HealthEquity (HQY) 3 Sep 242025 Q2 Earnings call transcript

Company Profile

Participants

Richard Putnam	executive
Jon Kessler	executive
James Lucania	executive
Anne McCormick	analyst
Stephen D. Neeleman	executive
Glen Santangelo	analyst
Sean Dodge	analyst
Stanislav Berenshteyn	analyst
Allen Lutz	analyst
Scott Schoenhaus	analyst
David Larsen	analyst
Stephanie Davis Demko	analyst
Mark Marcon	analyst
George Hill	analyst

Call transcript

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Operator

Good afternoon, and welcome to the HealthEquity Second Quarter 2025 Earnings Conference Call. [Operator Instructions]. Please note, this event is being recorded.

I would now like to turn the conference over to Richard Putnam. Please go ahead.

Richard Putnam

Gary. you, Thank Appreciate it. everyone. Hello, Quarter Year Second Call. Earnings of HealthEquity's to XXXX Fiscal Conference Welcome name do I Richard Relations My Putnam, Investor is for HealthEquity.

is Chair the Joining Steve Vice President X-year today Jon and Executive President me CFO. CEO; anniversary, Neeleman, James, Vice and and company; of and Founder James Lucania, Kessler, Dr.

to the a I couple of I turn Jon, Before reminders. call over have

the First, fiscal XXXX of our second the quarter press release afternoon. issued announcing market after the this financial results for close was

subsidiaries we and contributions release include financial today. owned The certain our These they from press accounts wholly includes non-GAAP results administer. financial will of definitions measures that reference

the can release. website Relations including Investor website is with on these press of of today's measures non-GAAP of and webcast You reconciliations measures find comparable ir.healthequity.com. a our GAAP copy recording a

and including to view affect might information estimates they relating could will that today. the today reflect comments many important which today, X, defined our forward-looking to as predictions, forward-looking. be SEC statements factors our considered questions responses by XXXX. business, management's September made your the statements expectations, contain And There of are as other Second, and forward-looking

here to risks materially forward-looking actual are the that from results These may statements statements cause uncertainties and to subject made today. differ

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

over Now Jon. to

Jon Kessler

leaves and Hello, Thank means everybody. today Day, for or the football season. Well start you, done. the day the some, of unofficial of after that And turning start Labor There that's fall. is Richard. --

season towards a Jim mid-sales share on our forward QX it season. discuss are and is corner. on also the authorization. cycle and very and here And also a we're looking detailing busy means about guidance raised results and based in QX's goals. bit right busy on capital. financial before that on open busy numbers in our to the And little very and enrollment will will momentum the repurchase the of on nation's progress we're our for touch Team key at market metrics For strategic purple, our I recent developments Steve state Q&A us productive around today, reporting

year-over-year and from XX% XX%. Strong with team BenefitWallet. members it. Let's that over QX, the accounts, $XX year-over-year. assets X%. drove metrics, including X course, year-over-year than assets. of over adjusted EBITDA and strong growth up XX year-over-year; of the get HealthEquity ended sales HSA to delivered final HSA key plus tranche again closing including HSA growth members total In plus $X.XX plus double-digit accounts across HSA revenue, grew most XX% grew by XX% our $XX HSA fact, year-over-year. invest And overall billion total in of faster $X.X we the XX% in to HSA million up increased in $X.X drive and holding billion assets the invested quarter billion. billion million number to assets HSAs, helping accounts, HSA QX

record selling sales our about QX sales in of season. a the last first Turning for this in half and Purple relationship team, management we year, remain XXX,XXX resulting quarter, more HSAs to Team year's XX% from very sales. new and added positive than

$X.X approximately start second HSA HSAs quarter. of HSAs, QX, XXX,XXX In in growth. the June, at and organic billion the transitioned had the the tranches we of BenefitWallet reported team last assets X adding of Beyond of in the

QX, discussed lapped Results the our account and yields Day. CDB national growth extended thank 'XX X, which for on look Thank year. growth X% I and strong of into quite to opportunity turned transferring custodial the final this our completion strategy, though greatly, beginning locked cross-sales down partners these and years opened XD at has occur also assets year CD the into life FY XDs BenefitWallet we quarter represent very year-over-year runoff even for haven't good. multiyear that's payment the BenefitWallet That which sales positive at timely for plan you. is in the on with team Investor assets later will accounts, of in a we HSAs also for clients emergency The robust. up January and CDB this come.

of And represents each company. these of the kind the a within transformation

ago. new believe I can't just mobile last first rollout which A our continuing team the last of launched August, good. that's That's is AI. total It Plains remarkable expense service QX, service And delivery. delivering account the days is experiences delivered month, app of In growth. transformation seems really like about X% was The D, in year-over-year it X on flat digital month.

processor year issuance, and enables card really migration digital up, you, I'm thank on next Instant team, wallets which card for which Our major cards that, wrapped about. stack excited

D, digital and transformation of the is deepening our partnerships sales and partnerships of the benefits deepening -- health second The ecosystem. around our the about

continued HSA third by that. stable coming I also and coming. maybe think partner-facing in partners, year, of keep little openings rates and transcribe developer rates, up quarter. enhanced third-party members. It's with -- The In of expanded partners scaling of third try the with addition just speaking a our results, to to adoption team team chip especially new blue new The towards this later CDB APIs team record work strong a the it's portal, HSA the quarter, enhanced

broadly, differentiation for we're third to health utilization outcomes more. position accounts our as only a health more but we've not driving solutions point health time, something of been is now of long in even accelerator, extending member The doing about a HealthEquity's and and benefits do savings a partners'

actually, HPAs, HPAs launch [indiscernible], are payment is enough talked HPA's, doesn't spelled interest terms. fee option One HPAY's, dignity. no to pursue and about flexible medical And a employees announced formal we care get morning, though, of yes, those of no for this outcomes the that

your about it. access or should should into employers about to we're the that Jim of to of its in of market, happen. put excited cash it, top a really of margins, and present and detail. for to recipients quarter envelope equities was within the credit to the Jim? its for employers adds the growth make terms line, not is operations, A Your All commercial this way future in up version as in promise Medicare a bringing and robust from to for flow investment and law them, Part it care already have influence D we're it

James Lucania

Thank our you, results. quarter GAAP fiscal I and will John. everyone. Hi, financial briefly non-GAAP highlight second

GAAP non-GAAP measures measures press As always, a we of in release. provide to today's reconciliation

'XX reminder, XX-K, results fiscal the fiscal both our a for for in year reflect fiscal As comparison. here the presented reclassifications described . XXXX we 'XX our of statement and income

to shift and lower result cash was continued yield revenue to wallet faster in to the increased to to payment activity quarter XX% unit rate interest than $XX.X the and growth of Second $XX revenue million, towards due a mix X.X% grew members card cash revenue second Custodial quarter benefit than service [indiscernible] HSAs. revenue shift enhanced reimbursement. [indiscernible] invested The annualized reflecting notably drive account million on $XXX.X mix from HSA as for rates. total Interchange as quarter. more assets XX% in placements the average accounts growth grew

second GAAP for Gross in last the second the a year. of million XX% $X.XX year, as income quarter quarter's basis. percent was EPS from Net profit a revenue or per $XX.X quarter on up second the XX% share in was

net XX% same last share year. over point as EBITDA and revenue compared XX%, per $XXX.X a to QX improvement $XX.X year. non-GAAP year, XXX versus adjusted was for income up EBITDA or $X.XX quarter Adjusted percentage basis last million the Our million, was per quarter a the share of $X.XX was last

the to sheet. Turning balance

end, XX, fiscal quarter debt used we the net BenefitWallet had cash first issuance million of of acquisition. our for 'XX XXXX, operations including on in connection The billion July on BenefitWallet million company hand million generated of of the costs, of $XXX flow half of line credit as in year outstanding of the with was drawn cash million $X.X $XXX $XXX from cash $XXX and As acquisition.

filing our retiring As and we extending revolving the post facility. refinanced facilities, and term month, an reported, credit consolidated QX, last credit and amending was in A X-K the loan

carryforward The investments and with changes commensurate of new trajectory, provides extends the maturities facility strong the our company's additional in our resulting credit recent quality. conditions and interest and from XXXX terms rate markets. sales to efficiencies XXXX technology operational flexibility reflects guidance and scale Today's fiscal enhanced in

between $X.XXX billion and in billion. revenue range expect We a $X.XXX

million range GAAP of net $XX share. per $X.XX or $X.XX the $XXX to income to in million

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

Finally, million we $XXX to million. expect adjusted and $XXX between EBITDA be

We on approximately expect cash be the yield X.XX% for average fiscal will HSA 'XX.

a HSA custodial assumptions is mid-duration we contained conditions. are, to in as today's of predictors such secured of rollovers, in and forward indicators deployments embedded treasury forward-looking change These overnight market of of course, guidance an reminder, curves. future projected which and release, on subject cash As yield based the the perfect schedule financing and not analysis market rate

expense higher and earnings, guidance fiscal the an to due portfolio debt the outstanding along amount higher to expected HSA drawdown cash increase acquisition. and corporate the the rate now net acquisition of BenefitWallet on of with of our completed of interest Our impacts remainder also includes including the in year, fund revenue variable

includes today. of repurchases announced Our the repurchase also $XXX commencement part as share million guidance authorization of the

capital for maintain borrowings flows, shareholders become now common We year. Based our approximately a tax of acquisitions should income With new XXXX rate a fiscal XX% X and available. expect tax revolver fiscal guidance, equivalents. for ample at to We we'll non-GAAP count rate a return million, as the full continuing year including and revolver diluted cash GAAP share current quarters assume strong of of and and they to the remaining about both capacity our well. XX% project we portfolio $XX reduce share on in

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

generated included. from In of assets while acquired from intangible acquired addition, those intangible the excluded is income, revenue assets non-GAAP amortization being net is the

With that, have of know questions. we a you number

right our Q&A. So let's go for operator to

Operator

JPMorgan. first Samuel is question Anne Our from with

Anne McCormick

more great think season I bit you this of to Congrats was accounts. payment year? be could to And selling And P&L? launch going quarter. a provide how contribute how about part hoping on those might little that to detail on the maybe the is your a health of your

Jon Kessler

folks product . But really just way the it to back their plan-sponsored So way score. to credit the be employer-based plans, It's let the those work particularly are are not term. expenses, going product is with to get to And also this ability intended me avoid does credit view. that. their people, and in our there's employers when when works start at who pay demand get to that but or term care there. and answer what the that health if limited point our for to gives right by plans, plans short really assure in limit a shouldn't individual health longer just cost-effective the their product out-of-pocket very

but will market view accounts, or who have also we that maturity, be might that population, there, to including that using at expect the this that like. everyone right, And have going HSA the HSAs broader so people applicability an my don't. both is is don't relatively to or to other even remember the broad out health those And

standard this highly see is we'd seems this -- establishing be time, goal next goal that achievable here, to view, as part group the part access significant. And internally like And to so coverage over and within have the years sort said this of -- X, like we goal. could a -- in benefits of we've those X in midterm of one is that is rather of the of think my kind package That that.

relatively that -- then near there. for so seems -- from go fine Now term the and

-- new just a premiums. back were establishing typically in way. the something they that is costs They folks little in these it's and had HMO same the were covered plans So to past. in way being with When choice whatnot,

sort way it's a management a going to from flow cash of And perspective. that back so in

the really the mind, how in have terms impact quality with The obviously, being ones this been quantity as fiscal we topic. a more both no including do in testing in importantly, ours see clients of modest out release impact our observers in my and There also, large on good to, and used. short think, it's regard this are can term, who of product, 'XX, 'XX fiscal response, anticipate with, of I of

significant so do the thing And as we in impact 'XX, a modest there'll more and in be on impact a think 'XX 'XX. catches

we certainly mucking problem. thinking been But mean we'll this, that around this that get solve go this about does good to a reflect is So do longer? with we've Steve, how to as been long guidance. XX I product. to we've it 'XX years, maybe products how back

Stephen D. Neeleman

longer. Yes,

think I started when of at wanted then that We a end XXXX it. is and first XXXX. had the client about we melted thinking the them world large

the couldn't it. come are great, think practiced but their was fund So the thinking it's in is getting been started. been, think, to delaying best that because to And say XX were they I deductible. when I about and they HSA we just years way John, since patients have people were deductible, the for we've These afford it too. heartbreaking care

[indiscernible], So exactly.

Anne McCormick

the lunch. on Congrats

Operator

Santangelo is The next question from Jefferies. with Glen

Glen Santangelo

want custodial rates the at of we on focus look that $X.X I needs next which sort as you're Jon, renegotiated a almost cash. billion of year, be replacing you to right, year. bit. end think have to to I the the X.X% little out And

about so want rates. investors And not at I all. year as curve, you I talk about in the to are the next think that concerned decline want continuously like But to yield about

years get top really at custodian So that Am even on that that basis it with enhanced obviously given thinking now of you'd X of you correctly? XX rates, kind sit points revenue like that. And right the another where shouldn't all benefit yield $XXX. your on that much seems the your I move of about

Jon Kessler

on is reflect. rate put will cash I'll you the which that rate little currently that that Jim. was that the The bit think a only lost I on to part at that, earning me

James Lucania

Yes. that's right. Yes,

think So you're right, well, Glenn. this -- I year, -- yes, the remainder Yes. was that of this

mid-Xs mid-Xs of is mid- spread. So a reprice kind plus at going to

So when as obviously, you tailwind Xs, in that the by X.X that curves next some couple years, is next X.X%. we at we're rolling But high priced If can over years about to tailwind billion over dwarfed there's still number at and the that right, look great currently plus off X heading it's the as $X.X spread, that's well the can. number year. fiscal into that's that yes, forward the a next of potential

Glen Santangelo

quarter. volatility miss the this . on I towards about rates should I split number shift continued did rates greater we has quarter? the lesser Because based enhanced Jim, the that And enhanced having know been And of on or any climbing think rates? every effect

James Lucania

we which We've It's whole No. but to really by XX% our to a feel Like last you of get when volatility, it about to at deployed, that not getting we of move over based line. and to reduce about our it is we told and number Yes. achieved straight to a other benefits year, end time one objective fiscal than time. Yes. provided we should of extra the objective goal guided not little really, rates, right? cash XX% -- trying cash well be on of non-GAAP be and to going lumpy. any per get is increase the our to moving are to there. should Obviously, the enhanced to It's those double the good to going we're XX% volatility a share going objective, X-year on over net income track

Operator

from with Markets. RBC next Sean The question is Capital Dodge

Sean Dodge

the of year revenue, there and onetime Are all adjustment? beat well QX the the flow won't just magnitude in the But difference in saw. explains items of is be we guidance. that full the we should of that [indiscernible] guidance that some than less guidance those kind half else of EBITDA, for year? the something QX upside the into there the the a on did wise, we aware this consensus. was that this Or necessarily adjustment . ahead or at EPS in QX of upside between in of If back quarter Maybe look came

Jon Kessler

the the look, I first QX that for that little is the bit think a conservative Thanks side. point is question. Yes, I on think probably consensus Yes.

of quite align $XX kind the is about not really the of on But maturity of rate million phasing sort and internal expectations by schedule of just year. that movement expectations. we the our our our come forward other think offset shift the It's then by for upside it, about curves question. if So a quarterly from? think guidance in versus million we with didn't downward half on we the would the direction prior how prior we about And the of that $X it materially talked does for about year $X the -- where based that driven back talked million in about

rate placement $X of the billion second of XX-day of those $XXX the driven dollars end short-term These the go health in client component half about really by are of than be then It's replaced be bit Obviously, little half guide funds. of have of the year. year, the will And the at deposits. $XXX-and-change-million replaced the a cash, HSA placed in floating slightly back hinted. which the there's there's the would in placed, million of quarter, at lower

expectations we rates. across the by then of about think of the in $XX lines to in manner. magnitude sort it achieving We're offset million than and So X that better $X our million of the shift revenue

Operator

question Stan is Berenshteyn next Wells from with Fargo. The

Stanislav Berenshteyn

that on growth us a just on the automating us? services there? be just on chat of mechanisms for for flat top stats can communications? you give margins X% helpful. out That Is you Any leverage progress called would function this within you line unpack Jon, services. Can

Jon Kessler

Yes. not flat margins, it's Yes. cost. flat I . first, it's mean,

Stanislav Berenshteyn

Yes. Correct.

Jon Kessler

if all is maybe But bit at that and isn't which a margin, us, this look to. the down. a But nonetheless, get event. year-over-year. really quite used gross hesitate you let's I gone number for has thing any giving not but called so -- to But service phones in Jim's say thing up

that. So what caused

question yes. to The first answer is your

just quarter after be speaking, is is after got talk plays said this we of that's month, a -- to as And AI what couple make it on to just investment can generative to to in you a still ahead things look, it's like needs -- So of past -- we're month you who with rates, we've digitization particularly but in the do the where the world kind broadly role. term quarter, have the that And a our the quarters, in working. somewhat we whose better. ultimately don't do tried that of people of term, -- in investments like curve your -- see in about make call we've member are electronically. handled will And avoidance this our

of start out clouds cards. kind to to my Einstein on AI. as nice place have the have example, transition, there's mentioned It's is second and another different But and into going digital in processor is issuance factor digitization I the comments, this. and fact year, and to second Salesforce, our as we're they're going and more look from us go also next CCAI out of half I for particularly Stan, or completed competing the the and then this of year of thing into there all their that's we've the that's see, that Google, the forward, we helping -- There's vein competing each that, from in they in

of we that we've this the the we've cuts that as all it get least of a would. hump The that to of and never year, place. got at instant infrastructure Ultimately, year default. value some we We said there at in about the of off But expense. won't is end talked issuance an getting

utilizing I think go term, at look going -- them. I members terrible so number at keep there's way you but And I long that, of up. when again, at look the deploying they very look long you -- then but services avoidance we're your And we are the these rates, satisfaction kind where here, Again, a still a to is if that

And deploying the point. think like the don't we're we they'll they -- this them not high. satisfactory where at CSAT and And remain be quite

where plenty with. in think I progress particularly of noteworthy this have is quarter stuff a we to deal So

Stanislav Berenshteyn

that? developer And maybe one can on cases Any of we emerge a third-party . ideal the just use platform. quick expect from kind

Jon Kessler

is and are mean say are Yes. the in ones just and that that think time. way, some today, already So just the not we out stuff time I are and but so not a right? and help balances I'll -- opportunities interesting support to more over I this easiest transactions in, scalable like other over the much things going stuff. do us recent But coming going

for they member broadening a Some again, client and great that want this do are enrollment in on we can offer API example that's now right got you've here debt even a why it's fence, reach enrollment service portal, of are, pretty side them where through our their example, enrollment partners and good. -- an that's to is is sales cases, API-based as where some of really the is about

So things differentiation, looking been bring the continuing here to in to for can really building they a about, again, off the we of partners lot that's and the bring sort partnerships value the and at always build of up. bedroom, been our as of value what's lack just are of we're

kinds time than So type API would that think, And years come of those amount first term, I months within see of I rather that I those find measured expect particularly online. the enrollment in are that exciting. of the we'll near things, things some

Operator

The from with is America. Bank question Allen next of Lutz

Allen Lutz

. to the put And new incremental a of efforts think back these going the question, margin the up to forward? of about How mitigation service guess, commentary members around you've Stan's on course started service there. should margin. about think Day, the then the how on the we to the want gross cost the we in should I the the here. moving on all And question is higher-level follow commentary year? digitization cost over that helpful Investor service I remainder obviously, gross now

Jon Kessler

would seasonality always I I'll start. there say, we give will be still a the that have. just same

not a those second that in think, We luck to to is of of really particular, new that fact rid people, of delivery number you're down individuals. I of the the gotten as I've the cards expense, around have enrolling said half comes but and times, hump

But didn't so is rid get of we and this the in for our like. have would over the up of -- proof hiring now this question speak starting say rest won't. significant of that time, we And a that you you But can year, terms kind and that about impact. -- it. can we're that to the year, And of really we can ramp maybe that, the beyond of was and that

James Lucania

going I potential real absorb it now digital The cost of No, that's Jon last more card So right. do costs issuance, right? And X.X% perpetuity, mailings flat postal future value keep costs, to be especially and about talked month, right? It's every July because than instant Yes. think of in the right? to right? what's issuance hard one service increased by X.X%, those in did cost we

my these it's card, So value service -- service password, that avoidance investments actually means lost avoidance, no all doesn't can mean not the service handled And digitally. It is lost complex the the most all I -- handling forgot handling skilled I of my in annoying, highly right? like future people center be calls, I inflation the people. the people a call that of potential

over objective to to going quarter, is unit So just drive I'm our I account. each quarter every what over to I've reiterate cost and down an said serve think the

a we're at Now that level. doing product

aggregate year. get You down and a team keeping there. cost I of we've job. going But to particularly to be level, first many drive guys done to remain but as an costs both account to as levers that pull yes, can strong and has serve the quarter. across many, true. each amazing the this see the a We're flat is each those trying really done to strong think really, half, it's

Operator

is Scott with question next KeyBanc. Schoenhaus from The

Scott Schoenhaus

I job want it question why about growth? this quarter. you the drove Was market saw and a kind on trying dynamics the towards such the investment that accounts account what you all have that's the question. growth curious were my from kind Just talk there? of to And investment Just automatically push new second strong but recent of data, then first on to

Jon Kessler

Sure.

question, think was over helpful an set certainly, was it options the available platform, of -- the gave our in probably weren't us of wallet and first prior I a the opportunity of the helpful. all the the quite benefit to On that that that last tranche accounts, perspective, set present transition from rolling on investment and a

we right for well Generally, nonetheless people beyond long-term A dollars. we you don't HSA think as cash, the investments the know, I it, about shy that, not answer as as think we're between want give -- the is while and fact capital on advice allocation call -- we we we that investing that

Gauge That's, promote kind of AD why ] better that or other term, that to are I guess, it's enrollment used the way that of, open sure week for or [ out and to some of be I'm refining the not days. XXX lack we're year-round. at strategies we That so we a called the continue one degrees we've used XXX. And one digital been

James Lucania

days X days. take off We

Jon Kessler

But in on getting And all stuff moment right at pretty seriousness. people the this valuable. is

times, themselves the So right and organization. additive -- average the broader for the of who for the and of customers, that to and cash we people's the They they're to longer. hang -- is many doing on the as mission investment people we've stickier we thing said they're are they think around sort invest balances

But less well played I July in XX growth for but terms -- think I of maybe but helpful. so quarter, there, was as and [indiscernible]. not today, role number the gains to So today. mean, a the that obviously, there of on were during not to so though that the market

Scott Schoenhaus

labor helpful, I you are in right data suggests seeing front really follow-up, we're from given your the it. here data want all market softening your a all in market, half? from softening this in we're back now of My the to appreciate John. of kind does HSAs of the what the and . is market follow-up getting. get early that growth and guidance employer perspective Yes. that's Just both My CEDs, on stage job thoughts the further from an the asset contemplate that

Jon Kessler

Yes. on the ask I'll on part marketplace. Steve and the -- a to in what's time your take question try going and real comment We last in generally of answer then a our have to take take guidance, our we on going it's unlikely constructing much guide. of of any macro view truth The view. impact would neutral terms is that kind is

extraordinarily the But And these how we have generally, new far kind we're one of of things So in -- what just in things that's from the say, that it. thinking and of do. have it's about not the in hiring that approach that But year. see about rates. you macro of is you Steve, terms the I'll the way terms in the pace like. clients of hearing is you market kind their impacting the can that's to you any of this event, maybe churn talk low view

James Lucania

by have Scott. this design, by Not but having our huddle [indiscernible] sense, morning. we Thanks, sales Sure. weekly

which exciting. we're after had of can do. So listen a of getting in tell to I are when after is they And half into lot nice got sales which and a getting year, as typically the among get we our you it, quarter, second team. the enthusiasm We and I there's I really it is

now cycles we've through I we've think things with several been HealthEquity. one the of that seen,

efficient back but in -- get pole it by have also look I mean, when again, because softens, people best say, save their CDBs good and XXXX have we do these we do look, trend still premiums. what's And when back of need it a and benefits for way little really the some HSAs the in bit all most them to, take we the to premiums market going for money money save at we being a protected that of comes plans. our kind are job it. with But -- don't to our costs, on consumer-directed like some the ultimately position. employer softens, the we and even downturn it and others. And employers to kind

enthusiasm. of lot a there's look, So

We all that acquisitions to distribution base. things expand our plans been good the of into the and continue really, our of family doing We're that. HealthEquity partner we've bring job really integrating the like new able to through a

would the say, team, excited ever team on if things sales I'm I they been have that look, despite a you So to would were the as as in or redeveloped. you're member now HealthEquity sales that of say ask some

Operator

David next with BTIG. Larsen question from is The

David Larsen

. that the on are the dollars now? is I'm the product bucket, Congratulations not total quarter. great the that invested enhanced And in the in assuming What investment correct? cash bucket, that's rates

Jon Kessler

it's that the your way second, other it HSA go the buying in cash than case it eat FDIC. you card private insurer investments. the you the guarantee in bucket like swipe sense behaves cash this do And can because and with by is rather around It's principal which -- get, in that a can't

our just I our total at being That's little goal we $XX XX HSA was So have in -- a adding $X year goal roughly I this is if that's been and end and little right, XX, enhanced are to do. a XX% have -- is little I can be rates... billion. of in the at this -- billion to of over under our But all cash, over see,

James Lucania

Our goal the be [ by is of XXXX]. to end XX%

Jon Kessler

FY said said kind that. XX% lumpy color in specifically to can of and And maybe his Is commentary, extent, you that in has, X I interpolate some bit commentary, within his expire. to since -- contracts cash just years the would as little it's be or in add as 'XX. as Jim a Jim

sheet As little 'XX. you can see loaded a into fiscal that's forward there, in our

think more progress last make in sprint get 'XX. year the next and this we'll and we'll I in so And

say, amount breakdown think think with quarter. But meet a to we cash that's suffice placed release a track every No, very enhanced rates we much on Deco. we're it can to I Jim, of Yes. Obviously, clean benefit don't right? maybe, I up right, So the in. wallet coming And you good

goal. a on head that progress So towards we good got start our

whole cash this lot year. placed being a the not part of at there's Now of

end have being the bunch cash have towards placed of cash So year. next we move the of really end placed. said, the that year, a a We'll of doesn't as bunch much. mix the John of towards And being

goal. be feel trajectory we So XX% quite to about to the good it but to lumpy, that. will that getting getting

David Larsen

Okay.

be XX% be of would the like... it like would is So which total, around so $XX that billion,

Jon Kessler

percentage separate. And of cash totally sorry, no, no. rates. cash. is rates, HSA the cash sorry, basic Of investments percentage the enhanced only the

David Larsen

Yes.

$XX how Okay. that of much And then term nature? billion is in short

Jon Kessler

Okay. Yes.

reprice of look is cash of as after floating of -- is how breakdown investments. in in X at of a Q, well about the it the this the as So we big take remainder what that and a $XX.X I fiscal it there is think, have there then is million bucket, $XXX encourage I that next you look to rate that billion, years year fiscal a

will be out chart. pulled that the So of

is of you'll that's schedule HSA the million cash the -- total interest interest think years. with I with outlined rates see average each the in for maturity So $XX.X rates

of $X about I this fiscal year. billion, in think got the we've So it $X.X repricing remainder billion was. current

James Lucania

Yes.

Operator

with is Barclays. . question The from next Davis Stephanie

Stephanie Davis Demko

to again? I Can be back annoying guidance you question that go

Jon Kessler

get You a may. you better answer. See if

Stephanie Davis Demko

million the Look, a there's it's down, the margin a Is from that so than scale there million that get first baked that margin lower delta I of opening. down just much what investments yield half said, I yield, the when conservatism second that look the step XQ was I guidance. half that I at your And $XX Is appreciate? year? getting X-point is raised some you into are this is What step levels. implied implies $X but delta. you what of the didn't And numbers? on X-point profit

Jon Kessler

We change did yield with not me start say our Right. one. I'd let HSA guidance Well, the --

still... So we just

James Lucania

off took the bottom We end.

Jon Kessler

Yes, still X.XX.

Stephanie Davis Demko

I to X which Versus X.XX, contact...

Jon Kessler

planned Definitely clearly question. this

James Lucania

of parts. a No, couple look, there's I think

the So obviously, of alluded with to little are moving yield to that we well, interest take downward step Jon going the bit -- rate down. curve

quarter can't talked into I every on a And John that perpetuity. for service gross [indiscernible] about about the the this as back-end side we I into costs to, that, profit quarter think alluded service the was a below as We cost yes, like on weighted that's performance lot well. haven't fantastic year. talked think we

maybe of the I'll is spend, questions on tech dev preempt So coming the right? X and

a we're as have has there's and we to that half out like some the back timing fill, the back more So But a and open pushing so So spend in pretty are the also world to that and significantly. to of quite percentage we we like of the would of fill would it planning come half year. that than revenue year. tech little we positions dev And of in be, to of okay, bit projects, down dev tech right?

percentage to high out we So talked we said of hit likely a as we've of and going about should back kind of to right So last that that's sort to watermark revenue tech dev is think -- XX-ish peaking where percent get be. now, to revenue. We right? get got that's of we're We're at be the it and is light, where year. we

Stephanie Davis Demko

just was to . about harass spend. dev going and more go the I and tech

Jon Kessler

talk That's what I was going about. to

Stephanie Davis Demko

there's so Well, that want of positions go you talked to a open about you them. install lot

call a fashion, to that hiring, in half about the there the do trying your is that's given where to pretty you're straight Or second out that think down? is . So of pockets step more margin cadence more still? because to a big going any it rapid just I be when line stable big

Jon Kessler

have -- -- is, I'm I'm answer I the I'm not admit, Yes. Stefan, not not to sure.

little would last quarter that said I a very tell of see that bit. it's fair from the -- I some T&D is want moving, to is -- in I projects. is, to faster there's version as other the that than we -- have spend Though think say mean, -- my little the Jim be to ramp you of reflected of activity. moving what we finance fourth that projects it's and that's are probably high-return look, commentary, they're there's that bit can going a fact what that

first little fix the going and Jim like It is to that. half all bit right? light, up, For to was saying, it we're make exactly going a doesn't as we're mean

to But be. these stats. back get be need there return we're the to where And is going reason to on of because to the we

whether it's event. any in So

what So think issue I alone I about think talking you're -- of about. that's X/X about that is

line, off took above that we is in right? course, the took say, QX, bottom we to to of issue, QX you X/X the just all and gross we're drops do margin service another of And like -- that. $X is second have million we then that's probably going I'm The going to all And the expense line. that

enough. close So probably that's

any... don't She's I believe doesn't still it. like, She believe

Stephanie Davis Demko

to You call fun. be can pay for not the going It's back.

Jon Kessler

what know you're SPX. talking don't I about. And

Operator

next Baird. The from is Mark Marcon . question with

Mark Marcon

X mean tough Well, we've to -- a did up I I done... that on follow all exactly was

Jon Kessler

[indiscernible]

Mark Marcon

you to today? net non-GAAP that 'XX. off conservatism. some the there's we've relative which guidance, I just obviously, that things non-income I One on going dramatically by that today possibility fiscal would of X there other mean But of about always that is the was And just the XX% income of your can yields, -- regards the anything elements fiscal of wondering fiscal out to the of change. is the with take you yield is enhanced seeing in terms to you're all 'XX some 'XX way thing anything talked you're chan. Ges doubling that seen like seeing guidance given expectation

Jon Kessler

That answer remain simple. actually are no. pretty the there the pluses business. The I that short are And our is puts what think and It's would and say performance view. puts takes? The are the takes. of to is

well. likes I of that's If you there's there's up, -- this obviously service quarter, and look a the mean right? performed Jim as lot green lot interchange want it. and bars, way small say, green at small of they you a well, But here, performed add bars to

good, enhanced for dominant wasn't had bumps. a Custodial team We but which through fine, performed rates The is force once, worked is fine. going just the those. few

sales So greater.

which which go the like for a come everyone So the rates in an and pace at which the good of stuff. better up at impact have I of, we're terms lack will then down, at pace think And the business the pace revenues else, margins. term, that's on

the new is here there's that by look nothing So that's forget increasing business modelable here that, multiyear have. rates guidance, of that's large, the right, we're to would feel a business reiterate everything say of the beyond But very all X think the doing revenue will think missed things efforts And a like happy to without cetera, is, short-term us -- the which permanent I'm et whether that the but commitment I of thing -- like years I'll product service today. has not the a that grow of thing, something all -- that help that good cetera, the to by other well model be business. it's it, to minus stuff grow makes about. going at value to say we goal. for is service cost or about et harder are a are impact all trying the if investments this to to for problem sort transition of talked was making something beyond that we some that likely of we're to and the to the in of us I make envelope way, not the be within horizon that to kind those that this enhance impact to has

my longer answer. that's slightly So

Mark Marcon

election that then decision-making But high Steve, have could little do to switching potentially Steve wondering, terms expanding blue chatter a in HSAs can just the is sweep with care to. with over how up how go. was And bit capital of take what just deductible ends regards terms held accounts. to think I various a and in let's regards the if you There's we comment Great. a are scenarios impacting health . of

Stephen D. Neeleman

Sure, your hear Mark. Good voice. to

long taken D.C. the years always more mean maybe ago John more, I years HSA than when you ago. should people realize. back bipartisan ago, XX way go back, in was I we've actually that think time if way, or be approach

the is a really as they XX It was call a account, of Hamptons. in from And we John. bipartisan of bipartisan what's on effort. August bipartisan think over was the people days. came Sorry, congressmen it Nebraska nice together you if just playing know off during to and around There [indiscernible] August, what were actually don't Pennsylvania, all that's I were Mark, Fast This that security you. whole saw back came but years, put Act. the Daskal a together the country, care Utah, HOPE effort while And the wherever are effort. the called come recess fix concept forward they California, and it, forward. the have bipartisan XXrd I mean out Tom they medical I of

And up kind I and It and You Americans. by and in together of bill Jimmy can XX. look come of Republicans Utah legislation. great here answers your question. then it's by we think Democrats can XX, it house was California. it on led Panetta in that a And there's help legislation Blake Borne think work really -- piece Can

about or And or for so I think blue think and is or you all that blue bill half half whether however read well positioned, ad it's all it.

XXX there's to account on note families Bill, there's working that, way access saving to of the HSA, access about health roughly about about there's And don't the but math, that have million that XX means American have don't. do X/X right we X/X an now. them a Americans million and Just

to HSA. HOPE the some access start fill would XX have there's Medicare, And of Americans But gaps. and Act an that are they to in another don't million those

And so keep your eye on that.

portable But of a as care I personally I could that some and but to effort. there's think investable think a be going like our out and bipartisan it's that this tremendous is now accounts. other something of account we're HSA we health there there's X can, move, expand supportive concept to an continue to opportunity owned

Operator

from Hill is Bank. George with The next . Deutsche question

George Hill

price integrate ability is I'll platform guys does partnerships. anything launch what kind call are And ones wallet, then, digital in the on. quick deployment? share you about just of at it all think change me. share you how just Jon, of seamlessly and an the And the cap that transactability. on Number the does of into repo maybe for like seeing . repo guys the about for the for the more say digital And comments retail them X ask card just update I'll market? to for assets X Just the start

Jon Kessler

I'll Yes, maybe take one. first Yes. the

about not signal read pricing would the in into I So any market.

are the to logical come market. we think HSA portfolios I of that buyer

price, think very pretty M&A -- transaction. and been I consistent up right, is drive think Jon I disciplined market, we evidenced by So the about have right? not by we've I approach to we're what the are have a assets wallet benefit -- portfolio going as to bidding we to

aggressively think continue to business, and pursue that to quite opportunities. will the similar accretive I was we

out or reflective So it's of of being desire right? our pricing lack not whack, of

and continue do we to we'll try to accretive portfolio, add think capability assets so. to ample I have to the

of executing. that I the So we've in share to been the repurchases addition strategy think

end the easier we're on do the We've not waiting Yes. a this, the helping do buy lot the of what And plastic they providers need a at the of to out-of-pocket do, whether that of online. that's like just things virtualization with basically who want that your HSA firms of number really easily designed to out for and we're I'll on it your first second to for that there. or are there point, point owed that's partnerships And the for like. or stuff of the December people are collect the digitization make in of space say meeting FSA created to folks member not just eligible

feed reduce service but a to both helpful, they been there, there's a think have and -- so either cost revenue to more tend And they bit. those they also we service little do lot and

continue. good So that and something thing, it's that's a we'll

Operator

Greg Raymond with is question from next James. The Peters

Unknown Analyst

Sid the to that is you assets the also enhanced the assets? on just product, members about into coming of the rate assets for reallocate moving seeing most existing XX% into getting This HSA yes, product? are allocation Greg. from -- thinking new that Or on Curious on or product

Jon Kessler

Yes. there. question Great

year, is new this it yes, assets. primarily, So

as acquisition, the next mature. bulk bank begin option are as of contracts. contracts lion's new the in pulse into of are XX%, default obviously that that we you It went But to basic phase being share We'll BenefitWallet be who is being rate will right presenting that members the is order added. maturing rates. hitting rate to get enhanced migrating that's in a members clients the new cash So the the enhanced on

why bank comfortable braking contracts operate move try we're it faster, that So we're not be why will on to it little there. we're that XX% going target will pace also lumpy, be And it's and the the with schedule. we're that's a on to but maturity

that is agreements, be the our want break thin. biggest deposits particularly people Something the this don't said worth to in navigating is so. on Day Investor a We where the maturity agreements. at reminding that breaking you of be that's rates are thing of these bank position it when of time to profitable basic do always the might at even

just a it be partners future. that's And regulators think so we good to in would look the don't or our

that's do wouldn't wife It's So not and to operate me to I still chosen it also liquidity. And that large. -- uptake that and us say there. but its presentation to solid, not that's then just it's managing And it, or we've my is going maturity wanted getting working. my and let keep I coolest, to way the the a one the from that of I think wanted sit kids name it's by

. it's So like going whatever your it, do to you be with solid.

Operator

for turn concludes would question-and-answer like conference over I any Jon the to This session. back our remarks. closing to Kessler .

Jon Kessler

the disclosed -- say which we and that the members personally nature might it and very truly on response focus Q&A quarter. a I during this for this haven't who I and incident the the do We team take I discussed, is supporting our but of humbled be again, thank to support. sort the a something Well, to the thought to second. I'd just was to And in response by were is in for We should think our here, constructive think need I to have how might Yes. clients wanted both we chance the folks which we the cyber really to done. team partners --

Dolphin team olefins. sitting are So wasn't September the maybe strongest to so that's Boston, the And is. in much there appreciated. best beyond But that go the very idea. And that,

See months. Thank all it in So you be you, everyone. good. few a should .

James Lucania

Gary. Thanks,

Operator

concluded. conference Thank has now today's for The attending presentation. you

may disconnect. now You

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