BNFT - Earnings call transcript Q2 2019

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Operator

Greetings. Welcome to Benefitfocus Second Quarter 2019 Earnings Call. At this time, all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. will conference I Bauer. to time, this turn over the Michael At Mr. you begin. Bauer, may

Michael Bauer

operator. welcome Thank quarter afternoon Good you, and call. XXXX to earnings second Benefitfocus’

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

call August, Ray prepared will Officer; Officer; The Financial President and Lou team question-and-answer Corporate remarks Development. Anne we Gilmore, for will are Stephen today Chief the our some Swad, and me then open our Joining of offer Chief and Executive session. our VP

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

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

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

those our about in press can measures disclosures earnings release. important find You

now will over to the Ray. turn call I

Ray August

are are innovation afternoon, leading creating everyone. significant economic you, Good from benefits we growth platform. around There value and call, AI all powered three centered takeaways Thank as key Mike. today’s a

of the size scale First, and our is growing. network

XX X We lives. consumer partnership In suppliers. major a beyond We our approximately to deal voluntary have lives. benefit Blues we lives eligible well difference its of growth in members deliver one are to added voluntary QX, grown benefits a leading with with million brokers partner We relationship major signed and in a deepened notable acquisition. and benefits our making our customer net

Second, of the technology value investments accelerating. is our

personalize just Our network engine. is to accessing Amazon’s platform like that data offers our recommendation us allows on

are with structure consumer platform removing benefits the Our sold. and and file-based dramatically standardized framework, API how the and launch And improves of ecosystem processes. changes bought our manual are experience and automating friction we

of and data power models hold. is the our taking Third, data

consumers intelligence ecosystem. entire helping engine is smarter to better, Our experience make value benefits improving the providing and decisions user

starting the fact objectives to is financial growth strategy want our Finally, a our emphasize payoff. I new updated back and pace. accelerate at the We against of expected revenue robust that the to executed half well to year is still which for platform QX our estimates

This is platform. success business, fundamental. our Before I will I the highlight our discuss of

run continues driving transformation how and It’s Our we mature. we our to ourselves describe how business.

from shifting a are We benefits provider platform administration solutions company. a to

company, just no much software longer are administration we are benefits more. We a

employer multi-sided network. platform well our beyond goes robust Our

We have deep XX understanding of and more million consumers than employers.

and growing. are brokers aligned of hundreds with We

complex are expand environment. voluntary to regularly renters connects auto strong adding and in this a vast a providers our new offering. medical and specialty live carriers foundation Benefitfocus benefits network this by have We with we and

growing. of entire platform network. connections Every our network innovations, is expanding for is focus ultimately and assets our Our value driving we create technology, data amplifying economic part on the the

highlights now Let’s platform. to business discuss and turn our our growing

strengthening our of discuss and advancing our areas three leadership focus our We platform, our growing will core.

platform our brokers, a million then and a will areas value matter We on on benefit and we the our record value of net platform start sellers approximately underscored business, and of finally carriers are value. on new and QX, business eligible how is who lives medical driving growth Live of across economic our employers, the scales In added greater and for strengthened of this market Each by carriers, network X results. our economic we and to discussing our all foundational platform. our and suppliers growth. of lives, network area our drives by matters company

scale approach XXX made off. to premier channel. XXx brokers. effect, added strategy a paying when and broker brokers. with In XXX our is a purposeful influential to is premier growth QX, network we go-to-market making our we accelerate in acquisition. we over This customer Brokers also over are had over bringing the To our year shift XX in the partner This improvement a total difference premier last lives brokers

year on advance prior For connections. from the and This broker influenced employer our to leadership. market approach key first added creates half our our XX% up and quarter, new network is of us positions and partnership scale lives second over confirms periods platform. This all brokers

greater closed larger Now, The favorable season platform. sales the than quarter timing strength our is lives to of how our reflects The and in earlier value let’s deeper contributing both go that selling deal of on transactions sales success our bench original in leadership size depth growth. our we economic expectations. are driving of and through the

universities of year of We performance strong eligible conjunction MetLife. is our ecosystem state indication on for growth. continued partners, benefit connections. that full clear the accounts. the a sector This target partners network our of leadership accelerating are lives us employers, benefits puts in A net large highlight Our of is one QX addition public sector voluntary Alaska well our added our leading and with course public of

ways in contributing are our growth. partners Our platform new to

voluntary able This plan innovate with major them differentiate and to partnership. they base, Shield is deliver platform. another our member platform relationship effect our deepening to strategic grow, Cross the benefits Blue action. are This connections and large network using helps a their their in We Blue our By competitiveness. increasing network on are

Plan of the nation. a across medical carriers, significant serves Blues three Benefitfocus of percentage including leading the quarters

in this are acquired area best-of-breed the it an Market solution. strategy. rating medical in unmatched a coding our end-to-end we Connecture, capabilities next growth strong pairing this industry’s assets is validates market of solution We and we are with for introducing and generation delivery accelerating quote-to-bill our platform first our carriers. and By from leader acquired are the interest lives illusion

growing and medical and through in carrier live to ever increasing the are network, benefit well With growth an the offerings large and segment. voluntary accelerate positioned we space specialty

benefits scaling in medical the network public and with their growth. for to lives which large business connect efficient lives most of These a offering are range network Our we growth These are and us those position economic opportunities generate on way enterprises end-to-end long large to for Benefitfocus. allows platform turn to greater and drives larger carriers the bring employers, capture us to opportunities lives larger grow and transactions. effect transactions the Through both innovation our carriers, our thoughtfully sector that value. members, lives to medical

visibility revenue bring longer from they transaction-based lag future begin later. While and are these deals years bookings. our long-lasting also numerous and This value. or revenue X and to implementation have Go-lives revenue future timelines. of the of They speaks deals X larger subscription recognition strategic staged have attributes, and

technology. benefits total We product employers employees revenue we we during another number platform and growing triple to the quarter, This catalog. in increasing suppliers are our It BenefitsPlace This doubled continued voluntary the added our bringing XX. grow portfolio. suppliers ancillary need is our the is and benefit of their carriers greater complete is very clear supplier XX and to XXXX. and is life and In traction strengthening X QX Our nearly value BenefitsPlace specialty of to driving BenefitsPlace. and significantly overall QX

partnerships CBH. number continue Earlier offering this the we a a market. as CDH year, WageWorks drives with of high It directed total QX, PayFlex. plans expands or and employers health launched offering availability deductible grow. new market also further consumer leaders, to health we BenefitsPlace addressable demand In for signed BenefitsPlace

seamlessly requires technologies. us Our and to scale automate integrate

between employer administration, administrators teams points integration have of technology Absent payroll there In record, leading industry-wide. internal friction been of frustrated system single technical and For benefit too encounter well-established Systems. HCM limitations long, are and our details a of the Software our enterprise first with human capabilities Ultimate in our platforms officially technology partnership of will capital is management advanced near API. announce the and our we future. launch API QX, benefits the integrated partner

framework eliminate manual system result automates exchange API file-based Our standardized is This and greater with a enterprise capabilities integrated experience. more traditional improved efficiency, better creates and a end data reduced replace reliable with deeply the of data near administrative and integration experience a framework. burden, single logic accuracy. record HCM The processes instant friction and systems

the scale strengthening seamlessly we our priority into is number our transactions to processing ecosystem. are business. our turn Now, across Data them our we third let’s interactions to The and billions of business. of is can all improving areas we continue core of as core

products Our focus extends features. and beyond

advancing We outcomes. insights business drive network are data model analytics and innovation value through our to

products customers to they and value reach called can decisions benefits to strengthen increase are allow at workforce time offer ecosystem. depth They allow providing a the benefits right their they employees life right suppliers employers their allow property growth. platform BenefitSAIGE their engine enrollment. casualty and and will intelligence better, powering to consumers their entire higher artificial member to advisor Ultimately, to make the as trusted and the their the and platform benefit through consumers. the strategy and and our to Our and for brokers expand to medical They business voluntary analytics to of allow and ancillary, expand offer employer smarter value employees. carriers data better These their role understand

simple XXX machine their about guided offered carriers and shop key participate of we metrics across that learning our proactively what consumers on notify single result person’s better This for preferences in benefits their paired about by identify uses by data. the consumers moments. Every offered options more and help experience. understand platform benefit by trusted we economic employer. of days consumers source interactions driven benefits horizon, enhances events When the user SAIGE To employer a relevant These a suppliers value and with generates sales the user-friendly on call analytics in life, allows benefits smart year, data offer our we by become relevant benefit Amazon individual platform. increases product in our the to a key explanations educated for like help event insight a effect strengthen and an us offerings. ecosystem. of and employer, This shopping creates key data for the greater offered they network to number

technology, AI our innovation. our model is growth value of greater analytics Data and our The our achieving result XXX data by need QX, company. our and and business of software data results, assets target. to insights, are exceeded significant. infrastructure in Through and usable business gross our talent decision we and XX% our across analytics and support The our is leadership terabytes continue the XX%. our To consumer core are technology grew for able from revenue Over network. increased and top primary driving retain margin are we revenue data data to and we all to is products. Total across non-GAAP power of in source we profitability these attract parts

has and for product and numerous marketing on July market has made XX. as welcome serve as Steve Microsoft excited Benefitfocus. President Swad Vice key Officer enterprise Financial Malme our very and Senior to to experienced we will I Platform our bringing executives products roles And additions started new companies sales Steve Steve like extensive IBM. software of several quarter, Chief held am management, Strategy. and to experience spanning This two

and a As in years many was of leading member our aware, our already understanding for of experience XXXX roles CEO. of CFO. numerous you and her formerly finance leadership Lou our Development. our also of and Gilmore He more would Interim company as as are company a a since of than will deep has and VP has held executive of teams. IPO our Board thank brings the of leader Steve Directors remain XX I Corporate was Anne CFO public key She to company like

call for his From I Swad will then will conclude Steve remarks, today’s turn call with Steve? here, over cover guidance. Lou Anne and our I will the to financial introductory results QX new CFO,

Stephen Swad

reasons two weeks team Thanks, welcome. joining a team spent business Today, Benefitfocus Benefitfocus. broader Since at getting most closer Benefitfocus Ray for to leaders. thanks management I the and to the and roughly I the the meeting time share you my as I joined the warm will member, company’s many with ago, of

the is company the of part connecting attractive platform most buyers the me, For sellers. and

the that our simple, on removing across we to the it. focus technology, of network. execute the tools incredible sounds the it strategy key needed all powerful While friction and and have centerpiece of on involves It’s connection relationships

the our and resonating potential current technologies are is product customers. offerings Second, and with well industry, scalable unmatched in which

Third is data.

data using the model. and help for This consumers power in insights business we of powerful Fourth very and is and are beginning. businesses make AI We the to better advance are is decisions. the

business opportunity. business a a By adding from on the mean, large is pure revenue platform model This Our on SaaS partners represents to I streams platform. existing model evolving and is model a other its building this, the from streams and SaaS business is new revenue model. unique

and Finally, help and I level. believe my leadership take team skills will company complement next to nicely the the experience

to the to ton Lou With quarter second that, pass it let financials. Anne me review

Lou Anne Gilmore

of flow. welcome a I and team. our go to to to then sheet initiatives. quarter and the our view the priced details platform and of second results starting of I details Steve you, services GAAP broad software will and our balance cash will technology financial and deeper and the results non-GAAP review Thank outcomes with cover

XX% quarterly for range. and the of above Total XXXX for of results, quarter was $XX.X quarter a compared second of view broad the an solid our was quarter First, million, the guidance our revenue to QX Benefitfocus. increase

growth from and driven to $X.X which revenue was than Second in our quarter revenue revenue stronger and organic a contributed BenefitsPlace by quarter. subscription million the revenue Connecture, expected

of was discussed, previously by contract. the renegotiation partially As Mercer revenue QX offset the our

from revenue the double-digits in low total Mercer, acceleration periods’ It of QX and grew Connecture from XXXX. to meaningful compared contributions prior the growth. was Excluding

services from year the reflects Next, in and prior and in an as continued XX% by million be of period. for and Connecture quarter, a to of The continues key outcomes review software revenue quarterly $X both our increase driven subscriptions growth the I platform $XX.X would contribution our to was like BenefitsPlace. increased to growth compared a platform million and result initiatives. traction technology growth Total

compared Excluding meaningful contributions double-digits rates. total services and of XXXX. low the to growth grew from year prior Connecture QX from software growth a represents of Mercer, acceleration in the This

$XX.X and acquisition QX an predominantly Our recent XXXX XX% increase reflects services professional was revenue Connecture. of of it over of million, our

to XX% of million represents expectations; moving results, margin of of Now, and in GAAP profit the line with million, for quarter include XX%. gross overall a software the margin of $XX.X results $XX.X profit gross representing a

margin from was loss operating totaled profit per loss million gross of related and contributing share $X.X margin. compares is non-GAAP XX% million, Non-GAAP The expenses. net operating or QX sequential of in gross XX% to gross non-GAAP increase software non-GAAP of favorably a $XX.X XXXX. $X.XX. Our margins was This XXXX. to year-over-year $XX.X margin QX XX% in Connecture expense non-GAAP XX% largely gross million Non-GAAP and resulted from gross a profit in up the

reflects non-GAAP data in improved prior inherent non-GAAP and point our gross improvement platform’s to revenue; improvement higher increased consolidated automation basis point investments margin organic in shift towards transaction BenefitsPlace XXX efficiency; the margin second, software and basis our XXX third, scale. first, operational focused subscriptions and have our operational nearly margins and Similar quarters, gross purposeful

We improvement $XXX,XXX QX EBITDA also It exceeds to to EBITDA. compares QX adjusted of continue the our roughly favorably $XXX,XXX. in in approximate our was drive adjusted XXXX. guidance. consistent loss also This

$XX margin gross compared recurring loss operational was net by $X.X ago growth million EBITDA a year Non-GAAP adjusted expansion positively in a Our loss revenue scale. the period. impacting increasing million net and was to

usage we as positive and million in for of $XXX.X operations cash from company. exciting equipment in to working non-GAAP was on quarter. and down expected platforms. the QX million negative investments, no working balance the define and we measure or cash, our provided investments anticipate which million, and $X.X longer cash are that the flow cash half prior These Due driven with to higher property ended half second times free to by and of used capital higher in XXXX. capital first be our cash flow, needs in $XXX.X we of plus flow, equivalents a purchases Free sheet cash Moving cash is

would pass And with that, August. to I this Ray back like to

Ray August

Thank you, Anne. Lou

move guidance. let’s Now, to

by the platform the strategy. market’s demand are of our We our and encouraged to response

and Our ecosystem growing. thriving large, is

technology a robust of SaaS Our is and differentiation. point

and models and business data advantage long-term experiences. driving create consumer insights a data valuable Our are and

favorable We accelerated backdrop drive this will are confident growth. half second revenue

We have profile foundation capture strong to well share a that increased to longer term. position us contributing growth market X% of revenue

to we $XX of the and XXXX, For of the that million total million revenue midpoint growth. quarter XX% third targeting represents year-over-year $XX are

million loss We and common $X.XX average $X.X diluted $XX million, expect weighted million net $X.XX $X.X million adjusted XX.X $XX negative negative net of to share a a of to non-GAAP basic million of on to based loss EBITDA shares per outstanding. and non-GAAP

of growth million expect EBITDA the million range At For million adjusted full to to and accelerating to revenue the $XXX million. is XXXX, year revenue in total we $XX year-over-year XX%. midpoint, $XXX of $XX

also of loss $XX non-GAAP average to and million based shares weighted outstanding. net basic of per represents to million million, $X.XX a which non-GAAP share $XX common XX.X net We expect loss $X.XX diluted on

Our guidance large XXXX with revenue revenue. we products reflects from base into BenefitsPlace our range These QX consumer installed products will participation. selected estimates mix and of drive transactions revised include contribution XXXX of a and and of of placement BenefitsPlace the carriers that expect both associated and employers,

estimates. Let me provide some specifics on our

of placement, open First, We in our access limited anticipate base XXXX, year-over-year. expansion BenefitsPlace. continued enrollment growing. leading installed is to into segment had BenefitsPlace a This

immediately open revenue throughout and impact during The products will XXXX. life ancillary and more not casualty BenefitsPlace weighted revenue our Consumer carriers, and consumer. be of to-date, been purchases selection being forecast. original to specialty purchased of ancillary drive property than product recognized QX and Second, contributes product heavily products will levels, employers by to life products have selection and enrollment upon revenue, ratable to but by

improve. estimates continued visibility and Our to

outlook. our revenue of remains timing large recognition. deal and limited However, experience third, reflected in our the is And

Our opportunities increasing has up and from platform job done opening includes customers. larger large a an influence our revised fantastic outlook

of the our the example, of For larger half result were majority growth lives transactions. first

While these previously longer. to deals as bookings most revenue takes highlighted, the us were the our grow of for to timing efficient way platform

We for Operator? call Q&A. will the now open

Operator

Thank Thank you. [Operator you. Instructions]

the proceed Our Raymond with James. comes line from of Please question questions. Brian first with your Peterson

Brian Peterson

Hi, thanks for taking questions. my

XXXX bit, just the your just maybe take the ago? a know don’t this drove remarks, but versus you what us I know Ray, guidance major revision who little hit this, I on of So, understand on context help just wants revision, what start maybe but few prepared to quarters saw in you the

Ray August

Yes, I it, appreciate Brian.

the we on We are about are particular progress really in our with platform BenefitsPlace. excited making

look they seeing we in up our half that you which back platform revenue in If growth as well setting are at the fundamentals, are our you see activity.

which If for to we look that seeing demand that the million company is to shows added we are are the go by really delivering of Benefitfocus back and you quarter are lives really we our the consumers that coming our overall way value and the at platform this the the record. a It seeing marketplace.

Before deliver about our value about platform. talk the we want that I little to they bit see I lives talk how guide, to the a and

value our significant it, steps platform way single lives with and adding think are life, the to you net steps four If most value. happens really that about four on we there is that the provide

a that At of to commitment. buys in course when customer step makes the customer point Benefitfocus. the makes partner time, a first contractual with and The is decision

provided However, little that’s Benefitfocus. revenue there is very to

the Benefitfocus step begins When the second customer implementation. revenue. the receives is services when they professional a begin implementation, The

And we received consumers a and products to When enroll delivering begins when BenefitsPlace our at not creation on live of when services BenefitsPlace is our point, that on selects receive Step consideration of revenue live customer platform, we on to platform is consumer for to a employees to three step the at receive focus PEPM. the from on a fourth we is is that point, platform. professional implementation. goes our goes are we transaction us the our customer that that platform show ours the value our While revenue the partners. something and

those can is every at you the we by you single gets So of created look they when or complexity see we add four size we which is how lives, of and the It’s way. interesting the there value or up if receive company. determined speed step the step in receive revenue steps value of

employer we to if up were sign value platform bring small we to our a revenue increase and days. So, on XX within

a year with be to large it years work begin layer X that to we we in could before value. government, If state a

over ago where state them layer example, into relationship. we saw before that we come platform just of as medical on our they carriers. they the For middle, time the all life time, value track and of XX% and them on our Texas year but the it And in significant implemented have takes over on

complex a between value medical and year accelerate between really half Our small and state they employer somewhere – carriers start large to on are a to a platform. before between our and a year

from we these we received revenue in see which So timeframes lives. different

but So, phenomenons mean we our And and What our marketplace, demand does are the a to revenue we excited really let’s platform. mean lives look the take seeing does show about our are that what of First, couple The really revenue? in for guidance? at that are million what that to forward. play.

I and those about That’s we are after The show That is getting that in are their this talked as is receiving. the to are growth companies interested actually we four year. institutions larger first in steps lives platform. very revenue that growth going why significant larger given up live periods

will economic on our we platform. see So, significant future value

the and in to relates on what’s BenefitsPlace. it we company. happening very employees high thing BenefitsPlace, seeing by are the And of other a level engagement their The employers

about product the or are comes revenue As revenue enrollment. during selects product, year when recognize their product specialty to of is each two period. in occurring And are we in me, BenefitsPlace. XX% seeing different in is of ways XX% QX enrollments – If InfoArmor we stages occurred enrollments a occur auto there we all that it the what the open a know, early that like product, excuse when take of recognize individual it’s you

a type in the ancillary When other product individual, happens so of product that life next year. that product recognize term in the product. the and ancillary the case we selects in and product, of The delivers somebody revenue to is over ancillary a life life and which

think So, about a are for if it we you high BenefitsPlace. seeing very demand in enrollment

However, year we of propensity ancillary revenue originally much products than are not a next estimated. QX of recognition are seeing life in in high products and creating we Those this year.

So there and is QX. two factors: model. our about the second the life one, the guide product good adjustment are deals; ancillary reason size really the our We of primary for the selection in of feel

really in We anticipated. news we consumer significant look are later shareholders. a to providing are revenue come than that at at It’s the bit that the sure is benefit look make continue great data to talked is those I And if we to about, still economic just both are our two we you cases, little the going that and to behavior. attributes calibrate understanding that

So, well very for we our in the that and we about half first in of the the We feel second good bodes in the feel really half saw acceleration the year us that we the good seeing about of future. are year. revenue growth

Brian Peterson

mentioned for that trajectory think growth brokers the side million the the this on that the Ray. help growth employer metric the just how on Got than net quarter we maybe And about any it. lives, higher X know but I you expected, Thanks, going forward? should what and eligible drove that? was I on

Ray August

you they it busiest quarter. leadership lives, if Yes, am lives I sales on our proud in the really think delivered million our million know I and the the team, fact about team that of

three look at to market the very the pursued, brokers are that that medical from public it that impact. really we Benefitfocus news in types an benefit unpack is a playing lives little perspective, a Just that bit, From employer sell And really to net that’s direct sector, there lives, we significant has eligible of big carrier. is sector employer large employers. where traditional

But brokers were a of is who additions fact, things brokers active In are role with they that ever really in have lives very those than one the the quarter, XX% played in much our working great of seen. we about bigger which sales cycles. is

lives efficiency type to having sector impact in is sector, So us selling employer we the are addition and and progress in of allowing leader the are great public actually have in market selling after and our that lives clearly, greater we going our are to making next them segment. an expense The public there.

picking every we states great and example community is really in the state it enrollment And brought company to me, and entire are for added state MetLife. They a we on us on platform, and state platform of to go we us, Alaska of Alaska the for effect more We our platform, the add brought network was partners great the up to our the the and a that of us state action, with as to partners that’s period lives is of about put using us Alaska. we forward. as deal about the platform our more benefits. State talks grows a by actually platform just Alaska of because Alaska. story of the of our one That

the also more public We on universities. two sector added

our really focus and our in So sector. continuing strength this that is public

of third area in. The confidence where that’s is carriers. area very lives look medical you distinctive have a medical carriers, And growth we our our at if an

and have the quarters a enrollment Benefitfocus with our products. time been Blue’s with three leader we as over of and We the have the carriers, medical billing customers Plans

generation Connecture our marrying are with products rating. and quoting that we are which Now, next

and about because excited we the have. that the it’s way medical ability industry from industry enroll very else them quote, carriers very proposition bill on see this has voluntary simply having important and in the to So, grow in something an rate, as our are benefits unique nobody platform to and that is a getting they

employer take of you sector BenefitsPlace. those if are public lives, So three those lives medical Brian, now all for carrier, types eligible

future. So us us allows every in us which time, they to to for single life we the the are value Benefitsplace, bring in transaction delivers consumer deliver for eligible over which revenue

from the at extremely in lives we it perspective, we year. pleased a Looking half with growth first had obviously, that are the the lives of growth

believe with to value Benefitfocus For lives. we future. customers full be our really and the we are still as these for will we low unique the year, creation pleased very stage They mid growth teens setting organically really into for all the the in grow and lives are

Brian Peterson

Ray. Thanks,

Ray August

you. Thank

Operator

Chris next Goldman Thank with proceed you. the Merwin question is question. from line your Please of The Sachs. with

Kevin Kumar

is on question. Thanks for this Hi, Chris. Kevin taking my for

contribution, of you most remind think Regarding QX? I to the deal, you us University which that that as of lives, can XXX,XXX the in this flow more quarter, the was expect of of revenue do Texas timing

Ray August

that’s we example great we live about the four means well lifecycle for we we are right talked no BenefitsPlace. then Texas. down have about PEPM time, No, we the way buys of of implement, project where go is XX% and customer are on we Texas, we the the implemented, turned of XX% the have going steps we a and which

actually impact of So the the of the growth course majority would layering and BenefitsPlace. of is after then be forward-looking that in

Kevin Kumar

kind specifically about don’t you the have think can And That’s anything it then R&D, on there of quarter up sequentially increase? follow-up looks $X million we this like it. helpful. about Got went seen I talk that before drove which

Ray August

Lou take that you want Anne, to one?

Lou Anne Gilmore

Sure.

enhancements to to invest in large but data, clients. not scales product our platform and these continue our We only to deliver improve

Ray August

focus margin. that software you we about one think as And of our really is the it, on Yes. gross things

at we row, But can, couple about XXX over that, basis single software automation that period. ago in if and our gross our focused driven points by look a on is task up XX% that’s every possibly really being second For factors. our are seeing our we is is the friction gross quarter year margin different every of the margin the both automating in we up on will increase off One friction in see driving user impact we to remove is our continue is increasing investments R&D platform. phase for really but role paying in automation. the removing And and of platform, also up the see for demand which and to our you

Kevin Kumar

Great. you. Thank

Operator

Murphy your JPMorgan. next Please question the Mark from of line Our proceed is question. with with

Matt Coss

in recognition my like taking Murphy. on but sense on close did Mark mean deals and much mentioned impacted behalf you perhaps the good makes currently versus you Ray, later go now This have your Thank or for is these of could impacted larger question. guidance? pipeline ago lives you guidance points for and the versus other revenue finer course Hi, if give can factors deals Coss the afternoon. you much which the of sense, this many of are later you year may you Matt how how that

Ray August

if you single about And reasons, opposed we it Yes, that’s the every we life of logos think as PEPM. a really life discrete deals, as thanks think as year our count. revenue about drives a that. for a think because And we about Every to one drives single business. had lives to business BenefitsPlace us ago,

demand the our on that year-over-year focus gives the lives, lives really really better we XX% putting demand and and growth, forward-looking up to really much solution. platform because on our you Now, overall speaks marketplace a indication so revenue, is excited the our our for of that is about

As revising what our contributed the big is as were factors that QX stated, factors our really far as to at there two backend guidance. and I play,

that is So, first the not hard those those deals, revenue that’s the second that employers about products that’s in us life our more material which we for was BenefitsPlace. ancillary BenefitsPlace both that live was but products products accruing with both of impacts are in are of of thing we why the really great impact are it’s about we provided are buying them, had both the future and people originally say bigger talking are than take-down about because getting, happening, they for products, it’s the talked larger in talking as both LNA not that’s are coming revenue those of selection people the deals through we versus deals, familiar was whether periods are the creating situations in to larger part specialty as are platform where about And if to modeled. later and cases, a are

really we creating for about our So, platform. value feel great the that’s

Matt Coss

receive sort over And you. more mean year of I a uptake in half still what to voluntary there think just of product sort of to is the permanent to you do consumption are or in XX do terms of expect higher to voluntary be Thank months? learn to going it. you BenefitsPlace products next follow-up, basis of percentage Got sort or your on a LNA

Ray August

for point at creation to Yes, to this we value platform. them us we rate. months are the add live our our in be X have scale. about a very specialty that’s know us think is versus lives our at the on us August to platform year the when And production. focused a placing get It’s are into visibility We it’s right in interesting about for time time really we in a importantly, XX% products intense implement And this and it’s where most for the of employers and happen still we going our our are significant LNA now, about point at to left good on in time enrollments X QX months for us customers products. a higher bring that

the selecting products. where exactly see will consumers We are their

Of course, year to to this it’s is that analytics, that good we are to think insights are we models we and data for monitor. going give doing from what on they going but happen, are something continue very last to year us

the a versus is that’s health very selects the this unique the I deductible selection anticipate about the When event If very others an our both a you at for And and significant of things equation, deductible platform specialty, be look of about high savings health versus the of plans. it the to I it individual. one company way think L&A plan, piece individual high is creates long-term any the L&A for a driver. majority

both. for thing good a it’s So,

is continue high One somebody hospitalization American, products demand things thing of deductible rise a and the GAP cancer deductible select plan the for that to high to plans. when accident, health the and those as for GAP Americans is right the house selects products middleclass products. as happens purchase will this such

for very, see our market will life a continue very to we robust So ancillary these GAP definition products, product. and by which

very into So, we the being as that robust future. see

Matt Coss

Thank you.

Operator

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

Nandan Amladi

Yes, thank my taking question. you for

we trajectory meaningful third the engaged of years, bump at actually last of look quarter and broker last selling once be fourth the not you course the lives the quarter that’s year to as because tends up light, saw Ray, community, season. over in of So couple we active the

am ahead, similar you you about far overlay trajectory you specifically the expecting also trying then ask of and said more are As have I to look guidance actually just will the about in the expect some guidance so be fourth any lives revision the those I and revenue third added to on contribute downward? everything in of quarter will there because quarter, disappointment

Ray August

about believe are Yes, year. factored into positive lives we year the we the to what through half of have we perspective back revenue growth we a are from QX growth the really rest of and be in where the

Just a the accelerated to first and half QX. reminder, we continue and significantly acceleration into QX that is in going

us line, like So all the in shows business strengthening our up as factors of the our improving improving for business. margin, EBITDA those gross but our revenue also things different

that. really feel good we So, about

Nandan Amladi

of of to of much of investments demand normal you by expense demand seeing the side going I because or are so year into this Anne some the know head is you those mentioned fiscal ‘XX? the we and new And conclude a sort making seeing more on are end the are you as lot Lou are

Ray August

Yes.

see here see great market adding in lives. lead on going to our opportunity are We to a great friction to our continue opportunity increase We by technology. to really remove a platform. invest our We

selection We are to to move they level in up perspective. invest continue to like making artificial from if this in benefits helping are things next really consumers going intelligence to to the consumers

really about. that And of we solid the numbers that making I growth, deliver lives that are expenses. execution that at about period we sure our XXXX deliver earlier, our As that guide revenue at will spoke sure to focused talked we end we ppoint, QX, be see BenefitsPlace will five of we and we prepared in months on the we about to talk making

Nandan Amladi

Okay, thank you.

Operator

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

Frank Sparacino

Hi, guys.

I in from Is Connecture in any there the had come forecasted or headwind think back performed the the expectations to expected change the outperformed Mercer? in indicated change moment, from guidance your Just you at the and there the a of for guidance quarter. Ray is time during the any terms Connecture then same contribution original

Ray August

Yes, don’t that? why you Lou Anne, take

Lou Anne Gilmore

Yes.

that rest about for million $X.X as foresee that a fairly we quarter, and Connecture the For good over-performed was and year. run-rate our the forecast the of

performance the do level through to that at I and said this will year. with perform rest pleased as very believe the they of continue the are We

Ray August

with a particularly medical the enrollment about Companies. are in to of Connecture Blues is talked unique is are perspective short-term that’s the solution very the rating in the they a because value their is excited marketplace next Connecture The Yes. and revenue from And solution really marrying medical the I providing Benefitfocus, serving customers from that brings stability revenue and about and solution what one quoting billing and the former about the are key is robust the proposition to a that acquisition seeing while is for we very carriers it carriers real in in excited our by reasons the us nice Connecture that the generation company. pipeline coming

value about our the what really and we showing So excited medical there do we can for is carriers. that are that,

Frank Sparacino

thanks. you any as of people talk one follow-up how obviously there on relates in to or feel in Great, a turnover, And just leadership stability had has but have here Ray, about maybe that first been can the maybe the maybe change the about, it half? here, additional sales board new some organization, sort you you

Ray August

a our in The he record great team. is speak working group themselves. quarter driving is lives team, the sales who the he is results job doing growth and leads no, for and Allen Peter with Yes,

where move employer model, brokers we we the of really doing platform this One that medical over important significantly both having do this sell about talked focusing driving. that. up part the model, this as to the we that team We this takes is in though, to the is made carriers we an on To which It organization on terrific have brokers, about lives first things are and the have brokered we make is XXX we we to team growth multidimensional that as wise have get that pivot that is the of sales job. a year. happen talked

LNA Benefitsplace on you products to which up we added If Benefitsplace us carriers X have brings XX. and look at Benefitsplace, to

as that We products more to so well. are another had have we market adding specialty provider

constantly increased So and brokers that production direct giving very model pleased board about leadership we the us looking across the help how efficiencies, of the are the on optimize model we seeing how continue advent with so do to we that’s the our the a we at the do make the that’s the terrific back and resources year. job the for growth are in effectively, great, sure are marketing and but serving continued as and catalyst a really officially doing as sales acceleration results is deploying our of half

Frank Sparacino

you. Thank

Operator

Thank you.

Ives for today the Wedbush additional questions. question time Dan Please with of We which have your be from proceed from line would Securities. one coming

Strecker Backe

some like made Hi, then some the feedback to over CDH last talk been about of BenefitsPlace this changes is Strecker for on Can from Dan. you year customers? have you key you the getting of and Thanks. the have

Ray August

that in have XX be participation BenefitsPlace first we enrollment selling BenefitsPlace saw from in increase the increase really our That sellers Yes, also second showed will that our value. out that we consumers open the year on the us suppliers that’s are nice very and showing in over our enrollment previous just rates a moving open rolled seeing us ago platform participation value are a year. and BenefitsPlace this now in us was

think Uber riders high demand are buyers and in for buying sellers the So buyers and there carriers it and the their and sellers, the up about platform. much more like you is where our we really is if us have drivers

consumer our on drive adoption, our year purchasing been do we platform. has entered consumer we focus how drive our we how second As BenefitsPlace, do

recommendations lifestyle it be we the improve significant time people in which telling them solution personal auto. have health our what’s And AI. make investments a our We on their some made to success wealth that best with in very that for their of buy them and product engine or now the or is will their whether proactively part platform to recommendation as

platform. add product more a to seeing consumer QX QX in our also see in and auto And results. interaction are we rolled lot anticipate continue QX our to We to announced types different solution. and out So, which we the we

platform. products our core have are of auto their who the leading in We selling providers

CDH seeing clip. really success our their excited we of the we out actually the which and for offerings, where for rolled contributing The them CDH doing a And should that. benefit on a is the And e-mail the things on nice through about of more recommendation are raise, then We in coming this say we there. somebody CDH seeing values providers for this are – about you example platform talked auto gets are We that to enrollment can a picking our open the have very one companies out platform that putting, consider at we they are we quarter where post up plan. to is like are tax make platform. engine, smart your says, it’s a show notification recommendation hey, time

and the revenue. enables families, provide So, into the employees the increased for plan. helps to it’s provider consumer helps plans CDH make receive investments decisions it – the it and the CDH really for we the their get to their them of day, employer better transaction better At end

platform this both So, of buyers taking value. really are off is really benefit the and and sellers the seeing

Strecker Backe

you. Thank Great.

Operator

August for comments. over call the turn will closing I time, this At you. Thank to Ray

Ray August

Thank that platform close scaling today Great. our quickly. like we I reinforcing you. are our call would to

our the of value initiatives our data. the we accelerating the leveraging are and scale platform engagement technology across driving are We greater of consumer

look on today. future to our updating calls. us for Thank executing I ends call. joining you you well and forward are This We

Operator

Thank Today’s concluded. you. conference has

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

Benefitfocus (BNFT) 7 Aug 192019 Q2 Earnings call transcript