CSLT - Earnings call transcript Q3 2020

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Operator

Good afternoon, and welcome to the Castlight Health Third Quarter 2020 Conference Call. [Operator Instructions] Leading today's call are Maeve O'Meara, Chief Executive Officer; and Will Bondurant, Chief Financial Officer. Maeve and Will offer their prepared remarks and then they will take your questions. The Castlight press release, webcast link and other related materials are available on the Investor Relations section of Castlight's website. This call contains forward-looking statements regarding trends, strategies, anticipated performance of the Castlight business, including but not limited to guidance for full year 2020, new sales, our ability to bring new innovation, the opportunities and impact of COVID on our own operations, our ability to sell and our operating results, opportunities and the impact of COVID on our customers' business and their decisions to buy certain benefits or institute workforce reductions, retention of existing customers, gross margin and operating expense trends, cash used, future cash position and the changes in the growth strategy on the company's performance. assumptions. as expectations X, are at various uncertainties made management's and subject are risks, and views this and statements of XXXX, November reflects to These time and develop If or prove any actual differ implied expressed could from results risks statements. by of or our incorrect, if of forward-looking these these any assumptions those or materially uncertainties The forward-looking statements. company disclaims all obligations to update or revise any unless any in but further financial Regulation call guidance, the during company the not performance contains forum. quarter or guidance compliant provide a updates FD on This will contained filings Please factors the refer for to risk actual materially factors today's in important the those results press may that release included Castlight's and in Securities or forward-looking the with of differ events Commission statements. Exchange and cause a discussion to company's from presentation – as loss and non-GAAP metrics, and margin, expenses, share. call per loss certain including operating such operating includes net income gross non-GAAP Today's income be a in in addition These in to, measures financial with GAAP. as accordance from should isolation not non-GAAP and considered measures for substitute prepared

before the the heading earnings that, With Health. to Maeve Castlight aid the metrics historical that Measures Castlight's regarding Maeve? over Disclosures non-GAAP However, was O'Meara, filed Reconciliation Castlight comparable to results. of turn Financial the call release financial GAAP found non-GAAP of non-GAAP of call. understanding in reconciliation that be under can I'll metrics these on the basis GAAP to CEO a and believes metrics of

Maeve O'Meara

today. joining all you us for Thank

quarter. We are looking forward an our providing to on you update third

dive financials the with plan then, each our today, growth On start strategic will on our our priorities, I and for deep will a strategy. the Will, of I'll health review progress our quarter. provide call into

business have a their Cigna plan quality support our I goal a of we of to Taft-Hartley of an third we portion Federal goal in when new signed Under as pleased quarter in this February. you segment. XXXX agreement, many a set spoke in we an and the at We're agreement with to thousand that will As on met represents implementation of initial with search, health November the the and I'm customer know, signing cost. several The $X date to of provider testing XXXX. approximately annualized track million of X, recurring revenue, end provide hundred launch pleased and completion on population January ARR. initial contract an expected members or access is

expansion a flawless and market we is priority within product have in and plan grow expansion two, of additional segments segment; three, immediate size believe Cigna. in segment; with to this clear Our A membership partnership this a an our growth we within launch, three of ways: validation national solutions opportunity this one, and represents fit. of

strong, employer to signed business. innovation most As it Anthem we representing onto weeks, to beneficial of In more for and Engage, than within cohosting where relationship than client a more their and outline product studies, expansion case plus Summit book will few partnership have mutually further we Engage Anthem, with of the future quarter, Engage clients, in showcase employees. third and saw large Anthem. we the largest continue national large the will annual map In recent XX relates our road a customers be strategic XX XXX,XXX employer

of pipeline Importantly, we have a prospects. strong health plan

our our plan to bringing who national to you ultimately in plan believe goal navigation we that customer, foundation In health updating two of partnerships developing addition provides to opportunity look accelerate validates progress. our signing new We our exceeded our will to solutions. We people having need pipeline. met a strategy forward on expectations have grow, of and our

employer to Turning to direct business. our

challenging was as peers sales churn some of slow to COVID, due third quarter terms noted. our and anticipated, of ARR we have As in employer

XXXX of XX than more a a handful renewed quarter importantly, large we strategic and, side, positive ARR. representing this the customer including forward seven-figure renewals On into clients, renewed pulling

we customer we've January our forward, NPS, of which Delivering our demonstrated product product for innovation we creating this most as business, highlight critical I'd increasing care year. year given tracks customer shift in delivery made our is from virtual by in aligned time. innovation the product satisfaction like at XX and this real for baseline points traction employers year, this have what's this the the to Looking accelerated buyers' with channels. our satisfaction, integrations tighter to with are from First, three updates important care, quarter:

of For and friction a within reducing the we our platform example, the health telehealth directly enabling these the enable visits process, access partnered our with through knowledge Amwell, QX, intake invest will insurance in and and care information. user automating in history the were for virtual app, and in We Castlight streamlining virtual leading to to movers users' ecosystem solution, leveraging solutions. to continue curated first

capabilities as solutions. and access our develop personalized to leveraging core available connect newer behavioral to specifically XXXX, Second, navigate, is bricks-and-mortar both in data in no the journeys to which user all behavioral we health most our Behavioral in light our the clients. is to system challenges as teletherapy launched the affordability, invested to address increase and customers, health tech-enabled first has facing the of areas of complex Castlight and made health that well dramatic awareness, health barriers cost at other of offering, one our in

recognized ecosystem, the several COVID-XX with and with health. To Quest or partnerships added expanded Ayco Health, with new partners market. the the deepest Livongo. launched for added we to and our response, diagnostics ecosystem, our Nox for support COVID-XX Visera, and relationships and in Everlywell broader we where behavioral Third, as Across broadest we clients' testing we Vida are

Castlight integrations. clients shift contract ecosystem navigation our purchase these partners, Castlight's of As advantage turnkey their accelerated and care, of well with through solutions can given virtual to all solution the the our positioned ecosystem API-driven is take of strength In capabilities.

navigation, to offerings a given of support against plus high-tech the return a growth of One, employer is solution generally the COVID. levers our high-touch product our is market on to two during growing, demand the the continued to have addition challenge unaware of opportunity the In high-touch innovation, we to education but specifically, market for side execute business:

in even have invest Guides. We are to thus, health in to channels, well greater need and existing to their customers buying on remove Care COVID, are seen channels we additional enabling on our and the Two, capture share we an our educating through friction employers prospects, market this growing base but for positioned including during plan. customer need in focused to purchase process

mutually with partnerships. plans Our provide natural beneficial health conversations opportunities channel develop these to positive us

in year but acknowledge see market strategic due their next discussions by encouraged are the to in planning inform what We we to uncertainty employers COVID. with engaging

We hired XXXX our new and on sales and for are laser-focused preparation have reps. already onboarded

time the for the We are kickoff sales training full our notably, Care most on given into of importance event the pulling Guides. solution, December first

consulting to We RFPs. the the solution ensure duality the they in and of have also criticality given QX each scheduled understand of high-tech business large houses of navigation reviews with our high-touch plus

well are measures ensure in to these market are we We the opportunity capitalize positioned proactive XXXX. confident on will

Turning to Care Guides.

ago time of generally We learnings QX on significant that launched with We are a delivered with delivered year year by this and be goal solution nearly from high-touch on customers. goal the pleased year. to available have on of that a ensuring budget experience we would below our of and our early

drive and data infrastructure to greater efficiency our the scale, both product We operations impact. and have to optimized leveraging

their employees capacity more support Intercept and need. and staff and us cases or of enabling broader implemented to score out market customers added and for route is us several offerings nurses We workflow that to more built our have the needs We confident Guides to drive for of high-tech array the the cases to incremental barriers directly a a impact, them in Care complex care to and This rapidly who families. accelerating both to feel respond use high-touch risk of quarter. greater enables to complex demand regardless have

solution in offerings approaches Our navigation is problem are true a adding to who now the us market with traditional operate which than efficiently the offering service technology that backbone, more allows technology. the only

point hole for of market competitors that at seen to is focus, health our routes decisions in products and to built, allow below clearly our are execute and confident market price in have navigation I'm decision this strategic in have the I Guides, Thus, consultants in I the to we of with increased us aware importance enablement in RFPs. Care ensure a data are marketing I market readiness has service technology but our market market in the of Care high-touch our Guides and our and addition there meet in the the and We build capabilities. one our first the The offerings high-quality opportunity. a core the confident and that critical now navigation to capability price we feel is competitive need mentioned the at made demand it was same expanding, is we which customers, point. earlier. Training, work against to plan prospects

Turning the our in from management We quarter. From expectations and full more overall, quarter, the our and will work the in detail. financials this final proactive financial taken cost perspective, positive I'm are with benefiting of this again was again But team. are we year XXXX. our strategic pleased solid quarter in to We performance another a raising guidance. flow our the cash our priority. and measures earlier Will, achieved beat confident cover in

our want safe to customers our to institutions continued our comment employers and country ongoing out pandemic. academic through and to close feedback I great garnering customers. Before help COVID-XX and our reopening, workforce from I reentry Working campus commitment support is our my the on end-to-end solution well, remarks, manage

workplace, power make most our our recent resources a to contribute could departments. human by well never working my years are build are state council: “I new and quickly.” vendor so it Google but in Given support to worked health multiple also quote a Working to a the product Test there XXXX Site leverage comprehensive the powering customers, will nominally work COVID-testing Finder, evidenced we XX and of the and as existing with have that delayed pleased COVID-XX revenue, return from relationships of out available, customer We only to database put

generation support testing navigation as with Alexa. We access the with example supported most position Amazon integration our Site comprehensive demand continue Test one being The to reinforced and available. recent is to but increased solution Finder has free our

importantly more continue that and, we've strategic for are progress built our year. the to proud to priorities this team We the future, against make

month, enterprise, experience announced of we technology, of health. Over Vice Chief Executive President consumer more People the addition Experience, Customer who Angel Vijay some couple of Richa Gupta, Engineering; of XX leaders. Anand, years of on President than digital brought Rosa, the across and great and bring last Vice have collectively quarters, Senior technology Last we Officer;

mission-oriented adviser. strategic end to on CEO, a and leaders the be we the the business team. financials. a for Brian at I'll Business proven the incredibly Will? to I through industry this powerful, one President so such expertise of of staying summer, now is important energy of Group want innovative over the I call former the feel do. already that are to be brought the experienced, commitment leading team in to Additionally, and entire thank privileged Health, to same work on the level we lucky Will to most to his Marcotte, has focused Brian pandemic invaluable. the and as and bringing turn Castlight review

Will Bondurant

strategic with financial progress or third revenue, we to quarter, made approximately the million was start this pleased review $XXX.X many of on at and quarter annualized forward which this of million sequentially. end I'm I Maeve. $X.X results. my our ARR, look down our I'll with on the recurring quarter expanding Thanks, initiatives,

employer As principal Maeve mentioned, the was of churn of we QX, in churn driver anticipated the risk sequential decline. and

did this continued to related the we given long-term bit benefit chose slow for opportunity to Care which our quarter, sales, $XX.X year. that Subscription of revenue layoffs expectations. unique services for of In a COVID, we was product up ARR the momentum to in certain to our for position million the color, commitments count did challenges health X% saw conservative revenue plan To of employer accounted difficulties. the exceed expected, several financial client circumstances, saw renewal renew clients in responsibly that the churn, financial the of around line Revenue ARR in quarter, to our and add we the our professional clients. at as levels decline not in exchange potential was our in intended experience forecasts with benefited Revenue Looking decreases business. employer year-over-year. quarter million Guides from though COVID-related $X offset from a year, in coming reduce to or third XX% user total and our membership for revenue

management in margin benefit to and non-GAAP the XX% from year cost third to ago. to year compares earlier Gross continued a Turning this we the XX% implemented our financials actions quarter. of

in off compared factors, is straight quarter shared the of of loss year. operating the margin our second to QX goal Our the declined was million non-GAAP million to income down following improvement million we financial reflects to pleased priority third a of cost this $XX.X specifically The year-over-year represented to non-GAAP expectations another well XXXX May, at gross and Non-GAAP our about realized management half this of as year implemented of revenue million. ago. percentage flow level this of compared earlier in around impact subscription straight were the positive XXXX. second year expenses and quarter. line income cash year. in expenses small $X.X savings operating for base. sequentially quarter mid approaching of platform with company, X% shared we that QX for a as these XX% sustainability, Based X In migrations on $X.X completed $X.X XX% January in was that second quarter on proactive of of positive provided albeit profitability measures a in our XXXX XX% in QX of operations of breakeven our as as share the This was down the a record the the we Non-GAAP operating our from of by I'm operating cash year. XX%

second relative a generate flow cash of positive As a achieve the anticipate will revenue non-GAAP proactive our based margins as and X-X year our benefit cost positive and post-COVID $X.XX, deferral expect even to in to We million that a for between share forecasts second with We a per be million are on At range in mid-XX% of updating with ended of expect flow of operating XXXX. breakeven margins be cash million used from cash. quarter our actions, strong revenue achieve $XX the expect now third to million $X programs, and shares. we XXXX cash $XX QX structure flow COVID-related half full operations and cash in we pleased our million result now several typically the cash range and to and We activity. outlook to now earnings to $XX this quarter $X gross approximately the of expect we to in million $X half customer to non-GAAP XXXX, time, of XXX million, million $XXX end XXXX ramp-up for for and the lower the $X.XX given second in are expect our gross support for more the than XXXX between range to profit $XXX cash. were

and Care our As Maeve deliver to Guides health financial XXXX. believe we and our strategies plan key steps to sales in we share will results, against employer traction identified have support pleased meaningful are mentioned, continue the

Castlight up Team a values Things every our Happen. to Our Making One On this our take time, questions. of be pandemic team Castlighter and to embodies during on and for all pleased our each users customers, of grateful our of we’d Mission this At I'm stakeholders. showing behalf at

Operator

Blair. comes from [Operator question First Garro William Jeff with Instructions]

Jeff Garro

and I questions. wanted to for the Yes, the the good renewal ARR taking and everyone, the thanks about results in afternoon quarter momentum. ask

you're on you've renew given there Care taken, you the clients – what quarter? You transparency-only able how much to successfully. some And solutions? then those like through for to as the and renewal much some I add calendar does were forward Guides early, the guess, we're look actions fourth of how mentioned and worked brought renewals trade-offs the that

Maeve O'Meara

to Sure. Hey, Jeff. Great hear you. from

so a to So break lot in of it I'll try pieces there, apart.

then move course, plan momentum. ARR, in So the that conservative been as out. we sales, of relatively with we And churn deals health the kind it would knew those then, QX pleased And had to be difficult mentioned, on a expectations as saw was of of set. you by it some year relates line employer have

just color there. churn bit spend of little think time to terms a because some it's important I of In on

any did foreshadowed kind through due we which pricing concessions. pressure, a to didn't environment to including our was really quarter, financial a As create discussed buyer lost be downturn contributed I understanding to insufficient we dated there product where said, really was this is When value. we've totally That the that creating new reset to terminations and impact last or because the portfolio, churn indeed was had issues important in operational of in or difficult a year. COVID of both past, secondary certain XXXX. to pause and the of think churn, whether it economic That what churn more contribute been of Care has relationships it different the Guides. customers do, Really, understanding

mentioned, do both a our That renewals specifically of kind including as we has about that the the So feel certainly comprehensive added. customers addition solution, Guides. in Care as valuable been we've with as well good you

that just I regarding speak you versus platform. color that churn. question wanted So transparency additional provide directly on And to you to Will, the can asked

Will Bondurant

absolutely. Yes,

The majority So their at Jeff, the contract I'll renewals two term. end of points were of our hit quickly.

some majority point, of come But past. and point Jiff separately bought had the them we also from Many solution. at of full on Complete. did Castlight that the customers, customers the so are And this in platform renewing are

than to basis. QX, the majority ARR an When have what's renewals of XX% renewals piece, our left XX% point, At asked this in after had remaining hit, less we a quickly remaining. we about of about the little Second you we year. on just because bit – the spoke

are remaining as of I a Q do forward pulling have them, set the – also XXXX then mentioned, QX QX. and we've focused, So on into renewals most in care taken of

Jeff Garro

And it. that’s Got helpful. very

Guides. So ask more bit about I'll a little Care

As existing part Guides lift offering. weave about it's renewal of new be add-on into should expectations think just terms to by conversation presented, Care potential I you the these been to for customers the for where of Care an net more in sales it a Guides in you as of just adding Can more to as contracts think ROI broadly, conversations? maybe comprehensive of us remind or, as how deliver

Maeve O'Meara

Sure, absolutely.

invest is all, solution a that is we've the about what I really in So pleased met step that a so having say important think, observed we we're high-tech really is increasingly becoming is back, taking have Guides high-touch Having this navigation. that goal to a And plus would I HGA] Care delivering QX. good decision in rapid market strategic Guides. a feel of to Care acceleration, our in

question In of on your terms expectations.

that So as the and the our about market in is market, I others our ways mentioned, excited us that of allows scalable, service. high-quality things to can't we're provide really one because technology access that growing foundation ability to of full

So acknowledge year we kind of certainly in selling of Care one that Guides. we're

to we and win allowing on factor be market do us enablement do But in to it awareness. in work grow and So in XXXX. view we to critical a navigation have market the

Jeff Garro

last reflect – entering pipeline. funnel? yes, positive the that do progressing pipeline. there's the squeeze of comments more the there. health And I'll That on the deals leave one health me, it More more it plan top deals it. comments on Got And as is those the for helps Or through one pipeline? And well. in plan

Maeve O'Meara

Jeff. Yes. No. Thanks,

broader two as to the can because are to sign new executed national course, you against we at plan plan validation of be goal that have having that course, opportunities to customer. represents one as imagine And plans. thrilled the the have as, national that a excited, health really of of well of the the expansion was beginning we of which are set that, year, We

of actually pipeline, stage we we In but as really terms healthy. you top of mid-to-late quite have do few opportunities. And have a mentioned, several entering funnel, certainly, the opportunities the

the as see implementation to we're I think mentioned, think, is starting have do to lines. that I mid-XXXX those picking time up, that due movement pipeline I validation. of the in And particularly, Some that

that And the our pipeline that exceed expectations, has we so hopeful year. this set opportunity to gives exceeded an and our us this we're goal

Jeff Garro

questions. Great. queue. Thanks the I’ll for taking back jump in the

Maeve O'Meara

Thanks, Jeff.

Operator

this will to telephone And Instructions] do have turn presenters. any we I not at the the questions time. call over [Operator

Maeve O'Meara

today's Thank Suisse the We you joining for Conference XX. Credit call. forward us November Healthcare Thank many you virtually of on for today. seeing us on look next at to you joining week

Operator

call. conference today’s concludes This

You may disconnect. now

Castlight Health (CSLT) 8 Nov 202020 Q3 Earnings call transcript