Paylocity Holding (PCTY) 5 Feb 212021 Q2 Earnings call transcript

Company Profile

Participants

Ryan Glenn	Vice President-FP&A
Steve Beauchamp	Chief Executive Officer
Toby Williams	Chief Financial Officer
Brian Peterson	Raymond James
Scott Berg	Needham
Terry Tillman	Truist Securities
Brad Reback	Stifel
Matt Pfau	William Blair
Jared Levine	Cowen
Mark Marcon	Baird
Jordan Boretz	Jefferies
Daniel Jester	Citi
Robert Simmons	RBC Capital Markets
Arvind Ramnani	Piper Sandler
Joey Marincek	JMP Securities
Siti Panigrahi	Mizuho

Call transcript

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Paylocity Holding Corporation's Second Quarter 2021 Fiscal Year Results Conference Call. At this time all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. Ryan Glenn, VP of FP&A. begin. please Sir,

Ryan Glenn

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

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

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

Steve Beauchamp

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

we and continue last this related with ramped entire January Despite $XXX.X revenue, of market to midpoint continued states many selling of amidst our January. second fiscal be cases versus second guidance, of last these macroeconomic continued started and same pleased still resurgence we have strong are total more sales the mitigation efforts had of our with headwinds. XXXX headwinds, coming the environment a and season to quarter COVID performance in business COVID solid and challenging results quarter through than despite our and still across up QX. as pleased $X.X an million, with by related Our quarter the the above revenue in increase COVID million fiscal XX.X% grew XX.X% Recurring year, other

accelerated which focus end last under unit through webinars. referrals, pandemic in strength to pivoted advisors in as selling the $X brokers enhancing performance and to our cycle, use The and new by activities, growth the a employees, successfully with the business momentum mentioned will As by again video from channel once environment core our realize of efforts increased XX.X% benefits second teams primarily year-over-year investments represented all EBITDA well nurturing engine connection continue improved made market, conditions continue throughout multi-media to our and led on that generation, more was including marketing we've total search website coming from maintain we November to client than prospects, capabilities of Channel podcasts normalize. benefit points economic on use healthy digital a of XX.X% and as our well include campaigns of virtual midpoint upper for QX XX prospect lead clients Similar of virtual exceeded sales the and gatherings through website and sales well XX% $XX virtual the and margin, million. digital million us as serve helped of financial referral have as in which or guidance see call, was Adjusted with the optimization events, of connection continue broker increased increased strong levels. quarter us QX. to our macro as year,

operational macroeconomic more our development to on and with and us focused to to with sales continue remain growth momentum our be position product while future and in and fiscal XXXX investments sales G&A in are and we initiatives pleased incremental driving normalized marketing environment. we research costs our for a We in return efficient ability to and once

differentiator investment provides businesses in commitment $X we a most remain the in that committed leading collaboration team U.S. adding includes development, we be the more. offer We continues solution end both to To which R&D acquisition in to document by file the products. marketplace. modern and And sustained to an XXXX sharing real-time the announced product key functionality more of software XX platform including believe November, with than we in employees between Our task industry market all-in-one to in million suite existing that our and collaboration, and our expanding and providing management, product of Samepage, features the

are Samepage commitment into of delivering now a focused on cases, our suite functionality use to suite which support collaboration reinforces team set most modern HR broader the the We to solutions. Paylocity collaboration of workforce

employees Since experience collaborate and their it's remote together task we employees initiatives, and elevate to work as for client Video a Premium company-wide clients their insights communicate to efforts. and provide and seen on messaging how recent enable greater the provides to as bolster a functionality job released through the expanded remote also just enable about For to clients better an CEO we've of recording examples community, to efficiency example, ability their projects management quarter, a of video. to last survey with within see well documents the these clients believe platform direct other on have opportunity team our collaboration recruiting Video of and to among that video increasing our From teams. capabilities many with release the platform productivity utilized social organization. recent throughout creating We video while Premium will co-editing and descriptions productivity

their our Video engagement and employees experience Premium clients offering. are with their Our and voice amplifying their

heavily our challenging also We focused serving on clients this during time. remain

software Our the PPP in clients. our the our and address automated its digest among requirements in and impact We Consolidated Appropriation product on extension Act and these other including eligibility operations to fashion, functionality extension from of updated credits employee loans tax teams quickly leave credits on legislative to December an to to and related added mobilized the of benefits FFCRA. enhancement changes. The retention changes

the fiscal also to year teams. legislative quarter addition In busy the environment, of changing second time a operation our for is very

of growing W-Xs, I great key like working filing time updated on for would the of to XXX portions certifications also The of of in XXXX employees Toby, and X closely year Well, to detail state results end pass now work quarter's dedication during ranked of guidance. during to and all we to As was the with very annual review on local federal, list driver in a Paylocity the form companies. quarter. payroll, second to agencies. being fastest this our Number our places they call year. thank earn for provide I processing work dedication clients and employees busy want tax

Toby Williams

Total revenue the from was XX.X% QX $XXX.X period year. up same increase revenues other Thanks, and million, for Steve. recurring an of last XX.X%,

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

from QX Our profit both COVID-XX headwinds. XX.X% was adjusted related pressure interstate and continued with gross for

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

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

in basis average was billion assume $X.X of XX QX approximately basis daily X $X.X we billion the be third will balance daily client average in of average We're estimating the an to balance yield quarter. and Our points approximately in QX. funds points

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

performance quarter. to fiscal year and pleased we As of past our sales the Steve mentioned, continue with be this

still a we our challenging COVID of then the last pleased teams performance clients this in new help business face operational are our January with to also We continue as navigate of and year teams environment legislation. started service the more

our Additionally, continues why product differentiation delivering one on primarily driven to the double-digit related In LMS recurring companies in COVID-XX, regards by our ongoing platform. continue Paylocity to sustained be the we Community, choose on client reason level and focus market. continue Video to revenue employees most headwinds as our on to primarily lower platform modern see the growth we number Premium the of

improvements see client incremental on the Within slight the quarter, we platform. did employees in

a However, levels highly October, and on basis. while continues November December a be environment uncertain. the January a saw backwards, slightly, in backwards the trended levels not slight was trend went marginal saw consistent We monthly to then improvement increase,

some XXXX, provide to and to like our which QX I'd full fiscal guidance incorporates impacts COVID-XX. known Finally, for and estimated financial related

approximately includes per million year related in $X across W-X guidance directly impact QX annual million is fully hiring which to our headwind our to base. and client throughout of is a a $X.X of third Our COVID recognized related lower of related level to the quarter, one-time fiscal billing, XXXX

mid-single total of through XXXX, the of activity impact January macroeconomic in W-X further on levels at our workforce throughout COVID in lower year. regard the up have we only were seen of digits. up guidance our but clients, overall including improvements the XX.X% is increases growth resulted QX While employees year-over-year, revenue hiring volumes reduced The clients per environment. In to client, fiscal incorporates see mild the would normalized in pandemic, from than remainder no during the a depths we W-X

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

Operator

Raymond first James. Our Peterson Instructions] Brian from [Operator question with comes

is open. line Your

Brian Peterson

Congrats on and gentlemen. the the thanks Hi for taking question. results

it like in from level What learned from would lessons in going and is learn higher terms and relating to you this So on-boarding how say quarter. of sounds terms selling on-boarding I'm if strong first customers? the customers? just go-to-market that your are you there's curious and that just of to guys you've any off, really a COVID, forward

Steve Beauchamp

Yes, sure.

prepared been the happy It huge that we've the pretty to last months us the COVID on and in similar I remarks, first be had well and sales has a lot we of those a the been. sales and Obviously market in year we to less there's shutdowns. that able six think, industries industries for are the pivoted affected, resilient has said how market through by team year. think I to as so the focus of deliver growth affected then are is very the with team, what really

time think I the in to a sell, people customers post-pandemic. really world be think process lessons maybe virtually keeping and maybe I be experience will virtually that hybrid of engaged able fashion, And where with we more can little would a so sales done there'll interested. have that a leverage this they've job bit to great able we'll managing little bit and then to get do a a but the done learned we've And learned are before be face-to-face back that and whole again, and you more virtual we to a

Brian Peterson

last has of Thanks, Steve. if just curious changed just this seeing And here customers are what over when in that terms the new that I'm I'm Greenfield, maybe you the quarters? think new one, the about curious another of to the you're customers platform, coming couple added? just displacement

Steve Beauchamp

I No, don't think a lot has changed.

are a feel interacted of move. that pandemic. customers you We we bit those like the of front see less although very them, probably you think to little still just prior I hospitality, customers from because industries the from most other were in how with definitely impacted customers automated got the terms some they've priorities industries in the making bigger

So everything remote. was being done,

on Our implementation much site. didn't time spend typically specialists

all relatively of seamless. We I think way, interacted that so remote has We have that them that tools trained with we and clients. been

just last there's bit the on more is the little would make was client a think comment there sometimes I side. disruption I

issues to or so, making that and on had to for we've at them a because bit sure person time. and starting might personal the be on might their the delays do end clients and get times of have are more them might work extra And running There's that, other up little business really more because just impacted. COVID some

where starts, efficiently. bit delay to all still very started in customers seen places do little we've that those so get and And we're there's able but in a

Brian Peterson

Great. Thanks Steve.

Operator

Thank you.

comes from question Berg with Needham. Our Scott next

is open. line Your

Scott Berg

you is customer today? or a six or your conference certainly two rates to and make the for we it are increasing Paylocity Steven, central as questions. months talked guess was alter the your at back Toby Hey, X last, of hub. retention the kind we've in Thanks fall changes the been I here, engagement your to communication engagement are months highlighted platform over Steve. quarter. guess, so, seeing you over know last about XX taking that I customer Ryan. what look got Good I maybe as since platform pandemic;

Steve Beauchamp

great That's question. Yes. a

I'm with XX% we of this sit with we're over a staying from from And legislation, in changes of where have to our retention, with team customer done, proud customers our continue questions really ton bunch our a the of We engaged through has and client time really job an overall customers. perspective. happy difficult retention

of So such add-on we've is these capabilities features that. pandemic particularly necessarily that more you start what think then of the I of top though more during seen on to we mentioned, features that we've don't use needle have modern as and to delivered the seen move meaningfully. that community, But the video as customers them,

see start we the these to so use organization also capabilities. other leaders And of within some

HR folks capability of our interacting announcement just might So capability managers rather actually or C level their than teams team, our the video and using you see groups. their in

interesting been And our lot platform, calendar see we expand types a really on last of it's year. see so activity over to the

Scott Berg

think of span, just across as additions better maybe segment general, you is there two the having the or call maybe net would are in trends space strong that you quarter seen look And a it, if at maybe the have that a out the serve base or you one helpful. last at smaller We I segments X,XXX of of may as follow-up more customer that, that Got I certainly better didn't I a guess, know from new question those kind but customer perspective, XXX,XXX and over pretty as a Customers are guess you've drive or strength? two. have but be particular the low maybe than day. then relatively I the employees, few customers end that XX wide don't employees, than that's obviously

Steve Beauchamp

XX the want getting perspective, XXX from we look and reasons fairly that's with consistent similar last it is I has for unit continued we thing And then bit And a us, last we in actually the little one think growth were customers space. market and rates, the the core year I data I think of to really under we similar pretty interesting about fact is, good across if of the that growth kind seeing, we're the the provide that at a were where that call the than that at well. were plus year. been of last growth that strong to feel we're XX it market's had XXX a than from and very we're perspective in that salesforce year resilience I of so is really a that we customers kind previously onboarding space. better doing you board called number

Scott Berg

all for That's Thanks have. the I Great. time. taking

Operator

Thank you.

question Tillman next Our Securities. Truist with comes Terry from

is line open. Your

Terry Tillman

you hear can Gentlemen, Yes. me okay?

Steve Beauchamp

Yes, can. we

Terry Tillman

just day Are interesting page payroll. are What market. because modernize curious, I work your Steve, you're core question. of your same to it big maybe all every long. kind potentially I'm into conversations broad mean, the need you HR you is pretty is hey, a and management like, potentially – usage Collaborate desktop, delving picture like?

that. kind interesting, And with by into I'm you because same I of potentially does stand-alone this way, page same have almost sound anything, not but of flip so the follow-up. get kind at And then look you actually Oh, market. trying another help it a the it about we did page to I'm thing.

Steve Beauchamp

for community, first is give ability Sure. the when one example launched to manage might organization think were customers we things tools. parts reality be because thought was the I different different we you would their I the the really of asking our announcements Well, using that of is

HR team the the were reaching be were making of policy updates, they sure to and on notification they get their the they're benefit changes able they that giving make behind wanted phone announcing sure get employees and to that. analytics and And so all

with drove And then to announcement exactly really interesting wanted it. terms with create core to videos. like is so was to They we They emoji, be wanted comments. saw people is actually additional what in The felt the actually at that That capability sometimes we saw saw going employees to sometimes content. us include community because thing this utilization. links we include to of reacting of YouTube

And be the for so community because the collaboration role background could of a behind increase that be people a believe, those introduced see with but the here, a of asking utilization It just it to could it groups your the started interest of there. a to us we we bigger working in you announcements, and reason as opportunities. groups, fun. for project. in communication. on people in is within And across led could platform, to team. group could started group video And And use really idea that broader it a be be just to could I not then kind HR see common play started teams a give It group we just people

add full, how capabilities And how way when and in so to then And and to we same what listen them just that's page at community, I led our customers And to look we capabilities. use learn to bring is customers learn off groups see get within enhance we we a going on it. demand. we're product terms it is it. of And to continue that's our use and of develop And capabilities really could going features always the product point the expand groups, us the their continue top reality based to we're our collaboration that into launch been in we philosophy. on the collaboration that we

Terry Tillman

it's is of yours and new you And kind said to going driving so marketing traffic this or the terms And maybe digital probably the but of plenty it's past, it's speeds observations, be been Got about up refining tools perspective, payoffs it's more evolving using maybe far? – cycle some is, time really it, you – BXB about pandemic there's and a whether observation in sub-XX have of innovation or digital of you're in – kind any understood. guess on with I'm Just curious where and – through investments, it's it's follow-up just selling my marketing I but takeaways seeing on, or from of there talking and lot fascinating automation? more making are driving altogether. more anything some that of how

Steve Beauchamp

Yes.

had launched digital pretty we in investment spring. we we've our see I on branding last that were We've content, we able some And put efforts. a of What and the you really more So to variety I done got social good bunch capabilities So we've of behind think is seminars changes. that website say some new a to fortunately right? need our muscle and industry. terms leverage you available those webinars would people, podcasts of of on webinars done movements in seminars legislation and the done of

to got of really you've the are do real-world and to all topics to channels, eBooks, email mediums. able you've so and connect marketing, in it got top that mind, of variety to a And be

and think client. that recording I And working meeting be with that asynchronous one to is that. do ways video customer, or probably cycle an the happens the And XX And that's lead – that that a – average actually it. in is of you're and us it sales with days as initial so from we've bigger amount benefited still us I our you to platform own after for I sales other stay that where used come connected think fair to moving, size And we've COVID. that's lot you And from really for videos, generation, we've know, the to really video surprises of for then momentum process. get customer, It's find still our something through you've we able lead a during expanded helped once use we're demo which, think quickly. to XX create got fairly keep days,

at than we've wasn't have would the adept so environment tools we probably those And if become using around of it all us. for faster

Terry Tillman

Thanks, job. solid

Steve Beauchamp

you. Thank

Operator

Thank you.

Our Brad next comes Reback question from [Stifel].

open. Your line is

Brad Reback

looking much, you're back they're talking Steve, things types existing at? to sense for adding as of employees? What to Great. customers, they're start waiting what any Thanks very

Steve Beauchamp

produce, customers tell the would W-Xs whether I a of you right, What different number at of we because look examine, terms we Yes. customers are when we've data, it's in lot those the they've a where that. significantly and of they less got you they're at which Because all those find level, way ineffective hospitality. find hired employment throughout the lower year, impact in industries, called just of out right? or You will we the

You in find those retail.

you places in would and expect, fighting it types for make business those find ultimately cases restrictions many different very operate. You of in they're all that that the difficult their to

And I'm to to optimistic that back, need. that to think and levels something of as the change whole capacity we'll We my do out, so, then customers back gain see don't I'm momentum the but vaccine allowed I to prior. consistent usually bunch waiting roll come start saying with with that was up hiring, hear message. benefit a largely that, the waiting open that feel Then hiring. are from clients we the going continues I I'm at businesses for that's for and environment to around and me to to the from

Brad Reback

very much. Great. Thanks

Operator

you. Thank

Blair. Our next question comes from Matt Pfau William with

is open. line Your

Matt Pfau

question. Hey, guys. Thanks for taking my

administration; the passed me. relief that the a bit here the all? And under with that you associated help bills Do at from is impact perspective? the inbound additional new an then get of discussed was there's for to or Just kinds a it one ask additional you going potentially that business? that these but revenue and drive under there for added administration; you passed that about see obviously functionality you how that? for bill Does current to another COVID business Biden does one Trump be Wanted passed you've when

Steve Beauchamp

understand. fairly market that and we for serve manage, absorb speaking, challenging change So the legislative able I to to think it's generally be

back most recent so And legislative all you and ACA saw that the way to through changes. the

and ask questions We So be more to more – us for with we or they ask call there usually us us us our customers, and need email need be questions. content. to

And got that lot do to a so when we've of training happens.

I think that's job to customers. biggest your impact a probably really good what's the do is the for place

going they're in have understand this they So the do in what of iteration choices make of the to to bill. that they Because particularly bill, to it. case, in reaction first terms

lot we something tell different. it's so wouldn't spend time And on. a of that that's I that you

you did so tailwind several case Whereas into a has go for it. market to bit when that's the quickly been I mode. I'm prepare enacted like into have seeing reactive This back right not ACA with go we're of had ACA, think the what a that time everyone long you now. has just a something sure years that ago. for

manage demand it. think about how This happening see an I to had creation, show don't them. a going but customers to you help can just to your you're opportunity You much how that quickly really is so

Matt Pfau

Great. Thanks guys.

Operator

you. Thank

comes question Bergin next from Our Cowen. with Bryan

line Your open. is

Jared Levine

Hi, this you. Bryan. I Jared for two Levine on is actually have for

momentum record sales So October? the first, the how progress following quarter month did in the booking in the

Steve Beauchamp

Yes.

So, I than we've year. last sold overall more think

year, we we of pandemic, Prior XX% last on definitely pace. not growing were very to strong at were a that new pace. year-over-year. kind type We're Now, the of bookings

more selling we still last than did are We year.

So you do ways than in set you year. selling some do when more records you're of last kind

through we happy pretty were the that onboard. XX% that were nearly through quarters two and is continued several customers in important selling unit So continued. then has season and momentum actually with to is of Year-end that we momentum you the start our us, January we that see And any prior than kind to right? other season. months the that of able of selling growth business kind And to really first So volume more with month.

Jared Levine

Got it. was terms a emerging then unit the the space sub-XX markets between XX in skew in new XX it was towards there in units? balanced more then the noted, you and of that that employees, or employee of sub-XX of pretty to And new strength sub-XX terms

Steve Beauchamp

you tell we've on. What meaningfully would the the think is, I size of No. that been that customers changed bringing don't has I

has mix been that So fairly consistent.

from the an focused whole right? we've there's market bringing that, Now customers, current the admittedly, you're to less X,XXX. been has to as having we've both a that on other employees, But So on. way been size and impact all your same and success the XX customers the than clients employment

Jared Levine

Got you. it. Thank

Operator

Thank you.

Mark Marcon Baird. comes question from next with Our

is line Your open.

Mark Marcon

be across across units to were of considering to by just Or it in on being when in about I Good and around board the primarily of below I'm clear, that? new XXX% terms of terms the environment. the just on. the we XXX% so afternoon wins talk that congrats XX%? was number wasn't increase brought XX% board, other number just a the wondering in close it words that XX? Is was the of unit skewed

Steve Beauchamp

Yes.

to So that quarter, platform, year-over-year. XX.X% we clients number on clear, second have total clients up be the through the was of the

very just losses last your So end of question the was to new serve. a of and of skewed count It's the mix the think And to customers that December specifically; is I mix of a not it kind markets adding across any similar ending and board, XX.X%. to up answer as that's really fiscal we driven year.

Mark Marcon

just a source Just about ADP versus And you talk do-it-yourself? bit perspective? Paychex the and regional of what little versus you can in Great. see the then of from do clients, terms players some that

Steve Beauchamp

out consistent. in stands versus say I fairly would anomaly at Yes. information. being nothing Obviously, we an And terms of is prior years, look what that

Mark Marcon

Okay. XXXXs gross the and – R&D of slower should of both employment of and with that? sales? in terms we in current terms guidance terms EBITDA reasons how of regards in having how Like, margins of step-up think terms And W-Xs versus then we increase for the in a should about for in and obvious the to terms quarter; investment, impact the

Toby Williams

it's mean, Yes. I Hey I think key elements. on there's Mark, – hit you Toby. the

pretty in would our that business the the I from invest way sales consistent through, And themes the And year the last I said, And and of of half that end year growth. but to has through sorry, back to would that marketing have types intention. – through, in the at that's So from drive in this drive year. one marketing particularly consistently those think our continue investments. of this would all we we to sales would think we and of specifically we investments standpoint, been year, throughout continue continue

everybody of the in back is But to part is W-X obviously industry, question year. EBITDA half specific that so on the revenue that's fairly included And the in W-Xs, margin. I equation mean, I definitely of high the for your think

feel revenue And that so impact that of the from standpoint. the – feel anyways you would of you impact

feel an of of think a of impact the because out-sized you bit represents. little revenue I that type

investments been so probably would normal – I course a and consistently. pretty So, bit than I think impact think that just has I we heavier the calling mean, that have that little out a

Mark Marcon

Appreciate explanation. the for Thanks it.

Steve Beauchamp

comes Sure. next Jefferies. with question Thank Samad you. And Samana from our

Your line is open.

Jordan Boretz

Hi. This quarter. is you Jordan taking the Boretz Samad. Thank for on on for my and question congrats

environment. on question a So competitive the

of within new market with become out You or record segment? you more startups trend promos share really amid formation. private aggressive business pricing competitors that previously think bookings that down or any whether Do to called your strong capture public around is

Steve Beauchamp

Sure.

XX, when the are segment, under necessarily end lower what you businesses the not the about startups. new many brand So of would is those I or tell talk we of

that they business mature, get in focus have under So markets. to super don't lot really businesses be we because a don't of but don't generally necessarily we startup that XX see we

strong in pick up them as and that So but been of that we market. kind us they're for growing pretty do has XX under

wouldn't competitive In very pricing I competitors either different marketplace. new kind the or terms are seeing we're that there of in environment, models say of

pay everyone the it's not bit maybe of platform of just little from their a to think at and the someone these COVID they buying big of the a day, macroeconomic is our the a for business. than end us I little those relative headwind environment, more are but payments feels year, $XX,XXX size when the customers

being a and have time save to where they isn't this to so lot much that employees. it's connect necessarily product And allows dollars pricing conversation. it service that a more of ends going you're up important their the save something pretty all them conversation a the place of than and and with And

Jordan Boretz

it. Got you. Thank

Operator

question with from next And comes our Daniel Thank Citi. Jester you.

Your line is open.

Daniel Jester

On relative taking for to demand Video, my out how been Thanks of and great. gate surveys has the launches Hi, question. LMS? like recently Premium other some

Steve Beauchamp

Yes.

whole. would that products fairly LMS both for like you buy, quickly those Premium, recruiting utilization people even of are it's are been and concepts products, is as us. modules community HCM I on for accelerated the well-known those looking and newer So at similar what market to the a like other will think some newer surveys Video tell pretty I And then

the we've And longer spending mean, importance penetration, of and backdrop a been COVID but the in typically to with understanding take our on the bit everybody used for little happy time they uptake really the can of I so, video, to Zoom drive and starts. January

Daniel Jester

just sort mean, to Okay, just that on you COVID of the get by the aspirations I remarks then longer the back for path thanks. improvement, And rates of pandemic you the pressure, Toby your and business. we in toughest path. to going see back calendar glide about sort of back macroeconomic to lapping do term prepared financial cetera should start get of on you Thanks. et that year or get that to on back need kind see guys higher interest XXXX, path later to actually for

Steve Beauchamp

question, Yes. Daniel. Yes. It’s a good

implied see I fiscal is for think lap we around that and about to which the and some mean, – sense little rate. a employees we seen. of QX getting you think the to prepared come at talked not said growth I of I in said bit I a on you leverage pre-pandemic. just we've in to until to our some when start But see – that the I year going of this, start and even back that been the EBITDA in snap platform real we as way, also back remarks you some we see guidance implied that have to haven't ability you the there trajectory look getting back and think, to of the compares, I you're date we would both. think planning, next unless mean on the we've revenue

you of turn are year XXXX. as so then fiscal and how in think of you over both And terms fiscal rest think I this of those into dynamics real very about the

Daniel Jester

And then on of clarification of like change on in terms sort you last base Thanks. platform one stable improvements? guidance, on do employment macroeconomic what the the quick Okay. any have or

Steve Beauchamp

it's their on by No, we trend. remarks, I stable. you've consistent called prepared mean, month pretty been specifically month a basis, there in has seen out not I think a

back. You'll month have step you'll a one small forward, step take

of have the improvements for we've guidance year. of year, rest our we're so the seen certainly depths so, from of terms mild And but this fiscal seen any pandemic, not what the we to improvement the far assuming in

Daniel Jester

Great. Thanks so much.

Steve Beauchamp

Sure.

Operator

Beck, with Mr. is line KBCM. your open

Unidentified Analyst

performance, this Maddy focus is our and you remote wellness, capital a a and questions Josh. factor ultimately we like follow-up. conference, this this players, a on of methods. HCM one world Hi, how could that I management I tools a recently couple new legacy much factors attended had have management your played talent has improves new on of acquisition into and we your rate for up you're client greater human guys. When having. I'm win just conversations if Thanks. be for childcare, picked And the wondering benefits, just a those versus

Steve Beauchamp

Sure. Yes.

little conversations the at here finding So we've pandemic bucket I think recruiting see a if nine look that you or months talent. in world, a as XX you last and less probably operated in

finding are would environment, manage that bit talent that. a example lot an are really Now, little I to as less trying employees there's important, in industries are growing. difficult a there say these We're but adding and of clearly organizations still of still because a

of and engaged it's top annual different think to people for management, some play employees I performance your absolutely that mind wellness, and that reward our trying ways capability many connecting around trend. of with in feature real-time to is in performance with our versus customers into more recognition really point keeping on us and way, a for have or journal waiting all a impressions modern whether capabilities, really conversation cycle, that with

Unidentified Analyst

in second interest as you any office? Thanks. expect human these capital home or awareness from And have to general question the how the my you some management of permanent seen helpful. in some Super to people work modernizing is be? back change changes to do solutions Great. go And start

Steve Beauchamp

pandemic a post some itself think that increased world of might do that will that in employees trends flexibility just and I Yes, persist have. manifest of terms these in

speaking, you So people a might even scenario, go maybe more remote. certain And completely becoming positions comfortable hybrid have with that. in are generally

hybrid having part you're are you second people where the as having that question put meetings some is, that not lot in-person tools pressure and meetings, many in-person of a yes, remote. does use some on you're because The your are people of

consistent important. fingertips, the And they And it, need shared going so that's be communication can whenever really digested back video that to so capability, information fatigue. where and having meeting can back Paylocity across I board is they people's we're having where to really that a think be sure available make finding ways of asynchronous to Zoom becomes without and Also that information at to Zoom – important. be emphasizing at creating lot back is

defiantly made trends platform we those serve. in the with the we to position think most for some investments of so industry products us that will modern are we've going and And the that persist long-term

Unidentified Analyst

Thank helpful. you. Super

Operator

our RBC Thank you. with Robert question next Capital Markets. from Simmons comes And

Your line open. is

Robert Simmons

the question. Most questions guidance? was have Hi, wondering I Samepage but thanks for impact much taking how been your asked, does

Steve Beauchamp

no I a handfuls impact Samepage year is minimal. and revenue on employees Yes, pretty very the business, mean perspective for material of small from mean, I sure.

pretty So, minimal impact.

Robert Simmons

is And little then probably bit a again, there, right? there deliver margin

Steve Beauchamp

way. material any I I mean… mean, not in

Robert Simmons

Got it.

Okay.

Steve Beauchamp

fact significant the a there's that given it very standpoint, little the just revenue from It size not of and impact. it's

Robert Simmons

Thank you very much.

Operator

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

open. is line Your

Arvind Ramnani

your product roadmap. used way typically rolling roadmap But four these launched it's products more a to taking are and about at back three and be to out it’s to community, customers your then Certainly and where had LMS Hi, will years question start question. eventually with stage that product by my the it. getting now you longer I years find you a two out. thanks monetize for term

the So two five side making large think you're certain, monetized on with like, will to are there years from that now? incremental you investments product be

Steve Beauchamp

customers, in that our we are to new can going course, in going working that experience that we on are organization, better modules for think Yes, always to our things drive of just or I scalability think so a roadmaps product then features our we're be and monetize. things

building multi-year definitely to come of these ahead roadmap to and really rate been called So the that of those our thing our have Samepage categories. And out more most operating a so adapting and the a is balanced reasons. key that there's product towards is of issue currently always I customers signaled remote platform upon a for But new equation. don't kind competitive we've that that approach out cases we've clearly use fashion time into necessarily application. in think being think modern many integrating thrust and We I that three

our more good of those recent we've a as collaborate is client seen employees monetization most we very success capabilities allow for focus exist Video efficient definitely in to and our key community a with towards to So that fashion drive us, Premium offering.

Arvind Ramnani

growth And versus of you [indiscernible] of refocusing how expansion, increases operational price expansion when And think price a kind efficiencies? about prepared talked more Great. the on in of in better a much – then it will remarks, environment. normalized a really you macro from come

Toby Williams

So focused, Toby mentioned back what you and as this I would we investing say, product are sales. mentioned, – investing in and

had you can the this we similar year. new last see we that And pandemic. other with went XX% bringing customers, through on we we we're momentum XX.X% as come side – entered pandemic, the we can of roughly up that So continue that as

that got to engine sales we've So work. continues

new creates us and our you're employee there's comping to EBITDA some return get Your take to execute. as that a you good us growth period might add little get associated gatherings. to areas the lot can a because our and we we've longer like costs you incremental and off travel no with EBITDA And ability way of start of is then as for bit point for time on based travel talked that. And one. this then not revenue see, about those faster obviously a for to each clients similar revenue back a

employment to build returns that's off start if when cycle. EBITDA able to be you So that the environment

stated we where step which long-term way growth. XX% have for next of but get obviously given then EBITDA we plus were is not perspective two-step marching range, And would year, in we we do a that our bit to guidance revenue and So can then adjusted we process to a this back into EBITDA. back from XX% towards where continue happens XX% think an our

Arvind Ramnani

non-discarded is about of next year. still per talk the early The this level? for one you Great. sort about per And of Or next to communicated is your pricing too start have just employee the last the pricing, last kind it Are all level? you me. around about talking ready to $XXX

Toby Williams

I periodically market. think updated products so to last Yes, we've over we've launched the as years several that

employee recently year. per from most so And $XXX per $XXX year went to per employee per we

And product the market towards as that to with so year. kind next progress launched when update we'll it for our we'll that's the which product $XXX in available definitely PEPY we per per we continue and total portfolio. are of that mindset be we make milestone, available making employee us would the And

Arvind Ramnani

Great. you Thank much. very

Operator

our from And Walravens Securities. Pat you. question next from Thank comes JMP

open. is line Your

Joey Marincek

Great. Marincek on Pat. Thank you. Joey for It's

you about secondly, you. relates the it are about you those M&A? As guys point? given hiring thinking how And at this can then Thank remind acquisition, how to think investment us plans, you Samepage

Steve Beauchamp

Sure.

So mean, on bullish we're through I our about the COVID start how now. has and the been are we first our really in point, – hiring performance our of season right

and hiring really time. So we spring, marketing do most in the of our in summer sales the

we're the it we supporting of customers ready as structure we've that those been we've board. definitely but on And of we're the we able give to momentum. to then so time, other so business people update at market and in that have people We'll the headcount active to to of position terms obviously to handle end going and looks success are the a heads hire like this add the feel call we across in with rest an your like, environment, the very of and want in in year-over-year they come bringing for that side what of trained And onboard. out got ahead

to have about so be unified use it comes very an an other when to for hiring us product. say really seamless. would I year. perspective, customer has From all easy change normal we So M&A to in any no It our experience would to pattern that given it's the experience,

years years acquisitions kind are that bolt-on us of to we're not so, And going that looking and are for products to make to take integrate.

Samepage that's no things where about build great not revenue driving team, look faster. Paylocity user ahead the we that about working video roadmap works that all we're is and is VidGrid perspective, team into there like creating right on will In integrate experiences of fact, can team a product just kind for the absolutely the way us difference. those product that acquiring where and modern scenarios tuck-ins And suite, acquisitions. smaller we And that our we team a around truly from already move integrate And that that community, to that. basis. teams really will that the on of It's experiences. think and they client about with or It's allow on and

Joey Marincek

Awesome. Super you. Thank helpful.

Operator

Siti from with Mizuho. Panigrahi next our And comes question

Your line is open.

Siti Panigrahi

Thanks verticals problem. back switch but if in payroll back driving for My still strong last customer had But environment, January at that sales my some And your understand to a their to recovered certain in for not the others? are fully into point? macro what's seeing this your investment you over strength asked. I versus this phone year, I comment taking question we going on apologies question. are

Steve Beauchamp

a question. good That's Sure.

know all we heavily as more verticals definitely from there's that are So impacted COVID.

a And had that environment. in we at so those imagine, of in HR on you're in can you switch seating that where with locations operating to XX% you a for is payroll running bringing to prioritize hard only or platform that environment vertical. said kind and probably Having have a restaurant that, several customers customers success an outdoor might if capacity, have you're

a probably So but absent, it's TAM where for seeing not huge most that's we're activity. us. not It's

go of can So after. customers we we of that hundreds have thousands

pretty we than people we've our to it maybe how ago. and a able little switching, changed industries that year done very pivoting slightly hasn't more and and are a that people community, growth conversation a So their like come effective they've looking been for, video, the that the people like the drive bit impacted, been force work of different ago. year from launched some of capabilities product become though pandemic similar capabilities for a unit getting at less part has might service the always important to that of sales nature reasons of And might features have than did be the we've of industries are because some been of even the some the newer

Siti Panigrahi

helpful. that's And

impact the in So million terms one X.X WXs. clarification said you about of because – to one X

the do of year So end number on part employees based process of the at the or of year? you WX any

Steve Beauchamp

Yes…

Siti Panigrahi

they say, So let what WXs they're let's I'm are for still saying February, but go. somebody Do employee, process January, is you them? like,

Steve Beauchamp

speaking. generally Yes,

is were on has clients which employee I a been we an unemployment of the calling think if and I what rates course WX out with year, on a day to of fewer them. based script would the would one we employees the experience was think you to in employed year, course extent the having our So unemployment during that somewhat is we're therefore day probably would the and process for through And year all the the obvious that number through platform are course is normally being they employees clients the because aren't by have that to of of the and the the down rehiring people up WXs extent the that of fewer of as

Siti Panigrahi

you Thank Got so much. it.

Steve Beauchamp

Sure.

Operator

further the Q&A this hand any you. portion. conference over Thank the Beauchamp to like And to I'd Mr. remarks. concludes for

Steve Beauchamp

take gone Paylocity the to definitely to for our the you is to and of all and like there time employees just thank our of we've customers. moment are I'd quick interest above had very busy season January of and for a for And thank be all in This beyond a your today, the year really Great. busiest us. employees.

So everybody. thank you

Operator

Ladies and conference gentlemen, this concludes call. today's

wonderful disconnect. now have You day. may Everyone a

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