Q4 2022 Talkspace Inc Earnings Call
Speaker 1: Please wait, the conference will begin shortly.
Speaker 2: Good morning, my name is Audra and I will be your conference operator today. At this time I would like to welcome everyone to the Talkspace 4th quarter and full year 2022 earnings conference call. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise.
Speaker 2: After the speakers remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again.
Speaker 2: At this time, I would like to turn the conference over to Jodine Vian from Talkspace.
Speaker 2: Good morning and welcome to Talk Spaces Earnings Conference call for the fourth quarter and year end 2022.
Speaker 2: I'm Janine Fein, Director of Communications. I hope you've had the opportunity to access the press release we posted on Talk Basis IR website and the presentation of our earnings results.
Speaker 3: We'll use this presentation to walk you through today's remarks.
Speaker 3: Reading today's call are our CEO , Dr. John Cohen, and Jennifer Fulk Chief Financial Officer. Management will offer their prepared remarks and we'll take your questions at that point.
Speaker 3: Certain measures we'll discuss on this call are expressed on a non-gap basis and have been adjusted to exclude the impact of one-off item.
Speaker 3: Reconciliation to these non-GAF measures are included in our earnings relief and on our website talkface.com.
Speaker 3: I also want to remind you that we will be discussing forward looking information today, which may include forecast targets and other statements regarding our plan goals, strategic priorities, and anticipated financial results.
Speaker 3: While these statements represent our best current judgment about future results and performance as of today, our actual results are subject to many risks and uncertainties that could cause actual results to differ materially from what we expect.
Speaker 3: Important factors that may affect our future results are described in our most recent SEC report, since today is earnings press release. For more information, please review our Safe Harbor Disclaimer on Slide 2.
Speaker 3: important factors that may affect our future results are described in our most recent SEC report, since today is earnings press release. For more information, please review our Safe Harbor disclaimer on slide two. Now I will turn it over to Dr. John Cohen.
Speaker 4: Thanks, Jidine. And welcome to Talkspace' fourth quarter and full year 2022 earnings call. Thank you all for joining us today. This is my first full quarter earnings call since becoming CEO back in November . I want to reiterate my continued optimism about the current.
Speaker 4: and future state of the business. As you will hear on this call, our positive results from the last quarter, the sustained trajectory through January and our positive guidance for 2023 confirms my impressions on the positive future of this business.
Speaker 4: I'd like to spend the moment discussing how awareness for mental health has drastically changed in the short term, and the positive tailwinds we continue to see for the industry.
Speaker 4: The federal government, multiple states, large employers, colleges and great schools have all announced new funding initiatives in support of mental health services.
Speaker 4: Barely a day goes by when there is not some news event highlighting the need for enhanced mental health services in the country.
Speaker 4: Talkspace was created as a technology-driven platform to address the fundamental lack of access and the significant stigma related to mental health care. The initial market growth was accelerated by the COVID-19 crisis when we saw incident rates of anxiety and depression rise significantly.
Speaker 4: Telehealth solutions were significantly accelerated by COVID, and telehealth mental health emerged quickly as an effective system to deliver mental health services.
Two weeks ago talk States released our early findings that <unk> therapy with highly effective for frontline health care workers at the onset of the COVID-19 pandemic.
Over 600 health care workers from major hospitals across the United States participated.
We found that 56% of health care workers recorded clinically significant improvements in their anxiety and depression symptoms with just three weeks of therapy.
Our business model allows us to take advantage of the large growing underpenetrated addressable market our.
Our extremely strong brand and success from exceptional outcome.
Helps bring in more potential users.
Our brand strength built on our experience is a fundamental part of our competitive edge in the market.
Unlike our competitors talk space as a pure play mental health company, we offer the full spectrum of mental health services self guided texting voice live video.
Both sub specialties and psychiatric services.
In Q4, with very well bind conducted a comprehensive analysis of digital therapy platforms to help readers find options that suit their individual needs to serve as a starting point as to where to begin.
What are your top space the best large service of 2022 out of 55 online therapy companies evaluated.
With that let me turn to our near term strategic initiatives.
In the past several months, we have aligned the company around our overall priority to achieve profitability, while making talk space. The platform of choice for people seeking therapy enterprises seeking to provide their constituents access to therapy and to providers.
We have developed for specific strategic objectives to focus the management team and employees to deliver on the financial plan.
These objectives have a clear operational program and metrics behind them to deliver on that plan.
Number one.
Grow our behavioral health and employee assistance plan member business the investment of resources to establish talk space as an in network provider has been substantial and is the foundation of our competitive edge to serve the mental healthcare addressable market now and in the future.
Let me elaborate on some aspects of this important capability.
First we were able to onboard payor lives efficiently, while supporting often complex technical requirements when integrating with the payers.
Second we have established vigorous credentialing processes for our clinicians to serve as in network providers.
And third we have built our revenue cycle capabilities, including real time eligibility assessment and in house claims processing to effectively bill and collect from the payers.
These are critical competencies that take years to build and help establish a competitive edge in the market.
Our specific goals to grow this part of the business include increasing revenue from existing covered lives, adding new covered lives increasing sessions per day and increasing therapists ratings.
Second.
Our intention to build.
Bigger and more focused direct to enterprise business solutions more specifically focus our sales teams are both small and large companies universities schools and government entities.
Our goals include improving and upgrading the talent within the organization and improving the product offerings along those lines. We recently hired a new senior Vice President, Steve <unk>, who brings a wealth of experience to the HR benefit sector, specifically and to lead the DTE sales organization.
Recent product innovations to help reduce the friction in adoption and usage, including talk space Flex solution.
This is our offering for employers who want a low cost solution to help employees gain knowledge of and appropriately utilized their behavioral health benefits from their employee assistance plan.
And their behavior health plans.
We help them with two products talk space engage our products. So human resource executives engage is an entire mental health engagement suite that helps HR professionals promote mental health awareness internally and drive employee utilization. It does this by a step by step monthly awareness plans.
To prop their people to take action a huge selection of live and on demand therapy workshops, and downloadable worksheets with mental health exercises.
Next is the talk space self guided a product for the employees.
Phosphate self guided as one of the most popular self guided wellness apps in the market. It provides users with daily reflections of huge selection of self guided sessions on topics like burnout depression parenting substance abuse et cetera, and five live workshops every week.
Each led by license clinicians.
Third of our major objectives is to continue to be the platform of choice for providers with specific goals of increasing the network hours work.
Improving NPS score and decreasing monthly churn.
So that space has thousands of licensed providers across all 50 states each of whom have a master's degree or higher and have on average nine years of experience and of course, each is required to pass a thorough screening and on boarding process.
For the fourth quarter, we continued to grow our provider network, increasing the total number of providers, 11% quarter over quarter.
Utilization and productivity from our full time therapists trended positively as we saw an 11% increase in billable hours quarter over quarter.
Provide our retention rates improved as well as monthly churn has approximately half in the fourth quarter versus the prior period and.
And finally under the last bucket, we significantly improved our time to access metrics with average match times declining by more than 50% in Q4 versus Q3.
Yeah.
Fourth objective is as Jennifer will dive more deeply into we will continue to work on achieving operational and compliance excellence, which entails focusing more on our cost structure collection rates and compliance.
As we have previously said our focus on driving down operating expenditures includes labor cost efficiencies optimizing market spend for revenue and profit growth vendor contract renegotiations, Salesforce productivity network productivity and streamlining corporate spend.
Going forward, we will continue to adopt a disciplined approach to spending leveraging the scalable nature of our fixed cost basis, which enables growth at lower cost.
And now let me turn to the full 2022 financial highlights, which the results demonstrates that we are delivering on our strategic priorities and business transformation.
Beginning with revenue year over year revenue grew 5%.
Total <unk> revenue, which includes both member payer, which is the employee assistance program and behavioral health and direct to employer or enterprise increased 66% year over year, while consumer revenues decreased 26% during the same period.
For the year, we grew our covered lives by 33% to 92 million covered lives <unk>.
<unk> payers session volume grew 56%.
We grew the B to B DTE account base over 43%.
Of note we ended the year with <unk> revenue, representing more than half of the company's revenue for the year and inflection point that started in the third quarter and widened in this quarter's results.
So now let me turn to the fourth quarter results.
In the fourth quarter of 2022 revenue for B to B, which includes payer the EAP and behavioral health.
And the direct to employer increased 52% over the same period fourth quarter, 2021, a year ago, and 15% sequentially and.
In the fourth quarter, we added an additional 6 million new covered lives while also launching another national health behavioral payer.
We continue to experience meaningful growth in sessions in the fourth quarter compared to the fourth quarter of last year as well as over the previous quarter.
It is important to note that we achieved these strong results in what is traditionally a slower quarter due to seasonality, which includes a therapist going on holiday or decreasing their work hours and users skipping the sessions over the holidays.
From a profitability standpoint, you could see the tremendous work the team has achieved reducing our adjusted EBITDA loss in the fourth quarter as compared to the same period a year ago on the back of our focus on reducing operating expenses that were not driving revenue growth or efficiencies in the business.
Jennifer will expand more on our financial results on her section, but I want to note our commitment that we will remain very disciplined in our spending with a focus on efficiency and funding only our highest priority investments.
And with that let's turn to our guidance.
With a disciplined and focused plan, we have put in place to deliver on our fiscal 2023 goals. We are providing the following breakeven guidance.
We will be within a range of $125 million to $135 million in revenue.
With a minus 32 to minus $28 million and adjusted EBITDA loss for the full year of 2023.
These guideposts will help mark our progress on our way to breakeven adjusted EBITDA with a cash balance of at least $95 million by the end of the first half of 2024.
Note that this targeted approach to cash preservation, while on our path to profitability provides us with sufficient room for additional strategic initiatives I will now turn the call over to Jennifer for a more detailed discussion on our results and outlook.
Thank you John and good morning, everyone. My discussion today will be based on fourth quarter results on a sequential quarter over quarter basis.
Cover highlights across our financial results.
Provide more detail on our corporate operational objectives.
Lastly, I will share some guideposts for our expected breakeven timeline, including 2023 guidance.
Starting on slide seven revenue for the fourth quarter was $30 2 million, an increase of 3% from the third quarter of 2022.
This increase was driven by continued strong momentum in payer sessions and DTE revenue.
Partially offset by continued and anticipated lower consumer revenue.
Our fourth quarter gross margin was 53, 5% and gross profit grew approximately 11% sequentially to $16 2 million.
Primarily due to the full quarter effect of Q3 price improvements and DTE and higher provider productivity actions finalized in the network in the third quarter.
These benefits were partially offset by the mix shift toward b to b revenue categories.
On slide eight youll see the breakout of our three revenue categories.
Consumer revenue was $11 million down 13% from the previous quarter, driven by a 14% reduction in active consumer members.
End of Q3 to the end of Q4.
This is the result of continued optimization of the unit economics in this category. We further reduced media in the quarter, which is now down 60% from Q3 2021 with revenues down 21% over the same period.
B to B and payer revenue was $10 7 million.
Up 13% compared to the third quarter sessions completed by members covered through their EAP benefit or their insurance increased 15% to a one.
28000 sessions in the fourth quarter.
As John mentioned, we had anticipated a possible reduction in sessions in Q4 due to seasonality as providers take time off for the holidays and members reduce their consumption.
We were pleased with only a moderate impact on session growth in the quarter and as John mentioned, we see good momentum in sessions. So far in Q1 as more and more members are leveraging our in network health benefits to excess truck space.
Lastly, <unk> direct enterprise revenue for the fourth quarter was $8 $6 million driven in large part by new accounts, which totaled 226 at year end as well as the full quarter impact from Q3 account renewals on favorable terms.
Turning to slide nine fourth quarter, GAAP operating expense increased to $37 $2 million.
Primarily due to the nonrecurring expense of $6 1 million for the impairment of goodwill as well as an estimate for one time legal expenses.
Excluding these charges other favorable nonrecurring items and stock based compensation Q4 expenses were approximately $25 million.
Compared to $30 million in the third quarter and demonstrating important progress that we've made not only in optimizing advertising spend but in driving efficiencies across our entire expense base.
As planned we reduced advertising spend 16% from third quarter levels in anticipation of seasonal adjustments to volume described earlier and higher advertising unit costs.
As I previously mentioned, we have made meaningful strides to optimize the economics in our consumer category.
We now have unified our product funnel marketing function and advertising spend to leverage our brands traffic and expensive covered lives base to drive member growth.
We are very encouraged with the early trends we are seeing and this is reflected in our guidance, which I will discuss in a moment.
Besides the continued reduction in advertising spend and as we highlighted on our last call in the fourth quarter. We took important actions to further reduce our cost base, which came primarily through a reduction in corporate employee head count and through the elimination of several third party vendors.
The fourth quarter, adjusted EBITDA loss narrowed to $8 9 million, an improvement of $6 $6 million compared to the third quarter driven primarily by these cost reductions.
Turning to the balance sheet.
Cash burn for the quarter outpaced adjusted EBITDA loss by approximately $5 million.
Of which $4 million is attributable to nonrecurring cash flows, including the timing of certain vendor and customer invoices.
As a result, we ended the year with a very healthy balance sheet with $138 $5 million of cash and cash equivalents.
Going forward, we expect our cash flow to trend largely in line with adjusted EBITDA with the exception of net working capital expansion related to our growing payer business, where the claims process typically takes a few weeks.
Turning to slide 10, I would like to share the key elements of our strategic priority addressing operational excellence.
Importantly, we have an operational plan in place that comprehensively supports our financial plan.
This means that each employee has objectives that tied directly to our company priorities.
This is important to us as it drives engagement and accountability and execution at every level.
Next is operating efficiency, ensuring our fixed cost base is commensurate with our gross profit.
As John described we made meaningful investments in 2022 to our systems processes and controls to ensure our ability to leverage and scale the operations as we grow.
And we continue to optimize capital allocation across the business prioritizing, our most compelling and profitable growth initiatives.
Third we continue to manage our advertising spend with the aim of maximizing total company profit at the member level.
<unk> analytics applied to our platform with flexible programmatic investment channels, and optimize creative and targeting to continue to maximize ROI.
And finally revenue cycle management is an important core competency and as John described a competitive advantage.
We have invested substantial time and effort to build this critical function to serve payer clients, which is vital as we scale the b to b payer business.
We're also hard at work continuing to build out our Sarbanes Oxley compliance program refining processes and controls across the business.
Turning to slide 11, I would like to offer some context for the guidance, we're providing today.
For 2023, we expect revenue to be between 125 and $135 million.
We expect adjusted EBITDA loss to narrow within a range of $32 million to $28 million.
Each of these points are supported by what we have discussed throughout this call and highlighted in the strategic priorities that John described.
First as demonstrated in our Q3 and Q4 results and further supported by our view that the mental health care market growth will be primarily driven by expansion of access and members leveraging health benefits, we believe need to be payer revenue growth will outpace other revenue categories.
This will be driven primarily through continued growth in utilization as well as expansion in covered lives.
We also expect that consumer revenue will begin to stabilize this year as a result of our improvements to the member experience.
Over the course of the year, we expect gross margin to trend slightly lower from Q4 2022 level as the revenue mix shifts towards <unk> categories.
Partially offset by price optimization initiatives.
Continued increase in provider network efficiency.
We also believe we have significant operating leverage from our current infrastructure and have the ability to continue to optimize our costs to deliver on our path to profitability.
We expect the company to reach breakeven adjusted EBITDA by the end of the first half of 2024.
And we will have more than $95 million of cash remaining on the balance sheet at this time.
This cash balance factors in the increase in net working capital required by our growing <unk> category and also the investments we will make to continue to grow revenue and profitability over time.
As John noted this ample cash reserves provides us with the flexibility to adjust to any market trends, while capitalizing on future strategic initiatives.
We believe these four points outlined in our guidance demonstrate our enthusiasm about the fundamentals of our <unk> and DTE categories, and our confidence in our ability to leverage our opex base to scale the business to profitability.
And with that I'll turn the call back over to John .
Thanks, Jennifer.
In summary, we are excited by our opportunity to leverage our existing operating base and capabilities to capitalize on the growing mental health total addressable market and shift towards members leveraging their health care benefits by driving growth across our <unk> payer as well as the DTE.
<unk> focusing on becoming the platform of choice for providers and striving to achieve operational excellence, we have put ourselves on a path that we believe will enable us to reach breakeven adjusted EBITDA by the end of the first half of 2024, while maintaining a strong cash balance that provides us with the opera.
<unk> flexibility to Opportunistically capitalize on our other strategic initiatives with that we will open it up to Q&A.
Thank you at this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad. We ask that you. Please limit yourself to one question and one follow up to allow everyone an opportunity to ask a question.
We will go first to Charles <unk> at Cowen.
Hi, This is Lucas on for Charles Thanks for taking the questions.
2023 revenue guide implies around 5% to 13% year over year growth, obviously, there's some moving pieces between the <unk> and PC segments. If we assume PTC revenue stays at this rate.
At the <unk> rates through 2023, it implies <unk> revenue is growing somewhere.
In the neighborhood of 30% to 35% one is that the right way, we should think about the guidance and then two can you give us some detail on what you guys are seeing in terms of underlying demand in the <unk> market, especially given the macro uncertainty that employers and consumers are facing.
Yeah. Thanks for the question Luca So I'll start with just kind of highlighting some points.
On the revenue.
Items that we've provided and then ill pass it to John on.
What we're seeing as far as demand in the BW segments. So.
First of all like I said consumer revenues, we see that stabilizing this year.
We see our product enhancements, helping to offset any pressure that we could see in consumer spend.
Spending which is a factor of course is these are members that are paying out of pocket.
For <unk> based therapy.
And the DTE space. This is an exciting category for us John will talk more about that in a minute.
And expand on the comments that we've already made.
This is <unk>.
Also though or kind of lumpier revenue categories. As we've talked before there were pursuing larger employers and enterprises, which tend to have longer lead times as well as the factoring in a macro economic factors.
Factors that could just make those lead times be a bit longer.
Having said that we still see mental health care coverage for employees.
Being the highest in the highest priority for decision makers for companies on the <unk>.
Payer revenue like I said, we see this being our biggest growth driver and <unk>.
Becoming the largest portion of our revenue base going forward. This is we've seen really strong growth in session is completed in this category in the last several quarters and.
And like we said we continue to see this growth in Q1, so with that I'll pass it to John .
Hey, yeah. Thanks.
I think.
I've talked about before the addressable market is unknown because it's so large what we're seeing is a.
To reiterate our significant demand and what really calling the enterprise.
And as Jennifer mentioned, VHF EAP side, but let me just talk about the enterprise side. There is a call it enterprise because it's not.
As a significant number of large employers we divided up by both large and smaller employers depending on the number of employees. We've also seen other significant interest.
Education side universities colleges public schools.
And actually also on the government side cities and states. So the demand has been.
Significant.
We've built out the commercial organization, we continue to build out the commercial organization to address the needs.
As we see them come in during the year.
We'll go next to Ryan Daniels at William Blair.
Yeah.
Hi, Good morning, this is Jack on for.
Ryan.
It looks like we saw decent step down in spend on clinical operations, both in absolute and relative terms this quarter.
And I was kind of surprised to hear in your prepared remarks that you're also experienced double digit provider growth.
Especially alongside this delta.
Any commentary on what drove this lower clinical operating expense.
Yes, thanks, Jack so those two things of note.
First is the cost of our therapists that are providing service to the network are captured in our cost of goods. So it will be captured in our in our margin line.
The step down in clinical operations on a reported basis was the impact of some favorable.
A reversal of an accrual that was favorable to our expense base was captured in our nonrecurring items.
For the quarter.
Okay, great. Thank you.
And then I guess moving to marketing spend we also saw a nice step down this quarter, Don roughly $4 3 million and this is something similar to what we've seen over the past five quarters.
So you're asking at roughly 47% as a percentage of sales any color into where you see the spend category sort of bottoming out and with that any insight into the forward cadence of this pullback.
Thank you.
Yes.
Yes.
So we describe $5 million removed in our cost base in the fourth quarter.
So this included both are the expected impacts that we had from some significant cost reductions that we described earlier.
In the fourth quarter at this point I would describe our run rate Q4, opex of $25 million as our new high watermark. So we said earlier, we're going to continue to scrutinize our cost structure.
Turing, we're optimizing for efficiency.
We did we did this with several actions in the fourth quarter, but going forward and as enabled by our operational plan that we described eliminating lower priority work are finding more cost effective ways of getting work done will be the way we operate going forward. So it makes it makes it to where we can eliminate that lower priority work, but also.
Fund important investments that we see as we as we find them and organic revenue growth opportunities. So these two things make us confident that our current cost base provides us with the operating leverage as we scale the revenue lines.
We'll take our next question from Stephanie Davis at <unk> Securities.
Yeah.
Hey, guys. Thanks for taking my question I've got a kind of math, one so buckle up for this one but we're not.
Think about your path to EBITDA breakeven in tubes, and 24 that implies not just 37 points of margin expansion. This year, but an acceleration of that pace in the first half of next year 'twenty two points and that's despite gross margins trending down and some seasonality in the business and then if you look at it.
Another way, it's 70 million of EBITDA dollars that you need to begin to get to breakeven, which represents half of your total opex. Despite johns compared kind of it sounded like there were some investments in a few of these opex categories.
So talk me through this math.
How are you getting there how is this pace accelerating and what levers are you pulling in order to.
To make sure youre able to grow while still having your opex.
Yeah.
Thanks, Stephanie.
Maybe a couple of things one earlier.
They're described what we're seeing on the revenue lines without getting specific between the categories.
We see growth on <unk> to be payer, we're excited about RMB to be DTE category, and we see a stabilization on the consumer line.
<unk> moved to margin and again, we're not getting specific on category margins that we've got.
Yes, we've noted before our BBB categories have a lower margin, having said that we've got a few.
A few efforts underway that helped to offset that so one is driving.
Productivity within the network there is a couple of items.
There we took several actions last year related to our full time therapists network, so eliminating lower productive areas of the network and then going forward only adding back full time therapists as we're able to fulfill.
Fulfill demand.
But they're done in an efficient way this leaves us with a lot of leverage as we grow our contractor network in a way that's really efficient essentially it becomes a very variable.
Just purely variable item on our on our margin line.
We're also working on the value of our offerings.
In terms of net price they commented on both in the third quarter and in the fourth quarter.
We benefited from price renegotiations on more favorable terms, particularly in our DTE category.
We have more opportunities here.
Namely in the payer space by improving our collection rate.
With payers, we have some positive.
Projects underway, where we see that as being an opportunity for us having said that.
You go to Opex and like I said, we're going to continue to make sure that we're managing opex in the most optimal way.
Across scrutinizing.
Head Count third party spend but also in terms of our advertising spend as we are.
Focusing that spend on making sure we're maximizing profitability across the business.
Hey, Stephanie, it's John and good morning.
Yes, I want to reiterate that.
If you look at the <unk>.
Looking at the Opex trajectory.
The there is actually.
Im not just online a plan.
Is fairly significant and obvious.
For a more room for us to take out Opex costs.
That is part of the trajectory about how we're going to get there to breakeven by as we said the first half of next year. So.
The trajectory will continue is what I would tell you and we have so we have room there to continue to take out costs as needed at the same time remember the platform is essentially built it's been the 10 years that we build this base of our platform that functions extremely well so although there'll be some other.
Possible capital investments in some other areas.
There is not a significant need on the base of operations to further improve the product.
So that's a really important issue we're not we're not in a category.
Digital company, where we need to continue to invest significant dollars in our platform to make it functional that is not the case here.
It is a really important issue for us as we move forward.
So, let's maybe dig in a little bit into one of those areas of spend that you mentioned the sales and marketing side of the world, where it sounds like you're looking at DTC stabilizing, but maybe getting more efficiencies out of that.
How should we think about the forward arc of your investments in the DTC business.
Yes.
Yes.
<unk>.
We've commented earlier about how we're viewing investments really on the kind of platform basis. So optimizing we've historically focused on consumer members as we've commented on advertising side, you've heard us for the last several quarters.
Comment on how at this point, we have unified all aspects of our business and that's really given the market trends that we've described earlier.
The market is driven by people.
Looking to leverage healthcare and cover their cover their therapy.
So.
This includes optimizing our channels for acquisitions, meaning our media spend regardless of payment type.
And explicitly leveraging our advertising messages to aid awareness of our expanse of covered lives. So we're seeing really encouraging results so far.
The data that we've had with that with that messaging. So in short we're maximizing overall profit.
Whether that acquisition in the denominator comes from our BTB payor or from the from a consumer member and like I said, we're seeing really good momentum on the B to B pair demand from these efforts.
Yes.
Let me.
Also reiterate that.
The investment in the marketing spend.
As.
Is targeted to all members. It is it is not a breakout like we're specifically targeting the BDC market, we're targeting members for us as that effects the broad platform of the people.
It's a very obviously.
Somewhat of a different approach relative to how we address it but it is no longer like we're saying this is the amount of money, we're going to put into marketing beyond the on the BDC side.
Alright understood. Thank you Jay.
Yes.
We will go next to Daniel gross light of Citi.
Hi, guys. Thanks for taking the question and congrats on the quarter.
I'm going to stick with the steps.
Line of questioning here, because we were surprised on the cadence of Opex improvement over the next year year, and a half or so.
So maybe if I could take kind of the flip side, a flip side of that coin and focus on revenue.
Rose.
I guess is there a way to Dimensionalize, how fast you have to grow the top line to get to that breakeven point in the first half of 'twenty four because at some point, there's only so much juice you can squeeze out of the cost structure that you have.
Youre going to need I assume to accelerate growth at some point or youre going to see some type of diseconomies of scale. So can you just talk about how much growth you will need to see on the top line to reach that breakeven point in the first half of 'twenty four.
Maybe just a couple of points to add to what we already have which is.
I guess there is an element of first of all just the growth in.
In the B to B categories that we've already demonstrated that like we said, we see continued momentum there even in the first quarter I will say that.
The difference between as we close this year in our revenue guidance for that versus an excel.
Any acceleration in the first half would be impacted by our view of potential seasonality that we historically see we did see a moderation of growth in the fourth quarter like I mentioned, we were really pleased that.
We didn't see a big impact for that but that is something to think about as you look at kind of run rate revenue in our expectations.
Got it Okay, and then maybe a bigger picture question and my question is around controversies more broadly not related to <unk>, specifically, but theres two controversies that came up recently.
In digital health more.
More broadly one.
There was a news article a week or two ago I'm not sure. If you saw this about.
In academic.
Paper written.
By someone who used chat GPT to conduct mental health visits.
Without.
The patients actually knowing I think.
And it performed pretty well chat GPT this AI tool.
So question one is how can you or do you intend to use some new AI tools that have come to market more recently to make your provider network more efficient.
Thats controversy wine controversy too just on the use of trackers pixels to do some performance marketing to some members. How are you using member data to do performance marketing are you using Facebook pixels, and sharing data with Google and other performance marketers to two.
Advertise to your potential members.
Okay. So.
As John So let me take the <unk>.
First.
We have for quite some time Ben.
You May know, we have a fairly robust research team.
Data analytics, so we have a more than a fair degree of data that looks at.
Issues that youre, referring to.
Round AI.
<unk>.
I will reserve comments now to the at least the next probably the next quarter, but we already have in place substantial data analysis to look at how people perform.
And what those messages needs to be the therapist, so what I mean by that is.
<unk>.
I've seen and understand exactly what youre talking about relative to Chad PTT or our approach on this is not.
Right now, it's not going to be that a chat GPT will provide a substitute in any way for a therapist, what the AI information can do though is what it will do is help direct a therapist in ways of which to provide better therapy for their patients.
So that's that's where I see as the next the next obvious place for AI to begin to have an impact to improve not just.
<unk> therapy, but the performance of the therapist.
To improve the quality of the product that we're delivering to people so thats.
That's what I believe is going to happen and as I said I'll have more to talk about that in the future, but it is two years two to answer your question. It is very much on our radar.
And we have substantial information and experience with that I'll talk about in the future. So that's H b.
In terms of.
The data analysis relative to how the platform performs on social media.
Our marketing Department is really really good at this they have now they have been for some time been able to analyze where the marketing dollars go who actually clicks through so we will have the information.
Our social media ads from social media data.
Around the analytics to be able to track, how we're performing relative to our marketing spend so that actually is already in place and just just to add that we do not share pixels Wednesday member engages alright.
<unk> back with us So we are very very.
No. We are absolutely confident we're not ashamed personal information I'm not sure I'm familiar with the article.
That youre describing.
Sure you that is not that's not the case, how we are operating.
It's more so on the spend we know what the click through is so that we can modify our spend rate.
Makes sense thanks for the color.
And that does conclude the question and answer session. At this time I will turn the conference back over to John for any closing remarks.
Okay.
Well first off thank all of you again for joining us this morning.
<unk> fourth quarter and year end 2022 earnings call as I noted earlier in the call.
Our positive results from the last quarter, our sustained trajectory through January and our positive guidance for 2023 confirms my impressions on the absolute positive future of this business, we look forward to sharing updates on our progress sometime in the.
Near future certainly on our next earnings call. Thank you once again.
And that concludes today's conference call. Thank you for your participation you may now disconnect.
Please wait the conference will begin shortly.
Sure.
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