Ladies and gentlemen, thank you for standing by, and welcome to the Accolade, Inc. fiscal third quarter earnings call. At this time, all participants are in listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your touch-tone telephone. Please be advised that today's conference may be recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your host, Senior Vice President of Investor Relations, Todd Friedman. Sir, please go ahead. Thanks, operator. Welcome everyone to our fiscal third quarter earnings call. With me on the call today are our Chief Executive Officer, Rajeev Singh, and our Chief Financial Officer, Steve Barnes. Shantanu Nundy, our Chief Medical Officer, will join us for the question and answer portion of the call. Before turning the call over to Rajeev, please note that we will be discussing certain Non-GAAP financial measures that we believe are important in evaluating Accolade's performance. Details in the relationship between these Non-GAAP measures to the most comparable GAAP measures and reconciliations thereof can be found in the press release that is posted on our website. Please note that certain statements made during this call will be forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks, uncertainties, and other factors that could cause the actual results for Accolade to differ materially from those expressed or implied on this call. For additional information, please refer to our cautionary statement in our press release and our filings with the SEC, all of which are available on our website. With that, I'd like to turn the call over to our Chief Executive Officer, Rajeev Singh. Thanks, Todd. Hello, everyone. All of us at Accolade would like to wish you a happy New Year and thank you for joining us to discuss the results of our third quarter for fiscal year 2021. It's a busy time of year for us with the pandemic and vaccines at the front of our members' minds and a set of new customer go-lives in early stages given the beginning of the new calendar year, and we're excited to report on our progress. Put succinctly, we enter 2021 in a stronger competitive position than any time in Accolade's history, and the key metrics bear it out. Revenue of $38.4 million and adjusted EBITDA loss of $11.4 million were both ahead of our guidance. We raised additional capital via our follow-on offering in October to further strengthen our balance sheet. The third quarter represents the end of the traditional healthcare selling season, and we saw record adds in terms of new customers and members. We saw continued momentum across all market segments and product offerings, further demonstrating that mainstream customers, the consulting and broker community, carriers, and other partners are embracing our leadership position in this important category. In fact, less than two years ago, at the end of fiscal 2019, Accolade had 20 customers. About 18 months later, at the time of our follow-on offering in October, we had nearly 5x that number, and our momentum has continued into this quarter. Our customers are seeing tangible results and sharing their results with their peers. One customer I'll call out today is Ocean State Job Lot, who reported a 2x return on investment in their first year, with 90+% high-cost family engagement and 97% customer satisfaction. Customers are also speaking about our new solutions. We hope you take a minute to go to our website, where you can watch the replay of the Johnson Controls webinar, where they discuss their results with Accolade COVID Response Care. For example, they saved more than 17,000 workdays by avoiding unnecessary quarantine. On that topic, we're seeing strong traction with Accolade COVID Response Care, where we have continued to sign new customers and have launched a partnership with Labcorp Pixel to deliver COVID tests to the home. In a similar vein, initial results from our first mental health integrated care customer are showing positive trends. It is early to share the data or make assumptions, but we're very pleased with those early returns and remain enthusiastic about the impact our partnership with Ginger can have on our customers and their employees' mental wellbeing. On the strength of all these factors, we're raising top-line guidance for the 2021 fiscal year by $3 million, which Steve will discuss in more detail later in the call. More qualitatively, we see broad macro trends that are shaping the healthcare industry and impacting all companies across the healthcare spectrum. We don't need to explain to you how or why healthcare has become so broken in the U.S. If you're on this call, you already know because you've chosen to get to know us better and understand how we're trying to change the system. The COVID-19 pandemic has been tragic in many ways, and it has exposed some of the worst characteristics of the industry. Healthcare is still too costly, it is still too complex, and in too many places, it is far too hard for the average person to access quality care or get the information they need to make the right decisions. Underlying all that chaos, however, we have seen how good our healthcare system can be. Frontline workers, nurses, doctors, lab technicians, custodians, researchers, together, they have all been working tirelessly to find a vaccine to heal the sick and to comfort the grieving. In our darkest moments, we've seen just how powerful the system can be when our industry comes together to solve a problem. At Accolade, we believe that is the future of healthcare, and it underscores everything we do. We believe that the future of healthcare must be integrated and collaborative and reimagined with the consumer or the member at the center of everything. We're investing in evidence-based clinical programs to help our customers and their members choose the right care and realize the best outcomes. We understand that the best way to bend the cost curve is to embrace those principles and to focus on total population health. Because focusing on only the highest cost patients this year, like most of our industry does, doesn't help you identify and prevent the challenges of next year. We believe that consumers have never had a greater need for high touch, empathetic benefit navigation and advocacy services and clinical programs to help them negotiate this increasingly complex marketplace. The pandemic has elevated and accelerated the discussion about the need to fix the healthcare system, and Accolade is squarely positioned at the confluence of these macro trends. The distribution of the COVID-19 vaccine in the United States is a great example of this need. Our incredibly high engagement rates and member satisfaction levels mean we are the go-to source for information in times like these, and we have an opportunity to turn tactical interactions into strategic moments. Take the example of a member calling in to find out if vaccines are fully covered by their employer. At Accolade, we turn those moments, and yes, most employers are covering the vaccination, into opportunities to answer some of the more strategic questions that members are facing. Is it safe? Do I have to get it? What are the potential side effects? All the while increasing the possibilities to get that member to the right outcome. The need for our services clearly could not be more significant than it is right now. It is with that backdrop that I would like to begin to address a question that many of you have asked from the time of our IPO. We were very proud to include the data from an independent study with Aon referenced in our IPO prospectus that demonstrated tangible cost savings to Accolade's customers. I'm excited to share for the first time that Aon not only updated their research, but they expanded the study. They examined a broader list of customers to include those with 1,000 employees- 30,000 employees. The results reaffirmed what we saw in the original study. Accolade delivers tangible, measurable improvements to companies of all sizes, bending the healthcare cost curve in a material way. The rigor of the Aon study creates a strong degree of confidence that these results represent conclusions that are relevant to a broad range of employers in the market. Now, for the sake of my marketing team, I have to say that the full report will not be published for a few weeks now. Aon wraps up their work shortly. I highly encourage you to go to our website and sign up to receive the study when it's released. We're proud of the customers' results. The 1,200+ employees at Accolade go to work every day with a purpose and passion to serve our customers' employees and their families and their businesses. Our model, integrated clinical programs, superior member engagement, measurable value to customers and partners, ability to rapidly iterate on solutions to meet specific needs, ultimately delivers better outcomes and lower healthcare costs. The Aon study quantifies those benefits and validates the Accolade vision. Here are a few of the highlights. All customers in this study saw lower healthcare cost trends relative to their control group in their first year of engaging with Accolade and see continued lower trend in the second year. Accolade lowers employer costs in many clinical categories, from mental health to diabetes and hypertension to asthma. Accolade reduces employer healthcare costs across the member population, including age groups, demographics, geography, and condition levels. That is a very high-level preview of what you will see in the full report. I encourage you to read the full report for one simple reason. If you can understand how Aon came to their conclusions and you understand the way they validated our value proposition, then you will understand why employers choose Accolade. It is why I said at the start of the call that we are better positioned today competitively than at any other time in our history. With that, I'd like to turn the call over to Steve to cover financials and other operating highlights. Thanks, Raj. I'm pleased to report on our results for our third quarter of fiscal 2021, which ended on November 30th, and provide an update to our guidance. We generated $38.4 million in revenue in the third fiscal quarter, representing 30% year-over-year growth. This is $1.4 million ahead of the top end of the range of our guidance, which we provided during our last earnings call. Revenue growth was driven primarily by strength in new customer adds, and therefore members, particularly in the enterprise and mid-market segments. Adjusted gross margin of 41.8% was roughly flat compared to 41.1% in the prior year period, reflecting investments we've made in new customer launches, including the Defense Health Agency, which launched in May. Adjusted operating expenses improved to 71% of revenues in Q3 of fiscal 2021 versus 88% of revenues in the prior year period, reflecting operating scale efficiencies as we continue on our path toward break even. I'll revisit this point about spend during my guidance remarks. Adjusted EBITDA loss in the third quarter of fiscal 2021 was $11.4 million, which compares favorably to $13.8 million in the prior year, third fiscal quarter, and was nearly $600,000 better than the top of our guidance from our last earnings call. The outperformance in adjusted EBITDA is primarily attributable to a higher adjusted gross profit driven by the revenue overperformance versus guidance. Turning to the balance sheet, on the strength of our IPO in July and our follow-on offering in October, cash and cash equivalents at the end of fiscal Q3 totaled $418.9 million, with no debt outstanding. Our cash balance reflects $208 million of proceeds from the follow-on offering, net of fees and offering expenses. I'll update you on our accounts receivable balance. AR increased to $15.4 million at the end of fiscal Q3, representing about 37 days revenue outstanding, driven in part by an increase associated with our airline customers. You'll recall from our last quarter that we are working with our airline customers to help them manage their cash needs during COVID, primarily by changing their payment schedules. Both customers remain on schedule with their payments, and the schedule is designed to keep cash receipts from those customers unchanged within our fiscal year. In addition to the airline's impact, the AR balance also reflects receivables associated with new customer go lives. On a go-forward basis, we expect DSO to normalize in the 20 to 30 range. Finally, we had approximately 55.2 million shares of common stock outstanding as of November 30th. Now, turning to guidance. For the fiscal fourth quarter ending February 28th, 2021, we expect revenue in the range of $51 million-$54 million, representing 18% growth over the prior year at the midpoint, and adjusted EBITDA loss in the range of $2.4 million-$5.4 million. For the full year ending February 28th, 2021, we expect revenue in the range of $162 million-$165 million, reflecting a $3 million increase to the range previously provided, which reflects 23% growth over the prior year at the midpoint, and adjusted EBITDA loss in the range of $32 million-$35 million. Now I'll turn it back over to Raj for his concluding remarks. Thank you, Steve. Amidst incredibly challenging times, we remain focused on our mission and our vision to help every person lead their healthiest life. That single-minded focus has continued to lead to strong results for the company. With that, operator, I'd like to open the call up to questions. Thank you, sir. As a reminder, to ask a question, you will need to press star one on your touchtone telephone. Again, that's star one on your touchtone telephone to ask a question. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from the line of Jeff Garro of William Blair & Company. Your line is open. Yeah. Good afternoon, guys, and thanks for taking the questions. I want to ask a couple questions about the fourth quarter guidance, and I guess maybe more specifically about new customer launches and performance-based fees. First on performance-based fees, you've talked about a majority of those performance-based fees accruing in your fourth fiscal quarter historically. With the visibility you have now on fiscal 2021 performance, how has the seasonality of performance-based fees played out during the year? Hey, Jeff, this is Steve. Thanks for the question. You're right. The cost savings-based performance guarantees, we almost, in every case, defer and recognize those in the fourth quarter as we track and see the healthcare spend finalized in December, then we do that ultimate tally in January and February. This year would be similar to those prior years where we've deferred and would recognize those in the fourth quarter. Some customers, we pick that up along the way, that is generally the case. That's why when you look at our P&L, you see somewhere in the range of 1/3 to about 35% of a year's worth of revenues occur in the fourth quarter because we're picking up those cost-based revenues there. I would say that that shape looks similar this year as it has in prior years. Yeah, I know claims need to be reconciled for some time after we pass the end of the calendar year. Any visibility or degree of confidence in achieving a similar level of performance-based fees compared to your annual contract value or ACV versus what you've done historically? Right. It's certainly an incredibly unusual year in terms of the pandemic and spend. What we're seeing now, remember the way that our contracts work is we generally earn that revenue when we beat the index or we beat the market. Even in this environment in which healthcare spend decreased quite a bit immediately after the pandemic and now is rising back up as people come back into the healthcare system, our data is showing that we are continuing to save against those indices. With all that said, Jeff, we are maintaining some conservatism even within the guide that we're providing today because it is such an unusual year in the end-of-year guidance that we provided. Understood. That's helpful. One more from me. Back to the fourth quarter guidance and the impact of new customers launching on January 1st. I know there's some diversification there, but you referenced it in the prepared remarks, many customers starting on January 1st. You talked about strong customer count growth throughout the year, and I look forward to an update in a few months when you close out the fiscal year on where you end there. In the interim, could you discuss the mix of signed customers that were live as of the end of this November fiscal quarter versus those that went live as of January 1st? Sure. I can give you some color on that. One of the reasons we're so pleased with being able to provide an increase in guidance today in the midst of a pandemic is the underlying core strength of the business that we're seeing. Raj mentioned in his remarks, we're seeing strong growth in terms of new bookings across market segments, meaning size of customer and offerings. We've had a strong bookings year. Many of those either went live in terms of open enrollment services in November timeframe or launched on January 1st. Some of that uplift in our guidance relate to a strong new booking season of customers that launched on January 1st. Got it. That helps. Thanks for taking the questions, guys. Thanks, Jeff. Thanks, Jeff. Thank you. Our next question comes from the line of Robert Jones of Goldman Sachs. Your line is open. Great. Thanks for the questions. I know we'll have to wait till next quarter to get the ACV number and guidance. Maybe just wanted to try to get some preliminary thoughts on how you're thinking about revenue growth shaping up for next year. Maybe just to frame it a little, some of the major announcements that you've shared so far with Johnson Controls, which you mentioned, Humana, University System of Georgia, just making some rough assumptions around normal course of economics on members, employees. It seems like you can get a lot of the way there, if not beyond, your kind of long-term 25% revenue growth target. Just wanted to kind of level set ahead of the specific numbers next quarter. Is there anything specific around the wins this year that would be different than historical wins, or is it right to think that some of the wins you guys have already announced that are in the book, if you will, can really kind of set you up well against your long-term targets for next year? Hey, Bob, this is Steve. I'll start. A couple of things on that. The wins from this year are very much a part of what gives us confidence in raising the guidance and the view that we're providing today for this year. We will provide guidance for fiscal 2022 in next quarter. That all said, we're really bullish on the business and the long-term growth rate that we've spoken about, that 25%+ kind of growth rate that we think is achievable. We do temper that a bit given the COVID environment that we're in. The fact that there are unemployment issues that, given our per member per month revenue model, does give us pause. It puts us in a place where we want to have some conservatism in the way we think about the numbers, while we're incredibly bullish about the core underlying business. Those bookings this year that we've spoken about, I think, are in line very much so with the kinds of bookings we've done before from a pricing standpoint. We're seeing it again across offerings, oftentimes, with add-ons in our Trusted Supplier Program or our COVID Response Care capability and so forth. Yeah, Bob, this is Raj. I'll just chime into Steve's point. The bottom line is that throughout the course of the year, we've been very consistent around the fact that every market segment and all of our core products have seen traction. Therefore, we've been able to raise guidance throughout the course of the year. We continue to see a strong demand environment. We'll obviously update guidance as it relates to next year, coming up next quarter. The outlook and the makeup of the types of customers signing on has been positive all year. Yeah. No, that's encouraging. I guess just maybe one follow-up. You mentioned that the raise from the proceeds from the follow-on offering strengthened the balance sheet. Balance sheet was in pretty good shape to begin with. Anything you would want to highlight as far as just priorities in use of proceeds, use of cash, as we think about where the balance sheet sits today post that raise? Steve, how about if I take a quick swing at that one, and then you add on anything I missed? The bottom line is we think we sit in a marketplace with enormous growth opportunities, with a huge target addressable market, and in a leadership position where we're acquiring customers across segments and across products at a rapid clip. Strengthening the balance sheet was entirely about investment, investing in the business clearly in terms of continuing to fund that growth. Beyond that, to strategically identify opportunities where we can expand our product portfolio and/or expand the types of value propositions we can deliver to our existing customers and the new customers. We're consistent against both of those objectives. Outside of that, not much more to give you, obviously, before we announce new products or new offerings or potential new capabilities. That's where our focus is. Okay, great. I appreciate it. Thanks. Bye. Thank you. Our next question comes from the line of Ricky Goldwasser of Morgan Stanley. Your question, please. Yeah. Hi, good afternoon. My question's focused on the partnership with Ginger. Can you maybe give us some updates there and the uptake that you are seeing with both existing customers and the new win? Sure. I'm going to let Shantanu speak to the relationship and the sort of the how it's working. I will tell you, we've acquired our first customer. We think the pipeline is very strong there, and we see significant demand. Shantanu, you want to jump in and talk a little bit about how the relationship's going? Yeah, absolutely. Thanks, Ricky, for the question. First of all, from a demand perspective, as a physician, acutely aware of how much mental health is really a crisis around the country. That's being reflected in the interest that we're seeing. There's also a broader recognition from the market that with a lot of different point solutions out there's a lot of interest for solutions that can drive outcomes and ultimately lead to cost savings. All of those are creating significant tailwinds around the partnership with Ginger, which the whole idea was to create a solution that integrated physical and mental health with an eye toward outcomes, which we thought was pretty differentiating from how the rest of the market in mental health has pursued it. With that, the two teams have gotten into a really great cadence, starting to learn a lot from that first customer that Raj mentioned, and a lot of great early indications that we're having the impact that we wanted to see at the outset. As we think about the relationship and the uptake of customer, is this a sort of an add-on offering that we could see adding upside midyear that not necessarily customers bring on if they launched a program, but something that they would add on as the year progresses? Certainly, Ricky, we would expect that offerings like this one, like we saw with COVID Response Care this year, Accolade COVID Response Care this year, are products or offerings that are capable of launching mid-year. While some of our core offerings are capable of launching mid-year, as has been noted previously, many of them launch predominantly on one-one coincident with the plan year. I think the short answer to your question is, yes, it's very feasible, and it'll be largely dependent upon the culture of deployment and rollouts at the customers who are purchasing. When we think about the delta between the revenue guide raise and the EBITDA guide, seems that there's less of a flow-through. Can you maybe talk a little bit about the investments that you are doing, and how should we think about these investments as we kind of also update our models for next year, understanding that it's too early for guidance yet? Sure. Ricky, this is Steve. Thanks for the question. A couple of things. As we raise guidance in terms of revenue and seeing a very strong core underlying business, it's really important to us to maintain that profitability target, but not in a rush to outperform, per se, on the bottom line, given all the opportunities we see to invest in growth. For example, investing in distribution around sales and marketing, not just adding quota-carrying reps, so to speak, but also building strong relationships in channels with brokers and consultants and others in those channels. The way we work with Humana, for example. Investing behind those opportunities to drive smart growth with attractive unit economics is how we think about it. When you step back, I would harken back to guidance we've spoken about in the past, which is this idea of a demonstrable step towards breakeven as we drive attractive growth. That idea of roughly two years out to a breakeven or roughly breakeven profile is still how we think about the business. Big market opportunity, creating value by pursuing it with attractive unit economics to get to a responsible breakeven type of profile over the next couple of years. Thank you. Thank you. Thank you. Our next question comes from Michael Cherny of Bank of America. Your line is open. Thanks so much for taking the questions. Pulling a little bit more on that thread relative to the EBITDA side, tying back to a couple other questions that you had addressed earlier. As you think about that future growth, and you talked about the mid-20s, give or take, long-term growth targets that you've had, would there be any desire, I guess, how would you contemplate, especially with some of the new products, the potential to essentially spend to accelerate that growth? Or is it more a fact of wanting to stay measured, roll out products as is, and not get too ahead of your skis in terms of new customer momentum? Just trying to think about the puts and pulls on that long-term trend and how you think about manage those cost investments along those lines. First of all, hi, Mike. It's nice to chat again. Steve, let me take that from a philosophical point and then kick it to you to add any color. Okay. From my perspective, Mike, the way we think about it, we've tried to be very disciplined consistently in terms of the way we talk about our business and the way we run our business, that we see a 25% growth rate as far as the eye can see, and that we're going to run the business in a disciplined fashion, trending towards that breakeven point out in fiscal 2023. With the acknowledgement as well, that to the degree we see growth opportunities that are more material than that 25%, that in a huge targeted addressable market with a leadership position, that we'll evaluate those opportunities and potentially, and bias towards spending against those opportunities.To the degree we're outperforming, you're going to see us spend into that outperformance, to continue that growth trajectory and to continue to distance ourselves from the competition as it relates to both innovation and customer acquisition. I think that the reverse is also true. You'll see us discipline that from a top-line and growth perspective, and you'll see us discipline from a bottom-line perspective to the degree that growth doesn't materialize. Steve, let me give it to you. Yeah. Hi, Mike. The only thing I'd add to that is, as you see us, for example, in this quarter outperforming on the top line and pursuing those opportunities, as Raj just spoke of, a discipline towards maintaining those bottom-line targets as a step towards breakeven. We have a very, I think, healthy tension as we run the business, Mike, between pursuing growth at attractive unit economics levels while we maintain that discipline to roughly breakeven. When you dig into the metrics behind our business, when we have longest-term contracts, three-year type of multi-year contracts on a PMPM basis that are very predictable, you can make a strong argument to invest even more in growth where we are today, investing in 20% or so of revenue in sales and marketing. We're doing so with a real eye towards maintaining that step towards running a disciplined business towards breakeven, balanced with the growth opportunity in front of us. That's very helpful. I guess one follow-up that, Raj, you kind of gave me the opening for, you had obviously a nice selling season momentum in terms of the number of new customers added. Can you give us any sense of the push and pull you had in some of the discussions during the selling season? We hear so much from companies about basically everything is COVID-19, COVID-19, COVID-19, and figuring out how to return to work and all these other dynamics. Well, you actually can help with that on that front and have a ready-made solution. I guess as you sat through, whether it's that specifically or just pitching the total wares of Accolade, how did those discussions start to shape out, and how were some of the proof points really able to shine through to allow you to drive the customer additions that you had? Thanks for the question, Mike. I think if you think about us, if you rewind, or excuse me, zoom out to the highest level, what Accolade provides is extraordinary relationships with members who are seeking healthcare, but confused by the healthcare system. We build trust with those members. That trust yields more interactions, therefore high engagement. Because we do a good job of guiding them to the right place, we lower costs. If you zoom out to that, there's been no more profound set of needs as it relates to healthcare questions and decision-making than has occurred in the last 12 months with COVID and now rolling into the vaccine. First testing, then the vaccine, and then, of course, the mental health challenges that have been exacerbated in the country. Everything that prospects have been talking about in many respects, Mike, have been things that they needed to be able to get data to their employees, start with education, move towards guidance, and then yield better results. In a shorter way of saying things, our entire business is built on building relationships and leveraging those relationships to drive good guidance towards better clinical outcomes at lower costs. This year, that need has been more profound than ever. Thus, we've been able to sit in a lot more boardrooms than maybe other vendors who might be more condition-focused. Great. Thank you. Thank you. Our next question comes from the line of Jailendra Singh of Credit Suisse. Your line is open. Hi. Thanks, everyone. Just wanted to follow up on the question earlier about implied Q4 guidance. Is it fair to say that around two-third of that revenue is fixed? The $3 million range you have on the guidance, is that all a function of savings-based revenue and operational performance revenue? I'm assuming that the fixed portion is pretty much locked in at this point, with most of your contracts gone effective one-one. I'm just curious if you can give a little bit more color around where is the variability there, and when you say that you're building some cushion there for fiscal Q4, is it more on the savings side or some other variable we should be aware of? Hi, Jailendra, it's Steve. Thanks for the question. Yeah, you're in the right ballpark in the fourth quarter that you can think about as somewhere in the range of a third being variable-based revenue. The reason when you think about what's in there, when we think of fixed revenues, we think of that PMPM revenues, members times a PMPM rate. There's always some uncertainty around how many employees are going to be on the rolls, so to speak, when we're in the midst of a situation like we are right now. We maintain some conservatism on those so that we don't get ahead of ourselves given that employers are still managing their businesses through the pandemic. With respect to PGs similar type of approach, where we want to have some conservatism around it given the unusual environment that we're in. You're seeing that in the guide that we're providing today. All of that to say, a lot of that uplift relates to the new customers we've booked and the growth that we're seeing and the confidence that we have in the business. Okay. Last quarter, you talked about results benefiting from the slower hiring ramp. I was just curious that if you still continue to remain conservative on hiring, even when the demand environment looks okay for you guys. Just curious, how you're thinking about that. Sure. You'll see this year, or this quarter, I should say, the third quarter OpEx as a percentage of revenues grew a bit on a sequential basis. That's the impact of us letting out the reins a bit as we came out of the initial part of the COVID-19 pandemic back in March, April, May, and the confidence that we saw as we booked more customers, prepared for customer launches in the fourth quarter, and are seeing the demand environment remain strong. It's always about maintaining that balance of hitting those bottom-line targets and reinvesting oftentimes back into that growth as we over-perform on the top. Okay. The last question, Raj. I was wondering if you can spend some time on the competitive landscape. We have come across several digital health companies which historically focused on some point solutions or some set of services and are looking to explore the employee navigation, employee engagement services for employers. I know it is still an under-penetrated market. Do you think COVID has resulted in increased competition in this space and more interest from other players where you come across during RFPs? Any thoughts on that? Raj, you may be on mute. Oops. I was on mute. I just gave a great answer, Jailendra, I'll try to hit it again. First, it's great to talk to you. Thanks for the question. When you think about the competitive landscape in advocacy, navigation, benefits, and health management, I think, the space has been fairly competitive for a long time with digital-only providers who have attempted to solve the problem fundamentally by providing digital tools to consumers to be able to manage their healthcare decision-making. That's proven to be ineffective for a number of years for a variety of reasons that we've outlined in previous conversations. You've also seen companies really focused on either conditions or very specific populations, high-cost claimants, or those who are dealing with acute conditions. I think you continue to see activity in those spaces. Those categories might choose to potentially position themselves more in navigation or advocacy, largely because this category, navigation advocacy, is growing really quickly, and therefore it might be advantageous to position themselves there. We haven't seen a material change in companies entering this space with the variety of tools needed to be able to deliver value to customers. For us, that, as you know, means frontline care teams that can build trusted relationships, clinical teams that can guide people through clinical programs that are evidence-based and that lead to better clinical results, all of which drive cost savings that you're willing to sign up to right down to the dollar. Has the competitive landscape changed in that regard? No. Have we seen more companies doing the same thing but announcing that they're engagement companies or that they're navigation companies? Absolutely. Okay, thanks. Thank you. Our next question comes from the line of Sean Wieland of Piper Sandler. Your line is open. Thanks very much. My question is on the recent price transparency rule for providers. I wanted to get your sense of how you see this longer term impacting your value proposition in the care navigation space. Shantanu, you want to grab that one? Yeah, absolutely. It's a great question. As you know, one of the most common points in someone's care journey that we help them with is finding a provider. We've made a lot of investment in being able to personalize that decision and help match people to the best provider for them. I think for us, the new transparency rule is actually really exciting because I think what that allows us to do is have even more granular data that we can use in concert with other data. We know as a patient, price is important. It's a critical input into a decision, but so is the quality of provider, so is the appropriateness of the care of the provider, so is the safety and quality of the facility that they're in. We look at it as really additive to what we're able to provide, which is we're able to combine multiple data points together, including price transparency data, and deliver that in a way that consumers can understand and actually help them make that right decision for them and ultimately get to better health outcomes. We're very bullish on the new regulation. That's great. Thank you. I just wanted to check in again on the airlines. They announced that they were bringing back some of their furloughed employees. Did that have any impact on your guidance? Hey, Sean, this is Steve. I would say a little bit, but not a lot. Certainly, the majority of what you're seeing in the guide is the underlying business launches on one-one, and so forth. The airlines we maintain conservatism around in the fourth quarter, primarily because it's not clear exactly when and how many of those employees come back. Just the overhang that the airlines are obviously still punching through a low travel environment. We're maintaining some real rational conservatism there. Okay. Steve, you said that you're managing cash collections for the airlines to be flat for the fiscal year. Is there any kind of catch-up payment that is planned for next fiscal year? We don't comment specifically on customer contracts, Sean, but I would say this, that was primarily meant to address the acute situation of the pandemic and to keep any of the changes in the contract, try to keep that inside the fiscal year. Otherwise, those relationships continue to be strong, and those contracts are the way that they're originally structured. All right. Thanks very much. Thank you. Thank you. Our next question comes from the line of Matthew Gillmor of Baird. Your line is open. Hey, thanks for the question. Maybe going back to the Aon study, I was curious if that was specific to Total Health and Benefits or to some of the other products. More broadly, is this a segment of the market, the smaller employers, are they more sensitive to studies like this? Or is it a similar dynamic to the prior study for large employers in terms of the importance from this? Shantanu, you want to grab that one? Yeah, absolutely. It's a great question, and we love talking about that study. I think on the first, yes, this is of Total Health and Benefits customers, and that's really a function of the fact that we wanted to do the most rigorous study design possible. What that meant is we wanted to have a baseline year. We wanted to be able to look at customers at one year and look at them in two years. Just in terms of where the business was two years ago, the preponderance of our customers were in Total Health and Benefits. In terms of your second point, I think it actually ties to the earlier question about competitiveness too. I think where we are today, with different navigation services out there, I think the market's matured to the point where ultimately what they care about is cost and outcomes. That's extremely difficult to achieve in healthcare, as you know. For us, I think the Aon study is a significant competitive differentiator, right? Because it allows us to say that independently, through a very rigorous study design, we're able to demonstrate significant and sustained cost savings. We think that's difficult to replicate, frankly. It's important to all sizes of customers because ultimately, one of the greatest challenges that small customers, large customers are facing is the significant cost. As we're looking at the next year and seeing predictions of potentially another double-digit year in terms of a cost trend, we think that's going to be of critical importance to all sorts of customers. Okay, great. Then, I guess I wanted to ask about the TRICARE contract. I know in the past you said that implementation's gone really well. I was hoping you could remind us about the process that they'll go through to determine when to potentially expand the number of lives you're supporting. Does that take place in calendar 2021, or is that further out? I think, Matt, the best way to think about that is, we need a measurable period upon which we can demonstrate value associated with the agreed-upon measurables for the contract. Those agreed-upon measurables for the contracts, just to take one step back, look fairly similar to the types of performance guarantees and incentives that we've educated the market on as it relates to our consumer customers, or excuse me, our commercial customers. That deployment really went live in the early part of this year, in May. Excuse me, the early part of last year, calendar 2020. We would expect that we need at least a year, potentially a little longer, to be able to show the effects of all of the capabilities that we deliver to those consumers, and then claims run out against that year or potentially longer. We don't have an exact timeframe where the government will make that decision. We would expect it would be in late 2021 calendar or early calendar 2022. Giving you more color commentary on where we are, we continue to expand to the growth side of the population in terms of members engaged, and we continue to see really strong results as it relates to engagement levels within those populations as well as satisfaction levels. Great. Thanks a lot. Sure. Thank you. Our next question comes from the line of Hannah Baade of D.A. Davidson. Your question please. Hi. I first wanted to ask a bit of a follow-up on the price transparency rule. Obviously, the rule itself will not change the impact of high prices and overall spend levels or your overall consumer demand. Do you have any concerns that more consumer-friendly price menus may impact the number of annual encounters you have with your members? Shantanu, you want to grab that one? Yes. It's a great question, thanks, Hannah. I think for us, the decision around choosing a provider is an incredibly complex and personalized decision, right? I think all of us have been in that position of trying to find a doctor, and price and cost is certainly a critical input, but we do really look at it as just one input, right? In a lot of care decisions as a consumer, you may want to pay for a higher cost- provider, if there's a commensurate increase in value that you can get in terms of the quality or the complications that you're going to face. That's what we see, and that's what our record has been with serving these members, is that what's really missing is not necessarily a single self-service tool, but it's the ability to integrate disparate pieces of information and deliver it in a personalized, empathetic way that ultimately is what our consumers are looking for, and ultimately what drives the greatest value. We don't anticipate that this alone is going to decrease the engagement that we see. We think it's going to continue to be able to strengthen what we can deliver to our members. Awesome. Thanks. Yeah. Just one follow-up. When thinking about that initial PMPM rate on a customer land, how does that vary when Accolade is replacing other solutions versus a greenfield customer? Thanks. Sorry, go ahead, Steve. Sure. Sorry, Raj. Hannah, this is Steve. The way to think about that is, generally speaking, if you think about total health and benefits, we're oftentimes replacing member services, provider services, and clinical services that the health plan is providing. There is some potential for savings there. The way to think about it, really, that we think about it with our customers, is in terms of the ROI that's generated. You harken back to that Aon report, and the returns and the savings that we're generating for customers is, we think of it in that way, the return on the PMPM fee that the customer's investing. Great. Thanks, guys. Thank you. Our next question comes from the line of Richard Close of Canaccord Genuity. Your line is open. Great. Thank you for the question. Maybe a follow-up on Mike's questions on client discussions. Raj, I was wondering if you could talk a little bit, give us some insight in terms of maybe how discussions with potential customers changed from the beginning of the year to the end of the year, and how it maybe compared to past years, what they were mainly focused on. I think you said demand, overall demand, is accelerating. Is there any way or any metric you can provide to sort of quantify that? First off, thanks for the question, Richard. Let me start with the beginning, and I'll end with the early part of the question, which is: How are the conversations evolving over the course of the calendar year, and perhaps really even from years previous to a pandemic year like the one we have this year? By and large, what I would say for sure is by segment, we saw in the middle part of the year, as we were hitting the heart of the pandemic and the first wave of the pandemic, customers were very preoccupied, understandably, with COVID-19, COVID-19 testing, access to care, and an understanding of how to keep their employees safe. I think our immediate response to that was not only Accolade COVID Response Care to help people return to work, but also a set of clinical programs available to all of our customers to help them manage their employees, employee education, and access to care, et cetera. Beyond that, the conversations have continued to then move into a sense of what population health looks like for 2021. I think post the first wave of the pandemic, the conversations moved into, we believe that costs are potentially depressed in 2020. In 2021, to the degree they return, how can we manage that? Again, an area where we think we can play a really significant role for prospects and customers as it relates to engaging in total population health management via risk stratification and clinical programs. Today, it's a little early to tell, with the second wave upon us and the vaccine upon us, where the conversations will lead us. We do know that they're growing, that conversations continue, and that our relevance continues to be really, really high. Last point, I think, Richard, as it relates to any metrics we could guide you to, I think we're really focused on growth in each of the core market segments and across each of the core products. We'll update guidance next quarter in terms of where we are from an ACV perspective and our expectations for the next year. Beyond that, I think it's more a qualitative view on the continued strength of the business as evidenced by the top-line growth of the company. Okay, that's very helpful. If I can slip one in for Steve, appreciate the comments on the visibility and with respect to performance fee. I think we've discussed previously about two-thirds of performance fees are based on operational metrics, maybe the net promoter score or engagement and customer satisfaction. I would think that you performed very well on those engagements during COVID. Is there any insight you can provide in terms of how that has trended during the year? Sure, thanks for the question, Richard. Good to talk to you. First of all, you're right that of the variable revenue, or the performance-based revenue, about two-thirds of them are operational types of performance guarantees like engagement rates, consumer satisfaction as measured by NPS or CSAT, engagement of families, and membership. Those have trended very well during the year. Obviously, it took a different shape and way that that happened from the beginning of the year when COVID first hit to where it is today. All along, we've been helping members, and those have borne out through those kinds of operational PGs. Then as it relates to the other part, the cost savings PGs, those are primarily measured in the fourth quarter contractually in determining the dollar amount that we earn. We're able to track them as we move through the year. I would say we've got good visibility baked into the guidance that we've provided as it relates to those PGs. Okay. Thank you very much. Thank you. Our next question comes from the line of David Grossman of Stifel. Your line is open. Good afternoon. Thank you. I want to go back to some of your prepared remarks, and maybe I didn't catch this right, but I thought you said that ramping new business could be a temporary drag on gross margin. I just wanted to make sure I heard that right. If I did hear that right, maybe you could perhaps help me better understand that dynamic. Sure. David, it's Steve. One way to think about that is, you're right. In October, November, and going into December and January one go lives, we're certainly investing in launching new customers. Part of that is staffing up. You'll see historically our fiscal third quarter, which includes that October-November timeframe, gross margins do compress a bit. That's reflecting the staffing up for those one-one launches. Part of what you're hearing from us in the fourth quarter guide, not only strong top line, but also investment in those new customer launches to ensure that they go really well while we also invest in growth parts of the business for new business around innovation and sales and marketing. That's a bit around the dynamic that we see in third and fourth quarter. Got it. Thanks for that. Another question just about the business model. I'm curious whether you can give us a sense of how much automation the market and the model can tolerate as the business matures and where we are in that journey, particularly in the large company segment. Is there some kind of curve that it follows as you get to know these clients better? I know it varies by customer size, are there any other factors we should consider as we think about how many kind of physical interactions you will have versus how many will be automated over time? I'll start on that. Raj, if you'd like to chime in. Yeah, there are a couple of ways we think about that, David. I would step all the way back to our model at its core, which is we believe very strongly that the engagement of members in getting them to the right health outcome is important to combine that clinical expertise, the empathetic touch, along with the technology and innovation behind it to help it scale. We're constantly balancing those and investing in that. As customers mature, for example, we see mobile app interactions and self-service interactions increase as customers get to know us better. There is that efficiency built into customers as they mature with us. As we introduce more offerings and continue to add on to that relationship, it's kind of a constantly moving target across customers. There certainly are those kinds of efficiencies that can happen with customers as we grow with them. One last point, because I know we're running out of time. Just a quick addition to that. As we add interactions with customers and add data about those customers from the various data sources, we're able to better restratify those populations and then therefore prioritize and guide them to the right programs in a highly prioritized, risk-stratified fashion. That might be the, in addition to the technology levers that Steve mentioned, the single biggest drivers of long-term step functions from a margin perspective. All right, great. Thanks very much. Thank you. Thank you. Our next question comes from Stephanie Davis of SVB Leerink. Your line is open. Hi, this is Joy Zhang on for Stephanie. Just wondering if you can talk about if there were any levels of revenues reserves going into the quarter, and was any of that reversed? Hi, Joy. Meaning with respect to the third quarter. Yeah, third quarter. If the revenue beat, I think is your question? Beating the guidance that we provided was multifaceted. Some of that was related to stronger membership growth. You could make a point that we had a level of conservatism that, fortunately, showed up better even than we had in our model. There are elements there where we outperformed in terms of just membership. A reminder that we have a very diversified customer base across industries. Where we do see some industries under pressure, like the airlines, those were well made up for from customers in retail and technology and financial services. There was certainly some of the beat there. Other parts of the outperformance came from new offerings like COVID Response Care that Raj spoke about and Accolade Boost and some trusted supplier upsells. In-period revenues, then finally, just continued strong performance on the PGs and the operational performance guarantees as we just talked about on a question or two ago. Got it. Thank you. As a follow-up, can you provide any color on what the current mix of airline revenues are and what the mix of Comcast is? Airlines and Comcast, was that your point? Yes. Yeah. You'll see references throughout our 10-Q about major customers, that those percentages are roughly consistent quarter-over-quarter. You saw Comcast pop back up, our largest customer, in line with expectations. Nonetheless, the big trend is that as the business grows, each single customer becomes less a percentage of our total revenue, which is obviously healthy from a diversification standpoint. That trend continues, and we expect it to continue into the future. Got it. Thank you. Thanks. Thank you. Our next question comes from David Larsen of BTIG. Please go ahead. Mr. Larsen, your line is open. Please make sure you are not muted. Sorry about that. Congrats on a good quarter. With the revenue growth of 30% this quarter, it seems to me like 25% growth longer term, that that might be a little bit conservative. I'm just thinking about fiscal 2022. The variables in my mind are people going back to the doctor's offices and claims sort of catching up from the delayed care that had happened over the past year, also the labor markets. Can you maybe just talk a little bit about that? Do you need to see a significant improvement in the labor markets to meet that sort of 25% growth in revenue bogey? With the claims sort of catch-up, assuming that does happen, in your minds, is that a potential tailwind or a headwind or a neutral? Thanks. Hey, David. It's Steve here. A couple of things. Obviously, we're pleased with a 30% growth rate in the third quarter, and I understand your underlying point. We'll come back with future guidance. Importantly, I don't think we're dependent upon very discreet or specific employment factors into that long-term targeted growth rate of 25%. What we're looking at there is very early stages of an extremely large market in which most recently reported just under 100 customers against a market of 20,000+ opportunities. That's where that growth comes from, that strong demand environment that Raj was speaking to. That's what gives us confidence in that kind of 25%+ growth rate opportunity. With respect to claims catch-up, we view it as more neutral because our contracts are generally structured that our costs need to do better than market. Whether spend environments are lower like they were this year or higher like we all expect them to be next year, the Accolade service ought to show up just like the Aon study we talked about earlier will describe, that we do better, materially better than the market because of our model. I think that's the takeaway for us. It gives us the confidence in the strength of the business and the opportunity in front of us. Okay. One more really quick follow-up. Assuming claims costs do come in significantly higher in fiscal 2022 relative to fiscal 2021, and assuming that you can provide the typical percent cost savings, might that result in higher sort of performance fees in fiscal 4Q 2022, or is that not how the contracts are structured? Generally not, David. There is a cap on them. We do that. We think it's smart. Our customers appreciate it. They want to know how to budget for the service. There isn't this unlimited upside in the contract. Our view is continuing to provide that value, really strong ROI for customers, that will result in high returns for the customer and which should show up in retention and new customer acquisition. Okay, great. Thanks. Thank you. At this time, I'd like to turn the call over to Rajeev Singh for closing remarks. Sir? Thank you, operator. We appreciate all of you being here and tuning into our Q3 update. We look forward to talking to you next quarter and looking ahead to fiscal 2022. Thanks very much. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.