Sean Dodge : Maybe just coming at the pricing service fee question in a little bit different ways. If we look at revenue per customer, on one of the last calls, Jon, you talked about customer fields, so fields being fees plus yields. As yields have increased, how much pushback or skin, I guess, have you had to give up on the fee side, maybe kind of catalyze more by the higher yields and not necessarily from any change in the competitive landscape. Is there been I guess, has there been a meaningful shift there? And then over the longer run, should we think about average revenue performance customer outside of cross being pretty stable, where lower fees offset higher yields? Or do you think there’s some kind of net gain where higher yields you don’t necessarily have to give all the back end in fees or lower fees?
Jon Kessler: What your question suggests, Sean, is and it is an important observation is that there is some I’m an economist, so I’ll say it this way. There is some cross elasticity between what’s happening with yields and in particular what’s happening with the spot market and pricing pressure. That’s a natural thing, and it makes a lot of sense from the perspective, particularly of larger customers. But I actually think when you look at it, I’ve been somewhat underwhelmed, I’ll say, by the extent to which there has been that kind of competitive pricing pressure. I think the bigger issue is that, is two issues. One is that and as it relates to this year and one is more generally is that is the pace of, for lack of a better term, mix shift as Jim put it earlier.
And that mix shift being towards HSA, which in terms of total revenue per customer is awesome or total margin per customer. However you want to think about it is awesome per account. But if I focus solely on service revenues, it’s a little bit of a downer, because HSAs tend to have the lowest monthly fees and then there are a few other things. Now you’ve got the fees from investments in there. But they’re going to be lower service fees, whereas conversely, for example, the highest service fee per account product is commuter. Fantastic. And as well as COBRA. But I don’t think anyone would say that COBRA is a big margin maker. And it’s because you don’t have a bunch of other revenue sources there. And so, I think that’s really the biggest factor.
And so as you model this, I mean, there should be some correlation between the pace of relative growth of HSA versus the rest of our business in terms of accounts. And the pressure that you might see on these for lack of a better term, unit services. Second point is that I think now for more unique to this year is that as we reported, we did very, very well with relative to our expectations this year with our new logo business and particularly with our enterprise. And, of course, enterprise, where you get new logos is, where you’re going to be most competitive, particularly when, those logos are coming with existing assets. And so the fact that we did well on assets is in part reflected, the sort of other side of that coin is that, you’re going to be more competitive on your HSA fees for that business.
So, that’s a thing that that’s worth considering in particular for this year, but it doesn’t move the needle that much. I don’t I don’t know. I mean expressed on a account, service fee for total account basis, maybe it’s moved the needle a half percent. I don’t know. And then the last point I’d make is a little bit into our strategic planning horizon. So thinking about beyond fiscal 2025, it is very much our goal or a goal of ours to grow the noncustodial line. Remember, we think about service revenue as inclusive of interchange. And the reason we break out interchange from the rest of service revenue is just that it’s big. It’s material. But if you look at that line as a whole, or for that matter, exclude interchange if you want to, right?
Our goal is very much to see that line grow. And the way that’s going to happen is several fold. The first is, as we talked about it at the investor day, you know, it it’s going to about the growth of incremental services as we talked about, both new and then turning that CDB growth from, okay. Now we’ve got it to the place where notwithstanding the national emergency type stuff. It’s a black maybe it’s a one. I don’t know. It’s black at least a black zero, but it’s not a crooked number. That will be helpful. But also incremental services around data analytics and the like that we talked about at Investor Day. So over time, we do want this thing to grow. We’re never going to shy away from the fact that the custodial businesses, the component of revenue is and should be a growth engine for the business, particularly if balances continue to grow.
And that we’re able, we’ve been able to and I think we’re going to continue to be able to make it both more productive and less cyclical. But it’s not like we’re forgetting about the service revenue. We’re going to try and grow this over time.
Operator: The next question is from Allen Lutz with Bank of America.
Allen Lutz: I guess for Jon or Jim here. The technology and development spend has increased pretty dramatically over the past 2 years. But if you look at this past quarter, it was flat year-over-year. And at Investor Day, you talked about a lot of the investments you’re making in digital CDB parts, cost transparency, cybersecurity. So I guess as we think about this fourth quarter number here and you think about what’s embedded in the fiscal 2025 guidance, do you expect the technology development spend to be more flattish or is that kind of continue to grow trajectory has over the past 24 months?
