HQY - Earnings call transcript Q4 2022

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Operator

Thank you for standing by. I'd now like to turn the call over to Mr. Richard Putnam.

Richard Putnam

Thank you, Valerie. Good afternoon and welcome to HealthEquity's Fiscal Year 2022 Earnings Call. Putnam, for Richard is name Investor HealthEquity. Relation My Jon and CEO; joining me President is today And Dr. Kessler, Executive CFO; Neeleman, Steve Vice Ted Operating and Murdock, Chair the and Bloomberg, Officer. and of company; and Tyson Vice Executive Vice Chief President Founder President

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

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

predictions, information comments from March update forward-looking statements, to you materially stock considered our important to on these no are periodic business reliance uncertainties SEC. Second, these our today, XX-K risks reflect on or factors conclusion differ call information estimates, There view also subsequent remarks, by today detailed management's or future today. our Form to these you and made made will and that future as talk some new which price relating SEC, against to questions After factors other we encourage Kessler. could We affect turn risks be are caution forward-looking our statements and the future the our to subject host results undue your cause of reports statements our forward-looking statements in and over here defined over to of obligation the the review including responses she events. that, mike forward-looking These prepared placing affect provide to forward-looking may the our We we today. our statements or statements filed XXXX, as about also that other and XX, to might Jon will CEO, annual With assume and will or on and many expectations, latest the forward-looking. Q&A. of results, report Valerie light market turn the may revise discussion that of of to with our we instructions

Jon Kessler

Q&A. will assets, XXXX. And Richard. fiscal together we're for with billion today. accounts. results portfolio Hello, for HSA XXst fiscal everyone high Tyson providing January sales milestones. details in whole thank we during and us. us FY the custodial, HSA a XXXX total and here the we're million XX%, operational HealthEquity's pandemic. year-over-year, margin Fiscal our with and quarter both discuss the always from tempered of metrics. year. million and guidance QX to of we slightly the $XX.X Commuter Today, It's ended HSA Ted time, million. as interchange provide ended ended will XXXX of I for Record in impact for fourth time, fiscal on announcing fiscal the and fiscal key will results up join we're EBITDA joining cool. XXXX is rate financial the better down and reflecting Steve Adjusted fiscal is All XXXX time XXXX crew of guidance and you $X.X XXXX which the every results members $XX.X on of for revenue helped five fiscal long acquisitions fiscal effects EBITDA on grow XXXX, and really $XXX in-person, Starting, revenues our then reporting members HSA with adjusted and margin first X% for pandemic's based headwinds XXXX reporting provide million the by $XXX with

delivery me for speak key HSAs investments custodial the growth custodial HSAs members portfolio and XXXX driven being significant driven of core, assets our wealth, up the driven FY of member health partner it to invested our allow moment and contribution growth, XX%, to retirement for enterprise. XX%, growth. vision improve. progress balance ubiquitous as we growth, XX%, client of a the believe as metrics, is to with mission the also the and highlights accounts, up team's us the on is growth. double-digit growth, a up and durable driven on This continued it's connect to Beyond up towards highlights assets HSA Leading opportunities is XX%, HSA value

COBRA directed uneven you employers, However, total and administration. as benefits CDBs, services XXXX. know, our ancillary in fiscal consumer FSA, solution for benefits delivered Commuter performance within including are

bundle CDB and total XXXX, and As in in record solution HSA macro results drove the our FY Ted on growth. factors pandemic weighed will opportunities but migration regulatory net platform discuss

these to is process. standalone us. our accelerate and performance, many are reducing behind of CDB exposure we're to exploring that Now, challenges Fast growth ways HSA

Enhanced spurring over the APIs, XXXX. customer As on platform yields in are term are HSA changers innovations with final XXX the and facing boost our network among custodial we new note, integration adoption our team longer a employees. that product launched rates engaged part of raising partners cash, prospect game deepening clients' HSA fiscal believe

Ted call QX operational leadership, turn technology arrived this over CTO, Bloomberg. will added have Rosner, to We week Eli future Mr. these about milestones. our new talk drive now to I to including the innovations.

Ted Bloomberg

of $XX beyond $XX is substantially everybody. integration is to synergies several behind It key rate hypothesis WageWorks The my us integration Thank Good report proved goal milestones. afternoon, with migrations million. Jon. million Moreover, initial the correct. run pleasure XX-plus achieved annual our you, complete, well of of our attainment and

plans and were XXXX, solution to fiscal able that XX% XXX,XXX retirement clients, and solution Purple accounts could and of record. through and it total previous ago a years. grew new our partners prouder sales. integration prove contributed X.X bundled are Team clients Purple, helped other fiscal open to than year-over-year. HSA which administration offer has our a increased not our year total sales be and efforts better we in members HSAs more We when health benefit we member I over team bundle, our and our Cross HSA XX% partners sales XX% partner the to past year the sold of every more

this and administrators, migrations both early our the Third plan. And underway Cross/Blue Fifth among Shield an Integration with are to scale of from of continue from proprietary We further platform with partners portfolios leverage early month purchased completed. HealthSavings generate on these deepening HSA relationships from fiscal cross-sell XXXX. Blue just opportunities our additional focus and is in

As noted licensees. further Shield Cross/Blue closed, when now the of partner we Blue a with great majority

fully seller of from the business out year. will the carve this We this complete

see COVID-XX and regarding about help QX and team platform as and contractor the then growth Finally, I seasonally experience margins, our of infection the absenteeism remotely equipping concerned to of needs training front our delivering investors longer disparate pandemic times was from of members to challenging a due lower turnover whom HealthEquity needs say just the peak high team clients. about the roughly our lines Clients across and member serving Omicron team X,XXX during new I'd on gave internal days. mandate like external of season. impacts members Purple service their case avoided experienced Members, service us the hiring, What and scenarios the QX are We and new bit increased team peak a highest resolution workforce. just delivery variant marks vaccine members. pending meet teammates rates attrition. to federal migrations discussed, We and even entered of record combined worst to on for completed peak the many we the season

moment. implications we've While We've to to do the like who with our more hard, behind a serve and the clients discuss other in well Purple staffing adopted service. members. conservative now Tyson prioritizing to season our us, and than wind to with and our in thank more worked tireless to consultant seasonality a as and us you partners huge costs margin for so conclude in both QX will to out. broker, this I'd years peak teammates have and other peak approach worked is who process network a had as

I Tyson turn over will to results Now, outlook. and to it talk our financial about

Tyson Murdock

cash yield in to was welcome out grew from non-GAAP new HSAs. you, and growth acquired as revenue Ted. year. the revenue The with we HSA of will revenue XXX Fifth in not helped XX% year. new profit GAAP in in gross integration $XXX.X details. HealthSavings million yield was enrollment even basis quarter. XX:XX was annualized going financial revenue. investments and for HSA operations amortization the accounts a Strong $XXX.X be assets to additional increased decline for on in XX% And XXX,XXX year-over-year, XX% without and growth grew margin start together million year-over-year quarter XXX higher to Thank yield this in January. contract] total assets the of million Service offset And were for loss mentioned, as XX asset loss the million negatively impacted from we members of the as was intangible each further. categories quarter. I today's found ]sports revenue of of average to were while or to XX% in in million per the and season of in growth acquired yield pandemic $XXX.X the of basis last Custodial and selling XX% three XX% HSA quarter HSA of Interchange cash in quarter costs a $X.XX and in of assets $XXX.X year. which superfluous in press with further provides a include from quarter revenue with year-over-year economic GAAP fourth million fourth HSA X% of primarily today's benefit assets rate with from members. is of yield. $XX.X XX% XX% the the merger breaking HSA WageWorks. up results. loss Third Service The $XX.X XX% in of XX% fourth points the the GAAP the XXX,XXX and measures to HSA with point the out Gross release over share yield was representing on associated average representing reconciliation is with total that total Operating million, year-over-year exiting year's Net average due The The compared compared revenue grew interchange ramped expenses in quarter, increased $X.X quarter XX% increase million, non-GAAP million the $XX.X HSA quarter inherited spend or accounts net blended revenue was administrator forward. press in the fourth to will X% in QX representing $XX.X yield cash our or represented HSA income compared per including in And growth new revenue of acquisitions share all revenue the expenses, revenue, annualized EPS year. basis effects and year. $X.XX including cash by $X.X prior The yield Fourth A XX% million to release. total year-over-year XX% a rate quarter. prior the measures for benefiting to yield X% from on growth previously of the table and This HSA review was HSA of additional CDBs interest open has for quarter. our

compared impacted $X.XX EBITDA million to income adjusted share service EBITDA income XX%. net by adjusted ran non-GAAP Our year. Ted were per cost quarter per discussed. quarter ago. the million Fourth to Non-GAAP per to million was for Adjusted share share $XX.X was EBITDA quarter year for a the $X.XX margins $XX net and $XX.X as XX% decreased was compared margin

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

sheet. balance the to Turning

XXXX, fiscal XXXX. undrawn which from debt roughly a The XXXX, issuance fiscal we cash we net year-end. $XX March Based XXst, year-end in had includes million HSA of course, which closed and in where following end and on balance, cash cash will reduction costs, of $X the outstanding fiscal Administrators equivalence, million of fiscal million in used $XXX of The QX for on million acquisition, company's now be January the billion XXXX. reflected Xst XXXX. more expect debt of As $XXX remained of line credit is fiscal of we $XX with at

We XXXX million and fiscal expect to $XXX between generate $XXX in revenue for range million.

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

fiscal yield XXXX points. decision to results. This We raise to expect on a and our benefit Guidance the EBITDA fiscal most HealthEquity service by $XXX and XXXX interchange be $XXX revenue fiscal successful guidance between fed the for approximately fed based rate. with basis from of XXXX. officials funds includes yield yield assumes season last early the and a cash Today's HSA includes custodial adjusted to XXX million of on recent estimate Wednesday's selling benchmark million

does monetary guidance practice, positive fixed placement such the as in multiyear income. as HSA not expected revenue of additional our impact increases you further our Importantly, cash on policy, hikes deployed a from in today's instruments. as would rates custodial or recent widely is HSA know, most cash. changes These and fed into however, is factor have rates of our rate And

XX% fiscal funds client-held cash, lift rate So, XXXX LIBOR. deployed provide in are in greater CDB, beyond. between to plus this X% and tied variable will rate of a to increases HSA Policy year instruments, driven

our deposit fiscal assumed the of a have over mix We rates products measure and of shift offering our continued guidance. from to XXXX course enhanced

increase associated with rate bed connected loan term and will future with expense to Our it also is hypes. LIBOR interest A

remaining XXXX assume and fiscal first fiscal about revenue With in guidance respect assume healthcare for account We with levels. will the and the grace With gradual Guidance spend what that only half rates revenue, our and disruptions. the Our per XXXX will we modest impact remain of with as its XXXX. FSAs. to very improvements impact of that as new no year. from revenues at benefits open uptake cause prior in COBRA Commuter healthcare we depressed off members, subsidies employment roll close runoff broadly from assume additional full further And to periods on we throughout spend assumes services benefited such year fiscal normal COBRA remain assumes variant interchange fiscal in FSAs year normal no that calendar XXXX, may subdued.

spend capitalized years and flow. in the and recent seen increased on fiscal as reflects can amortization cash effects of guidance Our depreciation XXXX our be expense historical technology development of and in statements

As you know, we don't provide quarterly guidance.

years. that However, expect from I we results want past to to highlight seasonally differ

year we maintained we to of year in tax QX QX, for second attrition the to the $X income approximately portfolio are Specifically, a share pandemic million fiscal projected expense, to and expect rate would in these our XXXX assumes historical migration capacity deliver of record clear, response incur suggest. risks. in is To full be than volume, the half will expenses in patterns full of related QX in reflected statutory activity, due The $X larger share XX%. This guidance. because and elevated sales primarily and to acquisitions, profits servicing platform outlook on other million smaller converse

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

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

Jon Kessler

and to it midst members season really, our season Ted kind on illnesses and activity safe Tyson. three record And unusual we've last starting of and comments and incredible both substantially made of regarding a the the through was that platform retained. wind done keep the were pulled Omicron CDBs, sales, has exclamation that now healthy on trying months gone WageWorks Tyson just team for This are -- an point off. a or down. within combination want and and to Thanks I four all happy peak completing migrations put to of and really been with effort and

And person want both that with reasonable do one there's us but who's no our to this so, and and moment our patient challenges partners for be Purple we for period. that, during team to -- thank and Purple, face for to partners, withstanding being our I take team that's the no and our a determination its responsible not do

you with Valerie? And thank open everyone. to up that, So, the let's to call questions.

Operator

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

line Your open. is

Anne Samuel

question. Thanks guys. the taking Hey, for

Jon Kessler

Anne. Hi,

Anne Samuel

color provide on within and could what bit guidance? EBITDA the Maybe are a that embedded more headwinds the tailwinds you little guide,

Jon Kessler

Tyson?

Tyson Murdock

Yeah.

script, And so, million, the out to in I in that's to $X right, pointed QX. going just $X come million

relates of on, that and portfolio within the that date again, were really, we had definitely record end We have period the vaccine CDBs. fact migrations increasing completing that We the of over that And the guidance. So embedded attrition is going the had all to time. acquisition sales.

factors So, lot of there were a into that. going

So the been hasn't case, Anne, in that that years. into just other current over And year. runs the

increases I about specifically guidance when on. the takes point million. for So, into to we of wanted the puts about course, $X to that you every our if that to morning rest million haven't television in, Then built that you and $X year, the you the of turn think the fed related hear rate out single

tailwind on portfolio, baked hear portion XX $X around we into aren't And under. billion, our about you get variable we know, would those, just of you those from is rates a that which So, bps. and as baked increasing

like increase point on the that. can And so, basis you kind do of math a

a included the that of in but course, guidance. that, not So into tailwind guidance, would be

lot before you'd account, so factor is COBRA of being of a that current repetitive that times year. take we I think the said in we've want to other don't have kind I this subsidy this into the

a the this was that year. so million prior as in upside to a $XX comparable year And revenue

So, to that you take have as into well. account

I Jon, anything I'll you stop there. add? like think would to

Jon Kessler

I you not it may think, relative rates. moment of optimism That because of to down know line. with be regard you a And, the I headwind at would still guidance. but XXXX to -- add. look this mean, to compared to all XXXX this case, I Anne, the drops rates course, just kind XXXX, bottom everybody obvious when that a being are fiscal in fiscal of our of course, right, of we're at

it look approaching XX $XX to looking you've in like what's fiscal at points, that XXXX. cash. is you way got So, XX of rather that's to But $XX million headwind And relative now a basis teens high right? XXXX billion now the than math, do can -- to

in -- that Fortunately, continue December grow. is seems and more said this become and since, clear turning pretty true around it our it's we cash that that back balances it's to

think going I so, And forward one nice be going to tailwind that for is us. a

Anne Samuel

that. I That's just really then, if maybe And follow one could ask helpful. up to

from Now that be look normalized thinking is kind like How about captured integrated, WageWorks fully forward? the should we expansion should going that. synergies all margin what of you've

Jon Kessler

with start one? this to want You

Tyson Murdock

Sure. Yeah.

in that that our And think believe. course, cross-sell custodial I reason in and CDBs do and over the right? expansion change we the And being it year, rate to inherent bundle, products. goes also the rates the But that able back this assets bought to would of to, sales on the we increased I we we -- made place look of time. enhanced so obviously backs improve way how the was new why margin just the the the that

way continuing to we're work that. so, our And to

We haveXX% programs. plus those in

there cash able most we acquisition cases. put to Now, are in in

as do And the so, get to that we'll opportunity. we continue

Jon Kessler

Yeah.

I that’s think right.

Anne Samuel

Great. Thank you.

Jon Kessler

Anne. Thanks,

Operator

Greg from of comes Peters question next Raymond James. Our

is open. Your line

Greg Peters

Good afternoon Purple. team

Jon Kessler

Hello.

Greg Peters

in-person. you're that Glad hear all to

Jon Kessler

old are We back Greg. the back are one rules back though, part to We're in place. with like

Greg Peters

didn't hear no, I that No, No, in. no.

think that Jon. I you're me, I on think I you're picking me, Jon. think for just you're using -- just just rule

Let's be honest.

script, some statement. of areas but on you income I to wanted know in focus of the two in this I the expenses So, are that covered

of the at sales as development number, and at and technology specifically look Just a looking percentage total I'm and revenue. annual marketing

numbers talk so, XXXX just certainly forecasting fiscal been trends of and like in percentage watching what XXXX for of XXXX words And in up what's Can statement, in of to seems is income it be and those in the for those as line technology lot. XXXX? a the on both items that again and both about put might And us up those versus they've numbers your they're versus your year total going a don't you're XXXX, thinking revenue of up development but about mouth. you

Jon Kessler

I don't two Why start? Yeah. So, thoughts. the

expense I about what we, the if we're you you base opportunity for look perspective, all, from we've going you know, at of of to as -- innovation on return. if T&D an talked And First look at sort From through really income and really a quantitative see there as that make the you statement. increased is of be that the sort return the having been observation CapEx to continuing perspective driving thing there. flowing is though,

if to this little So, Tyson and I and come about will because walk talk maybe sales back and about but we you a is talked marketing. this of I'll then kind bit maybe to turn and through -- you before, it, where

Tyson Murdock

I it what number last flows much we've up develop platforms back added then good a that then, period on made been nicely there. see vast flow capitalize place was cash go at and line essentially this, and statement we of investing. with development And it smaller again that Sure. Greg a Wage capitalize investing the went in when in item. as It year additional how were time. -- we And and the we section some there. efforts as really acquisition, company, made over improvements And doubled the is our can and look you and to mean,

And, through up has come the items. development then course, that the over amortized line and technology has that of So time.

because So, through, you have of that, that investment going that.

think the we probably it. do there thing ROI get not like to going high through biggest we can that's said, Jon that's we're a think I can on and rolling so, stuff unless like And that

Jon Kessler

the both And biggest to with thing bigger then and is we're and That's I expense. forward, about it right, marketing a last there, we sales it expense, call metal terms what as expense partners, may our February just there, think the right? driving just the And December, the putting particularly the you through sales really is. -- from There's company. pedal going recall back discussion, of that's in Yeah. on in the and frankly,

And so, there. the wasn't to been have the I'm on probably and that's recordings prior somebody where you, that was tempted a the of earnings try why course, almost big So, I puzzle -- but there's like, it. then -- and find go, I'm, from enough record sales calls it and of expense? of sales come aren't you spending marketing

But but T&D, of think of it. snake, that through that's runs there, course. in terms -- is we still amortization, I But that right? that the see return I any think the So, what it. continuing the thinking the very don't we both forward-looking is, in is kind expect far. the it cases, about term -- really of be marketing function probably it don't would runs of I observation's of your eating eating this so trend going we about whatnot and whatever it's regard, Whatever the are. kind think bubble, I snake to when wishing sales right make I of not T&D, mean, or kind it's line a function. in in that's snake. through to you without just kind statement of where the I you're particular snake how eat have some,

Greg Peters

a a day. that's paint of to for picture, to how rest That's the for know the mark You leave sure. going

So larger fiscal than in And -- projected the for compensation year but XXXX. all for you stock-based the is a number XXXX year embedded for number XXXX. guess fiscal for is I guidance the lot this offered the

higher And It's what's of so XXXX you to for Tech and was development's running versus into a be number I and year state, sort maybe what up getting of higher. the fiscal marketing up the steady pieces sort is of little bit. but was trying it. moving XXXX? year. it reported Sales last What's -- for up, causing that

Jon Kessler

You start will on, want and I to come. then

Tyson Murdock

with the one and that of is -- is we're that the way we're Yeah. I way mean, the things paying RSUs. people that performance

so, simulations, using actually the value lot they value we those And amount. higher when a

that So up it perform. that stock because obviously, we to then our value then don't the on because increase. interest through it's performance aligns go -- ever runs and amount, Its it, investors' change it going want with the is So you amount and that based to you right? stock interest

So that with And one course, people. of is just lot reason leadership your happens you're why a if to that have back then, we going history, more comp.

if years, half less we've X,XXX, and a three you we're now, go back So, had two years than now and X,XXX.

So a lot but pretty gets big increase. a Not equity, do. everyone that's of people

increase. an makes that So

Jon Kessler

Yeah. to highlight. I mean, I just wanted

know like burn and rates can't of But look talking this topic on know that percentage We ranges. have just Let topic about back terms first increases. and we at this reasonable and talking because that pat been that we're is me like, it's in things ourselves on of about, sort in a the the we're on. we say, those like move that we that -- not the much so

topic just a that PRSUs. is They large that. the know, compensation do argue definitely it matter And mean, is Tyson the mentioned of it others And some that doesn't are the amount. control price with is is And XXX% not. the increases would why under when I Greg, valued they're price understand it. the That's as doesn't One, this do to way may the three particular, you it way, by accountants factors in earned. It ones my keeping of ever myself, they what I don't I if the So, time think earned. things they're conversation. I I highlight. about mean, that's granted. matter can't but those at It they're it. And

more -- other the we is here within as strength and work forward that, some to organization point strength are adding from point and both we mentioned I second our additional the let bench make earlier, me transformation. to tech want work technology do and I return doing The want seeing more in as -- I more are say, also significant

guidance our of tend And expenses. you just as have kind anticipated That's so, some in of know, happens. XXXX heavy. reflected hires, be equity we to those what fiscal Those

And are material here. so that's the actually and a probably probably piece that this of the a accounts component. factors to two delta puzzle alone that's all bulk the relevant of fairly for Those of

Greg Peters

my Got welcome it. I overstay later. me calling Richard don't then Well, want to and

I'm So, and thank to you answers. there stop going for

Jon Kessler

He's you. called Has never he?

Greg Peters

a get every in I on. once Come while. a call

Jon Kessler

that. does Richard is just enforcer. the He

have plausible We deniability.

Okay.

Greg Peters

Thanks, guys.

Jon Kessler

Thanks.

Operator

Thank you.

of next Our question comes Bank. George from Deutsche Hill

is open. line Your

George Hill

afternoon, Hey. guys. Good

Jon Kessler

George. Hi,

George Hill

-- guess, in are is I coming and team. question. Jon questions looks bit I for call, with mix call thing opening cohort one of and afternoon, I I about you have you wanted into the the the continues Tyson. back of strength of middle feel me. front I to list kind then -- like? to saw in three. what HSAs about middle given have like XXXX, market. -- taking go adopting call are or the -- I'll what two the And like have like feel calendar is Steve going fiscal market? for going the I'm than number seeing XX I what mix to on to prior the to the are housekeeping greater of you I Like labor coming pick in and a people is return last who I the ask general Thanks in two And guess Good the the do to the that market the of questions who and about improve? you're talked sales the HSA a of people XXXX, the prior

Jon Kessler

-- is I this do to take think market is -- technologically because why in HSA Ted, as clients it's this it's what doing come really asking and the new what us don't we're around one, about driving you adoption.

Ted Bloomberg

Yeah. make type able HSA early I between of how exactly the to it's this in HRA points. it's think would And cycle a couple a to I out you shaking plans. and year's tell split sales be little FSA,

but a them and what we than is to about things time, continue sales Help the it about And how us is of maximize start great our over That's real into obligation meet to is. actually mix as people off differentiator. that use family them we're us the done where right? solid competitive just But marketing of design is, alluded like how the years. do. talking about bring higher comments, department HSA, where to we're an have getting leverage to Our asking the is they -- better and benefits. points our Jon to us I And our think XXs marketplaces HSAs than is of has talk to right, in employees plans wonderful is, then and people to is sacred us clients existing to appreciably and early, what how to that it's in plans, it's job percent to adopt benefits retention opportunity see a to seeing what there's driving percentage I convince nothing in high of And season right? at to to their market for very which hey, are, a his this the value the So, different benefit, obvious them year. non-HSA our their the -- feels how and for previous which help HSA better couple think the

Jon Kessler

the you That's the people have. keeping as you it by grows way start

Ted Bloomberg

Right. Exactly.

of well. would what partnership existing clients driving in sales mix on comment this clients no insightful I so, progress really year, growth just through say in that's of opportunity this and And the with both in working but a our early and is HSA been lot

George Hill

I'll ask all was like question, I wanted question the you simplistically seeing to this I I how and is. retention, my of labor on this listen terribly. The to tight asked I answer say, thing kind market the as demand realized we're -- Ted, focus I employee feel given

a You heading very had sales guys calendar XXXX. into season strong

of on richer source the is is your benefit than answer of everybody yes, sorry. question. season just HSAs kind are to the answer. a other in focused to at more the least on employers seems it HSAs employ I part -- are a But benefits As what are employee a ways statement benefit I'm answer guess I retention a maybe why as at, the trying get design to are retention, the attention of -- the design of feedback or answer That's answer selling opposed was from as saying, to the was

Jon Kessler

that we've is many of terms what's are in it the plan. of of now something is what cases, qualified PPO deliberately which before, typical mean I back they Yeah. of sort that identically. They're value to health actuarial And a an HSA kind the different. comes talked just about in richness of richness not plan versus

research talked back may be either must about call topic we was or recall, market You on December. last in some this

And you can HSA perspective, be of you need the little have to bit on from a those what do to what doing effectively then so, is qualified. have by plans employer's focusing you

think comments better I And same or then, more do you're and have wave which factor, the value, employers. true particularly I benefit in that why trying market, part with other these mid more other one more like the had that? are giving that wouldn't Ted's have actuarial surf, is -- people would add a where is this you is, less. and you You're at of to

of as want one move, it of that one. they there's impacts don't while labor how movement. very the also people of have not markets an So, labor lot tight, out if is current works, is And situation figured a the HSA what and they practical are to

everyone But to plans Everyone we to people I what? health are know to of that level years, XXX(k), is like had not And world parenthetical. departments route will getting The my plan that driving making don't and from prevalence right? -- you to I HSA, helps the shift That's pressure I of process a an to just something And that this me -- I do which and go of as we like have is that's see, HSA something so me. us it's that doesn't of world that is want have the less I put this HSA, health the outcome in of of have that do. wish has too have the have didn't overall something -- I kind of to benefits many wish part that conceive good, right? it are on the part are all similar. pretty to --

George Hill

of concerns housekeeping like two But Jon, I'd a beneficiary going I And, to to HSA beneficiary. the it's retain -- trend? victim think where of work employees, that or say a context the quick that if we've helpful. it heard employers some That's just seems in questions-- Tyson, a was harder be Okay. were to going

Jon Kessler

It certainly a victim. hasn't been

George Hill

Right. Two questions. housekeeping quick

the On you was in year. around the guess on million said $XX guidance no Can XXXX about included talk I is, the XXXX, And any is? And you about the that COVID the you explicitly most color the subsidy quiet. a housekeeping question you benefit thought most from is I fiscal in other last margin hike talked be benefit recent profile recent the in flesh more then I can rate included hike? explicitly guidance. what will what

Tyson Murdock

Yes.

the COBRA with market. with think we've don't about them I the So, subsidy, ever talked

Ted Bloomberg

talked about -- didn't we Yes,

Tyson Murdock

revenue, to but million we $XX of $XX million necessarily said -- we Yes, haven't

Ted Bloomberg

average. We said the

Tyson Murdock

average would the I that we is … say, --

Jon Kessler

-- It profitable. wasn't It wasn't super like

Tyson Murdock

work, It hard was yes.

Jon Kessler

a Yes. was lot It of work.

Tyson Murdock

-- was second the And question then

Jon Kessler

I think Ted's for hair. was profitable it

Ted Bloomberg

that I contract mean real won't variable that's The the that basis until money Yes. January. think next money if we you -- we about that, something points, really big again, place affects so only XX have

negotiate and what of So at we that's really rates an impact on we think next about banked year that then. can gets kind

little of component couple And annualized, so like points $X X.X something that, XX is billion, on so the million, than a a that. million less variable basis

we the we'll of guidance, be landing. raised was and bottom the So that where

George Hill

Very helpful.

Tyson Murdock

George. Thanks,

Jon Kessler

pick new now? hook. the the is Peter you're will George, we George -- who on off

Operator

you. Thank

Our next of Scott from comes Schoenhaus question Stephens.

Your line is open.

Scott Schoenhaus

guys. Hey, enough. Close

Third EBITDA at margins around and were commentary, to your believe I guidance Can you at be improving XX%, about the when acquisitions? dilutive. yields, quantified you I back when your recent business historical that's these EBITDA running your quarter repriced So on implies the margins. throughout want those you adjusted all that adjusted two a last were you're on steep of Thanks. Further that touch it discount and talk what how to that mentioned that books can -- Fifth year, parts moving book higher

Jon Kessler

made Fifth that I that further we Third. -- Yeah. comment not about think really It's

And of state Ted, let so integration speak to further. maybe, you I'll the of sort

Ted Bloomberg

take we bought is little to is asset time, it slower. Further the and continue expect slightly with that the and going which active the Sure. to we to which less -- But perform sort migrating the we're years the at that to expand like And the And business, to HealthEquity investing margin I is expect business a have is distinction go business, profile nice to in expectation platforms synergizing it similar it our in profile. to different is than Fifth portfolio Further we of a tractive of margin gets bought profile active now those time some of Wage. margin lower acquisitions wage the margin but Third margin. roughly Wage relatively of that Jon that was has a businesses we we that typically ultimately than had we amount our at the case reasons, making. the sunsetting could the And business, really for we cases, around with then Further, to have just the tend X.X immediately, a act of like take Wage, combining

Scott Schoenhaus

Great. And for your fiscal guidance that's baked 'XX? into

Ted Bloomberg

Correct.

Scott Schoenhaus

you Okay. going you're Then be versus is going out the cash my breaking right, not second HSA question to hear did forward? I investments

Jon Kessler

HSAs thank were one or we all saying we -- have the -- be next XX prior acquisition, those is effectively you No, things. saying for all during that that broken recall, this WageWorks earning platforms no. and because without I that asking not dealing think on in that's yield. the of yield with done were And were were some some as just of the also out for No, And the broke periods, will investment after days. they we a -- can We was -- actually cash had we in what imagine without you Wage question period like -- for WageWorks third-party now. I was period that where we'd

yield without there aren't any. breaking effectively, there's cash out yield or So no in investments because point any without

as to always continue we'll that -- cash all that's and out have. really break so And we investments

Scott Schoenhaus

HSA and I expand, during -- it. strategy cash does this rates from just market to follow-up there versus interest set toward the pushing investments your a Got stock guess, in change as is people And sorry, are shift more period? comes sales

Jon Kessler

No.

uniquely And strategy members, Our to comes Ted, and used this our we and you when meet let want think, me another a -- to well, here, are spender, you an How do they if our an the look or say, get every are, Putnam like we our industry myself. feel a we like is from we completely meet like a superfluous. cat investor, saver, you I over major they it fat to they're members have, that earlier, are. competitors, superfluous back where positioned where perspective, whether up at phrase member

to responsibility our all say over B long A periods that to is going a members is my a think from that so yields are, is to don't point to view time, way se from our that And of we help we're wherever and changing long-term. based members per in because on and push perspective of to have they about take our our try them

answer members celebrate the of They volatility. who They're own and ultimately, to in with invested thing. the increase accounts, view only continue what end members. HSA, view of that us drive when employer not learn they no use of how up as view, And to understand are we'll our how being that kind also for end will subject think to And one continue of customers, to continue though, that do of cash of been use the on an and the that stickier always what matter our you should people on numbers, to is if of more long right? likely the account the that stick assets, they the a up to because mature report about or yields to better as more them, market those off remain they success and increase right are that's you some have in going we it's that we given that average, see to these like more people relative it's investors, likely products, So take their invest, to that's course, having a spin right? percentage it our

and this is time and in nothing terms like so of for change this a going investments at strategy has conditions current about been cash yields that whole And relative the us to between winning strategy.

Scott Schoenhaus

you helpful. very Thank much. Very

Operator

you. Thank

from David next of Larsen BTIG. question comes Our

line open. Your is

David Larsen

fiscal on you 'XX how Further quarter. and Fifth the Can the Congratulations what just is me from remind concepts guide? contribution there Third revenue again? in much is And Thanks. benefit

Jon Kessler

what concept I don't is. know benefit

Tyson Murdock

administrator. It benefits

Jon Kessler

company I've the heard It's but affiliated called it's a of that, administrators. not with us.

focus a So time the for on I'm and to get of at to going to you the it, just feel Further acquisition. back refer numbers the

about I in think run rate at the Further time revenue. produce of the said million would XX that acquisition, we

let's carved carved exactly -- and it's just XX. in would say, roughly that fiscal we in said -- we that's component, call contributing the X it And as ultimately out that's million, recall, as it -- you that Veeva 'XX. may what so you If out

like are number that transactions the fourth was what course, in other And contributed the something note much smaller. of case the last in some Further, quarter. about was I They're or it, earlier XX Further mid-teens contributors. The in Third closed right, single-digit's year. would of Fifth

half the the over course of year and last contributed the of it So so forth.

for difference between, difference net QX Further XX, and 'XX the fiscal don't they fiscal the So it's But 'XX 'XX I know, in and weren't not is like XX. roughly either. between between between fiscal XX, XX, or -- and --

David Larsen

the increase more of yield over are or like or the in low rates, like you Okay. Great. mean the locked it just years? to seems LIBOR, take why going earnings with based And on I 'XX of you're in into portion couple accounts that seemingly generate that then Thanks. terms next not risk.

Jon Kessler

so what hugged somewhere know and ability of times, call And our of David, something getting various -- I'm give Well, is you I question. because five we've asked that but over own the being probably current on and fund, be no pension be do just know since different our we likes. trying to we to to at I'm a be And we at on like little I what a of then contracts wave of and thought But look, -- managing And three to a is quarter-by-quarter was between -- given three-year. a closer and of we somewhere massage have he smooth not you, going with really were I about I basis, maintained -- to the that don't effectively rather that's Mott risk. sign that duration, that consistently, mean, And either to of has prep and version and we say And flip any "investment probably and a that answered then a -- why listening durations beginning. Darcy those that. liquid have us optimization that have either we sorry. people us X% is actually as you you your or asked typically out it, where at this probably to within maintained funds with it or to It's about this kind very policy" -- -- because we're a various time, depending what but so have will -- penalty. manage a get so think a liquid we And will duration, a was have right, to times, that, years, we between think in misnomer, maintained go here. like it. time. maintained XX% we've much extremely on view way is bit to average, environment, you're out little way come which the funds in policy a maintain, macro asking, in, or here in our in if is would will been pointed consistent that consistent --

tells pandemic, look, managed beginning environment don't the remember turned -- sitting pun be we And yet, company We phone yield like, "Where's this phone? something living don't. on think, The still a was looked what that no over environment potentially I the room us this which think pandemic a effectively floor saying, like to dividends, like into in really intended, house," didn't I paid what really a could cycle. the yield at Well, is It's third overnight. X% But last almost of it's me that investor have turn almost And basis don't to to little what that rate my couple of we know around we the X.X% and years. here while it a we've not points approach. going year, is taken every to which going a giving to us. HealthEquity right? out at do take this XXX that for and speculator, better is here, that. our purely that, bottom to right, take kind are we're guidance going the a is right That the approach out into a we than for bottoming of

we Now reason -- the way. do it that's anyway, so that

David Larsen

Great. Thanks Okay. much. it. very Appreciate

Operator

you. Thank

of Marcon Mark Baird. from comes question next Our

open. is line Your

Mark Marcon

end relative of 'XX afternoon. my are Thanks questions. sort Good open in in to a you up the taking One, And the change of rate any what commented terms sort any Are during in Hey, how the in everybody. of conference performing terms commuter? improvement expectations for fiscal things commuter little bit. up seeing of with last starting of you terms call? to just could take-up

Jon Kessler

think to that like stuff burned -- But see talked expected can and fundamentally like at been different We've I also like observed NYC this, indicators. you before, don't think today's no, transit about that answer month I least well, are short the good look and a than things on is meaning ridership situation at we're that, situation twice. that mean, is we ago. I the we've

think accordingly. what see these And even fiscal we're in -- -- to comments, actually, would we'll time. I guidance said as maybe -- going just to assume right? Tyson, numbers going introduced But silly. you we nothing, we over when and improvement the time, actually very think we we're revise I and a it, look so, all at gradual as not or assuming, that view That said, that we're We'd when I happens you about now modest -- be 'XX QX in the think we're

Tyson Murdock

big increases bit another Yeah. have prior we've place us got tailwind, that's impact. I now going mean, kind timeframe, hopefully, bank that gives it there, nice to article but So, I in just paper us the not the I'm to every little behind of that to see People do work not go to and we're now, for And open comps of compute and that it. year-over-year but to an a about morning it. interesting you think there, pre-pandemic gradually and do people the that how it's it still. of a on sort how going run going people of to there's midtown. on very I are right? think want And necessarily businesses want to commuting

Jon Kessler

have were it negative like calling of start to pandemic, -- have One paid. don't a if I it's because -- that has people thing of the that can either was and Ted's is show team crazy or of they've of less whatnot, in we're matter and go we the not it's at in And get ridership only it done business pandemic. the in say month, us of vulnerable absolutely on and far we say vulnerability data, didn't teams that terms done get that that, the the revenue. whatever, we a a terms even the want passes they for hit still you didn't for the can big expectations. paid, trying that way but positive work reason that quarter anymore. is on result than really was order small reason revenue, of But altered ridership dip and X% some we've example, upside so that passes. and They little at though can were regard, January, had that to see look this runs that we that start I Ted's and was if of so actually just stabilizers only up we as kind behalf is if can't At of -- in so our that get there we commuter bit reported One than we forth there periods. That's Omicron was we a that put was their didn't when didn't return a during in our we those do to clients in recognize members -- not the better And true monthly the one paid. pass, dip in our

And be business and so, stable to that's it even growing made it more that if a little glad pace. beneficiaries a grows we'll be of

Mark Marcon

relates inflation one then question areas. it And related two Great. to and different

monthly service sales of sure seeing you've still working to any costs, some retention Purple terms to and from which of sort wage fees, inflation when the are the That's Specifically, the you mentioned flip season on you a of just and challenges put that making in prices? strong take pricing that some wage and a from there potential look got even your correctly increased monthly people element. And the the pressure service everybody in home. that implemented raise fee, of we have is with per recruiting the the inflation place competitors due account is on does then, of side, your But at the to regards team perspective? are one some pressure in terms reduce

Jon Kessler

Ted let comment point. first point. on going the I'll comment pricing I'm on the to

guidance. -- spent you this help -- we're in cycle were in can But sure thinking reality. trouble We -- a decide not annualized thoughtful So, the that's amounts or that lot with up how of tend to, to at if current I'm deal like were what we we'll I don't we reflected about our time know we maintain but is our don't that's current not. the a the team and -- moment, very recognizing well, inflation. at with with And that, to whatever, inflation. X% it. Wages least members' that certainly keep

good are year. And increase a of is you got so, We essentially, -- we a our and in -- if salary standing, this you team absolutely again, were guidance. and in this member all reflected you

an team take home members' addition, But to earn And our in real protect opportunities in hourly also have member, you to we to this our more. were actual pay. again, try you things. reflected do If team all guidance

plan, guess, say, own think don't our take in general, in would that. this try -- -- health froze plan, of one stuff we like we So, the I we in to. for froze granted increases not I the things I But nice annual and we ever or

fairly for of with aren't for environment but that in want people respect. about And to large, here meaning the is to be just move they're this money. things by and not One treated also an nice that $X, extra -- working the they going

And from open At doesn't but some during was open not very That's stories and HealthEquity and non-art one. we is season. our maybe about a season we to that was you're -- so, during -- thing. help. an peak we still do But That's difficult but of season, do different that hearing open it which there earlier season, hunting. peak for Tyson here, talked season, when Cordele Ted tried things a the people,

can of closet. bosses people I'm to And anyway, the whistling from at work but here, they are you whatever maybe so COVID, because got work who sick come your yelling in past

it, the flip question, to busy about how the the we've kind on you event, tried that's essentially And manage any hit with is of side that goes answer here our so, some my in opportunity which of can the think of the discussion to maybe season. hand-in-hand I raise Ted, answer But first price?

Ted Bloomberg

Yeah.

saying that certainly On market expect. of doubled, do statements, everyone's a raising to environment, And there the the for mean, I hop to in forthcoming the paper or a analytics hundred pricing an is You are side, what price, just I still start is in terms be the type XX% offering paper us paper cost right? of we're sizes prices raise board for -- an awareness of definitely we willing pursuing not the us example, thousand we certainly has segments type aggressively but on paid might deal there over a year. right, work and prices that, up. less our by our think the get to silly send last those reasons to course and but opportunity cost of a for cost are like as And the but people, across the opportunities. of there's are in there we There are and pricing few we've lot invested you opportunity would capability and certain have wouldn't and a all market where

it's of we're we and so, about I would like just And pinpointed things and wouldn't I stay price to some say increases. keep We'll partnership studying. it there's growing and distribution But teams and winning. that, with that wave doing sure our say keep we make our tidal like smarter just are it's sales selective in competitive. getting partners

Mark Marcon

Thank you.

Jon Kessler

Thanks Mark.

about Sorry and Wisconsin Milwaukee too.

Mark Marcon

That was Yeah. tough.

Operator

you. Thank

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

is line Your open.

Jon Kessler

Hey, Allen.

Allen Lutz

exclude been and service year, account year? line, lot in nominal you kind $XX guess nominal bit. a the last moving kind per suggest a go would guys. service of FSAs then I fee the you little have a account So Is HSAs? XX% I the a per Hey, fee least in at account uplift that that decline. of I of assume obviously coming and -- the then But inch about Thanks historically, think to fee a pieces. talked that I year? up for guys to the taking chance nominal But if X% -- up uplift the question. it's thinking this with are this could that? for about COBRA the service you've where guess fee back, we per all there Commuter impact a I million There's increase to are going fair guess, you to to how service from guess,

Jon Kessler

Commuter example, a mean, so it I the And well. fee right? shift, little mostly you I comment because to what you is that's right I'll can Yeah. is. for as then, our got that have mixes about think themselves is really and on what type, bit the mean, mix service you it because -- highest Tyson,

helpful per of growing HRAs, And a is, it's is Commuter think, net up small business that in unfortunately, already if and obviously not lowest so -- regard. of next, inch But anticipating a COBRA FSAs It's up. we inching we're And within more Commuter, piece in unit that our substantially. kind business I on or of and the then then kind HSAs, that are basis. guidance the

maybe can you for thinking about mix -- about want the just shift I what year? talk Tyson, to would the -- outlay outlay, something. don't -- out this we're you the give outline, mix out So, why

Tyson Murdock

and and I'm But that we're a I'm Well, deals are HSA, assets, in going fees. Allen, of too. before we somebody the components if about deal various serve know and think the of about I signing of they're I multiple this the considering that buying thinking when how service lot talked then accounts, about to like we bringing they're an amount how feels and

I say I So, about right. would it think you're thinking

because it would less a compete, have maybe a to started given opportunity outlined strength and of you the market. some we of but in in kind the bit You as at a HSA bit there like little question, of the actually I decline will more still just we're have inflation probably when where we little

competitors. the day that making the compared it of I gives long about our But putting of end us it's really really at confidence. some yield we some and run. item the to rate collecting That grew and item well in against assets line the biggest think line

me, give So, if up I little I will. do a bit have that, to to to

of And … so that's kind

Jon Kessler

I is For will be, about so because But is average my very total are question your and fee fee fiscal is that I would comments, you're you growth think and account worth for HSA, growth we think working should to a of essentially of grow as custodial service help what underwriting interchange. -- CDB on the initial our us balance And the an all good fees interpreted account it the of bit most there, I fiscal on pressured all sort right? that then the be so, essentially helpful. HSA. expect heard And noting about combination But XXXX, the And that basis. answer forward? little that side from will going XXXX, of for reason

Allen Lutz

around my question per interchange me into kind And that leads second the of kind of account.

on where guidance guess, kind of today? to FSAs as of business interchange the sort what weird that just XQ kind seeing, and embedded weaker. I understand of and basis, contribution HSAs got what's peaked guess, So, then a last think another per you of year in across kind trying about account I year was you're in and of

Jon Kessler

add You want to this.

Tyson Murdock

Sure. the Yeah. I given say can make really have that here mean, to COVID, be is, we volatility so that exceed sure in that put we we would it. we what I the make think about sure what experienced tried over I I've

the impact. first -- kind as when think really has it. back think smoother that's through kind an year Omicron the I their would actually see that in that think about are think was to mean, part of working just so, this like things. heightened I It I people be will would way we an you through do on this. And when of year, given a way the how that of impact I

forecast we're that. it's can't not just and I -- So, any things, specifically pandemic-related mentioned I to -- going

up seasonality HSAs. that And topped a because sure course, think we've timeframe to So, more really to February, year, the but on we match the the in that. build heavier, parts user make as their of March a FSAs the lose little get to we're it And and see trying trying it if look back get the we then, and it's of got in people forecast January, last half normalized a to just nailed lighter their middle gets can we place, that where in heavier they have too, but of of gets it the at summer. it kind

Jon Kessler

point I to I quarter been something that I wish there, I is -- if this pick saying like, remember I I sort that plus up. say for if about the eight would the years, is last you like had thing this think of that so third wish the

year that a one understated, would always as than last right? stronger overstated keep going that, that quarter that's you is weakest per it's the account it quarter. kind is, have, quarter answer of seasonally the relative normally just much that and that I is said, to third exactly seasonality, flat be probably basis, second just right? third The So, mind but interchange. in is It it's in second you surprised quarter is and this -- weakest quarter still roughly it obviously, quarter on and is for the as not the us know this to -- last -- quarterize you think year a And

Allen Lutz

Thank Great. you.

Jon Kessler

Allen. Thanks,

Operator

Thank you.

Our next with question Stephanie SVB comes from Davis Leerink.

line open. Your is

Jon Kessler

Stephanie. Hi,

Joy Zhang

Zhang you for for Joy is taking Hi, guys. This Stephanie. Thank on question. the

Jon Kessler

her? to have What done to happened What her? you

Joy Zhang

call. time, the Every on she's never

Jon Kessler

a little thing's whole The suspicious.

Joy Zhang

an I guess, my is you, ecomm first for Jon. question question

can environment guidance. You in and fundamentally guys different -- mentioned custodial we've XXXX? in in that type the what you're saw rate cadence you current any rate rising do this we But similar versus forward, to a not baking seen we XXXX revenues of in further going us past? your fed in anything Or expect to hikes model terms see in of trying

Jon Kessler

that I how but of have are here's fed, out are also tend remarkably at is be a our policy There human this it's at The think [ph]. guess, and our guidance that that easier, been drove I decisions. bad that various I'm including just a particular, not the beings fact factors And futures that we turned I reflection the they're think the that shown in it also, makes predictors. assuming world include are these terrible to because have play. not who and not studies make they're in trying of that's people reason are fed -- predicting because And are listening market, listening it's to -- do ultimately lives actions what there today. basically not hoping

cycle. back will an And of what so, were the level to kind cycle got thought if a be all is still guess, longer, of little and that this And that whatever, here people you range hope difference what got a my I where I wobbliness of a boom, that's last XXXX, just the cycle, biggest rate -- bit we -- go normality versus normal what we're that the in meaning think I would down end of but that the pandemic. is the is doing a we we of place feeling think to upcycle potential as normal toward then to is returning probably and

of different. is think the probably think case thing there's reason policy, it be to the not the whatever will than the process the also the would say is another but that truly normal two, next biggest or year that we're as are we which the we about right, fives normal is beginning to to of not where will I is in be no maybe think funds zero I also be over won't wrong monetary thing normal fed believe, you the interest, that's other fours And twos all or cycles probably anyone. for rate way believe that be rate so, than which good What and the rather in a returning hopeful

the that's about. think main would thing So that I

Joy Zhang

helpful. super That's

benefit incentivizing over As to enhanced this color this give can us baked of some give us a function a a folks much on shift rate you from of to is into how And side. follow-up the Is you're accounts? sense you new project? maybe the Can purely new how guidance? product of the then, on move

Jon Kessler

don't are encourage Ted right, don't in our formula our campaigns suggests, whatnot. first enhanced But the rates name by as agreements, part call, first the Tyson the doing. like based determined commented answer what then they The on earlier that's as to we we custodial on special on but answer are and like others are can't we provide think that's that the second to members a run I'll part. an part, -- and we I

the you'll see running to, special to And sometimes so, we have a like banks don't we're leeway come say here's in, -- do. like

battery year, points but for is the print, sold basis Here separately. in fine a XXX

aware newer is most also they're the that's members -- is are sure be education. in to And choice. are our practice into And awareness systems, option. so, of our to that around much is who only our a pretty have of making they the main are focused people greatest those where energy coming going all make but we are practice, be not to "incentive" accounts, likely most In among having because our this

you're And so, anyone for else, battling whereas inertia.

time, question our so Tyson that does And that's how and guide our is that's reflect and of of thinking piece much over about it. kind into part seeps product of where the And in. comes the this

Tyson Murdock

Yeah.

As I types get Administrators. us way into of mentioned chunks to HSA the before, a portfolio assets great I just too, these we mean, one get this to the for of That's accounts. like closed way acquisitions

of the of an average $X,XXX. You remember accounts got are majority that the at $XXX to right

then we that's and to that by to in So, someone make isn't take just we'll be very message though -- necessarily the over a even there's place enhanced them that's would of more move getting it one there built moving going people in little, move and upside to without any, not I the a would a takes we'll say, It's go rates. more over about do of it that. say, time going get a opportunities. chunk. if in to one, of fast very in bit lot in And little funds move course, We'll mind. I -- and my will it's January, into

that increases on enhanced whatever will to in kind as they those January even relative but be So, stands it the we what rates built a there, haven't products. fed are, are We've upside bunch in rate done of of it rate today.

upside call would I so, of where at or that's of to there, on guidance. a it's over January month getting for little a more with upside And it people regards kind half and

Joy Zhang

Very helpful. Thank you.

Jon Kessler

Thanks Joy.

Operator

you. Thank

comes Our of Jefferies. Glen question next from Santangelo

line is Your open.

Glen Santangelo

important we forward Thanks forecast as think particularly rate guys. but because question questions I just it's Hi. interest rates want I make want about it. my it get forward, this understand lot on on to relates don't I'm more one so sure that curve. to going just correctly, of for to thinking to I we a the time, follow-up taking want rate I Hey, question. this

bit average said Jon, the just years. of portfolio over now three think, is you duration little that I the a

XX almost if two to the months reinvest And we end in the of look it's correctly ultimately that so, third short And thinking curve portfolio. January a alone. last am of here, at the next it basis the about points I you'll up XXX

pretty you're nothing make to a today, we to if right, dramatic this from that else go want changed. year if as curve, were sure I into right, XXX a about investing yield headwind And of have higher, nothing where going to tailwind your which we on $XX change of And so I'm significant just theoretically, the are thinking to right? impact sudden, right, points changes, third all fiscal so, a XX XXXX, portfolio that million year, nothing basis again, could be next almost a correctly. would if be

Jon Kessler

XXXX, Yeah. that right, we beginning in or the that a The in XXXX, before will I at which -- be average, fiscal which make of just on way only another way fiscal like the is point of is fiscal reinvesting investing dollars end put -- you would at say so pandemic. of the is beginning you're to XXXX,

Glen Santangelo

Okay.

Jon Kessler

you're words, make So, still there perspective, rate -- That what replacing. we you're the it's the from that in yes, -- you're it's of -- peak the But when be, -- rate be at last implication not But cycle, some were you're -- upwind sense. there, will also right? other like would right?

Glen Santangelo

it. get I

the to becomes back much look the XXXX, year big So, XXXX we greater? to right, where look assuming now. that So, you're right? three-year we get just step-up saying is when back, are Again, fiscal we the fiscal

Jon Kessler

even there would a But in point, is still step-up, the in say based step-up, issue part still my see will it's rates because would right? right? right? because And of you and So. part, on enhanced assumptions, just I that your be notwithstanding a

Glen Santangelo

million almost a $X Tyson, for quick sort were then I follow-up -- for year-over-year. like would had we the backed the normalize on XQ maybe to of it just business. are a second, out and coming in And costs flat $X that million side margin that margin of of If we assuming assumes to the have you're

three about fiscal will generally or XXXX or way margins of So, the Is think in of quarters? cadence right that sort no? months nine flattish way down think sort QX following is year-over-year, right the the the for but about that to to then cadence in be the

Tyson Murdock

Yeah.

be that's I us I'd about also we'll merging think QX. QX think mean -- of right. I think just out I into

of the that most So, they're mention QX to is get little for that really rates other versus may back just question, just there, in rates negotiated bit But it the right. not exactly I clear. you've quick, make a not to have to right? was just One thing got last part, a the the are rate, -- too. going fed It's actually we connected,

we they're So, there's point. negotiate do -- out not connection, a wanted make and our I rate, partners, the go rate. enhanced not with still with that a partners, fed raises a to rate that do we direct [technical We difficulty] the but that right? just

Glen Santangelo

Right.

right, the the fed variable not should I fed be only at think looking rate? because the treasury we rates, funds, funds impacts

Tyson Murdock

You need looking to the be really rates. CD at

Jon Kessler

rising, rates a are you. I Yeah. we okay? look, -- right, the curve. answers your assumptions, mean, believes do. what reflection -- They of I you to rates what will don't would forward our if always just were But On what don't again, be end that think mean anyone just always be of he's tell at I from I'm I is, can rate aren't. trying that I -- understand with curves curves forward really rate good

to don't mean, basis -- substantial on give every that master's amount. or that -- take. thoughtful I -- And $XX to billion by timing, -- larger picture, a just I and that think to a points And so, a we XXX don't kind have way growing little and that and it -- all moment, said, that I is cash that to manage is just of is big been for math. outside pile for having got a have today that But do be about in of I of need but every a degree, year reel we this about so bit. And

business. there so, is embedded And real in the profitability

the basis Some does, talked that $X.XX every as more or expense either -- that on pressure maybe up ultimately, we've before, of obviously like top, as as right, -- dollar up shows up about showing in embedded on or suggesting, service that as our ends business fees, going of on time. lot now in custodial clearly was of is to the be what fiscal trough Tyson the yield a there's being at But XXXX profitability the ultimately over curve. of

Glen Santangelo

Thanks answers. Got the Yeah. Perfect. it. it. for Appreciate

Jon Kessler

Thank you.

Operator

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

Jon Kessler

Thanks everybody.

faces said bit. forever -- We're I'm we're we kind It of here that together but the us little may seen a excited seeing that of I too our in the work, been doing been And beginning, seen and seen sell-side you work have have work, people doing years kind our that been doing. I and lot a have be too. that that at As -- all haven't folks also seeing in-person. I of ever, investors two-plus to reminds remind or haven't I know haven't

guys the these pandemic. few for But be like sure that regard, a I'm days that's it that. good ahead brighter all And more of because things there and that's to so, seems all you days scary thank seem Hopefully, thing. of how in work for a with will us

So thanks, everybody.

Operator

gentlemen, and you Ladies all does you. Thank this Thank conference. participating. today's conclude for

You disconnect. a great Have day. may all

HealthEquity (HQY) 23 Mar 222022 Q4 Earnings call transcript