HealthEquity, Inc. (NASDAQ:HQY) Q4 2016 Earnings Conference Call - Preliminary Transcript

Mar 22, 2016 • 05:00 pm ET

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HealthEquity, Inc. (NASDAQ:HQY) Q4 2016 Earnings Conference Call - Preliminary Transcript

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Presentation
Operator
Operator

Good day and welcome to the HealthEquity's Fourth Quarter and Full-Year 2016 Results Conference Call. Please note this event is being recorded. And I would now like to turn the call over to Frode Jensen, General Counsel. Please go ahead.

Executive
Frode Jensen

Thank you, Ann. Good afternoon and welcome. My name is Frode Jensen and I'm General Counsel of HealthEquity. Please be advised that today's discussion includes forward-looking statements including predictions, expectations, estimates and other information that might be considered forward-looking. Throughout today's discussion, we will present some important factors relating to our business which could affect those forward-looking statements. Those forward-looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements made today.

As a result, we caution you against placing undue reliance on these forward-looking statements. We'd encourage you to review the risk factors detailed in our Annual Report on Form 10-K filed with the SEC on March 31, 2015 and any subsequent periodic or current reports for a discussion of these risk factors and other risks that may affect our future results or the market price of our stock. Finally, we are not obligating ourselves to revise our results or publicly release any updates to these forward-looking statements in light of new information or future events.

With that, I will turn the call over to Jon Kessler.

Executive
Jon Kessler

Thank you, Frode, and thanks everyone and welcome from wintry Salt Lake City. I'm joined today by Darcy Mott, our EVP and CFO; by Matt Sydney, our EVP for Sales and Marketing; and by Steve Neeleman, our Founder and Vice Chairman. Darcy, Matt and I will have some prepared remarks and then all four of us will be available to answer questions.

Here we go. HealthEquity delivered another strong year of results in the four key metrics that drive our business, which are revenue, adjusted EBITDA, HSA Members, and assets under management or AUM. For the fiscal year 2016, we recorded revenue of $126.8 million, an increase of 44% compared to fiscal 2015. Adjusted EBITDA of $40.6 million which grew 61% compared to fiscal 2015 once again outpacing revenue growth. And as we announced in February, HSA membership reached $2.1 million, up 50% year-over-year and AUM reached $3.7 billion, up 56% year-over-year. As we discussed with you on our call in early February, we had a phenomenal fourth quarter in terms of new accounts and AUM increases.

Financial results were equally strong. Q4 revenue of $35.9 million and adjusted EBITDA of $8.9 million were up 44% and 61% respectively year-over-year despite record on boarding activity. These results set us up for a strong fiscal 2017 which Darcy will talk about in a few minutes. Almost exactly two years ago today, Darcy, Steve and I began speaking to public investors about HealthEquity in advance of our IPO. We setback then that the HSA opportunity, the opportunity on which we uniquely focus as a business was in its early innings. We said HealthEquity's addressable market would grow