Earnings Call Transcript - TALK Q4 2022

Operator, Operator

Good morning. My name is Adra and I will be your conference operator today. At this time, I would like to welcome everyone to the Talkspace Fourth Quarter and Full Year 2022 Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Jeannine Feyen from Talkspace.

Jeannine Feyen, Director of Communications

Good morning and welcome to Talkspace's earnings conference call for the fourth quarter and year end 2022. I'm Jeannine Feyen, Director of Communications. I hope you've had the opportunity to access the press release we posted on Talkspace's IR website and the presentation of our earnings results. We'll use this presentation to walk you through today's remarks. Leading today's call are our CEO, Dr. Jon Cohen; and Jennifer Fulk, Chief Financial Officer. Management will offer their prepared remarks and we'll take your questions at that point. Certain measures we'll discuss on this call are expressed on a non-GAAP basis and have been adjusted to exclude the impact of one-off items. Reconciliations of these non-GAAP measures are included in our earnings release and on our website, talkspace.com. I also want to remind you that we will be discussing forward-looking information today which may include forecasts, targets and other statements regarding our plans, goals, strategic priorities and anticipated financial results. While these statements represent our best current judgment about future results and performance as of today, our actual results are subject to many risks and uncertainties that could cause actual results to differ materially from what we expect. Important factors that may affect our future results are described in our most recent SEC reports and today's earnings press release. For more information, please review our Safe Harbor disclaimer on Slide 2. Now, I will turn it over to Dr. Jon Cohen.

Jon Cohen, CEO

Thanks, Jeannine and welcome to Talkspace fourth quarter and full year 2022 earnings call. Thank you all for joining us today. As this is my first full quarter earnings call since becoming CEO back in November, I want to reiterate my continued optimism about the current and future state of the business. As you will hear on this call, our positive results from the last quarter, the sustained trajectory through January, and our positive guidance for 2023 confirms my impressions on the positive future of this business. I'd like to spend a moment discussing how awareness for mental health has drastically changed in the short term and the positive tailwinds we continue to see for the industry. The federal government, multiple states, large employers, colleges, and grade schools have all announced new funding initiatives in support of mental health services. Barely a day goes by when there is not some news event highlighting the need for enhanced mental health services in the country. Talkspace was created as a technology-driven platform to address the fundamental lack of access and a significant stigma related to mental health care. The initial market growth was accelerated by the COVID-19 crisis when we saw incident rates of anxiety and depression rise significantly. Telehealth solutions were significantly accelerated by COVID and telehealth mental health emerged quickly as an effective system to deliver mental health services. Two weeks ago, Talkspace released our early findings that text therapy was highly effective for frontline health care workers at the onset of the COVID-19 pandemic. Over 600 health care workers from major hospitals across the United States participated. We found that 56% of health care workers recorded clinically significant improvements in their anxiety and depression symptoms with just three weeks of therapy. Our business model allows us to take advantage of the large growing underpenetrated addressable market. Our extremely strong brand and success from exceptional outcomes helps bring in more potential users. Our brand strength built on our experience is a fundamental part of our competitive edge in the market. And like our competitors, Talkspace is a pure-play mental health company. We offer the full spectrum of mental health services, self-guided texting, voice, live video, multiple subspecialties, and psychiatric services. In Q4, Verywell Mind conducted a comprehensive analysis of digital therapy platforms to help readers find options that suit their individual needs to serve as a starting point as to where to begin. They awarded Talkspace as the best large service of 2022 out of 55 online therapy companies evaluated. With that, let me turn to our near-term strategic initiatives. In the past several months, we have aligned the company around our overall priority to achieve profitability while making Talkspace the platform of choice for people seeking therapy, enterprises seeking to provide their constituents access to therapy, and to providers. We have developed four specific strategic objectives to focus the management team and employees to deliver on the financial plan. These objectives have a clear operational program and metrics behind them to deliver on that plan. Number one, grow our behavioral health and employee assistance plan member business. The investment of resources to establish Talkspace as an in-network provider has been substantial and is the foundation of our competitive edge to serve the mental health care addressable market now and in the future. Let me elaborate on some aspects of this important capability. First, we were able to onboard payer lives efficiently while supporting often complex technical requirements when integrating with the payers. Second, we have established vigorous credentialing processes for our clinicians to serve as in-network providers. And third, we have built our revenue cycle capabilities including real-time eligibility assessments and in-house claims processing to effectively build and collect from the payers. These are critical competencies that take years to build and help establish our competitive edge in the market. Our specific goals to grow this part of the business include increasing revenue from existing covered lives, adding new covered lives, increasing sessions per day, and increasing therapist ratings. Second, our intention to build a bigger and more focused direct-to-enterprise business solution. More specifically, focus our sales teams on both small and large companies, universities, schools, and government entities. Our goals include improving and upgrading the talent within the organization and improving the product offerings. Along those lines, we recently hired a new Senior Vice President, Steve Smallidge, who brings a wealth of experience to the HR benefits sector specifically to lead the DTE sales organization, recent product innovations to help reduce the friction and adoption and usage, including Talkspace's Switch solution. This is our offering for employers who want a low-cost solution to help employees gain knowledge of and appropriately utilize their behavioral health benefits from their employee assistance plans and their behavior health plans. We help them with two products. Talkspace Engage, a product for human resource executives. Engage is an entire mental health engagement suite that helps HR professionals promote mental health awareness internally and drive employee utilization. It does this via a step-by-step, monthly awareness plan to prompt their people to take action. A huge selection of live and on-demand therapy workshops and downloadable worksheets with mental health exercises. Next is the Talkspace Self-Guided a product for the employees. Talkspace Self-Guided is one of the most popular self-guided wellness apps in the market. It provides users with daily reflections, a huge selection of self-guided sessions on topics like burnout, depression, parenting, substance abuse, etc., and five live workshops every week, each led by licensed clinicians. Our third major objective is to continue to be the platform of choice for providers with the specific goals of increasing the network hours worked, improving NPS score, and decreasing monthly churn. Talkspace has thousands of licensed providers across all 50 states, each of which has a master's degree or higher and has on average nine years of experience. And of course, each is required to pass a thorough screening and onboarding process. For the fourth quarter, we continued to grow our provider network, increasing the total number of providers by 11% quarter-over-quarter. Utilization and productivity from our full-time therapists trended positively as we saw an 11% increase in their billable hours quarter-over-quarter. Provider retention rates improved as well as monthly churn has approximately halved in the fourth quarter versus the prior period. And finally, under the last bucket, we significantly improved our time-to-access metrics with average match times declining by more than 50% in Q4 versus Q3. Our fourth objective is, as Jennifer will dive more deeply into, we will continue to work on achieving operational and compliance excellence which entails focusing more on our cost structure, collection rates, and compliance. As we have previously said, our focus on driving down operating expenditures includes labor cost efficiencies, optimizing market spend for revenue and profit growth, vendor contract renegotiations, sales force productivity, network productivity, and streamlining corporate spend. Going forward, we will continue to adopt a disciplined approach to spending, leveraging the scalable nature of our fixed cost basis which enables growth at lower costs. And now let me turn to the full 2022 financial highlights which the results demonstrate that we are delivering on the strategic priorities and business transformation. Beginning with revenue. Year-over-year revenue grew 5%. Total B2B revenue which includes both member payer which is the employee assistance program and behavioral health and direct-to-employer or enterprise increased 66% year-over-year, while consumer revenues decreased 26% during the same period. For the year, we grew our covered lives by 33% to 92 million covered lives. B2B payer session volume grew 56% and we grew the B2B DTE account base by over 43%. Of those, we ended the year with B2B revenue representing more than half of the company's revenue for the year, an inflection point that started in the third quarter and widened in this quarter's results. So now let me turn to the fourth quarter results. In the fourth quarter of 2022, revenue for B2B which includes payer, the EAP and behavioral health, and the direct-to-employer increased 52% over the same period fourth quarter for 2021 a year ago and 15% sequentially. In the fourth quarter, we added an additional six million new covered lives while also launching another national health behavioral payer. We continue to experience meaningful growth in sessions in the fourth quarter compared to the fourth quarter of last year as well as over the previous quarter. It is important to note that we achieved these strong results in what is traditionally a slower quarter due to seasonality which includes the therapists going on holiday or decreasing their work hours and users skipping their sessions over the holidays. From a profitability standpoint, you could see the tremendous work the team has achieved in reducing our adjusted EBITDA loss in the fourth quarter as compared to the same period a year ago on the back of our focus on reducing operating expenses that were not driving revenue growth or efficiencies in the business. Jennifer will expand more on our financial results in her section but I want to note our commitment that we will remain very disciplined in our spending with a focus on efficiency and funding only our highest priority investments. And with that, let's turn to our guidance. With the disciplined and focused plan we have put in place to deliver on our fiscal 2023 goals, we are providing the following breakeven guidance. We will be within a range of $125 million to $135 million in revenue with a loss of $32 million to $28 million in adjusted EBITDA for the full year of 2023. These guideposts will help mark our progress on the way to breakeven adjusted EBITDA with a cash balance of at least $95 million by the end of the first half of 2024. Note that this targeted approach to cash preservation while on our path to profitability provides us with sufficient room for additional strategic initiatives. I will now turn the call over to Jennifer for a more detailed discussion of results and outlook.

Jennifer Fulk, CFO

Thank you, Jon and good morning, everyone. My discussion today will be based on fourth quarter results on a sequential quarter-over-quarter basis. I will cover highlights across our financial results, provide more detail on our corporate operational objectives, and lastly, I will share some guideposts for our expected breakeven timeline, including 2023 guidance. Starting on Slide 7. Revenue for the fourth quarter was $30.2 million, an increase of 3% from the third quarter of 2022. This increase was driven by continued strong momentum in payer sessions and DTE revenue, partially offset by continued and anticipated lower consumer revenue. Our fourth quarter gross margin was 53.5% and gross profit grew approximately 11% sequentially to $16.2 million, primarily due to the full quarter effect of Q3 price improvements in DTE and higher provider productivity from actions finalized in the network in the third quarter. These benefits were partially offset by the mix shift toward B2B revenue categories. On Slide 8, you will see the breakout of our three revenue categories. Consumer revenue was $11 million, down 13% from the previous quarter, driven by a 14% reduction in active consumer members from the end of Q3 to the end of Q4. This is the result of continued optimization of the unit economics in this category. We further reduced media in the quarter which is now down 60% from Q3 2021, with revenues down 41% over the same period. B2B and payer revenue was $10.7 million, up 13% compared to the third quarter as sessions completed by members covered through their EAP benefit or their insurance increased by 15% to 128,000 sessions in the fourth quarter. As Jon mentioned, we had anticipated a possible reduction in sessions in Q4 due to seasonality as providers take time off for the holidays and members reduce their consumption. We were pleased with only a moderate impact on session growth in the quarter and as Jon mentioned, we see good momentum in sessions so far in Q1 as more and more members are leveraging our in-network health benefits to access Talkspace. Lastly, B2B drift-to-enterprise revenue for the fourth quarter was $8.6 million, driven in large part by new accounts which totaled $226 million at year-end as well as the full quarter impact from Q3 account renewals on favorable terms. Turning to Slide 9. Fourth quarter GAAP operating expense increased to $37.2 million, primarily due to a nonrecurring expense of $6.1 million for the impairment of goodwill as well as an estimate for one-time legal expenses. Excluding these charges, other favorable nonrecurring items and stock-based compensation, Q4 expenses were approximately $25 million compared to $30 million in the third quarter demonstrating important progress that we have made not only in optimizing advertising spend but in driving efficiencies across our entire expense base. As planned, we reduced advertising spend by 16% from the third quarter levels in anticipation of seasonal adjustments to volume described earlier and higher advertising unit costs. As I previously mentioned, we have made meaningful strides to optimize the economics in our consumer category. We now have unified our product funnel, marketing function, and advertising spend to leverage our brands, traffic, and expansive covered live base to drive member growth. We are very encouraged with the early trends we are seeing and this is reflected in our guidance which I will discuss in a moment. Besides the continued reduction in advertising spend and as we highlighted on our last call, in the fourth quarter, we took important actions to further reduce our cost base which came primarily through a reduction in corporate employee headcount and through the elimination of several third-party vendors. The fourth quarter adjusted EBITDA loss narrowed to $8.9 million, an improvement of $6.6 million compared to the third quarter, driven primarily by these cost reductions. Turning to the balance sheet. Cash burn for the quarter outpaced adjusted EBITDA loss by approximately $5 million, of which $4 million is attributable to nonrecurring cash flows, including the timing of certain vendor and customer invoices. As a result, we ended the year with a very healthy balance sheet with $138.5 million of cash and cash equivalents. Going forward, we expect our cash flow to trend largely in line with adjusted EBITDA, with the exception of net working capital expansion related to our growing payer business where the claims process typically takes a few weeks. Turning to Slide 10. I would like to share the key elements of our strategic priority addressing operational excellence. Importantly, we have an operational plan in place that comprehensively supports our financial plan. This means that each employee has objectives that tie directly to our company priorities. This is important to us as it drives engagement and accountability and execution at every level. Next is operating efficiency, ensuring our fixed cost base is commensurate with our gross profit. As Jon described, we made meaningful investments in 2022 to our systems, processes, and controls to ensure our ability to leverage and scale the operations as we grow. And we continue to optimize capital allocation across the business, prioritizing our most compelling and profitable growth initiatives. Third, we continue to manage our advertising spend with the aim of maximizing total company profit at the member level, leveraging analytics applied to our platform with flexible programmatic investment channels and optimizing creative and targeting to continue to maximize ROI. And finally, revenue cycle management is an important core competency and as Jon described, a competitive advantage. We have invested substantial time and effort to build this critical function to serve payer clients which is vital as we scale the B2B payer business. We're also hard at work continuing to build out our Sarbanes-Oxley compliance program, refining processes and controls across the business. Turning to Slide 11. I would like to offer some context for the guidance we are providing today. For 2023, we expect revenue to be between $125 million and $135 million and we expect adjusted EBITDA loss to narrow within a range of $32 million to $28 million. Each of these points is supported by what we have discussed throughout this call and highlighted in the strategic priorities that Jon described. First, as demonstrated in our Q3 and Q4 results and further supported by our view that the mental health care market growth will be primarily driven by expansion of access and members leveraging health benefits, we believe B2B payer revenue growth will outpace other revenue categories. This will be driven primarily through continued growth in utilization as well as expansion in covered lives. We also expect that consumer revenue will begin to stabilize this year as a result of our improvements to the member experience. Over the course of the year, we expect gross margin to trend slightly lower from the Q4 2022 level as the revenue mix shifts towards B2B categories, partially offset by price optimization initiatives and continued increase in provider network efficiency. We also believe we have significant operating leverage from our current infrastructure and have the ability to continue to optimize our cost to deliver on our path to profitability. We expect the company to reach breakeven adjusted EBITDA by the end of the first half of 2024 and we'll have more than $95 million of cash remaining on the balance sheet at this time. This cash balance factors in the increase in net working capital required by our growing B2B category and also the investments we will make to continue to grow revenue and profitability over time. As Jon noted, this ample cash reserve provides us with the flexibility to adjust to any market trends while capitalizing on future strategic initiatives. We believe these four points outlined in our guidance demonstrate our enthusiasm about the fundamentals of our B2B payer and DTE categories and our confidence in our ability to leverage our OpEx base to scale the business to profitability. And with that, I'll turn the call back over to Jon.

Jon Cohen, CEO

Thanks, Jennifer. In summary, we are excited by our opportunity to leverage our existing operating base and capabilities to capitalize on the growing mental health total addressable market and shift towards members leveraging their health care benefits. By driving growth across our B2B payer as well as the DTE categories, focusing on becoming the platform of choice for providers and striving to achieve operational excellence, we have put ourselves on a path that we believe will enable us to reach breakeven adjusted EBITDA by the end of the first half of 2024, while maintaining a strong cash balance that provides us with the operational flexibility to opportunistically capitalize on our other strategic initiatives. With that, we will open it up to Q&A.

Operator, Operator

Thank you. We'll go first to Charles Rhyee at Cowen.

Lucas Romanski, Analyst

Hi, this is Lucas on for Charles. Your guidance, 2023 revenue guide implies around 5% to 13% year-over-year growth. Obviously, there's some moving pieces between the B2B and B2C segments. If we assume B2C revenue stays at this rate, at the 4Q rate through 2023 implies B2B revenue is growing somewhere in the neighborhood of 30% to 35%. One, is that the right way we should think about the guidance? And then two, can you give us some detail on what you guys are seeing in terms of underlying demand in the B2B market, especially given the macro uncertainty that employers and consumers are facing?

Jennifer Fulk, CFO

Thank you for the question, Lucas. I'll begin by highlighting some key points regarding the revenue guidance we've shared, and then I'll turn it over to Jon to discuss our observations on demand in the B2B segment. First, we anticipate that consumer revenues will stabilize this year, thanks to our product enhancements that help mitigate potential pressures from consumer spending, especially since these members are paying for Talkspace therapy out of pocket. The DTE space is an exciting category for us, and Jon will elaborate on that shortly based on our previous comments. However, this segment also presents a lumpier revenue profile because we focus on large employers and enterprises, which typically have longer lead times. Additionally, we are considering macroeconomic factors that may extend these lead times. Nonetheless, we believe that mental health care coverage remains the top priority for decision-makers at companies. Regarding B2B payer revenue, we anticipate it will be our largest growth driver and will make up a significant portion of our revenue moving forward. We have observed strong growth in completed sessions in this category over the last several quarters, and we expect this trend to continue into Q1. With that, I will hand it over to Jon.

Jon Cohen, CEO

I think that I've talked about before the addressable market is unknown because it's so large. What we're seeing is to reiterate a significant demand on what really is called the enterprise and, as Jennifer mentioned and the EAP side. But let me just talk about the enterprise side. The reason you call it enterprise is that there's a significant number of large employers. We divide it up by both large and smaller employers, depending on the number of employees. We've also seen other significant interest on the education side, universities, colleges, public schools, and actually also on the government side, cities, and states. So the demand has been significant. We've built out the commercial organization and we continue to build out the commercial organization to address the needs as we see them come in during the year.

Operator, Operator

We'll go next to Ryan Daniels at William Blair.

Jack Senft, Analyst

This is Jack on for Ryan. It looks like we saw a decent step down in spend on clinical operations, both in absolute and relative terms this quarter. And I'm kind of surprised to hear in your prepared remarks that you also experienced double-digit provider growth, especially alongside this delta. Any commentary on what drove this lower clinical operating expense?

Jennifer Fulk, CFO

Thank you, Jack. There are two key points to mention. First, the costs associated with our therapists who provide services to the network are included in our cost of goods, which will influence our margin. The decrease in clinical operations reported was due to a favorable reversal of an accrual that positively affected our expense base, which is reflected in our nonrecurring items for the quarter.

Jack Senft, Analyst

Great. And then I guess moving to marketing spend. We also saw a nice step-down this quarter, down roughly $4.3 million. And this is something similar to what we've seen over the past five quarters. So you're now sitting at roughly 47% as a percentage of sales. Any color into where you see the spend category sort of bottoming out? And with that, any insight into the forward cadence of this pullback?

Jennifer Fulk, CFO

We removed $5 million from our cost base in the fourth quarter, reflecting significant cost reductions we previously mentioned. I consider our run rate Q4 operating expenses of $25 million as the new benchmark. We will continue to examine our cost structure to enhance efficiency. We took several steps in the fourth quarter to achieve this, and moving forward, our operational plan will allow us to eliminate lower priority tasks and find more cost-effective methods for completing work. This approach enables us to cut low-priority work to fund vital investments we identify in organic revenue growth opportunities. These factors give us confidence that our current cost base provides the necessary operating leverage as we grow our revenue.

Operator, Operator

We'll take our next question from Stephanie Davis at SVB Securities.

Stephanie Davis, Analyst

I've got a math one, so buckle up for this one. But when I think about your path to EBITDA breakeven in 2Q '24, that implies not just 37 points of margin expansion this year but an acceleration of that pace in the first half of next year, 22 points. And that's despite gross margins trending down and some seasonality in the business. And then if you look at it another way, it's $70 million of EBITDA dollars that you need to regain to get to breakeven which represents half of your total OpEx despite Jon's prepared comments. It sounded like there were some investments in a few of these OpEx categories. So talk me through this math. How are you getting there? How is this pace accelerating? And what levers are you pulling in order to make sure you're able to grow while still having your OpEx halved?

Jennifer Fulk, CFO

Thank you, Stephanie. I wanted to highlight a few things. Firstly, I previously discussed our revenue trends without diving into specific categories. We are experiencing growth in our B2B payer sector and are optimistic about our B2B DTE category, while the consumer margins are stabilizing. Although I won't provide details on category margins, our B2B categories typically operate with lower margins. However, we have some initiatives in place to counterbalance that. One of these is enhancing productivity within our network. Last year, we made several changes to our full-time therapist network by removing less productive areas and will only hire additional full-time therapists as we meet demand efficiently. This strategy allows us to expand our contractor network in a cost-effective manner, turning this into a variable cost on our margin. We are also enhancing the value of our offerings by negotiating better net prices, particularly in our DTE category, and we see further potential in improving collection rates with payers. We have some promising projects in this area. As for operating expenses, we are committed to managing them effectively by closely monitoring headcount, third-party expenses, and advertising spend to ensure we maximize profitability across the business.

Jon Cohen, CEO

Hey, Stephanie. It's Jon. I want to emphasize that the OpEx trajectory indicates a significant and clear plan for us to reduce OpEx costs. This is essential for achieving our goal of breaking even by the first half of next year. We have the capacity to continue cutting costs as necessary. Additionally, the platform has been well-established over the past ten years and operates effectively. While there may be some capital investments in certain areas, we do not need to invest heavily in the core operations to enhance the product. This is a critical point, as we are not in a situation where we need to continually allocate substantial funds to maintain a functional platform. This is an important consideration for our progress moving ahead.

Stephanie Davis, Analyst

So let's maybe dig in a little bit into one of those areas of spend that you mentioned, the sales and marketing side of the world, where it sounds like you're looking at DTC stabilizing but maybe getting more efficiencies out of that. How should we think about the forward arc of your investments in the DTC business?

Jennifer Fulk, CFO

Yes. We have previously discussed how we view investments on a platform basis. We have focused on consumer members concerning our advertising spend. Over the last several quarters, we have unified all aspects of our business, which aligns with the market trends we've mentioned. Currently, the market is driven by individuals looking to utilize healthcare therapy. For us, this means optimizing our acquisition channels, which includes our media spending across all payment types and using our advertising messages to raise awareness about our extensive offerings. We are seeing positive results from these efforts in the data we have collected with that messaging. In summary, we are maximizing overall profit, whether the acquisitions come from B2B payers or consumer members. We are also experiencing strong momentum in demand from B2B payers as a result of these initiatives.

Jon Cohen, CEO

Let me reiterate that our investment in marketing is directed at all members. We are not specifically focusing on the B2C market; instead, we are reaching out to members since it impacts the entire platform. This approach differs from previous strategies, as we are no longer committing a specific amount solely for B2C marketing.

Operator, Operator

We'll go next to Daniel Grosslight of Citi.

Daniel Grosslight, Analyst

Congrats on the quarter. I'm going to stick with the Steph's line of questioning here because we too were surprised on the cadence of OpEx improvement over the next year. So maybe if I could take kind of the flip side of that coin and focus on revenue growth. I guess, is there a way to dimensionalize how fast you have to grow the top line to get to that breakeven point in the first half of '24? Because at some point, there's only so much juice you can squeeze out of the cost structure that you have. You're going to need, I assume, to accelerate growth at some point or you're going to see some type of diseconomies of scale. So can you just talk about how much growth you will need to see on the top line to reach that breakeven point in the first half of '24?

Jennifer Fulk, CFO

I would like to add a couple of points to what we have already discussed. First, we are seeing ongoing growth in the B2B categories, and the momentum continues even in the first quarter. The difference as we finish this year and our revenue guidance compared to the acceleration we expect in the first half may be influenced by the seasonality we typically experience. We did observe a slowdown in growth during the fourth quarter, but we were pleased that it did not have a significant negative impact. However, this is something to consider when assessing our run rate revenue and expectations.

Daniel Grosslight, Analyst

Got it. And then perhaps a broader question regarding controversies in digital health, not specifically related to Talkspace. Recently, there were two significant controversies. One involved a news article about an academic paper where someone used ChatGPT to conduct mental health visits without the patients' knowledge, and the tool performed quite well. So my first question is how you plan to utilize these new AI tools to enhance efficiency in your provider network. The second controversy pertains to the use of trackers for performance marketing to members. How are you leveraging member data for performance marketing? Are you employing Facebook pixels and sharing data with Google and other performance marketers to target potential members?

Jon Cohen, CEO

It's Jon. So let me address the first point. For quite some time, we have had a robust research team focused on data analytics. We possess a significant amount of data regarding the issues you've mentioned about AI. I'm going to hold back on detailed comments for at least the next quarter. However, we already have substantial data analysis in place to examine how individuals perform and what messages need to be conveyed to therapists. I've understood your reference to ChatGPT. Our current stance is that ChatGPT will not replace therapists in any way. Instead, AI can assist therapists by providing guidance to enhance their therapy methods for patients. This is where I see AI making a meaningful impact—not only in therapy but also in improving therapist performance and the quality of services we provide. I believe this will happen, and I will discuss it further in the future. To answer your question, we are certainly monitoring it closely and have considerable insights and experience that I will share later. Regarding the second point about data analysis on platform performance in social media, our marketing team excels at this. They have long been able to analyze the allocation of marketing dollars and track who clicks through. We already have the capability to analyze our social media data to monitor our performance relative to marketing expenditures. This system is already in place.

Jennifer Fulk, CFO

And just to add to that, we do not share pixels once the member engages back with us. So we are very confident we're not sharing personal information. I'm familiar with the article you mentioned, and I can assure you that it's not the case regarding how we are operating.

Jon Cohen, CEO

It's more along the spend. We know what the click-through is so that we can modify our spend rate.

Operator, Operator

And that does conclude the question-and-answer session. At this time, we'll turn the conference back over to Jon for any closing remarks.

Jon Cohen, CEO

Okay. Well, first off, thanks to all of you again for joining us this morning on Talkspace fourth quarter and year end 2022 earnings call. As I noted earlier in the call, our positive results from the last quarter, our sustained trajectory through January, and our positive guidance for 2023 confirms my impressions on the absolute positive future of this business. We look forward to sharing updates on our progress sometime in the near future and certainly on our next earnings call. Thank you, once again.

Operator, Operator

And that concludes today's conference call. Thank you for your participation. You may now disconnect.