Benefitfocus, Inc.

Ladies and gentlemen, a welcome to the BenefitFocus second quarter of 2022 earnings call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question and answer session. At that time, if you have a question, please press the 1 followed by the 4 on your telephone. If at any time during the conference you need to reach an operator, please press star and zero. As a reminder, this conference is being recorded. I would now like to turn the call over to Mr. Doug Kuckelman, Head of Investor Relations. Please go ahead.

Thank you, Operator. Good afternoon, and welcome to Benefitfocus's second quarter 2022 earnings call. Joining me today are Matt Levin, President and Chief Executive Officer, and Alpana Wagner, Chief Financial Officer. Matt and Alpana will offer some prepared remarks, and then we'll open for questions. Before we begin, let me remind you that today's discussion will include forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those statements, including market developments and opportunities, the execution of our growth strategy, and integration and reliance on key personnel. For more information, please refer to risk factors discussed in our most recently filed Form 10-K. We also refer to certain non-GAAP financial measures. Important disclosures about those measures can be found in today's earnings release. Lastly, we will reference a presentation furnished in an 8K, which you can also find on our investor relations website at investor.benefitfocus.com. With that, I'll turn the call over to Matt.

Thank you, Doug, and good afternoon, everyone. Today, I will provide an update on our commercial achievements cover our progress to date against our strategic plan, and provide further insights on what to expect from our product roadmap during the second half of the year. After that, Alpana will discuss our second quarter results. I want to first recognize and share my deep appreciation for the entire BenefitFocus team for their steadfast focus on executing transformation plans. The tireless efforts put forward by this team have ensured that we remain a safe set of hands for our customers, and for that I am personally grateful. During the second quarter, the team also demonstrated our ability to deliver on our financial commitment, and I am encouraged by the continued signs that our collective work is setting us up to create long-term shareholder value. While our at-bats continued to improve in the second quarter, and we are seeing early indication of win rates improving for the year, we had pushes in timing for some of the larger deals in the pipeline, which are on track to close in the third quarter. That said, the growth in leads and our improving win rates are a testament to the fact that our unwavering focus on service excellence and our go-to-market strategy is working. We had a number of sizable new employer wins that we expect will drive revenue starting in the second half of 2022 and into next year. This includes a large global food packaging manufacturer, a Fortune 500 global electronics manufacturer, and a large regional bank, to name just a few. In addition to our direct sales efforts, the SAP sales channel has continued to be a solid growth driver for our business. We see positive momentum in this channel with both closed deals in the first half of the year and 2X pipeline growth going into the second half of the year. The SAP relationship remains a unique and important revenue-generating partnership for us, and we expect to see continued benefits as we move through the remainder of 2022. We continue to see demand returning in our health plan pipeline for upsells to existing customers as well as new pursuits. As a reminder, there is seasonality in our business, particularly in the sales cycle. The employer sales season normally takes place in the first half of each year, while the health plan, public sector, and sales through our SAP channel occur throughout the entire year. We remain optimistic about our deal pipeline. The current market sentiment is not lost on us. We have seen a lengthening of the sales cycles and a shift in timing for closed sales particularly driven by our mixed shift towards SAP in the public sector, which comprise larger and more complex deals. At this point, our leading sales indicators are positive. We expect to close deals across our various sales channels as we move through the balance of the year, and we continue to anticipate an inflection point in revenue growth towards the end of 2022. During the slide five, I'd like to share an update on delivering against our strategy and commitments. In the second quarter, we continue to demonstrate a high say-do ratio against our three-pillar transformation plan. Proof points this quarter include delivering on our financial commitment, the successful launch of our enhanced COBRA features, further bolstering our administrative services offering, and bringing to market an innovative new data offering called Claims Audit and Recovery Services. As we have talked about in the past, it is important to both me and Alpana as well as the rest of our team, that when we say we are going to do something, we make it happen. As an organization, we maintained our focus on service excellence to further strengthen our core. We put in place what I believe is the best team in the industry, and they are delivering. We are seeing the impacts of this focus and investment in many aspects of our customer service operations, including implementations and case resolution trends. To provide some additional color, case turnaround times are trending down and case counts across our customer base were down approximately 30% year-over-year through the first half of the year. These improvements have set us up well for open enrollment season, which starts in the second half of the year. Service excellence is also critical to brokers and third-party evaluators, key players in our ecosystem, as they need to have confidence in service levels to refer business to us. Last quarter, we announced our inclusion in Aon's Connected Benefits Solutions Panel, a key listing from one of the top brokers in the world. I am pleased to share that last month, we entered into a new strategic partnership with Lockton, another one of the world's largest insurance brokers, furthering our reach across the broker channel. Similar to our relationship with Aon, we expect the Lockton partnership will support and augment our go-to-market sales efforts, especially with larger customers with more lives. This deal of approval, along with referrals from other industry leading brokers and third party valuators, validates our strategy and execution efforts. We anticipate this partnership will help facilitate additional business from both existing and new customers in our employer sector. Importantly, our broker channel sales activity has grown more than 60% year over year, which has resulted in a greater number of conversions from this channel and gives us continued confidence in our expected revenue trajectory. On our progress on our broker channel efforts, I am equally pleased to share that our investments to improve our core product bundles, a key component of our go-to-market strategy, are paying off. Tango Health, our most recent bolt-on acquisition, is already delivering increased value to our customers. During the first half of the year, we successfully bundled Tango's suite of ACA offerings in new customer contracts, and started cross-selling it to our current customer base. Our more robust and comprehensive solutions platform is starting to drive improvement in attach rates. We are just getting started and are confident that Tango's best-in-class ACA compliance offerings will continue to be a key component of our product. Regarding our efforts to grow with intent, we are thoughtfully deploying capital to expand our product offerings, leveraging our data assets, and moving up markets. We recently launched a new product called Claims Audit and Recovery Services, or CARS. With our CARS product, we will be in a position to deliver additional value to our customers for our ability to not only analyze all of their claims data, but to identify errors in the claims and go back to providers to recover the lost money on our client's behalf. For background, approximately 20% of all medical claims contain errors, including data entry errors and miscodings. Each year, billions of dollars worth of bills are paid incorrectly, and while third-party administrators and carriers do their best to catch these errors, many are not identified nor corrected. The new CARS product is designed to address this known issue, and the preliminary feedback from customers has been positive. This is another example of our ability to quickly innovate and gain market traction with product offerings that take advantage of our data assets. Another example of our growth initiatives is the recent release of enhancements to our enrollment experience. These enhancements are designed to make it easier for customers to engage with and select voluntary benefits offerings, starting with the upcoming open enrollment season. We expect this will help drive increased participation rates, which will grow our platform revenues. Finally, regarding our third pillar related to operating efficiencies, We made technology investments that we believe will help us increase customer satisfaction and net promoter source. We expect that these efficiencies across our organizations will lower our cost of revenue and improve our margins later in the year. For example, our work in this area focused on service automation and process improvement in our call center. This effort is designed to facilitate a more seamless open enrollment experience. through further incorporation of AI technologies and advanced interactive voice response technology. These improvements support an enhanced customer service experience, enabling our associates to focus on the in-person customer cases where interactions are most critical. We are also leveraging third-party technology to monitor associate calls and address quality issues in real time, all of which support improvements in customer satisfaction scores. These efforts are designed to improve both the user experience, but also to help drive operational and cost efficiencies. Turning to slide six. As I have said before, we believe we have a compelling value proposition as we grow our presence in the large and growing benefits administration market. We are well underway in delivering on the strategy that we outlined at our May Investor Day. During the second half of 2022, you can expect us to follow through on our commitments to launch our employer, large market offerings, launch Health Insights 2.0, and launch our enhanced billing features. Our seasoned team of industry leaders continue to execute against our transformational growth strategy, and we are seeing the momentum build in the business. Before turning it over to Alpana to walk through the financial results, I'd like to announce our new Chief Technology Officer, Ed Rumses, who will begin working with us on August 8th. Ed and I work together at Hewitt Associates, and in my view, he is amongst the most experienced and credentialed CTOs in the industry. Ed brings more than 30 years of industry experience, having most recently served as the CTO at vSwift. He is a well-respected technology leader in the benefits administration industry, and his work to expand the scope and scale of vSwift's service offerings, as well as his contributions and leadership at DIAA-CREF, Xerox, ACS, Accelerate HRO, and Hewitt Associates make him a valuable addition to our team. As I've said before, one of my earliest priorities was to assemble a first-class team. We believe the tenure and domain experience of our team is unrivaled in the industry. It continues to fuel and support ongoing execution against our strategy, enabling us to reposition benefit-focused and establish our foundation for the future. With that, I'd like to hand it over to Alpana, who will cover our financial performance.