PCTY - Earnings call transcript Q1 2018 | Paylocity Holding Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen, and welcome to the Paylocity Fiscal 2018 First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. I’d like to introduce your host for today’s conference, Mr. of Investor Director Senior Glenn, Finance Relations. and Ryan Sir?

Ryan Glenn

Senior Paylocity’s call our XXXX, Relations; replay for market afternoon, CFO Paylocity. be Ryan the discussing ended and is Relations first and this results Beauchamp, to announced welcome Glenn, under I’m in be closed. the XXXX. will Today, the fiscal the Good the after webcast joining the will and me and call earnings press quarter we CEO September of of available XX, of on Director Finance on today Investor issued which Toby Steve of next of on Williams call XX Investor A release our results for tab. days Paylocity; website

other today’s these that remarks, actual the forward-looking results factors, results subject materially by uncertainties cause statements. you caution to including cause to can session, forward-looking are made implied those projected risks could that from statements. from the to must we These risks and based and or the statements beginning, solely to statements. the numerous during contain information Also, forward-looking these actual differ are question-and-answer statements and present subject important on which statements in are uncertainties, Before differ results

GAAP. forward-looking with We results For which are available Exchange reconciliation financial Securities business, do non-GAAP on will and Commission. under non-revenue as directly note financial measures time, non-GAAP We unable the GAAP unreasonable reconciliation website financial not additional with is upcoming schedule conference at reconcile we York be Investor unless needed Commission to any Also, With and their on in internally schedule, November which Exchange our more And Investor financial detailing representative Toby non-GAAP this filings will to Please X, in effort. how measure we Mizuho contained non-GAAP information, release, to In call we believe attending certain information, that, filed and York unavailable and tab there are I X. in is Stifel November we that the a Relations complete New at and comparable to Steve. of today the on please we is TIMT measure to and without the that paylocity.com measures to me will the discuss our regards during Conference state forward-looking today’s will because other The the and is the RBC located disclosures. are call, undertake any December press refer a currently these attending the the for update factors Steve Securities turn to statements. to measure let One-on-One measures. measure XXXX course Toby our refer and duty New on Conference therein the the of Growth the be risk Chicago in Conference any X. over our

Steve Beauchamp

to of Ryan, mid-September on quarter across and quarterly start development. first XXXX the team finance, to I brings his Toby by business for fiscal wealth call. us you, and to like to a of first our in our thanks us Williams earnings strategy all experience would call. and Thank joined Toby welcoming CFO, you earnings joining Paylocity corporate

new quarter, revenue client good and brokers we the to of new than continue increase channel, as referrals a creating once revenue of current year. first the invest million of driven off our revenue to additions of stronger by quarter while by again an represented penetration we grew to XX% of our increase client period increase number the newest partners. last are relationships XX.X% versus fiscal continue also total rates business in start average Broker an revenue in per more some Recurring in the XX% first as We in XXXX same for growing $XX.X on with with the offerings.

As of and fiscal Overall, our for million momentum all with training $X clients the first force, or enhancing XX.X% business. the providers we fall continue to many from switching broker by was based selling increased channel. we in the XX.X% as improvements season, of EBITDA the overall about our leverage January. staffing the million operating sales or our made of on revenue basis first year entering of target is XXXX expanded sales busiest in feel know, point our the revenue time investments you of improvement quarter good fall levels, in fiscal gross sales initiatives have EBITDA $XX.X the of in adjusted The in Adjusted driven in as scale XXX quarter in combined to XXXX. margin we programs

EBITDA we quarter adjusted fiscal increasing now adjusted With for performance, are our range. year of of our the the at million, XX.X% strong first midpoint targeting EBITDA by $X guidance the

to new of while were we HCM two conference. continue We across to today and quarter at compensation three conference HR off as as more announcement, X,XXX day to able products more are sessions with Clients calendar available our our the to same to will Today, welcomed time, both XXXX. variety clients profitability, kick Both XX excited growing improving wide We we portfolio. a breakout on revenue, product the first than Chicago, clients off kicked client of focus different in choose be we modules adding annual the from than scale. to product survey topics. our the

data providing analytics approvals. to a of our merit as Our clients part module and ability additional compensation rules Providing and overall allows cycle, compensation to informed platform HCM points compensation easily to the integrate clients most and automate will make customize workflow, our talent the decision. clients’ module our from bonus modules

ability survey new to new for employee the variety a surveys, including or Our hire, launch clients surveys. of provides product exit engagement

attracting a product IPO culture. group to clients or important addition and the our portfolio to improve ability our of available from on talent Company per completely per the data HR drive surveys module per company The from customized XX% $XXX employee employee client real-time time total when employees is March, employee from $XXX, to today’s leaders online competitive The surveys culture buys HR any all increases our of topic. targeted modules. providing compensation in addition, are to opportunity our XXXX. and up in $XXX surveys reputation increasingly the environment. per at can in year typical feedback initiatives year allows This In to of of a extend launch beyond to polls available

of we map as road Solutions. the focus our number highlighted addition product most on In initiatives to on product recent new innovative we HCM delivering announcements, a

We for continue introduction of to and a time labor invest costs. new in dashboard over total analytics with the managing

new labor, process a time learning as platform series of our some product enhancements in few largest predictive Azure all improve in modernized to clients, leveraging of Dashboard. the proprietary just categories, also capabilities our experience of a algorithm improved scheduling of approval name the recruiting and our to our Retention across We’re in insights announced submission and to and a for payroll automation machine including We examples. Risk

to product We will differentiation opportunity Our and product connection had platform the from additional our both investment believe to continued development users. soliciting clients zone, directly our provide in host ideas period in team that by in To and research year. our same XX.X% R&D opportunities. opportunity, we when increased compared quarter on development revenue continue spend as this the this capitalize to investments last total increase

continue as into Schaumburg, new in phase operational our expand our We to capacity headquarters we Illinois.

The combined overwhelmingly from work second positive. a amenities we the team environment positions and phase and of our feedback the completed first-class will our business. has with need be The making are us move investments collaborative attract been the retain grow in to creating in November, we talent to modern

McGrail and detail asset, The like opening learning to the provide to educating development most updated center to the will Peter our to employees. and excited review very would later a center the month. learning in results XX,XXX-square-foot I our Toby also pass training important guidance. and floor J. We’re call be be to quarter’s now dedicated this

Toby Williams

Steve. Thanks,

here from Paylocity. results, handful I’d some Before at I quarter’s observations review the overall first thought of I my weeks provide

this team known products built, continued a service. client So to on investment about opportunity the because and market-leading culture for developing in of time, the excited long was have and join focus that the Paylocity the and I’ve business I the Steve

being I’ve focus also impressed after weeks, into really great bringing tangible. in business with employees here and impressive. our us development on for The And is differentiates been product almost talent believe that’s seven the focus it the So on innovation market. really culture, the the I in

us, and our the products in great compensation like I and differentiator which R&D announced dedication our developing is to surveys, we just client about. time providing retention seen new Steve with service spent team show another real commitment for talked continues the have to which So management And up to earlier and rates.

here said, that this team. far, been I’ve and impressed to I’m all really really be so with with So excited

So into a quarter. with year. which period $XX.X results quarter XX.X% million, the the represents increase the that, was jump Total from in revenue I’ll prior for for the same the

in income total the of other during year-over-year the represented first a Recurring the interest we services interest client quarter, and first XX.X% the revenue of XX% result as year portion securities funds and on of quarter ago the up because in marketable increased recurring quarter, up fees $XX.X of year XXX.X% up $X.X a Implementation X.X% quarter our average ago million revenue For the funds up quarter. investing was was began balance from million and was were client XX% for revenue. increases, rates high-quality our and from total quarter.

mix. do products HCM than any modules we services revenue have which product implementation and previously, as fees. not and noted recruiting such the implementation can As general, in be by certain command carry In expense, payroll, implementation impacted our less growth marketplace fees

quarter, improvements Our basis and $XX.X compared profit to a million, adjusted quarter, continued quarter, the or see our expenses, margin ago in are million adjusted which from is research is in in of year in recurring development. quarter $XX.X If primarily Adjusted recurring first up improvement. we’ve we a total in million million the invest saw $XX.X XX.X% or gross point improvement. XX.X% in representing revenues scale as first recurring year XX.X% our of a the the XXX a was margin operating XX.X% which we basis XXX the result was to gross the profit adjusted turn gross point $XX.X or on natural to ago I and And business.

revenue is of combine addition On developing both sales our first or quarter a first quarter EBITDA XX.X% of revenue basis. revenue ability to extend total capabilities, expense to and was the quarter, what investment on important year $X year is the or was increased million we to adjusted XX.X% an In the our to of EBITDA modules which dollar quarter, R&D equally total modernizing XX.X% investment for pleased basis, million G&A million On or revenue refreshing year XXX income and first the or was are And basis, share maintain in expenses XX.X% million $X.X the which year. R&D, revenue $X or last G&A the fiscal annual in and non-GAAP results. of per were Non-GAAP million the we a XX.X% loss, our of basis, investments revenue $XX.X order new consistently with and by overall our XXX quarter. we in platform expense in $XX.X non-GAAP On million committed compared million versus ago basis, quarter a in to point to ago technological $X.XX GAAP improvement. leverage On basis a compared $XX.X first or our by or R&D million share in In be the million our On advantage. is in quarter $XX.X On last of to Briefly for or and our point marketing the continue adjusted to year-over-year year or $XX.X per covering ago improvement. year. we $X.X combined net $XX.X non-GAAP it quarter capitalize. a increased $X.XX of XX.X% to dollar XX.X%. what for XX.X% XX.X% basis, to or basis quarter. same million compared over a XX.X% versus revenue quarter the were of ago period costs income the a understand and in our in

was income quarter, profit operating gross the was $XXX,XXX. net was million, $XX.X income For and $XXX,XXX

our all reasonably As will may in impact or a factors a to valuation possible we to or continue is our tax will leasing we valuation we rate. release that to demonstrate months, GAAP which next relating our demonstrate GAAP maintaining quarterly If allowance profitability, it allowance we the XX portion effective basis. continue on the profitability, assess of

the any ended sheet. provide We lease effective these or With future operating $XX.X to a of potential quarter fiscal detail cannot the on valuation XXXX impact activities and million. for balance quarter basis. first tax our from we timing with on on And million currently $X.X to equivalents $X.X we assess of any will perspective, a or more quarterly While as cash continue we cash prior first respect year cash flow cash the allowance million items of corresponding the to compared in generated in the rate, quarter. from

second updated to guidance for Finally, quarter fiscal XXXX. provide our financial the for like I’d and guidance

than million. $XX.X range in greater $X.XX million based the revenue the range outstanding. total year. or expected approximately to weighted is XXXX, million to million the Adjusted be per income the to share of XX be expected be net of approximately to of is to $XX.X common $X.XX to shares EBITDA $XX.X prior XX% $XX.X range million in $X Non-GAAP is diluted average fiscal XX% million $X on million expected or in quarter second the For to

we approximately our expect in our of in in $X.XX income be diluted remain share outstanding. Thank updated in or based of you. begin in a $XXX.X $X.X is full than increase to the long-term $XXX.X million I’m guidance. greater EBITDA expected prior previous of XXXX, pleased range $XX of in of we XXXX, an our ability model. to Non-GAAP million net or an to to be range and XX of be is XX% year reflects per to is leverage per from million the to to $X.XX Q&A million expected to And from IPO from our shares share guidance. $X.XX $X when total year increase an we we’re on XXXX. ready $XX to or increase For This guidance. XX% average revenue common to adjusted stated March the million, plus the achieve weighted this goal EBITDA approximately likewise in drive goal further approximately confident million $XX the previous previous completed Operator, fiscal million Adjusted of that expected million million report We guidance our fiscal margins. $XX range now And business session. of $X million

Operator

William Thank you. is Blair Company. first Justin [Operator question from Instructions] & Furby with Our

Your line is open.

Justin Furby

And the with gusy. to aboard. I Toby, Thanks, welcome maybe guess, itself. quarter start Steve in of terms

quick commentary partly I’m hurricanes got in you think, linearity because then asked competitors you’ve think, guidance. public. I call it I any this one I about saw at a you think week I impact. all terms quarter guess, follow-up. smallest more is I’ve of since of or talked your market one obviously, And I ahead that some wondering be there wondering having there helpful? your if if or would the beat anything had dynamics? out But I’m to of went in it’s And

Steve Beauchamp

minor I the force. impact. I feel numbers that Certainly, saw great as about in were and out terms activity it than sales going question impact hurricanes. we was the the as was in – call areas, be pretty got now. enough understand bit we’re than Florida. is Texas But whole, there selling lot Yes, common. it the would to had season remarks. We what But a and got we’ve in But think for pretty get larger a historically. formal would in the happy the the our we’ve those raise call, on of some beat guidance down I quarter teams of sales didn’t we necessarily This narrowing think right in a a really is definitely I We smaller activity was slightly, what to beats able Sure.

as a we we’re better productivity how have in doing our from perspective force January. much terms to So a going assessment through is of get sales

As the in many fully went to the staffed, start like training out you January. would in We clients program. know, probably rolled of

good we think progress for and where quarter in the I are feel good really about the So year.

Justin Furby

and today, And XX% get it. Steve, if starting wondering market. And you in all around you comments in we rough at And And competitive conference deals? know your end your update your sales give of feel are then into the of of you an sort your the Got how them on dynamics? upper Paycor see Paycom think to keynote, bigger some towards letting you just level? often you that at I upper how target gave just that gravitating XX%, end? Are people impacts and as – run can user more at I’m your XX%, the reps presence

Steve Beauchamp

Sure.

The We start dynamics, first combination. and So business in I big our XX% seen a of with I’ll that. don’t ADP we’ve shift get roughly a in still competitive part. think, from Paychex

Paycom and bit different it’s grow. competitive to natural start kind companies honest you. be I’d from back be wouldn’t color we’ll think I’d go as to as I of the whole other I look But a that I’m say, to there’s sure that exact with we and you comfortable continue a not dynamics a we’ll more have I three little all see really numbers. bit Paycor seeing giving think at grow, concept all But perspective. the little more. a each is, on

last market of before. our average It year our XXX was year moved hadn’t the In customer employees. focus, terms from

And I X,XXX we do lot of of R&D, customers in would so say, become the to we as the you with at core today. But wouldn’t in and that our a in end true focus. as more of market. will continue is, we a to mid-market make the gets we’ve our space. beyond that competitive. change say XXX think we’re success attract think those staying product market upper segment, market little certainly I beyond on customers a to It’s But And we’re I the the just many or tells staying have conference customers. I fact that, employees. bit gain investments we that been focused were X,XXX that continue customers little in it’s that is, a our richer, point key at

Justin Furby

very it. much. Got Thanks

Operator

you. Thank

with Our is First Greendale Corey Analysis. next question

Your line is open.

Ken Wang

discussed Congratulations modules to Wang is the This selling in at keynote Ken today, customer on wondering the are a new opening intending quarter. conference on I’m of for you on Corey. back you more Or the just try to focus a focus? is these just great your customer base? existing new this attach really customer into

Steve Beauchamp

Sure.

we I And start roll that. then I as and today, new we the and sure train early turn it those that quarter, we organization, in getting product to product, back what products any think using the scaling new and available with client it we it’ll actively. start with that we’re we then with, we make have some be process right And and marketing now. team so the to to our do calendar talked that. they’re sales of And right typically with selling generally make will start adopters, focus the once base, that teams does which make those first in the available typically available, that on sales so a process in We we’re about as out year ourself then comfortable generally doing.

versus is, way gradually increases the will inside of client in products the back new base. to we to selling so see sales we And customers current think more

sales the I as our our reps sales existing well – as happen customers as both think customers sorry, visit that’s team. from they existing inside going from gradually to

going think to both. So be combination it’s a of I

Ken Wang

Perfect.

point? updated Just thoughts one more Any from ACA this at on me.

Steve Beauchamp

filings. ready in there’s That’s they with our of lot to customers So being at customers sure of filing. of that working a the I actively And think, to make conversations going for we’re to again ready the end happen ACA make are January. those with terms

change anything perspective experience the imminent great the legislative having on that at We’re that. point time so. that’s see this a from position in would and We product don’t to a front in do

compliance – ACA includes continue the we’re seeing to also really package, So which which clients – adopt has and the filing.

usual. our as from perspective, So business

Ken Wang

Thanks again. a lot and congratulations

Steve Beauchamp

Thank you.

Operator

Thank you.

Pat Your next from Walravens question is JMP of Securities.

Your line is open.

Matt Spencer

for Spencer like? This Pat. a you of terms lines what thanks just you’re for And Can question. bit in actually Matt new taking little on what is my seeing customers? implementation about look Hi, talk time

Steve Beauchamp

Sure.

not I have our tell you what frames would is, time implementation So changed.

kind So as been business also of that’s usual.

low-end bit XXX takes little For they’re could employee customer customer, of implement. the to weeks the us six if average-sized to It three be smaller. that at a

they changed little time products is, longer. we’ve bit it an key been can get point not bit lines and the little larger, I us. our think all As implementation have a consistently But integrated running the really take across of process a for

Matt Spencer

recruiting update excuse product January. Perfect. – can And seeing the you’re an in launched us just back then you just traction you me, Can on give that there? you

Steve Beauchamp

Yes.

we how bundles adopt give so the our of bundles don’t part in of and sell people we in entire like many we numbers the the So a of certainly lot to of recruiting exact terms And is, and reason to so buy our is part HCM average clients And continue module. similar and recruiting going surveys. new compensation that we driven in offer. the per bundle with increase is, have customer of and some to revenue hope Expense examples. being most the we’re obviously, by results recent products. see these But

Matt Spencer

much. very Helpful. you Thank

Operator

Thank you.

Robinson of of question next Your Lemus Humphrey. from Eric is SunTrust

Your is open. line

Eric Lemus

Hi, quarter. the guys. the to Thanks on taking my Nice Question question. having for partnerships. channel

but a as strong As has time, of revenue we revenue. down come pretty been look, percentage contributor over a they’ve slightly

partnerships? then expect the So look stable, And going in do when down remain with channel, increase? Or invest in investing that partnerships you your come relationships? current are to more forward, as furthermore, you more channel deeper channel that we from you so or sales

Steve Beauchamp

Sure.

then historical almost tick close post-IPO started get level be you business we were until really XX% into back think ACA getting to spike from last to we and down range. our was back to that that referrals. the of about first saw plus broker very So the I go time XX% continued year, IPO, We being if went case the fiscal to That implemented.

our so very XX% And post-IPO. the last with for been several we’ve plus range consistent historical quarters,

of think So long ACA. over one the time you I been consistent fairly down. it’s come period the for that really if don’t spike enough It’s look actually it at absent

about partnership, the channel, to the product. are that time, brokers about at investments want we Paylocity with to be of relationships also investing think I and able As a in the to think deeper same think We to new our both. tied we brokers. we want to current And lot our add get

portal give of effective continues broker that Our to doing our data brokers certain them gain be traction. their customers We many to allows ask – to the in to will access more job.

it’s so continue for we’ll last good the invest pretty for us steady channel And feel to been several and in that quarters. that

Eric Lemus

Okay. two excellent employee And next new inclusive per $XXX modules, is just then per that to color. correct? just year, want question, verify. The the of Great. That’s

Steve Beauchamp

inclusive new Correct. – the That modules. is of two new

Eric Lemus

Okay, great. Thanks, guys.

Operator

Thank you.

Your Subramanian next Lynch. Merrill from of Bank question Shankar America of is

is line open. Your

Shankar Subramanian

question. taking for thanks the Hi,

just term. margin, on EBITDA long is question the First

to in XX%. leverage you the you margin to around the about term? and a you that? long it can color where about at get But early talked too talk efficiency, You it. Can give are if gross qualitative can say operational us Is you

Steve Beauchamp

Yes.

back EBITDA. on range XX% at we of that long-term So, went adjusted we to in time kind of XXXX, XX% had I the public a think, being

cross and to so certainly us to XX% guidance a Our that, execute that’s current allows number milestone. we assuming that

at necessarily to stop I thought doesn’t it to think XX% our XX%. is, have process

up reevaluate a this where come like into see range going likely we We’re with and at looks range up this that next year we where end to – going think long-term end new year. of the year, long-term

impact we’ll of will also so We year, implementing XXX that in accounting an that that. factor well for be kind has rules as next

the you better to important XX% give by we has the where on is don’t end it So I think point end. year, fiscal this think think I XX% that to we’ll thoughts But it. of is,

As operating then scale and certainly goes to long-term we of get scale, it’s more the range. beyond current the grow business, we a possible range that think that continue can more

Shankar Subramanian

Perfect.

can guidance, a like follow-up it in year year, a consider the seems improvements, the little revenue some productivity As side. revenue sales do better versus you improvement you to the last if this actually

guidance? conservatism see So of leading it that guide growth is, that follow-up productivity I’m what revenue in you sales you are revenue assuming more in just versus to for that revenue? of to range – growth per growth to that’s is customer rate And – customer trying terms customer XX% growth

Steve Beauchamp

Okay.

So the ultimately, from revenue perspective. part first is sales the the a productivity think a certainly of is, question I driver

And so then improvements is we opportunity an were if performance, to there us. key get over productivity in a for for always certainly sales it’s focus certainly

a it’s it. top a of post-ACA different kind ACA think because world had bit of on I a of boost

And so we focused certainly progress progress saw back continued this we’re some the year, on towards and the half of year.

of But a focus that, kind color. it’s I additional So definitely have probably beyond for no us.

in, better time I the think the go back of We much have sense important an it’s selling to going we’ll point, position like we’re but in of year. season right post-January. now kind and

then – question? part second the of remind think I your me

Shankar Subramanian

Just growth? split revenue the customer between versus per growth customer

Steve Beauchamp

Sure. Yes.

new think our organization I we sales recurring to annual provide quotas that important it’s to note based revenue. off

I And history have – was around when with unit year had have But ARPU you the growth our think, specific at and actual we ACA targets growth, look revenue have customers bring so we if on. take the many little how ACA take that than growth, one we you if a typically you bit out don’t we more necessarily had launched.

on that quota would as future units. simply I because the history we just think to so best the about point don’t to way And

Shankar Subramanian

if I And may. Got question, last one it.

when you came took they feedback there? employee looking your share X,XXX away? to any with were us Can they what came And they of than larger any from conference. mentioned You feedback customers What kind for those on customers?

Steve Beauchamp

themes the this is key three there’s very for larger as think customers I well. so Yes, conference. Sure. And think we at I relevant the that shared

to have we customers and our the become in So analytics of we efficient. help actionable our around And a system. more that data based insights customers we trying one think is a launched off to theme really that the number will drive enhancements

leaders And to customers. process, manual automation. HR And looking think, a secondly, generation the the the of engagement. efficient. different us, they’re they’re think rest looking lastly, of they of different a really lot of these the then, really millennials, of and technology in involve workplace. next a of type when They’ve The paperless, completely the the I changing demographics demanding involve got become I more supervisors processes communication, coming type the become workers for in come to some are of

so was the our platform third of key so theme And really next their communicate with was our organization. to culture in generation, and that drive that that a right to part using able they engage are

we when And our themes. those to we of one to build try key so of all product, initiatives tie

Shankar Subramanian

Thank Perfect. much. so you

Operator

you. Thank

from is RBC Ross of question Capital Macmillan Markets. Next

Your line is open.

Ross Macmillan

lot well. or Toby Maybe Steve a you welcome and Thanks for as first. Toby

is sort obviously into about? could this investment basis but I areas of quarters. your the of, flat guidance that major and remainder thinking Just sort any for for by margins be next QX be conservatism, XXX I there beat three should think the EBITDA that you of year-over-year implies the will leading you’re, almost points, be some that of understand EBITDA there we year

Toby Williams

those we’re our impact is history generally of QX hires into think I you kind of probably And any can to area in year-end. ramping hires what not a is, Yes. specific see QX an of adjusted sometimes is timing EBITDA. terms more time No, the where there going But call in up have out.

for always want hires in longer get takes you year-end. bit us be to focused in that, some something fully staffed QX. that that we So on. ramp little to I onboard, a hiring We a It it benefit necessarily And is we get stay the carryover would if the doesn’t year. tell of into

had of bit thing as we we of kind we a little probably the being of quarter, move the and out in So I balance that fully that’s to think through call staffed would the the anticipate that year. only

Ross Macmillan

maybe helpful. just That’s you. Steve, another for one

in So Or churn ADP, sort that easy. in think, comp when curious, you into and market of talked consistent? of churn, that relatively basis does XXX sort and I about the what see up points factor today numbers like down, ever in in But their just you is is see I see think I’m market? what was or improvement you change

Steve Beauchamp

range. quarter wouldn’t Yes. any separate I I have this out, or even look longer at call past a as

I in I think their very down, or changes churn up think a rate And organization ADP we in necessarily is multiple market don’t different segments. small large feel.

Ross Macmillan

then one. And last a got Yes. I

products taking or those PEPY up new which PEPM Just are you’ve the nicely. introduced the

XX%, this You’ve realization something of I think, had historically in the, rate sort XX%.

to Just remind about that and we that ramping? of lag me, relative realization you’ve introduced sort of to to potential? perpetual right terms way rate that cycle got is getting in that there be any – thinking because are of Or what’s products have rate? should realization think So this been the about

Steve Beauchamp

Yes.

have the available I we’re calendar generally or products quarter think, So fiscal to third quarter. going in first of XXXX

new selling that is of so So bit them at look then a bit love one that rate certainly. early, years, there from penetration little typically of we XX% what comes lag And is, we into within a base, across announcing two a are plus we’d our lot customers. little a there, to or customer get

goal that. think we of as we’ve we XX% to that to We would to you up in see – idea XX% possible, customers. and range plus have. able an to successful Some But back that focused different the the definitely would off new I they ramped in rates. to of products, terms as of comes do been base what the That’s these – it successfully the ramp wanted think and kind try my from XX% be, are quickly if past. get of for at client different selling have both of need history with in Based products we

Ross Macmillan

Thanks lot. Congrats, Great. a again.

Steve Beauchamp

you. Thank

Operator

you. Thank

Your from of Wells Panigrahi is Siti next Fargo. question

is open. line Your

Siti Panigrahi

taking for my question. Thanks

side. Just question margin EBITDA the wanted last drill to the on into

have bps a million sales margin the gross your growth XX marketing bps. XXX also, just trend revenue forward like in sales EBITDA is follow-up. side? And improvement, going And And also should is $X.X operating by leverage? two and You in marketing mean, see solid quarters. more or should I we that where XX% we raised XX%, our last I see

Steve Beauchamp

Okay.

from certain be and more when attending. I initiatives are think marketing out initiatives a see whether off sales whether we those like larger you that shows So meetings where we’re we there’s can around and things have a groups quarter-by-quarter bringing perspective, might together, roll based training that

is has along some that tied obviously, and around more spend, variability go rest of a little marketing the spend, so the And the sales with mean, timing. commissions that. productivity I the bit obviously, the to

of So factor. another depending the be quarter, on the strength would that

we necessarily that you various think the increase I XX% roll So hat It I on marketing marketing and that can wouldn’t would be a that out. tie the depends in my say see we in just initiatives have I productivity sales something that that would to.

margin we an think certainly opportunity continued an for to as well get opportunity question, we G&A to overall on most that the operating that’s natural forward. as move I from see be leverage in probably as gross an leverage leverage, area focused leverage

Siti Panigrahi

have then mean, well competitors. And the been I as on right. investing guys landscape, your as you All competitive

wondering, different as ADP in you I talks the Just mean, about what’s investment make seeing actually you anything And well. are market? win?

ADP against makes competitors? what and So you win other

Steve Beauchamp

the us do think reason I is that most of it’s Sure. will strength to platform. the really customers come our

every feature demonstrate to robust that but the which only user these a also often a process, don’t great supervisor then because of implementation employee. not customers have we’re for fairly and experience marketplace is lot in, able resources. every the a them efficient set administrators, We’re a important combination a And for of fairly

is that tell combination winning being And they’re kind set would us. looking that, to in everything is for many so don’t to to – feature And and success same for for you’re together, fashion. really then of of The that an you able automate factors key about that I been when key. the them years has is ease to I of efficient robust enough that implement use, the able put it formula

Siti Panigrahi

you. Thank

Operator

you. Thank

from Brian is Raymond Peterson James. Next question of

is line Your open.

Vince Celentano

Celentano hiring is just trends. you on for give year? I can Brian. us far This on fiscal so was update been Thanks. hoping this in changes any Vince there Has

Steve Beauchamp

within our Or trends base? own hiring client trends? our Hiring

Vince Celentano

own trends? Your hiring

Steve Beauchamp

Yes.

we selling make that staffed. we a season from – into be perspective, sure try think fully sales and try to I to go marketing

that. our earnings announced we think last achieve I on call that we’re able to

set hiring able we we and So year. next time XX%. do get were we when of don’t marketing increase the targets we to And kind sales lot to for until of frame spring a reps

of we’ve I just that time all quarter first big got. for made that other think a think the hiring questions couple a I ago comment teams the jobs the operational for is us,

and And EBITDA. into some so in this behind plan year. we be the balance into good a staffed, our probably bit going we little we just like – got a But next that in to were of we’re feel of terms position fully of going and the quarter getting benefit

Vince Celentano

Okay. Perfect.

forward expect services Looking it a a for took color at – overall going improve the to like just the this you these this gross profit of it quarter, this step outlook any margin and on Can if you’d looks back. bit for give margins?

Steve Beauchamp

Sure.

think implementation charge onboard I at market-based off is we based if fee for and implementation that of really you services line, coming So buying. the customers look they’re fee generally our an what kind pricing,

often is, I implementation modules One can point of in in can And you the think made we see don’t prepared But trends necessarily that have, self-configurable they have more that the often remarks. the that the that number fees. more Toby HCM be.

big focus. think move those things of margin that implementation improvements an around of I area kind necessarily amount. in a So fair is don’t can

better There’s on we bit in so sales understand think, the on penetration the stuff – that HCM there products also and around it’s little can time. do revenue so think we less we collect the forth. I side, I moves revenue like to important more the gradually and get a opportunity. like over we mix, other But some everything, get

longer implementation the is I impact But recurring small gross bigger that. than over margin time, potentially we So think opportunity to term, I there a on think can have margin. the

Vince Celentano

Thank very much. great. you Okay,

Operator

you. Thank

from is question Jeff next Our Van Rhee Craig-Hallum. from

open. is line Your

Jeff Van Rhee

thanks. Great,

me. just opportunity look there, that? customer module, stands an you it have how to sort as – at on obviously, of is then the follow-up touch greenfield I if the going compensation that? the to from opportunity one in as you place two the on does maybe respect With And And of now? Just what could base to have

Steve Beauchamp

Yes.

you I’ll an example. So give

that American them many than half or used So compensation used bonus Excel annual asked I I announcement, using I today, at of when that. introduced accomplish to raise the to manage how module would their hands certainly the client their audience if we And of terms the you the in that conference cycle. and of raised hand Excel most to more they, audience made tell

prior Excel. that this of It’s we from module managed that, So – we we used to opportunity. a think it’s a the pretty big compensation one And greenfield year. ourself it past lot

process. be a pretty this manage automate it’s gives entire to think to this common able I opportunity manual. I think, So And that really great to

Jeff Van Rhee

sense. makes Yes,

Okay me any to structure? and with color changes with to Any customer organization. respect And your the meaningful just support support respect last of one from organization? just with satisfaction to measurements that customer

Steve Beauchamp

Sure.

than go and fact XX% certainly since prior we we to continue public been to So that consistent the to revenue back that’s greater and gone then. retention, have we’ve even

customers. back delivery the So consistent to

I of to is, only perspective. kind think make technology investments a we I that from out continue would call the thing

ever been with fast times response customers. as they’ve are as Our our

We’re getting based little that as we larger, consistent have. to us the we to allow good feedback does translating segment retention. bit of it customers from our type that’s customers off And in and a get ability, our terms of

product. customers ones customers more So the smaller that looking are at the larger use versus

within continual able certainly for I we’ve always able service case what would you we’ve But initiatives And that as retention. to us been on allow to to that got that the within has so plus some And And continue organization. our revenue to scale. us think just we great maintaining focus been tell service will be that XX% is a improvement. of do I philosophy

Jeff Van Rhee

taking for my Thanks questions. good. Sounds

Operator

you. Thank

question is from of next Stifel. Brad Our Reback

line Your is open.

Brad Reback

taking sales have some and may especially, begin the maybe from Steve, you things bread-and-butter? do longer need close at to of away to much. deals deals the in these very more to of Thanks Great. to put challenges look types getting bigger the consistently, maybe force what bigger as manage around you distracted place

Steve Beauchamp

it’s Yes. question. No, good a

to I you the implementation, back in think to typically six three implement go we if weeks.

always certainly again, which always three but take deals, happen, larger can the these have six for little that of than longer Some weeks, that’s a happened bit case. been us, to

get try our with that most and service, make some the most and them and we these new our we then, best sure do And we largest we that practices one segmentation in dealing do onboard. we so people as implementation customers with that’s from largest is, bring try share experienced customers so case or folks knowledgeable those also are have customers. to that to our we things the of with customers And those working

then few So teams the is, then at focus gotten And we is much over that and better we large what are better at. to done customers And more with specifically able something we last we’ve opportunity. tell the I’d years to this have opportunity you that interact get the the that it. at

have I our any tools. make. we are there It’s a process, change same leverage because complexity. we the the to different to handle qualified big is experience ones most think that do with to folks that just the slightly So don’t We they all want

Brad Reback

Thanks much. Great. very

Operator

Thank you.

is question next Our R.W. Mark from Marcon of Baird.

line Your open. is

Mark Marcon

on the weren’t to the reputation regards Wondering those that Or you customers. getting some could that that specifically just of your And some talk going congratulations. come in across just transom you originally? a it with spreading? of word-of-mouth the afternoon, if Good a after purposeful Is – follow-on targeting? terms comments is – larger

Steve Beauchamp

Sure.

just percentage ago. be larger today more don’t we customers to four clear, we than a have had three as or So years

effort targeted there at isn’t really a So necessarily, point, this at that.

And reps because much into effective tenured had broker more opportunities more to we’re we’re little we’ve become because in a we’re we simply However, larger, with those we’ve more been dealing these the more larger. because do referrals, longer organization. recognition, brand much complex larger, run able at bit marketplace,

time, trends us. kind the of for you positive I this that’s don’t customers, to at point want think some a with that separate give I focus there’s So that larger these in definitely impression but

Mark Marcon

that? asked like this the of it. was hurricanes any did sort apologize Got impact then, from see Appreciate any if or But differences, anything clarification. you earlier. And regional the

Steve Beauchamp

asked put wanted wasn’t worth sales those in those I’ll impact. see that. look a Texas, think but which team enough number it But earlier, have in but call teams, question that aggregate, I Sure. Certainly, at teams think got nothing I certainly that to you had Florida sales in we We the try calling and we and Yes, impacted it some answer, separately. necessarily if is, that we could on. not Certainly to would reiterate out. I it

Mark Marcon

Okay. are the can And that asked, how offline. about this the sort follow-up apologize, are of thinking of you then, point? and I on broker at over I of couple has out efficiency But again, seeing if that next been channel, What you years? channel this

Steve Beauchamp

Sure.

revenue in try business we’ve So quarters back we the new attract to a continue the in new many now, brokers. XX% invest We’ll quarter, channel brokers. for in with been from above terms again same deeper once for row, to Certainly to definitely feel historical into of getting good that range brokers and that. both existing about get relationships

solid broker channel. in So the say I pretty would execution

Mark Marcon

Great, thank you.

Operator

closing the them for this call turn At you. Thank Beauchamp to Mr. I’ll remarks.

Steve Beauchamp

special Paylocity conference X,XXX to Well, wrapping all day, to thank you with than our actually of It’s clients you much. more that you a and we’re and up interest been in fantastic our forward just looking a to tomorrow event, your great attendees. very for who today. Thank attended like all thanks of I’d

Operator

concludes conference. today’s gentlemen, and in participation This program. thank Ladies your for you your

now have Everyone, You a day. may disconnect. great

Paylocity Holding (PCTY) 4 Nov 172018 Q1 Earnings call transcript