TALKSPACE EQUITY WARRANT(TALKW) - 2024 Q4 - Annual Results

Financial Highlights and Business Overview This section summarizes Talkspace's strong 2024 financial performance, driven by strategic shifts and providing future guidance Fourth Quarter & Full Year 2024 Performance Summary Talkspace achieved strong growth and profitability in Q4 and full year 2024, driven by a strategic shift to the payor market and expanded covered lives Full Year 2024 Financial Highlights | Metric | FY 2024 (in millions) | YoY Growth | | :--- | :--- | :--- | | Total Revenue | $187.6 | 25% | | Net Income | $1.1 | * | | Adjusted EBITDA | $7.0 | * | Fourth Quarter 2024 Financial Highlights | Metric | Q4 2024 (in millions) | YoY Growth | | :--- | :--- | :--- | | Total Revenue | $48.7 | 15% | | Net Income | $1.2 | * | | Adjusted EBITDA | $2.7 | * | - The company's CEO highlighted a significant strategic shift focusing on the payor market, which has grown the total covered lives to nearly 200 million. This strategy targets commercially insured adults, teens, seniors, and active military members[4] Key Operating Metrics at Year-End 2024 | Metric | Value | YoY Growth | | :--- | :--- | :--- | | Eligible Lives (millions) | 179.4 | 37% | | Completed Payor Sessions (thousands) | 1,229.2 | 45% | | Consumer Active Members (thousands, at year end) | 7.2 | (38)% | Key Performance Metrics This section details Q4 and full year 2024 financial drivers, highlighting revenue growth from Payor and DTE segments and improved profitability Fourth Quarter 2024 Key Performance Metrics Q4 2024 saw 15% revenue growth, primarily from Payor segment, achieving net income and Adjusted EBITDA despite gross margin decline due to reduced operating expenses Q4 2024 Revenue Growth by Segment (YoY) | Segment | Growth Rate | | :--- | :--- | | Payor Revenue | +34% | | DTE Revenue | +7% | | Consumer Revenue | -35% | - Gross margin declined to 44.2% from 49.4% in the prior-year period, driven by a shift in revenue mix towards the Payor segment[7] - Operating expenses decreased by 11% year-over-year to $21.0 million, contributing to improved profitability[7] Q4 2024 Profitability | Metric | Q4 2024 (in millions) | Q4 2023 (in millions) | | :--- | :--- | :--- | | Net Income (Loss) | $1.2 | $(1.3) | | Adjusted EBITDA (Loss) | $2.7 | $(0.3) | Full Year 2024 Key Performance Metrics Full year 2024 revenue grew 25% to $187.6 million, driven by Payor segment, achieving profitability with $1.1 million net income and $7.0 million Adjusted EBITDA Full Year 2024 Revenue Growth by Segment (YoY) | Segment | Growth Rate | | :--- | :--- | | Payor Revenue | +54% | | DTE Revenue | +14% | | Consumer Revenue | -30% | - Full-year operating expenses decreased by 7% to $90.3 million, improving the company's bottom line[7] Full Year 2024 Profitability | Metric | FY 2024 (in millions) | FY 2023 (in millions) | | :--- | :--- | :--- | | Net Income (Loss) | $1.1 | $(19.2) | | Adjusted EBITDA (Loss) | $7.0 | $(13.5) | Financial Guidance for 2025 Talkspace projects continued strong revenue and Adjusted EBITDA growth for full year 2025, reflecting confidence in its strategic direction Full Year 2025 Guidance | Metric | Guidance Range (in millions) | | :--- | :--- | | Revenue | $220 to $235 | | Adjusted EBITDA | $14 to $20 | Consolidated Financial Statements This section presents Talkspace's consolidated financial statements, including income, balance sheets, and cash flows, detailing the company's financial position and performance Consolidated Statements of Income The 2024 consolidated income statement shows a significant turnaround to $1.1 million net income, driven by 25% revenue growth and reduced operating expenses Revenue by Segment (Full Year) | Revenue Segment | 2024 (in thousands) | 2023 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Payor revenue | $124,339 | $80,823 | 53.8% | | DTE revenue | $38,466 | $33,614 | 14.4% | | Consumer revenue | $24,788 | $35,608 | (30.4)% | | Total revenue | $187,593 | $150,045 | 25.0% | Profitability Metrics (Full Year) | Metric | 2024 (in thousands) | 2023 (in thousands) | | :--- | :--- | :--- | | Gross profit | $85,836 | $74,380 | | Income (loss) from operations | $(4,497) | $(23,209) | | Net income (loss) | $1,148 | $(19,182) | - Total operating expenses decreased by 7.4% year-over-year, driven by a significant 40.2% reduction in Research and development expenses and a 3.6% decrease in Sales and marketing expenses[15] Consolidated Balance Sheets As of December 31, 2024, Talkspace's balance sheet reflects strong liquidity with $117.8 million in cash and marketable securities and healthy stockholders' equity Key Balance Sheet Items (as of Dec 31) | Account (in thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $76,692 | $123,908 | | Marketable securities | $41,118 | $0 | | Total current assets | $130,182 | $139,800 | | Total assets | $138,677 | $142,221 | | Total liabilities | $21,282 | $23,575 | | Total stockholders' equity | $117,395 | $118,646 | Consolidated Statements of Cash Flows In 2024, Talkspace generated $11.7 million cash from operations, used $46.7 million in investing, and $12.2 million in financing, ending with $76.7 million cash - Net cash provided by operating activities was $11.7 million in 2024, a positive reversal from a net cash use of $16.4 million in 2023[25] - Net cash used in investing activities was $46.7 million, largely due to the purchase of $41.1 million in marketable securities and $5.4 million in capitalized internal-use software costs[25] - Net cash used in financing activities was $12.2 million, driven by an $11.0 million repurchase and cancellation of common stock[25] Non-GAAP Financial Measures This section provides a reconciliation of GAAP to non-GAAP financial measures, specifically Adjusted EBITDA, to offer a clearer view of operational performance Reconciliation of GAAP to Non-GAAP Results This section reconciles GAAP Net Income to Adjusted EBITDA, showing a significant improvement to $7.0 million Adjusted EBITDA in 2024 Reconciliation to Adjusted EBITDA (Full Year) | Line Item (in thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Net income (loss) | $1,148 | $(19,182) | | Stock-based compensation | $9,173 | $8,395 | | Financial (income), net | $(5,739) | $(4,245) | | Depreciation and amortization | $859 | $1,285 | | Other adjustments | $1,521 | $218 | | Adjusted EBITDA | $6,962 | $(13,529) | Reconciliation to Adjusted EBITDA (Fourth Quarter) | Line Item (in thousands) | Q4 2024 | Q4 2023 | | :--- | :--- | :--- | | Net income (loss) | $1,214 | $(1,306) | | Stock-based compensation | $1,883 | $1,994 | | Financial (income), net | $(616) | $(1,330) | | Adjusted EBITDA | $2,659 | $(306) |