PCTY - Earnings call transcript Q3 2018 | Paylocity Holding Corporation

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Operator

Good day, ladies and gentlemen and welcome to the Paylocity Holding Corporation’s Third Quarter Fiscal 2018 Results Conference Call. [Operator Instructions] As a reminder, today’s conference maybe recorded. I would now like to introduce your host for today’s conference, Mr. Ryan Glenn, Senior Director of Finance and Investor relations. Sir, please go ahead.

Ryan Glenn

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

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

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

Steve Beauchamp

improved by funds year. Thank an income HCM period an with joining clients. We of driven third on XX.X% $XXX.X Ryan of quarter interest all million, thanks quarter Recurring revenue fiscal new penetration versus call. total good additions, our you, and client us earnings a and revenue on very increase product same to of by grew for had you last XXXX in increase for the XX.X% held

new We of third clients. sales of start the new prefer as volume a the new onboarding at pleased our fiscal represents quarter largest of the execution the our and implementation our quarter quarter were teams to companies providers in The year. switch client many in with by starts calendar

last several generate quarters. new to We of over than the from revenue XX% also has business remained consistent continue more broker which our channel, the

EBITDA in the in from of or increase third last year by in largest fiscal revenue our Adjusted a quarter $X our quarter million the the revenue Our guidance third sales in $XX.X expanding key XX.X% revenue, years. million million, for of the or XX.X% the was factor of for $XX.X XXXX. quarter increase to ability two was fiscal performance fiscal

As margin filing. to due a for recurring client annual Calendar fiscal collected and significant year the tax fees requiring to a planning form and is busy interactions. volume reminder, operational quarter of W-Xs quarter the our year third very highest handle the ended the coordination of time increased

our maintain in the initiatives, improvement cross-functional We revenue us client innovation, continue continue improve experience product to a process These to make along as XX%. above focus on investments, with retention to have has us to our allowed grow investments consistently of product which portfolio. we continued variety allowed

both mid-market providers. our the additional We prospects. the products our our value to third-party strengthen and health new a us administrator, to BeneFLEX, channel, current refer accounts, offer in the the typically the clients spending savings believe flexible with who to accounts acquisition quarter, welcoming local During reimbursement of health will we to organization. a number proposition BeneFLEX provide employees of benefit regional accounts and and third-party third broker completed these clients XX opportunity

employee of around their many of are and already user ease-of-use. and differentiated data will convenience the actively online a FSA to logging seamless of centered With will and purchase. our experience point allow our and information online addition we onto the mobile which platform, believe a provide We at developing employees and real-time clients our that mobile employees so data account provides savings HSA the platforms, experience access to

are to switch manual employee expense engagement the solution also while quarter you also our of fiscal in driving by when strength last one over investments to third the a year interactions. processes, number automate total we have in of what the many as the they modernize R&D the traditional increasingly increased and We HR capitalize. The investment clients consider be XX.X% and to Paylocity. Clients continue offering R&D for searching product reason of

increase employee adoption in realized and specific are needs year. increased investments further the an how benefit revenue drive management are these and Our represent per client and of administration to addressing we examples talent average also opportunity product per

remain in the investing also state culture. was feedback. we on companies our the year recognized based is Paylocity strong award. for work XXXX our brightest focused employee growth, row and we one the for of recently as This Idaho best to that directly have won a to on in second of on addition In focus

We X pleased grown Boise and number have of market with in over expansion a have our employees quickly been very we than well the the entered since little XXX more years ago. to

software growth of in major as our fiscal won Places to operational have We allow June. teams and land XXXX highlight of awards quarter, excited believe these early to they are In that the and scale delivering with the of now year. feel our technology employees also by employees headquarters the Paylocity majority award, about all new are culture move We in our prospect moving we and continuing important in brand as fourth corporate the expansion Chicago we the into of new continued into next engaged centers. service. Best there building this our our particularly into area, and With our are new and empowered all Work award early we our industry-leading facility

and like our review Toby employees call detail, for hard dedication busiest I year. work our during would the I Before in the of thank of our quarter to results to all to their pass

Toby Williams

quarter for prior the revenue $XXX.X year. Total in represents the which Steve. period increase XX.X% a million, from same was Thanks, the

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

a period to On $XX.X the combine million million revenue our ago If make costs Through our XX% we investment and improvement. mentioned, of was to ago understand for point overall revenues basis, compared I adjusted of ago or million investments non-GAAP improvement. $XX to as On or were in of marketing XX% turn G&A profit Steve operating both compared R&D XX.X% improvement. XX% compared basis the expense up ago to the gross third $XX.X in the in basis, a non-GAAP is the to XX.X% in and quarter, were quarter, total and is as a $XX.X XX.X% $XX.X R&D basis million or to million year. fiscal XX.X% to XX.X% an revenue gross investments revenue $XX.X million the the And were sales recurring is it’s or XX.X% was quarter, $XX.X months what development. quarter million quarter. R&D, million XX.X% research expenses, important recurring third we we X to dollar in revenue to or representing or by XXX million revenue $X.X million year quarter period year, XXX what in adjusted in in or or from basis first increased revenue on year costs total XX.X%. quarter. of same continue On or year non-GAAP the basis, third combined XX year Our of revenue significant year-over-year million, of last the in point capitalize. investment basis, which $XX.X $XX in $XX of revenue a quarter XX.X% in the of which same or of expense profit a compared On G&A third in our gross the million a which of or $XX.X margin quarter a point third XX.X% compared last the ‘XX, Adjusted was in

tax to be focused revenue. our annual of on our ago $XX.X or increased for XX.X% $XX.X improvement. million, a XX.X% was a year. costs fiscal revenue operating basis, a months through XX.X% or to of up we last income for quarter fiscal dollar fiscal assets. million year. fiscal basis, loss, valuation basis, I net covering continue revenue on the million. target to adjusted of Briefly revenue of income want of the On a the the on the our we to EBITDA a against X to adjusted revenue address $XX.X to EBITDA adjusted X have X point G&A possibility ‘XX, months third quarter, $XX.X XXXX, based dollar first last by the in over quarter, $XX.X allowance XX.X% allowance ability financial basis also releasing deferred XX.X% range is of gross fiscal million first EBITDA And We was established of profit months and fiscal performance million income is million million through XX.X% compared XX% the EBITDA valuation of which the quarter the versus XXX $XX.X XXX indicated and In compared is an was basis our of results, previously which first Through remain XX% this of and was the certain in or improvement. period leverage On a ‘XX, of GAAP we business. the of confident same long-term year, or for year $XX.X allowance. was point On the ‘XX valuation adjusted G&A

our benefit including the allowance. of Paylocity to income corporate as During is substantially and purposes, basis, tax income new currently tax as in continued not fiscal of assets, fourth potential financial the of ‘XX tax $XX.X federal we our modeling become we net factors third ‘XX. our year, is corporate in rate Please metric quarter allowance well our the each to not used for one-time maintaining given legislation taxes have federal future percentage for the released may million impacts be effective quarter. which currently business. longer of valuation a performance, allowance, note, key strong periods. for released income the manage that tax performance payer a quarter-to-quarter of because business tax. of substantially provide of variability of review tax financial That one-time quarter, to other of given a no all have as in it the we non-GAAP respect more our potential items net non-cash of fiscal on all said, And a factors, our continue or to estimate as we With against impact quarter the income the third its and mid-XXs% to deferred payer a from or broadly, guidance represent relating tax assessment business this we the valuation cash releasing P&L does we will On cash income the in valuation to we net the on

or the million quarter, million operating increase compared to of quarter the will generated for both as balance on or sheet, performance the activities most and $XX.X third company performance. we fiscal these a quarter of $XXX.X quarter an of million of an adjusted measures believe from XX.X%. to fiscal flow financial EBITDA cash in equivalents metrics of key which and revenue which as is the with million continue the to end million are financial financial $XX in the we cash when year ‘XX increase guidance of compared third the we the From we of We our these as apply to the of With ended cash assessing million perspective, meaningful ‘XX, third cash as XX.X%. of $X.X use $XXX.X represent $XX.X prior is respect and

like updated fiscal begins fourth Please XXX be that Finally, our July financial note X, the fiscal on effective quarter for for will XXXX. in ASC guidance provide I guidance to ‘XX, would which for ‘XX. Paylocity and

such, of XXX. impact ASC the As does not reflect guidance following the

$XX.X So of ‘XX, EBITDA XX% be be to of expected $XX to than quarter million. and expected that total is adjusted million prior is said, million in of the $XX.X in the to revenue for year $XX range XX% fourth the range greater or to fiscal to approximately the million

‘XX, the including than ready Q&A at $XXX.X adjusted the prior the points revenue million $X and, For And of are million we Thank Overall, fiscal guidance X to increase of from at full Operator, greater expansion approximately points increase an total is midpoint, revenue are range which is expected XXX year or our XX% range and expected revenue we EBITDA fiscal XX% $X.X guidance. prior the $XX.X of XXXX, ability in basis this pleased midpoint, the be financial year XXX million to our prior million $XXX.X to is and of through to million to or million the year. first of session. the of EBITDA guidance. growth from our with XX.X% of be months an adjusted $XX.X approximately of provide begin basis our of fiscal you. now ‘XX to very increase an fiscal from results in

Operator

William Justin first question Blair. the Our [Operator line from Instructions] comes of Furby from

is line Your now open.

Justin Furby

guys two and questions on Thanks had quarter. both for for guess just a taking my nice questions I Steve. congrats I

you could can stands sense First, I’ve hiring of you Thanks. on pull then And wanted update sales give that sort on a quick got to an ago? some give follow-up. a last quarter year you where you mentioned forward one versus

Steve Beauchamp

Yes.

is weeks, us. like fact few a fiscal our a a next always remember would a in it if call process helpful called start hiring a you we matter that year. we which spring quarter, Last month on of So, typically that, for at the the of extra bit or to I little get jump for

about perspective on number and overall, color we from the is a give next year will important our going today reps into think good are think of we more point feel hiring where next terms in I of I call. we

Justin Furby

it’s and then grower when And that of just few into think was before come ACA rates big wondering thinking easier evolved am you mid-XXs you I smaller a changes, and think of Okay. years growth of I are I it XX% ago? product I about few guess sort things compare about factors more was you competitive on your the when sort XX%, much guess I then to guess and grow today I versus to wondering years any ago base. in high that if any and the picture, harder are your how play? asked if other you it’s Thanks. some today a or And I a

Steve Beauchamp

Yes.

it’s think been I environment. So, competitive always a

been a my is never has we in on in there from – deal. difference us So, deals of today competing no typically always perspective terms have just

a but a plus, time, big really scale over percentage it with don’t the to that But have is So, different. the I feel at does rate we on been lot growth, which enough grow actually and size that’s have model. that growing right and long-term we quarters also there opportunity, get ultimately market row three we we XX% got XX% Certainly, feel good product really which focused stay our from with has us makes a in same think can harder perspective, posted a good.

we feel will on right forward. So products stay move focused the so and XX% big as opportunity, plus we we enough

Justin Furby

much. Got very it. Thanks

Operator

line Scott next of Our the & comes Berg Company. with Needham question from

open. is now Your line

Scott Berg

nice and quarter Toby. brief a well. from ones Steve Congrats me. as on Hey, Two

little all, about look little the pricing bit, maybe the it it the sold now going at gets but kind had that BeneFLEX talk chance is operations a any cover the to now, hands different or Steve, up-sell, something? in your it a and you in acquisition changes of all sales can of be have to first bit maybe have First under assumption? a about it curious you Is your to than know motion, how you

Steve Beauchamp

Yes.

I completely we platform. developing integration really still that early into on think be are in a focused and are So the our we integrated solution will process

or think money kind vision able and proposition. into a would to that into We much to that’s value HRA of to exactly they as have part FSA our mobile know of portal, is pharmacy able point-of-purchase They see key into would walking they and or are or the that to our spend. they how the So, balance. see be be will log employee able their an HSA be

to headcount go-to-market our a normal So spring hiring both strategy we need same product. we actively are color hiring on are through that looks as have more motion strategy working in we on finalizing hope so give and sales and like. are the and the our during terms of integration. those the of what right integration really focused in timeframe included But we in now, we get time, we are launch plans things At

Scott Berg

to follow-up seasonal first customers modules customers you lot terms of in on they they QX that nature Great. that did might a of those interesting would mentioned note? you live anything the My any how that changes see But that to of be the you of year. get the buying, buying, question be in go are want are at

Steve Beauchamp

Yes, sure.

get more continue think HCM to I across we adoption components. our

that’s years. the been for think last happening several I

all called last to smaller call even are earnings greater clients of that we think market customers the of in that the I top that, where seeing have been adoption driving target our our in employees things from market out I the way to many And end certainly number have with big XX we is have adoption. are down of are market. management one below seeing terms talent and we starting benefits, the see a traction we target of good contributors higher we modules released of with our along really and

Scott Berg

Thank That’s all I have. you. Great.

Steve Beauchamp

you. Thank

Operator

line Capital Our comes MacMillan the Ross of RBC from question Markets. next with

line is open. Your now

Ross MacMillan

quarter there the notable got that to that, first just year. And any we was mentioned Steve, Thanks to was a I in quarter down-market had your curious bit anything little another sell a call half now of you for in but had seen last slight so the that reps of change you much. sales behind there? bias out modest, a us, more have

Steve Beauchamp

Yes.

reoccurring that think so off to reps note I there is are unit sales our revenue of So, no annual quota quota and focused to important it. it’s driven

move reps quarter that best so around focus they see will where of sales quarter. our on opportunity per does the and And kind

the adoption call broader important that think products to HCM we was point of I our seeing the out are down-market. fact

the our maybe in think is than even more solution past. it has So resonating we

report employee at these XX, you numbers adopted which client XX which a is slight. modules of way customers has it’s Some end resulted that mix slight being will next are XX, by higher our rate, in year And see some the pretty shift, we in quarter, but as think newer we XX, great.

is the would say major feel We we have out. good this in I a so mix quarter. And feel We good that the just call about quarter throughout sales shift nothing seen the and fiscal performance this to year. about

Ross MacMillan

in money out said That’s securities. a trying the maybe sweeps helpful. market million customer And in your any I to items there just float clarification? a with float from that and Thanks. then clarification regard are on or change was wasn’t on the maybe investment if available-for-sale there, other just call clear you $XXX strategy you to me

Toby Williams

mean Hey, same it’s terms in invested Ross, securities, what’s no it’s the Toby. change as pretty whatsoever. between in was of in it No strategy, change available-for-sale there the at I much split quarter last all.

Ross MacMillan

Great. Thank you. Congrats.

Operator

question from Raymond with Our comes the line Brian next of Peterson James.

Your open. line now is

Vince Celentano

with Celentano do any relative and just Vince on is into partners you you how see from do are broker to want This to I to know new a penetrated for you think interest Brian. Thanks. broker you potential increased looking prior periods partner network?

Steve Beauchamp

the a partners was I think existing there great over broker to grow XX% pretty still last add quarter That of partners. it’s important if called comes for out that prepared business, And think continue we business with you us then opportunity technology the obviously, an does I proposition. Yes, deepen again think is year. for value require quarters. channel. part so It’s broker new for And definitely partners. I looking the They back the in relationship from our been brokers. and that We remarks of the their once go to and several the for continue the on to we consistent were the are

And so opportunity for is us we still forward. a think great this going

Vince Celentano

I bookings to then the get that profile any worth the are thoughts just want on noting? of And linearity great. Okay,

Steve Beauchamp

about is come that from can results questions organization. of in is typically, Well, sales the I kind look get have bookings our you I variations at posted. we what past think mean And I I said when the the the

by is that years good the there have organization in So, expectations do where kind had last our sales we $X got quarter a raise have from definitely And million meet our the to we means able be that revenue raise we guidance of to that. to quarter X a times expectations. to have means largest and ability had decent meet be able to and we to

my good I are it. years So, pretty last last the you in and color biggest tells think quarter comfortable would raise with be X we

Vince Celentano

Okay, great. Thank you very much.

Operator

from the comes question Pat with next line Walravens Securities. of Our JMP

now open. Your is line

Matt Spencer

Matt question. for for do is areas think HR taking Thank this Pat. X you on addressing my you X What today you in Spencer Hi, that of might software address you to years? be not

Steve Beauchamp

Sure.

an think all I to our product portfolio, per of were employee buy would per So they if year. organization pay us $XXX about

As per ago. a per frame of time reference, the that’s X up IPO at employee year from $XXX of years

And new so develop products. we to continue

continue We specific development in ultimately organic might targets think is to what number those that terms focus on of don’t for definitely be. of We there. room products. there enhancements new We give

on much payroll, HSA addition in that new be there going total to available product and you is more a categories, think actively sale I and HRA the on maybe integrating government-driven. that We opportunities tell bump into for and which pretty But are all the I working is that’s opportunity. except would compliance

So from management, there and talent perspective, an opportunities is of in those think HR product we benefits incremental labor and time categories. all

Matt Spencer

you Thank Great. congratulations. and

Steve Beauchamp

Thank you.

Operator

question Reback Stifel. with next the of Brad comes from line Our

is now line Your open.

Brad Reback

get more productivity, not much. you could Ross’ sales guys goal answered segmenting I you help? all more question, to just segmentation, maybe in but a an thought effort about about talked dollar goal, force? very that Great. unit know a at Have Thanks you the having in it

Steve Beauchamp

good so question. Yes, a it’s

and something small have that in force. with at different historically year looked have having places divided pretty I a of every we we experimented at based at very terms geographically been But sales consistent approaches. we have it’s think times

are We now. process the right planning in

we right it any at haven’t process will the for segmentation. point in are again, We but at year, around so we now hiring this made time, look in next decisions

Brad Reback

Great. Thanks very much.

Operator

line comes Our First Corey next with from question Analysis. Greendale of the

open. Your now line is

Ken Wang

Wang is thanks. Hey, for Corey. This Congratulations quarter. strong a on Ken on

Steve Beauchamp

Thank you.

Ken Wang

any So revenue the you can you figure? just Does this acquisition? annual offer per customer BeneFLEX just – potential on comments the wondering, can increase

Steve Beauchamp

Yes, sure.

on definitely earlier, the then said launch the I sales and focused integrating as think I together acquisition and we plan. right are product putting operational So

working that feel be good we actively increase employee $XXX are to per to deliver are year. will market. what the we so We And that. to on able going It about per

finalized haven’t pricing strategy our We yet.

of do an a to broker So it prospects. strong And our update as time and labor referring data, as the we for the time a lot the and differentiation this value there proposition as who different offer all And to in platform sell marketplace. time their well will with channel TPAs think mid-market you. current opportunity and and paycheck these smaller for in clients addition of their today think the having value with clients their we and we our with certainly that data of does spent off is same both new benefit we date provides in

excited are we So about the opportunity.

Ken Wang

side, in done the anything commentary a Great. recruiting just Thanks. environment? on just offer you terms on recruiting And sales force have can lot of you the then switching gears, know so I of

Steve Beauchamp

Sure.

have today a we busy the terms is of team recruiting And this we of felt and hiring. time very So I an slightly years. prior got already we in good pretty pretty got where our it’s number than we versus the our are feel about prior to earlier, similar, compare sales for off team of if start that years, year in. earlier have And like hires

you end get know, year. perspective, those the or to of when certainly get January can that productivity from As we the earlier we people earlier two done, like sales, a and even January get summer people especially our in month hiring big a time helps completed the you typically starting by which the on consider of the the we is a

the far. with us get am foremost, very I for to first happy it’s but So, quality progress right people, important and so the

Ken Wang

Great. again. Congratulations

Steve Beauchamp

Thanks.

Operator

of Our with next line Robinson question Eric Lemus from comes SunTrust the Humphrey.

now is open. line Your

Eric Lemus

I seems guys. to It on job for the the wanted the question like channel. in opportunity BeneFLEX. Hey, broker in Nice it’s terms follow-up good of a quarter. last

of potentially can And then any for to on of having think BeneFLEX, this the XX% as sort timing sales? channel above on about being So integration? of idea secondly, be we a the catalyst the broker

Steve Beauchamp

Yes.

got product not product that as to to new on would sure be launches we are have have it’s there. a got timing progress fairly to we force the are introduced product to give typically hiccups. as get don’t we we ready before to brokers the think well make because making actively We any you don’t we we situation scale and in I I operation. where large this and sales go-to-market just So, we tell and the we got sales want have integrate a

So I specific don’t timing. have any

what good that you next quarter might like, we we tell update will about you feel terms the of progress making. in are We would I that look but

as think perspective, don’t revenue sell dramatically we broker new I significant it referred obviously necessarily channel. think our incremental us either value our gives opportunity client. and find the on from that are from us proposition we own or creates importantly, opportunity also ARPU back the trajectory, customers a to a to and on brokers in it’s more bring current additional changes but to this I

I as is So think channel well. the biggest certainly that’s incremental the the probably part but opportunity, in of it broker

Eric Lemus

Steve. Okay, Thanks, great.

Operator

comes Siti from the Our Wells next Panigrahi of with line question Fargo.

open. now line Your is

Siti Panigrahi

Hey, for questions. my taking guys. Thanks

we Could some forward? generation sales marketing and how besides what how sales line about how think and on should activity like color going the mainly your QX – the should guidance and happened XX% the Just and give like quarter, for you jumped of on about talked spending this that marketing increase? – some lead rep, half. for we And last sales triggered expect I you talked sort of that the much mean, expense second investing in and about marketing you

Steve Beauchamp

Yes.

of to at wanted think in give in year So call I the the they strong highlighted to earlier had years. the the third organization I half time likely start fourth than our first indicated bigger we of And we be hiring performance on go-ahead that prior last the of to fact advantage little to a part the EBITDA think sales versus impact quarter quarter. the we the would our the take that the

we as go into as that spend candidates would sales tell that as fiscal as really efforts full the as bring recruiting possible to get I marketing on of about next you So, headcount year. early and a early possible and lot is

I vary I those sales we think always driven headcount. do is change there bigger the of and part is by year-over-year quarter but the can by initiatives marketing think quarter, that

Siti Panigrahi

good seen landscape change you down market, your And from XX but in also employees, to the that you XXX talked competitive maybe it’s employees or success so? market below core see any have on about,

Steve Beauchamp

Sure. they Yes, people evaluate rare or for thing pretty be the incumbent. market. I the us go think only to as it’s always maybe They X person X to been they first typically and I are us evaluating, to the are you going would even ever competitive it’s tell is and X, that

our see we I newcomers it’s that from our as usual the think on are perspective, so people well, typically screen. to But on So we that focus coming radar own our no necessarily execution.

prospects. to we win our representing people we then how right client how got about execute our to continue within and force, we to that and do service to make make sales product that in we are So, we the sure feel grow. do ability and right the the are sure market that We delivering good have the experience –

today. So, still competitive competitive, it’s it’s always been

Siti Panigrahi

Okay, thank you.

Operator

line comes Abhey question next Mizuho with of Lamba Securities. from the Our

Your line is now open.

Parthiv Varadarajan

guys. Abhey. for Thanks. Parthiv This is Hi, results. on the on Congrats

in full for or either EBITDA of on on of adjusted they the contribution doing how things? the year and from guide Just coming BeneFLEX, side revenue were from on the cost acquisition? And of is the much the the line top terms any up

Steve Beauchamp

Sure.

employees look impact will revenue less of if than acquisition from XX potential fact a year So BeneFLEX, I the our the give would I year you annualize relatively and say cost of was certainly highlighted small it’s that would guidance full some perspective. was X% at for we Obviously, revenue. perspective indication. our the you the say a from you there

impact, but certainly does an it So, relatively it’s have small.

Parthiv Varadarajan

Got it.

you still XX% Okay, to that and focusing on are target? where areas lines further can efficiencies then And just you specifically, model helps. fully And speak that get long-term gross the revisiting you yet? think out you with haven’t margin that laid that the comfortable into maybe guys have tapped XX% the you to guys maybe

Steve Beauchamp

Yes.

configuration, like more to typically HCM I They expand think that also its the do feel the is well. we they think as definitely key require and overall typically helps broader margin. products us. adoption I the can certainly implementation you of less typically – margins but So gross one higher we continue see drivers And have they of

to we a driver certainly that that’s think to I so would able expect And continue. be

terms we In on XX% growth. long-term plus focus model, the view of to we how committed are

we think year fiscal I will over update the next margin what profile XXX. adopt like looks enter that as longer term and we

to think gross expand see to G&A leverage more to come to I So, opportunities definitely but margin. overall and that, continue we on

Parthiv Varadarajan

for Thanks taking question. the helpful. Very

Steve Beauchamp

Thank you.

Operator

Shankar Bank comes Lynch. of America/Merrill with the question Our Subramanian from line of

line Your now open. is

Shankar Subramanian

a Thank the you. kind ‘XX, allow on market to into from we the question shift Does should This the away end? on lower end even BeneFLEX address clients to in acquisition. quarter. Congrats higher it in the expect future, mix of of necessarily the this fiscal meaning larger you maybe is follow-up great the

Steve Beauchamp

Yes.

get well. back employees it’s way all where really that and I has times at market as market think smaller that our than important XX to the don’t than and X,XXX to clients So, changed target target I to up there we go is all. larger think is our a little

of we historically much as that have customers on really ours. things focused their about the acquisition liked similar where and solution sized very this they One is is

our there BeneFLEX of terms of the anticipate customer I time, driving if So, mix. in think in reason, change think average sized any XXX point range, great wouldn’t employee market. being at our this target I is in that our for you And to we guess overlap

Shankar Subramanian

prior relative assessment just modules, the all. quarter some of terms qualitative of it. you talk could is how give Got survey in of to by then your the compensation of modules? adoption and then maybe product And That’s rest about trending the HCM and the

Steve Beauchamp

Sure.

have great we on time I a past and think that of over in and two and period that expect back would say a over just our we look feel think last our surveys pretty compensation module has good module, both prior said recruiting a the experience of introduced for customers the those driver to a certainly I XX% about XX% the I with get I And between an But at time. to us. module. we on be So recruiting new new when the to I depends build this been expense getting into modules range. that module trajectory able to

We seen those demand we are right happy both been behind quite significant as very much has as recruiting. recruiting, probably of modules. demand but have Expense there, for not we both – with are

faster I for think nice a scaling slightly surveys on I is on but trajectory looking us. compensation early at would it both than say

Operator

questions in to am would back at time. I this the like to turn closing any no I further queue showing management for call remarks.

Steve Beauchamp

to Yes, to we just Paylocity interest and calls. take road I thank at investor the here their to this are like would be in opportunity on going everybody for

if make some our of with you on to can any have So schedule. you that get Thank us, time want sure you.

Operator

Ladies concludes now your This conference. day. you great in and have participation gentlemen, for today’s thank the program you may disconnect. Everyone, and a

Paylocity Holding (PCTY) 6 May 182018 Q3 Earnings call transcript