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Benefitfocus, Inc.
11/5/2020
Turning to Q4 guidance, we are targeting Q4 2020 total revenue of $68.1 to $78.1 million. This reflects the impact of Mercer lower employer bookings due to COVID and expected lower corresponding platform revenue compared to prior year. We expected adjusted EBITDA to be in the range of $11.2 and $16.2 million. We expect non-GAAP net income of between approximately $0 and $5 million, which represents a non-GAAP net loss per share of between $0.05 based on 32.3 million basic shares outstanding and non-GAAP net earnings of $0.08 per share based on 35 million diluted weighted average common shares outstanding. Our Q4 revenue guidance range reflects the low visibility and continued uncertainty for how our platform revenue will perform this open enrollment in light of COVID. For full year 2020 guidance, we are maintaining total revenue between 260 and 270 million, adjusted EBITDA between 35 and 40 million, and free cash flow between 10 and 20 million. Our free cash flow outlook reflects expected cash flow outflows related to an extra pay period and higher seasonal staffing expense in the fourth quarter tied to OE. In closing, I'm excited about our opportunity to execute on strategic priorities and create a more efficient and more profitable business, which should unlock substantial shareholder value. Thank you, and with that, I will now turn it over to the operator for questions.
Thank you. If you would like to register a question, please press the 1 followed by the 4 on your telephone. You will hear a three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the 1 followed by the 3. One moment for the first question. And the first question comes from the line of Sean Wayland from Piper Sandler. Please go ahead.
Hey, thanks. This is Matt Shea on for Sean. Just curious with the Q4 revenue guide, range is pretty wide. Just wondering what explains the range. Is it furloughs? Just curious on assumptions at the top and bottom end. Thanks.
Yeah. Hey, Matt. This is Alpana. Thanks for the question. The business has been performing as we had anticipated when we set our annual guidance reflecting the expected impacts of COVID. As we look ahead to Q4, we continue to see what we expect in terms of impacts for our platform revenue. For the first time, really, we haven't seen those in the earlier quarters this year because of the seasonality of that platform transaction that's really high volume in Q4. And so our Q4 guide just contemplates that variability and really that level of uncertainty that we continue to have as a result of what the purchasing decisions and behaviors will be as a result of COVID. Okay.
Okay, got it. And then if I could just ask one follow up to that, you guys have driven pretty amazing EBITDA margin expansion kind of absent any revenue growth. Q4 guide kind of implies another 200 basis points of expansion. Just kind of curious on what the ceiling is for EBITDA margin absent any revenue growth and at what point do you need revenue growth to kind of continue to see that margin leverage?
Yeah, we are really pleased with the actions that we took earlier this year and the impact that they're having on our profitability. And we're not providing guidance right now on 2021. We've got to close out the year and there's some uncertainty and we need to see what the performance looks like. But as Steve and I both mentioned in our comments, we really do feel like there's continued opportunity to unlock additional value here from expansion, and so that's definitely part of the strategic priorities for 2021. Got it.
Thanks.
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Okay, thank you, Operator. I recognize there's a lot going on in our world right now. I appreciate you joining the call, and I look forward to talking to you all in the coming weeks. Thank you very much.
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