November 8, 2013

Charleston Software Firm Benefitfocus Issues First Public Earnings Report

John McDermott  /  Post and Courier

Six weeks after its stock market debut, Benefitfocus marked another Wall Street ritual Thursday by releasing its first quarterly report as a publicly traded company.

The Daniel Island-based software business said its third-quarter net loss widened to $6.8 million from $2.4 million a year ago, reflecting its current focus on sales growth rather than profits. Revenue jumped 26 percent to $26.3 million for the June-September period.

Benefitfocus is a fast-growing provider of online workplace benefits software. Big insurance carriers and more than 379 large employers use its one-stop, cloud-based platform to shop for, enroll in and manage their health policies and other job perks.

Shawn Jenkins, CEO, said the company "delivered strong third quarter results" highlighted by 66 percent growth in sales from big employers.

Year-to-date, the loss at Benefitfocus grew to nearly $22 million from $12.7 million in the first nine months of 2012. Revenue climbed 25 percent to $74.4 million.

Looking ahead, the company predicted its full-year loss will be between $28.9 million and $29.4 million. Its revenue range for 2013 is estimated at $102.5 million to $103.5 million.

Jenkins said the company is "seeing strong demand" for its products "as employers need to more efficiently manage nearly 30 percent of their total employee compensation."

Jenkins noted that the personnel administrators are moving to "a more flexible, defined contribution approach that empowers employees and individuals to design the benefits package that best suits their needs."

He described the shift as being the "first inning."

"We believe we are in the very early stages of a multibillion-dollar market opportunity," he said on a conference call with stock analysts.

The company in late September raised $70.6 million in an initial public offering to accelerate its expansion plans. A top priority is increase it sales force and recruit more 1,000-plus-worker employers as customers.

"Our recent IPO was a significant milestone for Benefitfocus and served to further increase our market awareness, while also providing us with additional resources to execute on our strategic growth initiatives," Jenkins said.

Shares fell Thursday ahead of the earnings update, which was released after the stock market closed. The stock ended the session down nearly 5 percent to $46.26.