PCTY - Earnings call transcript Q4 2024 | Paylocity Holding Corporation

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Operator

Hello, and thank you for standing by. Welcome to Paylocity Holding Corporation Fourth Quarter 2024 Fiscal Year Results. [Operator Instructions] I would now like to turn the call over to Ryan Glenn. Sir, you may begin.

Ryan Glenn

Good afternoon, and welcome to Paylocity's earnings results call for the fourth quarter of fiscal year '24 which ended on June 30, 2024. Financial Chief Glenn, Ryan Officer. I'm on And Beauchamp today Steve call Toby joining Williams, me and Co-CEOs are the of Paylocity. Today, announced in the discussing the release be after market we issued closed. our will press results XX of replay the be the website call A days tab. webcast our this on Relations available will for next Investor under

caution today's session, we remarks, statements. forward-looking Before contain made statements must beginning, including you that question-and-answer during the

projected the results solely results statements the risks statements. These by and important uncertainties, uncertainties to cause results subject differ in are cause could are present that are other from statements or actual and forward-looking and factors, to actual implied these these to those forward-looking on to which Also, materially risks differ subject can information numerous statements. the based from

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

because York and September. the Stifel New conference schedule, upcoming in Tech reconciliation In September without at which needed effort. XX, Tech to Deer in regard in time attending Executive forward-looking Tech financial Valley the late reconcile comparable X will Vegas non-GAAP information any Las will financial Conference unreasonable to Please HR is be the in measure to note directly a this that August our is Global are measure on GAAP and on be Citi I Summit Toby to complete attending unavailable unable we the

know if that, with let me over any Steve. time Please like With call turn events. to of the you'd schedule let to at me us these

Steven Beauchamp

us Thank all quarter you, 'XX fourth for fiscal and joining Ryan, thanks call. our earnings of on you to and

most value proposition resonate the help in software of in differentiated of Our recurring providing XX% in XX% the and growth continues revenue revenue modern marketplace to total industry QX. growth drive and of the

For fiscal $X.X and 'XX, finished recurring grew at total revenue XX% 'XX, billion. fiscal XX% and grew over revenue

clients employees solid an revenue year, once compared X%. and Our were results by of end average fiscal with of 'XX increase and per at client. increasing again We to fiscal adding new ended last clients both driven the XX,XXX XX,XXX

to to our client an compared increase XX,XXX of revenue increased base. number client approximately rates nearly of X% XXX Average our given Additionally, $XX,XXX employees fiscal was average over success. per upmarket a over increasing attach just recurring product across client result continued of 'XX fiscal in in our per as 'XX,

as our more in success sale base clients entire the particular success. across voice our focused management, back the products have and We employee of product seeing realized continue rewards into and resonate increased attach to learning on selling workforce recognition at modern existing with time client

in continue investment voice, rewards, premium new to product by development and recognition and mobile employee 'XX several app. Our us market offerings scheduling, personalized pay, plans AI-driven in and allows sustained evidenced our fiscal the of to advanced product enhancements release expand suite, next-gen including learning our feature

as the our now of the mobile new on highest app highlighted mobile. these interactions product of interactions majority traction with of early offerings, software job platform platform XXX,XXX more the AI-assisted XX,XXX the with than one the by within in MarketPay pleased market employee ranking searches are We occurring over industry. via and

year market best recently GX's the and in as recognized categories the being overall be listed XXXX combo for as Summer row a HCM recognized Customer Advisor, platform to by an Insights ranked and Voice in for Gartner in reports, suites Forbes continues development named Peer the XXXX as with payroll leader product employee second for HR of grid management top-rated product Paylocity in software enterprises. to for commitment XX TrustRadius software Our cloud X,XXX-plus the

to call would I pass on the 'XX. like the quarter color to now Toby to provide fiscal and further

Toby Williams

Thanks, Steve.

the value continued feature trend in with highlighted, we're 'XX industry and most position the providing and of and we planning software the investments sales to PEPY differentiated more marketing continued across solid investing our fiscal with and in was to Steve we in than fiscal channels. premium into reflected in 'XX, 'XX, 'XX. to continue of new our QX our functions fiscal carry and headcount go-to-market differentiated fiscal sales, later this this XX% introduction execution, further launch In grow increased enhancements, products momentum modern and have our in in R&D proposition the As our of by excited

drive prior Coming expanded into our pleased be fully to fiscal on sales efficiency by are be 'XX. years, to reps force we continuing fiscal X% and focused across XXX productivity begin to will teams. our sales and we 'XX, staffed Consistent to with

year. believe fiscal we for We positioned continue industry, attract talent the the in we are to successfully best the that and well

fiscal release QX channel, further support marketing throughout We the driving 'XX, and clients support sales value our our channel our continue broker continued and plus new to our fiscal once invest delivered again differentiation enhancement teams our and to efforts benefits to help have also of which business of recent 'XX. including XX% in and to in decision new

certification Forbes' row, the remain remained and we at service Development third The culture service we Work the for to teams also a ATD's to for the Employers as to our clients. consecutive to in one earned to Great recently Place our year year. Award Best continued best Diversity Employee fiscal for recognized at were strong of support year named in received seventh XX%, be for Talent and invest deliver and continuing than to world-class Revenue Paylocity this committed retention strong greater

Our X,XXX over strong employees. commitment without execution dedication would and sales exceptional the possible and culture, of not industry-leading our software operational and be

very strong As financial fiscal would thank our Ryan for we review I people detail in like call year. 'XX the out of and close to I'd like to teams provide to all to now guidance. pass a 'XX, fantastic results a the and fiscal

Ryan Glenn

Thanks, the fourth for of revenue quarter increase up last the with year. Toby. same XX% $XXX.X Recurring revenue total million, an was from XX% period

guidance another other revenue. had noted, our quarter, our above to recurring team in pleased top QX revenue and beat Toby the majority $X.X and the As sales come of our from were we with coming of end million solid

$XXX.X for was margin and Adjusted exceeded $XX.X fourth million our or quarter by of XX.X% top the the million. end EBITDA guidance

of adjusted For resulting XX% XX% a EBITDA from million fiscal and 'XX, an on margin or fiscal leverage 'XX, increase dollar in of XXX basis was basis $XXX.X points.

was on XXX for fiscal versus Excluding clients, margin 'XX leverage the held of of EBITDA impact income reflecting basis points funds adjusted for XX%, operating interest fiscal 'XX.

free on progress fiscal flow increase XXX from XX.X%, points we fiscal on margin to a 'XX cash 'XX. free flow cash continue up of dollar of Additionally, strong an with XX% basis show basis and

clients, fiscal on Excluding of the interest free operating leverage income 'XX basis margin. XXX in points impact funds flow we held for drove XX.X% cash to of

fiscal full expect cash NOLs headwind become a remaining 'XX. increased in Given free limited to we credits, create profitability margin a and and in flow taxpayer which fiscal cash our will 'XX,

But expanding cash the coming margin we confident to remain free continue ability flow our in in years.

a revenue. in make On to we to our what quarter in investment capitalize. in it combined total and investments we to on were research fourth significant combine of full the understand and investments basis, and were what of continue revenue is and year total a basis, R&D R&D investments We expense XX.X% overall XX.X% development important R&D, both non-GAAP

our in total by fiscal R&D 'XX On a when XX% in to 'XX. increased fiscal dollar compared investment basis, year-over-year

continue growth of of the most us industry. in believe XX.X% basis, were investments We platform marketing and revenue fourth sales in a as the XX.X% the deliver fiscal differentiation in drive product the R&D quarter in ability modern 'XX. and valuable to we revenue and future On non-GAAP expenses to our with provide

X.X% of of representing in points X.X% on and fourth an expenses remain consistently leverage, GAAP non-GAAP Full XX% focused G&A On leveraging in costs same costs basis covering year. quarter to results. were the last revenue our compared 'XX a on versus revenue period year we of G&A in XX.X% G&A annual Briefly basis, XXX the fiscal were as basis.

profit gross was net and income $XXX.X QX, million, was For $XX.X million million. operating was $XX.X income

gross to funds billion client full For million. and clients funds $XXX.X year, and and for profit daily our $XXX.X QX in interest held the was of average net regard was for income, $X.X operating 'XX. was income billion $X.X income million fiscal balance In was $XXX.X million,

income yield annual in approximately $X.X of approximately the of points, an $XX estimating client QX are average basis of with daily average We fiscal health billion on approximately funds will million interest be representing 'XX in XXX balance QX.

in are rate will cut to with November, guidance basis representing In average reflected billion the in yield approximately fiscal the a of fiscal on approximately guidance. regards an during for XXX On March interest clients. our May average basis with XXX daily held rates, cuts funds million assumes basis, and we full $XXX estimating interest points, point September, balance be assumed year income 'XX of 'XX in $X.XX

of common in cash confidence $XXX.XX average X.X we stock share aggregate repurchases during the repurchased given strong $XXX of we million and our shares in an flows, business our approximately Additionally, price for have per million at QX.

million a reminder, program. $XXX have we remaining under As share repurchase our

and in with We our $XXX.X million closed on cash equivalents also cash QX sheet. balance

to stock-based leverage we towards revenue going in And stock-based of 'XX, less and fiscal also of target expect to comp leverage committed basis stock-based we expense. are leverage compensation of continued points XX% than drove XXX annually drive compensation in forward. incremental driving and in 'XX, our fiscal In

to levels Finally, in the I'd cuts full of 'XX, rate 'XX, and versus 'XX. flat includes impact as XX financial basis guidance and roughly point in for 'XX like QX fiscal which mentioned provide fiscal earlier, fiscal workforce interest fiscal the our

$XXX.X of quarter over first other $XXX.X expected range 'XX fiscal approximately and or of to revenue. the to growth revenue Recurring the in is XX.X% and million million fiscal recurring quarter of For 'XX, be first other

of income fiscal growth the million is points 'XX million, XX In 'XX. recurring fiscal And interest $X.XXX to recurring and funds million the the QX of which range XX.X% the is excluding range range expected or $X.XXX expected Adjusted represents in on be be of fiscal to 'XX, million. year over approximately held million first for be of $XXX.X clients in million EBITDA in XX.X% approximately over EBITDA, to growth of of And for revenue. is in leverage over to other to or $XX.X billion approximately billion basis revenue and range $XX.X to is other expected $XXX.X expected $XXX.X fiscal total be total adjusted to revenue to quarter revenue. 'XX $XXX.X

is of revenue to to approximately billion $XXX 'XX. Total Adjusted range or is million expected to to $X.XXX $X.XXX $XXX leverage held over the 'XX. X.X% EBITDA, which to the $XXX in billion excluding the on range expected EBITDA over clients be funds points be represents growth fiscal for basis of approximately of Adjusted is interest range in be million XX million. in income to million, $XXX of fiscal expected

XX% in of revenue we're headwinds the XX Despite we pleased and recurring a margin growth 'XX, XX% revenue total adjusted performance. of finish rule macro XX% to with faced EBITDA and the growth, overall year

fiscal continue of operational growth product revenue and high of confident $X against margins our in to goal as we proposition, multiyear we map, driving we our As increasing go-to-market remain in strategy, total our a confidence kick billion ability and road value level achieving in execute differentiated have off durable we and strength revenue. 'XX,

I to over turn would remarks. the for final Steve like call to now

Steven Beauchamp

Thanks, Ryan.

into the of Chairman our have its will confidence the as that in in March role move This August leadership under continue of effective position. the co-CEO announced XXXX. I'm model put X. Toby's the Executive I in earnings CEO evolution of of is market-leading President we and As excited release, Paylocity, natural Board of place full to

most the My role closely Paylocity product and industry. modern to me the platform with to continue team working corporate the as Executive Chairman and Toby strategy on in while continue leadership focus to will allow delivering

and -- Paylocity. participating to As dedicate Executive all on continue Chairman, calls. my I energy time will to future including earnings

our I'm for future back, about proud that, excited everything With we ready very of have we are and Looking accomplished opportunities. questions. I'm very

Operator

[Operator of first comes line with Instructions] Stifel. Reback from the Our Brad question

Brad Reback

great it's continue. Steve, a And run, Great. I it will and know been

here help and frame Steve experience, as in going as industry. your Given on? meaningfully market play Or decelerated purely you it, been issues for in across Is you've as what's the the this has growth are can long there Toby, secular at well? up some cyclical? Obviously,

Steven Beauchamp

Brad. Sure. I'll start,

going things few you've think I a on. got

I of size think, pretty excited of So first all, we opportunity. about remain the the

rate available terms of have the penetration TAM. obviously in we So small a

to able still we to a so think And great grow. be there's opportunity

of law the and sales scale. from was impact then and some terms certainly headwind the been We've size it or some we see impactful. this called out whether got the the Certainly You've economic growing numbers of large at of that. platform employees we recent on certainly cycle, has in most impact saw in some

to still a an you time, growth normal to have the a on profitability. focus so target. bit $X billion to a where And at think new be we get driving company I our same opportunity focused that And we've shifted of

we're balancing that so And equation.

that and about you I pretty the all still think front of put opportunity.. the got excited story size that the when we're us of together, we've in

Operator

of Samana line [ next with Instructions] [Operator the from Our Jefferies. Matt ] question comes

Unknown Analyst

the felt co-CEO on these you right back to in to glad the the and calls role move, Can is in still time on So be will joining congrats why is This this about Steve. future. hear you the you us talk step [indiscernible]

Steven Beauchamp

feels internally. largely It pretty to past Yes. have on COO him. I product now focused have organization. different been been X natural, our years, for I transitioning and technology This and I gradually functions Toby been has over year, think,

formally So that to and team will him obviously report will into Toby. transition that

I'll in have corporate several I strategy out with be of next be product we as our before, team involved the I over However, course years. the kind our will still initiatives chart as involved

gives honest opportunity the stuff focus to me you. to best I that. on this So the an think I'm quite It with is be that at,

amount like a team position And think feel and the got confidence the part do in we of both I'm second that to is tremendous I have around a executives Toby that I've that. of in I so

Operator

with question next from Our & Company. of Scott comes the Needham line Berg

Scott Berg

luck really I good step. on broad you shoulders. have big Steve, Toby, And next And the hope

questions me. of You might Couple need for them.

me for sub-XX% ARPU with start the subscription about year. imply little bit off net growth a we Let's do new the adds? between to The revenue that breaking would guidance customer of of year. and the think guidance How kind at least exiting down growth

to how in between last roughly that we're of looks and growth year blend like? we balanced pretty customers think going be categories. of about But category, the accounts kind those each Your what do in X% sub-XX%

Toby Williams

a of think call driving, ton pretty executing market performance able deals course came Scott, sell this I into those success from last of in new over mean, base. the I with to result X.X go-to-market of the being having and pretty a terms year, the customer last, perspective, think I a and back products I the it, you years to new balanced or so both then saw and attached of that products, think, well to from

providing from And also clients. ultimately, execution an I think we operations and our had perspective then service strong to

year. So I a think had balanced pretty

really from then an prior jump attach 'XX go-to-market drive perspective know, on we're pressing and delivering execution, from the thing same around standpoint, in you fiscal our years to pushed as As a to ultimately, those numbers same we has from service and think bit. continuing the penetration mix and things, little into And world-class I execution an in strong product a driving clients. ops all

yes, I every changed. has it different mix So year. think The in is single

to continuing 'XX. probably happy to we the that relative as year, don't the those think know the a to with jump expect course factors. throughout into X where things And going balance different 'XX, balance expect a those I drive level result perspective fiscal probably in I you of land exactly it's in and think but it's we're from of be on

Scott Berg

potentially one X% in the have year-over-year the for growth you balance you of for spring? how macro you're into think then assuming your But going flexible the year, then, through staffed forward other? change do Toby, season. the going fiscal plans are sales might how selling And capacity noted here And What both fully up I here? year or capacity Helpful. that this Understood. is that investments contemplated way we next those about busy your think your

Toby Williams

Yes.

we 'XX. go think and of we've maintained our course I amount been I -- been think that's fiscal that's what as in thinking couple be want I the go-to-market of opportunity for through quarters. flexibility of of a recognition certainly And coming the we've capacity. us over we to rightsized terms was think And into fair that said front the in last the 'XX of

new there year-over-year in as in in feel the with levers press really a the Steve we of good lot about us And we've coming the as opportunity feel said, the go-to-market out X% launched I growth motion. good about well I reps, to on think, products. productivity allows as think market. We really

I in in with feel sales if industry, the go-to-market fully think I ability best the And good about what staffed like. think, of positioned uplift we we really the how terms into think macro attract, the I in we're the looks And coming an get talent to and coming year.

even would we us we're and year. have fiscal move up that the the from starting think flexibility that into to I allow where coming

Operator

next Our comes the of line with Mark Baird. from Marcon question

Mark Marcon

is it sold has you regards in going motion, to and tremendous comments taking and wondering in congrats that that the stay internal back-to-base a back-to-base how can tell terms big Toby, the been on Steve, glad the the run terms with us to I'm of on of sales you're group motion?

the we how the logos much trend? from when look of bookings a the And could versus base? over was think existing year, this upsells much And new into that at you course take how how do

Toby Williams

with maybe little of mean history. I start just bit the Yes. a

was coming time off frame earnest I think, really think would opportunity motion us. back out start of started of that And back-to-base ACA to go and was to you that wise. our being that the if really general able I think go after that and of, for in coming have I XXXX motion

part have base I think it And we've of existing clients. more back as incremental is grown I and we plus our we've continued client base. every sell the invest into the of the available that years. that to handful that's the so also deliver year. And that of value the over set is, last to we've to product been in think direction that grown single of Part

base now. most X than philosophy. in that coming has team than we've investment the headcount that's growth a And in overall years, been been bigger higher the the and smaller invested off But

really of business being both growth. I on drive to and a think new after to new logos it's revenue But smaller attachment able us, in for terms the market. in basis off product well penetration paid incremental it's incremental relative and our on focus going still

customers think forward, and as our about dollars we being in investing I look into there products continuing around And able base. even to more -- providing those able solutions constant that's it's with back I to And client just come more but at not solutions to philosophy their us partnership keep value or bring the who being we to remain and as bought and and would to terms 'XX those true deploy of our of our ultimately, have there. might think outset

Mark Marcon

to it the where like Can bookings big and you incremental this year relative bookings ultimately is that could of you go? the that how had say terms total in

Toby Williams

a I of focus continuing able to the how expanding a think we've forward. set to about of the into I think look of strategy advantage opportunity the platform and be new don't pretty view the is drive and then I execution, directional we to to product growth, teams. from as to that And with guess, also done on I we've give thought think drive you our employees perspective real the try to continuing opportunity. different that Yes. unit any take -- good continue on But the

to And out again, to being in value incremental deliver ultimately, year our base. just client able and year

Mark Marcon

players and you upsell. the Great. obviously, terms pioneering And tools, getting On mentioned just you of some regards -- LMS they Hey, exist of or upsells, around, before. then in this good some tool can that LMS, comment to which used clients things sounds have them like like is you great with didn't some engagement is of Not you're success displacing of broadly haven't basically your a we saying, other But before. are available. been

Steven Beauchamp

Yes.

new we as you into can our a think buckets. of I of about product strategy, it think couple fit kind

kind an a existing new kind or we're scheduling where can we're think to being innovation to refers up category and even enhanced monetize ends of we plus probably as additional market able and to the of then a we and to sell the capabilities bundle. one offering, have So often an in first think module second that and we've that where about as LMS there's point where it that we market,

in a to from have to had was new LMS opportunity come that also was so sell available perspective that have they to but additional with so the the we saw content for on that bundle as customers compliance that And customers back new board, a they customers. opportunity there value we go to

the And opportunity of going we about look we as forward, for product those opportunities. so think both

the How we allow and add most them how coming with up that bundles by industry. new be and offer in modern ideas to do innovative the new products our and that level the and do to to with then platform value we continue come taking us packages more up value next

Operator

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

Brian Peterson

been and staying well-deserved on heck of [indiscernible] It's glad a a congratulations. you're I'm role.

moderate But anything industry. you I seen ahead that's growth across in about big we've if $X you're your appreciate there's changed as guidance there's I'm look still rates strategy. curious the towards opportunity revenue. thinking as a So billion

Toby Williams

call time. try has course think been we don't of think there us see that and of that think philosophy what can we've same right we course and the the go I front fiscal of throughout evolve beginning year. And think I our over the come pretty I philosophy. guidance in 'XX into mean, consistent And at No, the with been. we in we I yes, as I

Ryan Glenn

agree. I'd Yes,

into beat in momentum beat a back lot as happy 'XX. cadence. feel got point, to strong Toby's a with But fourth a on and recurring quarter, revenue a raise the think side, year, any fiscal like think to came headed desire we to out had of I where really fiscal certainly start particularly I obviously, we've the get

I of balance higher and that more fiscal the measured prudent think visible about the and growth year. the see to and quarter. of think you a taking approach closer we in first a revenue Was us sort as

some with we think strong across I good and execution, this sales good as operations really feel momentum plan product well. both the about and and feel about certainly

Brian Peterson

good has of It's to in of environment. following sales and of curious hiring. that in are anything terms anything reps I'm changed on current the people just if Maybe bring hear. you up looking terms types to of the the be type available in may in that

Steven Beauchamp

a It's Sure. question. good

we've made Toby that the category when fully of you staffed. think low would certainly And very been happy think well say performing out we call getting the turnover, this pretty I year. I had as

the So but year. not going we fully that into we only were with we to staffed, were able came a strong team retain in really

that really think have position to speaks the that in I we marketplace. the

sell able best be product reps in to The often want to the marketplace. the

And about so good feel that. we

We hire experience. with mostly continue to industry

talent. make. able bring So that point another I to would would be on We're

they've Sometimes feel like it but ramp those experience we the folks can comes faster. got from a prior definitely competitor, sometimes industry, in

so in our of And is element terms sales another building force. that of strategy the

fiscal clicking those year. into And so X this were of elements going all

Operator

of Our comes next Levine with TD line Cowen. from question Jared the

Jared Levine

trended has discuss call? the earnings you client since top how prospective and of pace last Can activity decision-making funnel of

Steven Beauchamp

calls as activity definitely think of appointment Think top opportunities. the good we So last first-time we seeing couple of earnings were I about that on that highlighted funnel.

a sales to be And We to seeing bit just are that drive making we of part little able longer definitely decision the cycles, are some upmarket. efficiency. particularly maybe force changes certainly in

going we've been a activity better year, process. like able a top-of-funnel process to sales clients to into and So we to start. drive, implement we've efficient this of start is and strong feel take The see think, I longer larger more reality sales fiscal able those to continue the been

the that And out the back start on quarter of see that to we so that I called half last of year. you success think

a starts January. get number fair You of in

plan good we're us, start. that to So are levels off good of strong. We and in got feel front a activity the the about we've

Jared Levine

can Health And what there? beat Great. XQ of Expo the then discuss you B, in drove terms that

Ryan Glenn

Sure.

it you beat think from that really revenue. as I was, coming recurring said,

the think strong quarter. felt sales from a ended I was where in perspective. retention good activity fiscal We really about year

wouldn't was incremental call some particularly But positive that incrementally material. out saw a expectations. workforce I better probably than from as trends perspective. We level

So of I each expected. of fourth maybe combination that a a initially really items think it was those quarter drove it's better than

Jared Levine

Or clarify, pressure? to Just were there some still levels sequential employment flat client quarter-over-quarter? was

Ryan Glenn

Did bit sequentially. sequential year, normalize. the earlier in not same started saw pressure that we really see the a year-over-year up That to

Operator

Our next question Terrell of comes from Tillman with Securities. Choice the line

Terrell Tillman

Toby, in of you to both. and and Steve you traditional congratulations seeing market are what kind the mid-market. down I more Curious signals And then had one follow-up.

Steven Beauchamp

activity the We've of our levels marketplace. pretty with core kind happy been Yes. and

kind coming sales force, we've as of where employees. of in in get a been have that referrals our We think we the broker XXX our That's under that of a So where time. lot bulk about marketplace. long

Ryan the one of just the we staffed. was similar called sales comments beat quarter. of certainly, in levels. And really about good so really feel staffing I reasons going fourth out, well the kind in

as of year fair a funnel So coming of with the would seeing well good amount into momentum. our of space as the funnel the same. activity this in And top core. top upmarket be We're comments

Terrell Tillman

And next And achievable? move aggressively around does of long-term change are that couple those still years, margin targets? if then so, rates if over your thinking the

Ryan Glenn

Yes.

but Certainly, headwind targets increased remarks, few we year. this our in my as profitability there. we last call years, margin last only potential on not the a that this over levels well There's I or prepared have referenced I And reset obviously progress, think the into year, made have significant today.

months. you If XX at aggressive rate so assumed, activity we the rate the 'XX, pretty guidance have X cut next cuts look over for

this seeing way basis interest I call called year. fiscal you're guidance it we to looks to, rates, guiding leverage ex leverage that about we're it, right? the us flow, outside continue is to drive XX points think of the think XX like would of We've out what

So headwind time. obviously, that may over a be

standpoint, adjusted continue both I to as But to EBITDA drive flow. leverage free we from an expect able to think as within well be operational cash

Operator

line William Blair. Our Jacob the comes next question Roberge from of with

Jacob Roberge

from guidance, Just environment as mainly macro-driven changed large law anything the on this numbers of just scale? the a perspective the you competitive and the guide? issues has that's Or impacting is

Steven Beauchamp

Yes.

been it's in So same competitors the the always competitive I more seeing market. pretty latter. think probably the We're environment. It's a

You're customer is competing X other competitors X that, different not has as dynamic with changed. typically or evaluating the that

numbers, not certainly as law just us competitive As set large of the with well. the with is

That look gotten is still this feel only year, all sights of not and today, at our on opportunity but set billion execute in we've the that we definitely we But the fiscal to we front relative us comfortable can pretty of a size when really can size on our $X So beyond. we bigger. factor. the plan

Jacob Roberge

just drivers from might pressured if into from term? coming the growth near little then being of you then And the into channel Helpful. the Okay. logos back you in new of feel heading kind maybe expansion the do confident base year, into some to partner being competitive had new between are driven next and that that logos with motion parse year -- the out bit thinking and more then existing next in a the which and motion be heading last which displacements most

Toby Williams

I our around relative centered Yes. year. of overall, questions Most I position your think about is the fiscal good feel coming mean go-to-market. into I say, really would we

our about teams, of across good go-to-market levels. the teams. the all feel about particularly feel our we staffing think sales great talent We I level

in ability fiscal referrals think And year play to XX% of degree through 'XX, a we I partners. new plus go have that I QX from high we confidence through our then business our another execute as coming of continue 'XX. of fiscal to our our think feel and driving

we I We about. our well think year. mean, balanced is I confidence about the point that into around And one have I So areas coming of think across each momentum feel momentum that asked the good the and we go-to-market. some we starting fairly fiscal have think you

Steven Beauchamp

upmarket We've team great pretty bit amount But with into a team. time. only think was Yes, the had is, of we year. last we've positioned add headwind made that a would in year, of into that the couple We've I several this a the over very little aggressively. thing focused of feel last as next calls, It success we this earnings clear and go fair years. well certainly we I grown

out That's year we more that in and at the X on. last year, that's are better team attention that this back spent fiscal we are if I a the called versus before where with start of much we that on, at we position. look we focused that one and the time And

Operator

Jester with question comes Our the next Markets. Capital Daniel BMO of line from

Daniel Jester

Maybe one that's of year. this coming planning sort up on headcount

start that As could you about feels about the potentially organization, in like as about persona to it in are all? the different and suite share a your thinking HR in wallet you expand map think like opportunity the cases thinking solution customers, you your be so use within selling just beyond and if used road into how at

Steven Beauchamp

great Yes. question. It's a

mobile and the to does platform just logging is open continually offer into to that all values app it things we for different I the customers the manage their platform of on opportunities. the logging And like workflows think using approvals, up our a employees really to got give data. way them our when the we all you've employee one real and start platform,

You of something to so have think as probably the we've products on video ago. wasn't That platform. been part I XX years different first many imagined would market of

really more starting really help to our have leverage to value. at that data able clients we're that to we employee how So offer we look do be

Headcount a gets to gets position as there's planning approvals, new tie workflows. where has added. position HR a natural There's replaced

your then into into to got recruiting tied tie You've gets then onboarding. platform, it

boundaries So by have traditional we're a set. been data leveraging what the going might HCM to push that maybe of continue to

that And very persona be CFOs, The excited. planning the involved in much to we're today. They're the we'd already selling headcount very sale largely.

a have call lot primary become wouldn't I probably a persona. maybe teams I they decision-maker So our more that buyer They dealing of new with than interaction CFOs to the really But used with the persona the today. was today. at of are

is that the equation an for So us. part part probably easier of

Daniel Jester

little And helpful. you of cash EBITDA to you think a sort margin? year. then, And headwind Ryan, mentioned a operating see going quantify sort that cash relative flow. tax what really That's about maybe Did like could to I on bit we're Okay. this of that payments look of

Ryan Glenn

year is of year just saw So and we not versus think million process you few a you you on that there's cash think dollars step million year look cash prepared X-step Dan, way -- us look taxpayer. the remarks, one to see a full this $XX of the it cash roughly sort a prior. in you if a the for but flows the And disclosure, to about I at paid becoming taxes supplemental this

we improvement. faced a So significant in that Obviously, capital working year. this you profitability, increases headwind saw overall is that

So we to and we cash free grew through leverage flow. continue that,

step Next year, up. a similar have we'll

paid on may looking at round you the taxes. So cash of for be

out. call the was that So

to Next going cash period be through. drive this drive that confidence call did have headwind want continue year, at be forward. on margins, we'll of a but tax sort cash to our taxpayer, there Ex But become float in in the will free side. flow a point a out entering ability to would expect leverage as lot to cash be we would able of still that least inflection flow free to XX-month we fighting flat I full cash are

Operator

Pat comes Walravens line Our with Citizens the from question of next JMP.

Patrick Walravens

Are Steve And that as and Great. adopt seeing Toby to you AI clients transition. levels. guys seems sign your client impact a more like going that's congratulations, any technologies well-planned

Steven Beauchamp

Yes.

terms us workforce. the what's to seen happen that in know to perspective of for driving hard it's from haven't macro overall AI a And efficiency we in yet. So going

As Ryan quarter, said, things well. pretty this we saw last stabilized actually

better we than expected than on what last a quarter levels basis. would pretty little workforce better have stable and So a sequential were

organizations part workforce in take that the trying market early that's significant this to you an efficiencies in remember to industries think longer signs I from might And no a much months. a of the lots last So is type kind over one of perspective. hiring of macro happening impacted levels got a time of today. be less I of that, And workforce bit workforce drive still in will think AI that XX the little be things been to are is that by evidenced that

our to the primary being talk AI hear we customers of them, we we interactions driver really have as and with that. when don't But

Patrick Walravens

All right. That's great.

follow-up. Just of examples are of industries? What some a quick some those

Steven Beauchamp

nearly you top right every it's that. Bradstreet like clients. -- the of took our of line XX,XXX lines businesses, We're can client really up, base distribution great & business, you part imagine in in up every restaurants, industry, Well, a over about of if kind Dun we're hospitality, we and

workforce client an the case kind hourly and as America. than example, half our more So of is that's across of

really you it So up see lines what to every day.

Operator

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

Raimo Lenschow

like, bigger change? frame like you Lot like slightly that questions centered the to I you. got of the around do okay, there growth outlook But you think for growth it questions what's centered rate? been the a -- want last you rate? in there's do How about you change growth industry growth has how industry Or think that do you and a forward? it's how think season And both see going

Steven Beauchamp

opportunity. terms size that Well, I trajectory, growth at in if relatively we of what earlier you look the our certainly of in think were

that, got you've UKG a larger obviously Paycom $X.X got now So Paycheck billion, us than ADP still little grow. all at you've a

of is numbers. I law always there of I the said, it's yes, always a large environment. And think And competitive kind of element some it's like been so

I think top of you've that had uncertain, of on overlaid that. kind a macro

out grow can drive at revenue the XX% and also We're at grow factor. are per about can year. same business we margin? -- profitability digits hey, there saying, this this we we business recurring double Because we So not this time, to I is on can a think continue basis that's think we a talking

You're trying the to balance equation.

have made outlined year those together, progress that get all there kind will we of starting like a our And about and put think you kind look We've we point good can feel targets great raising we to great to of business. if a so be and and can And we We what last beating this able there. from execute. on focus year. over

Raimo Lenschow

Yes.

and Okay. us where think capital can of Maybe Perfect. like a about repurchase, on you remind the Yes. talk there. clear. from you're then very interest, Rob, in maybe how M&A, about et standing for And little context you bit perspective? like Ryan, cetera, allocation one your you on this That's share

Ryan Glenn

Sure.

So program. repurchase as remember, you We $XXX million repurchased quarter, we last share stock million of a past quarter. this $XXX announced

$XXX So million date. There's that program. expiration we no formal remaining under have

that future. So for be will that's available the foreseeable us to something

be that that 'XX. will fiscal we something So to look continues in at closely

standpoint. ability the have really from of we us, different for allocation to a think priorities capital drive I number a

the sheet. on cash $XX in So million fourth We have quarter. balance repurchase of million still having done $XXX

have have credit of significant cash a We access cash we within facility, to flow. and amount our increasing

all to continue aspects sort of will we allocation. So capital at look of

active at well. had years, few Obviously, bar is looking. strategic of a handful we've that looking us, high certainly things the for may last but we're acquisitions over as -- we're be

are of So we a I the financial position things a and where in because we're great feel sort table standpoint. like of all on are from

Operator

of [Operator next Mizuho. with Panigrahi from comes Siti Instructions] Our line the question

Sitikantha Panigrahi

to to I to this want that, see growth. client per XX% I in recurring revenue into back XX% growing the years X that's dig If just 'XX. year FY

size about pressure you So per should client forward? driving we kind going that? And that cross-selling, how any pricing what What's of size? or Are lower customer seeing are the factors less influencing think that? revenue

Steven Beauchamp

Yes.

customers out, them on selling largely new I focused have product. really and think been as we've called landing we more

that and you've customers product, when so selling growth got client customer. X% revenue you're is And that per a more average contributor those big

you when back think we for higher had than higher much client I when years go was growth. it

top aspect. client pretty And out So of the able that's one then we've that back that, effectively. called to base fact been we've to on the

you that average the And us gives growth. X% revenue that's put what per customer so together, and

Ryan Glenn

couple was where which from only of add question, number would pretty of you think the a you post-COVID. is I have some periods employees if back as rapid your saw Siti, expansion think years, you're base rehired client average I going embedded within in thing a the companies I

growth year-over-year that in in up showed revenue. likely that recurring So

you some got start you the in numbers consistent would probably have look that 'XX make year. seen last it, elevated you've So when period, with numbers would to and normalize more fiscal what those 'XX

Sitikantha Panigrahi

Okay. fair. That's

that Now client looking the I -- for it client the at disposed growth. think assumes guidance also, the growth your assumes

really what's displacement vendors? seeing And of driving Because switching you payroll customers among it's that? So their market. trends are what a sort

causing switch or to what in this switch So them of is kind not environment? to

Steven Beauchamp

Yes.

same in can billion feel at the and on for of go-forward this trying growth continue about we're business the revenue, we think what increase you're profitability. double That's We're model can digits. revenue look I big like to at like time, we does $X.X question the get basis opportunity And a this basis we recurring at business. to enough. grow the of same doing. is talking what size a on The

mentioned, has everybody you way. paid to some get As

displacement. often then is it of products beyond to We try component payroll the So add additional that.

us on we're And growth and there's think a we this TAM priority, view balanced approaching a so forward, but really a for attack. still big going to like feel with profitability fairly we

Operator

line of next Kevin McVeigh with comes Our from question the UBS.

Kevin McVeigh

guidance, Following a float basis, equal, is like little reconcile, given core looks up to higher bit. but looks it better on bit the and all EBITDA floats the the coming 'XX margin. like is recurring things in, little it a just it relative a again, we like the the like, outpacing think float, Anything is where is on a outpacing leverage looks the little bit

EBITDA? that to any on and the how takes flows Just puts

Ryan Glenn

Sure.

remarks as we provided as well earnings guide, a total guide. in guidance, release, in a both think So revenue the I the revenue recurring prepared the

interest income there be is going on delta the income well gave we as the adjusted [indiscernible] interest And client-held then to as EBITDA expectations. So funds. adjusted EBITDA

to So puts able see and all takes. the you're

about those pieces, at the adjusted embedded the X guide, those rate the because I see include rate guiding do in leverage basis in think you ex points of guide. assumed going EBITDA of backwards impact float, when look the we're XX margins touch EBITDA you you a if cuts cuts X to adjusted of

Operator

from comes question Jason of next Celino Key. Our with line the

Jason Celino

of kind reasoning. and Maybe logic to go cities back if we

a any environment, there's we the would that think finite say current you in switching payroll year, of be about normal willing if who evaluate number So customers to would providers?

been a that number, kind of of in it type this reduced environment would of then has that, would propensity increase? switch find And you that better environment, in

Steven Beauchamp

Sure.

any have we So yes, a change. would customers so market just And for customers. customers. of given of year, number fair X million is in that over XX,XXX us The there's shy consider

they to change customer can convince change. a when you were Sometimes not considering a

sure completely So formulaic. that's I'm not

certain where that customers. cycles, then seen in whether come are there a create they're and more economic cycles, place compliance for also laws And of burden we've rules cycles

when nature be is there macro. environment what lot customers then, less macro change the And a But bit a can some tougher. go I'm inclined Maybe through happens. So course, little of to cyclical there. of still,

So yes, I think that's absolutely the case.

to a funnel XX had called months, the a that perspective, activity think pretty a taking tougher last macro last this has bit obviously top it nice been last people make out we've over quarter quarter little from environment, And We've longer I of a bit little of called a we has been and this beat decisions. good. out quarter. pretty

like So right more normalized maybe now, a feeling we're than environment was it ago. months X

Jason Celino

election from year-end, payroll more terms SMBs [indiscernible] a spending have not intentions, a do of a but from the And standpoint, care because you then their or insulated you're June like a like Okay. about little but hiring in

Steven Beauchamp

we've It's don't past. the probably election. broader that's that I observed macro specifically something than in necessarily in just think

Operator

line to Our question if mute. the check from next Zach you're see Partners. Regan FT of comes with Zach on

Steven Beauchamp

Do questions? we any have other

Operator

call turn I'm queue. questions closing for to the back in I further like to showing would over management remarks. the now no

Steven Beauchamp

That's message. last thank and to wanted are with excited much Paylocity not say you XX over for to I'm in your what Paylocity, I'm the going remarks do. anywhere. interest the you be I we're just years. this And to Well, very going able quarter about all big of my final

and Toby team have about that the excited driving success the we going I'm forward.

forward So Have great conversations. everybody. day, continued to look a

Operator

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

now disconnect. may You

Paylocity Holding (PCTY) 1 Aug 242024 Q4 Earnings call transcript