PCTY - Earnings call transcript Q3 2024 | Paylocity Holding Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and thank you for standing by. Welcome to the Paylocity Holding Corporation Third Quarter 2024 Fiscal Year Results Conference Call. [Operator Instructions] 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. Please go ahead. .

Ryan Glenn

Financial to fiscal results March market release are 'XX, I'm the Glenn, in welcome third for XX, announced Steve and me results we Ryan of joining after will Williams, issued closed. quarter which Chief Paylocity. Beauchamp, afternoon, and Paylocity's call press Co-CEOs call earnings the the XXXX. on Toby Good the and of today Today, Officer, our ended discussing on be

call this days of replay be under available Investor XX webcast A next the will on the for website our Relations tab.

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

solely projected based risks results present are those from and statements forward-looking that and to to can uncertainties these on cause actual statements. in are materially subject the Also, the differ information

on and detailing the located with the believe that is filed currently of schedule more Exchange Investor these For our the any for the and Securities reconciliation release, our We contained undertake and filings Relations are Commission. statements. how representative do which results any today's update during of additional we will non-GAAP at business, we and available measures forward-looking website a certain internally call, to non-GAAP with duty in financial measure Securities not Also, Commission risk paylocity.com factors to tab there's the press the to course Exchange please refer information, disclosures. other our in We refer measures. under

complete measure directly reconciliation effort. to is that at to non-GAAP forward-looking time GAAP measure information, this unavailable needed which to we are financial reconcile unreasonable any Please the because without note a the is comparable unable financial

on on XX. will May conference Jefferies Consumer in and upcoming attending be Conference XX. will the York the our and with on on be York BMO on of June attending be Baird will Conference us Media I Steve Technology attending any Software schedule, Telecom Toby be X, the like Virtual May in be Cowen also let Conference to Global time June Annual in Services you'd Growth June attending the New at will Toby regard Conference in Chicago In & I Software me New the attending William Please X. Technology to XX. know if Newport these events. will schedule Conference Blair

the call Steve. that, let to over me turn With

Steven Beauchamp

among to workers of the and market. to key quarter expectations value suite dominant acquisition our directly all in us of in solid data retain application deliver higher and integrated visits, help most and experience the particularly modern earnings for members you will features of particular, enable receive X-way our the continuing we scan better results intuitive and the with candidates next-generation real metrics time. texting workforce clients QX by in communicate baby the proposition industry. Most to the text and the engagements, driven Thanks, and with the thanks software providing total the in of our workforce. our on our to set talent to in another new number next modern In a year needs to Z resonate meeting differentiated recruit, in enhancements on new released this recruiters train generation to of of XX.X%, recently, Ryan, growth rates third of invest have call. as joining revenue continued to and represented the generation we with of to workforce fiscal overtake quarter Gen industry, the 'XX boomers most

into their collaboration integrate groups within smart and AI-driven integration. new Additionally, teams will hires promoting automatically community new help

effectively new employees enables essential accessible to and of stay connected, All contribute our these access which information directly via app, mobile anywhere. from are top-rated features

overall product in recently GX reports. to XX to an Paylocity commitment product in development Our also continues grid leader the the market Spring be XXXX in categories as placing recognized with

TrustRadius's Additionally, Paylocity XX again XXXX Most List. Solution ranked top GX's Loved #X Best once HR as Software Awards. overall listed on And in XXXX

would further call the to like now provide I on to to pass Toby the color quarter.

Toby Williams

Thanks, Steve.

the we our our in execution sales XX.X% our remain confident our high to by in position operational motion of go-to-market are with drive market, -- be helped $X.X activity of our guidance growth $XXX.X and million. year, continue or competitive in strong how end resonating and funnel the the to QX in top team million and sales last pleased as over revenue market. of our QX total as We well Solid and beating

'XX. continue on during the and to sales we see sales cycles quarter, market remain end focused driving While high and our fiscal we elongated at the go-to-market productivity QX of into in rep

referrals, saw of of the quarter from benefit and channel performance again leverage we XX% for channel once than as quarter to primarily continue strong advisers, more the We referrals. strong business of represented also as another financial third new brokers source

guidance with line adjusted efficiency which by helped $XX.X drive coupled top margin, XX.X% continued EBITDA the end exceeded million or high operational of million. Our of performance, $XXX.X our

clients. we and of more filings. huge to so other thank live a tax like to values Lastly, day year-end year who our to QX and X,XXX time I'd represent through work than form work say who our support to hard represents every employees annual processing our at I call you and provide the and busiest clients We best X as our The culture XXXX. for like results financial employers externally our detail strong 'XX in continues fiscal in America now review recently the to guidance. named to Ryan Forbes pass would to Paylocity were to be updated large recognized support as of we

Ryan Glenn

$X.X to guidance. XX.X% for $XXX.X year, above from were of of revenues in recurring was with end last Toby. QX Total come XX.X% an million million, revenue other we high same up QX the Thanks, increase period the revenue our and on pleased

XX.X% service focus as to an drive QX while Our on continue we was scaling adjusted for profit operational levels. our on maintaining costs annual basis gross industry-leading

to when investments XX.X% the compared combine make workforce. research capitalize. our by and the and overall platform in the what significant it of continue investments dollar to increased in third the We R&D, understand important serve in On we of to year-over-year as to investment quarter we investment in both what on development total a R&D and and modern continue we incremental basis, to needs expense to focused Paylocity making fiscal is remain build out 'XX R&D our we

On remain incremental focused sales we business of drive to this investments area QX, also on and go-to-market basis, of in growth In activities. and in were XX.X% our making regards a non-GAAP to forward. marketing revenue the going expenses

of the revenue same third non-GAAP basis, quarter in period in year, XXX representing leverage the a were XX.X% G&A versus On of X.X% QX. basis last in costs points

exceeded $XXX.X or 'XX. $XX.X and quarter, for QX revenue of of leverage guidance basis which our was million at EBITDA of million the midpoint fiscal versus the XX.X% adjusted Our by represented XXX points

GAAP Briefly covering results. our

with For debt equivalents cash $XXX.X we income was million. quarter income was million of sheet, cash invested QX, outstanding. to profit the ended In and $XXX.X gross Operating corporate $XX.X regard $XXX.X no was balance million. million cash, the and and net

strong adjusted profitability We continue EBITDA cash to revenue increased drive free and to leverage our also be margin, growth. through flow and gross adjusted by maintaining ability pleased while

margin, 'XX of expansion fiscal increased for EBITDA expansion client 'XX implying fiscal XX.X% margin over adjusted out of basis interest XXX XXX basis points margin when income represents Our funds. or excluding and guidance points

continued to and remain As drive in fiscal we environment, we margin forward on expansion interest in income 'XX uncertain beyond. also acknowledging look our confident client-held the and ability excluding interest when rate funds

a Directors $XXX our As strong share has profitability on authorized a our result focus million have repurchase confidence our business program. of and cash we our flows, and value, Board in shareholder driving of the

managing increasingly achieve and repurchase we to addition expect through annual XX% In which newly stock-based compensation $XXX the level stock-based of to an less our on in leverage million basis authorized coming comp focused with expense we target also on dilution revenue, than are a program, of years. share driving

funds points. income, QX, to regard funds average balance was billion annual interest and $X.X In any balance our approximately interest the with not XXX are that with an in future XXX health note QX in approximately basis 'XX the include of billion does changes. average impact we yield $X a guidance of rate and to our estimating fiscal of daily client average client Please

levels, workforce client And given approach QX to platform measured growth line with we employees to regard in a in was expectations. in expectations year-over-year uncertainty, are taking In the continued QX. our macro

full financial guidance our provide QX and 'XX. to for like I'd fiscal said, that With

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

to of XX% last growth of million billion 'XX, XX.X% of EBITDA EBITDA be approximately approximately margin expected basis versus the representing the in over 'XX. to in And be to total of XXX And an adjusted expected for to million, fiscal range $XXX.X fiscal revenue range adjusted $XXX.X or implying $X.XXX fiscal is is billion $X.XXX points and year. leverage

and approximately XX%. interest total implied earlier QX revenue the my growth income is prepared our remarks guidance, on recurring in our assumptions revenue Based provided for

revenue guidance an this annual increasing and value. levels on uncertain of growth, drive Our Against continuing an and focus profitability remains driving year. fiscal $X.X environment to basis billion and nearly on revenue with of strong productivity shareholder macroeconomic

Our next aligning as milestone of in organization industry. revenue focus towards evolution key HCM modern is of the provider all our achieving of $X most aspects our as billion the the

reconfirming flow of to than current total target margin XX% XX% of revenue, target XX% financial X% to our to target focus administrative on and XX% general XX% XX%, XX% target free of are of followed: In XX% XX% aligning and XX% newly revenue. revenue, of target and development research $X gross of adjusted comp revenue, our revenue, addition our adjusted other EBITDA less to of billion target of our to revenue, targets our added target stock-based our of margin of sales of XX% cash our our marketing of XX% we of to to as achieving and margin our

now for Operator, ready questions. we are

Operator

[Operator Berg Instructions] first from is Scott with Our Company. line question to of the & come Needham going

Scott Berg

quarter you wanted ago? Nice start for of the relative quarter net off do what But to . opportunity. Steve I your you brief questions environment do or kind cross-sell guess, maybe the a see necessarily demand new I how overall commentary with QX But -- the to versus just Toby, the in X expectations? compare not here. here. on And sales, year probably

Toby Williams

think were Scott, and continues environment I it's think mean, mean, I to quarter. in in expectations of met prop the I think, I would I I strategy, terms Toby. that resonate. say our overall, I overall, the mean demand value

XX% of of I think business. we a from we were overall pleased contribution new what north saw still with perspective, channel maintaining

funnel we think of with thought I would talent in continuing from to be. it and strong go-to-market And what line think, the overall, top was activity, perspective. a retain attract think I I

with So overall last what to think, we we -- probably in line what quarter see had and I in quarter. this expected seen

Scott Berg

growth to the your then think balance get of should And your of the state Are looking tweaked what year-over-year Helpful. you if the on and rate given new expand hire Excellent. or your force where through sales as year? higher... the is, calendar environment those roughly basis? XX% Or hiring ramp how of you we maybe a sales maybe still kind of about reps we

Steven Beauchamp

targets. you year, give with a rate. We we happy growth to is in really it's initial really quarter, financial not hire focus And we're #X the percentage the a same as adjusted quite into driving really We've which year we on an second go think think there's is are we're on last call, from about drive sales making to priority, had building I place. EBITDA at think No, opportunity we our sure as exact close and productivity. force, but in we us have the opportunity our go an Scott, definitely expansion a profitability into that some that good improvements balancing we on to on the of that an really from new targets. but comments focus really for the next earnings next talked We'll Steve. productivity

Operator

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

Brian Peterson

Congrats on the quarter.

focus Steve, time the back-to-base been this Any I motion. the that you've more like sales thoughts to the past, bit on know little now effort? feel does in asked So right on potentially a but

Steven Beauchamp

we the think we than back think for opportunity question Yes. go They do order of and That continually where And scalable expanded fairly that improvements it. got back to a need our I any kind with magnitude making that. going ability change. be we'll rate that above function. We really increase last kind base. overboard us in for to the about every expect gradually not pretty we're type well becomes who get is to of I we've because product team fairly to that step it, it be I products our continue still rhythm for ahead pushing that sure that often. them And That's but It's the have years. sure we've outside has adding able ARR That do time over field able consistently grown of the then cadence several to of us, necessarily of the to new adopted our nice by grow an and grown worked to it done our continue to call to I that and giant product, year. see wouldn't revenue organization, We've made gradually and well of year. is do making clients being really has don't growth this well, faster it us. but clients

Brian Peterson

guys repurchase the million. maybe on update you Any curious $XXX I'm potential . And at? might just Got M&A strategy share to the authorization, now? why looking just be it. the that

Steven Beauchamp

think the real perspective, with been done I that product-oriented fairly we've focused we've there's from We've side. have M&A consistent I over any update strategy deals Yes, technology-oriented that that been or don't think on an mostly smaller on time. been

have see of we with revolver $XXX quarter almost ended terms from in made can strong sheet, on cash a flow the we the mean, And perspective. capacity. of balance million also you in timing, progress a I cash the think free we and ton I obviously,

where business multiyear So lows, perform when repurchase this think to a program time are I I really well. of think in at the felt sort at we and while to right was look trading place. the like around now those And put a you reasonable multiples or continues

it's of drive I time the buyback. the which think SBC get offset and that to think obviously from decent with a stock composition doing inclusion I on we're target. continue as a focused perspective, to lever also using value shareholder you also some And a

those think the probably things went mix. I So the all that into are

Operator

our And to is Samana from line with Jefferies. come question the next going of Samad

Samad Samana

I on outlook. Or it growth wanted make in should Is the about ask clarity think on longer we I a that. looking and $X still just XX% maybe term? the X had just period? target sure understand to the getting wanted against over it I clarity the wanted that to near still previously. for Is long-term Is we just billion just on comparable? long-term target. to XX%

Steven Beauchamp

Yes.

look think to you this it I quarter, guiding if rate and we're what XX%. is our then below at is growth past fourth in the definitely quarter where

below been a And so we've that target while. little for

target we the target. as introduced in sit today. And business really the the on right the #X focus is where growth same XX% not is #X of that we and we terms on priority. think we've growth We'll think still at focused priority. time, I as probably the SBC are profitability where

see more a of a X than years you we bit balance X maybe So where were ago. or little

target a so a where seems setting growth going versus in time. what business that we've over company, certainly be us really will recently that the how billion And for for XX% think of focus isn't $X we milestone but the to we're way fit evolve on to seen the right stop, and better to terms is probably

Samad Samana

maybe then just more Okay. question. Great. X And

to still it's seeing it that historically your winning, as and that it's to you're maybe you've where think we've mix that larger about cloud deals Or curious size of where potentially guys your more share maybe were [ competitors incumbents seen there is of started or solutions? I'm scale, the replacing seed Paylocity cloud other you're some in are in see you that replacements if pipeline of if where As ] I in well? more or

Steven Beauchamp

Yes.

a relatively gotten of of and in a cloud have growth, that's module. HR the we've growth. other some does a just or subset buy that share competitors before, still low plus some it's question think market. function shape Everybody way, of the and the payroll We form, I our really they

for So method. replacement existing our are all sales an of

big the sometimes Sometimes time. that players been long that have a software, around is players, legacy the that

as to else. other isn't still then and And we it's large run competitively and percentage, see cloud grow, grow players start rate each very a in a the into The take we other to We deals -- do more. than probably other each anything still more little relatively low. from each

Operator

Andre comes question line from next of our with the Childress And Baird.

Mark Marcon

-- Mark if bit quarterly wondering Okay. the here performance. continues posted a hints give I the little in congratulations is for This kind us wondering And robust. any strong of Marcon with about of guide terms really is the growth. to a sounds be like quarters pipeline the strong Andre. productivity the And that you've fourth It improving. about Because like of it quarter. thinking -- sounds on I'm not year? was are number next there you can

continue any fiscal people the You start win thoughts to setting just -- in could factors share impact of expectations. in -- that as growth terms 'XX thoughts preliminary

Toby Williams

definitely a profitability as overall, of I able been with 'XX. I the to and for saying and ago, mix, mean Steve positioned environment then you And fiscal you the Maybe when far look the course and Toby. performed think I so how I'll overall off, year. we're think start deliver. growth mean the at it's we're in overall, we've overall, how look pleased and fiscal minute that QX guide of throughout the I the we guide at was

getting buyback. still driving the QX. able there's launching overall, deliver And PEPY. I profitability focused think many and innovation I been XX of a to we've so and in on able the then focused of good really and that over the that last just productivity, year fiscal again, XXX think coming I we're months, are on been mean on new lot think mark and to on products, of productivity the throughout over with level course I growth, that happy the focused this we've deliver authorization that things with

is to for to point probably think start degree, QX XX, some starting I about when think And the you

Ryan Glenn

we prepared would macro in the from Yes. thoughtful The only thing as I I I impact I expectations remarks, guess, think standpoint. Mark, is on that the is to to this and obviously, be Ryan. add referenced fairly continue

quarter expected. third consistent the with So in came what we

more So if of see try in And out. we're still some about given X that's point, larger expecting the environment. of of we level formal as call. to we'll sales XX%, provide broadly some level turn I softness we'll to speaking continue the But measured think Toby's be But on to obviously, how that's see cycles things that the the variables uncertainty in think elongation August pretty you with in we clients. guidance

we're I think an well the macro standpoint. think we progress as of doing environment as upmarket We're some where with I all there. 'XX seeing we'll But update guide fiscal from August. into consideration the that certainly things take happy we're in sits when

Mark Marcon

as rolling it the little with solutions sounds could then they be a interesting And that up as talk end -- you're talent Or well. bit those would with can out? always you Or platform? pretty stand-alones being Great. like full the about sold

Steven Beauchamp

Yes.

single terms year. talent kind of So our the increased have really every of with category pleased rates penetration we've in that been

that be upper of platform. recruiting recruiting and new higher market touched will also the with end these our us to allow drive the competitive we at features really on of more Some penetration

collaboration if And with a those So think clients an doing for our those is and and of fee we're early lot available community well all of really things received for like communication, is capabilities. that on. what been have not then driving of extra you

part so our really that industry. differentiated the being platform And the of is in most about story a core modern

win based So monetize. size the see allows target and will add really modules look creates At rates, can same us feedback features we the continue us strong drive client process off time, I that that to really to in think sales new all customers you're additional differentiation to in our going to interesting our across market. add we

Operator

our line of And the comes next question Lenschow from Barclays. Raimo with

Raimo Lenschow

Two things.

suffering terms generic that and of you is for speak Or First, little in guys HR, the of Can else an I'm of of term? moment in are in you because this kind what on hindrance a you AI, But focusing opportunity at question. something in and are bit that? kind from sorry ask hear of guys short like context to the people kind the is kind it you of of

the base, going in on broaden cetera. What your with second you talent does driven. installed is back terms question out more products you cross-selling motion the then your potentially mean as offering, for of to et And go-to-market it [indiscernible] have upselling,

Steven Beauchamp

start the first I'll Yes, with one.

HR perspective, think there's certainly of you start do I a parts. can drive. opportunities of from moving that AI market. when advantage AI fast-changing It's many an We think perspective an capabilities there's taking lots the from really

AI capabilities suite. have our We embedded across product

that the And of Sometimes that other opportunity for to able forecasting recommendations, to do personalization really our terms appears modern think times us plenty and And of in most that customers appears value innovate. the industry. to prop platform in in times being that of Other assistance. we our terms of reinforce writing that in there's and appears be models. help to will continue us

platforms also they're for sometimes different can think us. all challenging product users modules, to buying figure HR We more the out be from

able a we of the to represents being opportunity And help a AI our in. that so from also just investing an product we're that from and big think perspective serviceability customers,

We AI really guess overall the market is, maybe HR feel driven feel initiatives cycles got win the the and good that. our We And the market. our called the certainly earnings progress call. think last were out elongated answer there. do investing end at the upper don't your of question about of then towards size really I in know really sales more customers rates We we pipeline. That's because decisions that. that making part were to of not like they we're that platforms in about on We've good other making

causing know what I necessarily that. So don't was

than feedback I in more anything get think factor. could but certainly economy uncertainty else, it we the the be from a was customers

Ryan Glenn

think sales Steve back-to-base or new that of the on existence and question, referencing team customers developed that have I value I few last was ago, both products a has your sell a the that take upsell. back the our also back job or the minutes in existing while, of maybe I products we as and mean, been to but able of I base. other think a And just add great handful think years -- to we've able cross-sell being for part rolled team, relative the take to and out over the be into to and the cross-sell done

PPI that think multiyear of products where XXX the we've the from time with have, of the the today. that think continued really a as ACA. to it started I that's after growing the XXX incremental And we at So the launched sits I traction that and time effort IPO we've delivered

So the that's been the -- handful a growing fairly motion over a been it's -- last that's a course fairly of of consistent years. but been

Operator

next with TD to our Cowen. going is from Levine Jared And line of come the question

Jared Levine

sizing XQ? XQ sequential annual sense revenue Can of . form the headwind you us help filings for to a with us give that

Ryan Glenn

Ryan. is This Jared. Sure,

in it about past. probably I think we've talked the

We I you're as a aware, form haven't specific basis. there. on that number guess, is given obviously, per priced a

But have. that you about we the employees think I tick that the where number and guess what I impact clients. way disclosed the there's get clients at at over and a sequentially moved look specifically. I up would into an of has several is. years idea think and that relative number that of modeling you'll pretty idea turnover in is to what those fourth Obviously, good down if last haven't an quarter, of that impact have we You the

Jared Levine

excellent be, of assumptions . And came And were expectations? XQ terms of discuss was? your in guide any there in you that the primary that Okay. then can what revenue below the drivers

Ryan Glenn

board. profitability from across recurring in, the across quarter pretty solid to all incremental probably think a think saw a standpoint. certainly the board, I But I revenue, upside specific

sales I think the we felt execution the good in quarter. with third activity

through You flow that saw revenue. to

to came were beat as think I solid quarter workforce to a expected. the fourth from into be overall, by QX raise able in year in to happy I quarter. plus And full top think the we little levels the a bottom. And pretty bit

Operator

with going Citizens is to JMP. question the line Walravens next from come Pat Our of

Unknown Analyst

wondering new is going have that much. I But you little that rates customers different. just companies getting down Walravens, all is a their may know not might running ] made a -- for just logos the Workday into I a [ to up Pat Austin how up But market. just wanted about This know of high I'm like wondering how comment you are moving competitive market. follow dynamics upmarket environment who are level, bit about you're I competitive And on look I Cole specifically win what changing. and at are what guys kind on and are seeing change

Steven Beauchamp

Sure.

years. ago. So We been employees and we to X,XXX market had last great have years. a over the last expanding up of expanded couple couple years several over that success upmarket target really the have of

ramp saw look . the us. for of the fair with we expected. perspective, the quarters it last called cycle we out really what of little a saw If I we And sales strong we customer segments before, called rapidly out to have was think just year we And that than expanded year. entered took reps this we we and up rate being in be This performer we it that year rate, much gotten amount. X in fiscal to expanded quarter, a would a bit saw pretty couple year as and we We as from is the really the some the were at last receptivity. a you And new our real bigger. able of great and has win because of longer growth happy elongation first the for market

through kind we're As performance that but in that, today, the we about had we've are the of you to good the in way feel saw really that improve think quarter. throughput, I it. And not of here middle initiatives the the certainly we sit we all

think to the of We get board can't I we we'd feel tell And successful. right that be across performance. having the we're don't to level feel competitive to we success now. be about you where able we like environment sit good

win made for over product Our in we're feedback feel we the good about customers been have segment. rates time, really getting we've that the and investments and consistent in

Operator

Bank line is the And with of our next come question of Adam Bergere going from to America.

Adam Bergere

all this consistent tail March, pressure as some XX% the digging informing incremental see January Just a demand deceleration you that's into quarter and terms through the the were follow-up, a to in linearity the of QX? fairly end of towards quarter, brief bit for did

Steven Beauchamp

just maybe can Ryan perspective, I'll the handle just bookings seasonality there's natural linearity the occurs. business other From like a a and So then to one. this that let on

So of start the at you each typically see clients quarter. start

January kind big start up July October. being ends of being a month us. So up start April and ends for a month big in

. The between be just So even. progression. a relatively that's months in natural can

we abnormal callouts the those, on real and didn't from in a see quarter. anything no perspective So seasonality

Ryan Glenn

the the Yes. would just fourth I I question guess add to quarter. on relative

in I we that's execution implied come the third than quarter such I standpoint. think in guided performance the I to think a at that. think was better guidance if a probably what relative from February, touch when look we And QX in you sales the all saw it's

fourth a out nothing from see quarter, I I and through standpoint. So on was that a guidance the think that would call surprise flow necessarily you that

Operator

with is to from Capital the question our Daniel Jester come Markets. And line next BMO going of

Daniel Jester

Maybe for start. a Ryan couple to

quarter correctly, point guide, into that. Just remember on that a what's cut had about baked baked into you fourth rate last the I if

of you looks if I'm wrong, gross really strong the then about over or one, correct quarter that investment you and be guidance? how like you've so And X year forward. on expansion I kind consecutive quarter the there, two, year-over-year are margin, flatish gross viewing and year, margin And call we for should margin guess, me now of out thinking fourth but was how in had so anything going years third basically gross

Ryan Glenn

Sure.

not prepared a have in now the reference that So rate to first I guess assumed do cut remarks relative in I quarter. question, your fourth we did my

QX we February, You we a in call when are correct cut. out did rate that guide

in out based flow implied you've quarter. fourth seen from through And have think latest forecast. We taken income I that an on interest the that

and we or was it, guide think, million of interest took I so about revenue income $X.X So call that raise. $X by an up total million

performance that rate cut, interest that fourth QX is within we certainly, helped So the as which quarter. the well the saw of as in removal income

look and you longer-term Obviously, to margin. you're But we've gross a holistically on think Year-to-date, some margin, year. it period, year-to-date year. to basis level in you you're about quarter-to-quarter. of move some X adjusted relative headwinds XX-month to gross that a get of But back think right, relative headwind to question workforce year think that I there's going each same step we're adjusted to continue XX gross and always sort I think and the out. across of the first we leverage it ability drive back we'd that not about to year think expect if seen at basis, can months seen up leverage on the points as for believe I the when margin. look I on your Not around the at we've

P&L. And the balance I for that think of goes the

in adjusted You $XX not saw quarter, call we EBITDA almost leverage really points. significant basis obviously, million it, by, guidance in some XXX raised and but G&A, only this year-to-date,

But the flow in EBITDA really things execution. like strong the So feel through being continue ranges to value as buyback. and free we only revenue in to return XX%, the good, ability not shareholders call, cash about and to large adjusted earlier said up growth

Daniel Jester

in. then can more X great. That's if And sneak just I

out last there? products the change. to and a uptake the customer update an velocity call some lot you've over launched of platform and is the just that in anything terms attach of new different? of Or products year You've iteration past compare things Maybe and or the the maybe rate contrast of new of added the in of you'd similar

Steven Beauchamp

us capabilities, Scheduling really you to advanced we scheduling the and products has this an happy you've skew. slightly Plus, received customer with larger that well, helped launched. capability. past which That Scheduling being that that little certainly market, features is We've a Plus are develop bit for that's skewed Yes. fiscal we've in but about Really, size year, really probably new continuing average think been for those if got been

think process. a Employee to we within get remains reasonable recognition opportunity to us that, sales to we an time. market in great So really the XX% going voice and XX% forward. make penetration talk something, build about rewards for that differentiators and We always when can sure we

are with those we've products kind in to relative -- seen built I all modules on to of what of hit past. think the targets that we've track other those

good think really would differentiators well. the receptivity. other really feel about the we point I make is And So I as nice

it's but creating driving story selling to incremental differentiated value not the we're just PEPY in it's that So about market. and the the also adding about actually

Operator

And next line Capital the from Celino KeyBanc with question comes Jason our of Markets.

Jason Celino

say a might is mentioned platform, specifically. Gen others you've resonating . also Great. this on the be is I the would era think first Or that with a customers are focus And leading that differentiator this this being Z you time pursuing? Paylocity modern is -- trend

Steven Beauchamp

good obviously question. of the is the think, and a growing Well, I a be will to continue that case. Z Gen part That's workforce,

departments. I want more have what problem think and multimedia don't that the are a is they and culture demands the different a a want they looking to be they a how very the market, other. -- able organization other Gen have they approach in understand be being tight their type realtime very options Z from voice on things understand decisions a values, what on. really like a able be much what the to is labor to X want those still communicated are is know things to the reality job out And basis. They perspective, because really like And to have things to HR in often and really demands is to has made. They really are to call going from

find of but have organizations onboarded, sure there's really amount to you're a career so opportunities. payroll paths, on not only really significant time spend to right, And trying things developing making making making like connection, training sure sure is and compliance

about think years in everybody provide that we products you have of last a many dealing if all built capabilities unique the multigenerational HR those that to departments is to nature HR that have have, to with dynamic challenges the able several the tight be handle really of all over workforce tried so market. labor for teams And the a of

gotten think wanted has does for last And our just the the app the mobile and so the population. the Z in call it and how growing intuitive And years, great think of certainly several product we it has that feedback -- today. nature resonated really intuitive that managing to are fact our and message ratings feedback us nature terms I the of the I Gen customers including features of many

Jason Celino

maybe Ryan. then just And a X for Great. quick Okay.

I line think quarter. guide moderated continued it like revenue also levels. the but what for take in sounds you moderation levels the expected workforce in recurring last in workforce the QX with to further

Ryan Glenn

Yes, correct. that's think yes, I

We'll into I going from and that standpoint, that further a obviously bake not is some some QX moderation that in of QX expectation there So in out, guidance that see that, there with came update some did additional we still level did And macro assumption. is we the but which moderation given think then was in QX. expectations, standpoint. plays how from uncertainty consistent a out beyond

Operator

with line going question come Zukin the our Research. from of Wolfe And to is next Alex

Aleksandr Zukin

print Congrats maybe quick just ones I season. X on me. this the guess payroll for best

a a gives competition put these the longer finer a sales cycles micro the conviction that dynamic. what of confidence at we the on are versus or market kind can higher end or you macro point First, of

Steven Beauchamp

a good it's question. Yes,

So top we end. pipeline really the at what we at is look at the look

then sales with various all prospects, duration the And track cycle. so first-time appointments, demo of in the stages appointments the we of and that we're having

are a from for so those stages challenging And each macro in perspective, longer. things stay things of

it XX all if us to from that's a took and of usually days to So XX X stage indicator. taking an days next, us sudden go the it's

not is relatively and conclusion there's the bottom the as as losing that on And really you're your macro how to similar, uneasiness that's we off staying come kind going long win there. of them some rate

to try right? that seen with that, get initiatives And there's that. we've so you towards teams that's drive more really You involved

to what organization's try concerns an You understand might be. really

help try You through move the to them along funnel.

there's can what quarter. out like nothing that's called And that. we we last about do So

Sometimes at prospects situations, people making able it's training all involved to in decision. to the to be the manage are those have sure reps the right

at we quarter. in even little And the of last an those soft decisions. impact. right they're solution. initiatives And the driving. rates a like that have And to We the bit driving lot people a are it. got getting And we've team, initiatives going to better absolutely we've right we've like we're done feel of over that the just stays feedback. win feel to so We market got be back the terms making the going if We're handling like

Aleksandr Zukin

sense. a but with long to it. makes winded, question going That the And me. little Got be bear it's bit is then second

and of later. getting If about that through the that in QX last that billion you in $X rate roughly you getting if exit year now the growth think for there playing roughly numbers the about And that there about XX% fiscal X you kind time you you 'XX. at of kind you and growth talked has target look had guys kind of rate. Yes,

what's X kind X it those maybe year into apart how to break as x or that that that us of to it that driven again looking out out core about growth that we y. like is rate in of help kind kind understand to of fair categories, -- year growing moderation the a So like And or the your think target business push rate large is you're it? at and X if growing assume large growth overall of

Steven Beauchamp

Yes.

when really faster line think it was can mean upper with sometimes and though bit be our it's call several opportunity, even billion rate I think is same and the did as at in function I We as you being to out challenging market growth this across basis. years, the -- market, of a the core would for size. well a on been it I go-forward of can competitive getting of kind but $X.X half it our a of to hitting uniform different kind be larger it's that were fact we end. there's a that large fairly a look at more little a able scale, have segment the grow rate really business segments

on balance all We're to fast we're time, to profitability the growth. we targets. so everything able we doing of can to focus as grow we think the still be can at same still prioritizing going kind can. And And we as

just right story so And do thing value. of a shareholder a than little to more balanced bit becomes feel deliver growth. to only like I it most the the we think that's And

Operator

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

Sitikantha Panigrahi

good Congrats on quarter. a

growth revenue sequential year So rate I your recurring way That other growth sequential QX if than look XX%. for and QX at QX last Ryan, last are and QX below was better for year. whereas

revenue that? contribution of So QX, like kind live? anything annual was was or filing Or increase pull any of like form the Trace go any kind any there any price for forward inorganic in there of . or

Ryan Glenn

a quarter from onetime relative in revenue. I to would W-X take or had third so. quarters in after think We and X to call the guiding February good that the I of And And a No, a quarter. in started very a question revenue January. this from unexpected we perspective. really sat of think form what we're into obviously nothing or all had that the and get sequential in did account we number some able I idea out think where filings quarter. solid I We of source last

came incrementally the number, the $XXX,XXX $XXX.X But we're or certainly range. expectations. above in million So end better on so really about top than of

and to the I'd call is nature. size, results, but yes, onetime that were think relative incrementally material nothing better, pleased out with we but So certainly I

Sitikantha Panigrahi

know is about think flow don't filing? split, I but say And the year, any just how -- versus was guys different, filing think any we we form is the form year there onetime asking you when form for Was I'm filing. that, you to there when next big should this clarify about QX? reason recurring

Steven Beauchamp

Yes.

So this Steve. is

on if platform. think them to to going also have the calendar of be year. number of kind built that more our the previous is of grow of filing employees off in going about with you for product. you We're selling based the So a number lot that's employees that,

on if typically our always form as basis, fast a anything, the doesn't grow year-over-year rest revenue. of as filing So

actually not If from perspective. rate it's tailwind a a anything, So headwind. a slight growth it's

So this year. of -- out nothing and the ordinary there was

Operator

And our next with the comes BTIG. line from question VanVliet of Matt

Matthew VanVliet

clearly more and of system you the the sort or there? several how at months end much and over the feel the of get put through through and as of the One, maybe guess as front, few last not importantly, just more go-to-market impacting the you're corrections planning, head time-based place you year, progress the showing of And the I how X some improvements look go that 'XX planning I is you last the months. maybe elements this only strategies improvement light over of the especially the do guess on of how then in or like parts. up fiscal you reps here. sales to sort shaped this is your in but count have

Steven Beauchamp

it don't I our approach. think changes

opportunities, on I into think last next of year we the this productivity quarter, called and go be focused we balance out would year. as we

opportunities. those some of So in that's there. been terms factored process in we of count. around there's seeing definitely like into the opportunities We signs thought our head think that we're early

market say agree can they I to is revenue it, think the employees, the X go have even X,XXX all kind that that time customer if you go people and months only call above committing, sell of to on can happens call you you're or definitely average think out X to pretty sized X time X starting. our of up you you X-week I When implementation, quick. by of ahead would

these do you have initiatives. So you --

start those, of you of to several months obviously start the terms that start You see in the clients up, be out. value signing can see but dates to

the and little that does revenue between being of started. bit so a time recognize And to has driving improvements then longer actually period kind the have able it a seeing initiatives, of

our if Super you that would so is And year Bowl I'm January. sitting here tell I every today, big

of lot have improvements But getting clients a focused of And large will is calendar end large on certainly, the so market. the we typically cadence this balance month. these a fiscal we've and And next start of are ready every upper when that driving of the year January got throughout great that you're year. so initiatives

Matthew VanVliet

more willingness Okay. uptake Very whether terms customers seeing desire upmarket customers' platform. differing taking quickly the of down helpful. . in take or on on additional market and any it's to you And of then products product? I trends, of and just of on sort more the guess Are

Steven Beauchamp

No.

driven PEPY mean, think XXX, over -- real realization shift able or both XXX think we've to we've has at mean, that realize seen been think or XX%. even time. been amount I that. any I in don't rate over of been I I to the from I happy realized we've we've your PEPY north that as with of

been about is that's market. fairly consistent. the continues across last few in that adoption case over part of broad-based that's part think years. of think we think I I get 'XX. I the fiscal think the And as case And the the the that's be I reason to each case And you think

Operator

the to over showing management no I at further time. this remarks. like back questions conference closing for I'm hand to would And

Steven Beauchamp

you Thank Sure. much. so

and and give especially Paylocity of clients QX. our great course job thank also in to a for Paylocity, of all our Just all team wanted the special a you you to teams thank to in across interest your for say to our everyone of wanted I supporting operations

So thank great and night. have you everybody, a you, hope

Operator

you today's This Thank concludes call. for participating. conference

may disconnect. now You

Paylocity Holding (PCTY) 2 May 242024 Q3 Earnings call transcript