Meta Data Limited
Q2 2015 Earnings Call Transcript

Published: 6 Aug 2015

[Operator:]

Good day, ladies and gentlemen, and welcome to the Higher One Holdings, Incorporated Q2 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we’ll conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I would now like to introduce your host for today’s conference Patrick Pearson, Director of Investor Relations and Corporate Development. Mr. Pearson, please go ahead.

[Patrick Pearson:]

Thank you Wei. Good morning everyone, and welcome to the Higher One Second Quarter 2015 Earnings Call. Giving prepared remarks on the call today will be our Chief Executive Officer, Marc Sheinbaum; and our Chief Financial Officer, Chris Wolf. Marc will provide a summary of our quarterly performance and Chris will provide more detail on the financials before opening up the call for Q&A. There is a slide presentation that accompanies our discussion of the quarter that is available on our Investor Relations website at www.ir.higherone.com. This call contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Management's projections and expectations are subject to a number of risks and uncertainties that could cause actual performance to differ materially from that predicted or implied. Forward-looking statements may be identified by the use of words such as expect, anticipate, believe, estimate, potential, should or similar words intended to identify information that is not historical in nature. Forward-looking statements are based on the current beliefs and expectations of Higher One management and are subject to known and unknown risks and uncertainties. There are a number of risks and uncertainties that could cause actual events to differ materially from those contemplated by the forward-looking statements. These statements speak only as of the date they are made, and the Company does not intend to update or otherwise revise the forward-looking information to reflect actual results of operations, changes in financial conditions, changes in estimates, expectations or assumptions, changes in general economic or industry conditions or other circumstances arising and/or existing since the preparation of this presentation or to reflect the occurrence of any unanticipated events. The forward-looking statements in this presentation do not include the potential impact of any acquisitions or divestitures that may be announced and/or completed after the date hereof. For further information regarding the risks associated with our business, please refer to our filings with the Securities and Exchange Commission, including our annual report on Form 10-K for the most recent fiscal year end, quarterly reports on Form 10-Q and current reports on Form 8-K. Information about the factors that could affect the future performance can be found in our recent SEC filings available on our website. We will also provide certain metrics on a non-GAAP basis, including adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted EPS and free cash flow. We believe that these non-GAAP measures, which exclude amortization of intangibles, stock-based compensation and certain non-recurring or non-cash impacts to our results provide useful information regarding normalized trends relating to the Company's financial condition and results of operations. Reconciliations of these non-GAAP measures to their closest comparable GAAP measure are included in the appendix to the presentation that accompanies this call as well as in our recent SEC filings. With that, I will now turn the call over to our CEO, Marc Sheinbaum. Marc?

[Marc Sheinbaum:]

Thanks Pat, and thanks to everyone for joining us today. With me on the call is our CFO, Chris Wolf, who will provide our financial update, as well as our Chief Operating Officer, Casey McGuane who will be available to answer questions after our prepared remarks. Please refer to the accompanying slide deck that is available on our Investor Relations website, as I discuss the second quarter details beginning on Slide 3. On today’s call, we will provide operating results and relevant updates for each of our three lines of business. I will first discuss the payments business followed by data analytics and then disbursements including the OneAccount. I will then conclude with our thoughts on the Department of Education’s proposed regulations on title for cash management. Chris will then provide the financial update. So turning to Slide 4, gross revenue was $45.6 million in the second quarter of 2015 compared to $45.5 million in the second quarter of 2014. We ended the second quarter with non-GAAP adjusted earnings per share of $0.05 comparable to prior year. Revenue was mostly flat in the quarter reflecting increases in both the payments and Data Analytics lines of business offset by continued declines in the disbursement business including the OneAccount. As you know, beginning last quarter, we moved to segment reporting. As a result, the revenue categories in this chart are now shown in a slightly different manner as compared to earlier presentations. But the trends of revenue diversification remains the same. Payments in Data Analytics continue to grow becoming a larger portion of revenues. Now let’s take a look at the growth drivers of our payments business beginning on Slide 5. I’d like to start by once again giving you a brief reminder of the two types of revenue sources that rollup into the payments business. First to the transaction-based drivers. These are the fees collected through our SmartPay merchant processing service and full-service payment plans, second on a recurring subscription fees, we collect from clients’ institutions that utilize our CASHNet software. I am pleased to report that payments revenue was up 9% this quarter, compared to the second quarter of 2014, driven primarily by a 13% increase in payment transaction revenue. That increase in payment transaction revenue is largely attributable to increases at existing clients and to a lesser extent, clients who implemented during the past year. On Slide 6, you will see that we continue to sign and implement new business, which is fundamental to future revenue growth of payments. This quarter, we signed five new CASHNet clients and sold additional modules to over 40 existing payment clients, all of which we project will deliver over $400,000 in annual subscription revenue. Turning to Slide 7. We remained focus on making CASHNet a leading payments platform for the higher education market. We continue to execute on the number of exciting initiatives, some of which we rolled out in the second quarter and others that we will begin rolling out in the third quarter and beyond. During the quarter, we implemented database efficiencies that allow us to deploy our technology to new campuses more easily, enabling us to better scale our growing client base. In the third quarter, we will empower our administrators, students and parents, with access to a better user experience to improve customer satisfaction and gain efficiencies in our support functions. We are also rolling out an enhancement to our iPad app for cash sharing and assisted payments. And we are helping our campus partners navigate the evolving payments landscape by offering EMV and NFC comparable devices from our cash sharing products. Finally, we continue to consult with our campus solutions clients to potentially bridge them to the CASHNet product suite. And as I said on our previous earnings call, this transition process inherently brings some stresspoints to clients and we are working diligently to minimize client losses. Moving to Slide 8. We had another solid quarter in our Data Analytics business, which we commonly refer to as Campus Labs with revenue up over 20% compared to the second quarter of 2014. For reference, Data Analytics revenue is comprised mostly of subscription fees that client institutions pay to use our Campus Lab software accompanied by smaller one-time support and implementation fees. The continued growth in this business is a result of strong execution, adding new institutions, as well as selling additional modules to existing clients. I am pleased to report that we added 27 new clients to our Data Analytics client base this quarter and sold more than 50 modules to both new and existing Data Analytics clients. On the product development side, we continue to invest in the Campus Labs product suite to enhance the analytic capabilities available to institutions of higher education. In our last earnings call, I spoke briefly about our focus on enhancing the connectivity and value of the Campus Labs product suite. This quarter, I am pleased to say that we have made significant progress in this initiative. We have completed integrations with multiple learning management systems and released new assessment tools and empowering guide resource allocation and curricular improvements across campus. Now let’s move on to our disbursement business which includes the OneAccount. Turning to Slide 9, once again Disbursements revenues comprise of both recurring and transaction-based sources. The recurring revenues are the subscription fees we see from client institutions for Refund Management disbursement service and the transaction-based sources are interchange and service fees derived through the OneAccount. Disbursements revenue was down 7% on a year-over-year basis driven primarily by a decrease in OneAccount revenue of just under 8% over that same period. Similar to trends seen in previous quarters, the decrease in OneAccount revenue was the result of decrease in the financial aid refunds being disbursed into the OneAccount. Offsetting some of that decline, we did see a continued increase in non-refund dollars being deposited into the OneAccount this quarter which was 7% higher than in the second quarter of 2014. This type of deposits would represent the growing share of total deposits as a key indicator of customer engagement with the OneAccount. On the sales and renewals front, we signed four new clients representing over 16,000 signs score enrollment and renewed 59 current clients representing over 675,000 SSE. This brings our year-to-date renewals to over $1.3 million SSE. However, we did lose six clients representing over 86,000 SSE this quarter, which was a disappointment for us. But given the environment for disbursements, we knew we had a tough year for renewals as I mentioned on our previous two earnings calls and we are encouraged by all of the business we have retained this year which we believe reflects the strength of our product offering and the need of our services in the marketplace. You may remember that on our previous call, I announced that we were in the process of rolling out personal refund code functionality and I am pleased to say that it was well received by our clients. On that same call, I also announced that we were working on creating a set of money management tools for the OneAccount, and those features are expected to be available to our customers for the upcoming fall term. Moving to Slide 10. I will now discuss the proposed rule making by the Department of Education, which I will refer to as the NPRM on Program Integrity and Improvement issues published in the Federal Register on May 18, 2015. My comments today specifically focus on the provisions of the NPRM relating to cash management and campus debit cards. Following the posting of the NPRM in the Federal Register, there was a 45-day public comment period which closed on July 2, when any member of the general public could provide feedback to the education on the proposed rules. And looking at the comments it is evident that many others mirror are concerned, more than 80% of the comments share are opposition to some provisions of the proposed regulations. Not only to the financial services industry weighing strongly, but higher ed institutions did as well. More than 110 schools and students voiced their concerns that some draft provisions could take away and needed options for students, reverse part was made by financial aid disbursement programs or add new cost and burdens on institutions. You could read all the public comments including ours online in the Federal Register. Perhaps the most notable and potentially impactful aspects of the regulations to Higher One, is the 30-day fee prohibition. This broad restriction is proposed on top of individual fee prohibitions that would prohibit any fees being charged in an 30 day period following a deposit of Title 4 funds into an account offered by a third-party servicer. None of these restrictions would apply to an existing account that the student may have with another bank. Consistent with the comments of many Higher One institutions, in addition to other industry providers, this restriction could make offering a financial account for students on unviable for us and our competitors. If the department finalizes and publishes new regulations by November 1, 2015, we believe new rules would go into effect on July 1, 2016. So while the draft regulations are out, we do not have any level of certainty as to what the final rules will look like. Turning to Slide 11. So as we look towards the beginning of our peak back-to-school period, we remained focused on delivering the products and services that schools and students that come to expect from Higher One and we’ll be also be executing on strategic initiatives on all three of our lines of business, disbursements, including the OneAccount, payments and data analytics, many of which I described earlier. This concludes my prepared remarks. So I will turn it over to Chris to discuss the financials beginning on Slide 12. Chris?

[Chris Wolf:]

Great. Thanks, Marc. At this point, I’ll begin the discussion of our financial results for the quarter, starting on page 12 of the accompanying slide presentation. Please remember that all growth rates I mention will be year-over-year unless otherwise specified. I would also like to remind everyone that the second quarter is historically our lowest revenue quarter due to seasonal factors such as lower enrollment in both our payments and disbursement lines of business including the OneAccount business. So please keep this in mind when comparing Q2 results with other quarters. Turning to Slide 12. Gross revenue for the quarter was $45.6 million, compared to $45.5 million during the second quarter of last year. Net revenues during the second quarter of 2014 was impacted by an $8.75 million allowance for customer restitution. As you’ll recall, we recorded this liability last year as the minimum amount to cover the potential restitutions of certain OneAccount customers holding accounts at our bank partner institutions regulated by both the FDIC and the Federal Reserve. We had a gross profit margin of 52.9% in the second quarter of 2015 compared to 53.6% last year, the prior year margin excludes the impact for the amounts for customer restitutions. I’ll get into more detail in the drivers of our revenue and gross profit margin on the upcoming slides. Turning to slide 13, as mentioned earlier, we continue to diversify our revenue sources. Payments revenue showed strength in the quarter, equaling $15.8 million, up 9.2% over last year. The increase in payments revenue was primarily due to the solid revenue growth in our SmartPay payment processing service, which Marc discussed earlier. Our payments line of business accounted for approximately 35% of our total revenues this quarter. Data Analytics revenue, which comprised just under 10% of total revenue this quarter grew 21.3% year-over-year to $4.2 million. This growth was driven by the sales of Campus Labs products to both new and existing clients over the past 12 months. Disbursements gross revenue decreased by 7.1% from the prior year to $25.5 million, primarily from an 8% decrease in account revenue. This decrease was due to the lower amounts deposited into and spent from the OneAccount, which resulted in decreased interchange and service fees. Now we’ll take a look at changes in our Refund Management SSE and ending OneAccounts for the period beginning on slide 14. The Refund Management SSE account was down 2% on a year-over-year basis ended June 30, 2015. We did experience a sequential quarter decrease as a result of client losses that Marc mentioned in his comments. We believe it was going to be a difficult year for both sales and renewals and that is evident in our SSE accounts. Looking at the number of OneAccounts, you'll see that it decreased 4% year-over-year. The amount of OneAccounts is impacted by the reduction in the selection rate for the OneAccount from at same schools which we have discussed on other calls which impacts the number of accounts at those schools. In addition, the lower sales volumes is leading to fewer accounts added from new schools. Moving on to gross margin, let's turn to slide 15. As a reminder, consolidated gross margin percentage for this quarter was 52.9%. Excluding the impact of the potential restitution mentioned earlier, gross margin for the period ended June 30 2014 was 53.6%. Gross profit margin for payments this quarter increased to $52% from 50.6% in the comparable prior year period. Our cost of sales in payments was $7.6 million in the second quarter compared to $7.2 million for the three months ended June 30, 2014. The largest driver of the cost increase was additional volume-related merchant expenses as a result of increased transaction count in volumes in the SmartPay payment processing business. Offsetting those increases was a reduction of approximately $300,000 in costs incurred in the prior year associated with the Campus Solutions integration process. Gross profit margin in our data analytics line of business increased slightly this quarter to 88.5%, up from 88.4% last year. Finally on this slide gross margin for disbursements was $12.1 million for the quarter. The year-over-year comparison is impacted by the revenue adjustment from potential customer restitution covered earlier. Excluding the impact of the revenue adjustment, gross margin decreased as a result of lower account revenue. As we've previously stated, much of our cost of sales and disbursements are fixed and not necessarily reduced as revenue declines. While the decreases in transaction volumes in OneAccounts led to a decrease in certain cost of revenue, those decreases were offset in other areas, primarily in customer service-related costs. Turning to Slide 16, looking at operating expenses, we continue to make investments in compliance, product development and talent. During the current quarter, general and administrative costs increased to $17.7 million. This increase is attributable primarily to two factors. First, personnel costs increased by $700,000 of which $400,000 was related to stock-based compensation expense. Secondly, depreciation and amortization increased $800,000, including amortization related to internal use software. The 30% increase in product development costs, which equates to 5.1% of revenue was driven primarily by an expense of approximately $500,000 related to a one-time charge for the write-off of the software platform no longer being utilized. Additionally, we experienced higher personnel costs which were offset by a decrease and transition-related product development expenses associated with Campus Solutions acquisition, which we incurred in the prior year, but not in the current year period. Sales and marketing expense decreased 9.1% during the quarter to 9.4% of revenue. The decrease in sales and marketing expense was due primarily to decreases in external marketing costs. Turning to slide 17, you will note that adjusted EBITDA was $8 million, compared to $7.2 million last year. The revenue in gross margin gains we saw in the payments in Data Analytics businesses contributed to the increase all proceeds received from the resolution of an outstanding litigation matter offset a portion of the margin decline in the disbursements business. Now let’s look closer at the adjusted EBITDA margins at the three lines of business beginning on slide 18. Both payments and data analytics were able to achieve a measure of operating leverage as both profitability and margin outpaced revenue growth. Payments achieved adjusted EBITDA of $3.2 million, an increase of 46% over the prior-year period and increased adjusted EBITDA margin to 20.1% in the current period from 15.1% in the prior-year period. Our Data Analytics line saw adjusted EBITDA increase by 38% this quarter to $1.5 million with margins reaching 36% compared to 31.7% in the first quarter of 2014. However, adjusted EBITDA for Disbursements was down 15.3% to $3.3 million in the quarter, driven by many of the factors I discussed earlier in my remarks related to this line of business. We did record other income of $1.1 million as we settled the longstanding legal matter with a competitor resulting in a payment to us related to asserted patent infringement. Turning to slide 19. Our adjusted diluted EPS equaled $0.05 for both the current and prior year periods due to a change in state tax laws enacted in the second quarter, we now expect to utilize certain net operating loss carry-forward. We have included this benefit as an adjustment to net income this quarter. This is expected - this change is expected to decrease our overall annual effective tax rate for 2015 by one percentage point. Moving to slide 20, our free cash flow was $1.6 million in the second quarter of 2015, compared with the prior year quarter in which we generated free cash flow of $7 million. This decrease on a year-over-year basis was the result of the lower operating cash flows compared with the prior year. Our operating cash flows were sometimes impacted by the timing of normal working capital changes that vary quarter-to-quarter. Last year we experienced favorable movements in accrued expenses and income receivables and in the current year period we had unfavorable movements in accounts receivable and income tax payments. Capital expenditures were lower by $739,000 in the current quarter, compared to the same period in 2014. Moving to the last slide of the financials, slide 21. We ended the quarter with a cash balance of $16.8 million. We have $59 million drawn on our line of credit, one of the financial covenants in the credit facility relates to requirement for this quarter have a minimum of $45 million of trailing 12 month EBITDA as defined by the credit agreement. As of June 30, 2015, our trailing 12-month EBITDA, as defined, was $57.7 million. Last quarter, I discussed the potential impacts of the pending regulatory matters on our credit facility and liquidity sources. These regulatory matters have not been resolved and we are uncertain of the timing of their resolution. As part of the February amendment to our credit facility, we added flexibility to incur up to $75 million to address these regulatory matters. And with that, this concludes our prepared statements. We will now take your questions. Operator?

[Operator:]

Thank you. [Operator Instructions] And our first question comes from the line of [Indiscernible] of Piper Jaffray. Your line is open.

[Unidentified Analyst:]

Don for Mike Randall, actually this morning. Thanks for taking my questions. One question around the pricing actions on OneAccount that we’ve seen historically. At this point, are the majority of your pricing actions kind of through the OneAccount, because if you look at a revenue per account basis, it actually looks like that came in a little better than we expected. So I am curious if we had a decent run rate at these levels now, borrowing changes from the DOE in November potentially?

[Chris Wolf:]

Yes, this is Chris. I’ll take that question. I’ll try to answer, there is a couple of things there. I would hesitate to say that we are at a decent run rate because, first of all, we do have seasonality in the second quarter there. So, we don’t see as much refund activity. So we tend not to see as much volume going through the account that we see in the first quarter and especially in the third quarter and the fourth quarters. So I am a little hesitant there to say as far as that, as far seen stability. Now, we are talking a little bit, if I want to shift gears little bit about selection rates, as Marc mentioned in his comments, we talked about there. We have seen that number come down a bit and I think the big question that we are trying to figure out is really where that kind of where that inflection point is and we’ll know more as we go into the fall as far as the new school year goes and the other factors I do want to point out that with effect dollars flowing through the account in addition to selection rate to really enrollment and also fin aid or financial aid dollars as we go into the new school year as we all know. That has been challenging the past couple of years and as we go into the new school year, that will dictate sort of the top of the funnel if you will how many dollars will go into the account.

[Unidentified Analyst:]

Okay, and then, just curious, what’s the – of the dollars that are deposited into the OneAccount, what’s the breakdown between the financial aid and the non-financial aid? I think you said that non-financial aid was up 7% but is there a breakdown between the two?

[Chris Wolf:]

Yes, right now, right now, I’d say and this is Chris again, let me get there. It’s just under about 75% is what we call fin aid deposits and the difference are non-financial aid deposits.

[Unidentified Analyst:]

Okay, and is there any reason – what’s driving the increase in the non-fin aid growth? Is these new products that you’ve launched, any color there?

[Marc Sheinbaum:]

Yes, this is Marc, again. And I think, first of all, remember that as Chris said, second quarter was at low points for financial aid dollars. So, I hope, I think to that would imply the 25, 75 split is an ongoing run rate, but I think as you know, we have sent a lot of communication with our customers to make sure they extend the value of the product, they see the value of the product and many of them are using it. Many of our customers are working students. So they have jobs, they are using to write deposits. So, I think it’s just an ongoing perception of the value of having the accounts and using the accounts.

[Unidentified Analyst:]

Perfect. And then last one from me, was there any commentary from the schools that you picked up or maybe lost during the quarter as for reasons why they chose Higher One or decided to leave?

[Marc Sheinbaum:]

Casey, do you want to try?

[Casey McGuane:]

Sure, thanks for the question. This is Casey. We shared before be it challenging year for renewals, especially compared to our historical renewal rates and although we can’t say with certainty, there is an unusually higher number of deconversions in the quarter. We are not seeing a specific trend here. I think the vast majority of our clients have continued to share they wouldn’t want to operationally have the burden of managing this in-house again. But when I think about the quarter, and the six fee conversions this quarter, I can share some color that one was a larger client and we lost in an RFP to another bank. We believe mostly this is related to a revenue sharing agreement from that bank and then, several others just took the service back in-house. I hope that color helps.

[Unidentified Analyst:]

Yes, it does. Thank you and I can jump back in line.

[Operator:]

And our next question comes from the line of Gary Prestopino with Barrington Research. Your line is open.

[Gary Prestopino:]

Hey good morning, Wolf. Couple of quick questions. Did you give out a number for your total SSE at quarter end?

[Chris Wolf:]

Yes, hi, Gary. I think, we did on – it’s just over 5 million, I guess 5, 26,000 and the end of Q2. Yes.

[Gary Prestopino:]

Okay. And then in terms of the new business that you won in the data analytics space, can you give us some idea of what that kind of revenue contribution would be?

[Chris Wolf:]

We had – as I mentioned in my comment, that I thought it was in the 400,000, 500,000 range. Let me just check the number Gary.

[Gary Prestopino:]

Yes, just check the numbers, yes.

[Marc Sheinbaum:]

Why don’t we have the next question enrolled? We’ll put that answer for you.

[Gary Prestopino:]

And then the other thing regarding some of these comments that you talked about Marc, you mentioned that, you mentioned one that, you talked about, could you just repeat that in terms of what that entails, it was something like 30-days of no fee on an account?

[Marc Sheinbaum:]

Yes, so, Gary, the issue there is, that the way the rule is proposed is every time there is a disbursement made into the students accounts, we’d have to freeze all fees for 30 days. And so, any fees that we would normally – because we would not pay in that 30 day period, which if you track what happens with disbursements, during the course of the year, some get one disbursement, some might get two disbursements during a year and some schools are going through multiple disbursements as a help to have the students be able to manage their and budget their funds more effectively. So, the starting and stopping of that clock is challenging as well as of course, basically, losing the economics on the accounts which is why we’ve said that, one that one of it we once said that it doesn’t work, I mean, if you go through as someone expected read all the commentary, but if you look at just the commentary of people who are in this space, I don’t think there was anybody in the financial service industry who didn’t comment on the – that aspects although.

[Gary Prestopino:]

Would that include, like, fees from or revenue streams from the OneAccount card for 30 days?

[Chris Wolf:]

Yes, that’s exactly.

[Marc Sheinbaum:]

Yes, it would include – yes it’s somewhat, we will be freezing the fees on the OneAccount for the students wouldn’t had any fees during that 30 day period.

[Gary Prestopino:]

Okay, thank you.

[Chris Wolf:]

Hey, Gary is still on the line. I’ll answer your question. Yes I am sorry, hey it’s Chris here. On that closed business, it’s approximately $800,000.

[Gary Prestopino:]

$800,000, okay that was a little shy on that.

[Chris Wolf:]

So I guess, that’s a little shy in my account balance.

[Gary Prestopino:]

Okay, thank you.

[Operator:]

And our next question comes from the line of Oscar Turner of SunTrust. Your line is open.

[Oscar Turner:]

Good morning guys. Thanks for taking my questions. So just looking at payments, it looks like the subscription piece of that business was down both year-over-year and quarter-over-quarter. Can you talk about what was driving that?

[Chris Wolf:]

Yes, hi Oscar it’s Chris here. So, what I would say here first, kind of looking at the business on the CASHNet side of the business, the subscription side is very strong and robust. Any challenges that we have if any, come from the Campus Solutions side of the business and Marc alluded to some of the transitions that we are having on both NetPay or primarily on the NetPay piece of subscription side there. So, if there is an – we don’t give specific numbers there. Our subscription revenue was actually fairly strong there. There are other pieces that go in there as far as tuition payment plans and things like that as well. But, what I do want to emphasize is the CASHNet side of the business is very strong and that is the core side of the business where we’ve had challenges had to spin on some of the conversions of NetPay on the old Campus Solutions business.

[Oscar Turner:]

Okay, thanks. That’s helpful. And then on Campus Labs, continues to show strong growth both with revenue and clients, just looking for some more color there, most of these schools, ones that you already have a relationship with, are they new? And then also how do you think about the addressable market or the long-term revenue opportunity there?

[Marc Sheinbaum:]

Yes, so, it’s Marc again. I think as I said in my comments that we did add about 27 new clients in this past quarter and at the same time we – our total modules that we sold was 50 which was a stuck between new and existing schools. So, I think that’s an important part of our growth plan there was to deepen our relationships with existing schools. I don’t have the numbers in front of me now, but I think last quarter, I reported that the total majority of our clients had only two of our six modules. So, there was a lot of run way for growth in existing clients. So we worked that pretty hard, but at the same time, expanding our footprint as I just said, 27 new clients is a pretty good add in the quarter. So, I think that’s all being driven by the continued evolution of our product suite. I think the value that’s – the execution that we do with that team and with our schools. So, I hope that answers your question.

[Oscar Turner:]

Thanks, and then just on the – how about on the long-term addressable market opportunity there?

[Marc Sheinbaum:]

Yes, I think it’s really hard to put a dollar and cent next to it because it’s an evolving market it’s one of these markets that as opposed to like the payments space where there is a certain defined dollars of payments being made on campus every year. This is one that we are developing the market even as we grow it. So, there are a lot schools that do a lot of work manually and showing them the value of doing things in an automated fashion has been part of our value proposition too. So, it’s hard to put a number next to it.

[Oscar Turner:]

Okay thanks, and then just last question, can you provide the percentage of OneAccount revenue that was interchanged this quarter? Thanks.

[Chris Wolf:]

Yes, he Oscar, it’s Chris. We don’t give the specifics quarter-to-quarter, but the range of both totals that spoken about the 40%, 509% that’s consistent and so we’ll stick to that story for now.

[Oscar Turner:]

Okay, thank you.

[Operator:]

[Operator Instructions] And our next question comes from the line of Michael Tarkan of Compass Point. Your line is open.

[Michael Tarkan:]

Thanks for taking my questions. Just on the disbursement side again regarding that 30 day fee moratorium, any insight into how the Department of Education is thinking about it at this point, just given all the pushback and then assuming that provision, if it did make it into the final rule, are there options you have at your disposal that you can implement to offset some of that pressure and just keep the business profitable? Thanks.

[Marc Sheinbaum:]

Yes, thanks, Michael. It’s Marc. Great questions. I wish I could give you any insight, I don’t have any about the Department is thinking about it. I mean, - we think we all try to respect the spirit of the rule-making process and the public comment period and I think as we said earlier, that the comments were pretty loud and clear about the impact of that. So, we’ll just have to wait and see. And as far as look, we clearly are spending a lot of time and have spent a lot of time looking at the impact of the 30 days and other things that I said that are in the rules and we are trying to find anyway possible to be able to provide the service to our schools and the students. And so, I think the most important way to make sure that the service can still be provided as for the rules to be adjusted to make all the players to be able to continuing to operate in the space.

[Michael Tarkan:]

Understood, thanks, and then, just in terms of expenses, as we are in this sort of intermediate window ahead of the new ed schools, ahead of what the implementation date of the new rules, are you just, are you waiting to kind of get more clarity around what the rules will look like to kind of see what you are working with?

[Marc Sheinbaum:]

I think that’s fair, Michael.

[Michael Tarkan:]

Okay and then…

[Marc Sheinbaum:]

I am sorry, it’s just the prudent thing for us to do right now. Obviously, the – as we learn more about what the rules are, we’ll make whatever necessary adjustments we have to make.

[Michael Tarkan:]

That makes sense and then, this is sort of a similar question, just regarding the FDIC and Fed potential settlements, is it kind of a similar thought process here you are maybe holding off on negotiating until we get a little clarity from ed. Is that fair or it’s just no real change there? I am just curious.

[Marc Sheinbaum:]

Yes, there is nothing more to add about the Fed and the FDIC at this stage.

[Michael Tarkan:]

Okay, thank you very much.

[Marc Sheinbaum:]

Thanks Michael.

[Operator:]

And I am showing no further questions at this time. I would now like to turn the call back to Mr. Marc Sheinbaum, for further remarks.

[Marc Sheinbaum:]

Thanks operator. Okay, so, look, once again, I want to thank everybody for participating and joining the call today and look forward to giving you another update after the third quarter. Thanks and have a great day.

[Operator:]

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude today’s program. You may all disconnect. Everyone have a great day.