Greetings. Welcome to the Bright Horizons Family Solutions Fourth Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note this conference is being recorded. I’ll now turn the conference over to your host, Michael Flanagan, Senior Director of Investor Relations. You may begin.

Thanks, Shamal, and hello to everyone on the call. With me here are Stephen Kramer, our Chief Executive Officer; and Elizabeth Boland, our Chief Financial Officer. I’ll turn the call over to Stephen after covering a few administrative matters. Today’s call is being webcast and a recording will be available under the Investor Relations section of our website, brighthorizons.com. As a reminder to participants, any forward-looking statements made on this call, including those regarding future business and financial performance, including the effect of COVID-19 on our operations, are subject to the safe harbor statement included in our earnings release. Forward-looking statements inherently involve risks and uncertainties that may cause actual operating and financial results to differ materially and are described in detail in our 2020 Form 10-K and other SEC filings. Any forward-looking statements speak only as of the date on which it is made, and we undertake no obligation to update any forward-looking statements. We also refer today to non-GAAP financial measures, which are detailed and reconciled to the GAAP counterparts in our earnings release, which is available under the IR section of our website. Stephen will now take us through the review and update on the business.

Thanks, Mike, and welcome to everyone who has joined the call. To start this evening, I’ll recap our 2021 results and outline how the progress we made this past year positions us well for 2022 and beyond. Elizabeth will follow with a more detailed review of the numbers and outlook before we open it up for your questions. Overall, I’m really pleased with our performance in 2021 and all that the team has accomplished over the last two years. Prior to COVID-19, our business had been on a consistent revenue and earnings growth trajectory, which was upended with the onset of the pandemic and the temporary closure of nearly 80% of our centers. We responded swiftly with an immediate focus on health and safety, supporting clients and their essential frontline workers and pivoting to create new back-up care solutions for clients and employees to meet the incredible surge in need and demand. Throughout 2021, we gained traction in our recovery as we reopened hundreds of centers and welcomed back thousands of families. At the same time, we delivered hundreds of thousands of days of back-up care, launched services for more than 75 new clients, added 44 new centers and made important investments in technology and new service offerings that lay the foundation for growth and innovation over the next many years. As a result of all of this, we enter 2022 with good momentum. While the most recent COVID variant surge now appears to be waning, parent and client behavior has still been impacted and will take additional time to normalize. On the plus side, a long-term outlook I see for our business is incredibly positive. In fact, I believe the actions we have taken over the last two years will transform our opportunity for years ahead. Our longstanding value proposition with clients, families, learners and our employees has significantly strengthened during this period. Specifically, we have broadened our impact with the addition of more than 225 new clients, extending our service opportunity to more than 10 million eligible lives. We tapped into new potential use by cross-selling additional services to more than 100 existing clients. We galvanized our relationships with our more than 1,350 clients, responding to the unprecedented care needs arising from the chaos created by the pandemic. We led our sector in health and safety practices, strengthening our longstanding reputation for quality care in early education across the U.S., UK and Netherlands. We rationalized our existing portfolio of early education centers, while at the same time partnering with employers to expand capacity to meet their evolving needs. We expanded investments in technology to unify our services, speed and improve our end-user experience, and personalize our outreach to prospective and current employees. We invested in innovation, including deployment of additional care types in back-up care, and new pathways and partnerships to support adult learners and assist them. And finally, now more than ever, we are engaging with the CEOs and CHROs of existing and prospective clients. This underscores the strategic importance of the solutions we offer as organizations look to attract, retain, upskill and differentiate. With these building blocks in place and associated tailwinds, I am confident we are emerging from this pandemic structurally more effective, strategic and impactful. Let’s now take a closer look at our quarter four segment results. To recap, the headline numbers for this past quarter. Revenue increased 23% to $463 million, which yielded adjusted EBITDA of $79 million and adjusted earnings per share of $0.65, an increase of 81% from the prior year. For the full year 2021, revenue of $1.8 billion represented growth of 16%, while adjusted earnings per share of $1.99 extended 28% over 2020. In our full service segment, revenue grew 29% in Q4 on continued enrollment recovery. We added 14 centers in the quarter, including a second center for Houston Methodist hospitals, and a network of 12 centers we acquired in the UK, expanding our footprint in the southeast of England. We reopened 17 more centers in Q4 and ended 2021 with 96% of our 1,014 centers open. As we look ahead, the remaining 37 temporarily closed centers are currently slated to reopen in the first half of 2022. In our open centers, we are encouraged by the progressive improvement in enrollment, as occupancy levels ticked higher in Q4. Like many other businesses, the spread of the Omicron variant has been a disruptor. Specifically for us, it dampened the pace of enrollment growth, as prospective families delayed their start dates. Omicron also had an effect on the staffing of early childhood educators, particularly through the holiday period and carrying into January of this year. While still challenging, we are seeing improving trends on the labor front. As we discussed last quarter, the pandemic has exacerbated the staffing pressures the childcare industry has long faced. Bright Horizons has always been an employer of choice for early educators. And we have led our field investing in career growth underpinned by development opportunities, such as our eCDA credentialing and Horizons Teacher Degree Program. In an unprecedented environment, we have also taken a number of actions to specifically address the current conditions, including increased wages, recognition bonuses, and expanded employee benefits to ensure that we are attracting, retaining and growing the best teachers in the industry. While enrollment is still constrained by our ability to fully staff classrooms, we are encouraged by the early results of these measures. We are closely monitoring the progress and our talent teams continue to deploy creative solutions, including events like the National Hiring Day that we hosted earlier this month, to further accelerate our recruiting efforts. Let me now turn to back-up care, where revenue of $94 million increased 10% over the prior year. Overall, we saw unique users improve sequentially in the quarter, although in-home and in-center use was less than what we expected, heading into the quarter. The improvement we saw in the fall as the Delta impact started to dissipate was once again disrupted by the emergence and spread of Omicron in the latter half of the fourth quarter and continuing into early 2022. While we’ve dealt with the impact of COVID spikes over the last few years and recognize this dynamic could well persist in the first half of 2022, we believe the underlying need for back-up support among working parents has not diminished. To that end, we have worked hard to roll out additional new sites that align with the hurdles facing working parents. Our virtual tutoring solution that we launched mid-2021 has been highly successful, helping those parents whose children’s academic progress was impacted by remote learning and other disruptions to their education. We are expanding Steve & Kate’s camps to new communities where our clients and employees live and work including Austin, Atlanta, and Minneapolis, providing more outdoor and enrichment opportunities for children during school holidays and the extended summer break. And more recently, we launched virtual camps as another use case for parents in need of support that can be delivered remotely on demand with a similar learning opportunity as an in-person experience. We will continue to innovate on the delivery front with the goal of not only serving more working parents, but also to drive greater uptake of their use types provided by our client partners. Speaking of clients, the team delivered another strong quarter of new client launches, including, to name just a few. Not only have we added a record number of new clients over the last two years, but those clients are also larger on average. We’ve doubled the number of eligible employees per client than in the past. As a result, I remain very optimistic about the longer term trajectory of back-up use and the broader opportunities within our back-up care segment, despite the disruptions that are currently impacting use of traditional in-home and in-center care. Turning to our education advisory business, we launched a number of new clients in the quarter, including GEICO, Qualcomm, Synchrony Financial and Wawa. Activity levels were solid at College Coach, as this business continues to see high interest levels from parents needing help navigating the college admissions process. I remain excited about our opportunity in workforce education, as this remains a significant area of investment and focus for employers looking to differentiate their employee value proposition as well as upskill and reskill their employees in hard-to-fill roles. Before I wrap up, I want to take a moment to thank every member of the Bright Horizons family for their dedication and incredible resolve over the last two years. While there have been significant impacts to our families, our employees and our business, I couldn’t be more proud of the way in which our teams came together to deliver the highest quality education and care, always staying true to our mission to be a partner and employer of choice. It is that focus and passion for our mission that will not only have a profound impact on the lives of the many children, families, learners and clients we have the privilege to serve, but also allow us to realize the many goals we have as an organization over the next several years. We believe we will emerge from this disruption financially stronger and better positioned competitively to grow and drive value for all of our stakeholders. While the recovery in our industry hasn’t been and won’t be linear, our resiliency as an organization and the strength of our business model positions us for long-term success. We have and will continue to weather the short-term challenges, but the long-term outlook for our business remains very bright. While a number of variables continue to impact the pace and velocity of our recovery from the effects of the pandemic, we continue to execute on our long-term strategy and have improving visibility to our near-term performance. Therefore, we are pleased to reintroduce top level guidance on our expectations for near-term operating performance. As we look ahead for 2022, we anticipate 2022 revenue growth of 17% to 22% with operating leverage driving adjusted EPS growth of approximately 60% to 70% to $3.20 to $3.40 per share. This range contemplates a number of recovery paths based on current trends and our expectations of continued normalization of enrollment and use across our three segments. With that, I’ll turn the call over to Elizabeth who will dive into the quarterly numbers and share more details around our 2022 outlook.

Thank you, Stephen, and hello to everybody who’s joined the call tonight. To recap the most recent quarter, overall revenue increased 23% to $463 million. Adjusted operating income was $46 million or 10% of revenue and adjusted EBITDA increased 49% to $79 million or 17% of revenue. In the fourth quarter, we added 14 new centers and reopened 17 centers that had been temporarily closed. We also permanently closed 11 centers. We completed 2021 with revenue growth of 16% to $1.76 billion, adjusted EBITDA of $272 million or 15.5% of revenue, and with 977 out of our 1,014 centers open. Full service revenue increased $75 million in Q4 or 29%, which is at the top-end of our expected increase of 25% to 30% year-on-year. Our occupancy levels averaged between 50% and 60% having ticked up marginally from Q3, despite the near-term impact of Omicron that Stephen discussed. Adjusted operating income for the full service segment improved $36 million over 2020 to a positive $7 million. This represents a 48% flow through on the revenue growth. The outperformance relative to our 40% flow through expectation relates to improving efficiency with enrollment and lower-than-expected labor costs due to staffing constraints, as well as continued support from government programs targeted for the childcare industry. As Stephen mentioned, back-up care revenue increased 10% to $94 million, with $31 million of operating income. We continued to expand our client roster with another solid quarter of new client launches, although revenue growth was short of our expectations. As Stephen mentioned, we had softer use levels associated with the spread of the Omicron variant late in the quarter, which affected both the caregiver availability and parent demand for in-home and in-center care. Our educational advising segment reported growth of 5% to $30 million, on contributions from new client launches and expanded use of our workforce education and college admissions advising services. Interest expense of $8 million in Q4 was down about $1 million over 2020 on lower overall borrowing costs. Our structural tax rate on adjusted net income increased to 24% due to the significant increase in taxable income compared to the prior year. Turning to the balance sheet and cash flow. For the year, we generated $227 million in cash from operations. We made investments in capital and acquisitions of $112 million, which compares to $81 million in 2020 and we repurchased $214 million of common stock, including $112 million in Q4. We ended the year with $261 million of cash and our leverage ratio was 2.7 times net debt to EBITDA. So, moving on to our 2022 outlook. As Stephen touched on earlier, we are providing annual revenue and earnings guidance for 2022, and we’ll share as much color as possible on how we see this year unfolding. Of course, impacts of the pandemic remain difficult to time and to predict. And so, we are providing a range of potential performance to reflect that ongoing uncertainty. In terms of the top-line, we currently expect 2022 revenue growth in the range of 17% to 22%, or a range of $2.05 billion to $2.15 billion in revenue, which would exceed 2019, the pre-COVID benchmark. At a segment level, we expect full service to grow roughly 20% to 25%; back-up care to grow between 10% and 20%; and ed advisory to track to the mid-teens, approximately 15%. Based on what we see now, revenue will grow alongside the gradual improvement in enrollment and use trends over the course of the year. In terms of earnings, this will translate into sequential improvement, similar to the cadence we saw in 2021. For the full year, we currently expect 2022 EPS to be in the range of $3.20 to $3.40. In the more immediate timeframe, we expect our Q1 results to be impacted by the spread of Omicron that began in the latter half of Q4 and has continued into 2022. As a result, our outlook for Q1 is for total revenue growth in the range of 20% to 25%, with our full service segment recognizing growth of 25% to 30%, back-up growth in the high-single-digits, and advisory growth of approximately 15% similar to the full year. In terms of earnings, we expect Q1 adjusted EPS to be in the range of $0.37 a share to $0.42 a share. Overall, in summary, I share Stephen’s sentiment that we’ve made significant progress in our recovery over the last two years and we have a strong, diversified and differentiated business model to meet our plan by delivering the critical services that meet our client needs. And with that, Shamal, we are ready for our Q&A.

Thank you. And at this time, we will be conducting a question-and-answer session. Our first question comes from the line of Hamzah Mazari with Jefferies.

Good afternoon. Thank you. You mentioned in your prepared remarks a few times being better positioned competitively. I think you also mentioned being structurally more impactful coming out of the pandemic. Should investors expect that to show up in better organic revenue growth relative to kind of your framework that you had pre-COVID? And if so, do you see new center growth growing faster, because you have bigger clients, is back-up going to be a bigger contributor, or have you found kind of new adjacent services? Just maybe talk about, where people should begin to see some of those milestones. I know it’s early now, but maybe if you could flesh it out a bit?

Sure. So, from a new center growth standpoint, I think the key thing is to consider how the arc of our business and a relatively long sales and development cycle. So, we’re very encouraged by the amount of activity on the front end. We have a number of centers that are in development. This year, we’ll be expecting to open somewhere between 35 and 45 centers — a number that are already in development. So, we have visibility on a large number of those. We do have some plans for acquisitions as well that will feed into that. I think that the — just as a reminder, the development cycle is a long one and client activity is part of the value. I think of the conversations we’re having with clients now is the very nature of what they’re looking at. We have interest in dedicated centers, we have interest in sharing, participation in centers, near site versus on site support. And so, being able to respond to those different needs, including, there are opportunities for us to do consortium locations to put our capital to work and tap into many clients’ interests. So, that’s some of what we’re seeing on that practice. Stephen, any other color?

Yes. No, I think first, Hamzah, thank you for the question. I would say a couple of things. I’d say, first, I think we — through this two-year period, as we remarked on, have done very well garnering new clients. And so, we see good outlook as it relates to both continuing along that trajectory, but also, the cross-selling efforts that we have been focused on will continue to allow us to see more clients adopting more of our services. I think, the second element that again really speaks to the strength of what growth into the future is going to look like is our innovation and our expansion of the kinds of use case opportunities that we now have with our clients and their end users. And then, the final piece, which we had started pre-pandemic and continue to invest in during this pandemic period and beyond, is around investments in technology. We believe that we have become a much more tech-enabled set of services that will accrue really good dividends going forward. So, I think overall, reflecting on where we have been and where we are headed, we definitely feel like we are in a stronger position to deliver the kind of growth that we’re excited about.

And just my follow-up question is just on more near-term on 2022. I know you’ve given guidance. Maybe talk about — I think this is the first time you gave annual guidance since the pandemic. I think previous communication had been, we may reach pre-COVID — and correct me if I’m wrong, we may reach pre-COVID revenue in full service on a quarterly run rate sometime this year, but utilization will take longer. I think it was maybe by the end of Q4. Maybe if you could sort of talk about why you’re comfortable establishing annual guidance right now. And then, just in terms of when you think you’ll hit pre-COVID revenue in the full service business?

Sure. So, I think that the operations of the business over the last two years — and I know we commented on it a few times — there’s a lot of variables. There’s been a lot of twists and turns over the last couple of years. But there also is a true line of steady progress. Specifically to your question on the full service business, we’ve had centers reopen, we’ve had enrollment coming back. Although it has taken a little bit of a flatter ramp back toward the pre-COVID levels than we would have anticipated a year and a half ago as we’re reopening, it has remained a steady improver, including a modest uptick this quarter and our visibility to that continues into 2022. The demand from parents is there. We are taking a number of steps to both fulfill that demand, to meet parents where they are, and to get staff in the locations where the demand is happening. And so, we have the tools to work on this, even as parents are making decisions over a longer period of time and clients are making decisions about their return-to-office timing. So, our confidence comes from that steady progress. As we look out to the rest of this year and see where we are in terms of the occupancy of the centers we have, which ones have interest and demand, that’s what puts us on a trajectory. We’re not at the same level we were a quarter or two ago when we were looking at mid-year for pre-COVID revenue. But by the second half, end of the year, we do think that we will be approximating getting back to that pre-COVID time in terms of top-line. From an overall occupancy level, at this point, the plan and the guidance that we laid here doesn’t get us all the way back to the pre-COVID occupancy ranges. We had been in the 70% to 80% range. What this plan contemplates is us getting close, but not all the way there by the end of the year. So, we think that it’ll take us longer, and we are going to continue to update you as the year goes along, but we think that we are on a pathway to get close. We will be more measured than what that would indicate.

Next question comes from the line of George Tong with Goldman Sachs. Please proceed with your question.

Hi. Thanks. Good afternoon. I wanted to dive into the impact that you’re seeing from labor shortages. Can you talk about whether or not your capacities and your occupancy rates are affected at all by the current labor shortage situation? And how your pipeline for recruiting looks like as you look out into the rest of 2022?

So I can take the first part and let Stephen color commentary on some of the efforts underway on the labor front. We are seeing some constraints on our ability to take enrollment. It’s spread out across centers. It’s not in only one pocket, but it’s also not in every center. So, some variability there. But in general, we would probably estimate that it’s affecting our occupancy by 3 to 4 percentage points where we have demand and we are not able to match that with the available staff supply. We are working hard to address that. Stephen?

Yes. As we remarked, certainly, we have taken a very strong stance as it relates to making sure that we continue our position as an employer of choice. We have invested additionally in wages and benefits. As you will know, we have also been very focused over our history on making sure that we have the most well-educated workforce. We continue to reinforce our efforts around eCDA and the Horizons Teacher Degree Program, where any teacher in any one of our centers and schools can go back and get an associate or a bachelor’s degree completely free, with no out-of-pocket expense, and really helping to facilitate career mobility and upward trajectory for their careers. In terms of specific actions, you will see us really actively out there on the recruiting front. Referrals are still our number one source; referrals from existing employees are still our number one source of new employees. In addition to that, we continue to be very active with National Hiring Day, social media, and other technology-enabled ways to make sure that the candidate experience is seamless. Overall, we’ve come a long way in making sure that we are out there and really finding the best talent that is in the marketplace, and again, underscored by our employer of choice status, we feel good about our ability to continue to make progress against the demand that we have and the supply shortages that have been endemic in our industry.

Our next question comes from the line of Jeff Silber with BMO Capital Markets.

In your commentary about back-up, you talked about some weakness in in-home and in-center business. Can you give a little bit more color on that? I really want the specifics around that.

I think that first, when we think about in-center and in-home care, we believe and certainly our research suggests that parents are more cautious when considering those use types compared with permanent care. When a variant, for example, hit, we see an increase in cancellations and resistance to making new reservations. That’s reflective of the fact that when someone is thinking about intermittent care, they are much more careful than what they might do for permanent care where there’s consistency in the children and teachers in the classroom, versus being an intermittent trial for the day, either in-home or in-center. During the fall with Delta, and again more recently with Omicron, people were more cautious and we saw that show up in the form of fewer new reservations and more cancellations. That said, we have additional use types beyond in-center and in-home to include things like virtual tutoring and camps, both virtually and in person. We have seen a nice uptick in those use types, and during more difficult COVID times we’ve also seen an uptick in reimbursed care. As the variant started to surge, we did see some hesitation among families for in-center and in-home intermittent care. But we have good use types to compensate for some of that, and we remain positive about longer-term family use of our back-up care services.

Getting back to near-term trends. We’ve seen in a number of locales, New York City and other northeast areas, that the Omicron variant has waned dramatically. I’m curious: you saw some negative impact in the fourth quarter — are you starting to see that shift away in certain geographic areas where we’re seeing declines in cases?

I would start by saying the phenomenon of rapidly declining case counts is relatively new, and while we are cautiously optimistic, it is a bit soon to declare a clear trend and its specific impact on our business. We anticipate that declines in cases will improve parental confidence and usage of our services, and we’ll continue to monitor trends closely. At this point it’s early to draw definitive conclusions, but we do expect improved confidence to be favorable for use over time.

Our next question comes from the line of Stephanie Yee with JP Morgan. Please proceed with your question.

Hi. Good afternoon. I just want to clarify on the utilization rate not reaching that high-70s level by the end of the year. It sounds like it’s really due to constraints on the labor front, as opposed to center reopening or parents wanting to put their kids back. If the labor supply situation improves, do you expect it to be maybe first half 2023 when we’ll see that high-70s utilization rate again?

I think you’re pointing out the different inputs. Across the portfolio, there’s variability, but we are in a constrained environment on the staffing side. The actions we are taking — our policies, procedures, investments — are taking hold. We are heartened by early results, but they need time to fully play out. It’s also the combination of staffing constraints along with parents gradually coming back. Changes in sentiment and headlines translate to actual behavior in a non-linear way over time. We will see how it unfolds. We certainly see a path to get to prior occupancy ranges, but we need to get through the next couple of quarters of normalization to be more definitive. It could be into 2023 before we’re back to the high-70s in occupancy, depending on how staffing and parental behavior normalize.

Okay. That’s helpful color. We’ve seen headlines of some employers postponing a date to bring employees back to the office. What conversations are you having with your clients about the services they want this year into next year? Is demand more geared toward expanding back-up care options or are clients still interested in onsite centers?

In our conversations with clients and prospects, there is pervasive ambition to get employees back to the office. We are starting to see that pick up beyond financial services and New York. Employers are considering worksite childcare as an amenity to make the office an attractive place to return to. They also recognize shortages in care that impact employees’ ability to return to work and want to address that. So, we’re seeing upbeat conversations about on-site centers and strong interest in adding back-up care for business continuity and productivity. Overriding all this is a focus on upskilling and reskilling: employers want to fill hard-to-fill jobs and are looking at education as a way to differentiate and enable internal mobility. We are well-positioned across our service segments to address these strategic challenges and are having robust conversations with prospective clients.

Our next question comes from the line of Toni Kaplan with Morgan Stanley.

I wanted to follow up on employers wanting to provide more benefits. How does universal pre-K fit into employer thinking on whether it’s worth starting up a new center? Does that come up at all or is that something investors are thinking about but employers are not?

I don’t think universal pre-K is a focus for employers. Employers recognize the largest shortage in care is very specific to younger age groups, particularly infant care where supply is shortest. Historically, employers and prospective clients have placed the most emphasis on infant care and then progressively older groups. Employers are focused on getting employees back to work and ensuring high-quality onsite childcare for young children. Government discussions about public early education are a different policy area, typically focused on elementary education or preschool, and are separate from the employer decisions we’re seeing around onsite support.

Got it. And for my follow-up, I wanted to ask about M&A. You mentioned a few times that some of the increased number of centers this year may be driven by M&A. Should we expect that to be bigger this year, especially as you’re on this recovery path, or should it stay more modest?

To clarify, we completed an acquisition in the fourth quarter of a 12-center group in the UK and a couple of other single-site locations earlier in the year. We actually added a typical average number of centers by acquisition in 2021, roughly in the range of about 15 via tuck-ins. Our plan calls for a similar level of acquisitions in 2022 — a handful of single sites or small groups of centers. The market for M&A is coming back selectively. Many sellers are waiting for performance to return to pre-COVID levels to realize desired valuations. Some owners are holding on longer, so we are being disciplined on pricing while focusing on where we want to be over the next many years. We see opportunities as the recovery continues, and we continue to be careful and deliberate.

I would add that as markets progress toward pre-COVID levels, sellers are more interested in conversations, and we have teams on the ground in the U.S., the UK and the Netherlands. We are viewed as an acquirer of choice, so as recovery continues we expect to find high-quality acquisition opportunities. We also continue to look globally at markets where we don’t operate today and believe there may be opportunities over the coming years to expand beyond our current three geographies.

Our next question comes from the line of Jeff Mueller with Baird. Please proceed with your question.

Thanks. Good afternoon. I wanted to ask about the implied step-up in the expense base into Q1 and then subsequently your stronger margins over the balance of the year. Is there anything unusual in Q1? Are there temporary surged labor rates given Omicron, anything in terms of full year guidance around the timing of government support benefits, or anything else other than the enrollment ramp that helps explain the margin ramp through the year?

It’s a fair question. Several things happen in Q1 that are a bit different than Q4. There are resets of payroll tax limits which have an impact. There are some plans that we launched that have a bit more cost in Q1. On government funding, in 2021 we saw more of a back-end weighted deployment as states opened up grant applications and distributed funds in Q3 and Q4. For 2022, we are planning for continued government funding but it’s dependent on states rolling out funds; our full-year assumption is lower than Q4. We’re looking at roughly $25 million for the full year in government support, and it’s fairly straight-lined in our view. Additionally, when back-up use increases, there’s more cost to deliver that care versus a more paused environment. We also acquired Sittercity in late 2020; the platform investment there has more investment activity in Q1 than in Q4, so that’s several million dollars of step-up as well. So, mix of payroll resets, timing of government funds, platform investments, and delivery costs explains some of the Q1 step-up.

If back-up care usage normalizes or returns to pre-COVID fulfillment percentages and mix — meaning more in-home and in-center — is that a step-function higher revenue outcome for you, or is your 10% to 20% growth assumption for 2022 already assuming normalization? How should we think about where revenue could go as mix normalizes?

For the year, Q1 comparative is a bit lighter at high single digits and we expect use to continue to pick up over the year. We expect progression toward the 10% to 20% range for the full year, stepping up over Q1 accordingly. Regarding margins, we expect back-up margins to be in the range of our long-term guide of 25% to 35% overall for the year based on the revenue we’re forecasting. Many of the clients we added over the last couple years are still underutilizing relative to their eligible populations, so there is opportunity to drive more use than we’re planning for this year as those clients season. That would translate to more revenue and more operating income. So yes, there’s upside if usage normalizes beyond our current assumptions.

To add, the full service business is underearning relative to pre-COVID occupancy and we expect improvement over time. Back-up care similarly has under-captured the potential demand from clients we onboarded; as clients season and utilization increases, there’s upside. We believe both segments have the ability to generate stronger results as staffing and parental confidence normalize and as client adoption deepens. Excellent. Well, we appreciate everyone joining the call this evening, and wishing you a great night.

Thanks, everyone. Take care.

And this concludes today’s conference. You may disconnect your line at this time. Thank you for your participation.