Q1 2024 Accolade Inc Earnings Call
Participants
Rajeev Singh; Chairman of the Board & CEO; Accolade, Inc.
Stephen H. Barnes; CFO & Treasurer; Accolade, Inc.
Todd Friedman; SVP of IR; Accolade, Inc.
Alexander Yearley Draper; Senior MD & Healthcare IT Analyst; Guggenheim Securities, LLC, Research Division
Allen Charles Lutz; Associate; BofA Securities, Research Division
Craig Matthew Hettenbach; VP; Morgan Stanley, Research Division
David Michael Larsen; MD and Senior Healthcare IT & Digital Health Analyst; BTIG, LLC, Research Division
Jailendra P. Singh; Analyst; Truist Securities, Inc., Research Division
Jeffrey Robert Garro; MD & Analyst; Stephens Inc., Research Division
Jessica Elizabeth Tassan; VP & Senior Research Analyst; Piper Sandler & Co., Research Division
John Pinney
Jonathan Yong; Research Analyst; Crédit Suisse AG, Research Division
Robert Edward Simmons; Senior VP & Research Analyst; D.A. Davidson & Co., Research Division
Ryan Michael MacDonald; Senior Analyst; Needham & Company, LLC, Research Division
Ryan Scott Daniels; Partner & Co-Group Head of Healthcare Technology and Services; William Blair & Company L.L.C., Research Division
Stanislav Berenshteyn; Senior Equity Analyst; Wells Fargo Securities, LLC, Research Division
Stephanie July Davis; Senior MD of Healthcare Technology and Distribution & Senior Research Analyst; SVB Securities LLC, Research Division
Presentation
Operator
Good day, and thank you for standing by, and welcome to Accolade First Quarter '24 Earnings Results Conference Call. (Operator Instructions).
Todd Friedman
Thanks, operator. Welcome, everyone, to our fiscal first quarter earnings call. With me on the call today are our Chief Executive Officer, Rajeev Singh; and our Chief Financial Officer, Steve Barnes. Shantanu Nundy, our Chief Health Officer, will join for the question-and-answer portion of the call later. Before turning the call over to Rajeev, please note that we'll be discussing certain non-GAAP financial measures that we believe are important when evaluating Accolade's performance over. It's over to our CEO, Rajeev Singh.
Rajeev Singh
Thank you, Todd, and thank you, everyone, for joining us today. We entered fiscal Q2 with optimism regarding our company, our category and our opportunity to build a nationwide customer-obsessed health care delivery system off the foundation of advocacy led primary care. Let's get into the reasons for our excitement. First, revenue and adjusted EBITDA were both ahead of (technical difficulty) Second, the selling season is off to a strong start. Fiscal Q1 is really the first quarter our buyers put pen to paper on contracts, and we saw large companies in food services and retail choose Accolade. Fiscal Q2 is also a major quarter for signing new business, and the pipeline continues to look strong.
Notably, more of the deals in the pipeline include multiple offerings and (inaudible) evaluating in our category. Third, calling out 2 other drivers of growth for our business. As I mentioned earlier, both our expert medical opinion business, Accolade Expert MD and our virtual primary care and mental health business, Accolade Care and PlushCare are demonstrating strength. Today, we'll focus on the virtual primary care business. On the enterprise side of the business we fully deployed is notable. On the consumer side of the business, we continue to see strong demand for the high-quality longitudinal care delivered by our physicians and therapists and growth rates remain strong and steady.
Since I'm sure we'll get a question about the impact of GLP-1 drugs, let me make a few comments here. Accolade's approach is different than many other companies in this space. That said, we did see a benefiting from the demand associated with GLP-1 weight loss drugs. I call this out for 2 reasons: to bring your attention to how Accolade differs from other companies who have a role or a part to play in this health care journey. While it is a fact that GLP-1 drugs are driving interest in virtual primary care, this is, in many ways, no different than when COVID drove demand for virtual primary care or during is. Our care delivery teams, led by Dr. Shantanu Nundy and Dr. James Wanda, are ensuring that we apply the proper clinical rigor in prescribing these drugs only to patients who meet the defined criterion for prescription. We don't earn money for prescribing medications, so there are no incentives driving behavior to the contrary.
Additionally, because of the nature of our service, we have the ability to help the patient with all of our expertise medications. Partners like Virta may be a strong alternative for our customers and members seeking to address their need. Moving on. Fourth, our government business continues to grow on the strength of our autism care demonstration and other opportunities we are pursuing. As we have said previously, the T5 award remains in a process phase with a decision on HealthNet protests now due in September. Our customers, benefit buyers are overwhelmed by the number of solutions available to them in the market. Our trusted partner ecosystem solves that problem by betting critical partners in core categories. Last quarter, we added Equip, a leader in delivering eating disorder treatments. We'll continue to add new partners in a highly curated way and leverage our technology and data platforms to ensure strong adoption and efficacy for those programs.
Finally, in terms of quarterly highlights, we made tremendous progress on our One Accolade Initiative. This is already having the effect of streamlining decision-making in Accolade and improving our operating structure as we scale to serve hundreds more customers and millions more members. Now wrapping up before I turn the call over to Steve, let's briefly take a giant step backward and look at our opportunity, Blackstone costly health care system that intimidates people instead of welcoming them. We are demonstrating through outcomes, engagement and measurable ROI that an advocacy led population health strategy, one we call personalized health care is the key to transforming the U.S. health care system for our customers. To address that challenge, we're aspiring to build the first customer-obsessed nationwide delivery system in the United States. That is no small task, but the opportunity for the company that succeeds there is enormous.
The heart of that business is an advice-led primary care practice that once again puts primary care in the center of delivering high-quality care. Over the last 50 years, for a variety of reasons, primary care spend as a percentage of total health care spend and utilization has gone down, while specialty care and pharmacy couple means of reversing that trend, and our clients and prospects are agreeing and voting with their dollars. The market opportunity for doing this successfully is enormous. Our ability to influence many different parts of the health care journey has many significant factors. Advocacy by itself is a $25 billion market. Expert medical opinion is similarly sized. Primary care is a 200B and the capacity to enable dozens of ecosystem partners is also extraordinary. Today, fewer than 1,000 companies have adopted true advocacy led benefits programs. There are over 35,000 companies with more than 500 employees who would consider our target market. Put it all together, and we see runway for years to come with the real beneficiary of being the health care consumer.
Approximately, $1 million in performance guarantee-related revenue earlier than expected as we had initially forecasted this PG to be earned in fiscal Q4. As we've noted previously and highlighted in our Capital Markets Day presentation on May 8, at the start of the fiscal year, we generally forecast that savings-related PGs will be recognized in our fiscal Q4 when we are in the second half of the fiscal year. Turning to the balance sheet. Cash and cash equivalents totaled $303 million at the end of the first fiscal quarter. As a reminder, our convertible notes are not due for about 3 years. So with $303 million cash on hand, we have more than adequate liquidity to achieve our financial plans without going back to the capital markets, placed guidance to a range of $410 million to $414 million, representing year-over-year growth of approximately 21% at the midpoint, excluding the customer termination noted earlier.
We are also raising our full year outlook on our bottom line, updating our adjusted EBITDA loss for fiscal '24 to a range of $6 million to $12 million. And with respect to the fiscal second quarter, we are now guiding to revenue in the range of $93 million to $95 million and adjusted EBITDA loss in the range of $11 million to $14 million. This adjusted EBITDA guide puts you at roughly negative $25 million for the first half of the year, which when combined with our annual guidance shows that we expect to be significantly positive on an adjusted EBITDA basis for the second half of the year as our cost initiatives become fully realized, and we turned the corner towards full year profitability on an adjusted EBITDA basis in fiscal '25. And with that, we'll open the call to questions.
Question and Answer Session
Operator
And thank you. Our first question comes from Ryan Daniels from William Blair.
Ryan Scott Daniels
Maybe a big picture one for you. We're seeing a lot of recent data that indicates that 2024 could be one of the larger health care cost trend increases for employers in about a decade. So maybe a 2-part here, #1, do your early channel conversations lead you to believe this is being widely recognized in the market? And then #2, if so, is that really helping your efficacy led PCP initiative is kind of a means to battle that trend at scale?
Rajeev Singh
Ryan, thanks for the question. Thanks for being here. I'll address the question and see if Barnes got anything, you might want to jump in on it. The first part of the question, are we looking at a year ahead where medical canine is going to be significantly higher or materially higher than it has been in years past. I think that's very consistent feedback we're hearing both from our customers, from the consultant community and from the indexes with the early view on the indexes for the year. And I think the corollary to that, Ryan, is very true.
Now when companies are looking at increased cost, some companies are looking at significant changes in the landscape with things like GLP-1 or other material ways that are hitting the healthcare ecosystem in 2023 and 2024. They're looking for broad-based solutions that solve the problem at scale across the entirety of their population. And that's where we think we really differentiate ourselves. Primary care is a part of the story, but primary care built off of an advocacy platform where you can surround primary care with data, service and simplicity, we think it's really differentiated. And that no doubt is playing a role in the growth of our pipeline on a quarter-for-quarter basis.
Operator
And one moment for our next question. And our next question comes from Craig Hatan Back from Morgan Stanley.
Craig Matthew Hettenbach
Rajeev, you spoke to some of the strength in expert medical opinion. And it does look like maybe there's some pent-up demand out there. Can you maybe just give a little bit more color in terms of some of the patterns that you're seeing and what that means for your outlook here?
Rajeev Singh
Yes. Craig, first of all, thanks for the question. I've got you here. One of the 2 things that drive extra medical revenues and growth. The first is new logo acquisition, are we growing by acquiring of new customers. And we do that both with our direct sales channel and with our outside partner channel. The answer to that question is yes. We're continuing to see strong growth there. The demand for a service like apneas rationally aligned what the customer needs continues to be strong. The second part of that story is utilization. And we're continuing to see utilization at levels that we've previously seen. And both of those things are driving the growth rate of there for mention business.
Operator
And our next question comes from Jeff Garro from Stephens, Inc.
Jeffrey Robert Garro
So it sounds like I'm hearing an increased emphasis on virtual primary care as a differentiator. So I was hoping you could comment a little bit more on that? And also the mention of an increase in interest in more than one product at a time. So relatedly there, curiously here on any particular themes of combinations of products that prospects are interested in.
Rajeev Singh
Thanks for the question, Jeff. Let me start with the back end of your question. Last year, when you look at the deals we closed last year, and we had a strong bookings year last year, 30% growth of the year before. That year, we saw the majority of new customer acquisition came in with more than one product. And so whether that was a apps primary care, advocacy plus DMO, advocacy plus a trusted partner, you saw the majority of our deals come in with multiple products as part of the first sale. We think that's reflective of customers understanding the strategy, believing that a first-line health care suite is aligned with their needs and also wanting to see a platform to leave all of those capabilities together. And so that trend continues into this year.
And so I think I would guess over time that, that just becomes the norm and that what we're looking at or customers who are looking for a suite of solutions to solve the lithium challenges that they're facing when they're trying to reduce health care costs and improve patient experience or member experience. First part of your question, Jeff, we would say that the way we've been thinking about our service from the beginning is that primary care on a platform of advocacy is fundamentally differentiated, particularly when you're talking about an advocacy platform that today is between 2.5 million and 3 million members, we have an extraordinary experience of delivering advocacy. We're now layering primary care on top of it. And what that really means is every primary care physician that works at Accolade has a 360-degree view of history of the patients that we're serving has an understanding of the medications that are on and the conditions that they're facing and also have an understanding of the benefits ecosystem that the employer has aligned for that to put for that patient.
That gives our primary care position to superpower that other primary care don't have. And so a year ago, we really just got started in bringing primary care to market, they actually care offering. And I think we were learning about how customers wanted to understand and embrace the solution. What we saw was a strong grade of the solution last year. We deployed those customers on January 1. We're seeing great uptake in terms of their utilization. And I think it's fair to say that it's a more significant and pronounced part of our value proposition as we go to market today because we saw such traction in last year.
Operator
Our next question comes from Jessica Tassan from Piper Sandler.
Jessica Elizabeth Tassan
Congrats on the quarter. We were just hoping you could remind us what the performance revenue in 1Q '23 was, whether there was any in this quarter? And then just is that kind of what accounts for the year-over-year change in adjusted gross margin?
Stephen H. Barnes
It's Steve. Thanks for the question. Yes, there is certainly some performance guarantee impact in Q1. Let me just walk you through to the guidance change for the quarter was 89% to 91%. So at the midpoint of the range by a little more than $3 million in the top end of the range, little more than $2 million. There was about $1 million of performance guarantee pull forward, recognized in Q1 that we expect it to be recognized later in the year. So we called that out. So the 2 betas, call it, $2 million, $2.2 million as the midpoint, $1 million at the top of the range. If you look back to last year, you'd see that in this quarter last year, we had a fairly significant performance guarantee revenue item recognized in Q1 for a little more than $3 million. So the year-over-year comp there is driving some of the change in -- or actually most of the change in the gross margin and the full year outlook for gross margin, we remain consistent with, call it, high 40s expectations for the year.
Operator
And our next question comes from Michael Turney from Bank of America.
Allen Charles Lutz
This is Allen in for Mike. Raj, you mentioned, I guess, at Investor Day, you talked a lot about the partnership strategy. And I think one of your partners, Verta, talked about how who is already driving some volume into their business. I guess is there any way at this moment year to quantify the referral momentum that you're seeing or maybe total partners, how that's changed? And I guess, how important is the partnership strategy as you think about the 2025 selling season?
Rajeev Singh
I appreciate the question, Allen. I think whether you're talking about the 2024 selling season the 2025 selling season, the partnership strategy has been essential part of the way we position our value to customers. Remember, if you were to step back, customers are looking to solve 3 core problems. The first, they want a better experience for their employees. They believe fundamentally that the existing health care ecosystem makes it difficult for people to understand and get the health care that they need. Second, as Barnes spoke about in his first question today, looking at trend lines that is beginning to have a very negative impact on their business and off of big, big numbers. They want to be able to control that trend line.
And the third thing they're wrestling with is an extraordinarily complicated health care ecosystem with a whole suite of carve-out solutions that offer extraordinary innovation to their members, but their members have a very difficult time finding and the benefits buyers have a very difficult time managing. That third value proposition is fundamentally addressed by our trusted partner ecosystem and our capacity to go to market with a betted set of partners where we've built real product integration, and we have an opportunity to help manage those partners on behalf of our customers. That's been essential to the value proposition forever. And what we've seen now is that as the ecosystem has grown and the integrations have delivered more depth, we're driving the kind of results that, as you mentioned, (inaudible) spoke about at Investor Day, right, 2x utilization at Accolade customers versus non-Accolade customers. That value proposition is so clean and so great for customers that it impacts buying behaviors.
And so in terms of quantification, I'd say there's a couple of ways to look at it today that we speak about. First is the breadth of the relationship if you look across all the categories that our customers are looking at, I think you'll find that our ecosystem is broader and has more depth in a category that matters those customers than any other ecosystem in the space. The second part of that story is customer uptick. And we've been talking over the course of the last couple of years about the fact that we're seeing an increasing majority of customers who have taken at least one trusted partner ecosystem relationship. Those 2 things should give you some sense, Allen, that this is right at the heart of the value proposition we deliver to our customers.
Operator
And our next question comes from Stephanie Davis from SVB Securities.
Stephanie July Davis
I wanted to also touch on the trusted partner ecosystem. Is this something where there's exclusivity with these partners? So there's some sort of head-to-head competition as you try to go and get them in your network versus that of another peers? Or is this something where it's more of a question of rest and having kind of the widest possible bench for folks that might want some variants in who they're partnering with.
Rajeev Singh
Thanks for the question, Stephanie. I think it's actually neither of those. And so let me start with the question of exclusivity. In fact, our partners, we partner with multiple companies in certain categories that we would expect to continue to partner with multiple companies in certain categories. The rationale for that is fundamentally around ensuring that our customers have the right choice. It also reads competition and innovation in each of those categories, which we think is good for the universe, good for our members, and good for our customers. And our opportunity to build differentiation with those partners, which could be exclusive of your differentiation and your investment in building integration with those partners is real, is where we think we have the opportunity to differentiate ourselves from potential competitors in the category who also have partnership, but also give our customers incremental value. So that hopefully, that addresses the exclusivity point.
On the second point, as it relates to breadth of the service, we're going to be very focused on categories that our customers care about, categories where they're spending money, category where clinical outcomes can be improved and that we think can tangibly have hard impact on headline. And in those categories, we're going to go keep -- but I think what's important in terms of our strategy is we're going to bet those partners. We want to choose a multitude of partners. We'll choose a couple, 2, maybe can 3 that we believe are at the high end of that category in terms of value delivery at the high end of that category in terms of accountability and also around what our customers are most interested in. So we won't go wide necessarily that we have to, we'll be focused on the categories that matter and being really smart about the company that we've had.
Operator
And our next question comes from Ryan MacDonald from Needham & Company.
Ryan Michael MacDonald
Congrats on the quarter. Raj, you talked about in the prepared remarks that the government business continues to grow nicely there with areas like the initiatives in Accolade Care. But obviously, you've got some delays on the T5 contract. As we think about the growth opportunity in government over the next couple of years here, what do you expect the primary drivers to be? And are you dependent on success with T5 to be able to continue to grow that government vertical?
Rajeev Singh
Thanks for the question, Ryan. Well, it is a couple of different ways. First, Accolade continues to be an exciting part of the business. It grew modestly on a year-over-year basis. We expect it to continue to grow, and we have an opportunity to continue to grow that, and it will be an important part of our government business moving forward. In terms of opportunities to grow beyond that, there are multiple incremental evaluations happening inside the government that we'll continue to pursue the range from the Tricare universe to other parts of the government universe that because we're still in the depths of those conversations, we haven't really talked about publicly and we'll -- but then, of course, it's a T5 relationship. We believe the CFO relationship presents significant opportunity as we've talked about that now going in the past.
Unfortunately, the government build process tends to delay things. And so it's now, as we said, at this point, delayed until August 24, it could potentially delay beyond that. We don't know. But what we can say is between office care between our other pursuits of the government, we can grow without the T5 arrangement. But with the T5 arrangement, we think there's a very real opportunity to show strong growth across the category. And one moment for our next question.
Operator
And our next question comes from Jonathan Yong from Crédit Suisse.
Jonathan Yong
Just on the pipeline commentary, it sounds like things are tracking well. But I guess can you provide any color on how it's developing against your internal expectations? Is the pipeline larger than last year? And alongside that, it sounds like you're selling more -- or there's more interest in multiproduct solutions. So I guess, can you give any additional color on that and what are people looking for, which I think you talked about before, but just get a little more color there.
Rajeev Singh
Hi, Jonathan, pipeline is bigger than it was last year at this time. Pipeline continues to grow. I wouldn't say beyond our expectations because our expectations are always aggressive, but the pipeline continues to grow in a way that supports the objectives we have for the company for the year. As it relates to multiproduct deals, last year, the majority of our deals were multiproduct deals. And that same phenomenon is -- we're quite confident. Q1 witnessed the same phenomenon. We're quite confident that, that same thing will happen in Q2 through Q4. And because of the breadth of our trusted partner ecosystem and because of the breadth of our solutions, advocacy, primary care and mental health and expert medical opinion, that desire for customers to do -- to one-stop shop across a number of categories, we think differentiates us against a number of our competition.
Operator
And our next question comes from Gloria Singh from Truist Securities.
Jailendra P. Singh
Is Jailendra Singh from Truist Securities. Congrats on a good quarter. One of your competitors recently announced a partnership with in-home care provider to add virtual to in-home care model to its offerings. I was just curious on your thoughts on extending your offerings to your home? And have you seen any demand in this area among your employee lines?
Rajeev Singh
Thanks, Jailendra. I have a couple of thoughts here. First, you'll see us continue to expand our partner ecosystem into new category -- we announced today the partnership that we're really excited about, a company called Equip that's disposed on really improving the service for people, families challenged by eating disorders. If you look across the breadth of the categories that we're delivering, we're delivering the widest set of solutions to customers in categories that are directly relevant to as I mentioned before, improving clinical outcomes, improving convenience for their members and lowering cost. Do we believe over time that home health is an area that could potentially have an impact in those 3 categories. Absolutely, we do. And you should stay tuned in terms of what are we -- for us, it's always about finding the right partner, checking those 3 blocks and ensuring that it's aligned with our customers' expectations.
Operator
And one moment for our next question. And our next question comes from Sandy Draper from Guggenheim.
Alexander Yearley Draper
Thanks very much, and I appreciate you taking the question. I'll try to see if I can frame this right, probably for you, Steve. With the EBITDA outperformance this quarter, improving guidance and EBITDA, lower EBITDA losses -- are you -- as you go through the year, looking beyond that, do you change the way you think about, okay, maybe we step back up some reinvestments in sales and marketing and R&D or maybe we go back into the M&A market? Or is it really what we just want to scale margins, improve our sales, improve to the market, we can get closer and closer to those EBITDA targets you set at Investor Day. I'm just trying to think with the strong start to the year, you're not going to make a snap decision, but if this type of performance continues by the end of the year, do you start to think about changing either M&A or internal investments? Or is it really just -- let's just ramp faster in terms of margins. Hopefully, that makes sense.
Stephen H. Barnes
Yes, a great. Thanks, Sandy. This is Steve. So a couple of things. First of all, you're right, we had a strong quarter in Q1, the bottom line by about $4 million, and you see us raising our guidance for the full year. For most of that case 3 and the other $1 million, you could consider that to the timing of investments and things like marketing programs, et cetera. But we're very focused on getting the company to profitability as we laid out at Capital Markets Day. And by the second half of this year, we will be better and on a full year basis in fiscal '25. So that's a very important operational and strategic initiative for us. We also believe a frother reasons Raj has laid out, given the strength we're seeing in the business and the strength of the platform and being diversified across as you can see primary care expermedical opinion, the partner ecosystem. There's a lot of ways for us to grow, and we believe we're investing amply to achieve the growth targets we've laid out while also driving the company to profitability as we laid out in a lot of detail on Investor Day. So take a little bit more color around the EBITDA guide and how it ties into our balance of growth and profitability.
Operator
And one moment for our next question. And our next question comes from Richard Close from Canaccord Genuity.
John Pinney
This is John Penny on for Richard Close. I was just hoping you can get some commentary on the virtual blue plan and how that's progressing? Or any commentary you can provide there would be great.
Rajeev Singh
Yes, I appreciate the question. The partnership continues to progress as expected. We've got the first round of going to market in that space. We've seen the first green shoots customer acquisition and utilization. And so yes, I'd say the good news is we have the relationship in hand. The good news is we've actually deployed and delivered. And it's a little bit too early for us to give you any color commentary on the kind of utilization that we're seeing. But I can tell you that we continue to be really excited about the relationship and the opportunity in that space.
Operator
And our next question comes from Stanislav Berenshteyn from Wells Fargo.
Stanislav Berenshteyn
Maybe on PlushCare, what percentage of incremental growth expected to come this year will be coming from the enterprise channel? And can you also maybe comment on customer acquisition costs on the consumer side?
Stephen H. Barnes
First of all, thank you for the question. The growth coming today that you're seeing in revenue is largely driven by the consumer business. But importantly, we just launched several customers at more than 0.5 million members on the enterprise side of the platform. So that was on January 1, where most of those launched. So it's early days, but we're seeing strong utilization in line with our expectations here in that first quarter. So most of the near-term growth has been on the consumer side, but our expectation for that, that will also -- will see significant contributions from the enterprise side. With respect to customer acquisition costs, I would say, without getting specific about the dollar, we've seen it be consistently attractive in the same range we've seen over the past period of time, call it, last 12 months. And so there's been a lot of opportunities to capitalize on that.
Operator
And our next question comes from David Larsen from BTIG.
David Michael Larsen
Congrats on the good quarter. You clearly have a very robust solution that's very comprehensive and impacts trends and improves the quality of care. One of the things that we've heard, though, is that when a customer decides to implement or potentially decides to implement accolade, it can be a heavy lift. You got to switch call centers from the carriers. Sometimes they have to switch TPAs. And because of that, sometimes they may delay or not choose to implement Accolade. Just what are your thoughts around that? Do you ever get pushback from that or not? Appreciate it.
Rajeev Singh
Thanks for the question, David. There the way to think about it, if you're to look at the growth of the category, look at the growth of our customer base, our company had 54 customers on July 3, 2021. 2020 when we went public. The last time we talked about our customer count. Here we are in 2023, we have more than 800 customers. When we think about bookings growth from fiscal 2022 to fiscal 2023, our bookings grew by 30%. We're looking at a strong year ahead and we had a very strong Q1 as it relates to bookings. So when we look at customer adoption of a brand-new category, we talk about health care services, I don't know that there's a category in the enterprise segment, where we're going directly to employers and the health plans. So that's growing more aggressively active scale at this side. When you think about our revenue forecast for the year, we just took up top line guidance for $400 million to $414 million from a range perspective. Each of those representing strength of the business, the strength of the business is always fundamentally driven by growth as it relates to new customer acquisitions. So hopefully that answers your question, man.
Operator
And our next question comes from Robert Simmons from D.A. Davison.
Robert Edward Simmons
I was wondering if you could put a finer point on your commentary around new sales or new bookings core being strong. Like how much do they actually grow? And what are your expectations for the year?
Stephen H. Barnes
Thanks for the question. We don't epically talk about bookings numbers in at the outset of the year. We've talked about consistent growth on bookings on a year-over-year basis. Last year, even outperforming our expectations of growing at 30%. We expect bookings to grow in that 20% to 25% range on a year-over-year basis. And that's the way we're thinking about the year ahead. And so we'll give you more color commentary on that at the end of the year. But what we can tell you, as we mentioned in the prepared remarks and in several questions, we're tracking to our expectations with a stronger pipeline than we've seen in the past.
Operator
And I am showing no further questions. I would now like to turn the call back over to Todd Friedman for closing remarks.
Todd Friedman
Thank you, everyone, for being here, Raj. We appreciate you spending the time with us, and we look forward to future conversations.
Operator
This concludes today's conference call. Thank you for participating. You may now disconnect.
