Meta Data Limited
Q4 2014 Earnings Call Transcript

Published: 26 Feb 2015

[Operator:]

Good day, ladies and gentlemen, and welcome to the Quarter 4 2014 Higher One Holdings, Inc., Earnings Conference Call. My name is Sheila, and I'll be your operator for today. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I would like to turn the call over to Mr. Patrick Pearson, Investor Relations Director. Please proceed, Sir.

[Patrick Pearson:]

Thank you, Sheila. Good morning, everyone, and welcome to the Higher One Fourth Quarter 2014 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 risk and uncertainties. There are a number of risks and uncertainties that could cause actual results 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 condition, 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 risk 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 future performance can be found in our current 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 nonrecurring or noncash 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 Chief Financial Officer Chris Wolf who will provide our financial update. We also have our Chief Operating Officer, Casey McGuane to help answer questions after our prepared remarks. Now if you'll please refer to the company slide deck that is available on our Investor Relations website, as I discuss the fourth quarter details and other topics. So turning to slide three, our fourth quarter results reflect the continued trend from previous periods. We saw strong organic growth in our Payments and Campus Labs businesses which was offset by declines in the Disbursement Services business which includes the OneAccount. Overall revenue increased close to 1% in the fourth quarter of 2014 compared to the fourth quarter of 2013. Our Payments business continues to deliver increased transaction and dollar volumes especially from our SmartPay product offering. Campus Labs, our data analytics business performed well as a result of strong sales and high client retention. We ended the fourth quarter with a non-GAAP adjusted earnings per share of $0.14 compared to $0.17 in the prior year. I am also pleased with the amendment to our credit facility that we recently signed, which provides us with flexibility. Chris will be covering this in more detail in his comments. Turning to slide four, the trend of generating a greater percentage of our revenue from payment transactions and higher educational institutions has continued increasing to 44% in the fourth quarter of 2014 up from 24% just two years ago. Let me give you more detail on the positive results in our payments and data analytics business. So turning to slide five, our payments business includes electronic billing, ePayment options including SmartPay and payment plans that allow students and their parents to pay a portion of their tuition over a period of time. Each of these products offers an outstanding service that benefits students and their parents and enables our client schools to operate more efficiently. Overall, SmartPay payment transaction and dollar volume were both up over 20% in the fourth quarter versus the fourth quarter of 2013. We achieved solid sales gains in the fourth quarter, signing up seven campuses for at least one of our CASHNet payment solutions. And the Campus Solutions clients we obtained as part of the Sallie Mae acquisition continue to perform well. Customers are recognizing the value of our offerings and the strong service that we provide. Let's look at Campus Labs, which provides institutions with the products and services needed to leverage data and analytics to support student retention, resource allocation decisions and core processes such as accreditation. I am pleased to say, revenue grew 17% in the fourth quarter compared with the fourth quarter of 2013. Our Campus Labs team signed over 20 new schools in the fourth quarter, including the largest accounts in our Campus Labs’ history, which was a long-term contract covering multiple campuses in a large state system. Turning to slide six, on Disbursement Services, let me start by addressing the regulatory landscape. The past few quarters, I updated you regarding notifications from the staff of the Board of Governors of the Federal Reserve that they intended to recommend that the Board of Governors seek an administrative order against the company with respect to asserted violations of the Federal Trade Commission Act. While we have received many questions from investors as to when this matter will be resolved, we cannot give you a specific timeframe or any additional details at this time. Turning to slide seven and moving on to the Department of Education. If the new set of proposed rules are published in the Federal Register by November 1, 2015, then we believe they will become effective July 1, 2016. We will continue to engage with the Department of Education and other regulators to help establish a new standard within the industry for clear, fact-based and neutral presentation of choices for students receiving their refund. And we have not been waiting for potential rules. We are evolving and refining our refund selection process now and will give campuses additional options for the future. Despite this regulatory uncertainty, our sales team successfully brought in new business as we added over 60,000 SSE to our disbursement services portfolio in the fourth quarter with over 13,000 coming from the competitor who has recently left this space. Our continued refund sales are encouraging. I will emphasize what I’ve said in previous quarters. We need to be cautious about modeling significant gains on the refund side until there is more clarity on the regulatory matters related to the business. Account revenue was down 5% this quarter, which is the result of many of the trends we highlighted in our earnings call following the third quarter, including a reduction of financial aid dollars disbursed into OneAccounts. In addition to new sales, our relationship and management team has done an outstanding job of maintaining existing relationships and we continue to sign renewal contracts through our Disbursement Service business. While in the fourth quarter, we retained all of our Disbursement Services business, we know that 2015 will be a challenging year for renewals as the regulatory landscape evolves. Turning to slide eight, so as I approach my first anniversary with the company, I continue to be excited about the prospects for our business. In fact, I just came from our user conference this week and met with over 150 members of our client community, and I was very pleased to see the level of enthusiasm for our company and our people. We’ve come a long way in a very short period of time. I continue to be encouraged with the volume of non-refund based deposits that come into the OneAccounts. Non-refund dollars deposited into OneAccounts grew 16% over the prior year and accounted for more than 15% of total dollars deposited during the year. These non-refund dollars helped to diversify our deposit mix and result in more customers that are using the OneAccounts for every day purposes. We’ve launched several new product enhancements to the OneAccounts including expanded bill pay features, a card on/off switched to provide stronger security, additional deposit options and also made improvements to the web and mobile experience for students. We’ve enhanced the refund disbursement process and are testing additional options that we believe will prepare us potentially in the rules and provide new approaches to using our sales efforts. We completed the migration of the Sallie Mae Campus Solutions clients into the Higher One hosted environment setting the stage for single payment solution for all customers. With respect to our compliance management program and systems, we have made good progress over the last few years and continue to add resources and tools in this area. We also continue to focus on enhancing our risk management practices which will take further investment and diligence moving forward. We believe that the addition of Mark Archer as our Chief Risk Officer is another great step forward in this process. We re-launched our financial literacy programs $tart With Change. This program provides students with relevant and engaging content and enables them to make smarter financial decisions. Turning to slide nine, in 2015 and beyond there remains a significant opportunity to cross-sell within our existing client base and further deepen client relationships, so much so, that if we didn’t add one new client and only sold them to existing schools we could add over $100 million in annual revenue. Our newly combined payments and refund sales force is nearing completion of its cross training, and with focus on execution, we believe we can start to capitalize on that opportunity. We will be completing the full upgrade of our CASHNet Payment Solutions System which we believe will make it best-in-breed. We expect these enhancements to take place over the next 18 months providing our clients with superior capabilities and improved user experience shorten the learning curve for our team and our clients and lead to meaningful cost savings. We plan to provide greater insight into our operating years. To that end we will begin to share product line profitability measures. This will provide management, our board and our investors with better insight into each of the three core businesses and we will continue to look for ways to diversify our business and revenue sources. On Campus Labs our next phase is to create more connectivity among our various product areas. This strategy will further strengthen the institution’s ability to turn critical data into powerful information and extend support to students and faculty. These enhanced data connection should provide tools such as adaptive faculty development and teaching method training to aid and support student learning within the classroom. We continue to innovate to support the many challenges facing higher education institutions. For the OneAccount, we are further enhancing our value proposition recognizing and continuing to meet the needs of this unique group of customers. We will of course add to the core banking capabilities, but we will also integrate features that help students overcome known financial challenges that could prevent them from completing their degree. We are building our rollout plan now and plan to launch several new features in time for the 2015/2016 academic year. I also think that we have unique opportunity to broaden the types of products and services we provide to students and by doing so potentially extend the customer relationship. Turning to slide 10, we are excited about these opportunities and are beginning to allocate resources to this vision. That said, we recognize that headwinds remain in the OneAccount business. With the onset of the New Year, it is apparent that the negative trends that we have been discussing in 2014 will continue into 2015. As a result, we expect to see fewer disbursement dollars into the OneAccount as fewer students are making the OneAccount their choice to receive the refund disbursements. And we believe many schools are still interested in our disbursement services, consistent with my earlier comments, our expectation is that market demand for the service will be modest over the next 12 months, pending clarity on the regulatory items. Additionally, we intend to refine our fee structure over the next year as a way to strengthen our value proposition for students, which will likely lead to the modification or elimination of certain fees. The combination of these factors has led us to believe that Disbursement Services including the OneAccount will experience the client revenue for 2015 compared to 2014. We expect that this revenue decline will continue to be partially offset by growth in the Payments and Campus Labs lines of business. However, our current expectation for 2015 is for consolidated gross revenues to be between $205 million and $215 million. We will manage our expenses and spending closely, but due to the projected decrease in revenue, we expect annual non-GAAP adjusted EPS to be in the range of $0.40 to $0.45 in 2015. We all recognize that our business and the industry are going through changes. We are working to position the company for long term success. As I mentioned previously, we are diversifying our revenue streams and our business lines, making necessary investments and continuing to meet the needs of our clients and students every day. In our comments here, we've tried to provide some guidance as for the range of possible financial outcomes for the company in the short-term, recognizing that the longer term financials of the Disbursement Services business including the OneAccount will continue to evolve as clarity comes to the market on regulatory matters. I will now turn it over to Chris for a review of our financial performance. Chris?

[Christopher Wolf:]

Thanks, Marc. At this point, I’ll begin the discussion of our financial results for the quarter starting on page 11 of the accompanying slide presentation. Please remember that all growth rates I mention will be year-over-year unless otherwise specified. Turning to slide 11, revenue for the fourth quarter was $57.1 million, compared to $56.6 million during the fourth quarter last year, an increase of just under 1%. I’ll get into more detail on the drivers of our revenue changes on the upcoming slides. We had gross profit margin of 55.3% in the fourth quarter of 2014, compared to 58.3% last year. The change in gross profit margin this quarter reflects a change in our mix of business including our larger contribution from our Payment's business, which in total has lower gross margin percentage than our other lines of business. In addition, margin decrease was a result of lower account revenue, coupled with higher costs to support the OneAccount product. Similar to the third quarter, the primary expense increase related to fraud-related cost to support the OneAccount. Gross profit dollars grew for both the Payments and Campus Labs businesses. Payment's gross profit increased approximately $900,000 and Campus Labs increased by nearly $600,000. Offsetting those increases was the decline in gross profit related to our Refund Disbursement and OneAccount business, which I previously mentioned. The combination of these factors led to an overall decrease in gross profit of approximately $1.4 million. Turning to slide 12, as Marc mentioned earlier, we continue to diversify the sources of our revenue. Payment transaction revenue showed strength in the quarter up approximately 14% over last year. The increase in Payment transaction volume was the result of volume increases at same schools as well as new schools adopting our products over the course of the year. Higher Ed. Institution revenue increased approximately 5% year-over-year. Increases in Campus Labs and CASHNet revenue totaling approximately $1 million offset the decline in revenue from the Campus Solutions business. We stopped servicing certain former Campus Solutions clients on their legacy Refund Disbursement product during 2014, leading to a revenue decline year-over-year. Last quarter, we covered a lot of information on enrollment and disbursement trends for the fall disbursement cycle. Those trends including a reduction in the amount of dollars disbursed into OneAccounts continue to impact to our fourth quarter results and account revenue in particular. Consistent with the third quarter, Account Revenue decreased approximately 5% from the prior year, which was due to the lower amounts deposited into and spent from the OneAccount which resulted in decreased interchange and service fees. Total amounts spent from OneAccount during the fourth quarter were 4% lower than the prior year. Moving to slide 13, our operating expenses increased to approximately $1 million or 5% year-over-year. Overall, the increase is due to the combination of higher personnel-related costs plus depreciation and amortization offset by lower professional services costs. G&A costs were higher this quarter due to personnel-related costs in the areas such as compliance, risk management and client operations. We continue to invest our resources in these important areas. In addition, while our non-cash depreciation and amortization charges were up those increases were offset by lower professional service costs. Our professional services cost can fluctuate from period to period. Our G&A expense in Q4 was up slightly from what we reported in Q3. The decrease in product development costs was driven by a couple of factors. First, there was a decrease in certain transition related product development expenses associated with the Campus Solutions acquisition compared to the prior year period as a result of the migration efforts that Marc described earlier. In addition, there was an increase in 2014 of costs which were capitalized rather than expense. These costs are related to internal use software development projects. Sales and marketing expense was up slightly compared to the prior year. We continue to look for the best ways to spend these dollars to generate growth in our business lines. Turning to slide 14, you will see that non-GAAP adjusted EBITDA was $14.7 million in the fourth quarter compared to $16 million last year. This 8% decrease was largely driven by the decrease in gross profit which I covered earlier. Moving to slide 15, our non-GAAP adjusted diluted EPS equaled $0.14 in the fourth quarter compared to $0.17 last year. The decrease in adjusted EPS is due to a combination of the decrease in adjusted EBITDA and higher depreciation charges compared to the prior year. Slide 16 shows that our free cash flow decreased to $7.6 million from the prior year quarter of $8.6 million. This was largely due to our lower operating income and a corresponding decrease in cash provided by operating activities in the fourth quarter of 2014 compared to the prior year. Working capital changes continue to drive certain variations in our operating cash flows from quarter-to-quarter. Capital expenditures were $1.8 million in the fourth quarter 2014 which was lower than the approximately $2.7 million in the same period in 2013. We expect capital expenditures to range between 5% and 6% of revenue in 2015. Turning to slide 17, we ended the quarter with a cash balance of $40 million. Last quarter I talked about the possibility for us to seek alternative financing options to address potential restitution and civil money penalties related to the current regulatory matters. As you may have seen, we amended our credit facility agreement in February with our current bank group. In connection with that amendment, subsequent to year end, we used $35 million of our cash to pay down the line of credit reducing our outstanding balance from $94 million to $59 million. As described in our Form 8-K filed last week, the amendment adjusted certain covenants which were designed to provide us with flexibility. As a result of these changes to the credit facility our trailing 12-month EBITDA as now defined in the credit agreement was $59.6 million. Moving to the last slide, slide 18, we have previously discussed our views on what impacted sales in the fourth quarter of 2014. The Refund Disbursement's SSE growth rate was 2% on a year-over-year basis ended December 31. The change this quarter reflects an increase of 60,000 SSE from new sales. Looking at the number of OneAccount, you’ll see that it decreased slightly year-over-year. This decrease was partially a result of the closing earlier in the year of nearly 100,000 accounts which had minimally overdrawn balances. In addition, the reduction in students that are making the OneAccount their choice to receive refund disbursements at the same schools has continued to impact the number of accounts of those schools. In closing, the payments and data analytics business both had a good fourth quarter and a strong 2014 overall. Despite the regulatory uncertainties that persist within our refunds disbursements business, we continue to make progress with enhancements to our offerings as we adapt to an evolving market. Our goal is to make sure that our products are compliant with new regulations that maybe issued as Higher One continues to be a market leader of products and services that allow colleges and universities to operate in a more efficient and cost effective manner and we look forward to the opportunity and work towards those goals in 2015 and beyond. This concludes our prepared statements and with that we’ll take your questions. Operator?

[Operator:]

Thank you. [Operator Instructions] Your first question comes from the line of Mike Grondahl of Piper Jaffray. Please proceed.

[Mike Grondahl:]

Yes, thanks guys. The first question is, could you just talk a little bit about your outlook for OneAccount growth, if you see any growth versus just sort of revenue per account and how you think the two will interplay in 2015?

[Christopher Wolf:]

Sure, Mike this is Chris. I’ll go ahead and start on that. As far as in Marc’s comments, I think what we’re really saying there is that the revenue decline that we’re seeing or we’re anticipating in 2015 is being driven primarily by OneAccount. I mean up from an overall standpoint there, so that’s really the driver there as opposed to say payments or the higher education side of the business. So we do expect the economics to go down. As Marc said in his comments, the question of how many dollars were going into the account has been a challenge for us. We foresee greater challenges in 2015 with that. In addition, we are relooking at our fee structure and so the combination of those things and a certain point I think that I also want to make there is we’re not seeing as many new schools interested in signing up right now. So, the confluence of all those things really is what's leading to the decrease like they said overall and they were talking about there from 2005 to 2015 is really being driven by OneAccount and that is that. As far as the account economics there, it remains to be seen where the fee structure and how many SSE will play out there, but I suspect, I don’t think it’s hard to do step there will some unit pressure there as well. But I think the bigger picture is obviously the overall account revenue there. So and Marc I don’t know if you want to add anything to that.

[Marc Sheinbaum:]

Yes, I think not much to add, but I think that the line of sight that we are sharing today is really what we’re seeing in 2015, clearly I think when you ask the question about growth, we expect that once there is clarity in the marketplace, that the opportunity will be there to grow again. But I think we don’t really have a line of sight beyond this calendar year.

[Mike Grondahl:]

Okay and then, you talked about a couple or some new disbursement options for schools and some new features for the students in the OneAccount. Could you just give us an example or two of what those might be?

[Marc Sheinbaum:]

Yeah, so again I think we are trying to work with our clients now and testing a bunch of different things. So, I think I’ve shared this with you in previous calls that we’ve had historically one-size-fits-all on the disbursement side in terms of how we service the schools. And I think that schools have asked for different flavors of what we do and different combinations of our approach. So those are some of the things we're testing now to see how they work and I think we’ll be able to, once we are more firm with that, we’ll able to go out to schools and talk about that and I expect that we’ll be out in the marketplace with that in time for, yes again, for the fall. On the OneAccount side, I think again we’ve shared this too that we are, I think we have a very good banking product and like our clients do share that with me all the time. You know and of course in fact that has come let’s say our user conference in Dallas and we shared with them some of our ideas for how we are adding value. And they were thrilled to hear it, but it was also good to hear them say, we think the OneAccount is pretty good as it is, but we’re glad that you are enhancing it. And the enhancements that we are trying to direct and undersell new banking features although we are adding to our mobile experience, I think we are trying to add things that are unique to students’ needs. So we do a lot of research with students and so the things about we are rewarding them for good financial behavior. We are rewarding them for grades and things of that nature that are stuff that major banks aren’t getting into that space because this is a small niche, but to us this is our business. So I think it’s really things that are around the student experience as opposed to just pure banking experience.

[Mike Grondahl:]

Okay. And then maybe just lastly, the cost structure in 2015, is there anything you can call out in 2014 that was non-recurring or how should we just think about that overall cost structure in 2015?

[Christopher Wolf:]

Yes Mike, it’s Chris. I’ll go ahead and start on that as far as the things there in 2014 and going forward in 2015. We’re going to be very prudent in our spend as we go on to 2015, we're aware that the pressure OneAccount puts on us, but I do have to process that it by definition is high margin and so there is not a high level variable cost that’s attracted to OneAccount that can be taken out. So, there are some costs, but we generally have to look elsewhere. We are being very prudent with our spend. We are going to invest in some of the areas like compliance and in areas in IT there is development that we’re going to still do. But we are going to hold a very hard line on overhead costs. I think that’s going to be a big thing [Audio Gap] do there. We are monitoring very closely, so really we’re looking on the overhead side, I would characterize and heading into the year to a flattish type scenario, obviously if things change we’ll have to adjust that and like I said, we’re looking at everything. And some of the other things that is probably worth mentioning is that as we complete the Campus Solutions integration there, we are looking to get some cost saves out there that I would say, were somewhat unique in 2014 as we've done the migration there we’ll see some of that going in there. So and then everything on corporate overhead obviously will look at everything. So I guess the overall message I do want to send here is that we’re going to manage costs very tightly, but I don’t want to point out to say there is a big issue or big number that we’re necessarily looking to take out. We are just monitoring those closely and we’re going to monitor our spent closely. At the same time, to echo Marc’s comments there are on the Payments and the Campus Labs side, we’ll continue to make investments in those businesses.

[Mike Grondahl:]

Got it. Okay. Thanks guys.

[Christopher Wolf:]

Thank you. Operator

[Michael Tarkan:]

Thank you. Just a few questions on the Refund Management side, on the fee changes you are contemplating, can you just elaborate a little bit, may be on what specific fees you are looking at? I don’t know if you are in a position to do that yet? And may be just a timing of when those changes could erratically roll through and then on that front, are those changes incorporated into your guidance?

[Marc Sheinbaum:]

Hi, Michael, it's Marc. So we are looking at the all the fees. We haven't analyzed the changes we're going to make. I think we would expect that any changes we make similar to wanting to have the student value proposition locked and loaded in time for the 2015 school year, I think that we would want to line up any change we make in time for that same launch. That would be the expectation and I think that's part of how we've laid out the guidance for you.

[Michael Tarkan:]

Okay. You said that 2015 is going to be a challenging year for renewals, any sense as to how many contracts or what percentage of your SSEs are up for renewal in 2015?

[Casey McGuane:]

Hi, Michael, this is Casey here. Thanks for the question.

[Michael Tarkan:]

Sure.

[Casey McGuane:]

Yes, as Marc mentioned, we've retained all of our Refund Disbursement clients in Q4 and we're really focused on client satisfaction retention of course. Overall, I think I was really pleased with renewals success in 2014 that was a challenging year. And there is a lot going on right now and every quarter our teams are focused on our clients and I expect 2015 to be another challenging year. We're working hard on this. We don’t really comment on the specific numbers, but I can, I’ve shared in the past that 2014, we renewed over 100 clients there for about 1.5 million SSE, and we’re looking at 2015 numbers and it is slightly more than that for 2015.

[Michael Tarkan:]

Okay, thank you. That’s helpful. And then, the competitor that left the space, do you see an opportunity to pick up some more campuses or SSE in 2015 from them?

[Marc Sheinbaum:]

Do you have any facts on that Casey? I know that was one that we have in particular in one state. Are there I’ve known not definitely with the pipeline of that client right now.

[Casey McGuane:]

Yeah, it’s small right now, but we have seen and we've picked up some in one particular state.

[Michael Tarkan:]

Okay. And then last one, in the past you’ve said interchanges represent around 40% to 50% of total account revenue, is that still the range that we’re looking at?

[Christopher Wolf:]

Yeah. Mike, this is Chris, that range is still good.

[Michael Tarkan:]

Perfect. Thank you very much.

[Operator:]

Thank you. Your next question comes from the line of Oscar Turner of SunTrust. Please proceed.

[Oscar Turner:]

Good morning.

[Marc Sheinbaum:]

Good morning.

[Oscar Turner:]

Thanks for taking my questions. I was just wondering have you guys notice any effect on account activity of the future enhancements? I know you mentioned the few there including the expanded Bill Pay and then also enhancements to web and mobile?

[Marc Sheinbaum:]

Yes, Oscar, it’s Marc. I think probably the one that we don’t have a direct correlation to, but the one that we highlight a few every quarter, I think there were most intrigued buyers is the deposit percentage, right. The percentage is coming from non-refund. So people think that that’s probably the best indication that, because when we see when people do that, deposit non-refunds it tends to show that they are using this account as their core primary account. So I think I might have mentioned this on previous calls that our basic interchange revenue per account is about twice what it is for the accounts that don’t do any non-refund based deposit. So I think that you can’t point to One Mobile feature gives you that or One Enhancement. But I think it’s attracting people to say that this is more, it is going to be used more as their core account.

[Oscar Turner:]

Okay. That makes sense. And then also in the past you’ve mentioned the importance of the rewards program and getting students to keep bank accounts after graduation. I was just wondering is that still a focus and can you talk about any progress there?

[Marc Sheinbaum:]

Yeah. So, Rewards Program is something that we have in the development lab nowadays and so we are definitely trying to see if that makes sense to launch something like that in the back-to-school period. And I think as I’ve mentioned before is that reward program wouldn’t be your traditional hey, spend money and we’ll give you cash back. They have a notion that would be to look for rewarding for good financial behavior, good academic behavior; so very unique kinds of things that we would give people points for. And again, we are still trying to figure out what the reward would be, but it won’t be a cash-back, I have to say. It will be something that that really applies back to things that relate to their academic program. So stay tuned, hopefully we’ll be able to put more meat on that one before the next earnings call.

[Oscar Turner:]

Okay. Thanks. That’s helpful.

[Operator:]

Thank you. We have no more questions and I would now like to turn the call over to management for closing remarks.

[Marc Sheinbaum:]

Okay, well look, I appreciate all your time here today. Higher One is committed to helping colleges and universities drive student success. Our services help students reduce their cost, enabling them to reinvest their savings in academic programs and creating a better experience on campus. Higher One is also committed to helping students remove financial barriers to graduation. We will continue to enhance the critical parts of our business to bring the long-term value to colleges and universities as well as the students we serve. So, thanks again for joining us today and we look forward to speaking to you on our next call.

[Operator:]

And thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Have a great day.