Paylocity Holding (PCTY) 1 Nov 182019 Q1 Earnings call transcript

Company Profile

Participants

Ryan Glenn	Vice President of FP&A and Investor Relations
Steve Beauchamp	Chief Executive Officer
Toby Williams	Chief Financial Officer
Justin Furby	William Blair
Scott Berg	Needham
Terry Tillman	SunTrust
Kevin Ruth	Raymond James
Nandan Amladi	Guggenheim Securities
Ken Wang	First Analysis
Shankar Subramanian	Bank of America Merrill Lynch
Mark Marcon	Robert W. Baird
Jeff Van Rhee	Craig-Hallum
Ross MacMillan	RBC Capital Markets

Call transcript

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Operator

Good day, ladies and gentlemen, and welcome to the Paylocity Holding Corporation’s First Quarter 2019 Fiscal Year Results 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 be given at that time. [Operator Instructions] As a reminder, today’s conference is being recorded. I would now like to turn the call over to Mr. of Investor President Vice Glenn, FP&A Relations. and Ryan you may begin. Sir,

Ryan Glenn

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

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

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

Steve Beauchamp

Thank you our us fiscal joining you, of and Ryan, thanks XXXX on for call. first to earnings all of quarter

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

kicked EBITDA midpoint business adjusted of with to total topics the Annual quarter the first XX% fiscal in revenue as EBITDA in Adjusted mid off with pleased also our the quarter and from record experience. were we than work the of marking we We Elevate leverage the the talent marketing of our with operational Last growth seventh XXs. our such We’ll welcomed exceeded our business remain and XX% $XX.X workforce number of attendees target consistency the XXXX in continue continue revised to development initiatives first sales XX to as our on focused professional and sessions be also Clients straight by fiscal investments which development $X.X guidance margin management, and choose towards for of we research month, focused drive Chicago of as more Conference. Client and able in to to employee a We million. quarter breakout XXXX. revenue. incremental was on million,

in to our product XXXX. announcement with quarter product the the features zone introduce Additionally, latest a suite. clients of We our also teams begin with connection excited and our of onsite to the calendar be of to new will available the were functionality solutions, were first in conference which and TPA product technology addition

point offering focused and technology Account, single such as and a Savings Account includes TPA unified Our HR Spending payroll, administration. a benefits of with for access number Health Flexible users providing products

Our allowing offering claims users while from self-service employee to and will balances ability include our having also mobile transaction all details account submit portal. to and see the web access,

product allow as pay and changes administrators based number on role enhancements TPA updates a functionalities announcement supervisors a period. to delivering Key and process approval the employee pay employee the to ability scheduling provides we process a innovative action calculator through addition customized of adjust that more for initiate streamlines robust and HCM scheduling, of retro the that proration forms solutions. employee within to continue swapping solutions, we that includes focus new In shift to highlighted and

professionals. a we clients self-service Education that and free for additional contained HCM training resource launched and payroll topics our and materials information or Paylocity Additionally, Knowledge PEAK, also for supplemental trending

Chicago’s best and Work one the number Built the and by proud We in awards to winter Paylocity’s for best the In a to very companies, culture quarter, recognized won best Chicago list Power For to honored a of are being companies have elite are by Sell including of Selling as first Magazine. brightest and of on place

working to Ginnie board company Ginnie several and announced Breen very During experienced addition to the boards public like provide directors. career quarter, pass technology a on other high our to guidance. companies. review we the now updated Toby and and has serving private call had driven also the and of results to detail of the would growth with I successful quarter’s has in

Toby Williams

Thanks, Steve.

seeing QX the issued illustrates our market please is last provided that non-GAAP press the business of client fees balance pro up period Consistent during last was we invest XXX.X%, the funds available-for-sale securities forma our same revenue up a fiscal QX as result straight interest and fiscal pro of recurring XX.X% we quarter, financial from that discussion we as the quarterly reported forma prior revenue QX Before period same with a And continue be because million, table results, continue which the for revenue a fiscal total seventh Total quarter in as results in revenue results going comparison the on Steve up growth marking noted, funds the XXXX and $XXX.X revenue the to in of income XXXX. quarter. into to interest in to increase in in portion increases, from client a QX QX in the today, by following recurring rates year total will growth with we’re XXXX. XX.X% for on our for on mid-XXs. XX.X% increased be closed note average was with after release high-quality basis pleased we consistency the non-GAAP primarily year.

adjusted scale And model. to gross profit Our profit focus consistent our XX.X%. business while we adjusted driving recurring driving also QX also gross while as XX%, scale, in revenue for total was growth on continue

and to a in year-over-year in investment R&D our research basis, R&D non-GAAP what to QX. a both in basis, to And what were significant And our in in of of R&D, make we continue it’s investments we We On capitalize. dollar XX.X% increased total revenue development. combine on and combined investment investments important overall by On costs as understand expense XX.X% sales revenue focused our were remain an G&A consistently XX.X%. our non-GAAP we leveraging on area basis. On expenses on fiscal G&A marketing of in this a investments expenses we were remain focused annual incremental revenue of of business on in QX, and and non-GAAP QX XXXX. in basis, a XX.X% basis,

or with in activities quarter, We and for income confident we period cash to a which $X.X to was free basis, balance revenue $X.X the of $X.X cash, from invested margin of was million. exceeded XX.X% cash and included by generated flow quarter, $X.X for the was QX, to operating tenant cash adjusted was fiscal year, remain million; an perspective, $X.X corporate From sheet, results net quarter Briefly the continue the million Our we as guidance regard allowance. improvement expand including $XX.X we for $XX.X will the at covering ended our million equivalents cash million in XXXX. midpoint. annual flow million operating gross million profit $X.X our $XX.X on In which last same in EBITDA a that million cash income compared GAAP the million.

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

is quarter is or For of range $XX be to expected XXXX, fiscal And of growth over quarter in approximately range be million million adjusted the second total million. of expected to XX% total to to second revenue $XX.X EBITDA $XXX proforma of million. $XX.X fiscal the $XXX in XXXX the revenue million nonGAAP

generated non-GAAP expected $XXX.X the million. our range conclusion, is million of or the long-term our Adjusted we’re mid-XXs our $XXX.X over growth million total ability scale XXXX In we’re targets. of growth, and ready to to be the results. range fiscal we pro expected revenue questions. now approximately making Thank seven business revenue we’ve Including to for continuously the be $XXX.X towards our to is revenue total million. XX% demonstrate forma pleased fiscal in quarters, For QX last you. in $XXX financial in are $XXX XXXX, the to with of progress over EBITDA Operator,

Operator

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

now is line Your open.

Justin Furby

new Toby. ones versus we of maybe of if the Steve, the demand selling confidence And just versus you you’re the have And can follow-up drive other terms what products, selling reps, some most just level give a ramped I time to guys. of that. I’m thinking incremental in last guys, curious whatever competitive as factors pushing the then, I’ve you for guess growth just start for season consider for and with season, Thanks opportunity into your go are just as year? a into to quick you you to backdrop think just last might SMB that you curious year. sense in head I’m the this got

Toby Williams

Sure.

in us going felt and for staffed time staffed year, the think the making I so our that fully into we’re fiscal sure that’s by have being we we So August key a up call. about good metric

I So think that’s positive. pretty

think I get another able year have is the as guidance the also first products new And the we’ve raise really question, them dovetails I being to quarter in continue into in These sign. the positive to the which some products then think it second marketplace. got after the bag. we for is better

So gain season. I to continues TPA the products And a management a excited think conversations. we’re the we’re product, fall recruiting ago the new if you about couple in at pretty that’s some lot topic with of annual to newest momentum, of people cycles, compensation look a then of popular years

I quarter customers of introducing first selling opportunities energy some Some in good and going it’s the season. next good think fall with launch excitement integrated this into experience really that with but the brokers, year, will creating

Justin Furby

helpful. line That’s float a just float Toby, housekeeping item. the with the then revenue guess, it. Got balance or I And item

the curious of the there. your year Just the in guidance terms of Thanks. balance growth what assumes for rate

Toby Williams

Yes, sure.

historically baked along incremental So would increase in. we’ve think the incremental that baked in the just we daily only generally talked year rate growth. think will average we of have thing And balances rate is I the don’t the with client rest that about we that for the I any track but saw, have hikes

Justin Furby

it. Got

or... in QX, we just little from up what that if to reasonable you of flat is model did bit it So sort a

Toby Williams

That’s think the right it. probably way about to

Justin Furby

Thanks guys. great. Okay,

Toby Williams

Yes.

Operator

Berg from comes Needham. Scott with question next Our

is line Your now open.

Scott Berg

for Thanks two got everyone. Hi my questions. here. I taking I guess

contributing about Let’s channel. of quarters. your the over the start of super terms with That’s broker been last XX% clients in consistent several

terms plus or in deals rate growing that they’re are actually you you? a more Steve, think are are XX% throughput at that You you those gaining the you recently, of now. giving

Steve Beauchamp

Yes.

mix. a it’s think I So

relationships number between the getting you would and that growing definitely growth mix current tell We’re get have. we to But out number I of a in brokers of more that the brokers. to then it’s of XX% really

relationships. individual these as about think So being

operating the are terms their offices, with the on who in the some field, working reps these of customers, but brokers creating being relationships, who brokers are with Our in the also of operating marketplace. the in working prospects in in

are the correlation So definitely time more and territories, broker referrals. I in have reps relationships and their the they tenured think the create longer with the more see to and we opportunity a market

definitely mix of So more the new a getting existing between and adding relationships.

Scott Berg

helpful. that continues types that anything And in to months Steve, you kind maybe driving my pre-scripted customers different than ARPU or you in XX modules of That’s that higher? ago then of terms Are your or had months the over buying seeing mentioned Great. follow-up, different quarter that’s of XX trend up. are two last might ARPU be remarks,

Steve Beauchamp

management. there. We’ve to one were a of Yes, that if operate of talent in, we number categories the sure. would modules it’s added I highlight say, I

performance management. recent us, recruiting, for well management, surveys, doing been being onboarding’s compensation adds, So

category has I think ARPU growth. to a the probably contributor as been that biggest whole the

We’re still benefits though labor of it highlight and in one places certainly management But like upticks would those, the have and talent category. time I if and seeing to HR. be

Scott Berg

taking that’s helpful. Thanks my Great, questions. for

Operator

comes with Our next from Terry SunTrust. question Tillman

Your now open. line is

Terry Tillman

hear Can good okay? you me Hey, gentlemen. afternoon,

Steve Beauchamp

Yes.

Terry Tillman

new look yes, your kind the nice was whether Anything employees, to, Steve, of generally could quarter. solid has at across sweet under I stood relates of may first guess stuff strength client more my really I’m it’s or be the of where been, in Okay, if than of some spot maybe about actually out maybe XXX? balanced you and Or curious microsegments, talk quarter. you you what well, it and terms strength? just know the question what I that or kind could additions the did XXX in on and it just sub-XX, see about board? the

Steve Beauchamp

Yes.

clients XXX average. – So employees of a I little on average think more mean, you’d our than

can obviously, X,XXX below And we so we clients XXX. at a of exceed even then, that market lot get well. the as target And times

a I across quarter, think I maybe all that some continued years see thing looking strength are clients stronger, highlight might the last really maybe we’ve products what said were I are we years are more smaller of and talent solution. it’s three so bit in that one the And a to seen be for management or slightly segments. than interested two same these ago, If little it’s broader therefore,

XXX bit the the in that of in you with bit, part space a a sales see perspective. I’d So space, more XX a in employees pretty certainly, space becoming across that it’s a say strength maybe process. board the important little that under under little but – XX XXX more to from mostly across evenly maybe

Terry Tillman

not and reps down talent maybe and the you’ve around putting your Okay, to a Do that. help products to start maybe getting cycles. about you these need to need overlay maybe you would – terms or in would the as going these the you innovation, bags modules more a to innovation And them suite into that, more other sales balance do or follow-up do of bringing next specialist lengthening question the it cetera, you’re just to sales and sometimes added, I learn dynamics year, all or awesome. anything to market now for management, relates sales and type in how – love bogged et just more more all more TPA doing of like related that learning

Steve Beauchamp

fair Yes, that’s a question.

consultants. kind of a doing sales we role demonstrations So a on pretty the of solution of the often significant that I have sized engineer that’s sales as most rep. think of behalf

more some got a they’ve product. explain that them help really, really can so resources complicated And maybe

in more want. fashion. we’ve perspective. bundled the they one a employee picking buying really that I bundled per think looking a these the clients modules about a simple our month the price past, at It’s They’re in are price. thing They’re talked other fairly per from

So which, of think, And years, over sales has that’s demonstration digest to to Leveraging process. it’s consultant efficiently the client one if little a solution look resources it allows more we from in the couple invested perspective. easier a world, you been bit we’ve that engineers reasons, last at effective. a through run of very the us

Terry Tillman

thank you. Okay,

Operator

with Our James. next comes Peterson from question Brian Raymond

now open. line Your is

Kevin Ruth

heard for here some the guys, at newer LMS interest help adopter taking of add-on Hi lot of Thanks And We your experience employee about have Can like there? trajectory of those the some for offerings? frame a Kevin you how for on looked surrounding we user us Brian. my product conference think call. and what early the offerings. customers should maybe

Steve Beauchamp

Yes.

So one that and we feedback adopters. do in, from of things development are early we and are the that even not products launch at the really, some take for is Conference yet ready seek we Elevate

some of and have built a in And to got components able to that we’re into adding of and the organization versions we’ve opportunity being we employee using leveraging excited very early an experience different the we create and today, having think those some ability learning position And and initial very the idea entire product really organization. learning product upon into content across – build eventually to content market. launch adopters share to to that that products. be to that so and LMS an So be our really across that the some on can we’re about

them an and this. interesting then into And to an employees can going whole we It data the our really feedback more but drive to next opportunity off adopters them engagement analytics bunch in So application of organization a beyond the drive drive to the some and well also capture drive really us the culture. it’s is of kind types of really those conversation take and as as that can this HR of things really knowledge that level. organization an gives from I think think early just the is across connecting helping processes, are their automating allowing

So real our able changes the excited drive products clients for early long be we’re really by adopter culture platform. opportunity our about to and those to term leveraging

Kevin Ruth

Got it.

enhanced as across view for You how features And that Self-service out curious And the term? area conference building do those think capabilities as leverage are longer expense potential you had the on well. I’m some that a maybe, you at display about platform.

Steve Beauchamp

seeing continue definitely for we’re can we that. Yes, we’re increases across our utilization whole. as looking platform And increased additional that features drive a to to employee

about are is think, roughly pictures. our bit where And X,XXX offices. the talking initiatives, community to share able so you’re employees We’ve a creating got the example, we’re really of product within different I country, across a employees

And more our an more content HCM an just a so to bit a to fun the we’ll And the organization. We’ll Halloween-type across that’s for be things and holidays. community think the create community and of be to long-term important going the create leverage comments our but not little run clients run platform one campaigns. overall across experience. from example engagement platform move to different campaigns, reactions continue charitable organization. And employee that’s really giving part where strategy can in of a to of we able We’ll like share to

Kevin Ruth

you. thank helpful, Very

Operator

Our comes Nandan from next question Securities. Amladi with Guggenheim

Your line is open. now

Nandan Amladi

Thanks for my taking question.

talked the you Steve, products. talked number Because made you about other the you’ve So an data large and How acquisition with relate quarter. the context of does capability in have historically differentiating this the you of TPA integrations about last product?

the part and do be speed owning of you ones? a integrating these to how all having product this contrast other So with relative it

Steve Beauchamp

Yes.

the us on opportunity acquisition HSA this experience to FSA make market that better employee. focused on team targeted drove and really a think a much consequently and our develop at building then I analysis

mobile exists really marketplace so got fairly it’s employee both app about the portal. of you what And significant still utilization and our We’ve in today, disaggregated. if our think

or have XXX,XXX And users unique basis. daily on so a XXX,XXX we’ll

they’ve if experience they to before they significant all paycheck, something their they money application marketplace. integrated balance, they’re we an can they can pharmacy And and can user got see a take they a make the make time that so make of picture punch. drive check sure where into and We see the used that their be in enough using off from can more walk payment, advantage can to balance their request claims think and actually where

up And strategic so think we’ll our calendar a product that such we a we in we’re towards pretty product that continue partners of have first launch And building significant quarter the this with ends if or to being a with actively we’ll integrate XXXX. launch. choice. advantage also preference that can But

Nandan Amladi

accelerate with right. quick broker side, economics sharing a your follow-up. And for Because you economics expand with channel your to that’s an Is you. by perhaps on Thank no historically there cross-referral opportunity a either been them? growth and some

Steve Beauchamp

I been relationships think these what’s you think if local much that Yes, is very successful for broker Sure. from the level. at a about really us exist perspective

for or last think relationship They’re exchanged been broker to incentives is great shares. a sales by really solution. are relationships the might four have their the what of new that customer, organizational or driven with customers current they be These might are dissatisfied obviously, years, so prospect is with customers helping who’s able really and being three the And for that and clients. their us not for couple rep working handle doing right them level we of that commission small some broker driven by

Obviously, a that it to this it’s something been has be consider on so don’t in would that we needle. think really not point we move go-forward the meaningful necessary. And But just enough at could economics the time, basis.

Nandan Amladi

you. Thank

Operator

Our Analysis. Greendale First next Corey comes question with from

Your now line open. is

Ken Wang

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

any want of the see the the to of change just any notable Just begin, competitive in during quarter incumbents? posture to large

Steve Beauchamp

continue to it’s differentiating R&D. the – solutions in a and investing for it’s wouldn’t landscape, say I wouldn’t anything always a different we competitive of number long in obviously us it time. to call focus say been competitive in It’s and really our the space, on feel There’s that’s would important competitive. why I however. I No.

Ken Wang

for second salespeople? Got one thanks. the the me, just recruiting And any then it, for environment change in

Steve Beauchamp

being technology a pretty really, We a folks. whole, across as great great of at to great priming all that I the right finding on our find time markets in operational if are It’s of think, that, overall, Well, a labor lot tight. well. energy market constantly team spend positions and does pipe people, of employees, focusing finding sales the recruiting people. example, and strong a as the terms got we’re look the and We’ve tough obviously, you

fully fiscal We this staffed perspective, a about going that. really year we from are into felt sales so good

last emerging we mentioned something the we’ll people think we’ll meaningful to throughout fiscal market staff this also to which in but we come. focused won’t think year, I be this – could opportunity, at it’s on call, some year, start have any this impact years that

actively we and terms we’re good trajectory that as so feel And our that, for doing on well. bringing opportunity people about of in

Ken Wang

you. thank Great,

Operator

Subramanian of with Our Shankar Lynch. next question comes from America Merrill Bank

line is now Your open.

Shankar Subramanian

guys. results. the for the and on Thanks taking question congrats Hi,

if year on look revenue the at the have the beat. a for just than your question up So seem – was implied accelerating first doesn’t And revenue by for from overall If it’s I the and it – recurring more rate, the be interest guidance just income, levels. revenue but to year. quarter current I but growth the doubled in

color thought wanted any product catalyst to understand Do any on So the growth say, the there you sales, will rest your increase in product be of into helpful. recurring improvements look rate for Just the as upsells? based on, see process year. you revenue of

Steve Beauchamp

I now. And kind I of for kind in we’ve out of overall, the have growth revenue been prepared my overall, We’ve seven interest of remarks. growth. think mentioned if Yes, you kind revenue even I some about quarters in recurring range of mid-XXs pretty back kind this think had, consistent

revenue perspective, driving think we really I growth. obviously, the And of from XX% is feel model to plus long-term about what good we’re growth. that a consistency

especially consistency, off good the about having So back right we ago important, now. where of sit a go ACA. if coming you years of couple really feel We is back us, for the

Shankar Subramanian

Got it.

customer your I been that did you understand September segment? XX% that and On in know that make higher them the plus the in Talk in that sales, you’re know even have customers. to a to lower make in you about the to has level. anything market in of if changed, end. some Help came end able survey XXX X,XXX X,XXX I that actually with more. plus the of we higher in a And the split, or of past segment in how better there’s XX% them opportunity. anything you’ve made mentioned improvements is of trying to go you any there us have end you – make growth upside investment about can

Steve Beauchamp

Yes.

So a customers small target percentage their of very the are so our employees, over majority we markets. X,XXX have large large, in are that

But find able So focus to were have some we three do we And obviously, those. all of we segments. really some. definitely on

also about have good end large opportunity of feel you think of some there. a in If momentum there, the we investments marketplace, we that about There’s and there. the majors. ton our made we’ve got There’s certainly opportunity

number I overall clients impact in total our clients small we’ve wouldn’t marketplace. this And the got a and penetration at to at look new, of relatively relative you year. say just an point, rate, available emerging, is the this If to having then

strategy So here majors we’re of can raise upper in terms sit. the where go-to-market of really the both And we end like would the as market. our results we’ve well continued segment. have and now, driving, focused on we’re And enhancements I market end you in our feeling that of consistency revenue in got upper we right to the as that tell majors consistent that think

Shankar Subramanian

you. Thank Perfect.

Operator

Marcon Robert W. of Our comes line [Operator Baird. the Mark from question Instructions] next with

open. is now line Your

Mark Marcon

afternoon. Good

this during could new additional as the into year from – talk into existing it you selling the little of this could was At my into some a bit like of logos next I Elevate, benefit go me Let ARPU as sales, calendar the just as enthusiasm about looked wondering well much there a around lot if season congrats. the contextualizing how was new both solutions. cross logos. we

You’ve – and more recruiting Steve, management talent you mentioned prominently.

Just how wondering – that? if we could think we about should

Steve Beauchamp

Sure.

think of XX%. approximately had ARPU I So year, we last growth

would that. it client And even so little last bit range in than have that just higher And was of remember, kind year. so the slightly, size a we’re been down

look So I over the it years you lower ARPU we’ve from if teens been last to the think mid-teens growth perspective. several in at an

quarter one just We’re in.

early season the in We the midst like right We’re momentum. now. of selling

momentum We continued around have ARPU growth.

I and So at products provide you specific tell our it just client to don’t a predict would will prior be reacting nothing And probably difficult going do customer and way point-of-sale. the remember, time, of for inconsistent penetration very as be unit base, necessarily to at really incentives. we we the you at as product little with this many back to provide sale the our which ARPU’s to us that or because, them our good The that we ARPU. years. would needs feel sales incentives same possible with as helps But organization’s point kind the trying obviously

Mark Marcon

then think really something you a you charge And the things those that like session like with – QuickBooks about that packed integration or for we extra Do how for Great. there’s should that. things?

Steve Beauchamp

Yes.

offer So about they obviously with, can think don’t we have. that solutions use if and but integrate data typically points you we we our the there, that all data marketplace they’re the integration

obviously. XXX(k) So is a good example,

example which mentioned you is another the software. so great GL And

done. you’re if running journals ultimately, to your payroll, get entries And you’ve so got

the end in GL of we packages, so packages. conference of the marketplace. level QuickBooks, dominant of variety improved the obviously much smaller integrate general is with particularly And of the one things which wide at with ledger a highlighted that of the we And one integration was a more

those the well our to able customers the And to continue add reacted those We’ll integrations APIs marketplace, services new integration integrations to and and to enhance be we’ll continue so be improve to web to look integration. also capabilities. existing as able partners use to really with

Mark Marcon

obviously, you clients, and how we just the you – but potential saw to pull economy of macro look the of change? a terms we wondering feedback And as just and Great. the right overall guidance, just from environment at trigger ability would in make characterize the clients now

Steve Beauchamp

terms it’s I find in think be retain struggle I with we up of professionals work some the conversation looking you to what a sentiments to they’re harder HR – suite. to you, think in to hear Yes. on able clients is Certainly, the really our gaps need clients got. conversations, tease for I the broader talent are and skill gave mean, you’ve obviously, same in clients marketplace. that with echoing that probably, the harder talent, great which We

think, or in the seeing the in of that’s are that management traction we think definitely pressure all our more of feeling economy one talent an is more right little people development line little focused which on we’re bit tenant attracting with I better, growing a and have, product they’re bit that’s So is strategy. they a the reasons, retaining

Mark Marcon

Can you that. of sense how as average follow-up ARPU with talent give us Just be the kind versus take penetration just more and of management didn’t, for your to a if if the what rate they there? much would on a they is client

Steve Beauchamp

Yes.

you’re exactly over growing it talent module, employee think we’d that know So of by time. contributor year, per you if I management I don’t being at out a $XXX. but break per It’s pretty as if $XXX to can think significant

kind and a added reasonable we’ve that for of modules the range that. to through back kind trace of get probably can You

We’re administration ones, time it. still but automating I focused area us, is added us. the and to we’ve – the the so management, and in is And in that’s certainly capabilities to be also talent for that that. nicely and biggest on probably getting driver a growing Benefit labor, modules most growth scheduling behind solely don’t is other of an necessarily interest want

Mark Marcon

at And fairly the just in terms Great. Historically, lastly, half been of year. the conservative. then second looking of you’ve the guidance fiscal

you’ve call several the mentioned just at half, we of right? that’s just times conference de-sell terms the second consistent typically in in implied been look conservatism, that growth You’ve over on the When rate. this

Steve Beauchamp

year, get to be think to I we and for raise business works starts. off like important going us a the of us guidance. then good January certainly be selling cycle for the to big is where in first to it’s start way can really, the position Well, season quarter cycle is our But we a

to that existing And see our year-after-year is January conservatism you season it’s I so that extremely think important from And is for both typically of what into of just January through going we’re for a fiscal year the important bit retention in. because starts us the clients business. well so little the as as

Mark Marcon

Got you. it. Thank

Operator

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

open. Your line now is

Jeff Van Rhee

could. quarter. the just A couple, other for I question. Great. Thanks and if then taking numbers one Nice

first. guide, EBITDA I outperformance EBITDA revenue line, the And Obviously, high-level after and the bottom the outperformance at nice the a but quarter. look Just then this look annual reiterated at your performance, top if the you raised quarter. you’ve this

So and put the revenue the the take that take higher comfort in business. back to of and seemingly then it some

is? Just me investment help where that understand incremental

Steve Beauchamp

Yes.

quarter, in are investments, if some we of business. drivers marketing, year at what go opportunity incremental sales said this an which, looked we big to you last and to R&D I as obviously, make back our the So both and think

size of definitely the doesn’t it but beat the it’s those And in-flight, we that marketing two initiatives in allow year, new some talking, talking huge the have sales and not early necessarily number. able advance in that we’re there’s does million initiative fall associated in It those $X to to million some potentially so mean brand that us it, currently you’re some that when of be would on be to R&D. or a with use and categories, $X

Jeff Van Rhee

it. Got

Okay. And taking would have just just of many capture, new you what changed in those versus customer a look product you’re you at displacing changed. – I’m it’s what of terms as How how then you’re curious that modern customers out the what others? has and you’re cloud call what displacing? just

Steve Beauchamp

yes. Sure,

from different that of execution strength is the last market wouldn’t number I been part the one customers think smaller less a up from. sales consistency to off The by over players competitor we’re out In-house our of most enough, more us. consistent. about based in provider biggest rep. It’s based the that really get But I success the reasonable value fairly years. a fact think of And off get call think the the winning other. it dramatically probably marketplace. the anything the available today. of customer, just don’t portfolio, offering I several interestingly It’s prior I what’s of our we’re them. have lines the still that our where product is from driven the We we really front we probably than is that’s in

Jeff Van Rhee

Thank it. Got you

Operator

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

now is open. line Your

Ross MacMillan

there to investments answered, question, opportunity I’m opportunity, which my upside curious, revenue mean, see we you’ve much was revenue, of maybe really more are Steve, do end are calibrate upside reinvest? think, about partially on But some was And talked we then invest that the And highlight is is is about, just you’d lower where other I some It that invested? if think how that in investment? you the I that were also being third, or how incremental to margins. in of to part that taking areas of calibrating would

Steve Beauchamp

you marketing. of I and think R&D. if is the marketing it I on an I kind sales two, certainly and if call element it’s it It’s we oriented the think is some that absolutely and flight. called And into your one I probably, emerging But Yes, investing there’s the category, us market probably R&D that marketing out think and accelerate across sales is in to in of out you those. existing initiatives sprinkling have going trying weighted sales dive on in than

in early that cycle. We’re

to certainly we’ve strength again, initiative accelerate So this quarter, little going potentially gives of many of other us the as having but first on. a to year, material the bit got impact as well that after the once opportunity no that ones

Ross MacMillan

to divest that with would if Or I you – show all. more you then upside, you would were stating that? at hear incremental rev don’t investment And you balance

I’m So the understand I just to thought. trying guess

Steve Beauchamp

mean, once the quarter again, it’s I Yes, first fiscal of year.

we selling I in I season back as speak point to we earlier now. the the go midst which think is I of made are right

our As revenue a well our – we new important as year, revenue as retention. get part both of very in through January, of it’s important part

And we They’re the third the through not really so so of more talking year, huge dollars kind much about. get just we’re of that quarter visible. it’s as

for look So and think invest. our those bottom we’ve history has of we’ve changed if I you don’t been And philosophy. think taken the at look dollars I history, to that to line our some opportunities

Ross MacMillan

I’m do downmarket? differently Okay. you a of carving just is know, advanced way plus downmarket, competition it have to – you employee plus, area. of how, products? the market set than just your curious, sophisticated context the relative about that different a you a there how in of kind different slightly it don’t is traditional there dynamic I or one the for you, when XXX it out that do of that’s And kind competitive think in of Is last maybe one, competition emerging XXX versus think maybe down competitor

Steve Beauchamp

Sure.

some I think, as down-market, indicate. you there are differences

traditional it upmarket. competitors we usual It same, primary they’re different we the large see is think a be see but I the that the that might most. are players the downmarket driving, the providers product

can You are be regional just some play be of obviously of going players at that so new a have new. won’t that certain players the going based, there’s whole all. in Many obviously upmarket you’re see in to to are there regionally space. players those that set And

and used things exact we take we’re one I the different to be it platform, of of unique what our think down employees that very that’s It’s take it’s grow with of a able able of product, up we the and to scale. the can and XX and from people terms skinny capabilities similar little customer do we turn same think customers bit organizations X,XXX in to most and think be then a is on employees in to terms functionality similar, seeing. though oftentimes a use as

Ross MacMillan

Thanks so much.

Steve Beauchamp

you. Thank

Operator

questions I’m Beauchamp this time. the in to showing no I’d to queue remarks. further like Mr. call closing for at turn back

Steve Beauchamp

in quarter. call I efforts in have all a you interest just for thank to our for your all and are their and great of this Paylocity thank Thanks, listening last everybody, of like to the opportunity take who night. employees this

Operator

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

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