CSLT - Earnings call transcript Q1 2018

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Operator

Good afternoon. My name is Sheryl, and I will be your conference operator today. At this time, I would like to welcome everyone to the Castlight Health Q1 2018 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. you. Thank of may Head your Relations, Investor Fuges, begin you conference. Gary

Gary J. Fuges

Health and XXXX welcome afternoon, first to Good Castlight quarter conference call.

Joining John Doyle, the call Nolan call remarks and today Officer, their take will will the Officer. Siobhan open we Siobhan Financial Mangini, me and Chief your prepared and offer to then Chief on Executive John are questions.

contained Securities forward-looking filings factors the XX, materially actual release important current any those in the may and updates our We accurate. and are and of statements this cause or presentation position with website. included If This Our business, the are do we XXXX, and risks, our Exchange regarding call management's performance the public trends, guidance but standards. discussion views the assumptions. on press full changes a press the provide be the on company's our release, statements. for not XXXX forward-looking performance to of subject accounting flows uncertainties or revise future are year at timing to webcast or Please in available and longer no obligation non-GAAP the guidance and events our We refer including certain to disclaim our These statements. made will we of quarter time unless cash that company's May May strategies and our to reflect call, differ expected operating expectations statements breakeven, after our may XX, of further contains the information forum. forward-looking update or anticipated various guidance the and provide and any impact risk May any PowerPoint factors Commission from of during that the in call call of cash as results on XX, of replayed and is so for in XXXX XXXX,

non-GAAP that the certain margin, loss financial this includes historical filed in metrics our gross be section share call. Our metrics, the operating presentation such believe to A results. net understanding GAAP earnings our operating comparable we in profit also found can expenses, basis diluted non-GAAP Appendix on a and of aid per release reconciliation as loss of before

that professional note consists requirements Finally, and which of ASC a full in X, adopted recognition, to presented. method, utilizing as the costs, accounting contract of Adoption periods for which the standard company resulted required recast deferred policies standard to county the the of the of our XXXX, XXX deferred balances, commissions prior changes deferred company reporting retrospective the and new revenue, revenue contract deferred costs. services January

that, illustrates have to that our supplemental over now With our presentation XXX Doyle, on John We a I'll the financial Investor published call statements. website impact of on historical of the turn CEO ASC Relations John? Castlight.

John C. Doyle

we was exciting an for first joint this care financial By Castlight this health. partnered as and people the it a Castlight incredibly this making year. sustainability. in growth, healthcare related high leap the made XXXX to why healthcare and believe health like joining personalize, rely for discuss Complete responsibility afternoon, Castlight, fragmented launch customer priorities us launches later product call individuals their and on increasingly on our States. of to humanly the health navigate it as I'll successful provide as This the plans delivery Engage, major resources wellbeing offering on the money one of in you the our improve ours of to of can first more way, effectively At ecosystem. thank Engage Anthem milestone on direct forward more see and simplify that in Good also as easy United for they'll of save technologies that guidance with integrate, and take us. to wave QX color with that on largest the possible value we guide healthcare, today. I'll our we progress front and foundational

financial will pro Siobhan XXXX and and revenue Q&A. finish in million review with the we'll results increase Next, quarter our ended basis. year-over-year XX% annualized represented QX This outlook with on then recurring ARR. or $XXX We a a forma

the transparency platform platform to to this solutions. customers we continued that increase Importantly, of the tied new of our through into clients, platform. the sales and legacy wellbeing to focus We converting the care business, ARR continued remaining did is cross-sales share guidance of on

improve that for a transparency-only on of are for metric our expect its represents relationships our of number large of total solution creates this equation than strong and foundation target customer on by XX% integrations, increasingly solutions, over endure. year-end. ARR value of a time. to with ARR, As platform it breadth customers now believe these less track Accordingly, to hit we XX% to is We just we improved churn evident result efforts, continue and to of

Anthem The delivery As We X I are said, Engage was highlights in Castlight the big on impressive. milestone launched than XX more time employers. more January of lives on and QX across individual XXX,XXX at our than at scale.

Right wellbeing to to Colorado. also compares California with combining satisfaction in version group we've guidance insure a applications We and of healthcare, favorably we've single the outside user and lighter large digital fully a care Engage app. consumer deployed away, power in quickly weight demonstrated of that seen and well-known Engage of populations

an of and significant strong without And with to Engage. increase health scope and this broad the decision in and that and platform is commitment to efficient to care past. vector results, collaborate the are year. Good in also partner ecosystem to Engage we runs deliver functionality employer to focused and growth Complete selling to customers a brings our is a serve scale, closely user validation including on members enables one incentives capabilities will combined and best-in-class utilization healthy to targeted Castlight in utilization gaps of early through measurable Engage example, opportunity a care closing becoming our including of believe health offer This of peak wellbeing digital consumer a personalized penetration next Engage uptake single For top-line of selling integrations season, of that sell With that segments Complete, foundational layers us we good QX, number which progress wellbeing, Xx the in addressed for driving the led to of navigation rapidly and results identified and functionality. us the on to for to-date QX, difficult increase care in guidance ahead We market launching which guidance Xx compared saw in through that with all experience. that launch a end and care the us deployed been for those during the outreach have solutions. our our successful in growth of strategic increases

later which are integrate, We health launches ever represent customers best-of-breed are on platform and track offers vendor. for Complete to a these a our and they about customers digital before for this Castlight initial drive opportunity year, personalize deploy the can solutions through and single launches Complete the excited assemble, more through users. of we value than

the approach is stakeholders, this And to and to customers we observe health believe is they to the opportunity benefits. value uniformly how powerful delivering see it other talk significant. we platform As of

solutions most of leveraging third-party the own has had to in we the market. our R&D to solutions of all The substance and with customers just year-over-year innovation investment. high from this required strategies life levels to of commitment than can pace XX% QX, have customers of is R&D With As purchased unmistakable. their through XX% increasing relationships with Castlight non-GAAP at innovation our ecosystem higher, of QX, think benefit and innovative expense been us Ultimately, in our Castlight. benefit never their bring more

our march have in increased managing As by financial areas. towards closely have other R&D investments we sustainability investments, we sustained

As a the which business great year. our on to hit be breakeven another milestone will are this cash result, for QX target, we flow track

first off our for Their In highest remarks. the are congratulate want got good QX, key for in start an I are period. a financial execution turn better to particular, launch our get results do to and goals in our I'll we satisfaction seen drive of XXXX biggest it. improvements our the us to the great So to we in Siobhan, discuss intense will in XXXX solid a that now products such of look about against level outlook real with the will and more with inspiring forward results call in time say achieving all the teams user delivering history quarter activity already to her in We we've we at in Siobhan and full-year Castlight every commitments who do, over of QX to detail. everything that of yielding at commitment same behavior the ever period. to more short which change

Siobhan Nolan Mangini

Thanks, And questions. by all John. outlook. I'll then today's that, After we'll me us reviewing call. results thank start our our up Good on open everyone. call of QX discuss you afternoon, XXXX for also let and the to joining

reminder, reported XXXX. April X, in acquisition Jiff's As And Jiff results QX. basis in are fully XXXX. on on financial the a we all call closed which accounting starting in as and on Also, press included note standard, QX that ASC of numbers the release retrospective today's included the our the please adopted XXX is on performance based a a in starting result,

illustrated on expectations the on for financials, from tracked available our good our to relatively in IR impact cash our was loss, QX our XXXX non-GAAP operations. As as year, operating including revenue, impact a supplemental used on website, a XXX flow. the presentation and overall financial no small had performance cash start

increased net closed $XXX,XXX, of XX% ARR quarter customers, Fortune is signed in over sequentially slow seasonally line approximately million of expectations which given QX XXX annualized the recurring with or QX. approximately quarter ARR $XXX.X We companies. are for at growth. with XXX the John shared, totaled end a was by revenue which As

reflects in QX, end migrate XX% was of the the Subscription early ARR. which reported are still are customers to At continue million, was in pleased to customers year-over-year accounted on cycle a transparency improve for platform quality our basis. legacy as the of we total four we $XX.X revenue of quarter XX% Castlight of While of the increased XXXX, see in associated for fees, the Total as the revenue which onetime Anthem revenue first product business. platform to implementations, renewal XX% quarter year-over-year. we book local with revenues quarter is launching Services increase Anthem Reported XX% products. $XXX,XXX of and XX revenue that new record had customers year-over-year, and in total we XX launched in customers, QX, completed a we development an XX% launching January. local approximately the from as increased revenue the of function increased and well revenue cross-sell a the

services revenue QX. decline professional expect As we result to quarter-over-quarter a of this, in

turn let's non-GAAP non-GAAP to first QX Now ago. margin prior in to was and XX% gross compared a quarter XX% XX% financials. our quarter the year

quarter. XX% year-over-year XX% our gross had compared in to QX. first From As starting in I to expect quarter to user sequentially services of the invested expected number sequentially in the launches in support non-GAAP million, dip success the over expense first improve we last to we to here, margin Total QX's margins growth as we increased and we was mentioned of record teams gross both $XX.X the revenue operating same our in call, period. professional the continue ensure which

of are in million cash, our annual our which $XX.X QX in marketable the Cash investing we typically We million, with XXXX occur our the quarters, to sequential XXXX We're by and majority operating solid which approximately more payment G&A innovation. non-GAAP operating and R&D $XX by QX that that in $X.X used operations in and operating in in usage fiscal was equivalents quarter in reflects expectation expense expenses, As disciplined partially line in would expected of ended year. dip usage the front-end margin. their ongoing long-term targets the remain loss and driving performance revenue cash marketing million bonus due securities. drive to in was offset loaded cash in aggressively gross was prior of to and sales year-end. QX, timing with cash our continue to other

Additionally, cash from as to customer QX a operations XXXX reminder, was in due better expected. several pre-payments, than

track for our now to a on We from flow basis outlook I'll remain continue in QX. that, on cash breakeven operations With XXXX. discuss be to

call. the February reiterating we provided guidance are We our ranges on initially

and continue $XX $XXX between million loss on non-GAAP non-GAAP loss $X.XX and million million to to between million; $XXX We $X.XX XXX expect to and revenue based million share of shares. $XX XXXX operating million; XXX per

of us feedback solid customers, to million of for $XX and we'll the Finally, sustainability. their was single partners customer questions. such this provides early scale want innovation Anthem Castlight's their our In shareholders, a Engage to you. moment health cash we at quarter insight take strategic the summary, in work expect particular, on and a initiatives I the a XXXX QX mid power of successful execution user journey. operations take launch integrated with range. be and employees our Thank health, growth and used with positive In now in support into hard navigation to for users thank for Operator, to platform. across

Operator

first question the Cantor of Our Steven line ahead. comes of Please from Halper go Fitzgerald.

open. is line Your

Steven Halper

Hi, then one bigger and afternoon. One housekeeping question. good question picture

accounts increase question, the housekeeping for was the On in the sequential what the reason receivable?

Siobhan Nolan Mangini

a Yes. It's great Steve. question,

year. few billings a So beginning annual we and have to occur that the at the advance of tend quite

of that just there happened expect billing seeing we over course QX QX. in the you're what so And that collect to is

Steven Halper

And pipeline do Complete, points could like that a big revenue heavy and a talk XXXX of you little in obviously you just season recognizing about could us part not Complete It what the Complete? that will the launch relative of of it's the the you But for Okay. drive of selling lot the Complete a validation of then, have any sort sort give initiative sounds yet? And if sort characterization of you're to growth. of bit? –

John C. Doyle

And Yes. care integrating bringing Thanks, of evolution way. we've perspective, first, product is Steve. the from capabilities Jiff the wellbeing I Jiff Castlight from together, been brought merger we bringing and capabilities. phased in a capabilities, part when a those Complete an Castlight guidance of mean, time

first So the the points in proof this launch Anthem of the first a number of of year dimensions. important part Engage offers on

on built is as support that's product the there we will One work the that time did Castlight users. the Complete. of the those of dimensions at than is and that been more scale, XXX,XXX And and product said, we that we launched launch for the infrastructure infrastructure

So that was super.

users, not seeing, seeing our In we're in much terms really excited of are we applications, from also range much, and the grade of the because but the capabilities we're incentives there levels higher. NPS from the response in layer are are particular, blending only adding consumer that companies two engagement

registered users past, to two we talked month, remember functionality of us XX% together, wellbeing returning with users we've opportunity engagement their companies help talked the Anthem is with to when more we once once So, returning the – we're for leap. of of lot frequent healthcare And that in brought about example, the them reason quarter. to in XX% half decisions. registered to a a a of nature which a we about With the healthcare levels among Engage, give you users episodic use and the bring users seeing major and interactions opportunity if more

launch for for And Castlight response of product you we so points, these, populations. And capabilities the exciting. really out of was see the and this non-Anthem launching is essentially the if rolled as Engage, will, similar of proof which important scale, of both the Anthem users at Complete,

a start. And exciting so really it's

Steven Halper

Great. Thank you.

John C. Doyle

Thanks.

Operator

comes go from ahead. the of Canaccord Richard Please question line next Close Your of Genuity.

line Your open. is

Richard Collamer Close

Great.

quarter, ARR on $XXX how that Just us came targets? the maybe in you to million versus the your little a and can internal in talk bit

Siobhan Nolan Mangini

Sure. Richard, hear you. it's Siobhan. great is to This from

So -

Richard Collamer Close

Thanks.

Siobhan Nolan Mangini

typically very the very – in are came QX leaders for the us. as focused tends on to a The benefits growth quarter one-one light be seasonally launches. absolutely, plan, on

a of very we in And talked and solution in secure much been plus over plan in same dynamics platform. and tracking past that as side that year the so the the much the about, business on about the churn talking growth really and of to seeing transparency we've terms plan,

John C. Doyle

to me part I as gives question, chance Steve's which a second Richard, And question well. answer of the missed your

Richard Collamer Close

Okay.

John C. Doyle

which said, buckets. out Siobhan in our peak really as that as QX. growth, QX, on is revenue you So expected. played think season, way QX the of three our And kind XXXX as to is and performance depends about in know, selling

the confidence business, of Anthem that relative growth the of have and what business saw the visibility to we in of last good So part book in year. we strong

give extra I points about and of some launch that. from we're the momentum, product proof the us the think excited

Next a bucket year, significant cross-selling. to had contribution bookings overall we Last is really from cross-sells.

lower expect – year, last that largest year a although the sequentially made We our bucket significant this we contribution cross-sells many to again were contribution because from customers.

an from in standpoint, just place. a we're so opportunity different And

And so to the two we're variability in going bookings the Complete. quarters in that down for Castlight see really next comes over pipeline execution the to

Anthem we're where next but that going clearer, much update have the excited how excited we're early QX points about, more certainly proof about a have granular from land importantly, need ecosystem for in we're to the I say to talked call. We're And we and a that for very you looking seeing It's the quarters, over going and we think Jiff from is in As for about customer pipeline two usability why developing. both to Engage. we're consolidate too the merged platform going marketplace partners, to and from perspective user. Castlight the a back first a ahead, place, contractual that solutions again also the perspective growing on from clear, the

And really in Complete we're positioned so, about long-term year, the growth. for where we're as gets half second the of excited launched

Richard Collamer Close

there maybe third ARR with Does the quarter quarter? a you and second help year, of on emergence here you the similar that if follow-up product? see versus it's close as more then then throughout with of should terms see the to we the your is the -- and it more that or process Complete of as deals ARR, type a a sequencing there last ability education an relates or of how in to And quicker as grow year deals because then viewing trajectory quicker, clients? the it anything sequencing the of the you're different goes, offering, the is close in as And new

John C. Doyle

Well.

So and last quarter add in Siobhan year's you if to. second should – need

in quarter, to terms And customers. So see the same similar some had we're don't legacy last about big I cross-sells customers the saying, evolution with to products, those Cross-sells second But certainly. the we of you I think the sales from about talk major forth. was buckets. year activity go Complete tend the major in the building the Castlight business least to think quarterly rest so relationship of we're big at because been of going level in to to at as of building contribution a able on way three we're from to relates perspective a of fastest. these efficient that – a Anthem on we've are relatively because our also sales kind need relationship course reviews and and cycle over really

So look we've we sales we're the a time. year expect Castlight be Castlight cycles of for got first cycles traditional more. or the Complete tend like a which sales And product to more launching past, that

points are meaningful proof while a to, So going Anthem again, sales don't helpful, sales to of acceleration be historical expect cycles. the there Engage be those would relative I cycles

Richard Collamer Close

Okay.

as here the though contribution maybe ARR bumps third in the some quarter? quarter maybe in So in sequentially second it but bigger a sounds

John C. Doyle

our in sales there. cross-sells And And relative just a as QX Anthem just to goal in in outperform bring with perspective period right. to growth and said. are to XXXX. the and opportunity for that's the Yes, Complete that QX, foundation to really circle top-line it headed comes Castlight time you from from we're full And of XXXX what accelerate is

Richard Collamer Close

that good then would you're see converting to over people platform. be to my transparency. And the And Okay. on next question

has of in transparency positively if I I about guess your how CMS, I'm I'm think getting that impacts comments online. your prices here negatively. maybe recently, hospital business talking and or maybe some view on their about interested potentially talked not recently here mistaken,

John C. Doyle

leveraging to and big difference the Well, between of data data so a so there's benefit availability the of – consumers. of those the

think of can any You industry. other

of boom. our the about and a And better. applications to pick for data incomplete transparency into better the which for travel, we airlines good because pricing high-value steering more really organizations care high-value users better other market, forth but hotels would more element – settings, so on when be relative job is certainly an market doing Right? our us increasingly is important themselves having and it comes a data Let's doesn't is prices on users. for transparency those the visible outside makes element to high-value strength case, which example, materially Castlight data widely. create transparency terrific. Different as programs, Because and In getting in impact we where value as are, benefits, are use or think

Siobhan Nolan Mangini

a transparency we market definitely I is add. just which packages, I'd thing a this not three with to year but to of kind guess of this component, And did but have. Richard, go It's the only we sub-point

now than which guidance includes care proactive approach providing more a is so capability, much transparency our passively genius And data. just

we've over, is component seen when in about package, care product we're I them to but doing our over anymore. which so migrating this And a full folks was which talking year guidance transparency migrating of this, already the success not definitely

John C. Doyle

world, entire the many the something a broad sources business we I and people among I the ought the the their mean, that, all through need want transparency customers evolution that's and our available we a a ago at years don't communications market When been was employees need scope, employers, use doing. what their directive is the get eligibility And out that Right? profiles help data, as product much giving add the or core point that their benefits about of on to just function of but of was product figure of educate among health the data has the that into made. Well, data. Siobhan options, which much about platform said, Castlight's and whole them with about targeting And to to just of front case to do. directive them what be the now need data In piece. claims more being that's bias what offering, transparency just our in transparency moment, want data. ought it want based about is as they we employers the of was search really on entire is employees personalized the selling Actually to employers else. Siobhan were to to the evolution shifting of and giving to reason put resources Castlight, many, And those today help. data then is more be in and really they resources because

Richard Collamer Close

my Castlight. John, had you – third XX% I of gave customers, Can final through number, just repeat party And question, mentioned you systems think you XX% but a XX% that?

John C. Doyle

Yes, that's exactly right.

state So their – one over of like a the website the ecosystem things it. selling that But things partners biometric tend partners things things you diabetes, and see that allow on solutions, everybody range report to The employers focused to point and And leverage I and encourage now different out we covering do of them this recently. one like there for download purchase that. screening, issued digital is partners. comes we that employers areas. of to EAP health be we us top XX with get is contract have the to of on of a

employees a on losing better, paper. different have we While Castlight offer of reducing examples these of sleeping all weight, solutions retirement, for sale for stress, saving focus, ecosystem that are

area for us see our And future. talking us, XX% expect of ecosystem So exactly of in about. I'm major the growth this why business customer be a when can you it's the of base solutions I we that area purchased has say set through easily to solutions

customer For stickiness broadening now, functionality and in about relationships. it's all

Richard Collamer Close

very you much. Thank

John C. Doyle

Thanks, Richard.

Operator

of Frank of Please from First Sparacino line comes question the next go And Analysis. ahead.

open. is line Your

Frank Sparacino

guys. Hi,

John C. Doyle

Hi.

Frank Sparacino

hoping maybe of have. a here Anthem, key also we you but when are plan, start, any maybe of potential was the thinking relationships obviously look terms partner, which insight entities Anthem just other set you how at non-health I some developments partners? like those of of just if and about is guys sort in you John, And maybe any to in XXXX a update, terms plan, market other health in aside,

John C. Doyle

Absolutely.

Anthem setting is think fine. I aside

in clinical element Anthem, is deeply with squarely Castlight what we've I majority in of more in market investing view, in that very rapid side perspective. business. set capability employers of interested previously. and our really I very important, the number uptake business have think a And of segment that an on a seen a to integrated the but crossing is for immediately not here, of on Whereas product evolution important of some the others. early more yet. think of which in being been in wouldn't the that We've space the of as it's tells of market is Definitely been the across innovator-dominated our learn that aggressively an our similar solutions getting The an a sales are a much in us that of from side our critical the tipping is CASM as capabilities is a market CASM. customer one direct point than And market from that remains maybe but business, so years. relationship from quite the example now sold, Anthem obviously there piece channel model really population

of go And looking be health ahead going most And think will additional plan I I as natural think be those so, to ones for actually XXXX. to and relationships. partner out your us relationships the point, longer this would beyond term. we think build additional We're out looking – I

HRM this didn't space the continue experience productive While time represent a in in vector the I potential long-term. to another with SAP think we around, that first the vendors channel have very

relationships. And answer broadly, in these so interested more of kinds absolutely is the

Anthem. much being, still time focused For on the very

Frank Sparacino

see? the of of I half back us obviously follow-up. the year, about today, be one of any think help just could to you will elevated then level we out thoughts the year, R&D with out, the But type look spend Siobhan, as And bit Complete assume just of around today the the spend going we're sustained But that forward. maybe curious Great. coming when seeing levels a trajectory also I we look that? R&D remainder as of little what should in further we I'm

Siobhan Nolan Mangini

of going rest over area develop to this efficiencies down and Absolutely. a now. long-term the the are driving rest we target. given of even begins great still That XXXX. be as OpEx over single through Complete, question, to as We're we absolutely Sure. there aggressively, bit obviously a being platform end said, we're we fourth R&D start are grow it's you continue year be growing the the that driving little working that but to its then multiple more right the very to way quarter as platforms their that And to see right to year, of you'll we're maintaining a and towards

platform that and platform. then migrated from integrated We completely the the all think technology. imagine Castlight a Jiff the But customers have it able will get while hope legacy XXXX, the us the we to XXXX you ramping way through We of that until all to and of to beginning down migrate platform take Jiff legacy be where of over. everyone from off can the costs

Frank Sparacino

Thank you. Great.

Operator

next go the question Please ahead. of comes Your from Stanley. Essex Brian of Morgan line

line Your is open.

Brian Essex

then, number Hi, trying new Engage for like install how for just quarter, customer as an you – customers the the apologize ramping total customers it. those spend – good you I in the in engagement you're in customers customers a idea or existing signed to of the Did afternoon. what I that on like get question. versus guess new of selling many newly Thank quarter? I of ramp-up base, there? missed taking if And the been give And have terms

Siobhan Nolan Mangini

Brian. Sure,

and tell then this you your me if question me few a stats answers Let fully. give

- So

Brian Essex

Sure.

Siobhan Nolan Mangini

quarter of : about customers, XXX. We with over Fortune those around XXX XX% the ended

XX have are of customers over that We so platform. of that integrated some XX%, north level

more. XX We've have this quarter. this is customers Complete over talked launch Engage. Castlight as well We having still at So Engage as past about

logo the count QX is us. past quarter mentioned earlier In not quarter, for a terms huge the of I

so And -

Unknown Speaker

Right.

Siobhan Nolan Mangini

Engage Engage we in logos few a did – see of terms contribution.

I the see mix help and coming what QX really gross about of Engage answer and what question? between think side. channel Anthem direct – your XX% is will us coming XX% from that talked the versus the direct Does channel channel the is expecting QX and the Engage about growth Anthem through we've Engage

Brian Essex

what the base, Anthem conversation get is that to into guess No, is offering? the partnership. for Got new expect I – And more of going materializing? understand with What that we And what it. easy I can given to helpful. the get is guess – that kind I integrated And the conversation of forward? But particularly Very one That yeah. install customary. super. with customers legacy kind legacy like how a is trajectory then

Siobhan Nolan Mangini

a that We've we packages had put Yes. lot launch the effort into beginning with at this year. of the of the of that

wellbeing. we've guidance, and you count that Complete, XX%-ish our care have got either can or customers care of imagine. We if have wellbeing only guidance And by then

and about a either And and customer talking that's opportunity promise so right teams that happening customers, about of the cross-sell Castlight a out going think strategy for seeing I've whole approach now within as of part talking And there Complete, that our renewal sure. I of there to – that been there a success or is really proactive is opportunity.

brought companies earlier, the John mentioned we together. cross-sells as happened we XXXX, very in As very, saw some large

one there other. year, conversion but for have a the that the less last still logos or only opportunity what than real the expecting product purely us just we've seen being on So that we're in

John C. Doyle

I of one the think -

Brian Essex

Got it.

John C. Doyle

for of of is One conversation the making Brian, well migrations important parts work on the very that sure that focused our other, customers. we're

customers One reasons migrate are of some until want complete the is that. the quarter that XXXX just sooner to don't all of of who than we migrations that first won't there the

the really and And points – so get prefer we of which support need that to have to. when the going that think, meantime, willing extended are being super-exciting, proof are we're We we're some going we're to demo we're But making launch new and that in those timeline to in show the conversations. the as to we with able change. comfortable flexible get we products, Complete absolutely and that people

Brian Essex

trajectory year. guess Got of amortization software – it. you rest there. to year? the particularly I relative gross have margins Great. And quick to How and the one, capitalized releases then, we product a of should new should expect just of the role I'm follow-up moving a costs throughout track expect development we pieces few XXX a playing like, ASC different maybe how last sure

Siobhan Nolan Mangini

absolutely. Yes,

well, and the well as For QX. and components of record of of – we launches sure. activity launch California volume we're state mentioned Colorado accounts. lives customer just number sheer as the Engage business really Anthem in I as then the different things the is well I had just the given proud of as the that would say the one of national

and professional lifetime P&L QX. you as coming And really a (XX:XX) this thinking we obviously want then an invested we functions, into that great the in customer support practically saw functions, have flow investment out as value, so just aggressively customer to And very in our through services as gate. the of well experience our about center so so call

start across We QX. expect obviously of adding services we're Castlight our as And we see XX% to margin driving revenue over confident both efficiencies more and able to to more long-term driven going as to the things course revenue and subscription efficiencies going we're revenue. in that's then of cost professional terms quarter-over-quarter launches progression Complete. for year, the gross of XX%. be see And get feel you'll just these through And definitely to like of towards driving in ranges by

Brian Essex

great. Okay,

Siobhan Nolan Mangini

In terms the - of

Brian Essex

you Wonderful. Thank much. very

Siobhan Nolan Mangini

Okay. Great. there other - any Are

Brian Essex

Sorry.

Siobhan Nolan Mangini

– questions Elsewhere, XXX. you've I something about no – ASC had you – just mentioned problem.

impacted there of – that where questions the had think I is terms in anything P&L? you about that else

Brian Essex

little Yes. I of color. mean, maybe a bit

in year. relatively the bit a end the little meaningful I then that from was it what understand, year think in wasn't impact. it of be it to of tailwind a bit like the supposed of headwind tail sounded an the and minimal But I first

Siobhan Nolan Mangini

That's right. That's right.

reallocated professional a into on accelerated had overall, minimal of it that a presentation the I'd this. a impact. had services We even But provides have in bit a do website was a some say, detail revenue QX and periods headwind value amortization and level of marketing. on of just of and gross impact, some lifetime and sales that's There slight margin across a of basically that then to margin operating revenues full the related costs the and subscription commissions were five-year a fulfillment prior we as lot is So more we obviously customer. actually into positive

Brian Essex

helpful. you. Got Thank it. That's

John C. Doyle

you. Thank

Operator

next & of Your of Please ahead. Dougherty line Company. Gene from question the Mannheimer go

is line Your open.

Eugene Mannheimer

a on Congrats afternoon. start good good the to year. Hey,

on last Just Siobhan. a comment, follow-up the

if suggesting line? SOX XXX it the in the on So, better impact the or wasn't revenue looked quarter – have for that are you ASC professional even the services might

Siobhan Nolan Mangini

so had I mean we fully – approach. a retrospective

revenues, we an did in some undergoing only materials is But that were revenues annual in we put revenues the But less than ASC There to for as well under fee adoption, perspective So of as X% professional subscription. XXXX. into that's was It's years. there QX both we just into reallocation XXX. It's there services as attached. the actually prior in P&L, bit a on was for of minimal. the

Eugene Mannheimer

helpful. about And with That's sort you the sounds burned trail XX%. Okay. line Would through the way in XX% X% to heavy we benefits to year-end that of at more with transparency like off going end in of it the the here? off a balanced expect respect quarter from the to year-end in fourth churn, or

Siobhan Nolan Mangini

– actually relates in to the made to customers now this I had earlier And our converting over transparency the comment right terms of is approach platform.

we in discussions. So active are

of we the pattern of get for if field the we the of ARR in to that paper quarter about year. two-thirds there said, so. renewals, movement we're – being when out They're the will today. are happens our renewal at able in look up fourth in teams early, Our That do

these And before about. QX. working to to that we're so of there that get is and try solidified that certainly try ahead talking you're QX things dynamic to get

Eugene Mannheimer

Okay.

smooth a So bit. that you're to trying little

the already clarify, installs in to off handful later to in of those respect with are correct? put the your And ARR, included year, until their customers Okay. that just

Siobhan Nolan Mangini

They are. end they the the included QX were of at XXXX. Yes,

Eugene Mannheimer

year the say that well? Okay. you the be to expect guidance. the seasonality for Is you ramp And QX would as way of revenue that just fair it? a the to is then last Do me in of terms cadence question in similar last saw

Siobhan Nolan Mangini

say I said – And just what I'd I reiterate quarter. would last Yes.

we year a I had a QX we've the for large toward (XX:XX) Castlight – the second in and handful remainder half So in and same. year, the the QX. stayed any these of expected Complete of first beginning revenue then High very half, of customers of XX% launching the contribution the customers, because this said the in ramp at

Eugene Mannheimer

Terrific. Okay. you. Thank

Siobhan Nolan Mangini

Thanks.

John C. Doyle

Thank you.

Operator

of Raymond ahead. line from go Brian Peterson Your the of James. Please comes last question

Your line is open.

Brian Peterson

Hi. taking question. Thanks for the

So, first one, ARR. just on

potentially the genesis to few out with and the was of potentially So as how we that recognition. revenue. could – going of we timeline the maybe see But call ago I bookings from momentum I diverge Jiff three-quarter a and disclosure that then revenue cross-sell that ARR potentially use does see to into a migrating customers think the over accelerate? to years really platform, Because recognition to the supposed think to were five-quarter

if that's all. Just curious at changed

Siobhan Nolan Mangini

doesn't great what ARR well of of dynamic, about get to soon up through, a It is disclose This a and looking it. That's would get platform launch actually is said, we're five why reduced this shift question. what Complete we because we seen P&L year, between four is through a we It's when that the to as churn. We it temporary do you in notified at be. that real-time the a as and changed, we advance. Yes. quarters where we've customer. period elongate Historically, the subscription quarters launches as it metric. announce obviously quarters And believe Complete This expecting has and great around, Castlight forward-leaning was launched. until integrated six revenue play fails we Castlight to what as very future until it

we've timeframe, as expecting think become year. and that previously, not to and we're we ARR at I seen when can what Action, which this conversion Anthem a launched proven now get this both product, to we've but faster that see launch once closer has that we scale Engage, it as is five-quarter and four-quarter we much well is launch genius,

Brian Peterson

Got it.

overall just does just that how guys Thanks the customer Engage usage some base? there. the channel. to I'm Okay. I think stats curious, for you it to clarity as And gave the Anthem compare relates

John C. Doyle

So care is that visits. are two guidance Brian. XX% customer the that's The about what those or the that of most care I year. makes excited be that person a of – sense. thanks, return is three in – usage That's frequently we've quarterly XX% registered so back care getting at consulting base stats a talked least mean, to typical for times to And And coming have tended to a users ton gets once us quarter. context, a

is So embedded users the three of monthly, times if math, quarter do we've which half Castlight that first we've the coming engagement deeply registered And three how the the the of launch seen makes you kind sense are. that of Engage a ton that of wellbeing level times in capabilities tracks. and What with given seen incentives back with is – historically.

And these so the helpful. the two and care a So tracking, validates we rubber decision, forth. food tracking, And on to road Castlight we're was meets mind. steps keep of together, guidance there be when things top tracking, right if the sleep which put original we thesis,

we're so really And excited about those data.

Brian Peterson

John. Thanks, it. Got

John C. Doyle

a Brian. Thanks lot,

Operator

like Castlight now CEO would for call John closing the I to Health, over Doyle, turn of back remarks. to

John C. Doyle

forward a at we with Thanks, June. in to you today's evening. call. set Conference everybody, building simplifies on making the pleased quarter. on and strides and for to Jefferies that deliver Have on this joining super health We're that really Conference Digital Healthcare focused the technology Chardan the we're foundation month We us we're seeing this look navigation, Health

Operator

call. This concludes today's conference

disconnect. now may You

Castlight Health (CSLT) 10 May 182018 Q1 Earnings call transcript