BNFT - Earnings call transcript Q1 2019

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Operator

Greetings, and welcome to the Benefitfocus First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I now like to turn the conference over to your host Michael Bauer, Senior Director of Finance and Investor Relations. you. Thank

begin. may You

Michael Bauer

Good call. welcome operator. quarter Benefitfocus's XXXX earnings afternoon, you, to and first Thank

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

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

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

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

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

measures Ray. earnings over those our You release. turn now call about in press to the I'll important disclosures can find

Ray August

Good are away Mike. Thank three afternoon, call. to today's points you, from take There everyone. key

commitments. quarter, on consecutive we are sixth our delivering the for First,

total we quarter, was guidance. of guidance high-end and the For our profitability our revenue exceeded the at

second We half are well the in XXXX. of positioned for accelerated growth

we than now grown through lives number our Second, million consumers platform. the with Benefitfocus on more the connecting of have platform XX

for offerings from the eligible the top are throughout at stronger of to user, is expanding million average our the net expand in per increased the And, matter, growth our our at expect lives multiple customers. to strategic ARPU pipeline improving QX. than on XX.X the with through key consumers metric revenue interactions on in XX.X we product medical carrier benefit by delivering prior one the XXXX. end of lives Our Expanding lives third, end of and access ways and this million is of ARPU, platform, or new BenefitsPlace we by year adding ever, objectives that by moments

in for We set growth up are well of half the back the year. very

of All benefits being of goal these our the sellers. factors buyers connects platform towards and move us that

market is strategy resonating, and flourishing strengthening. is our position our Our is ecosystem

and our the three advancing priorities; have growing market platform, We strengthening our core our of business. leadership, strategic

with we're platform. how start our Let's growing

our on up our the our over executing growth of ended We presence. lives high-quality improving at February. broker expansion capabilities, QX future by pipeline diversified with of and go-to-market engine at premier sales expanding by time roughly by earnings our by in our investing XXX and QX strategy, the end brokers, XXX continue We driving growth, from call

is field all playing brokers off. for paying Our decision

of are XXXX the revenue, in renegotiation impact we on ecosystem. explained we our critical confident the a the agreement longer-term of while As with value have of this the our our in last expanding will Mercer influence short-term call, segment

not making meaningful that we broker-driven this have pivot. pipeline would have had In without fact, we

adoption market and, to QX over broker our better time. of penetrate BenefitsPlace product is Our continued key in BenefitsPlace the quickly us is believe, helping strengthen. premier employer of momentum a and scale, partners large ARPU expanding drive driver group expansion we

have Investor multiple drive strategy, our increasing progress ARPU. Day, growth adding BenefitsPlace at measure highlighted our levers lives As XP and to and against growth we model use to our

ended XXXX. less This benefit only eligible with net initial quarter to QX, net This carrier customer. broadened lives. will by carrier Connecture the net million significantly XX.X enabling In ARPU. customers. this approximately benefit certain successfully changing. benefit platform. had eyes In assets of As to large BenefitsPlace We BenefitsPlace mentioned, to eligible added of half The our software meant we the we eligible is million our for on key than believe that reach X lives access deal the acquired expand integration medical employer access commercial now was XXXX, BenefitsPlace a offered in

are of forward, acquisition Blues fueled, we bringing options by BenefitsPlace pipeline of is Connecture's specifically our on demand more medical to robust. software carrier commercial backed high. focused interest partially carrier and down Both certain market to Going to are is recent solutions BenefitsPlace members The plans, customers, benefit assets business. their for provide

wealth, auto industry lifestyle progress signed Investor made quarter, Mutual. two In largest expansion we and in platform three the insurers, in against offering. the lines, Day the personal MetLife insurance group BenefitsPlace our Liberty property grow auto During goals December. to continue QX, personal became we categories. that TAM significant first our were add complement health, of product benefits and and to the our to We've showcased We during

private United part is opportunity in the our Insurance also a signed auto insurance, over expansion significant of the West Group. passenger for which $XXX of billion premiums Farmers net States. of last is year written This as We Bristol were

and BenefitsPlace new carrier, In which we said four eleventh suppliers, doing and exactly we our Company the other XX. what also suppliers, in personalized are including we we another adding insurance BenefitsPlace insurance by renters property value to to quickly our Insurance Toggle, auto would platform, our enhancing Farmers categories our do. L&A total added existing MassMutual, for We specialty of introduced nine brings QX,

successful leaders multi-generational workforces and our continue footprint last attendance help expand One inside with March, We event with HR most higher serve This In their products. relevant Place One at point sales a our year. focal to than we to was best premier broker XX% hosted Place.

and two session we Open our days, help three, of and Benefitfocus are into millions The of XX attended buying and has process and has industry's knowledge Place largest with Planning majority action learned. consumer in lives. with Enrollment collaborated unmatched put been the our prospects and terrific One the On vast employers, Feedback employers ecosystem the For us. who engagement hosted participation. platform represented day which engaged

of than was year will be participation year. expect Our the benefits industry that revenue Open proved access materially employers We our the to fully the case average. drive accelerated this voluntary higher among second year experience the with this last in to Enrollment BenefitsPlace growth half and

Now, priority discuss we let's and our second our turn advancing leadership. market how are to

enhancement the We demonstrating assist enrollment wallet, platform. chatbot key analytics the year we contextual the At provides reduce improvement addition relevant it of and experience constructive One weeks metrics are accelerating our lets sector. Moments we of guesswork disruption was Smart launch artificial and and app, identify that announced with by out intelligence takes launch executives. multiple key better payroll Place, also amount leverages our select the generation the and our benefits This and healthcare, Benefitfocus conversation, consumer year launched engine Place, massive paymentmethods experience of are the platform of round help benefits that payroll it dashboards the a to wisdom uses to benchmarking. to data. It and benefits carrier, XX/X/XXX, benefits consumer shop complexity. is of truly disruptive. data creating a benefits, consumers BenefitSAIGE consumers announcement BenefitSAIGE adoption, preferences and of solutions most quickly possible our market benefit and A to flexible our user the One network continued of with automated measurement next to improve them and for the HR to and it making effect provides enabling BenefitSAIGE, of means tracking, At deductions. industry that mobile voluntary in our throughout the to the which XX

Our designed the startup enable our introduced suppliers generation actively this, QX, to looking are first create which we company, quarter, find focused To InnovationPlace, innovative test help best goal achieve and most our program new and offerings. and the the next to the of is partner additional In fertility, market to in benefits is in first innovators we onboarded and for join today. on the women's health we program.

business. track Revenue to end well and guidance our turn was XXX our of generate and expanded points. remain year margin in third we services executed stated and full at for XXX software financial on free margin against year the high priority, In of basis quarter. cash our our strengthening our let's prior with flow QX, adjusted XXXX. high Now, revenue over basis commitments to core the range We to our the exceeded profitability nearly double-digits EBITDA growing our period the gross by points guidance compared our

in first-pass data XXX resulting the on accuracy files means and customer for impact differentiation which data profitability to is in yield, benefits When insurance the yield cost in investment transmission. This will people files. The higher This have industry the payroll if and significant. person correct that multi-year a ecosystem deepened firm, are incorrect, XX%. accuracy, approximately can as first data been data driver Our has key measure data. the for the these is for average and has To impacts critical be first-pass improved XX,XXX queries uses satisfaction. ecosystem is incorrect medical industry

first-pass proud demonstrate brand. our in Given is our investments, our of driving Benefitfocus to XX.X%, yield confidence

solid opportunities. are expanding to a a strong and season We demonstrated foundation, start are ARPU our our adding XXXX we and with lives results, pleased solid selling with pipeline and entering

and enhances have our innovation have leadership that We position. engine strengthened sales delivered our

our continue shareholder to grow value. platform will drive and We

leadership, today reasons. the quarters to want I well Benefitfocus have his for financial that been has announcing Jonathon leave am responsibilities. his on fundamentals. contributions our for to and many Dussault, Jonathon August our ensure he CFO, will an his future company team endeavors. of personal with thank and execution I six Jonathon's business instrumental wish of through in remain Before to of decided strengthening Benefitfocus. transition conclude, and our Jonathon end his him also We the orderly I Under transformation,

our you Interim for over begin VP provider. in and Development and Lou We let immediately. look permanent will in to ability acquisition. her activities Connecture the a CSC CFO. I'm to and is VP I've Lou at She be currently of Gilmore with to Development worked search his brings billion appointed hand to a I replacement it experience June Corporate announce, I CFO team. related XX Jonathon. at that, of beginning Lou utmost XX Anne our almost years and previously X, With our lead pleased Finance Anne for the our with Lumeris, confidence over to Executive Anne of I'll our future. will years division for Medicare the $X Advantage sharing have forward updates finance was

Jonathon Dussault

of and continue is that couple to fiscal successes I've guidance part Thank to the to details I'll his provide entire you, last team. Benefitfocus Ray. over My the the not express of years. poised then also results of the I'm for to decision confident I that easy. thank and appreciation first QX want of finance quarter partnership the review Ray the of our financial accomplishments and proud and personally Benefitfocus my XXXX. for Benefitfocus I'm been was team now leave a

Turning quarter it Benefitfocus. a to QX, was solid for

targets. our and well XXXX. subscriptions prior compared of software our was first the revenue by an of XX% high-end range at executed million, driven for was $XX.X and guidance This the to teams the met results quarter increase of BenefitsPlace or exceeded our and quarter revenue. the Our Total was

contributions XXXX. longer of platform map manage favorably will updates As to prior employer higher both gross $XX and software reporting financial XX% lease offering improved a loss our revenue This costs and representing operational efficiencies, we recent margin Day, our compares $XX.X BenefitsPlace. the platforms the automation, the which implementation Similar software $XX.X contributing million, services by by an of operational million, XXX continue reflects gross the XX% basis XXXX, revenue an of towards operating and the point gross segments, reflects to with Connecture new to in compared non-GAAP over shares in point indicated subscription services the to of Sachs software increase million, non-GAAP revenue, services XXXX. XX% Total year accounting increased share performance QX focused types. or $XX.X reflects improvement XX%; and both margin include items quarter the business, from revenue our of QX million, how owned of margin data with Mercer, XX% provide the totaled a provide gross our was in at non-GAAP and margin. will resulting non-GAAP period to gross professional This on subscription and acquisition. of and of an we profit $X.XX. line per from software loss $XX.X prior was by Investor improvement we of G&A GAAP a Non-GAAP secondary that expense in no consolidated results of benefits BenefitsPlace by from in rules the strategy were non-GAAP quarters, carrier gross profit the gross an over in the increase Non-GAAP and our over shift XXXX. representing XX%; or was and combination our gross margin better margin. Goldman XXX revenue XX% gross $XX.X margin gross Total margin This is increase profit million transaction for our our in software profit inherent investments X% non-GAAP purposeful to financial driven a net QX scale. our of deal and associated and up margin million $X.X million, basis

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

the Our net EBITDA loss scale which million, certain impacted ago was our Non-GAAP to by the operational expansion, positively our period. revenue recurring increasing and in investments. loss the gross growth, timing $X was adjusted of margin year net compares million $X.X favorably

quarter which million ended with reflects Connecture million, Total deferred carrier $X of or driving cash away as cash flow, large million and $XXX.X revenue. Free the our traditional our on and Moving in associated negative to user was of cash the of and property in service down sequentially statement. the from with non-GAAP we $XXX.X Connecture, sheet. million use operations, quarter. to defined which of the equivalents contracts and cash purchases plus $XX.X transaction-based of $XX.X focus prior provided XXXX was offset certain acquisition, QX commercial bonuses. in increase balance cash primary that repeatable timing from flow cash our a to strategic by the shift One of the million. the The and and We assets, the used revenue the On ongoing acquisition to of increased driver related equipment, is periods, QX seasonality working expectations conference, the [indiscernible] pay capital, (XX:XX) measure reflects timing Place software and the

XXXX. to Importantly, we for ability generate our remain flow free in full confident year the cash

Now, let's move to the guidance.

adjusted from revenue From timing enterprise For services Mercer, BenefitsPlace headwinds second we of $XX are QX and million outstanding. of a to EBITDA $X negative of average to million, shares per basic net loss diluted common based expect a of non-GAAP million, XX.X quarter and our $XX.X revenue a growth weighting half we Embedded go-live targeting XXXX, non-GAAP total and net million are to the the $X second perspective, $XX of in share and revenue. loss $XX.X profitability million. revenue $X.XX million professional to of $X.XX on of weighted million negative

to margin highlighted, accelerate the expansion our As in half of revenue the are Ray second our in we and confident year. ability growth

EBITDA includes million the EBITDA to million. we million outlook. total of and For $XXX adjusted to of reiterating range million revenue $XX full $XX our adjusted revenue the are XXXX and in existing year, This $XXX

foundation to to pipeline. of represents per solid are $XX of selling which net our non-GAAP and closing, loss well million loss million million, $XX based with outstanding. also non-GAAP season $X.XX common on We XX.X team average and we a QX shares $X.XX strong in weighted a entering expect executed basic share diluted In net and our

ARPU We With this we to our our priorities session market Operator, positioned time. value. are strengthening our platform, are core, questions. our your at are please ready that growing drive begin live, to executing and three confident expand on question-and-answer now by and strategic shareholder take well add we advancing that, of leadership that the

Operator

you. James. is [Operator question-and-answer Our question this a conducting from thank be session. Please Instructions] go Great, At Raymond from Peterson we'll first time, Brian ahead.

Brian Peterson

evening, Good taking my thanks gentlemen, and for question.

So wanted outlook. XXXX to start the on

in us You're reiterating ramp? implies can you gives ramp that help confidence it in you understand looks the a like that growth, second revenue half that what

Ray August

Yes. Thanks, really of Brian. actually We're our results far. proud so

of And to all we're what quarters before. business, going exceeding targets. stronger As ever we're or we exactly said had an a much overall executing of consecutive meeting We've have we're company, than do. today sixth we as been our

cash that gross from XX% very standpoint software our accelerating look our EBITDA, you we growth, good. growing fact the If very, position, financial at this overall quarter, margins have our feel revenue a we

If at ARPU, of you our are also the compared our take a down way a our to the grown versus click overall XX% by businesses, business fundamentals times lives the model XX% lives we've we of number lives ago XX%. accelerating look year organic number and and period, and

we of perspective, revenue both have we From average the our than ends products lives effect the really we're is to both And strong more inorganic. for lives, BenefitsPlace and in cool leveraged where opportunity now before. ever important growth value thing about and and every those represents model one now in more on have us add ARPU what's the to unit. opportunity. we lives most have the seeing model The compounding consumer per our is, organic both and of really comes the monetize So an

with of look really whole that. have a as a at consumer of range products going we experience good what's We sense on the on

year, where would half exactly for we're positioned good, So thought we the feel very we of very, and be. back the well we

As back confidence at there's that the second we things look year, us we half half. the at of give main look the three in to

business on is of just QX. our platform. ago and in QX which QX XXX,XXX our so eyes we reported in That XXXX, eligible net a QX over fall begin represented overall first growth, signing in UTS, year feather revenue and the The a reminder, will to benefit

our a very that MRR seeing up in ramp to we're significant So due customer.

us is pipeline, at selling back in we about we number other the the good we're marketplace. our about that feel we the important the we really factors to feel see year, really in critical, good season the As really half of what lives look are of the QX and seeing

In you Today, fact, didn't with strategy. ago, over glove that. with ago, when to year hand XXX a basically platform year look add look just we working our we broker And brokers, if out field on have we who any are our announced them. lives to a premier the have you in and partnering of

we So prove the be expansion. will ARPU at that's look is helpful really growth. as very life that our and helpful And to last

vast our look is If QX our of our platform. in you at When platform people products, year, revenue. enroll receive for they enrolling we when that's full when our specialty majority the

available than that and have for when consumer more did way very the today to we We us of We using products half we're ago habits the the a year. back position understand buying well year period.

the factors different gives and of high So confidence half all beyond. second year those me the in

Brian Peterson

can by a don't guys. I Got with anything timeline think replacement? if you. Jonathon, Thanks, more Thanks, it's on Ray. any when And surprised a a And, share? Ray, little working the just naming been a know it. I'm news, pleasure you permanent about you for follow-up. there's

Ray August

working overall transformed He new performance. have two We in sorry terms strategy a consistent our company, together. Jonathon to lot we it's together, Yes. so I'm this a go. our financial really years place and accomplished in of really enjoyed see performance,

the is, leaving joined it. about much things our better One we Jonathon of really than he's finance function off proud he when

that level, we foundation new We to that have place, some the a on will and and kind CEO, able will have team. but a we're the individual CFO we in to as strong CFO miss work my leaders had we I'm on that add the And as sure forward, and... excited strong mix. business. that I'm Jonathon to have finance to individual first our going be build about overall At go with hiring Jonathon impact of closely

Jonathon Dussault

Ray, Thanks, the And, thanks I for that. commentary. appreciate Brian

to are term As with you very transition in is that seamless ensuring can imagine, with very easy and there But successful to. that X. this said, short beginning to on the a guys like not decisions June come Lou I'm Anne, committed

strength I will very and I'm Ray confident As finance very company. the strong, look very continued mentioned, I the the business that strategy. be the but strategy the and ahead importantly, to I of Ray team, continue success the to and strength way, of of as for strength our fundamentals the seeing of importantly, that the believe in has of look company, the and, forward partnership between been it the

Brian Peterson

guys. Thanks,

Operator

go Ross next Our from Capital ahead. RBC from question Please is MacMillan Markets.

Ross MacMillan

much. wanted just lives. so to organic I net Thanks touch on the

I have to the on any talk we benefit how then exiting is could of, kind season? as should a, that about us for number your conviction total the and on range of this it those this you row are I you we've could this key just up lives with net even wondered if to year-over-year go down year, you end not out year? I into that quarter terms the Do QX hope key QX kick – or season, if in on think been Thanks. be think in and it'd And quarter, but also live comp, second deal think selling to plan think you in year? last that know the we the about what I a I down. where would we be the in of excluding which still And down were UTS that eligible color share so $XXX,XXX data

Ray August

Ross. Yes,

the paint picture. to Just

the releasing experience new improve allows the which at look our in adding to our OE really focused have end to then is is business. platform the revenue. the Enrollment vast four our products when do selling, Open begin focus majority year, on and upcoming into beginning our to our QX our platform At quarter, and consumers which and we is that us continues new we also enhancements, in Open QX. operate the the which QX bringing BenefitsPlace In for we you onto process If seasons full purchase QX, we first Enrollment, season. typical our drives the of of lives our of

from, If very is lives at opportunity industry. to of That's typically for lives added XX offer they in XXXX is for lives, our million us X which Like part I QX, us eligible our XXX,XXX growth QX. lives products. you Everyone eligible X.X platform, net are come lives. a that look slow be we QX and through in added an million increase Connecture over brought on and results, end our If we click lives the period compare that an regardless monetizing of benefit family, million but will Benefitfocus now acquisition, the XXXX, throughout down over of those that, to where benefit XX%. there into ARPU net there's lives BenefitsPlace on million expand is of XX

XXX,XXX net ago, that UTS, so lives. compare year has net over eligible eligible grow when benefit year you account eligible growth, net If you lives. into benefit we continue take and year-over-year, our This added added which even that's a we XX% XX% to benefit

take everybody you from over we for So previous getting really about feel all the that lives Connecture lives our very we're consumers on the period, growth and when about UTS you the the especially that – out out acquisition the and excited believe value produce we platform. take we're because too, good when it

year busiest the fact optimism gives things season, our the premier is As we're tripled the of with that and call. selling of we earnings just number a into A look different of at lot focus getting brokers started from of just XXX us we're our fact the going brokers. ago, that brokers with are part partnering one last our we've and we working that now the with QX,

a will brokers, to both these and with we growth together catalyst working that believe QX lives go be QX So forward. in as we

Ross MacMillan

of lives To the said, XX%, you the growth? helpful. about be think that think, for a maybe trend line that That's that growth to teens way could baseline I

Ray August

Because in such look of in to for the trending there's a Yes. happens because vast know difference always year-over-year, it's seasons, us what in our season. important we

how so, at that's we it. look And

Jonathon Dussault

an And, important ARPU the our and emphasis thing we growth. part our ARPU driving if Ross, about BenefitsPlace, through driving that and you model think focus one see two sustainable of lives on lives too, taking account, the of drive and there the are I'd adding into add to can as can engines, you long-term buildup plus XX% get but the targets expansion how occur the and

Ross MacMillan

Yes.

you. Thank Maybe one to follow-up. Okay.

alternative you comes Just the how this out understand model just Thank we some come that, that that year? in specific out seasonality Mercer I so terms on you. revenue Mercer, Jonathon, of of to wondered of the could waiting XQ, the going mentioned, if you just – maybe

Jonathon Dussault

Yes.

quarters, of professional QX the there's Mercer, of we've perspective. intra-year timing is going in headwinds the So of services in also enterprise there's going which a revenue some from just some typical the of things talked QX. course, on mentioned past a couple a about with We larger processes of year UTS the land in the later than direct-to-employer a like deals implementation And, smaller in than deal. between to longer

for of to in that QX. investments QX in that believe feeling strategic accounting we're that the that of which QX commercial second talked the the about of some But specific making prior we've discussions clearly we new arrangement of the headwind that benefits Mercer, half long-term that increasing strongly variable the we noise will [ph] and we're into there occur. with – the also have in There's plays year. then All terms

QX, as impact Mercer point tough had in in year, with the You with come accounting creates may the reference a year-over-year. think that's we we And about revenue another compare our recall, some Mercer last quarter. this variable year associated incremental

Ross MacMillan

In the components? have a some Okay. the Mercer quarter the take on QX, we Okay. from to and changes year-over-year us of headwinds basis, the biggest

Jonathon Dussault

Yeah.

Ross MacMillan

helpful. super Okay. That's

see probably working you it's know Okay, thanks before thank help. but great been all Jonathon, so you. for with much And, we'll you. I the depart,

Jonathon Dussault

you, the comment. that Ross. I too, Likewise appreciate by way. Thank

Operator

from is Jamie Fargo. Stockton go from Please question next Our Wells ahead.

Jamie Stockton

Hi. like if these of with, on would about sales people give of if for Good taking bench I you a – of know Head the some I sure good kind color extent. guess, could stable guys could the on questions. I How the both of, feel the the give How us can maybe named leadership new great. we you any looks talk leadership Sales. mean, are there? of the you color team to about to kind what you of how on I I evening. within it's ask kind guess, But Thanks selling some that going for management. to with sales have execute focus the has, That'd season been? given my kind underneath Allen changes Jonathon start is leaving, ability deep I'm Peter be him there? change us kind to

Ray August

that. for Thanks Yeah.

to, to thousand wish of bigger XX organization, As did, global that for terrific became job And a we salespeople if transition with really publicly and look I of CRO $X a him was over part Rob to Rob very global look great do a him he a countries. aspire at our so went overall is our them. Rob go, a footprint company, billion about working several at he for is to Rob a what as he'll asset transitioning job, Very work he what revenue, And of which traded our in see much company. sad out well, for large enjoyed the with different was company. of

tracking year attractiveness Benefitfocus one really changes. join leaders to company any company, Presidents be for that a a company, the have strategy is, number in last and speaks to well-positioned Vice and of us that the of proud company to our our of executives joined position. really Directors Having to and the lots strong that we're to place of to the financial number we're people, attractiveness material enables of As management our things our since our

strong traded individual. CEO Peter our significant led been is within deep company Peter case, quickly, knowledge to how a publicly of Rob's within very, the who a we appointed in and very very on force have and sales So days has company and at has a organization, sales scale. extremely – vast, significant Peter, a drive understanding an joined

very So, a organization what from Rob. is he's inherited is, done Peter strong

and the I in is we ability his really a great impact the just come out few the with the in have in of his been a in already confidence about and that role. very those multi-dimensional this really every that sales was, deals deliver excited high that and single rate Peter the with fact to momentum past strong model moving immediately Rob we have with knowledge doing that Peter skill his in I'm there created has worked given the seeing and he the a that the utmost of strategy work level, I to taken weeks a in is he on have strong place. in and and things he's next sales working have of business our just One have did prosecuting and leader teams, in part

Jamie Stockton

question. then maybe one And just Okay. other

you getting Or a that numbers, of would is maybe guys the do to or on the kind not time contribute in more that accounting be like QX, $XX a revenue because guess, of solid of million. I that? grind a brunt purchase I basically would now that you that assumption, a about are to – little it great? have adjustments standpoint, you year, you business, kind million maybe anyway, mean, On have just that's think I business, so implied mid-single-digit you're From anything the on probably expenses feel that growth of can $XX still ownership you or the Connecture that? of stomach like having the still cadence lot talk we something of this

Ray August

Yes. We're Connecture with seeing we're assets about we what acquired. really excited that the

can acquired for lives are deep we products. or lives As be their BenefitsPlace an those about, synergistic by and that the see improve heartbeat we that amount adding of we're and to the of to platform every software also talked we've one lives million customer our going we Overall, prove individual through relationships those offering highly is us. to assets the them X where beneficial

have individual well can marketplace benefits platform individuals, uses employers great with both provide is, for that and will has our for important our and for individuals of to will assets USAA that of members where core and be technology focus to as their USAA. good typically the We individual USAA, strategic is Connecture we're the that our that on the us, real point marketplace. to groups One we And marketplace as marketplaces the launch association monetize example carriers part for providing. group where a as partnership going of as see that we a an

about they place come a Just today our example, In in to of terminate on would odd past, lives back to they million go of traditionally from they on and year. million family the platform those XX are and our their give platform, those employment consumers you would X million X Benefitfocus if plus an we individuals the off employer. lucky, Benefitfocus will given leave are

key technology, individual we'll into Connecture able million improve their and being the in leveraging those individual and lives them to the endeavor, all opportunity they're marketplace put rolling next them, onto out marketplace are individuals retiring, the the us it the or provide lives, X part that products economy, lifecycle. of an of those overall allow to With wherever going whether to the will to we'll be they be capture

and those the and insure you assets, the in the Connecture Blues of is, for and as only Connecture for the and us Blues one-third the assets the will medical Blues plans with our richer revenue having XX% Another us, combine improved country. drive know, we U.S., opportunities for improved plans, relationships great of serve when those performance population we about companies. value our of advantage improved deeper And in

really we and able our the stand to plan. closer we'll we'll to Connecture Blues So individual products, see for to also be get where provide BenefitsPlace marketplace, the benefits able be of synergistic, to up be be we'll to able

positive very acquisition. a been it's So

Jamie Stockton

the commentary there actual on Is any revenue contribution this year?

Jonathon Dussault

Yes.

consistent points feeling call. with supplementing comfortable still we our So with contribution discussed our and we what one Obviously, expectations have We'll our with had consistent worth when are we be expectations we month's of QX are previously. QX.

Jamie Stockton

Okay. Thank you.

Jonathon Dussault

Jamie. Thanks,

Operator

from question from Please Partners. Amladi ahead. Nandan go Guggenheim next is Our

Nandan Amladi

question. good Hi, Thanks afternoon. for my taking

you on your for So sales on the out metric, as enterprises? on-direct brokers your grow you lives the efforts network, versus growth broker in to dependent how are both and carriers

Ray August

Yes. on look either/or. The at brokers our is, we network way not

data the provide ultimate knowledge broker the closely solutions we our was the guidance, the the to for for company is we've of seen of it employers, our at so provide a headwind has they benefit us and employer the brokers, recommendations every that they a in without they not and brokers, look platform. force sure provide are part best and are past broker brokers that is brokers happening we broker recommends what's reorientated to ultimate single that the at years, company. value the XX% became you north opportunity, the seller of and make of to look platform we today, they entire the there working really where of to Benefit's the it If primary deal as on still wisdom, the provide in world stream in sales with with solution on can't their broker involved, work that past, time and the prosecute all – the when us In equation with the

ability our with customers. about brokers everyday it, the exponential of prospects that street if you the people to XXX for drive we premier those the their with drive Every today. increase our see really we're as we to ability working solution. So have on think it overall lives and And of working out is one their

making do are Chicago them give talking exactly with We need our about that successful. look The have on highly We for how we with satisfied, for us drive Broker the to leadership be to need serve together where that brokers next So we a coming brokers, around to how sure also forward. way country Place, sure work brokers. and brokers together going we amount we leverage it to plan week be of us. the are the they work it, Benefitfocus with customers successful selling first more this make ever make their we tremendous we're products really having what provides do that the the We're sure their they from closely we'll solutions at we season, really plan of but customers in and to them. into focused with

and of we essential the they So, do. part they're what are family to

Nandan Amladi

you. Thank

Operator

Chris from is ahead. Please question Goldman next Merwin Our Sachs. from go

Kevin Kumar

taking platform? last This the lot How magnitude we in Kevin of in participation given about Hi. Chris. for of introduction year's broadening and for newer the Thanks versus products the on just BenefitsPlace question. increases is should of think of for Kumar XXXX my the rate

Ray August

Yes.

ways As from we look perspective, different there's participation, it. BenefitsPlace our look a at at couple of to

that who's with. be to BenefitsPlace the that's in a consumers. we our who offered, same have products a that carriers companies Today, BenefitsPlace had year, we period, proud products nine really this different to on list XX a So companies and XX, associated nine BenefitsPlace offer different that we've of

more we the offer products that of amount we tremendous to So have a market.

at we based The other dataset we is one-year that on look now. our thing have

very season a trades the built to us what part reach went BenefitsPlace selling and have are called the the BenefitSAIGE something doing the been past of people accurate something we've So what individuals, intelligence behaviors buy, analytics have we Moments, suite of buying matter. what Insights, entire gives this. year, that as our out to call as buy, we our on consumer in what And specific moment part our is which for it on buy and actually of we they artificial QX an they we of cohorts BenefitSAIGE, through suite. they we've what Smart us what need, a which We of that allows information typically and call don't

years you're insurance you if to individual where a of differentiation XX sent go to and point your somebody child of an a product, participation. point old, that and us individual have email that that them all parents' and could moments who somebody who or aging or is a policy of is we remind out interaction really So medical beginning better for select those we another is drive contact and to drive had matter that baby, just a notification

and half feel very add look focused investing that of the next buying all we things consumer lives, products at that only also the And this I really in not we're have in customers, in see It's that very when important we with app, Insights good the it's out to products, more where if year products, One you two that, times also consumer platform increase look we'll were believe those rates of back if about participation you entire placement at to on our experience, to So rate. we – on the industry and would mobile average. products four but rolled an going we're confident to suite whether and the take growth we activity the more more and and we see we participation Place, our together generation that

whole participation others a before saying. what even increased all in did lot we're we So are stuff versus seeing the of

Kevin Kumar

you what portion Great. got about out? investments That the a was certain helpful. bit that then the of beat, drove follow-up, And talk investments beat, pushed timing noted can profitability of regarding you a

Ray August

a really QX. are slew between the things just that across of and organization There's QX Yes.

see that, that expectations Some little likely timing making investments of where Kevin, QX. those up a into QX lower of and bit than guidance on just EBITDA across our is it with investments and – with you'll some do of some coming a has ramped staffing that organization, we're in probably the to coming the

Kevin Kumar

Great. Thank you.

Ray August

welcome. You're

Operator

here Please from go Halper Steve ahead. [Operator from next Instructions] Cantor Our question is Fitzgerald.

Steve Halper

Hi. Yes.

balance sheet about was for and Is decrease $XX – property down quick to line the sequential your the the do with million. in to million it the quarter, right-of-use from assets? Just $XX a What December something equipment from reason question.

Ray August

Yes.

in see in amount balance of in those sheet combination fair and is to variances you balance lease the factor of activity and contribute in here the adoption think the that our really of a I factors the a to so accounting, had sheet. combination of all you of if QX, going we Connecture

Steve Halper

Yes, you. thank

Ray August

welcome. You're

Operator

from next ahead. from is go Our Ives Dan Wedbush question Please Securities.

Dan Ives

question. six the you challenge, nine strategic mean, Thanks. biggest a through Yes, is it's What said opportunity, those? more of you hit on biggest the next directly. months, both to just side there the the more but do even I we maybe some could you other maybe think, if go them maybe of

Ray August

million that. providing help have. making them life for risks thanks products provide see we're that that our as and we But any all opportunity – and really sure the on activity We increased about every we're it this Yes, platform – and focused improve and to on and lives, XX their opportunity as single and our their consumers and platform. on mitigating opportunity our for driving with family excited

at there's going This offer One in of past, prepared actually comments year, employers. than in in our we've net you the the them. employer we've BenefitsPlace, about marketplace. to things to benefit we're as opportunities there to and is, talked eligible about more the work the last in BenefitsPlace's look if large we targeted is medical talked year also BenefitsPlace with And the carriers carriers medical with BenefitsPlace lives only products

catalyst that ARPU working is a for quarter going plan deal their at their we're where expand This a now and see around kind impact it had offering creates very something revenue transformative this the we a with short-term, the to all of plans their QX, win, are net many opportunity, and in that Blues those what there a is BenefitsPlace company products U.S. we plan are with benefits carrier Blues the opportunities. they So for and carrier, to offering members. of benefit we doesn't this is we set to it's now robust with and situation of expand we're they the everybody customers in the lives eligible an does working which in which all it where

with really plans work deep and excited opportunities market to share opportunities relationships we're all them. the plans have we So we richer these with about and of XX% Blues of Blue that with product many expanding ARPU

great just as that opportunity. see we So,

Dan Ives

you. Insightful. Okay. Thank

Operator

Nina ahead. Jaffray. Our question Piper go from next from Please is Deka

Nina Deka

Do further medical such get will or leverage carriers Cross and go-to-market Hi. that that just more strategy your describe you to you teams? you your people Can Blue plan mentioned? of as to you into expand existing need

Ray August

No Yes. Nina. thanks, –

medical asset role our medical the are platform very carriers, our of with our carrier focused it's other one strategy, we it's associates, on who with a brought across great we're the look talent value in chain, carriers with sellers, providers team entire – strong to the segment. consumers, we leadership where expand medical the that it's the know added over in these to focused whether that in brokers, Connecture seeing As specialty people whether organization, with opportunity. many and is every to we and employers, whether We benefits Connecture pool sales that we this we the actually have working have things

both capability and service, us sales, So that in development. gave

One the is effect really network of things a however, is our exciting of offering. happening,

So and the the seeing brokers And people fact actually products. and RFPs coming the say, network hearing BenefitsPlace have that brokers, carriers of of be is and to that for selling medical have you are ways, brokers, medical to about team, about hey, the going addition have some from for effect of addition want carriers and are in by broker serving virtue out take plus back for medical Connecture with that BenefitsPlace selling opportunities our providers We're then creating part employers, to the Benefitfocus us, is their carriers force part we when BenefitsPlace. of us, voluntary asking this to expanded we that XXX the see be the sales employers so with family. we in

it's is our and network speed the So, full sellers in helping effect solutions.

Nina Deka

that. I Jonathon, congrats fun of quarter. working I you Great. best And really been also a have on with you wanted just – Thank and to luck the good you for to to wish it's

Jonathon Dussault

Nina. Thanks,

Operator

August floor the I'd Ray any turn like concludes session. to back comments. for to question-and-answer closing the This Mr.

Ray August

Yes. for we net our the positioned second thank and strong quarters of start platform In Thank QX solid have We've performance. We're for benefit as everybody XX%. enter have sixth and call. consecutive our you, we accelerated demonstrated on really earnings with number eyes selling We're our of the year. growth of by strong our joining significantly and XXXX expansion a for summary, grown well foundation very pleased the season, revenue we to future in future ARPU growth. half eligible

concludes our call. this So

Operator

concludes teleconference. This the

participation. may You your time. your at disconnect this lines for again you Thank

Benefitfocus (BNFT) 1 May 192019 Q1 Earnings call transcript