HQY
#Hello, <UNK>.
It really depends on account growth and the source of account growth.
So what's going on underneath that is a number of counter currents.
As you say, you've got new accounts that we have acquired from others.
And as we've commented, they generally have slightly higher cash balances than native HealthEquity accounts, simply because, on average, they are older.
And then the second undercurrent you've got is the influx of brand new accounts.
And as you well know, the new accounts start out with much lower balances.
And then the third is the aging of existing accounts.
And I'm sympathetic with the challenge of trying to take all those things and put them into an average, but the real answer to your question is that there's a link between what you assume about account growth and what you assume about balance growth.
If account growth, particularly brand new accounts, were to slow, then you would see, obviously you would see average account balances continue to rise pretty substantially.
Conversely, if account growth remains brisk, that will be less the case.
And we do occasionally, we have occasionally reported on, and others have reported on, what the older accounts start to look like, that the balances do, the cash balances definitely creep up well above $2,000.
And so I guess I'd say generally, if you're trying to time it quarter to quarter, I don't know how to help.
But if you think about it as a long term, there's this huge chunk of margin growth to the shareholders and benefit to the members that's locked into that existing account base.
<UNK> looked at me and he's like, do you want to try.
No.
I mean, I don't know and no.
I think the relative delta in employment growth ---+ first of all, I'd just rather have employment growth.
Whether it's good or bad for our Company, it's another question.
I'm not running for office or anything, but it would be a good thing.
But the deltas are so modest relative to our aggregate growth rates that they're not going to meaningfully affect our numbers.
I do think that in a world where ---+ maybe a slightly different question that you might have asked is really about earnings growth.
And broadly speaking, as we all know, corporate earnings growth has not been fantastic.
And so I think that puts a premium, no pun intended, on every dollar of compensation expense being used efficiently.
And the point that I think was at our Investor Day, one of our partners made, I think it was Eastman, was pointing out that this is just a more efficient form of compensation than the alternatives, if you look at it over the long term, is to shift some of the costs to the margin, but then provide contributions to the account and get folks educated up on how to use it.
And so I think there's a real opportunity for folks who are looking to squeeze win-wins out of every dollar of compensation expense, which, on average, for companies, comp is 40% of G&L, to look at this stuff.
And I think that's what's happening.
And that's just a longer way to say, as we've said before, the math on HSAs and HSA products works.
It may take people time to figure that out, but it works, and that's why the underlying market is growing.
I think so.
I do think, though, at the same time, to those with perhaps not quite as long of a telephoto lens, it also speaks to the benefits of having the flexibility on the pricing side on fees.
While as we said before we're not going to use that flexibility where there's no value to our shareholders, the ability to go in, in a case where the client sees the long term and they say, oh, by the way, I'm ready to commit to that and I'm asking you to commit with me, and for us to give them everything we can on the fee side, it really becomes a win-win.
And all that is enabled by the fact that we try very, very hard to get our members doing the right thing.
Doing the right thing means growing balances, and if they're going to spend money on healthcare, spending it through the platform.
That's good for them.
It's good for us, and we can transfer some of that benefit to our partners.
And so that's kind of a nice virtuous cycle.
I hope.
That sounded very good.
And then I'm like, hmm, I don't know.
Hello, <UNK>.
We don't typically provide too much breakdown in that regard, in part because we don't see what we're doing as an industry-specific phenomenon.
But let me say this.
I think what you're starting to see, or what you are seeing is, as this industry continues to grow, and we were sort of trumpeting our growth relative to Devenir and the market, but the market's still growing 20% plus.
And so by definition, you are moving into, let's say, more mainstream pragmatic customers.
And what do pragmatic customers want.
Pragmatic customers want to know that you're going to take care of their team members, they want to know about your service record, they want to know how long you've been in the business.
They want to know things along those lines.
They want to know what the investment lineup looks like and that they're going to be treated fairly and all that kind of stuff.
They want to know that you're thinking about security.
And I think those are questions that work really to our benefit as a specialist within, not only within the benefits arena, not only within the tax-advantaged account, whatever arena, but really focused on the HSA.
And there are other things we do, of course.
But that kind of focus of the buyer on the nuts and bolts of delivery really is something that we relish.
And so I guess that's probably the biggest thing that I could say in answer to that.
And where you see that is a lot more pre-buy security audits that are really in depth, as opposed to just the usual, we'll send our consultants out for 3 hours kind of stuff, that kind of thing.
More evaluation of people actually asking questions about the investment lineups, which they really should and we wish more did, because we have great answers ---+ people asking the difference between someone like us, who's a custodian that's taking fiduciary responsibility, and someone who says, oh, I'm just the administrator.
If you actually have a problem, you may have to go somewhere else.
Those kinds of things.
So I think that's the biggest, if you want to call that a demographic change, demographic that we see.
But broadly speaking, of course there are always going to be leading and laggard sectors.
We've talked before about the fact that, surprisingly, the healthcare sector, meaning hospital systems, physicians, et cetera, have been a great market for us and continue to be a great market for us.
We offer some pretty unique and interesting solutions in that market.
And you might not think of that as being the kind of market where this stuff would really take off.
And then there are always going to be some laggards, too.
But broadly, we see what's going on as more broad than sectoral.
<UNK>, why don't you talk a little bit about what we're doing to try and encourage our folks along the saving point.
I know you were probably not expecting to answer this one.
That's all right.
So it's important to remember that to truly build health savings, you need to educate and engage the member.
And at the heart of that engagement, it needs to be very personalized.
And so we're really focused on data analytics to understand this journey that our members ---+ and when I say members, that each individual member is going on.
Because every individual member has a different journey.
Some are very similar, but we're focused on using data and then using our platform to flex to meet their needs.
And in looking at the data, there's lots of opportunity for us to continue our mission of building health savings.
There's lots of members that really probably should be contributing more than they are.
And our vision and mission is to engage them in a way that is personalized and meaningful to them, to move them along that continuum of savings.
And we're really focused on doing that through data analytics, leveraging our open platform to be able to flex to meet their needs and create that personalized experience.
Yes, to date, we give fiscal year guidance from year to year.
At the time of the IPO, we did give some broader growth targets for both the revenue and for adjusted EBITDA.
And so we've been public just over 2 years now and we have exceeded both of those targets.
The revenue target was to grow from 25% to 35%, and the adjusted EBITDA was to grow from 35% to 45%.
And on both accounts, we've exceeded those ranges.
And so we're not really reiterating new longer-term guidance ranges, but that's the only that we've ever given in the past.
We'll revisit that to see if we give anything in the future, but that's where we're at today.
We'll put some thought to it.
Thank you.
Well, thank you, everyone.
Hope everyone had a great Labor Day and ready to get back to work, as we are.
So see you in a few months.
Thank you.
