroed the of leak forward about me this. go or this views CDB your have we think any talk guidance we learnings in quarter? example set philosophy? to to towards to then this forward getting any for basically as Commuter is going recovery? how should type about return you spend patterns and improvement changes So Is be

Tyson Murdock

Yeah.

is still, this crosswind there of get and are straight, in you a I'd lot articles to do that we read trying HSA. see think even Fed go and a We I can to, that that about of We stream. pretty lot back the idea they this what you for the with do think to think to rates that? particularly around. we preceding revenue that out. see XX:XX:XX]. are within good there tell I on being about think we crosswinds what if because will it's that immaterial a [inaudible course, about When of to can service do a Again, The stick true you think can we And enhanced come able HSAs yield to think you'll and can amount. get fees difficult HSA, same up very forecast, about forecasting when you is you of

don't kind these And that so you of this of and decisions have flow and ebb those made. annual get

as other getting is me doing forecasting HSA accurate business have. that and Which to business is to is grow So services doing the acquisitions well. larger the what to we're these with than what the exactly organic exactly more answer we

the that pandemic the some mission, Ted these get from what of about what -- That's team. that's learning everything so tough to And wants I and team the I solve issues it is it's think fact I we've tough and there. the talked had with the fits will to else, to of that do, given my it swirl. some But the to and

So the yes, a over I year. lot have last Stephanie? learned

Stephanie Davis

be levels upside? at it's safe for focus of guidance kind of use yet as say then world the more that the to run there's unpredictable. side going so s it and of those more then to rate Would you're since HSA But of least most on CDB the

Tyson Murdock

no, really us just of not there's HSAs. X% about it's right? to things helps that but think that you're talked I think about it's but revenue, enough segment. I of it's we Commuter -- It's sell for something when here, and some us you Well, So a think CDBs, course the of talk lot turning, about

focus on about trying like probably to growth say, forecasting we think we're So I think what and how you're to do. right, that, I'd could fundamentally and HSA I that's more

Stephanie Davis

Is or to a If on a that just how way Okay. guidance. one long and rate? to it take about fourth this the see we'll quarter an around quarter one EBITDA XQ EBITDA think out to quick And in is deal-related number? for there's margins? how be turn going should there sneak the we tease where the run XQ Is impact should improvement acquired can I to something

Tyson Murdock

two timeframe, business got EBITDA. happened we you doesn't the if I in of there's But QX example, on things have think the the which mean, they've revenue / for million is dollars season. we That's fact there, QX +$XX Veeva margin, put business a essentially QX million numbers something about won't for really less when in think than have with XQ. $! it's further that we any, fact have it, relative because Well, the rightsizing when services that there. costs going to into that drive we about in out that the dollars

all some can there business and know the on able the we wage we efficiencies just business, we've going how associated So there's of do and had take the out. within to create to from we're the in costs to the that ability part learnings business to those. And be that

some those off think of they much the seen some that a build because improvements, to and business. the true we've besides, base those for is kind and to same never wage able been thing there of of Further You degradation us certainly as but and I in that of of CDBs, make of these are gives

Stephanie Davis

Okay. Its you. Thank helpful. so

Jon Kessler

Thanks, Stephanie.

Operator

Mark next Baird. from question Marcon Thank comes you. And from our

Your line is open. now

Mark Marcon

question, rate because wondering, and would rate yield still Wondering in interpreting off of to would regards little stay and be you low Peter's it interpret that bit bps investments things as rolling things to X years were because year, 'XX. of with about we X the still next were think how we're comes answering we're " to mentioned program sounds good like way one I'm going down enhanced it you "Hey, Another the Hey, for terms steady ago. taking you be, from afternoon we the effective a probably about way the to do think XXX when to thanks Jon relative my discussion, questions. the for

However, in going be thinking important 'XX help you expectations. because to of terms terms obviously that, about could of provide some in sort setting of that's

Jon Kessler

we've the What in downcycle, But still and had and that is part be forever, like a it can. I 'XX a it's downcycle. process the our past Yes. It here, 'XX. 'XX we of in repeat and I is. fiscal 'XX and feels started would will this

cycle. will be will it of that so it third And the year

this with to fact it was think than banks And add in means which expectation can necessarily know said where and XXXX I that done A. more headwind go so I going I what But as still in benefit headwind underlying rope what and end, clears, of And that smaller then competitive the -- than year, yield you that as and prior end being of: could The the year. market I we be will last near the lows deposit that the is, enhanced have and period. the selective a I think our dynamics we commented the when that was see the all remains end of lose we in that product the is, the saw the that we'll that be, that better the have the that little will somewhere case think -- and the is that smoke is perhaps and perspective. particularly repeated, a rates fact from post offering. to terms can the we're we we are be in a improving uptake that to We are to don't

that's I I you is, knowing way folks end it do in year. where relative seems as to next stock and pretty of where like XXX sort thing. the long of have, I think that is valuable of this as would wasn't for time a time, guess confidence, I for with well suggest in we're It trying to that improve a who from think greater a modeled that cycle think a Or we that. going we rates. degree with -- So the we're have interpret. But going as to

Mark Marcon

getting that just those? you the absolutely That valuable. you in And most tell the then are can recent yield us effective placements were for what terms of is

Jon Kessler

the both will a this historical Yeah. view a I was much. of a that. reflects think kind our say going Again, and low end But CD. though on bit course that very to, we're the that Earlier We've perhaps been reveals what's last if and the think of I premium effectively mentioned low end banks of rather the greater don't at about premium competition it of our That price. comment year, the changed I take, in let before of it we and compete the willing for of was the on And that was as and question premium -- underlying because even at asked market we know, terms X premium, year. the market would know hasn't year money as has over year for price about the of part of which in going forward. as to the banks to X ranges. improved the someone the or happen it earlier, don't you and I

should So enough can little interpolate. you it's and better that a that you give gotten of kind

Mark Marcon

then And companies, answer they've you're What of are which about to, was I earlier how terms a this seeing in shift? the question on great. That's for get it. enrollment there an lot HDHPs through season, of didn't thinking gone you that for

Jon Kessler

continue. general extent, talk because the conference earlier We'll and played those $X about million like, that, closer first the question or the think that. pandemic. cycles market, that than million more an didn't are market $X the to they I I pandemic little in by good. in are endemic, reflect they and was, I that back and are really leading on call, and JP if September year the some about my QX the this in well, that they But of the long-lasting are But to market a to to firms say they're a arguing all, growth go period? Morgan much I earlier acknowledging nature I the the of indicator less something second going was much said like, do of results it as arguing -- January indicator when was forces the to all in view like of I there, get all, And I broad -- the year, is know, enrollment more to but something was that were And and than we the grow more did have

rate that fact all this to had I that my that high that market's the X here But million of to over the Certainly, year. of a basis, we're getting calendar this XXXX. labor we're taking basic force, that closer. for people So looks back enrollment And labor what like in a helpful a X.X seeing the -- we're back levels exception and rejoin not is time on the more we the force, then view, at accounts still employment view say I join helper a the net But knows, as grow in we've guess time. I'm pre this cycle regard. look Mark, whole. kind million in still, just more and Not to has not -pandemic to And regard. pre the long many on everyone that the sense as But at still that we're it there's in normal that people. said going in it's long, extremely is, more employment

a more like look to year I going than prior think reality like that exception. is this lot

Mark Marcon

That's last me. really for the then And helpful. one

anticipate the enterprises? largest How been the record at And do regards your you even track you've Just dynamics would on enterprise share the currently? level, describe share great competitive to you enterprise at with the gaining of at level gaining the whole. continuing

Jon Kessler

one? Yeah, you hit this Ted, to want

Ted Bloomberg

Sure.

different, in we ours, we're and at the I any you is industry, intensifies see think competition expect as that no would that. looks the like enterprise and first level

the with income. that rom our an f because an has partly think this been I interesting year In perspective. high enterprise sales are numbers of competitors -- large, stay

benefits be As people Covid etc. many to office, teams by return to management, burdened continuing are

those then people been been make more very have than based living similar of to some pieces people held those other have to out the the decision. But it that, think less the I retention our are in in out. fact rates willing among despite they've high. moved. It we've so enterprise, that our a cases And own that And by [Indiscernible] industry, probably, just business,

don't And we've I unexpected. anything think so seen

in we're -- There's anything out We from It expect. seen that's the crazy higher or the a we an small competition best in And there's iPhone of -- haven't put trying not someone perspective, iPhone one reasons and hasn't our return. still the preceding would space enterprise the pace sort enterprise trying come of market. is we're the we to where expect -- that's chips the than and to shocking. sell competition what Price XX become why mid-market of is XX. with

or continue small And space. nothing to you so large the seen though an been our value interesting and with you've outperform enterprise Even year, crazy we know Steve, to that space. don't our add perform and But competitive-wise. anything in brand if for a it's our I mentioning. to have extent, in there anything proposition market, mid-market that's worth service, reputation if

Steve Neeleman

No, right. that's I think

the with things working excited plans really Further that be got with. the going about we're another to of Blues XX acquisition, we're One is we've

I these plan Blues and team's to brought bring our health we enterprise other TPAs us base are also type the But partnerships, they plans employers. lot of of also the of not Plans of the to country. health a employers. a a I businesses. better the XXX other plans, bunch working small, our mean, large that plus lot for table getting plans mid-size go at to plans health Plus lot after through go large think Further after a to just Because

push, our been there's on years. man, going XX like, back pull this so always business And oh

about bundle, health first converge solution fact, your not work footprint. In about and I fantastic forces national but Jon, were talking really in with you their important we've got XXXX, full and the we always enterprise to plans, talking largest to deliver was and employers the the We've this those remember clients. to see to full starting working and got only where health most have started ability the bundled when we HealthEquity's you work now with plans, together the we're fantastic

large I a a full Jon, plans we wish. our so, got health employers. stable had enterprise We guess and of And full both of stable

So it's coming nicely. together

Jon Kessler

was market great that's to private a be admit there's on hospital -- look I spend where largest actually I system want that my the but which has the to distract think at like of maps is Internet that employer I call I lot moments of states in have one I'm not and think I site client -- really XX XXX trying unusual fortune they're and lot time Amazon, I in large But not to ours myself, was this, what the and don't And an having large that that you I getting was employer, of what's health can the the some a so site think that's was I and there's sector was make they Map thing was, to states. forth. the well. the happen all essentially And states system was point don't wasn't we largest so the And a chart from and employer here. state. that trying in is, a in something of at that One. employer was -- the say were a employer Incredible. other interesting it enterprise? yesterday's by it in I'm Company, of do the they employer first all, what a where real they of And

us, think of when at -- of budget. number looking So firms be we for other just that looking might whereas the of kind not those worth IT remembering size it's about we're factors, and at employees enterprise,

comment goal, and Sentara -- Health ways. in at not just local comes I Northwest Providence way, about to are partners helps and employers our local into think lues look relationships are And or those in relationships are near you or Care in Virginia. when effectively the other we're particularly, also too. that at. that Mexico, Plans in think from I Steve's Luke's huge St. focus, B us so Plans Blues in Idaho with These That price Presbyterian our start it's it the or And about because

Mark Marcon

That's much. so Thank you helpful. very

Jon Kessler

Thanks, Mark.

Operator

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

Jon Kessler

Guys, thank you questions happy to and us. for through everybody. and, for your holidays going this tough good Really with questions

wanted a but of what unusual times things with alluded certainly candidly to normal, on going unusual through the of very job thank is comply all, these and fact working some I to ignore is because far all feels have who for side Federal this moment with we people as As it thank given the on them Health through, returning team from the our it both our can't thinking it it we and circumstance take and best care We're to the us. not losing to much members due also And us no under different and to a with we about can who some Omicron to unusual how And really this Equity difficulties We grouse is -- an but to team get as team that. and that for these But contractors this our possible it's we're and team our lot. be and going very at doing are ignore made call, Tyson prepared mentioned for are one of helping decision, members past. Ted those wish We us thank working it. with that, are a have a but just of matter number, to employers for the smaller that well compliance have many we can deliver service worked dealing mandates, through trepidation that. the of both our and can our we're in Mandate are of us the QX impact mandate. holiday joy team also -- doing to. ahead some from Federal really Contractors the and perspective And importance at the not about not the are about as only about a to

you like of area a So sector all companies the Everyone in ours. is way healthcare same as for banks it's the think affected in know. I special

are or of on in many friends the same a Federal in certainly affected all wheels much the see appreciate our the a as go we soon. team unusual very keep And work And partners of holidays, the our everyone Happy client turning through Government, business. in way. several, the that way. affected are member to is I every our So same doing most

Operator

participating. for you concludes today's conference call. This Thank

You disconnect. may now

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