PCTY - Earnings call transcript Q1 2021 | Paylocity Holding Corporation

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Paylocity Q1 Fiscal Year 2021 Earnings Conference Call. At this time, all participants' lines are in a listen-only mode. After the speaker' presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Ryan Glenn, Vice President of FP&A and Investor Relations. go please and you ahead, sir. Thank

Ryan Glenn

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

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

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

Steven R. Beauchamp

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

year and We headwinds. of fiscal sales our $X.X guidance, to a pleased are be our challenging segments, performance the above across COVID-related continue first of of the XXXX, we coming despite amidst things a revenue with nice in an our midpoint environment. Recurring and to revenue macroeconomic of XX.X%, other by with continued each grew and still quarter total X.X% all same quarter versus increase in fiscal $XXX.X start considered, million, off last million

history. even best stronger in sales best we was our started to than are in ever, new we saw September month months single one into we sales sales, new back activity nine the over season. year-over-year coming our which of when pleased with increase a we significant first year last fiscal to performance our the continue saw XX% was fully and and in While have be selling gained months our in not sales momentum October July, came of pre-COVID

Our sales very levels. effectiveness quarters, are with over environment and teams of last the two selling successfully to we activity virtual overall pleased sales the a these pivoted have efforts and

us driven generation, sales broker selling by cycle, performance for Our the advisors, of Adjusted points, strong source of use by primarily million. of improved and has margin, throughout success and as multimedia midpoint digital brokers activities, the virtual including which the represented gatherings more quarter, lead and exceeded video by that webinars. been or business $XX.X new and quarter of first as connection use increased again for benefit referrals. of guidance website our an $XX.X XX% led podcast XX.X% EBITDA from once Channel the in referrals, virtual connection help well increased virtual maintain events was million first the financial than

more much with in while be which providing more professional once well the the to other conference changing a key and of our appeals macroeconomic we our more To ability giving provide a The the positioned virtual (XX:XX:XX), prospective recently challenges, growth pleased can research we employees where remotely, release operational initiatives ability users platform, our the announced sales social held clients give road opportunities costs, them of discussion with modern platform $XXX users are via to their we fiscal to engagement. clients will upload ensure to focused the their performance world while product G&A all included can flexibility to recruiters investments for check-ins. and Client was to and remain to industry. and our has Annual or more In Video while hiring HCM aspects exposure trends to connect theme on $XXX. in communication, record in to coworkers ways commitment candidates. HCM product, confident the a career for their of efficient for share sessions are efficient swap looking General help end, for and embed in We shifting to that focused words the The the for $XXX, Video, with and more employee software to a of job normalized September, highlights and workforce, employees to which capabilities of our in needs resulted recruiting of routine of ability marketing video video including companies XXXX in collaboration of Community overcome in product and journals that momentum companies that With way. launch Premium the Video our PEPY our with record, the the order conference. HCM workforce. collaboration, number engage map of working In innovative on record allows we we remain in to product development committed communicate to with our our breakout record incremental work, and effectively target on format return personal from to employees. postings, attendees regain PEPY The hosted upload our Premium and our reaching In and and our take we announcements of includes can how and Conference company-wide managers Elevate environment. we making provided sessions learning modern landscape heightened videos will in with suite, pages and process and video increase of across outside meaningful

and more our an communication and throughout play believe critical We suite. product are continue transforming our capabilities role video we workplace increasingly in collaboration, to to will excited leverage HCM broadly video

return of addition the attestations safe that customizable clients To In crisis, real-time scanning facilitate workplace, Video, of symptoms that providing a Premium navigate time and addition our management the COVID-XX support quarter, workforce temperature to commitment an workforce while best modern these with flexible the announced addition product. our we healthy clocks clocks and solutions to helping during the wellness. We of time believe time next-generation within to offer our work for these to clocks next-generation workplaces. touchless reinforces management suite assessment the touch-free

Our employees remain development the platform Toby like offer would with X,XXX differentiator and industry-leading the We million modern R&D including investment the in the and X detail a than market committed marketplace. XX our by of guidance. believe adding in both functionality to features between suite quarter's updated and commitment software to We most pass the to in review in the to in we continues US. key now businesses provide product be more expanding to and I products. results to to call providing product sustained existing

Toby Williams

Steve. Thanks,

Glassdoor, from well Steve, an increase of Before coming reviewing the in deserved. QX I up total would Steve by with Congrats, one revenues number other last recently On CEOs year. in results, results, highest-rated named being the our XX. like and revenue was on same period at XX of to US the crisis COVID-XX for X.X%, congratulate million, recurring $XXX.X XX.X% during the our

and come our to pleased despite midpoint were rate-related interest guidance above headwinds. anticipated we the $X.X noted, Steve the As COVID-XX-related in of million

period, gross and adjusted for ago profit XX.X% Our headwinds. revenue given year was the down the COVID-XX interest QX, rate-related from

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

we quarter, In another operating million. happy our to to client remain to demonstrate for XX.X% EBITDA of Covering was we the income made helping to of equivalents income and QX. guidance a incremental top return funds in profit was remain invested cost was $XXX.X quarter quarter, QX. target sheet, the and G&A midpoint. of balance million, towards costs, was a QX, sales progress beat strong quarter funds $X.X average identifying balance From opportunities to daily drive which held client for pleased guidance. perspective, revenue investments to team, our also regard million the of our results, end for We XX% we in In $XX.X included our growth, million revenue of progressing to that once at ended and the and million end cash in which the operational scale XX% revenue billion net million. on we're income, macroeconomic to adjusted with gross our $XX.X and we interest with Our focused of $X.X corporate normalized committed our We're us $XX.X the EBITDA exceeded by our $XX.X with environment. or the GAAP while and performance cash regard cash, was adjusted

in X the daily second average We an assume we approximately of quarter. will to in points $X.X are basis XX estimating billion basis QX, the balance average points yield and approximately be

provide environment. Before reviewing guidance, on the would I context operating to some like current additional

the this been our quarter. have we this mentioned, and sales Steve pleased As past year with performance team of

also the of revenue resonating in the to and have employees recurring though including growth. We COVID-XX-related our on have been around the seen number our have continued product the headwinds momentum development impact in a platform, new pandemic, is improvements depths improvement of we with market. from way the the double-digit And an on pleased mild platform

estimated QX, guidance during some which have I'd the mild no per further regard increases related Finally, client, incorporates but incorporates October, to impacts QX remainder known the COVID-XX. guidance provide to for of our seen and like quarter. we improvements employees through In financial the to our

our XXXX, adjusted expected X% is fiscal fiscal revenue $XXX in be of QX revenue. to environment. we're $XX.X momentum we in expected the we and to to remain macroeconomic positioned to in conclusion, or the Operator, the And to In particularly total well total investing of we are to to ensure quarter XX% now results, over second Thank operating pleased you. the XXXX second of million. be range million ready approximately the once growth is with business more normalized to we in $XX.X our questions. a to million return current range For are environment committed $XXX the quarter for regain EBITDA of context

Operator

from Peterson of our first comes with you. line And Raymond the Thank Brian James. question

Your line now open. is

Alexander Sklar

received? year. been out ask from is Alex to We obviously Conference. coming lot Brian. you. should on This tweaking sounds velocity on about you've past Thank of do of the feedback or force Thank for had out to on be enablement a from it motion more that has inside we I think this side Great. where some coming release product see your you heard And on the you've conference to front. Elevate like there still continue done virtual Have the sales done the you. sales Sklar sales Is of time the here? your product virtual lot a here improve enough early sales any wanted

Steven R. Beauchamp

the pleased to of I'll first. sales virtual Yeah, take complete switch We've the selling. part really last the with and performance the been team

process. there I process to think with a reminder, were did operate being start offices were as of to a used virtual, was but very customers, being remote. folks a was bit already transition, definitely sales with. home from including implementation of and our They used on-site so their to the a definitely lot they the And

job, The of effective. The that's really interact job certainly some clients throughout done to shift for team has of great the was a to really. great themselves marketing the it very So our We digital, focus a sales team and has with some done capabilities process. moved video been a using us. asynchronously

So we've doesn't It momentum. mean big improvements you that the really happy I get with always say there. better. sales made We're can't would

a we're think pleased sales the our the as with for trajectory really mentality, that's I but team always whole.

home having employees I the think focus marketplace. Premium experience more further that being platform, just the community, products trend. from on addition modern work have like question, the resonates in I Video, well the that do people to acceleration first is in really believe in of And all most your recent of pandemic the to our

Alexander Sklar

gains. or any performance Toby, All for still revenue right. just really of that upside I'm significant materialized was just Great. better-than-expected are piece could this quarter. if you planned you. And EBITDA parse help come one Thank if and yet that Thanks. and beat around just wondering to out efficiency investments haven't just there

Toby Williams

different Yeah, mentioned. think question. a some things, good which it's I few a of And little you bit it's of a

I think of think elements just like drops to or also timing which sort there from a seen relative environment some I right we've then a of certainly cost overperformance, lot is T&E there, things revenue reduction some that. control some down. standpoint And lower cost level being the of there's which and

think mix I So it's quarter. types those of elements in a of the

Alexander Sklar

Thank Great. right. All you.

Operator

of from Marcon you. And Thank our line next with Mark comes question the Baird.

now open. is Your line

Mark Steven Marcon

bit much can Hey, Wondering employee right the the compare congrats seeing from on it's – a more precise talk if that about you good per client? regards just how you combined headwind bit afternoon the the of lower can of seeing, results. rates you noted a well employees both you now – much little are and it you drag if a double-digit how mentioned how much of a – little of on to basis, with interest just drag. But the as number you're effect a as lower you be per the

Toby Williams

Yeah.

interest. COVID impact the ex So from really double-digit is

revenue. interest out obviously break we So

is other, is see from So interest of excluding revenue But reduced the and about you fact less impact, platform. we're cuts. have impact double-digit rates, a directly from and really recurring on most can on clients what the rate from that employees that the double-digit that the impact seeing coming impact

on over bit to the at few platform. months, October, slightly up. the very it's it's in look mild. employees the And mostly I And up our and directionally, fact to on think, it. in have fairly that if but in flat there we would think you so There's difference, small clients always just of focused very, And that's last way make just other number saw the I but a that be little things about that less the growth it

Mark Steven Marcon

much And expecting of impact like client? weather. How to thinking be be how in about of colder per the employees dealing fall to are number a where going terms I'm little imagining of are you in going challenged. that the more an bit some are areas There be are you Chicago, the might there? restaurants with

Steven R. Beauchamp

Yeah.

I challenging. forecasting obviously So the numbers would avoid because very our pandemic we're that to trying in be think

we so putting October we a consideration terms flat and we said And in the the looked of in quarter rest think, at of in together our guidance. relatively assumed and what as into I took the saw remarks, prepared Toby, then environment

Mark Steven Marcon

the are Premium Okay. regards it's just with to what And I days, you with seeing really to then the know that? uptake regards but How's Video, early from response been?

Steven R. Beauchamp

Yeah.

almost we we time and So but it every our day, have every and week this to sales launched at for January. start they're Obviously, force, on in selling January. they're largely largely focused point clients

message starting that's so to And resonate. we're see that really where

client hand that also to those take some We able came conference I'd team, use this. does of clients, the some to onboarding our time of into recruiting schedule. to to of new to take broader their remote the have use as your to with I be meeting work, whole, be love our they as example, it actually digest better all and own you able use current an know on And that, the some have said, fatigue you much you advantage employees. get we with to of challenges rate for raised their and about when video a ability job Zoom of some And obviously and a use is, after employees, you that company cases, communicate what inserted it positions the other really to our is communicate of can of if for then set meeting, think meeting after it

from them the are that clients of of I good early so gotten But using feedback advantage far. full so And kind still taking life of it. cycle in it, that have think, really started we've

Mark Steven Marcon

bell in highest level activity, of one, just you medium then or are Great. seeing terms one the just or large small-end, what bar? And of last

Steven R. Beauchamp

in XX% into new sales. of came pandemic year-over-year terms growing we the Well,

a So of It we came same of that in like feels selling back into season. we're momentum with as lot heading momentum. going type we're towards

that the to the XX as And it's across to an XX strength they're be we to more units continue as continue marketplace a little for so and more Good of of honest And doing kind I to doing board sure, little think a is the well. in I XXX add think that in core more we that really XXX, even our in that they're well we to that then with you. well under that create and the so on more our do advantage product, to well. bit XX XXX-plus.

And are those large some dealing so, our success. great are folks who in of having experienced most also with prospects

Mark Steven Marcon

Congrats. Great.

Steven R. Beauchamp

Thank you.

Operator

Thank you.

Our next comes line from with the Bryan Cowen. question of Bergin

Your line is now open.

Jared Levine

Jared actually is Bryan. Levine on for This

change terms terms prospective So size terms of in well has that, question? any as that of from? in there any coming buyers with And differences are in been where of employer

Steven R. Beauchamp

of I in difference Yeah. target And our our very customers focus still size. entire segment seeing size small level of of of say across employee market. the no terms would opportunity. We're in total penetration have a we the on terms

So target our clients, X us in think million-plus market. XX,XXX businesses as of

our team the And that are you affected. Maybe and would those industries so, shy and seen we haven't from restaurants related. think away necessarily in sales are travel hospitality

been I to that are so moving basically on those focus is smaller, really of platforms. industry, what they're any opportunity But at say, doing. still the overall, large customers, would market although an got that's we've and Some horizontally we've looking potentially just

Jared Levine

what witnessed out you elevated you experience XQ? Great. an business compared quarter one in to of did level follow-up, in losses And of the then

Steven R. Beauchamp

I enough out. call think to not

going that slightly that I overall some think some to easy impact clients to of had rate. that. of about it business say But portion the potentially pretty us. would a a Certainly, out is higher at that's way is of think I COVID small double-digit

Jared Levine

and Great. results. congrats you, Okay. the on Thank

Operator

you. Thank

line from Alex comes the RBC Markets. question Capital with next Zukin Our of

line open. Your is now

Alex Zukin

for Thanks questions. Yeah, the guys. taking

appreciate an Why So better stronger a basis, just bounce guess, ones. of there to a or ADP maybe sequentially we're thing – bigger back. one let's two is Paychex? some trying then the be quick or of employment follow-up. say, that that a is, the employment, on quick the between given why versus, kind I would you that bigger got incremental on understand is And aggregate basis, a trends or an I macro disconnect tailwinds and seeing

Steven R. Beauchamp

think Yeah. what are that when can tell and the mild I you overall, little in call it's that's consistency of of competitors across improvements. fair our quick kind it saw terms back that the our we're what been see down And we at we're we Maybe And kind September that's back we've with of base. spring month-by-month little group a by as of what some mentioning, in kind the post but to bounce guess, reflecting of from seeing And what bounce I seeing. exactly I client that looked early you're – base. I happened, there – think amount I our what would terms as you of different the competitors. board And customer maybe be depths. think many got, we a you've seeing seems client of is I fairly October, of you to August, the in really the went then consistent a think,

Alex Zukin

people seeing then of they think are virtual And them is on – or if it to cycles providers it switch I'm think trends, selling unwillingness are lengthened better you to were a you to it. prop are about a more buy in and is sales relative trying the faster like sales shorten switch? But and you the bookings your if better. cycles understand midst it is seeing you to less or value – actually basis because are sequentially if pandemics? appreciative sequential about sounds people driving of willing the they Got

Steven R. Beauchamp

on doing I it which how I much. on They buy be the the changed if think CFO in guess customers That There's not question, might get I time that understand the guess the steps run has can a that be get sales But of sometimes takes could you're through I make customer quickly be you and wouldn't agree you need focused happen line. it. Yeah. decision. time the point want to off to is I as virtually, scheduled. naturally this process that it to to efficient, to takes and have to these in more to faster. maybe

we increase. velocity haven't so seen And a big

we've moved being message And I eight into to the opportunities. we're with or about as ways appointments workforce of what different months think season, than seen in we you think that a of I what ready running is more resonating. ago just connect be selling more your might different six thought and variety

Alex Zukin

guys. you, Thank Perfect.

Operator

Thank our next Adam you. Borg And Stifel. question comes from the line with of

now is line Your open.

Adam Charles Borg

Hey over Premium guys and the just with you to Maybe questions. little I a products, I talk thanks engagement just that I little talked bit on the trending has Video? integration further a And follow-up. about was then monetize bit a you hoping could for product have taking know community opportunities time. about been more and

Steven R. Beauchamp

Yeah.

free. our collaboration clients as reminder our over of product time. for platform our is that everybody, to community So enhanced product, available a all to tool really We've that's a social within

you So, added the where department can questions. the ask HR expert we and capability asked

We capabilities to that's that audience look on back have end been. to a segment announcement whole your and allow you and of be the reach able your how at effective bunch analytics audience of

increased enhance pandemic, of as of course, we've increase. utilization we've the then, seen the also which product, take so, the impact to And And continued definitely utilization. you

probably videos, to is the out comment react really people is e-mailing so, think And announcements, and being say that's of advantage able sending and whether the see announcements most that. run the I'd that clients ability product. I taking popular in feature whether to are

Adam Charles Borg

about buying any just of And Thanks That's on end down small have really the you back about during of relative businesses types these number maybe below been changes made earlier been that of think you the market, the curious, there the thinking terms can helpful. the strength then modules patterns I again. the some market of have was just comments in at selecting XX, pandemic?

Steven R. Beauchamp

necessarily maybe community has oftentimes, than become a they down smaller have pick and I the we more because clients, would the the with saw time products. important don't five to before say four what conversation of or part market different go

having in be think able everything So powerful XX that a our under I across in particularly segment. do entire the of to idea platform powerful singular it's is It's to marketplace.

so mobile out from in are ever-changing people important. app and trying the And and to ability is now employee's really this different home do they're how communicate hand everything and working key the in with schedules I environment figure the to who have with have

even some And think of that the of I seen has because changes macro that so, resonated we've more the environment. in

Adam Charles Borg

Really Thanks again. helpful.

Steven R. Beauchamp

Thank you.

Operator

you. comes from Mizuho. our the next And Siti Thank Panigrahi of with question line

Your line now is open.

Unknown Speaker

I has is already Siti. asked. in (XX:XX:XX) This for Hey. this if apologize been

landscape that XX had ask retention to to characterizing trying given about is improved wanted Just has the ADP and competitive employee their go marketing said rate Paycom how of sort segment. down under

see to So characterize wanted you landscape? just I how competitive would the Thanks.

Steven R. Beauchamp

Sure. Yeah.

target XX,XXX So than X more back I million think clients. about our got we've in market. I'd go to the fact There's that

across I'm you're a We've we the competitive we key on. that We've about And our size season. all like feel. talking our activity levels selling healthy seen landscape changes segments very rate focus going at slight not our into sure of that so in increase seen

against competing and of that folks the – would normally compete we kind so against. same we're And

competing a wouldn't say in And we so with. I see who big change we're

seen haven't in the big We in a we effective players of change terms market against are how them. the or

Operator

Thank line of next our Sandler. Arvind Ramnani with question comes from you. Piper And the

open. now line Your is

Arvind Ramnani

the enhance offering? taking like for or product become players technology as you traditional some your maintain wanted distance the well. perspective, I feel of to are From players competitive enhancements to between the the keep more my about thanks product traditional to question. seeing you competitive this enhancements, just continued your environment Hey, a able product ask is and

Steven R. Beauchamp

Yeah.

well, in and part of why think and R&D investments of definitely been we clearly certainly time all, a say, have strategy. is that back been this ability as stay our our We of we which in making first and extremely our investments to innovate business would I a is So important to technology competitive in And environment. always a long really go ahead environment. competitors have our competitive are It's competition.

think to and resonate. believe so yes, in that last We question I XX-plus continuing fiscal season, of a our that we the had we're into to solution And We do we've growth we're we marketplace. lead continue year, your so got unit is, believe percent the share. second do part selling build seeing momentum gain

Arvind Ramnani

very you Thank much.

Operator

Thank on any line the further you. showing at time. I'm not questions And this phone

the closing now will to back I any So, call for turn management remarks.

Steven R. Beauchamp

managing Great. of quick the a challenging as work for times everybody continued usual effort like success. hard done, all then, our for very thanks a and they've our you thank for customers. I'd and these everything their on Paylocity. their that I'm to much. truly to Thank all done that Well, focus and of and effort in Paylocity employees just us interest they've And making appreciative for there being

So hope a with night. great everyone that, has I

Operator

gentlemen, this for and today's you concludes call. participating. Thank conference Ladies

You may now disconnect.

Paylocity Holding (PCTY) 6 Nov 202021 Q1 Earnings call transcript