BNFT - Earnings call transcript Q4 2018

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Operator

[Abrupt Start] Finance and Investor Relations. Mr. Bauer you may begin.

Michael Bauer

Thank you, operator. Good afternoon, and welcome to Benefitfocus' fourth quarter 2018 earnings call.

the the announced close discussing release our be after issued of will operating in results press We market today.

are Jonathon Financial the call today Executive remarks, and will me Ray for will President prepared our Joining open we and offer Officer; some and Ray a Dussault, Officer. Chief up then our and Jonathon August, Chief Q&A session.

of as are predictions, variety profitability, continuing about and and for services, our XXXX me recruitment to and views representing remind might GAAP need key uncertainties, personnel, should achieve forward-looking immature products the and will laws, to to volatile to our of including results, our risks retention a and reflect statements only risks such be discussion statements expectations. and not guidance that you future. include year risk full views and regulatory our of of financial with our for other today's that statements market changing fluctuation losses and need let actual of first the that and effectively begin, be subject including and today positioning services, we under expectations statements the any as innovate Before These subsequent considered to information from the as acquisitions, federal and a provide and quarter useful These date. forward-looking cyber-security cause could environment differ our ability materially associated results products compete considered our security

report other please refer that risks on other annual factors results affect on could our material the a our and actual SEC Form XX-K discussion and further For filings. to important

financial we today's refer will of to certain course measures. non-GAAP also the call During

announcing release. shareholders. disclosures by plan in You existing our certain offering press about Also to today release those press measures can issued a commence underwritten a find secondary separate we earnings our important

with registration we on more For secondary Form offering our our the filed press to the now Ray. call turn please regarding the SEC. and statement over see details I'll SX, release

Raymond August

three Thanks Mike. call. I Good afternoon you hope everyone. the takeaway today's I'll will by key points sharing start from

we balance year First, consecutive with our had also deliver or quarter We sheet significant strengthened our flow marks QX year commitments. of cash exceeding continue marks and fifth our $XX.X significantly positive. million. that full of are to first EBITDA expectations. the we This free meeting on

accelerated growth returned our Second, to revenue In with have we agenda we a XXXX, trajectory. growth of growth X%.

continue we will Our growth to positioned And growth well for organic XXXX. are future creation. in last and value accelerate

inception has has XXXX steadily to from performance revenue XXXX. in driving BenefitsPlace improved. in gone significant bookings Our

Now, let's dive into was the a highly year. details. XXXX successful

and quarter improve executing fundamentals value Our our on financial all year continue platform business milestone strategy strengthened pivot defined in our and our launched driving We key financial began of fronts. We and fourth accomplishments. aspects of and strategic our time. go-to-market new capped record to business a we shareholder

strong Our revenue and of guidance flow. million our flow of over million cash free $XX $XX cash profitability operating generating nearly QX and results exceeded

lowering notes, by balance million support senior providing financial to We capital increased raising also flexibility over net growth. of in cost our our $XXX sheet proceeds convertible of strengthened and our

points, over adjusted the EBITDA software our For half increased XXX services second and growth. accelerated XXXX, as well increased our gross our non-GAAP leverage raising year revenue of operating growth public full and as average of adding is flow. margin We basis we over XXX cash positive history performance we company for strong lives basis per user and Underlying our diversified free time growth achieved in as or strategy increasing the consumer the focus a revenue first ARPU. our our points;

an Beginning benefit of our XX% year-ago compared experience executed growth and strengthening participants, to simplicity sales in strong benefits QX expanding more lives consistency the buyers XXXX all for execution sales that This lower and the was our doubled timely and the compared data this three Improving addition the results landscape addresses and building by for a revenue unprecedented period. XXXX. accurate productivity benefit platform of benefits XXXX our another on which increased the information. sales in XXXX. to quarter when ecosystem. more for improvement providing with clarity entire Driving on choice core. of cost Our includes and consumer momentum net execution. was priorities: Total team of by complexity having lives benefits opportunities for and better sellers, net strategic closed eligible frustration throughout benefits unmatched We less eligible benefits

larger growth and with QX traction reflects employers. SAP Our penetrating strong continued success

Over resulting in the of organization platform. improved our year sales our we greatly capabilities increased productivity go-to-market our the past for demand and

Our seller platform partners are channel and network, entire our engaged, wins. every excited Brokers collaborating. The connected, ecosystem and our Premier participant is

connecting second for the BenefitsPlace It's accelerate ecosystem us our ago, Our to foundation improved alignment. year our simplify for result our priority, early the to than a buyers a benefits opportunities. our ecosystem. BenefitsPlace revenue entire the we brings and multidimensional marketplace. expanding offering sets of ability Less BenefitsPlace direct to to the and growth We which complex launched sellers the is experience of catalyst believe our further transparent success make

fast automation and increases Our delivers ROI. platform

our projected products families. their their offers protect providing analytics benefit needs data-driven Our and which into valuable consumers and powerful consumers solutions it needs. historical And combine insights of

simplifying the through are We entire our experience ecosystem.

consumers We greater greater value. and by providing greater are empowering choice, access

and buyers platform's entire brokers Group, premiums our number by for products carrier that Financial one our lives we BenefitsPlace expansion. our QX and Securian five strengthened adding our bringing and open effect adding ecosystem group to our growth now by our and and partners. enormous products lives. our from million over in benefits by ARPU in of for our adding alignment our adding BenefitsPlace fuel during doing traction and the Hartford. writer total We specialty In network factors open on expanded shift more premier these generated access the so millions strategic of consumer with balanced business and help of by platform. consumers Together drive of BenefitsPlace who value XX, can our strong additional current continued Our growing which delivered the connecting million to U.S. The in further enrollment XXth X on BenefitsPlace policies carriers $XXX Allstate insurance life leading and sellers By

marquee growing help Options sellers them and BenefitsPlace. consumers products is with comprised these we a and certified a better network of platform Combined Our XXXX, XX families manage their market-leading industry's of the on offering provide that benefits end have By over well-being. of options. their the finances catalog cost-effective leading health brands.

strengthening and throughout our business. of third well financial QX we against executed our stated In to turn the let's priority, commitments. core XXXX, Now, our

has focused We initiatives. and our ability to inherent streams enhanced on flow. automation recurring and our data diversified leverage and revenue have QX cash strategically model by improve In generate these investments our high contributed profitability margin to

company today we a year ago. stronger would When we are transformational. BenefitsPlace, We than a we launched it were be knew

continued means As as them the new of security clearly and saw greater business benefits and our we experience, it to see elements wanted In don't benefits, peace that throughout year, of see and mind model consumers our quote-unquote consumers maturing they brighter in day future. as a out. protection day

fundamentals. and with significant entering momentum We are XXXX strong now

strengthening focused We advancing leadership. we Grow year complementary platform our on on market platform, core milestone our our priorities: our XXXX are and our three accelerating strategy. building and are In XXXX,

sales team growth direct adding but our increasing through increasing carrying focus To organically Our organic growth, capabilities. and and includes are maintain reps, extending lives quota simply ARPU channel the with we platform our of sales multifaceted, Premier and sales in investment strong success Brokers. SAP supporting channel and This is defined XXXX lives acquisition. our both our as in indirect

Premier exceeds that's Broker customers and expand all bookings up up which plus our direct in And from from the our sizes. This to XXXX. are at relationships channel investing broker to start heavily new we of as new to inside will partnerships We of year-end, the today of our XXX, should team enabling grow at also XX continue year. sell sales zero accelerate our

broker In Mercer's a private they supporting to goals. in and for more with be an in expanding program with who to Mercer result been both ago. commercial away their line Our increased a business partner exchange Broker a Benefitfocus launched XXXX. customer pivot renewed Mercer was our extended became The material national has company's emphasis Mercer agreement from investor we valued a platform measured exchange Premier years agreement on and includes four since in with Benefitfocus QX, our private an investment through is our a selling partnership.

our a by to growth value and carrier our associates playing small business. are confident consumer field By tremendous provides also fuel We Yesterday, of to a BenefitsPlace purchase with software to we profitability our Acquiring these to brokers that While a also opportunity all also Mercer add technology, will will to quickly strategy and certain in complements all, pivoting expand over It will enhance future. and on By will our segments. pivot introducing assets remove this longer Benefitfocus this expected customers modest sheet on platform. growth the the software reseller carrier our in opportunity revenue to be work XXXX. our company. will capitalize XX, This restriction. all XXXX is to strong in opportunity, XXXX this our we will strategic the of acquisition and equally first broker prior this all provides and and to mid-market February company. be This headwind exited the market we level commercial our to U.S. brokers asset deliver individual business the us platform a moved attractive will accretive quarter result and strengthen with change reach being without it across the and allow customers. assets why medical for direction solutions of an broker during and lives That's a exclusivity constraints broaden acquired to balance term our that services Connecture's

extremely XX all employers, supplier with and million BenefitsPlace and In BenefitsPlace benefit high-quality of Investor to focus of on at and our to pleased eligible BenefitsPlace Day, XXXX, plus will BenefitsPlace products ARPU. we ability early net access are driving carrier highlighted our our consumer and more As continue the success to adding to with adoption providing participation. to higher we increasing platform, expand lives placement products

priority focus margin our plan a hyper business. aspect We strategic With as our improved and toward leadership. continue driving profitability our core. higher XXXX firm remain This in initiatives This as executing consumer across finally through growth excellence well to focused our strategic is cash accelerate in and XXXX. shift includes are a growth operational flow unchanged streams on data our upon from automation our enhancing our revenue is strengthen of foundation capital support every We objectives. to market innovation. advance of elevating priority third allocation And we to our which and

the increase significant premier this with over double our our the event Carolina, will leading and of South world. scale into insurance platform and Place. weeks to the level. market-leading will our and in This companies some Given is year next at respected our the brokers broker companies hosting markets. of we market the in our participation consumer we last are into visibility out start The most year's the leverage event will our largest take in influence position One Charleston a the sold few industry hometown event, customer At position

do results. our strong our QX XXXX, our proud our our advancing fundamentals, and delivered diverse on what remaining accomplished. leadership. our diligent I'm accomplished and strengthening tremendous are our With market strong our confident remain We streams, growth we of goals priorities. and balanced on on platform, truly growing the back In We XXXX, business Benefitfocus Looking same. our XXXX by team and We core full-year will revenue focused our opportunities. focused has

success for in have to We value more the continued even and create foundation XXXX. necessary

I Jonathon? financial Now, to the turn like our to over would review to Jonathon results. call

Jonathon Dussault

the effects acquisition certain Thank Today, for XXXX, financial full the be quarter of QX you agreement will guidance and and year commercial I'll Connecture. Ray. results software of XXXX and and Mercer inclusive our our from be with extended financial full which year fourth discussing assets of our

continued up transactional $XX.X previous Employer XX% QX, Turning increase timing Benefitfocus. growth The of XXXX. range. revenue quarter million services an up year-over-year fourth revenue combination X% services and our was quarter quarter This software offset professional timing fourth revenue of guidance $XX.X quarter was our was XXXX. was of representing a to million a for quarter XXXX in BenefitsPlace. revenue. compared revenue million, the revenue of period. period. gross of subscription XX% and growth $XX.X increase over as fourth is from services $XX.X revenue of for X% software BenefitsPlace of further. it by employer was Total XX% increase was driven margin Carrier of the subscription revenue outperformance. above Breaking the the software to QX to was Total GAAP was compared an Total strong strength was the million compared results the $XX was million the XX%. excess by for the an an our in an quarter of of partially QX increase of and increase of Carrier end streams $XX.X to service compared fourth software prior contributions XX% guidance services Fourth by $XX.X down revenue primarily profit of million XXXX. revenue quarter driven prior-year reflects high professional compared BenefitsPlace the revenue. prior-year million revenue Employer to to subscription revenue XX% both the of $XX.X of revenue professional and the million include was services

QX lease representing point implementation services software of in loss compares non-GAAP and gross compliance, from combination gross a gross in non-GAAP margin reflects QX, operational increase million margin. of net XXX improvement driven and XX% accounting XX% margin up million million resulting to and both software is from This data our margin and new improved loss per our of Non-GAAP non-GAAP by share XX%, and favorably basis non-GAAP and the of note BenefitsPlace efficiencies our software improvement shift basis margin XXXX. to scale. consolidated was a or Non-GAAP This an margin gross profit of stocks $X.XX. totaled first-year gross profit non-GAAP toward gross the purposeful XX% of $XX.X margin. subscription a cost point gross operational gross focused and profit $XX.X gross or higher investments deal an expenses XX% benefits $X.X a over non-GAAP Software over rules. operating items, reflects G&A in in increased $XX.X This convertible The contributing margin XXXX. our inherent XXX in platform's which transaction revenue, automation line million

results. in favorably million our guidance QX We XX% QX also to EBITDA continued was adjusted revenue This $XX of drive of adjusted our consistent XXXX. X% revenue. in EBITDA the exceeded or compares to improvements and

company. Our growth, was operational to our recurring prior of high adjusted was impacted EBITDA guidance. be positively the improved end continues and our and $X.X throughout by scale revenue increasing income net our gross margin million efficiencies Non-GAAP at expansion,

million. For XXXX, the X% to revenue year total $XXX.X increased our full

increased non-GAAP when margin adjusted full Our the points gross and increased basis XXX our basis over over year points EBITDA to compared XXXX. margin XXX

Moving the to sheet. balance

our plus deferred revolving of raising of repaying the year the of and our basis $XX.X points company's positive of $XX.X service by driving achieved focus cash flow cash generating and by million XXXX cost to capital flexibility December contracts QX revenue. senior of provides carrier our prior with line declined After successfully XXXX. to in $X.X lowers strategically Free $XXX.X We $XXX full on As large key million. our repeatable cash free Ray flow financial cash flow convertible business. traditional our transaction-based milestone history XXX position Onto revenue strategic in and a million decline This statement. million. in management an $XX.X end netting is reflects and million and our ongoing in cash generated purchases highlighted cash $X with sequential measure million. our or at the QX flow ended improvement This non-GAAP free equipment property the we the notes Benefitfocus approximately million credit of from in QX a define as that in cash away by from transaction operation strengthened XXXX. we shift was Total provided used sequentially we over grow

XXXX our compared and efficiencies million streams to full free in higher our cash For $XXX,XXX on toward year revenue focus flow, shift full year the nearly company. XXXX generated throughout $XX improvement margin we reflects the

let's to move guidance. Now,

is Our and Mercer extended Connecture. are bolstering of aimed software financial our assets strategic XXXX impacts commercial growth each from year agreement full of decisions These of effects and varying certain guidance our will long-term outlook. half the on inclusive have at acquisition with two the our first

cash. digit profitability. will First dilutive of this to on be February contribute certain slightly We we assets acquired currently XX, XXXX $XX million growth Connecture in mid-single to XXXX in for software points revenue anticipate commercial of and

acquisition low revenue first Second, the of to as targeting additional the for a we said digit $XX.X from asset XXXX million year $XX.X Mercer of With the revenue our revenue headwind partially will rate. we're total the full growth offset extended million. mid-single to that agreement to quarter anticipate

EBITDA to million. adjusted million a expect We of negative $X.X positive $X.X

above first waiting revenue. to the and first go BenefitsPlace lives quarter addition impacted half timing of In transaction second half will of growth enterprise the decisions, be by XXXX strategic and our certain

strengthened on In and XXXX. year $XX profitability EBITDA team enter As From compared we expansion. very built million of closing, million perspective range revenue to we the our year adjusted growth $XXX expect XXXX and a is accelerated in XX% be organic midpoint and momentum. represents million, we margin the $XX By positioned expect revenue approximately our to well total have priorities XXXX. strategic full three XXXX which business for a growth at Therefore, of executed for million. $XXX our to XXXX focusing Benefitfocus in to QX full we

are and Operator, questions. core upon leadership we that shareholder to at We we build our drive advancing priorities, can our on With that our are and your take ready the value. strategic question-and-answer session our please significant milestone time. our strengthening begin XXXX platform, three by growing now this XXXX executing that confident on market

Operator

[Operator question. Instructions] proceed the your Our Peterson line James. from Brian of first question Please from comes with Raymond

Brian Peterson

taking question, gentleman. Thanks. for the Thanks

to going relationship start forward? broader broker And on agreement your signed how of has And Mercer. a that the about is wanted see how going So, framing back? in way years few initiatives Could talk you terms that there think that when evolved about you any to you forward?

Raymond August

thank Brian hey you. Yes,

at it's going strategic you Mercer think Benefitfocus. to Mercer them, to be what's important about for that continues with and very a on state us If and important partner

that, we years. them we call extension on As the for will signed said go several just that with an

just a that. Mercer excited you little So a for a relationship want to we're going But little about provide about what's bit unpack bit our about on. of and frame really

at that overall another that Benefitfocus at only the So in time XXXX, with. as you partner, were in time with factor that business. a was for private with brokers and rage looking need Mercer company cash to was our was that of a point Mercer had somebody at work Benefitfocus partner, one was zero also their selected that XXXX Private point in time. the if we as Benefitfocus partnered exchanges to a XXXX go back at was Mercer for them And exchanges. in

Now, forward to now to fast have XXXX many things changed.

brokers have driving signed Benefitfocus' on part example, now a insight. they're we of in just platform, lines went year from terrific really that For up and XXX a than us strategy, well are over providing zero our brokers they're to less key

went point a position strength. overall part a strategy. and we cash our From are out a important of key brokers at of So

sheet for that for in on the marketplaces So exchange relationship. we Mercer opportunity from the to had companies era and they plus want. shift largely products free cash any looking overall private and point balance use passed platform us, we're strategy positive. And always has reason our said our And Jonathon view, $XXX the has flow million that's have of about an -- as are

look and any to have about for excited really extremely Mercer, opportunity we're We which we this and factor the where broker a once proud. now headwind from with really tailwind in it's opportunity will as growth. to a revenue us at was country. our exclusivity to think the a entire So, provision We this great so work important released ecosystem be and a we we this us, broker with now actually very work consider

rate a growth as XXXX in doubling in reminder, zero Just our it XXXX, in roughly was we X% and XXXX. see

every what go are in to in out our about more work seeing excited members really really All country we're People this our we platform. broker there. we're as wins excited model closely of the So forward. platform and adopting with

Brian Peterson

on you Thanks there, Thanks the Maybe guys. should M&A, color Ray. how to think Connecture one about strategically? the do you just acquisition. And brings we of forward? think that the for for pace What table going the

Raymond August

as small solutions they've there. certain Connecture group of they marketplaces, with assets broker us Yes, business commercial our to purchase raised million that capital individual Benefitfocus ability Connecture to capital. the going very very, processing. we impressed platform really help convert, a a a and on of give it $XXX They it Specific will robust We're with team be the whether was we're with have we're about to marketplaces very what the marketplaces, for quote-unquote going some the -- have expand both to actually midsize business. or their at approach we our of use and overall relationship. to to over They so that -- lives ARPU use part wisely, areas those around, it platform grow group acquired have or look very of built asset be for commercial

deep So just what our integration prepared a we to at our going over about QX doing we'll talk lot means call. be we'll XX be plan closed XX this and forward the robust so the next yesterday earnings have days days we'll is a what next business to over

all Our customers invited South in to Place One March Connecture Conference be will Carolina. Charleston our XX

that associates Connecture and there really our they've and using terrific properties across Connecture base. intellectual are the customer the customer with work now part deploying to Benefitfocus the who of entire excited really we're So built

Brian Peterson

Ray. thanks Great,

Operator

from question RBC. comes Our the proceed line Ross next MacMillan question. with of from Please your

Ross MacMillan

specifically the me Jonathon I million $XXX Can you on and to software so think if then start number? guidance Mercer million. will Connecture the apologize background Thanks. what on noise. the just the net that in impact at Well, And software understand be help change revenue But what's services airport services thanks. let I'm advance $XXX of within an acquisition? with, us asset there's

Jonathon Dussault

Yes, thanks question. Ross. Appreciate the

think we as but XXXX and say, to guidance specifically think models about our I similar revenue had it's don't guide As rate in we would XXXX, between Mercer with your services. To impact starts software the outlook having it the of and the we full professional question second answer regarding mix business into XXXX think about type about we as the going year, really for very on head strong mid-to-high estimating rate into rate. outlook total modest We indicated we're preliminary be growth that. XXXX our XXXX, provide low to the momentum digits to at XXXX. for we that was very on end headwinds in as and Mercer our arrangement mid-single does grow still in of teens which are track impact some at the to much The a we

which of offset our to Of benefit results for of which guidance we the $XXX aggregate is represents announced, that growth acquisition XX% the $XXX to the course, growth full that's million from million rate the year. by rate mid-single digit to XX%

Ross MacMillan

was on just lives. That's helpful. follow-up new my massive year net would on And lives. a be then XXXX -- for a

how million should growth feed And 'XX? you if which I think in eligible XXXX. lives about that obviously in versus about lives million comp added you thinking are How net will into you we XXXX? in X.X think big about X Thanks. XXXX, will

Raymond August

Ross. so Yes,

has lives very business adding hyper been a and focused So driving ARPU. our on as focus

number a revenue. at growth net increase as We really rate confidence the year-over-year future out revenue that with in a us our of visibility XX% our benefit closed eligible indicator it as look instrumental in XXXX's So into to key we XXXX and lives. gives

XXXX. lives not adding in going stop Our focus on to is

organized lives, of to so drive adding Our investing pursue And relationships much organic lives. our do we'll heavily we're channels team and opportunities so. are channel broker in -- and continue to is our to inorganic around very course

and So going future encourage you key track indicator of an growth to forward. as it'll measure revenue that I metric be a our

Ross MacMillan

much. Thanks so

Operator

Merwin Sachs. your line from Goldman the comes Our Please Chris from with next question proceed of question.

Chris Merwin

I ask ARPU thank wanted bit. a you. just Okay, to about

BenefitsPlace driver So you're driving in lives a to outcomes. addition enrollment seeing as also high

X the I think between mentioned you is times what somewhere Day. and at X times Analyst

So I revenue, in much BenefitsPlace Thanks. well. XXXX? is lives? how when a about into then had growth look think as from we enrollment how much And we higher And follow-up is as from

Raymond August

on revenue so they're at our we look overall those both platform growth, to ARPU Lives of they're look our as also and -- our one while to Yes, at times related drive together. dependent we business another.

look the the So it working we -- carriers lives an as aspects. ARPU our us we effects, brokers sellers on or upon our more add the with gives or at scale bigger standpoint platform from network various

brokers. As we perspective and continue and brokers up. synergies those from and allows lives buying for scale Benefitfocus Those to produce go their increase outcomes our us that gives our carriers volumes an to recommend ARPU us better on platform and

overall the for those So business. as linked network effect together our things us driving overall we two do and see

those specifically later value really things the with and months working $XXX are million As they of ARPU, nine is us on entire more in offer than phenomenal products everybody that million benefits because were better really who saw carriers products X seeing enabling Benefitfocus, this in at our them million $XXX we else is new million BenefitsPlace approximately increases. us were of that represented to getting at were enrollment, a consumers the better in place every far friction ecosystem. enrollment any were one but the seeing low important proud March of we're over then as of last BenefitsPlace, on open of announced were that year that open we policies for We policies X premium one to the, last sold in that Employers way. what's to those pricing

in model a was which it everybody So wins.

about As is rates. we and the that we biggest model one look our our think things participation dissect at of

averages an platform you will just industry the benefit. online benefits the of So show and to or time that you that some XX% voluntary about give typically on insights, platform that employee in participate

which is year. have fact at our we grew an XX% look our previous -- at year increase engagement we platform and over much on greater the of we're platform this As in we XX%

means So selling we're value are and a consumers the carriers more that in consumers a platform much products. What their participation. family big value for for jump getting seeing big are providing on growth, is and

So to everybody which we outcomes go see the will participation drive rates 'XX, on for better increase we continuing platform. into our as

Chris Merwin

then up And is on great. just 'XX follow EBITDA a Okay, guidance.

came that a little in few and there as think below a well. were bit call I other where we is in reps and sales things that investments

we revenue as business investments of get of make we you So going in margin think there, should of well? Thanks. to in you're guidance the trend XX%, how over the to when the think about target the particularly long-term about gave light multiyear that

Jonathon Dussault

margin Thanks target. remain same for Investor long-term plus a question. in which gross some by progress great targeted automation paying Notably year-over-year our on line. expanded plus focused underpinning discussed efficiency, demonstrated very margin of gross toward in XXX off and investments heels margin that. the gross We've consolidated that's gross as XXXX, are perspective, XX% are on on points a target our basis and a December we they software target margin follows. Day our that From Yes. the and is in that in We XX% and the is

organization time. to critical paying over that's which and time as that front technology ability scale target generate efficiencies and market G&A of that at is progress operating in order are structure solid with as will efforts as remain have as told, the that our in as achieve continuing us. we're in we and inclusive marketing invest our across those operating that to we good EBITDA our of position capture in where in to that our and same efficiency and some sales is All XX% combine you are automation If a business we seeing us well well opportunity making off time confident adjusted to and toward the of

Chris Merwin

All thank right, you.

Operator

Our from question comes Samad next with the of from Please Jefferies. Samana line your proceed question.

Samad Samana

quarter, taking Appreciate guidance I XXXX guidance. initial Mercer? the for help into new Mercer for us change you ask gave initial if one guidance a thanks walk way? with then the guess that with along my taking question. a us I already and Or the company to question. current account a it. -- maybe Mercer where have the When the And Hi, follow-up So third provision about out could following net on the follow-up outlook was was Maybe found I items? from the just

Jonathon Dussault

good Samad, question. Yes

of going we 'XX, ago two preliminary growth that decisions that actually the So was XXXX rate. XXXX same teens the to year and to high provide what events time our to indications consistent that's when at Since, mid point a little strategic of provided early early indicators provided look the in that occurred. like months to several ago over with end thing a did outlook in we we or provide

mean, them QX in was I however. of created us that headwinds added for which that XXXX. of earlier opportunities we One to 'XX acquisition in I to opportunity accretive mid-single digit growth of relationship long-term in referred the 'XX, the course then the low of mid-single with amended Mercer the digit addition

Samad Samana

ramp understand the there this Could much Great. how That's should really to of continue the help are help into Or the -- Or growth helpful. XXXX? the more acceleration And impact maybe you're XXXX? on into it factored for XXXX? is investment really year then that making just us you investments.

Jonathon Dussault

a Yes, it's so [indiscernible] of little both. bit

are trajectory are throughout today of to here investments and BenefitsPlace investments XXXX execution strategy our on committed therefore making course ourselves XX-plus then long-term optimizing target. position of maintain and very of driving in very continued to that we long-term Our achievement and of for And XXXX. focused percent growth

Samad Samana

Great, my questions thanks for answering guys.

Operator

proceed Jaffray. your Please of Piper comes question next line the question. from Our Deka from with Nina

Nina Deka

quarter the and for acquisition. on congrats Hi, this

Raymond August

Nina. you, it. Thank Appreciate

Nina Deka

acquisition into net the bring does many how lives, the eligible Regarding Connecture benefit platform?

Raymond August

advantage opportunity like eligible of Blues benefit us in that closed acquisition for exact eligible the yesterday the we and to current bring to number about lot of the the really Connecture's net net our customers will Connecture Blues have excited add is Blues of their the really much have lives. customers over both together is The allow Benefitfocus a is acquisition of presence we that It a to very of take working going that asset Connecture and and value the when lives. at acquisition they we're us benefit really do lot It's things look of coming serve excited with of strong customers a and something we're us. about. to the not actually Yes, to one and

ours. We that manner the with go through haven't in had a detail opportunity -- to consistent in the

with is QX for eligible XX-day have we'll Connecture call, impact be great in we'll this net what lives. and our of that talking see the have plan number a benefit we will earnings and be doing is So, integration this asset us about a very the but we including significant very,

Nina Deka

those open to the you platform BenefitsPlace have next do then, season? access that for Okay. And lives would the enrollment anticipate

Raymond August

our they'll Yes, and They're quickly will effective to of eligible course. platform on is BenefitsPlace Connecture over acquisition and working on moving be the strategy. be overall be The now.

should you during things have of accessible for we're XXXX, was by we employer is we last carrier as into customers. enrollment, customers. the only the done One big enabling go And is, of now BenefitsPlace BenefitsPlace one the our are open know -- things that we

leverage to carrier carrier of the our will the company. all for people expansion the leverage voluntary across ARPU platforms on customers which So of products have opportunity BenefitsPlace, now BenefitsPlace us goodness the will for the drive

we important real Connecture part a as that. So of see

Nina Deka

one Okay. Jonathon. And then more for

revenue Was You mentioned was the in what of been something in the in something have would call. later services come earlier that professional for you timing in delayed? QX expecting there professional specific XXXX? about services to Are

Jonathon Dussault

to between that's Yes, no. why some it. the we and Nina just reason there's that identified degree impacted a timing quarters the QX

Nina Deka

again. congrats and Thanks great. Okay,

Jonathon Dussault

Nina. you, Thank

Operator

with from Nandan comes your Our Partners. question. Guggenheim of from next proceed question Please the Amladi line

Nandan Amladi

my Hi, question. Thanks good afternoon. for taking

providing lives you're us, metric metrics the the on now. So

way that of also, there guess the two a brokers participate commentary in and vendors us those You're network. on the to anyway? triangulate I the giving Is some on for way number along

Jonathon Dussault

will that on of success the benefit through in the ultimately think our lives our I broker add Well, we eligible in channel Nandan. net come number platform

of So I organization of our success as would key the indicator sales benefit eligible point that channels. total through you our net the of all entire to metric

Nandan Amladi

quick a And side. follow-up CapEx Okay. the on

to CapEx? impact the be on meaningful more As any transactional-intensive there business might model, this you move

Jonathon Dussault

I wouldn't say industry. the anything meaningfully. past. high invested We'll for continue that to we invest in our technology believe organization points in as our We we have

look material. we'll of investment, optimizing our Of new note investments course, and targeted of we're Connecture acquisition ensure not assets that anything I but otherwise, that the to at would make

Nandan Amladi

you. Thank

Operator

comes with proceed Analysis. line question of Frank Please the next Sparacino First from Our your from question.

Frank Sparacino

Hi guys.

for probably one Just Ray. me for

moving Ray, In for the but terms you sort of had the some to maybe about market? comment the you in there made not a to Is change the regards also now? and then clients base Are also of, target inside to Just new direct. news market with thoughts a Connecture sales selling down you just back team there?

Raymond August

sure, equal shows Yes, value as much. ARPU. thanks evolved every that to as We, look the increasing our making and as us the business consumer model very at for treating consumer for we to consumer platform every single that we're and and and we've up really

marketplace same They'll the that our and what customers look Really we're we drive the benefits you that all we If that employers are what at carriers for as all voluntary to companies with over with of you the fact and at of component need do doing work are to the key our for Blues have platform if are -- a continue do. as that customers customers carrier with strategic with they doing to sizes see we're BenefitsPlace. BenefitsPlace, ARPU, key those of and XXX,XXX the look starting us. and ideal on

up So from XXX,XXX which Plan customer which lives. we're largest Carolina entire is at North Health our to two, the looking spectrum all has the approximately State way

important So all to very strategic are them and of us.

in us one to carrier get implemented are get by Of channel and us. by partners, a to all our small all carrier employer companies, -- gets or a and course, implemented but the A directly implemented small Benefitfocus larger important attractive of get employer ways. very different they lives will very

Operator

final for We have one time question.

Please the question question. Chardan from Steven comes from Wardell Markets. your proceed Capital of last with Our line

Steven Wardell

-- employers, guys. they Hey year? and pain of about categories about different on little and to minds what just of health could which your plans in forthcoming you a so what's like most going thinking the the for coming a now what little and hoping, your I'm speak of what and you they I'm understand customers the are talking are offerings to to customers and are I'd points better wondering the bit have, you year their if

Raymond August

Yes, lows. -- we one thanks now themselves about all customers Steven. focus on as significant trying two think a employer our outside is lot customers understanding have have that of who to and their so they're everybody the up, that the we businesses. our making are employer in right unemployment And this they And historic solve to really talking a way problems interesting actually is we [indiscernible] we that's an dilemma pretty put sure from for things talk where at to the

currently they're at rate. same rate, We where increasing are unemployment very are a a phenomenon that situation at wage is seeing ever more compression to before given people time an unemployment attract and fact can keep we're rates, of not company the rapid given itself employer on low employers retain because -- that vehicle cause What where are voluntary the where salaries moderating almost more at employee where doing while difficult as a seeing more for we're increase. cost And value the without way an their to HR a them benefits have They're have spending to adding lot employers to doing benefits actually administrators a to their low money. at company, base. this their the they're talent BenefitsPlace Marketplace ways individual and the entire it find a using a less and provides to a an through to has no to which Benefitfocus company of add drive

is employer. working that great loan their win for because value employers they a way paying. It's loans topic it's are reduce the leverage they they're and and now interest be hot that a no that will the win their a carriers. consolidate brokers student incremental our producing our with to to have for brokers and transactional by for that, is and get which rewarded the revenue cost a amount a example now because can to win It's an Benefitfocus, have with deploying the offer that right an company employee So a employer student refinancing which for of win

have happen. value So HR and unique and this more price in administrators a drive and ways tension Benefitfocus less to point, is dramatic at real of find it's trying that that to employers are is to enabling very up

Steven Wardell

you. thank Great,

Operator

of CEO reached closing And I Ray and August, the for remarks. have turn call end question-and-answer President the the session. over We to will now

Raymond August

Yes, everybody XXXX I XXXX a QX our year full we call. extremely summary, joining well. and team and our thank fantastic executing had want to for is In

the positioned is and you. improving time our for growth accelerating extremely profitability This call. well are the revenue and XXXX we concludes same future. at Thank Our is now

Jonathon Dussault

you. Thank

Operator

today's for you at lines you participation. concludes time. conference your Thank may your disconnect This and this

Benefitfocus (BNFT) 26 Feb 192018 Q4 Earnings call transcript