Q4 2019 Earnings Call

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Greetings and welcome to benefit focused Q4 full year 2019 earnings conference call.

All participants are not listen only mode of question then that's a session will follow the formal presentation.

What's required operator systems during the conference. Please press star zero on your telephone keypad.

No. This conference is being recorded I would now let's turn the conference over to you host Mr., Mike about Vice President Finance and Investor Relations. Thank you you may begin.

Thank you operator, good afternoon welcome to focus its fourth quarter full year 2019 earnings call. We will be discussing the operating results now it's not press release issued after the close of Mark Terry joining me today already August President and Chief Executive Officer, Steve slot.

Chief Financial Officer, right, Steve will offer some aftermarket and then we'll open the call up Curcumin a section.

And again no remind you that today's discussion will include forward looking statements such as first quarter and full year 2020 items noted predictions expectations and information there might be considered all looking on the federal security laws, including statements about positioning for the future. These statements reflect our views on how they only and should not be considered.

Turning up use.

He subsequent D. These statements are subject to a variety of risk and uncertainties, including out continuing losses and need to achieve GAAP profitability the fluctuation about financial results.

Mature and volatile market core products and services recruitment and retention of key personnel risk associated with acquisitions, the need to innovate and provide useful products and services.

We need to compete effectively cyber security risk and a changing regulatory environment that could cause actual results could differ materially from expectations for further discussion of the material risk no. Other important factors that could affect actual results. Please refer to <unk> annual report on form 10-K, and other actually see fine.

During the course of today's call will also refer to certain non-GAAP financial measures you can find important disclosed about those measures in our earnings press release, I'll now turn the call correct.

Thank you Mike Good afternoon, everyone I'm excited to share with you are significant progress for Q4 of the full year 2019, we achieved broad based growth across your business.

Putting in the three focus areas, we discussed on our call last quarter, namely benefit spice marketplace for carrier.

Broker channel.

There are three takeaways from today's call life's gross significant adoption of our innovative solutions.

Continued improved financial performance.

First the scale of our platform is accelerating with over 25 million consumer lives on our platform.

In Q4, we added over 500000.

Net benefit eligible lives. The total number of net benefit algebra lives ascribed to 17.3 million.

Representing a 30% increase in 2019.

We're pleased with this growth in Q4.

Our broker network continues to expand at the end up 2019, we had over 800 premier brokers are platform.

As a cost efficient and effective distribution channel promoting benefit focused services and capabilities. These brokers play a key role and the recommendation and utilization of our platform.

Increasingly the scale, we have achieved will be a key element of our story as.

As the investments we have made that success of our efforts give us tremendous operating leverage.

Second.

Our investments and benefits innovation are paying off.

Our new medical carrier offering is quickly materializing since our last call three medical carriers purchased our new quote to pay solution.

Based on or open enrollment metrics that at this place is seeing accelerating adoption and usage.

Customers you implemented benefits based products conducted over 800 million of transactions on our platform 2019.

Benefit Sage, our hey, I powered platform has been instrumental in driving more consumer activity and awareness of benefits place products. This is a massive opportunity making it possible should continue upselling benefits plays to the 17.3 million net benefit.

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Our focus on and investments in innovation are instrumental to our growth and success. We're excited that that continued growth of benefits place is enhancing and diversified earnings.

Third our transformation is generating better financial performance in gross.

Q4 revenue grew 17% over the previous year 2019 full year revenue grew by 14%.

Comparing favorably to 2018 revenue growth.

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29, teen EBITDA was $19 million, representing an 884% improvement over 2018.

Q4, EBITDA also exceeded expectations.

I am pleased with continued progress we have made and driving all phases of our platform transformation.

As a result of our progress our Q4 results or within or exceeded the range or our guidance.

Our platform strategy is transforming how benefits are bought sold and used across the industry.

We are the only company with experience scale and data assets to make it happen.

Let me share an example of what I mean, a large employer recently chose our platform the surface workforce.

Our ability to drive greater benefits engagement through data and high as well as deliberate deeper insights into health plan cost allocation utilization factor into their decision.

And they saw tremendous value in our <unk> capabilities to more efficiently connect.

Across the benefits ecosystem.

There are numerous customers like this out there and I am confident that benefit focus is best positioned to address customer pain points.

Or greater help cost insights and remove end to end friction.

I will now provide specific details for each area of our continued transformation starting with how we are scaling our platform in Q4, we added over 500000 net benefit eligible lives a company record for the fourth quarter.

This was fueled by many factors across all areas of our business for the year, we added more than 4 million net benefit eligible lives. This 30% increase reflects growth across all areas of our business medical carriers.

Public sector.

Employers and other aggregators or groups, such as getting economy workers.

With large employers in the public sector. Our channel efforts are paying off in Q4 hour S&P performance was strong.

Our broker channel or strategic Premier broker program continues to drive scale as well as accelerate lives growth onto our platform.

Our premier broker expansion continues climbing from 53 at the end of 2018 to over 800 at the end of 29, Chief. This represents a 15 times increase and just one year.

The rapid increase in our broker channel demonstrates strengthening relationships with its vital part of the ecosystem.

Brokers are influential and effective distribution channel to drive growth across the entire benefits industry.

We expect these key relationships to make a significant impact.

Position us well for the upcoming selling season.

To enable greater broker activity and 2019, we changed our relationship with Mercer.

Mercer is no longer a leading source of revenue in our 2020 outlook.

We remain confident that's a strategic decision to fully open our channel to be brokered caustic will offset the short term revenue headwind overtime.

We continue investing and benefits innovation totally industry transformation.

These investments include industry, leading data quality initiatives.

The adoption of artificial intelligence to better informed consumers.

As well as efforts to build our end to end solution for carriers all are producing positive financial returns.

2019, we acquired certain commercial software assets of Connecture.

Combined with our existing medical care solutions. These assets create the Industrys only end to end quote to pay solution.

This unique solution has been well received by the industry.

We've leveraged the best to benefit focus and the assets acquired from Connecture.

This means for this ball open enrollment, we will automate the entire benefits value chain.

This gives a greater number of consumers easy access to voluntary benefits from the leading brands and benefits place.

It does so through a smart intuitive mobile experience and it's driving new transformative discussions with existing customers and prospects.

We're very pleased that today, our innovative care solution has produced three strategic seven figure transactions tour <unk> signed in Q4, 2018, and one recently Q1 2025.

These are major wins side with Optumhealth Premier a blue cross.

And National Teachers Associates Optumhealth for example chose Benefitfocus first simple effective solution to help manage Optum is health care and benefits elections to better serve its customers.

We believe each of these carriers will contribute to our strong foundation for further revenue growth.

Our pipeline remains robust and we anticipate continued strong activity throughout the year over the past months, our sales process within the carrier segment has been moving from the insurance carriers COO.

See Aro.

And as the dynamics of all from the Chief operating officer to the Chief revenue officer approving contracts ourselves lead time has market oblique shortened what used to take several years to close now takes less than a year based on our recent wins. This dramatic improvement of closure time is due to the street.

Dziedzic and transformative nature of the value proposition that we're bringing to our customers. We're confident that the value. We are creating for our customers will continue to accelerate the growth and success of benefit focus.

Our best of breed platform enables medical carriers to deliver unmatched innovation to their members. It sets benefitfocus apart from the market, allowing medical carriers to purchase a complete benefits solution from one source benefitfocus.

Open enrollment 20, Twond he was the largest and most expensive and our company's history total premium purchased on our platform was a record of approximately 60 billion and our industry, leading data accuracy continued to improve.

We're pleased with benefits place was there a high powered platform benefit sage and our industry, leading data analytics assisting consumer storing the benefits selection process voluntary benefits participation increased by approximately 350 basis points to nearly 28%.

For all voluntary product offerings.

This represents over 800 million and premiums attributed to benefits place products.

In Q4, we expanded our benefits place Hs say FSC offerings with the addition of connect your care, a leading consumer directed health care solution provider.

We're very excited with our benefits place opportunity and the successful ramp of our platform to that.

These efforts are producing strong financial results expanding margins and improving financial performance.

Benefits place and our solid carrier performance, both contributed to our 2019 revenue growth.

Benefits place, there's also a catalyst.

For Q4 was a 34% growth rate.

Our revenue growth contributed to meaningful 2019, adjusted EBITDA expansion of approximately $9 million and we believe 2019 at Q4 bookings growth will lead to continued 2020 financial improvement.

In conclusion I am proud of what Benefitfocus has accomplished this team has a clear understanding of our path to profitable revenue growth. We are tremendously optimistic about our future. We're confident that weekend transforming the benefits industry and we look forward to the opportunity to deliver and 2020.

Now I would like to turn the call over to Steve.

Thank you Ray I wanted to start by providing some high level financial observations about the business activities since we last spoke.

With that I'll discuss 2019 financial results and provide guidance for Q1 and full year 2020.

Starting with my observations.

First we made significant progress selling our quote to pay offering into the carrier market.

As I mentioned during our last call. This channel is strategic for us principally because our products are critical to the operations of medical carriers and as a result, these relationships tend to be long lasting.

I'm pleased with our progress and expect more deals to close as we proceed through 2020.

Second we performed well with benefits place, which currently is exposed to about 5 million of our buyer lives.

We see a lot of runway by adding new products and exposing this offering to our existing base.

Over 17.3 million net benefit eligible lives.

Third our business model remains strong.

We have revenue sources from employers medical carriers and from voluntary benefits suppliers.

I believe this multi dimensional business model is going to serve us well over the long run, especially as benefit place exposure and engagement increases.

Now, let's turn to our results.

Total revenue for the quarter was 87.1 million, an increase of 17% compared to the fourth quarter 2018, and was driven by double digit growth in each of our revenue streams.

Platform revenue, which represents revenue from benefits place.

Was up 34% in the quarter compared to last year.

This was disclosed for the first time this quarter.

As we've highlighted on our prior earnings call at the start of 2019, we strategically renegotiated our Mercer contract.

Never rise contract contributed to stronger relationships with the influential broker community.

But from a 2019 revenue standpoint created a near term headwind of approximately 3 million in Q4, and 9 million for the full year.

Connection related assets continued to deliver solid results and contributed approximately $7 million of revenue in the quarter and nearly 24 million for the full year 2019.

For both the corridor and full year professional services revenue accounted for approximately half of this revenue contribution.

We continue to be pleased with the performance of the assets acquired from Connecture.

Excluding the contributions from Connecture any impact the Mercer total Q4 revenue grew 13%.

Compared to Q4, 18 and reflect high single digit subscription and professional services growth.

And 34% growth and platform revenue.

On a GAAP basis software gross profit was 46.8 million representing margin of 68%.

Professional services gross profit was negative 2.5 million.

Resulting in gross resulting in total gross profit a 44.3 million or 51%.

On a non-GAAP basis software gross profit was 47.8 million.

Representing margin of 70%.

Professional services gross profit was negative 2 million.

Resulting in total gross profit, a 45.8 million or 53%.

The year over year declining gross margin as a percentage of revenue reflects the combination of increasing investment in open enrollment staffing.

Investment and third party data.

And a reduction in high margin Mercer revenue.

Q4, adjusted EBITDA was 12.5 million.

This exceeded our guidance and compares favorably to 12 million.

EBITDA in Q4 2018.

Our adjusted EBITDA was positively impacted by tighter expense management in the quarter.

For the year, our adjusted EBITDA was 19 million, an increase of 84% compared to 2018.

We plan to continue rigorously managing our costs in 2020 and expect that our adjusted EBITDA will continue to improve.

Operating profit was 1.6 million and net loss per share was 12 cents. This compares favorably to the operating loss of 9.6 million and net loss per share a 41 cents in Q4 2018.

Now, let's move to the balance sheet and cash flow.

We ended Q4 with cash and cash equivalents of 131 million.

Also we are in the final stages of negotiating a new credit facility for approximately 50 million.

I'm expecting this facility to provide additional flexibility and liquidity at attractive terms.

Free cash flow a non-GAAP measure that we defined as cash provided are used in operations plus purchases of property and equipment was 2.5 million in the quarter and inline with our expectations.

Moving to guidance.

As Ray highlighted our outlook reflects several factors, including the combination of continued strong adoption and growth in benefits place.

A greater percentage of our backlog and new a are to be derived from larger transactions, which will benefit in Q4, 2020 and 2021 revenue.

Mercer revenue declining from approximately 26 million in 2019 to expected 10 million in 2020.

And a planned reduction in on premise connecture customers.

Let me also give more color regarding the political landscape as we frequently get ask questions on this topic.

Overall, we view changes in health care laws and the positive from benefit focus as our platform helps consumers make complex choices with relevant data and easy to use tools.

When regulations change our customers need help and we are uniquely positioned to provide that needed support.

We will continue to closely monitored the macro environment and assess the potential impact on our business.

For the first quarter 2020, we are targeting total revenue of 67.5 to 69.5 million.

A non-GAAP gross margin of approximately 50%.

And adjusted EBITDA between point 5 million and 2.5 million.

We expect a net loss.

10 million to 8 million, which represent a non-GAAP net loss per share.

30 cents to 24 cents based on 32.8 million.

Basic and diluted weighted average common shares outstanding.

For the full year 2020, we are targeting total revenue of 310 to 320 million and adjusted EBITDA.

Between 22 and 27 million.

We expect non-GAAP net loss of 23 million to 18 million, which represents a non-GAAP loss per share of 69 cents to 54 cents based on 33.2 million basic and diluted weighted average common shares outstanding.

For modeling purposes, we are expecting total revenue trends to resemble those 2019.

In addition, today, we announced that our board of directors has approved share repurchase program for up to $20 million of our common stock. This reflects confidence in our growth strategy, our ability to successfully execute and our belief that the intrinsic value the company as much.

Greater than the price at these current trading levels.

In closing we are entering 2020 with more lives than ever before and a plan to further increase lives and engagement on the platform.

I look forward to providing you with updates on our progress as we move through the year with that we'll open it up for questions.

Thank you at this time will be conducting a question and answer. So if you look that's a question. Please press star one on your telephone keypad a confirmation so would indicate your line is in the question Q. You May proceed to fuel the to move your question from the Q for participants you just speaker equipment, and maybe not certificate ansible for parts and the Sarkies.

Our first question comes on line of Brian Peterson with Raymond James. Please proceed with your question.

Hi, gentlemen, thanks for taking the questions. So just wanted to start out on the 2020 guidance Steve I. Appreciate some of the color there, but maybe you could walk through some of the assumptions are moving parts on what's driving the outlook for 2020.

Yeah. Thanks, Brian we appreciate it.

We think about 2020 were really excited about.

The future for benefit focus and our customers. There's really three main drivers that we look at in the first is benefits plays as you saw a from a benefits place perspective, the amount of premium that our customers purchased one up from 600 $800 million.

Our revenue went up from from about 20 million to about 30 million and we had plenty of runway, where we can sell more benefits play solutions to the to the 17 million plus that benefit eligible folks on our platform. So benefits places a key driver of our.

Our 2020 revenue second key driver for us is really around the carrier lives.

We're seeing a lot of great demand for carrier based solution last year, we acquired the assets are Connecture. We married up their next generation product with Benefitfocus carrier solutions brought to market in Q4 of last year and since our last earnings call.

Three different carriers sign up for that innovative quote to pay solution. We're told us it only product in the market like that so that's going to play.

Big growing our revenue growth in the back half of the year and we have a very very strong pipeline. The third Q lever for US is working with the broker community. We've increased the number of brokers, who are premier brokers and focus from year ago by about 15 times over 800 brokers.

Is that benefitfocus out in the market and we see these brokers the tailwind to our activities in the employer marketplace. So really looking forward to the lives that we're going to add to our over 17 million that benefit ALS realized from both the broker community Air medical carriers, and we're seeing strong expansion and engaged.

Benefits place those are some of the big drivers, we have going into this year.

And I'd just add to that Brian that we took that plan that operating plan and then to risk adjusted it yeah two to develop guidance I feel good about where we landed.

Understood. Thanks, guys in rate, maybe just a follow up to some of those comments other three seven figure carrier deals any help on what drove those and how we should be thinking about expectations or the pipeline for for some large potential carrier transactions going forward yes.

As we look at Bennett focus.

Through our platform transformation, we're really focused in the business of connecting people to benefits and we do that in multiple ways, we do that through carriers carriers help us connect to both employers.

And also individuals from a carrier perspective.

This solution. We have is very unique because it allows a carrier to quota quota product.

Enroll product bill or product and received a cash against that product and see only product like on the marketplace and is competitively distinctive for us So you see Justin.

Short amount of time since it's been out that we've added three different carriers.

To benefit focus a mix of both existing customers of Benefitfocus, great companies like Premier Optima, and a new customer national teachers associates and so the the carriers are responding saying this is a very innovative product and one of things that they really see that.

It's very compelling about it not only is the end to end quote to pay but has the ability to offer to their customers benefits place and having benefits place adoption by the carriers, which would be new to us at the end in 2020, something that they see as a way to compel their customers through offering more voluntary products is also good for us.

Because it allows us to match up our benefits place suppliers with these carriers.

So we're seeing that as a real driver for these carrier. So pipeline is very strong for the rest of the year respect to continue to have closures as we're driving through rest of 2020.

Okay. That's good to hear it maybe just one quick clarification, Steve I know you mentioned, the 5 million lives being exposed to benefits place I just want to be clear does that include or not include the benefit did in the prior customers that were on benefits store.

On that is all all lives expose to benefits place and so it would it would include those lives.

Got it. Thank you in just a point of clarification, Brian the way to think about benefits place is I think of it as a a grocery store and there is an island the grocery store and there are benefits in the aisle and align goes down the aisle and they pull voluntary benefits into their card and we get caught.

Compensated for those voluntary benefit so I don't I don't think about it as us.

Store in a place I, just think about it as consumer activity.

Engaging with voluntary insurance products that we put in front of them.

So that's why I think of it.

Understood. Thank you okay.

Our next question comes on line of Sean will with Piper Jaffray. Please proceed with your question.

Hi, Thank you very much so.

So you said sales cycle, you're seeing some sales cycle declining or improving but also that more or is going to be derived from larger transactions. So.

Hi deal size is increasing and cell cycle decreasing isn't something that we see very often help me connect those dots.

Yes, Thanks, Sean.

We're really pleased with the activity around the carriers with benefits place and you know as we think about it what's really happened as before we just had an enrollment system at a billing system in the marketplace. We were often purchase always purchase for operational efficiency by insurance companies. It was a tactical.

A solution that was.

It was very important for the company's but somewhat tactical it's really about automation and operational efficiency now that we have this end to end quote to pay solution. You know the quoting is key in August because quoting drives increased activity at drives providing quotes to people looking for insurance and that has helped create this shift.

From being a tactical efficiency solution to a strategic salute solution for the carriers, where they see by having this solution, they're going to drive more revenue for their companies and that's really that shift we talked about from the COO to the C Aro where companies need this their numbers for the for the coming year. So it's a ship.

That once you are talking to the Chief revenue Officer company. They have the year of the CEO typically about hey, I need to solution to drive incremental revenue and that's what we saw in these deals that we we added this over the last several months.

That's helpful. Thanks, and you have any thoughts on cash flow free cash flow guidance for 2020.

Yeah. Shaun this is Steve we ended 2019 with we consume $32 million, we are expecting significant improvement over that in 2020, driven by two things an increase and EBITDA as well as.

Reduction in our working capital investments and kind of the some of those two should result in free cash flow consumption somewhere between 15 and 20 million.

Okay.

Thank you and the line of credit renewal just a small one is this this is replacing the one.

That expired in February.

95 night.

That is correct. It's the line expired we replace that.

There is a a best efforts accordion to expand it I was comfortable with the 50 million principally because we have 131 million on our balance sheet and I didn't want to pay a the fees associated with unused line, but but it is it is a replacement to that and it is with the same primary bank.

Okay. Thank you very much.

Our next question comes a lot of Jamie Stockton with Wells Fargo. Please proceed with your question.

Hey, good evening, Thanks for taking my questions I guess, maybe the first one just on on the kind of Mercer business that's left.

You know how how should we think about that on a go forward basis I mean.

Yes.

You know that as an entity that is and in sourcing or using another partner and that's going to go away at some point or maybe it's going to be stable.

You could start that'd be great. Yeah, you know the brokers are a key part of our.

Growth drivers Jamie for for next year and into the future and our relationships continue to improve the Mercer revenue is really could come from a point of and we had this single source relationship to now where they're part of our robust broker community and like all parts of our robust brokerage community.

We're working closely with them have a good relationship with them and frankly hope to grow that revenue that we have working with them just like we were with any other brokers. So we're really seeing that you have to transition from a unique one off relationship to now they're part of overall community. They see a lot of value in our solution both because of benefits plays in the automation.

And that provides now we're going to continue to work that.

Hopefully drive it up as we go forward.

Okay. That's great and then maybe just you know you've given us a Q1 number.

And a full year number.

I think Q1, I still have some headwind from the restructuring.

You know.

That happened last year that didn't impact Q1 of 19, so maybe that's three or four points of headwind for growth or something like that.

But you know, even if I take that into account and that and that connecture.

You know getting a full quarter contribution permitting Q1 versus last year.

It seems like the businesses, maybe flat to slightly down organic.

In Q1, and then there's a you know average growth rate the rest of year, that's maybe eight or 9% something like that.

You know as we think about that inflection.

Is that an inflection that's likely to be relatively smooth throughout the year or is this a set up where.

I think maybe Steve's comment that.

You expect some big deals go live in Q4 is it more of kind of a Q4 centric inflection.

Yeah.

It was a lot in that kind of my my view is we guided Q1 and I'm going to let that guidance hold off course update it in like 60 days or something like that and then I did mention that the the Mercer headwinds are going to continue and in fact strain.

And that's why I called out explicitly mercers numbers and so you'll see when you look at the data that Mercers is going from like 26 million to 10 million.

And if you look back it was I think 35 million the 26 million and so you can see there's an acceleration in the decline for Mercer.

Yeah, and that's why I called it out the way I did and that might be part of what you're referencing but I'm at this point I'm not I'm not really going to comment much more in Q1.

And just a reference point in order to kind of.

Be transparent about this we put on our website a supplemental schedule that helps lay this out.

So you might want to look at that.

Okay. That's it for me thanks.

Thank you.

Our next question comes on line of Mark Murphy with JP Morgan. Please just a question.

Hi, Good afternoon. This is Matt costs on behalf of Mark Murphy, Steve You mentioned that you included some risk adjustment in your guidance can you explain a little bit us what the specific rate risk adjustments might be and if there.

I'm related to any events with the recent few days and weeks.

I would describe them more as business puts and takes so when you look at a a business plan over a 12 month period. There are some good things in some great things and then some things that could go other ways and so what I was referencing was more.

Our risk adjustment of the business plan over the next 12 months.

Okay. So nothing that's cropped up recently is kind of factored into that.

Ah that's correct.

Okay got it and then Greg you mentioned, a a large employer chose your platform to service its its workforce did disrupt place another solution and what was the sales cycle like for that.

Yeah the.

I'll speak more categorically then about.

The the specific situation, but we're seeing.

A lot of.

Multiple sources for our solutions, whether it be.

RP vendors be.

Benefit solutions that we replace and once in a while still a custom solution typically the sales cycle, depending on the size is anywhere from.

Three months to Joe over a year and it really depends on the company in the size of the company as you know.

Our biggest selling season for the employer side of the segment as is starting here in the next couple of weeks and will happen through early Q3 and.

Those deals will turn pretty quickly.

And the sales cycle is sales cycles or a matter of months is what will typically say for the carrier deals as longer and thats.

Simply because of deals are much more strategic for medical carrier.

Typically has the.

All the executives of the medical care looking at that deal and as a strategic importance. So it takes a little bit longer sales cycle.

Got it Okay and then finally, what steps do you think you could take or is it worth.

Sort of encouraging voluntary benefit consumption outside of the typical Q3 Q4 benefits enrollment cycle.

Yeah.

We're really pleased with the voluntary benefit consumption that we've seen with benefits plays going from $600 million of premium selected to 800 million of premium selected.

And we're starting to see it happens throughout the year the way that we're going to really engage with the consumers and continued engages consumers as was our artificial intelligence engine benefits age benefits age. We take this massive amount of data that we have on our platform, which is really health data well update.

Demographics data about every individual and want to specific event happened such as a new baby.

Child, turning 26 than a message as set out to the individual and its inciting then to act and provide products.

So the so really using artificial intelligence and technology to reach out to people to purchase those benefits when they need and we believe will be very very fundamental and moving from a to every two week period to a 52 week period data and data and artificial intelligence are going to drive us there.

Thank you.

Once again, if you will that does question. Please press star one on your telephone keypad. Once again, if you will notice question. Please press star one on your telephone keypad.

Our next question comes on line of Nandan Amladi with Guggenheim Partners Your question.

Hi, good afternoon, Thanks for taking my question.

So question on the a 17 million lives Hum. So these are produced BPM and 2019 and what's your expectation for 2020.

Could you just repeat that one more time.

Yeah, you you have 17 million lives now ending fiscal year 19.

How many of those lives produced a revenue if you know pahrump like per month type revenue in 2019, and what's your expectations for how many will generate that to subscription revenue in 2020.

Yeah.

As you know.

Those lives are what we call booked lives, which represent lives where we have a signed contract and then there is a journey to move those book lives into they first start with a professional services revenue and then ppm as you suggest we.

We do not break out those as you know that sound my to do list.

We do not break those lives out at this time I will say the the larger the deals the longer the implementation period in the longer it takes to get those lives generating ppm and.

And as it relates to the Q4 deals I said when we were preparing guidance that we expect some of that revenue some of those deals. They hit Q4 revenue, but then to hit Q4, 2020, and then to hit in fall.

In 2021, and so that gives you an idea of the time it takes to go from contract to revenue.

Right and another sort of broader question.

When you were disclosing and flyer versus carrier revenue separately up until 2018 imply was growing a lot faster and had become the majority deferred revenue at that point.

Given the Connecture assets now and the new quote to based solution.

You talked about the the size.

And the growth dynamics.

Foreign carriers since you don't disclose to separate getting.

And on it.

When we think about lives on our platform, we really think about benefit focus in our role as Ted to connect people to the benefit to benefits and then in the last year, we actually increase on that benefit eligible lives by 30%. So extremely large number of lives joined our family and we look at all lives equally bill.

Yes, if you think about it it's all about having somebody enrolling benefits through medical plan and then purchasing voluntary products around that so we don't we don't even think about him. Several that we think we think about them the same and thinking about how do we get more lives onto our platform and then once we get those lives on the platform how do we engage them. So.

So ultimately there get more value from our solution and then purchasing the medical plans voluntary plans to help them in their family.

For the future and then ultimately Benefitfocus reeses revenue from that.

So are they equally our consumers on in both areas seeing the same.

Types of products and method space.

Yes.

If you look it benefits place today, all revenue that we're seeing and benefits place over $30 million of revenue the purchased about $800 million a premium and 2019 those are all from the employer side as a segment.

In in 2020, we have several carriers, who will be offering benefits place products to their.

Employees.

Two excuse me to the employers that are on our platform and will begin to see benefits place revenue emerge in 2020 as well. So we'll see benefits place revenue from both what was formerly known as employers segment and the carrier segment both of those in Twentytwenty.

Thank you.

[noise] reached the end of our question answer session and I would like to turn the call back over to Mr. real this president and CEO.

Yes, I'd like to thank everybody for your questions here today, and we look forward to updating you to the progress that benefit focus is making.

As we go forward, both this quarter and for the remainder of the year. Thank you.

This concludes today's conference call you May now disconnect. Your lines at this time. Thank you for your participation have a wonderful day.

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