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Talkspace (TALK)

Participants
Mike Lovell Director, Investor Relations
Doug Braunstein Chairman & Interim Chief Executive Officer
Jennifer Fulk Chief Financial Officer
Charles Rhyee Cowen
Anna Kruszenski Citi
Joy Zhang SVB
Call transcript
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Operator

Thank you for standing by and welcome to the Talkspace Fourth Quarter and Full Year Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentations, there will be a question-and-answer session. [Operator Instructions] As a reminder, today’s conference call maybe recorded. I’ll now turn the conference over to your Mr. Investor of Director Lovell, Relations. Mike sir. Please go ahead,

Mike Lovell

to first Good today's I call. the on release. a Talkspace's Talkspace’s should We that opportunity to evening Thanks for press walk presentation added also the everyone. IR annual We've earnings hope see remarks. access materials you earnings to joining our use you've presentation site. the had through you

Both comments Officer, Financial our on with on want begin measures our from and available Fulk. I Doug Officer, strategic the including earnings have website and anticipated talkspace.com. followed will impact information remind Interim discussing other Certain to Executive our non-GAAP adjusted statements Chairman a release regarding following plans, non-GAAP We one-off Chief of this Reconciliations questions in of to Chief on also Braunstein, items. by that, targets, and Jennifer today, these financial forward-looking remarks. expressed their goals, exclude are we'll for and basis been you forecasts, call results. prepared be are discuss and included measures priorities, we'll are

SEC future While actual are risks statements materially are today, and of performance to and represent results our our we expect. earnings results reports what recent future from today's may current could our our as described about that these judgment many cause that affect and results differ press uncertainties subject release. actual results best to most factors Important in

slide Harbor to who now, turn over I'll our For Doug, more And information, on begin the please disclaimer on two. Safe slide review will call three.

Doug Braunstein

our XXXX quarter today Thank snapshot going you begin results. and summary with on to welcome our to discuss for the all third earnings Mike execution year want performance our Talkspace. joining to call. during financial and of of our to since a I'm full three us we've the discussing fourth both progress I my quarter made priorities page outlined operational majority the and time past spend in months, But three. Thanks we

year You a revenue towards BXB BXC of in in This BXC to can see the partially fourth subscription significant the order as full optimize by decision driven increase our in the drove year-over-year, more doubled decline effectively business XXXX at well which growth shift spend media offset more rise end tiers to our by in which reflects was which business, active XX% significant grew as XXXX, demonstrated continued in the as in an ARPU. period, higher on slide a three, BXB sessions, than the users BXC reduce by our in quarter, returns. in

at grow we we the our and channel enterprise lives, accounts. in the As the in been driver BXB increasingly growth penetration to and initiatives to in that on focus January, increase eligible our highlighted membership base, of EAP number has the business of Conference JPMorgan continue MBH as grow

Our and covered approximately wins, XXst, lives up regions. from as business client prior of BXB the period, including new eligible year XX% driven by Cigna XX million December

recently We by covered live go expect planning the meaningful in a by a the first we're with QX We large coverage. with to lives existing lives national new adding to end to XXXX. of of our expanded continue in add our to partnership quarter. of insurer And quarter Optum number the

We've our portion as business significant University. of such clients our of XXXX, adding enterprise while year. any Importantly, also and The we the larger focus continues January shift strong the to course enterprises continues began company's number the XXXX. in than to in into as momentum Expensify enterprise of continue and customers customers in XXXX. all the in retained we BXB throughout we other history, recurring doubled of West more to calendar We Blackstone, year Virginia also increase our the more accounts notable launched month than

note estimates quarter, I Well, in If been our items. to reserves the quarter actual do in X, some ongoing into results want since updated BXB. note the which fourth January. involve to have details you'll Jennifer two in the that will adjustments you slide our turn dive deeply to

First, better reported favorable the receivables revenue anticipated for business, guidance, ended above period. performance underlying the related the allowance high-end our in prior combined of quarter on our with reflecting BXB slightly to modestly yearend than our reserve

the quarterly we're strive we our we're here, consumer metrics, our optimize contribution. signs noted preliminary early capital to revenues returns innings modestly important A a our quarter, of BXC outpaced of in in in like conversion, the number business. reduction we Second, see while of release as improving in January, retention. would decline advertising spend declined in And as in in starting to efforts the and say I revenues, our stabilization in

this to you'll priorities listed organization we accelerate months, So and operational of page. past the prioritize we've I we that growth, made resources some through across adding and the before projects, identified third these progress actions taken operational that financial discipline at talked in same XXth, processes the call, about. if that we've you targeted establish the we to I'd substantive we to turn in believe on begun that the time, three implement to since organization they're all slide X, But specific note go November quarter here our note

team financially While and the the we improve of our some we're those But believe and that swiftly. of performance. clear time addressing our to quickly, actions impact will early financial performance operational issues have address the solutions of we will many our we take believe our have issues resources to the bulk work both

brand, remain can mission value environment the we team, macro the increasingly that unique our a backdrop and serve optimistic talented behavioral we our high ongoing significant need strong quality against care, over that solutions, time. product accessible, the and our we of driven build that for shareholder result, a recognizes As

Looking I our each priorities, at more closely to in take at want turn.

that funnel, take BXB, to significant leveraging brand awareness of We've recently particularly feature of to of funnel implemented that company's insurance this the BXB our by conversion process service be means Superbills, the this for a the helps the submit that consumer and changes upgraded members. to in reimbursements as visit advantage our of their of in to the version And the to members for BXBXC and number ultimately traffic end expedite BXC increasing simplifying space robust between and website acquisition improvements An customers mental number there's for unified benefits. opportunity the believe of quarter. the we website First, claims, rate. also customer our funnel drive all health synergies claims use expect in of Talkspace a the we unifying is a our claims. expected released part that out-of-network launched We've

further and retention base time. strengthen our to expect We over this rates customer conversion across initiative

we've proposition Talkspace’s introduced number for changes Second, to recently clinicians. our value of and increase capacity our enhanced network's

adding improve significant For today the we clinical where and licensing. experienced across value actions to to to alleviate a we're as shortages see state-wide in therapists therapists, our actively Talkspace states assisting the recruiting are result and Washington, improvement example, help for directly we've shortages. there's state as of result Both provider We've improving example, and licenses actions increased redesigned expected signs first beginning in Again, the these to therapists, capacity therapists’ of assist regional meaningfully as several to these also platform. we training. are our providers’ therapists changes. for early engagement as took in proposition of quarter, been the of In compensation, our a of our retention improve well in satisfaction increased

including patients. initial in new efforts introduced self-help our provide improve in and video experience the cash patient to finding been change the covered our the of discounts. we managing recent quarter, early can includes for focus continue and psychiatry. to We've user improving more plan offers in Fourth, stabilization needs, clinical offering half Third, our spend to also the continue deployment we're time. for to unify range this to capture in retention, expand offerings resources of our we that and optimizing enriched and We've of with the the our enterprise back therapy, expect for in throughout also continue to sessions therapy customers self-help our for also our our over content our utilization a year. driving live providers. refunds meaningfully This the also We've the more focus that partners. promising. DTE as And and fit serve the part we from Sixth investing as noted, optimizing are better more reactions capital quarter, business. driven It team health beyond I value products. focusing onboarding therapist-patient sales first part This several the interface closely large the Fifth, our demand incremental added those penetration on process. the we've finally, and on tools bundled develop to our side funnel both the BXB and We've we're efforts our we while enterprise from and to the media fully to to and as evaluation customer marketing flow organization the to to consumer includes improve resources quite to allocated fourth our We've observe by customers. our to reducing in couples enterprise growing aim the services lives.

on operating specific capabilities, upgrades, As we our taken I time. cash the prior to some expand resources ultimately, the our call, deliver ample leverage and over mentioned in have we we've But believe enhancements, actions. invest on

BXB improve capital. to and as billing committee well. in become on I We flow For better platform to controls, time, reduce our believe implemented reporting and will example, We a you. increase performance. system, base, the over both new that to improve the a and discussed allocator returns. Jennifer, which and our We've before, With ultimately, and reserves advertising financial financial reporting, out we and over more enhance allow to mix begun a our that, of and business to optimize our we're details of performance. to management I'll customer from expect turn collections stronger operating shareholders' cash drive our as accounting competitive to our over across financial built time. full to we've over there our spend Jennifer cost BXC platform And and our initiatives a claims improve leverage BXB team already us the implement and contribution these we our all order meaningfully optimizing provide cash call pricing

Jennifer Fulk

to XX% to reported third the both million, from landscape. basis a from reported BXB quarter, Thank useful customers. an normalize you, QX $XX.X basis XXXX understand respectively. XX% this comparing presented Much The revenue be growth my on growth Doug to and quarter. presentation good and We basis sequential the revenue revenue XXXX. million would the to was of evening in discussion approximately the fourth reserves most in adjustments, believe quarter third BXB results remaining $XX.X everyone. these the from $XX.X quarter will competitive is given revenue mix, been implement changing to in $XX.X fourth sessions the changes shift and performance, was on to due BXB Starting a business in and XX% slide started the six, and in a with million underlying November, revenue up increase third When up we revenue for million, the attributable sequentially, periods. DTE was we the related have and quarter prior on initiatives the rapidly QX

driven in XX% declined part spend our million, active sequentially, a we in advertising in improved revenue as lower users by mix by BXC number quarter the offset reduced consumer to $XX.X plans. of XX% Our by an

would XX.X%, margin grew quarter. of and greater gross to sequentially, revenue related adjustments XX% these quarter periods, increasing revenue impacted an a on profit by a shift primarily receivables number lower XX.X%, fourth reserve gross been to quarter $XX a fourth margin million, third full-time sequentially BXB prior due Our of up versus BXB to and Absent with toward have therapists.

to the slide to fourth quarter. compared were the seven, in quarter $XX.X $XX.X in third million expenses million GAAP Turning operating

and due to $X Our base stock-based by to compensation grew mainly non-recurring higher items. GAAP quarter million quarter, cost

$XX.X increased by sequentially. was and $XX.X million driven net competition $X.X Excluding headcount, fees. professional expenses quarter lower quarter was increased media Fourth these, were and was offset partially down by services loss to loss by employee talent million. spend, higher approximately due adjusted EBITDA for related fourth operating million This expenses,

balance XX, cash December of was $XXX million. as Our

million $XXX balance items, one-time been end the quarter. cash Excluding of our would approximately have at the

Turning closer BXB for look our at to a Slide performance. X,

into in of As sessions, with base increase quarter our XX% earlier, I an the revenue significant million DTE quarter, in mentioned number a BXB which XX on the lives grew going a the quarter. as quarter the of with versus normalized as for of customer XX% additional solid growth prior pipeline the We lives, approximately ended well increase eligible reflects in XXXX. basis, an

opportunity new driven pairs. completed As plan EAP BXB Doug expanding with by noted, sequentially partners, services. up our we sessions as well see our as to coverage a modestly with relationships of significant existing franchise, our The QX, MBH grow and utilization launching in of was number improved health XX%

of number of end the X.X% season. during as to BXB holiday activity period While active at the of therapist is a December XX,XXX, the users declined This to decline XX. the in due

and more have DTE business added already XX% the several customers new in XX revenue Doug enterprise We rebound quarter This we revenue launched our than BXB quarter-over-quarter. is We of users. a January more XX% as BXB already have seen Active grew and quarter. accounts mentioned, this and than in fourth recurring

X our closer BXC XX% performance, in by higher expectations with a improving the quarter. a partially declined media at migrate line look revenue outpaced as continued in spent to sequentially, increase quarterly tiers. was last subscription Advertising our sequentially, to to advertising on reduction our an XX% ARPU spend consumer spending less driven Turning optimize towards as for members capital the we active work we We Slide XX% our down The offset users, modestly declined, in by decline revenue in business. contribution. money outlined returns

during at funnels and XX, JPMorgan earnings utilization and drive to conversion, suite. our BXC and as Optimizing Conference, our taking discussed BXC our the to call month product the expanding clinical we're conclusion improve Turning includes BXB improve retention. This on steps the performance. last and quarter our our unifying reiterated tangible returns network third Slide to we strengthening to

materialize results. you updated growth the it some over to drive on believe time outlined our those and progress. keeping future questions forward and will We call that, initiatives profitability we our look today, time reported we'll the open take While With will in to for

Operator

of quest Thank you. William Blair. Ryan first Our Instructions] Daniels [Operator comes from

Your Please make on line unmute. phone is open. is sure you

Unidentified Analyst

Hi, hear me? you sorry. Can

Doug Braunstein

Yes.

Unidentified Analyst

have provide I in update Hello. Ryan. Hi, you an are any transition. that. workforce I if you think [ph] the if this for out there’s, I Nick asked my there. bit kind taking can a just we start, the changes if timeline going past in guys on appreciate know, Thanks you guess, to of, for a is little question. gotten WX I’d of

Jennifer Fulk

Yeah, for Nick. the thanks question,

just we progress the So the but have specific that the the and not months. timeline, last evolution mentioned made made over I can tell few we've you we

that. hire WXs operational we quarter, for did related make did to we overall So on but the some fourth -- we efforts progress hired

of So a those improve capacity earlier, the as and efforts to for have in productivity mentioned this that. don't utilization we do the Doug place the point, but of have network. network and enhancements plan specific we capacity overall, At around operational

Unidentified Analyst

other the And do how a job you you've And past, tracking kind you that. wondering there I need for than that mentioned or offerings. of of, is any something you're us bundling better guys product can update just, tracking kind are like other in I'm you RPU like tracking, there? guys guess, like Thanks with? Okay. you are metric then that to multi-bookings

Jennifer Fulk

Yeah.

the don't that say therapy advancements our I we portfolio anything psychiatry far with that both expanding product with bundling as So as our progress live as We that of to have attribute accounts. a few within clients a our initiatives and to peers. across and to made has platform specific regard would bundling to offering with traction services. well of did self-help as us Outside have our regard and we enterprise our have as we gotten recognize that, other services as would our combination. I our the peer I success well lot mentioned

Unidentified Analyst

appreciate Okay, I'll Thanks. great. that. hop I back.

Operator

Thank you.

comes with Our Rhyee Charles next question from Cowen.

is line Your open.

Charles Rhyee

about -- growth. obviously, media optimizing Yeah. talk correlation of question. there's and you direct Thanks about between membership and we talked can a spending Doug, the for examples you maybe you give you that to wanted doing entail? see what regard, you Can media spend what can optimizing, like -- we when how sort say actually does in some give are example, us of of you can an this taking

Doug Braunstein

do want Jennifer, Yeah. you to…

Jennifer Fulk

I’ll yeah. Yeah, Charles. the question. for Thanks start,

then third we call of being primarily and in acquisition that by So about talked our quarter decline and a our cost JPMorgan, at rising driven in conversion.

spending as the efforts marketing stabilization top the Our spending spending so conversion the really well channel, as those to to most see optimize better a working fourth optimizing, was positive in of the ad and getting as that we've understand the made with make efficient to look in specific a an to ask agency On that, related specifically better ROIs investment we're analytics from of dollars. as you quarter. of third-party channels our to sure spend we

Doug Braunstein

just our I unification I the but of of the add, our and would so directly the funnel, metrics. same covered access lives, our for experience website, talked And the easing is and coming LTV and taking as lives, insured to that key Jennifer all CAC, traffic both about impacts the

it's bill early, customer it that it's duration website just way that paying early the to gives that live visit them otherwise So new launched, the It's those another recently add function that is an super out-of-pocket of for not -- potential to that increase are turning alternative. the to out-of-pocket, days we've is otherwise and literally the that -- extend would another I a product. And would decide pay that retention. of

to go improving of the about we're media well of terms funnel, in of the specific as about, both lot the optimizations talked Jennifer spend. as that really talking our of a So the what unification economics

Charles Rhyee

I and could That's just if maybe follow-up. Good. helpful,

seeing seeing for that, of terms kind least first cost this ago. of one they're for, at a what spend here or here competitors expect Can sort media part a in seeing spending give sort kind year right now, do of it those of what largest the down Your you bit space in of talked your sense us the they're kind of for of, competitors costs, a you media of little from – do maybe about what in you're year? and of you

Jennifer Fulk

of into and say far the as -- us about spending, talked the has in building of the things level spend I goes far media We'll there, on to factor, continue infrastructure, significant fourth on our building advertising as that we level we've processes wouldn't the fourth prioritize same process, can mentioned, higher factor and as a media, the continuing product, quarter as into the not cost just conversion Charles, for first So, reduce we bigger that look we first element out investments on as of outside we talents -- that our that been so to-date. and of our as the The about quarter. that out and scale. with

Charles Rhyee

Thanks.

Doug Braunstein

obviously, going is and value to driver Yes, spend said, us be economic the I driving Those two just as for of -- at conversion of elements better advertising going It's around cost The analytics methodology we're mean, retention. this take the the marginal us point and dollars and to optimize we is value. mover so. the material advantage driver clear, and isn't retention. conversion. Charles, are in where for But of doing and be Jennifer conversion that to real

Charles Rhyee

one I’m last sorry, jump back for That's me, I'll follow-up in. great. and

strategy high kind do you -- lot of see of still you you call, lot change Thanks. any a the to profile for spokespeople that forward? that a strong company have what in of spokespeople of going gained. had some Wanted for driven and if Talkspace engaging by some there's had awareness sort think the I

Doug Braunstein

comment an continue you and watched YouTube saying, the Michael millions have -- by lives out invest we new can at on of have Charles brand you that an building We're have. say, and the only spokespeople And utilization of to we important. just a of going answer to behind driving continue on seen recognition. of BXC we our outstanding I'll series other certainly we really component than increasingly those That's business, because, to our Phelps in is BXB the brand but very It's specific go and advertising business not may ad. again, Yes. to not excellent works it look one. important

Charles Rhyee

Great. Thank you.

Operator

you. Thank

from Our next Grosslight with Daniel question comes Citi.

Your open. line is

Anna Kruszenski

on for Daniel. the Hi, guys. Thanks This is question. taking for Anna Kruszenski

on First, between is duration varies question how how trending, I a membership BXB the channels. and that BXC had and

duration I'm think the have compares platform. how I months to five was that that your and still numbers? Thanks. past, guys in on you said curious average the if that just the holds about

Jennifer Fulk

BXB Thanks current months for four our question. see the In of of Anna. roughly duration data in we Yes, BXC numbers. the those business, in We our -- average have business

Doug Braunstein

I at in good we Anna. -- that interrupt one a that for time just has saying Can just We're decline seen consistent level now. been it second? around That's haven't very a

Jennifer Fulk

BXC look rates, the see equivalent That's the a us. is what opportunity business, right. is less current for it say the to BXB why business And we would call utilization we that significant than at our as would of in I such we're and and we duration much

across efforts as and of So will we as to work business, on both which duration BXB is equivalent the look pay well to we penetration the in which our our duration business. Those off platform, in members. is BXB retention, that utilization conversion, on increase as as efforts

Anna Kruszenski

you. BXC has Okay. average durations higher follow-up a like was led the And Got in was that? are as quarter, video uplift. wondering on which to months a if visits that, channel mix you four like video Thank the last you. of also noting the I ARPU guys then about of visits

Jennifer Fulk

far as duration what measure don't kind choose. as modality our of We members

subscription areas premium video as asynchronous mix, as our the selection So includes on sessions. comments well higher of higher the so communication, more

Anna Kruszenski

Thank That’s helpful. it. That’s you. Okay.

Operator

Thank you.

with question from comes Stephanie next Davis Our SVB.

Your line is open.

Joy Zhang

Thank for you for question. taking Zhang Joy on is This Hi. my Stephanie.

the with your when Thanks. you shift think you heading business provided in someone you growth had BXB came outlook C-suite for the a public? that departure of the the about who's compared we towards BXB, projections Given should how

Doug Braunstein

I you by the will going the not provided I What that, in estimates. management. comment as know, misses with quarters were is our continue to It in February. the the prior added as exceeded so we say month on that January. was January, two and on do management of January, in month for the actually will DTE comment call to mentioned prior projections lives has in on in first in I'm strongest our December covered We Yeah. I signups. been December,

We resources business, our the functions, in marketing optimize of business. and our – We've a first cash have to and added in two not quarter also revenue, BXB added spend those to we've BXB pricing discipline control added but ultimately discipline whole only optimize billing generation series businesses. our of from the

on of BXB the would business today, course XXXX. say than it continue to expect November momentum XX, I So through was it to is stronger gain we and our

fruition, Jennifer any and for where those those not of We while will said have making comments, of believe lots will not come at will In the business. we’re moment, guidance around my confident but many changes be. said, to ultimately making businesses and said are the -- strengthen changes, providing take because we we're the I we things opening as where to time that part we

today about that's how we than we today. We it November XX. on feel did So feel better

Joy Zhang

Maybe just a follow-up….

Doug Braunstein

Sure. Sure.

Jennifer Fulk

ahead. Go

Joy Zhang

months. in health past follow-up. the profile seen We've transactions few some just Maybe the Talkspace a in high

or So the maybe provider? can acquired company a through large us value just pair standalone by of a being versus you walk maybe being

Doug Braunstein

the as shareholders. on value our management to team company say optimizing we're focused the would I a of

value say the value that now we the always would have chairman under board, shareholders. creates our things of most of whatever I fashion for the control our Right the in the increase BXB As the optimizing to grow financial BXC to our our improve business our flow business, and controls are and our generation. cash network, improve rigor discipline to to better, and to optimize interest run franchise and

open deliver focused get And remain value things and that's so to over and think we're of those to are to any going time us a that we lot we value. paths on the will

Joy Zhang

Thank That's very helpful. you.

Operator

you. Thank

Doug Braunstein

I'm Okay, our, that's unless mistaken.

our question. that's think last I

forward participating in one-on-one and upcoming for the our and everyone I call. XXXX. you our and quarter shareholders for in with thank questions, excellent end fourth speaking Mike for performance and look And So and year Jennifer the to

everyone. much thanks So very

Operator

all Thank you. conference. participating. Ladies you and gentlemen, Thank conclude for today's this does

may day. You now Have disconnect. a great