PCTY - Earnings call transcript Q4 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 Q4 and Full Year 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct the question-and-answer session and instructions will be given at that time [Operator Instructions].

As a reminder, this call is being recorded. to of conference FD&A like Glenn, to now President Vice and would turn over the Ryan I Investor relations. begin. may you Sir,

Ryan Glenn

Good and year today CEO Paylocity’s fourth to am the Ryan June afternoon. call call President I And And the of of joining Vice for on FD&A XX, earnings XXXX. Beauchamp, quarter Relations. which Paylocity is XXXX, results fiscal Steve Glenn, ended discussing of closed. days Paylocity. available Investor announced Today, on of of and the welcome Toby the be issued market results next on our will the this Williams, under site A Investor release press XX CFO Web for the be in tab. we Relations replay our call after me will webcast

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

measures update on measure at Commission. financial which the schedule, certain we I to reconcile factors press directly Investor reconciliation be Please conference non-GAAP believe events. Cap this the HR the Deutsche growth schedule and September you Exchange Relations schedule note a the Bank to will the currently these to without more to our on non-GAAP the available to conference GAAP With are filed upcoming the refer and site their and For is Las risk in duty in we and therein these contained conference, under located measures. Please representative do paylocity.com non-GAAP detailing know attending like measure us regards course to August release, if in to business. needed conference Exchange the Vegas there at filings is our with And is undertake of information financial let unable also XXth. of We our time of Las please disclosures. any the me at Commission unavailable reconciliation In are we over additional other any statements. refer Toby call, financial information, that, for XXst, unreasonable comparable complete tab Raymond forward-looking with and let the Tech the how James would to results Securities Tech forward-looking our is effort. any Web Vegas internally that because on will XXth Chicago Also, that today’s to turn not and We any measure, Securities me in with which time September Steve. call on SMID during

Steve Beauchamp

year-end of our We than included guidance revenue total pleased XXXX of which were also XX%. quarter. recurring the which thanks fourth revenue growth fiscal year Total our fees our growth with marks the revenue And another completed each XXXX you all and total on for growth XX.X% XX%. and XX% in us quarter more call. for recurring earnings Ryan. quarter our you, joining and quarter revenue growth new and straight was of growth driven total by We year, XX%, sales. This fourth revenue Thank quarter this fiscal sixth between was XX% of fiscal of strong growth exceeded with of consistency

of key financial XX.X%, to also an to on EBITDA margin continued our we make from XXX our including revenue significant XXXX, progress of fiscal fiscal addition strong increase basis current points In adjusted in XXXX. growth targets,

to with driven fiscal the We fiscal continues of to and growth adding year. clients to clients new by XX,XXX products selling last XX%, more XX,XXX our platform end Our finishing by compared increased to XXXX our at client. each formula be total clients

client also We average XX% $XX,XXX to by products selling primarily increased by to $XX,XXX, new recurring revenue per more clients. from

Broker as clients new of continue of our than the to activity, sales efforts representing fiscal target attach continued client driver also referrals rates remained are We to consistent throughout suite. in our comprehensive XXXX. are HCM to gradually Overall, sell a by market into growing our XX% business see back the value product we more we base. for realizing our expand portfolio pleased revenue

We our to which XXX newly data invest provide by announced experience review extends our our integration our to client than including superior to capabilities capabilities, functions. integration in commitment clients marketplace, our continue broker more HCM a and and allowing quickly across portal various partners integration

to investing in continued also at drive sales to programs and invest in by same the time, have productivity. initiatives We training force adding while reps, our marketing sales new

We XX% XXXX. in have sales by this from sales fiscal year to in sales XXX reps the XXX XXXX, fiscal expanded force reps fiscal

Being earnings As earlier And pleased to the very start am year. year. team us for for is were we I to than our successful I with year. staffed fall milestone fiscal fully these staffed earlier very position the report important last as February fully recruiting fiscal season enter our call, began this discussed to on sales strong a efforts reps fiscal our sales we

we’ve client those investing XX continued in deals. the under of In generation end XX lower growing businesses be reengineering new process terms sell invest strong employees to addition continue our from new for our as across force, to relationships, clients. broker than more to HCM sales sales support to and initiatives in to products of channel sales to market. Sales marketing in to investment of with XXXX, we lead and larger our investments will market our initiatives, support include fiscal our in both continued we employees, also our less new ability target continued engineer our optimization and see our sales sell In demand with ability

lower are as to building below of with their increasingly do are part We clients have this expect employees. uniquely our end components impact focused fiscal a single based positioned entire target of XX deliver a of Smaller a not We segment the XXXX. demanding clients on are we initiative businesses emerging product started have sales this market we to believe those HCM in market market. SaaS team, in at most and solution, material revenue across the SMB emerging-market who

and excited base. our grow the are potential expand continue about we the to addressable client market total However, to

fiscal our you and when in increased also XXXX development consider we expensed XX.X% what investment We research by capitalized. in and

and help us in our $XXX products, such research to investment the from fiscal $XXX and to management Continued solutions which new by industry introducing development survey XXXX. PEPY increase compensation positions in extend leading platform as

and have XXXX We continued target of and focused increased innovation in PEPY March remain our by since new introduction our we at PEPY with on XX% our product continued IPO $XXX. set now

make in to progress with products to work modern continue we release differentiated integration the as to we and suite, the a also broadly BeneFLEX these efforts fiscal user and XXXX. expect provide on TPA across We product experience

with to addition features to as to research invest in drive associated modules, new product In efforts we suite development continue by product we our look our increased and utilization existing launching functions within clients. and

nearly and our the product suite, app. with to usage continue unique throughout we platform self-service XXX,XXX increased our pleased including users see We daily to mobile be

our products Compensation platform. at XX,XXX same dashboard XX,XXX of to time, newer provide with world-class the well Our new that and implementing revenue and see compliance our technology for allowed a courses product, increased in XXXX. experience been in service million combination released dollars retention This service us including product across have to once usage, this of that a Management and merit operations our XXXX, January. we while unified on greater team the again received of than our fiscal is clients, in received focused initiatives and to delivering launched applications just payroll deliver service Throughout help past XX% over fiscal experience our continue number processed marketplace X also recruiting HCM over of of millions our increase

number in work including XX in to past are towards also culture of very one America's honored Fast and Midsize work Forbes, proud best best by to XX places Choice companies public places to Employers year, to this number to of of have We fiscal Employees' Crain's Paylocity’s and are rated work highest best work Best Idaho for Glassdoor's the XX Florida, Award. and places the

the We our we focus to majority of I’m to culture maintaining new a in are land at headquarters. in And our that our new announce Chicago working event our opening facility grand recently employees and continue held corporate pleased Boise. strong on

our well as thank functionally. including efforts features, and development a to environments for training dining and of to fiscal our centers like include dedicated the facilities, than the for past as would modern number centric facilities highly entertainment work new teams ample cross Our year. collaboration for all employees more state-of-the-art across country this and areas, X,XXX fitness space employee I

to now financial results detail. call more Toby over the to discuss our me Let turn in

Toby Williams

the I Thanks, honor Choice congratulations of our which leadership and and results, Steve. a I culture, Glassdoor's reflects straight your CEOs. highest employees jump like Steve congratulate Steve. Employees' to view our receiving recognizes on second into And before Award, of our great year on would his rated the It’s so

the was same million, $XX.X the million, the in last the year period into Total $XXX.X for for year. prior jumping from up from which is revenue Okay, results. XX.X% the Total increase was with quarter year. fiscal fiscal XX% revenue fourth

invest recurring during and up interest same result as XX.X% interest portion the high-quality quarter. up increases, quarter, available-for-sale in fees total For and year a last our client to of the we of client from funds revenue recurring because income with increased continue rates average up XX.X% XXX.X%, fourth securities primarily on was the balance period a funds

interest year, recurring funds up and client the income XXX.X%. up XX% For on revenue total our was was

was fourth was services and period year. and implementation quarter, XX.X% the other same up the from revenue for up year fiscal the XX.X% last For

which improvement basis from gross quarter the profit fourth our points adjusted fiscal For the fourth quarter, is XXX was XX.X%, recurring XX.

basis adjusted which fiscal was was basis full was year. for which gross the improvement. is For year, last gross XXX Adjusted the profit which XXX improvement. in is year fourth Adjusted recurring over profit points XX.X%, fiscal XX.X%, profit quarter points improvement fiscal basis gross XXX points the XX.X%, is

and understand year On of total to non-GAAP is research it combined the in investments We And what our revenue, investments XX.X% in marketing what by the expenses ago ’XX. basis, dollar fourth basis, same to we in of to were to when ‘XX. development. sales On overall as with Full year of continue in the is to and revenue non period fourth to XX% fiscal total our XX% quarter XX% increased compared XX.X% quarter. significant fiscal last the important total R&D, in which On R&D and in fiscal in were XX.X% in a we GAAP investment R&D were year. expense combine ’XX compared R&D revenue make a revenue both consistent investments a investments basis, compared capitalize. of quarter

to expense XX% of compared year, prior consistently in full year. to move G&A year of was we costs revenue as ability the annual last of our non-GAAP XX.X% of sales fourth we an were as For on revenue. On steadily fiscal as Full to same as revenue to to our of continue XX.X% the range revenue a G&A the basis, revenue XX.X% G&A pleased in closer costs costs to XX% long-term XX.X% revenue ’XX, with and in XX% marketing period to be year. XX.X% of were quarter of compared revenue the compared basis of and in leverage

for the million for revenue of of was adjusted Our quarter which EBITDA XX.X% basis total year the XX.X% $XX.X is improvement. $XX.X or XXX revenue million ago versus point quarter, or

the the Our total adjusted $XX.X total our increase. ‘XX of On for basis a year, over million versus million fiscal point adjusted ’XX. $XX.X XX.X% in a or or XXX fiscal XX.X% basis, prior year EBITDA EBITDA revenue increased dollar XX.X% of was revenue by

schedule. the that teams of new we of our in move certain of the our fourth the the depreciation quarter property our in will old accelerate equipment headquarters connection headquarters on costs our not As quarter as move, facility. the assets be leased the used able corporate in we to related completed Schaumburg, to facility Illinois have Steve And were taken new to new to In our accelerated ahead with in related have we move we and discussed, facility. certain exit

table As included gross the tenant of refer which which the cash for as purchases lease $XX.X of fourth is associated the internal define For increase the a a revenue activities a versus for phase less From $XX.X operating of on an compared equipment reconciliation in million point net property Purchases in Briefly new million to and non-GAAP of ended fiscal last ’XX, leased quarter, $XX.X of issued fiscal were compared GAAP XXX more million the we Free closed X.X% and includes of our used results: we the add-back includes after costs, build-out million; fiscal related from of in the covering $XX year $XX.X million cash Please move. as as basis for was full in adjusted XX.X% in $XX.X information. headquarters XX.X%. was XX.X% EBITDA flow, corporate was improvement. million; was And to million; income GAAP which operating ‘XX one-time fiscal cash $X to income with result, the release our revenue to regard and the million year, quarter the operating cash full basis, or exit million; profit non-cash million cash $XXX.X perspective, of profit year, s, in or generated million the $XX.X office the ‘XX Boise. million to costs $XX.X press and property in or net fiscal in of million: today loss software and with capitalized and a flow cash was was and used was loss first ‘XX, $X.X $XXX.X year of the operating $XX.X In balance $XXX.X increase. ‘XX $X.X revenue equipment gross sheet, end prior our of or equivalents we X.X% as allowances of million million. from and market activities to

expect X% free to are be we PP&E and we X%, purchases flow source leverage which as targeting below is of X% of of cash forward, X% historical to annual revenue. a percentage of equipment spend property average of spent Going of our as a revenue to

expanding on generation flow As a ’XX activities million leverage and and of realized sheet result of of our million. million resulted and $XXX.X that performance EBITDA in $XX.X adjusted cash fiscal from have $XX.X strong our cash financial balance to-date, operating including cash of total

Board XXXX. approved million Directors through repurchase which August Our XX, stock of plan, has $XX is available

recognize from fiscal is approximately implementation these drive assessing over To and we XXX closed quarterly we cash of ’XX ratably our respect adopted of change method. continue a million July ’XX. XXX of Previously amortization we Xst, effective we and over today, facilitate to stand-alone are to we after a we certain a begin With for a period modified the varying basis, this the will revenue our July of the the tailwind as ’XX revenue year $X a Also our of impacts our without to have in over a guidance incurred are of release XXX, to fiscal revenue from our have market issued standard to our recognizing balance impact that In common Xst to retrospective amortization. XX results. comparability Previously XX% the expenses full provided press growth approximately impact capital ASC completion same. grow a meant fiscal is and XXX, optimize implementation is under obligation the XX% changes driven each under implementation fiscal a The and live. clear, the if expenses the seven non-cash table The As go as to implementation over client that months adjusted up of impact with ASC fiscal to of certain these non-GAAP upon forma pro EBITDA ’XX. structure. any we sheet, primary uses headwind on of a accounting taken year will which would period of points basis. implementation supplemental of quarterly business all continue quarter XXX each sales to expenses of our amortizing to of period recognize ’XX revenue up ratably Roughly and comes revenue as be on basis fees both remaining amortizing impact implementation we we months. XX accounted for

I our four certain I financial margin to million guidance, basis point X% fiscal like increased years, EBITDA revenue, has provide adjusted of in our our gross our $X.X financial improvement. the a from last expenses. the IPO, and demonstrated operating in targets. our update would XX.X% XXXX, In million key revenue of to or Before leverage both time X,XXX have we in or model, $XX.X business of of adjusted Since March in consistent

XX%, of XXX target to to revising earlier, we XX% XX% financial achieve to performance and revenue; are as As revenue related continue strong target XX% In goal follows. basis, an plus be is fiscal introducing goal; our our and remains we regards to now XX%; key free in are continue changes XX% in certain growth including financial total margin ASC to expand XX%; are to XX% result our to we from adjusted on annual gross target as now to confident a margin cash our of free of flow ability from and increased a of this because target our targets is XX% cash we flow we of EBITDA XX% XX% will confident XX. increased outlined to

$XXX first million; quarter in total year revenue total financial expected $XX.X fiscal and first of the of fiscal guidance ’XX range full million million $XX.X for be is or to are Finally, $XXX.X $XXX.X EBITDA XX.X%. for expected year the million, EBITDA is first forma ’XX full is revenue I during quarter and to adjusted our ’XX; and the for adjusted approximately million. ready forma to now pro you. of to the ’XX approximately range XX% $XX and non-GAAP to we’re XX% fiscal EBITDA would million, In the $XX.X XX.X% expected with million; $XX year, performance fourth pleased fiscal range XXXX, summary, full total quarter in ’XX over the adjusted total XX% of in to $XXX.X be Operator, pro our the growth revenue be like of to $XXX very revenue to and margin provide is total or to in to for with expected XX% to range million million; growth fiscal operational quarter over and be of Thank non-GAAP questions. revenue of million growth we of

Operator

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

open. is now line Your

Justin Furby

start, just Maybe so on XXX, to I it right. Toby, just the got

you XXX that guidance away? If million take in revenue $X your world, were the to stay higher, is

Toby Williams

by July changes revenue to the provide to $X non-operational The as accounting an able the XXX% the and included ‘XX apples-to-apples timing rec in to be ’XX. the remarks. reason fiscal press resulted in which said So the as prepared accounting adopted million to of rules cash and driven on headwind Xst release is fiscal revenue, in I compare we table is pro forma rev

‘XX million rec the after revenue out taking guide the for rev $X So timing impact. XXX of impact XXX to fiscal is of the

Justin Furby

this just faster clear given than then should that that the So fair? to implementation be be Is have fees. growth on year services headwind you the recurring growth

Toby Williams

yet. not And Yes. changed is

Justin Furby

you how out below that a there what and think just is do XX XX% that it interested like impacts I in from the new margin looks growth the am number long headcount when opportunity you space. look standpoint down then for your over gave, you Steve on the of -- market market, you term? does then the is that sales carve-out part And the And

Steve Beauchamp

on core fiscal to headcount that first, would good So were really this able the marketplace. XX% growth our say we we year, going I really about. That's feel into bring in

no new expansion. market with there’s initiative associated that’s So that XX%

seen space. call demand that is the out I in that more under reflects fact that XX think marketplace really we’ve on the

seeing with definitely you that are looking capabilities. think year-over-year. clients these growth see HR comprehensive more XX% I a unit for We

after some don't folks think And millions year a fiscal be opportunity. think There’s that to throughout have sales so really revenue as in a that much that impact, our would to opportunity. dedicated longer-term We it’s XX of marketplace. under investment plan invest businesses to is about in clearly of go the this going

we’ll start the think we is more in there. so to out bigger market as size us. the And our we to the try exact space the demand that TAM for figuring go And opportunity

we’re as early bringing We’re in even excited some XX about or on, XX of we’re the process below both as but that that XX small early and employees. clients

Operator

comes from next James. Brian of Our Raymond Peterson question

Your is line open.

Vince Celentano

that for show And modules fiscal year on Celentano I Brian. on to see most past Vince is year? want see, basis? the absolute you This year-over-year in on do the how growth which this changing coming

Steve Beauchamp

packaging bundling terms of So of the do we make easy and trying process our buying a lot in customers. for to

I sometimes a for a it's bit seen be is category around the specific little category the to the What So where would we’ve say fair difficult us amount more growth. definitely is of modules. talent management

than saw a remarks around has about more for our the prepared our recruiting in platform, months. released which XX You now applications in million been color

highlight good probably So if we’ve to there. had because were while I it’s a category, really out recruiting, traction that go I’d I something been there talent management for in think to and

Vince Celentano

can a your do employee trending you size average you about give And fiscal year in hoping how ’XX? see little more color client was I that and per

Steve Beauchamp

successful of we’re the shift. investments marketplace that’s with different a then to If going a our of mix low the end bit at have

period smaller an and of strategy extended very to maybe over again, initial average those unit stages time imagine But growth of client would size. at I slightly investments. yield the that would slightly higher we’re So a

customer if size this the very fiscal last would you that the our what of average year at you size So end at at to similar customer average is past look is of year. year, end I tell this our

potentially successful markets. real if of really changes, changes the we’re So front us are no emerging in expanding in the in

Operator

Scott Needham. from comes of Our next Berg question

Your line is open. now

Scott Berg

from I us standpoint, new cash wanted EBITDA is. goals start timeframe any term the to a out or profitability goals? you guess that goals off intermediate-term to maybe you in for Toby, or of. goals, flow longer revenue off about have the margin to just Do the laid start think retaining, a on I free

Toby Williams

So probably set. targets original were to the back draw the of IPO when I would time the

saw when about And similar in step I those I forward crossing EBITDA these, thought as at think When -- thought to think the us obviously we you once. in we about in timeframe. you with that payment, those we about a big timeframe. take XXX, into year-ish two achievable in next a four think these one year all

so moderating about think little And would but I time about we’re as how over a bit that probably that's it. thinking

Steve Beauchamp

and that model. I’d we’re only would get is our growth we’re And really But a year the EBITDA on part I believe requires that to even towards way still defiantly be we move key mostly the be definitely years keeping encouraging. I the able bit so, pretty investment a formula. this if plus think a took years certainly four more long-term it willing plus that growth And toward by fact we’ve of thing fiscal on growth consistent revenue able doing us we’re recurring to that, add that past And plus is we to It do had focused time. targets adjusted long-term focused gradual four that -- XX% XX% target. think over as to gradually do march that. those little

Scott Berg

think segment? on don't the in pricing couple same that to And purchase a that current call growth guess segment third you that's buy maybe maybe terms years, absolute maybe you’d about growth emerging I How get from your just know of of I question to out, couple quarter next a right the years do yet is. now of that on Steve, area do trajectory, we Thanks. think your what you or as And and XX% quarter? and customer they there. versus revenue for your eyes half coming an product. basis product, the you or move over the growth the

Steve Beauchamp

segment. in already I So say that would we’re

of about you employees. law, ACA XX was If think have when years coming that couple than fact we our about -- when less we ago, the XX% talked clients into

market. market before, about can a this bit challenges the than lowering many opportunity over XX the going So a certainly who a see to type management initiative labor really if segment. brand-new the a important very haven't been We some plus. really size bit of to the really or little this folks target targeting We’ve dedicated isn’t XX we that been And more often customers And a them. necessarily little it’s go market. our are lower The similar is employee those have growth in our to -- are that be are components we employees. typically get those to putting talent that becoming businesses with key customers to segment. I to think drivers faced customers hundred of It’s tight are also

workforce. the generation got You’ve younger entering

engaging for traditional available looking them. and more a that to platforms options little that maybe are than bit they’re are So the

bundle features staff And complexity of they're the can balance for, excited the really make that got are to that we market, existing they’re bundle those even easier to in use. conversations about we so some that it the both that out can in what platform So take we’ve maybe offer. the but and we’re having looking our

So we running. that implement can them up and easier it’s for to get faster, them

folks a some experience. it's have it at and some new that we a the where targeting with same market. packaging So lot of it's But bundling platform, going really definitely

Operator

next question from SunTrust. of Terry Tillman comes Our

line is open. Your

Eric Lemus

product, been Terry that so shape are has to what like been sounds BeneFLEX that for Lemus admin guys on This showing Tillman. And response on if on have guys you on question you Eric is in releasing product? in good some that year. it actually customers, But this and coming early

Steve Beauchamp

really go that fiscal folks some So really is we on goal launch acquisition, I knowledgeable with if to And differentiated build working user that about were this last we year. we’ve a to the experience. to got the product that quarter bring after back team you talked the to able think was plan to of our the able board be

either existing getting with customers of their So in the input or acquisition involvement. prototypes, terms have BeneFLEX been showing from working and we certainly them of ours

bring also, perspective, input. closer early an certainly will as we We adopter launch, to from so get lots people of on

isn’t I is lot once-a-year often application there might that hearing separate think It’s use you a a download not of really usage. lot not a you from a that we’re great of mobile user app options experience.

think particularly get both the you HSA XXX,XXX if these we the our experience, So FSA we we’re to perspective. sentiments are from information, and and early with but clients. from And prospects really an those employee can conversations mobile from just about people really ease an and portal we integrate existing the hearing that and plus perspective this administrative on

Eric Lemus

And the next so you marketplace response people marketplace just of with on actually integration about that far far? and as do been think the then question moving that has the as how was using launched adoption recently. the forward that integration my How integration

Steve Beauchamp

years product particularly So I us health data integration goes third-party We've for and strength as providers. a more as think a XX back insurance than really of variety providers, integrated with providers, company. XXX(k) a always

real The make clients marketplace for we’ve marketplace available. already we’ve to see partners integration And made launch that even those the different purpose making XXX as have time so that you is integrations, established to we with more we those and got it the easier get with. integration marketplace, of the developed in APIs that

to we our core be think broker integration our been continued So attack brokers. is also evolution has that data which XX% more than continue to from of on able very strength, focus is of to new us this our and allowed channel, to drive business important we just think a a

Operator

First question comes Greendale next of Our from Analysis. Corey

Your is line open.

Corey Greendale

a of Just questions. couple

bit years, the a year. of slower of rep the you’ve terms force, it's think I grown first the little XX% XX% -- couple the this in I think In growth

think you the about if was Just behind growth slower investment this what thinking year?

Steve Beauchamp

So that would revenue say our we I that the we at the based quota setting look amount need sold. off of

a need the of amount revenue. it’s so And of overall off and formula the people we number based

back that fits half And so a into perspective. sales strong year of We equation. obviously from the productivity had a

our revenue. saw in You in recurring the that acceleration

top On our emerging of as we So investing goals opportunity put that, we’re I all could well. new more to this with XX% going we as think be in like headcount. in we that achieve felt together

and have finalized necessarily end Even the of add of But the look to this that going fiscal by won't we’ll year, feel overall think the the I what we’re pretty So at when about into we emerging we the though an to be end good numbers more percentage that we’re much the impact fiscal of mix, very adding heads early. up those haven’t the like with year. year. you end total similar

Corey Greendale

that speak latter would market the And the you’re on channel. working go going to think market. forward? looks to point, fit know think how I broker emerging you would I But just that with to well that you that

Steve Beauchamp

a sub-XX definitely and employees referrals I there. think, space in historically, that got we’ve referrals number we got significant of

open as be us figuring our market. right at But the anticipate channels out got been broker, opportunities market at leverage the a in necessarily all you the traditionally as definitely of other we’ve think out existing obviously channel. leveraging been part of when we some can long-term. broker one. terms it and think I referrals that go that will And that grow be would get same able more new -- the whole, look so driven But right to help it’s the to well business we that CPA as us of we to has will strategy time, channel than

Operator

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

open. Your now line is

Ross MacMillan

math maybe Toby much initial appears at EBITDA EBITDA adjustment maybe you Toby, year. just look quick was last first for and it I revenue, guidance ’XX, about if I then had the I last ’XX as on it other of double-click fiscal your to the implementation on wondered could the just on was And to all slightly in year like versus my services we that. just margin, up. be bigger same of relative fiscal do looks a QX when question QX in financial And like-for adjustment of

that that that continue to we that pretty smaller gets getting and the such you And that were ’XX. Does about so like-for into I’m Thanks. just think as wondering like go delta through much close smaller? year rolling fiscal as

Toby Williams

one Ross, hit let me first. the last

in terms way EBITDA I and right think flows reading way that that yes, quarters. reading answer think And from the then perspective, too. then the how the of is, right it the I an you’re you’re in

incremental I that had coming the think marketing incremental from we QX sales And basis year think more guide R&D of in EBITDA flat sales year, about investments and that I to improvement. where especially points and we’ve to of we’ve ’XX think off points XXX. we and its for as and the year year obviously, about of continue us last XXX tailwind marketing. talked the in a talked gone basis help this into investment XXX to And growth. we’re to getting XXX drive result a a for I And is

you're think reading that way. So I right

Ross MacMillan

can. follow-up And for Steve, just then he if a

you gave those on Just customer and us data adds going numbers pretty through good. look the

we a mix really I And seem little year last -- the you earlier didn’t that shift in in to growth healthy similar fact, customer mean bit about In be I some pretty think talked to year’s. size.

mix if function So or selling customer. it a per it's prevailed whether I or just wondered of products you if that shift more changed, actually

And down, though up? products mix even customer you got for you more got mix so

Steve Beauchamp

think slight I to that to necessarily size. got signal we the in go And seems to slight great So a think client have not around back, trying word were always I if definition a it. you change

a a it’s been a but what average client And down I think size new might not have have bit, so that so client And is been the had seeing we bit little might difference. size XX% you're client per growth. revenue big the higher, little

will was average to time, growth of similar thought be it And very what growth so the year. rest said what to And unit the the at ended from we client. per we come revenue revenue we last the up exactly

more and question had just size, no wasn't there we sales there's little in So a client impact much. that product bit the from but it slight a

Operator

Our comes of question Walravens Securities. from JMP next

Your is open. line

Matthew Spencer

you This for is for Walravens. question. Spencer my on Thank taking Patrick Matthew

you two Just ones mind. quick don’t if

you you how And in any whatsoever second have is, seen think going forward? change M&A First about the Thanks. competitive environment?

Steve Beauchamp

like M&A BeneFLEX always experience launch creates obviously, that tell product We platform next we've we fairly that earlier continue our things acquisition also it at be so the we’re talked look actively it. year. I to excited picky forward. definitely might we the clients. of for first sheet we’ll we in done. really think perspective, fiscal And integrating From a about though what about the that do an about and And call how and that and Obviously, we’ve opportunistically that But in it's said think was and is BeneFLEX, there. tuck-ins. you a ability definitely those first, would potential a to balance the as and experience looking competitive is to and for has terms been. advantage Having building moving about be to product build user believe delivering better extensions, the that is we’ll unified it got the at DNA organically a our we have

I of another potentially us. So a opportunity think in it's front

Matthew Spencer

seen And then guess environment competitive just I on the any have you changes there?

Steve Beauchamp

our feel competitive to been competitive from that retention good It’s speaks we still to deliver seeing competitive. same we’ve the service market. environment ability about right bring think XX% for differentiation Revenue I over We experience. seen people always can today. to product that the the we’re It's years. perspective,

happens the any we than be different pretty so to good against competitor and the whatever necessarily environment. it up and we And feel competitive call competitive wouldn’t

Operator

question comes Van Rhee from of Our Jeff Craig-Hallum. next

line Your is open.

Jeff Van Rhee

puts that just balance income annual Just the you around for line. help Can XXX XXX guide? us in me, income. on the interest to and How interest the

under give Just over rates; the this sensitivity us terms obviously, nice number trying of -- to drivers a quarter. a and little to in get

So how that to just there about maybe think start number?

Steve Beauchamp

the we rate increase from So fiscal haven’t interest modeled guide for ’XX. standpoint, any an into income

There incremental I baked -- is ’XX push from increase no tends forward from think in. our rate a that no be view on to that perspective.

the happen, that we’ve usually from it be to I takes to But partners. so us any there could to that upside. before, rate mean to And for a through increases while as was extent our said follow banking

that’s how looking we’re at it. So

Jeff Van Rhee

second other about versus they’re notable breadth particular pipeline variation in entry respect of of taking look open-ended. the with mined mainly deals size the and they past, any in initial and like the pipeline they’ve then callouts? the in customers, what the that portfolio of to or in and the And just scope the observations Any

Steve Beauchamp

I No, in number I more in added comes surveys -- and we I existing on new buying added would think that XX% some added products products average increase added in at But are of revenue per that’s expansion continue in expense, so talent selling of are the still have do would that. a customers to in the just that say most back sales terms we’ve that suite, And increase to people We board. management and embedded XX% the of that evident of clients, tell point-of-purchase to years that’s two get from client. compensation last we've that we've the coming in alone. we've lot recruiting you

been a suite we’ve pleased management of so the whole. And as our talent with ramp-up

Operator

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

Your is line open.

Mark Marcon

the with types profile attract that to of to terms regards Any of order in the wondering the might in market? of Just businesses. salespeople emerging change that recruit you

Steve Beauchamp

that people those say effort. really is would haven't But selling marketplace I dedicated have experience that customers. towards in what So we we

that career, that of folks, people pretty a a so you’re looking experienced similar end might And businesses product I as bit as are a BXB be you with the complexity But profile. is We up be so because at well sales. other that, fairly to might dealing a less. think profile. of little industry it's mix with folks smaller bit their similar But earlier little a in the it's used than

Mark Marcon

down. --- Do small revenue that year. as you with then per even you even that that you the can you Do that the to think this push that obviously clients? And regards think increased nicely client push continue -- really as with

Steve Beauchamp

opportunity midsize continue employee revenue So of to year. that per core what add and you per definitely increase would at definitely continue look I businesses. our segment say is, an product that, I to when think to have We

client. revenue emerging, it bring Now, in that if at per think And But versus if about looking smaller. think average units per is in for units shifts of on space and by we has opportunity those a you like, We more little start which average that start per are on could employee if for like to someone in very employees. what bit successful We that's us early us. opportunity and can definitely obviously looks profitable think per you that still then see very and mix those units looks individually even majors. year per approximate way clients what XX your still the so we’re employee

the solid dynamics of some the So of a more a I attracting you PEPY and will lots great good people and opportunity. where can yield retaining opportunity attractiveness just where industry when product at think big that bundles are pretty generate on market look there, talent, you much TAM, it’s market being focused

So to think go it's after. overall, market a great we

Mark Marcon

rev you margins the Can model talk we change of a about how about it. gross that the we and server little out bit should think implication the on rec just how should and the side

Toby Williams

that total against it’s about of how both impact. So is amortization down XXX I XX% the then from the of most from back is other so seven if the XXX spread go implementation impacts impact to and to costs, XXX, sales we said commission bonus basis year. the roughly the points breaks the of And and -- XX%

So both against of I pieces the think P&L. those of about would amortization the impact how of that’s

Mark Marcon

midpoint, old target And When towards to then we you end just to going of clearly midpoint to that moving it the upper already. the XX% XX% target. were about think

and from So versus longer-term bps? is of XXX terms XXX XXX the scale in much perspective, how a I guess

Toby Williams

I from think XXX, and… that XXX to XXX is

Mark Marcon

about I do just there think think it or… meant longer-term, it if you stays you

Toby Williams

Well, yes…

Steve Beauchamp

get So think you would a if to have taken one back forward that this us I take think the is we years to. many a way step get obviously leap year about in to

at our you we’re this what for long-term is target year, look guidance when is. our so below And what

because so sense. much little simply, of a think able the about and to be gotten so would makes I that that long-term one cadence bit into a achieve more in get that we’ve of slower if And benefits year to target

Toby Williams

we’ve And a I business. is margin expansion mean thing the comes in Steve’s long point, the with taken that in to I still think scale believe XXX. the with the we big forward But only guess to EBITDA I I’d term add that step

on moderate I the leverage to longer-term… EBITDA And would But of basis. ability to the see feel think expect go we in-year basis that so about I a leverage still good points forward perhaps

Steve Beauchamp

is a that cash I at the into worth obviously take target of flow think the which challenging model little on a introducing out that well we've And makes us some more comparability as mentioning bit long-term can noise too this put model, accounting times.

of we And years XX% target. had in cash free into get cash XX% so and about couple flow us the generation improvements to feel pretty opportunity the flow good last we’ve the to this for

Mark Marcon

tax On free you to effective thinking term longer the that over rate? XX% flow XX% cash target. What are

Toby Williams

that In thinking pegged to range. would type I tax about we that, XXs high the think we have would described to rate same in mid have being that

Operator

of from Siti comes Wells question next Fargo. Panigrahi Our

open. is line Your

Siti Panigrahi

if and between was back calls. this been forth apologies asked, I question My has going

on talked XXX-XXX, does revenue about impact impact. beginning So you well to back that think as going you the as EBITDA? of QX, that how Could tick double I FYXX

Toby Williams

the XXX an and points both we’ve out the XXX. sales the XXX, just that the of taken going apart top out EBITDA implementation. -- We’ve From it, to laid from standpoint, we’ve change basis then between coming laid

to to QX, in it As we’re guiding relates the guide. we’re year. XXish margin flow-through think XXish guiding to on I the And

flow follow and path or QX from the to ’XX perspective. through expect see that you does the you roughly And would think one would so from EBITDA in the the year, through the the year contribution if in to of expect the would so to we see EBITDA quarters EBITDA you fiscal how I have I each ’XX -- course the of you full think plug plug

Siti Panigrahi

back the Steve, more and and a and old going that’s product new is compensation to than expense year recruiting, the management. now in management

install those base? wanted of penetration what’s just know your So to the modules within

Steve Beauchamp

reasonable feel So to in that we of have be get and fairly penetration this time. we can XX% to XX% comfortable a philosophy that into able of love to rate our work says with period clients we

a really if boy, there two get within reasonable get is we can of there we which fast, that’s so if And year great. in that’s kind

year ago, get we that off range. that for feel things from that opportunity good there’s to products into the over we’re us enhance that feel a feedback pretty to of expansion continue getting recruiting also And time those that higher to based released clients. than we the we continue products more we drive think I like like as

Operator

from of comes question of Subramanian next Bank Our America. Shankar

line is open. Your

Shankar Subramanian

on the retention play you on rate, and so rate try out Question emerging on retention see from as customers there long do on? had market here to your How you’ve more run. spoke

Steve Beauchamp

into this I idea of think we’re early very expanding in emerging.

got in business great is great. about so that And is there. potential mix lose we emerging think so talking market shift really if in would we’re And successful you’re opportunity which obviously, higher, the defiantly marketplace, be we've Yes, a more clients. rate that what do you the

average on little smaller. a are Now bit they

there we as space. to come So that new we’d give retention at time have that client something an rate the initiative potential I for that a year, different a us don't type necessarily got think what of this to it’s that's gain for look as you over about years probably think to would we’ve issue momentum. to target if fiscal in base starts look is like that big in

Shankar Subramanian

on the year of end part a you’re on about the and any gaining market benefit in help if above, you the end? there app you follow expanding the market, past of above, releasing, traction as place higher in X,XXX is the thought to you think any you do released higher a that? of XXX lot How from that given up little meaning to you’re products that can As have that. So the see that you

Steve Beauchamp

-- on market. not for been We us for I’m target segment. us. market want our less higher the is of historically we’re So them be the I the I across positive utilization has And think things more any positive building or trend all overall, XX,XXX. for to market think at remember of utilizing to the employees sure our

some capabilities defiantly a sales So see those. We improve some and we’re already a processes and and are the of above that market. customers got we definitely up some mark the number that of of resources that same some say marketing we’ve today would of I the where exceed our XXX we we after fit employee have go doing thousand. thing

and to we continue about our number as of so upper it tweaking So have than wouldn't we we a better that that just at ago. to year we’re one the feel I But better different it market. call today get at it’s trying out grow end we can that strategy the a of did clients

Operator

with closing like further would back questions, And for remarks. to Beauchamp no turn Steve I the any to call

Steve Beauchamp

some thank more all Well, time on you you a very reach those Have in. really happy free conferences much jump phone. great so with out, coming, we’re And if to your feel who up to in to got us, dialed We anybody some we’ve Paylocity. of appreciate the interest need night.

Operator

you thank all conclude for Ladies you participating Everyone, and great the This conference. in gentlemen, today’s may a day. does program disconnect. and have

Paylocity Holding (PCTY) 10 Aug 182018 Q4 Earnings call transcript