Good afternoon. My name is Robin and I will be your conference operator today. At this time, I would like to welcome everyone to the Benefitfocus Q2 2015 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]. Thank you. I'd now like to turn the conference over to Mr. Milt Alpern, Chief Financial Officer. You may begin your conference.

Good afternoon everyone and welcome to Benefitfocus' second quarter 2015 earnings call. We will be discussing the operating results announced in our press release issued after the close of market today. I'm Milt Alpern, Chief Financial Officer of Benefitfocus; and with me on the call today is Shawn Jenkins, our Chief Executive Officer. As a reminder, today's discussion will include forward-looking statements, such as third quarter and full year 2015 guidance and other predictions, expectations and information that might be considered forward-looking under Federal Securities Laws. These statements reflect our views as of today only, and should not be considered as representing our views as of any subsequent date. These statements are subject to a variety of risks and uncertainties, including the fluctuation of our financial results, general economic risks, the early stage of our market, management of growth, and a changing regulatory environment that could cause actual results to differ materially from expectations. For a further discussion of the material risks and other important factors that could affect our actual results, please refer to our Annual Report on Form 10-K which is on file with the Securities and Exchange Commission, and our other SEC filings. During the course of today's call, we will also refer to certain non-GAAP financial measures. You can find important disclosures about those measures in our press release. With that, let me turn the call over to Shawn, and then I'll come back at the end to provide details regarding our second quarter results, as well as our updated guidance for the third quarter and full year 2015. Shawn?

Thanks Milt, and thanks to all of you for joining us today. Benefitfocus had a record quarter and experienced significant demand across both business segments in the second quarter, which was highlighted by a record 94 net new large employer customers added. From a financial perspective, revenue and profitability exceeded the high end of our guidance range. Total revenue of $42.7 million increased 32% year-over-year and was driven by employer revenue growth of 45% and carrier revenue growth of 21%. Non-GAAP gross margin of 46% was up by 1,000 basis points year-over-year for the second consecutive quarter. Companies increasingly recognize that legacy benefits administration offering are ill equipped for the changing benefit landscape, and are embracing the enhanced flexibility and user experience of the cloud-based BENEFITFOCUS Marketplace platform. We are seeing a greater number of employers evaluate their long term benefit offerings, while they also realize the significant level of disruption occurring in the market, whether from new government regulations or the consumerization of IT and healthcare. These trends are driving the need for a more comprehensive solutions that give employers cost effective way to provide a broader range of employee benefits, while also gaining greater insight into benefits usage, in order to bend the cost curve of one of their largest expenses. Let's take a few minutes to review the progress we have made against our three strategic priorities halfway through the year. The first area of focus is expanding on employer product offerings. This was the first full quarter we had our five new employer products. The Benefits Store, Core and Advanced Analytics, e-billing, Benefits Service Center and Video available for sale to our employers. We are incredibly pleased with the demand we are seeing from both new and current customers, which validates there is a substantial upsell…

Thanks John. We are very pleased with our second quarter results, which exceeded our expectations from both a revenue and profitability perspective. I will begin by reviewing the details of our financial performance, and then I will finish with our updated guidance for the full year 2015, and our outlook for the third quarter. Total revenue for the second quarter was $42.7 million, an increase of 32% compared to the second quarter of 2014, and above the high end of our guidance range of $41.8 million to $42.3 million. Breaking revenue down further, software subscription revenue was $38.1 million, representing 89% of total revenue and growing 28% year-over-year, while professional service revenue was $4.6 million, representing 11% of total revenue and up 82% year-over-year. As a reminder, our professional services revenue is being positively impacted by the changing customer relationship period that we instituted at the beginning of 2015 for both the carrier and employer segment to seven years from 10 years. Looking at revenue by segment, employer revenue for the quarter was $20.8 million, up 45% to the year ago period, while carrier revenues were $21.9 million, up 21% from the year ago period. Let me now review the supplemental metrics that we report on a quarterly basis. We ended the second quarter with 662 large employer customers, an increase of 94 compared to 568 at the end of the last quarter and up from 448 in the second quarter of 2014. As a reminder, the second and third quarters are typically our largest selling quarters, as customers look ahead to the upcoming open enrolment season. We also ended the quarter with 52 carrier customers, up from the 43 in the second quarter of 2014, and consistent with the end of last quarter. As a reminder, we added nine…

[Operator Instructions]. Your first question comes from the line of Nandan Amladi with Deutsche Bank.

Hi, good afternoon. Thanks for taking my question. Shawn, you touched upon the cross-sell and upsell opportunity among the carriers, employers, as well as your exchange customers. Can you characterize what the upsell pack looks for each of those? I am talking about exchange as a separate segment, just so you can highlight it?

Sure. Thanks for the question. A big theme for us that we rolled out in one place was this idea of expanding our employer offering, and we introduced a series of new products for the employer market beginning of that expansion. And what we actually saw, with some of those new offerings being picked up by our private exchange customers, which is a really exciting development. So we operate 26 private exchanges now, and we actually had first couple of private exchanges pick up the Benefits Store, which is really exciting dynamic if you think about it. A lot of the private exchanges are individual carriers, health plans, offering their products and also subsidiaries and what not, and we are seeing a real desire for those exchange operators to introduce a series of other voluntary benefits. And so, we have taken our Benefits Store concept, which offers voluntary benefits to the employer. Employees can buy those benefits at their option rate volunteer, basically to buy them. We are having great success in the employer market. Specifically to your question, Nandan, about the private exchange, we saw an uptick of that benefit store there, really for the first time, and quite frankly, way ahead of our expectation. We also did some selling in the quarter, around Advanced Analytics, another employer offering that we rolled out at March at one place, and we are seeing the carriers beginning to attach that to their private exchange offering as well. Then a third bucket I would just say is, expanding the scope of the private exchange functionality of the operators. So now that the private exchange is in the market, whether its for small employers or large employers or individuals or retirees, we support all four on the Benefitfocus platform. We are beginning to see those partners, whether they are carriers or brokers, come back and add additional things that they want to offer to sell to their customers, extend the functionality around billing capabilities, do things like more real time, coding of certain products and what not. So I'd say, we are kind of going into the 2.0 phase of the private exchange, where these big entities are really standardizing on the Benefitfocus platform, investing heavier in it, which is always a good sign, as it kind of gives you a window into their thinking, how big the opportunity is going out in the future.

Right. And also if you could frame for us the per employee per month roadmap for segments that you just outlined?

Sure. I will just give you a couple of additional data points that we had queued up. This is our first full quarter of the expanded product offering for the employer segment, and we actually saw a little bit better than a third of the employers attaching one or more products. And we haven't begun to break out yet, the PE/PM of those particular products, but I think it is really a healthy sign to see both new customers, and also a back to base selling of these offerings, as I mentioned a little bit over a third of the contracts that we did during the quarter, had one and many of them had more than one of the attached offerings. When you look at the carrier business specifically, that has been an expansion story for a number of years now, generally about 50% of our selling in any given year, is 50% to new carriers buying and about 50% of the selling is upsell, and those PMs are -- they vary depending on the service and the quantity of contracts and length of the term and what not.

Thank you.

Sure.

Your next question comes from the line of Terry Tillman with Raymond James.

Hey, good afternoon. I had a couple of questions. I guess Shawn, the first question just relates to last quarter; I think you had talked a little bit about -- because you had gotten the question about employer wins, and could it have been higher. And I think you had said, that maybe some of the packaging of some of these new products and putting together some bundles, may have taken some time for customers and prospects, even at one place, to investigate that. So would you say, that some of the really strong new employer wins in 2Q, some of that was probably what would have been naturally occurring business in [indiscernible]. The reason why I ask this, I am just trying to get a sense on how we should think about an expectation for 3Q? Should we assume that you actually build on that 94, or could it maybe be down a little bit, but still seasonally strong, because its just artificially higher in 2Q?

That's a great question. I will say Terry that, something that we are seeing this year, and I think it speaks of the phase of the market adoption that we are going in is -- historically, 2Q is our biggest quarter, as it was again this year 94 adds, and I will just pause for a minute and give a shout-out to our management team for building great client references and our sales team for winning so many, thousand plus employers, its just incredible to see that adoption. And we continue to see that, during the middle of the year, employers get ready for their open enrollments they need to buy in the second and third quarter. But I'd say, a fair amount of our pipeline now is looking out tow 2016, 2017, and 2018. Particularly as we go upmarket, we are seeing some larger and larger deals, both in our pipeline and in our wins. And those, along with our SAP arrangement, and that channel partner, tend to be a little less characteristic of signing in Q2 or Q3 to get ready for open enrolment, and they are really more around replatforming, moving to the cloud, generally connected to perhaps other projects that they have going on inside their IT shop, which I believe bodes well for benefit focus as we scale and grow and become a larger platform. So the idea of the acute timing of Q2 and how significant that is in the year, I think it has actually done a -- changed a little bit. I believe it will still be the dominant quarter for a number of years to come, but we are seeing -- more openness of employers to look at possibly signing later in the year even, and getting a headstart on next year or possibly starting earlier in the year and changing their implementation cadence up a little bit. Specifically to your question, we did land 94, a record number. I wouldn't over read that, as what it might mean for Q3. As I said, I think we are really starting to see a lot of conversation around employers getting ready for 2018 and the Cadillac tax, and even at that, we are moving around a little bit or a change in timing. We are hearing a lot of much more longer term strategy and those decisions tend to get made, once that strategy is set.

Okay. And Shawn, you have proactively talked about the consolidation in the carrier market, and what that could mean for your business. You are probably on the winning side of many of the M&A trades that are being proposed, and you talked about efficiency, so your platform could be a value-add. But what I am curious about I mean, one of them being a question on Anthem; I mean, you have got a lot of business right now that's supposed to be rolling out. Have you seen in the near term impact though, the implementation schedules there. Is there anything that you've contemplated in terms of the outlook for the carrier business, because there could be some bumps in the road, if you will, because of some of these M&A trades? And then I have a quick follow-up for Milt. Thanks.

Yeah, totally. Well certainly, our industry, the healthcare, in particular, Benefits largesse is going through a generational shift, with the affordable care act, and the regulatory environment and the cost pressures it puts on the carriers in their pricing. I think, with the recent set of announcements that we have heard just in the last 60 days or so, we are thankful to Benefitfocus that the acquiring companies, our customers at Benefitfocus and that historically has meant, that we are going to get more business, more subscribers come on to our platform would be the idea. And also, if you look into the strategy what's going on, kind of across the board, whether its in the health plan or the life companies or the other types of benefits, even wellness spenders, these companies are lining up additional products to sell into their base. And that means, they need a more sophisticated way to represent those products to handle that data to allow their members to see them and get build for them and pay in a consolidated fashion. So really, I would think they are wonderful themes for the use of the benefit focus platform, really across the board. But its clear that they are going to need flexible technology and they are going to want to invest, and I would say cloud-based technology, as they make these migrations. Specifically your question about Anthem, we are feeling very good about that implementation. We announced that earlier this year. Obviously they had been in talks with various parties, with what they were thinking throughout the -- for a year plus in their acquisition strategy. So I think their roll out and the timing with Benefitfocus was probably contemplated in that, and we haven't seen anything that would make us think its going to materially affect the rollout of the Anthem implementation.

Okay. And then Milt, in terms of -- you talked about -- now you have hit that milestone, and congrats on the standalone value for PS on employer, but what about the carrier side? Because I think that was one of the strategies originally as well, some claim to have standalone value. is there any sense that could happen in 2016? Thank you.

Yeah, thanks Terry. We did -- we were successful, as you have seen, in establishing standalone value in the employer segment. And as I said, most of the professional services work that we do is on the carrier side. The ability now to recognize revenue on the employer implementations over the implementation -- they are at the point of implementation, as opposed to recognizing over the customer relationship period, does provide some acceleration. But albeit, certainly modest, compared to what it would be in the carrier side. With regards to that, I think its possible, that at some point, maybe in the back half of 2016, that we are able to establish standalone value for carrier services. Clearly, as you know, those are more difficult, more complicated implementations, and it may take a little while longer to bring a partner up to speed to be able to perform an implementation. On a carrier, independently, Benefitfocus, which would be required best to establish standalone value in the carrier side of the business.

Thanks.

Our next question comes from the line of John DiFucci with Jefferies.

Thank you. I guess, I have just a couple. As you guys pointed out, you had a real nice uptick in the new large employer customers this quarter. Are you seeing any trends at all, in the size of those customers? Are they getting smaller or larger, or just staying about the same size?

Great question. A couple of things. One of the things we are actually seeing is a lengthening of the agreements, and particularly among the larger ones. And we are seeing in our pipeline and actually in our wins, some bigger and bigger deals. We have got -- we added six employers in the first half that are over 20,000. And so, as we go upmarket, those deals are entering the pipe more than we have seen historically. I think also, the SAP relationship adds to that dynamic, in addition to just the Benefitfocus platform scale and our size and more people learning about the company that we have been public for two years now. So we do see both in the pipeline, and also in the wins, some larger and larger customers. Overall, the average size is incrementing up. However in any given question you know, we might sign a handful of sub 2000 accounts that would possibly skew that average in a particular quarter. But to us it feels and looks like the average size of the employers increasing. In addition to that, from this expansion strategy, we are now attaching more products to those deals, so they are getting bigger, both -- because their employees are getting bigger, but also because we are selling more products to them and the terms are getting longer or the length of the contracts, all really good signals for what we are seeing.

Great. Thanks Shawn. I have a follow-up for Milt. Milt, cash balance declined by about $20 million this quarter, and I wanted to just get ahead of this, and have you addressed this publicly, you thought -- just get a ton of questions tomorrow on it. How should we be thinking about that going forward?

Yeah, good question John. I mean, it looks like the cash burn is around $20 million. Its probably just about $16 million, when you consider the $4 million repayment on the line of credit. And when you look at the cash burn that we have experienced in the first half o 2016, I mean, I wouldn't necessarily say its indicative of what to expect to see for the balance of the year. Remember, there are a couple of things that -- a couple of -- somewhat unique cash disbursements in the first half of the year. There was about $5 million worth building related cash disbursement that were made, and also remember that 2015 as the first year that we had one place in the first quarter as opposed to the second. So you might see that -- that reflects a little bit of a difference, although totally, your base is not. So I would say that, its not necessarily indicative of what you will see in the second half. I think there were some uniqueness in the first half of the year, in terms of cash disbursement. But certainly, as we look out in 2016, we are certainly expecting to make significant improvements towards our objective of an EBITDA breakeven in the middle of 2017, I think you will see leveraging from, not only our revenue growth, but also some operational efficiencies that we are certainly beginning to see, as we have seen recently, and we will continue to see as we move forward in our operations and some of the operational type of efficiencies and improvements that we have implemented. And also, the leveraging of now utilizing third party systems and integration partners to do implementation for us. It removes a lot of the -- we moved some cash, but also removes a lot of the unprofitableness from the model as well.

Great. That's helpful. If I could, just follow-up to that Milt. Can you just -- and I believe it sort of floats, but can you tell us about what the balance is on your line of credit, or what's available, as you so chose to? It sounds like you paid off some of it.

Yeah. The line of credit right now, I think, was about $5 million balance that's outstanding at the end of June. The line of credit that we renegotiated with a consortium led by a Silicon Valley bank in the first quarter, basically was a $60 million line of credit that's predicated on a multiple of our recurring software revenues. Its four times our recurring software revenues, and certainly those have grown. So the $60 million line, albeit for the $5 million that's outstanding, is what's available to us.

Okay, great. Thanks a lot. Nice job guys.

Thank you.

Your next question comes from the line of Richard Davis with Canaccord.

Hey thanks. Two questions; so you have had a lot of success and you kind of touched a little bit on this in the previous discussion. But with SAP and SuccessFactors, is there any reason why you would not work with additional HR partners, whether its Ultimate, Workday, Oracle, or whatever, things like that? Or is it something that's more kind of semi-exclusive?

Its not exclusive Richard, it’s a good question. I think as we get more and more customers with a particular -- that use a particular payroll company or ERP vendor or in Mercer's case, broker, we tend to win a really good reputation there. Those customers begin to talk about Benefitfocus, and allowing lending [ph] terms as we would expect and the data we ship back and forth really works out so well, and we build this kind of organic base, which is what happened with SuccessFactors and then SAP. We do have data integrations with really all the major payroll vendors and ERP vendors. We ship a ton of data back and forth, PeopleSoft, or Lawson or Ultimate Software, and are very good at that across the spectrum. So I think, hopefully in time, we will see ways to formalize those relationships, work with those customer communities. From us though, it starts more organically, and really just taking great care of our customers, regardless of the system we are using, and now our reputation tends to develop within that.

Got it. And as -- I think was it Ray that got promoted to President, was it last quarter as I recall? And has he done anything particularly different now, now that he's not COO? Or is there -- wearing different color shirts, or whatever?

It’s a good point, for those on the phone, for the first time listeners, this is Shawn speaking, I have been President and CEO for 15 years, and we promoted Ray August, our COO to take on the President's title. He has done a wonderful job as you can see, and Andy Howell is running sales, is just doing fantastic. I mean, imagine a quarter, where you grow by 32%. You have the record number of customers, 94 major enterprises, while you increase gross margin by 1,000 basis points. Actually in the quarter, when we tend to staff up a lot, getting ready for open enrollment. So the management team is just doing fantastic. One of the real benefits, I believe, to our customers and eventually to our shareholders, is its giving me even more time to spend on the product, the invention, the design of the products, the introduction of new products, and working with our ecosystem partners, to make sure that we have the absolute best array of products, both in the Benefits Store and in our app store. So really proud of what Ray has done, what Andy has done, Milt and the entire team, and the results are just across the board, spectacular.

Super. Thank you so much.

The next question comes from the line of Adam Klauber with William Blair.

Thanks. Good afternoon. Would you say the private exchange with Mercer. Is that business running ahead of what it was last year?

That's a good question. Mercer does a good job of putting out a whole bunch of staff, as they go into the open enrollment season, and we really follow their lead on what they disclose in the numbers and what not. So I can't comment directly on their progress. I do know that, they are having a heck of a run with the Mercer marketplace and they are very proud of their relationship with us, as you saw early in the year, where they made an investment in the company and expanded their relationship. So we are feeling really good about the work that we are doing with them, but as far as their actual numbers, we defer to them to report on them.

Okay. And then as far as larger clients, say 10,000 or above; would you say you're having more conversations during selling season this year than last year? And do those tend to be -- go later in the season?

Well the first part, yes. Our 10,000 plus, 20,000 plus and 50,000 plus buckets are more active than they ever have been. And we historically have not had a specific national accounts team. We wanted to be in all regions and talking to all of the employers, and we felt like as we went public and the Benefitfocus brand grew and our scale grew and our larger customer wins grew, that we would naturally begin to move upstream, which is what's happening. Things like the SAP arrangement and their customers obviously are massive. And so that has brought us into a lot of large conversations as well. So we definitely have more activity in that pipe. That pipeline tends to buy a little less seasonal, so they will buy when they are ready, and when their strategy is set. I don't know that is necessarily later in the year, as much as it is. The bigger they are, they tend to be thinking already about 117 and getting ready for next year's open enrollment, and with multiple geographies and international -- and they might roll out in a specific area. So I think, as those come, they will come maybe a little bit more spread throughout the year.

Okay. Thanks a lot.

Sure.

Your next question comes from the line of Sean Wieland with Piper Jaffray.

Hi. Thanks. I thought that the HealthTap partnership was interesting, that you announced during the quarter. Can you comment on that at all, and specifically, what are the conversations among your employer customers like regarding telehealth? Why did you choose HealthTap, and then how do the economics work in this relationship?

Yeah, good question. I will tell you what, just in general on the topic, Sean, I was with some great customers last week. And just spending some time with them, talking about their implementation and their roll out, and we spend a lot of time on their wellness initiatives, on telehealth, on new models of delivering. Cairns [ph] is the big employer, about 40,000 employees. And then I went to another meeting, and had the exact same conversation, different type of workforce and what not. And so, it sounds just like every conversation I am having with our customers now, they are looking to Benefitfocus to talk about, who works well in the wellness arena, who is innovating in telemedicine. Who can help us with our employee population that has more and more high deductible health plans. Who can coach people, through various scenarios? So we have, in our ecosystem, a very active set of individuals that work at Benefitfocus, that are taking inbound requests. Lot of partners want to partner with us, given the size of our audience, 25 million using the Benefitfocus platform. We put those through a filter of -- where do we already have common customers, where we can jointly work with an existing customer to do an advanced integration. And then as far as the economics go, on HealthTap in particular or most of our -- in the wellness area, it depends on -- if we bring the customer to them and we are attaching them to one of our contracts, they might be a referral fee or even a revenue share. In some cases, they are bringing us to their customer base, and there might be a referral fee going in the other direction. so the relationships -- we really try and maximize the flexibility for the customer, so they can buy the right paper. But a shift really about -- from last year and we are seeing it more this year, as more and more people, more and more customers want to buy from Benefitfocus. These additional services they want to attach into our service agreement, they want to attach a service level agreement, which should be an umbrella that Benefitfocus provides, and then in many cases, they actually want to pay Benefitfocus and then have us compensate the third parties through an arrangement. And in those cases, we generally do get paid, a fee for managing that whole relationship.

All right. Thank you. And then, a quick one for Milt; the commentary around the revenue recognition and professional services. I mean, that was pegged as of January of this year, there was no incremental change to that during the quarter. So am I right in thinking that, those P&L impacts were factored into your guidance, or no?

Yeah. I mean, we had basically anticipated, Sean, as we said, establishing standalone value in the employer space, in the middle of 2015, and we did. So going forward, the standalone value impact for the second half of the year is baked into our guidance, and had been, in the total year guidance, that we established at the beginning of the year as well.

Got it. Thank you very much.

Your next question comes from the line of Ross MacMillan with RBC Capital Markets.

Thanks a lot. Shawn, of the 94 employer customers added, any chance for how material Mercer is in that mix, or maybe, more broadly, the indirect channel in that mix?

Sure. Somebody asked just a minute ago as far as the Mercer breakout. We don't break out their numbers, and quite frankly, the way they will report them, when they go into open enrollment. Sometimes the timing, or the way count on the signing, is a little bit different than they might. So just depends if they are an existing customer there, when they sign up with Benefitfocus and what not. So kind of triangulate between their numbers and ours, can be a little bit of a chore. But I will say that, as I mentioned before, we are obviously very happy with the production of the Mercer Marketplace, as illustrated by their investment in Benefitfocus earlier in the year, and expanding their agreement. We had a lot of great projects going on with Mercer, and looking out multiple years. So very exciting. We have said consistently thought, that that new customer account continues to be the majority, as our direct salesforce. So the bulk of that number is sold directly by the Benefitfocus staff.

Okay. And I think you made a mention of 20,000 plus employer customers. You said six in the first half. In total, what sort of portion of the employer base is in the 20,000 plus? Is that a lot more than six, could you maybe help us understand that dynamic?

That's a good question. Ross, I don't have that number in front of me here. What actual count is of the 662, how many are 20,000 plus. I do know that, in our activity, in our pipeline now, we are seeing more and more of those show up, and we do have a team now focused on those larger employers more exclusively. They tend to be two, three year long cycles, so a lot of it is still yet to come. But adding six in the beginning of the year, and many more in the pipeline, we feel is a good strong bet. We may start breaking that out in the future quarters, but I don't have the actual total number, in front.

Okay, that's helpful. And then just one for Milt; just on the quarter itself, what was the CRP impact this quarter, do you have that in hand?

It was about $1 million, and $1.3 million, Ross, on revenue.

Okay. And then just one last one for me, when you guided for calendar 2015 originally, you had made some commentary around on profitable customers, and that would have a dampening impact in the second half of the year. Is that still the assumption with the updated guidance and is the magnitude of those unprofitable customer revenues coming off, still consistent with what you said before? Thank you.

Yeah. I mean, there was a small impact on unprofitable customers in the second quarter. But certainly, the balance or the bulk of what we had talked about at the beginning of the year, we will see in the third and fourth quarters of 2015. So yes, still in line, and certainly the majority of the impact was going to be in the second half of 2015.

Great. Thank you.

Thanks.

Your next question comes from the line of Stephen Lynch with Wells Fargo.

Hey guys, two quick questions. First, revenue per carrier client was up a fair amount year-over-year. I was just wondering, if you could talk about what's driving the improvement there? Whether its mostly expanded software adoption by the carrier clients, or is a large part of it being driven by growth in enrollment within the private exchange partnerships?

I would say its both, Stephen. I mean, certainly we continue to see the carrier relationships increase through adoption. We have always said that about 50% of the growth that we see in the carrier business comes from the base, as well as the other 50% coming from new owners [ph]. So yes, with regards to that, and I guess the second part of your question is also true, what we are seeing in terms of carrier growth coming from more and more marketplace adoption. As we talked about, we now have 26 customers that we are powering marketplaces for, and certainly, many of those are carriers. So both areas are providing the growth in the carrier revenues that you're seeing.

Okay, thanks. And then next, maybe a big picture question for Shawn. I know in the past, you guys have mentioned that your employer client base has an above average adoption of high deductible health plans compared to the industry. So I was curious, if we could get your thoughts on, where you see overall high deductible health plan penetration going? I think most industry reports peg at somewhere around 20% of employer sponsored lives today. So, what's your best guess about where that could top out, and then, how long do you think it takes for us to get there? Thanks.

Yeah, great question. I think that -- one thing that comes to mind, and the question is -- I think that there is so many things that are happening to make it easier for people to select a high deductible health plan. Whether it’s the influx of voluntary benefits, gap filler insurance, programs that can fill that whole -- between your deductible and when the insurance kicks in. A lot of those products didn't even exist a couple of years ago, where they weren't sold real effectively. And they're really just now coming on board. Combined with the markets -- the individual's ability to understand what they're being presented. If you just go back a couple of years, the presentation of what high deductible health plan was and how many options you had and what that really meant was so confusing and frustrating. Its almost -- its kind of surprising, even the industry has gotten as high as it has, given the difficulty with the legacy systems and paper-based enrollment. So in a sense, we have 662 large employers, we only have 4% of the addressable market, and we are growing rapidly. There are so many more employers yet that have really gotten, I'd say, a fresh way to communicate that. To me, it just feels like that there is a tailwind, that's going to continue to make it easier and easier for individuals to understand these programs, for carriers that innovate around how the programs will be designed to make them more flexible. And this idea, using data as the foundation, or data that you provide inside. So you can really understand, is this program going to be the right thing for me and my family. Those just feel like tailwinds are -- I think there is many years to go, the expansion of, not just high deductible plans, but really, I'd call it a more well-rounded program for the individual, which possibly means buying some less insurance in certain areas, but then, trading that with buying a bit more voluntary or appropriate insurance, given their fact pattern. As far as peg a percentage into the future, I don't have one that rolls off the top of my head. I think its going to be a higher percentage than it is today, and I think its going to continue to run for a number of years.

Thanks. That's great color.

And there are no audio questions. I will turn the call back over to the presenter, for closing remarks.

Okay, well thanks everybody. Glad, you tuned in for tour call, and we look forward to talking to you again next quarter. Thank you very much.

Thank you for your participation. That does conclude today's conference call. You may now disconnect.