PCTY - Earnings call transcript Q1 2025 | Paylocity Holding Corporation

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Operator

Good day, and thank you for standing by. Welcome to Paylocity's Holdings Corporation's First Quarter 2025 Fiscal Year Results Conference Call. [Operator Instructions] Please be advised, today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Ryan Glenn, Chief Financial Officer. Please go ahead.

Ryan Glenn

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

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

please information, filings forward-looking factors and Commission other refer our additional undertake any duty For statements. Securities to disclosures. risk therein and any update for contained do with Exchange not the the We to

measures. Relations we under measures Exchange Investor our which and we is release, the the available and today's located of the press schedule during non-GAAP that is website reconciliation the in results our at these business, a refer paylocity.com measure currently detailing filed are internally believe call, Commission. Also, on Securities tab certain to financial more course representative how We non-GAAP will of and there with

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

And the regard San if Global Toby and Human our I XX. on Needham the November any on Growth conference XX. know Conference in on Management XX, time to in December New like these attend of will Capital Technology with Virtual X, at the Cowen the you'd schedule will Barclays Conference Francisco on Virtual me upcoming one-on-one January Needham SaaS Summit conference York to let schedule, In events. December attend Please us

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

Steven Beauchamp

Ryan, value all joining on results resonate to in financial recurring 'XX in our the modern software of to marketplace. fiscal other and XX.X% strong you, Thank with proposition thanks and for the providing earnings quarter us fiscal continues started of most of We our revenue you differentiated first industry call. as growth 'XX off the with

or Total of growth revenue $XXX QX was million XX.X% over last year.

Our growth modern and spend recent and acquisition procurement platform capabilities. the that management expense pay, solution fueled be to most automation, innovation of modern management, corporate commitment software by ongoing finance driving highlighted industry, by providing the bill software accounts continues combines a in payable and our our Airbase, to cards

planning and The glass, Airbase finance single controls. allow financial real-time close existing our stronger allowing to HCM of a financial all for visibility, platform improved integration manage and pane through our payroll clients nonpayroll spend of solutions faster within will

leading Our innovation grid XXXX an GX's was marking parties by be leader straight also overall reports, Paylocity third XX XX in fall product continues recognized quarters as to categories HCM HCM recently in of pack. named the

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

Toby Williams

with a the new thousand continue IT, build Elevate, launch Elevate over finance, X the processes we the elevate representing annual to Client our emerging experience. chatbot streamline Paylocity position our industry AI-driven the as other our assistant, business hosted conversational HR, and the HR in where AI of leader held employee At we October, technologies In several into incorporating course days. operations designed to HCM and sessions across AI dozens leaders powerful Conference, and upon of we Steve. of platform Thanks,

Paylocity our make complete helping to our improve enabling the entire AI real-time employee platform, platform more answer providing support by experience. employee the across quickly Paylocity and HR-related questions, simplifies their more to tasks administrative efficient clients contextual assistant The tasks and

common leverage can clients our example, do AI PTO assistant accrual for blackout I For to set do as or such questions answer how adjust my I dates how rates.

Additionally, manage on to and available assistant strategic AI tasks service on clients the the new curated leverage within AI-driven time time and to recommendations also open up can and initiatives. identifying are spend our qualified reducing provides tickets, customer including AI create, assistant administrators administrative System employees to across which for employees with platform, track and freeing spent more LMS fill recommendations shifts.

to with than the see which, market, happy the pleased season. for team sales modern solutions we're of employee-focused We're continue strong target momentum our more XX% our similarly and with demand channel, selling our delivered QX. once We our business consistency our through in referral new again, in across of

Fortune's be the than to Workplaces Technology externally like were XXXX. 'XX. we would to all more thank Steve's recognized I The our recently culture of employees strong for Paylocity a in fiscal strong as to continues Best comments, Echoing to X,XXX in of named start

like pass to call provide the now to and to detail review updated fiscal guidance. Ryan in 'XX results would the I financial

Ryan Glenn

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

a to revenue above the to Airbase other with revenue increase and guidance year our guidance to guidance our a revenue, us had fiscal due raise by pleased to and majority QX our of the year, acquisition. recurring end team our from impact the top were than further more with the sales allowing in beat the solid revenue beat coming we $X.X of Our in of come start million

the and As did QX. a in acquisition not on X Airbase October our results closed financial impact reminder,

for levels. versus operational last Our to year, on points adjusted focus as QX leverage gross of we costs profit of industry-leading XX scaling was XX% XX.X% representing QX maintaining basis in continue while our service

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

focused XX.X% same period costs basis revenue the in In in of last of basis, regards leveraging focused basis, we G&A investments of growth. X.X% were quarter a representing leverage XX.X% annual making go-to-market expenses XX fiscal on this in consistently drive year, On area expenses a first on G&A and non-GAAP of the non-GAAP were continued to and on quarter our the business activities, versus remain sales to in 'XX marketing basis. we points an our remain the as first in on revenue

end quarter million million, the XXX adjusted or fiscal versus and 'XX. QX top of by for $XXX $X.X first margin, Our EBITDA our and represented of was XX.X% exceeded of guidance the basis points leverage

interest period Excluding funds XX.X%, reflecting margin on adjusted the same of basis held of versus year. EBITDA clients, for operating the for points XXX last income impact leverage QX was

sheet, down ended was QX income was $XX.X closed cash fund gross to covering GAAP in balance on operating that late we quarter profit our X. income million, the to we equivalents million, which credit $XXX $XXX.X the $XX.X includes October with net and million. September Briefly of results cash revolving and a In regard was our million, of on Airbase facility the acquisition $XXX drew million for

QX. In was client of regard approximately $X.X billion and interest funds average income, in client-held our to funds daily balance

$X.XX of an average balance points, the QX. be estimating annual yield approximately approximately average representing yield year $X.XX full are We balance we with approximately with daily QX be XXX representing a average basis, daily million points, billion will billion estimating XXX $XXX of $XX.X On income million interest approximately the in basis basis are of of income. an interest average will approximately approximately in

interest our of points to and cut reflects points each December, guidance of the XX rates, recent point in regard a basis rate an of rate in in rate for total November, included XX with basis of May, XXX basis cut cuts additional September March guidance. In

may our program million given remaining the our have confidence flows, our repurchase business of the we over to the 'XX. course in against $XXX strong we continue cash fiscal Additionally, authorized share in and execute

shares X.X% as or have million same we approximately $XXX date, reducing shares or the September period versus repurchased stock, common diluted XXX,XXX million XX of X.X To of by approximately outstanding year. last shares

our I'd financial provide for Finally, year to like fiscal full and 'XX. guidance QX

X% our revenue enter of the to increasing X factors: Airbase strong represent heart results as the organization guidance based fiscal of and which second, key our we of 'XX. momentum and first, sales selling in fiscal in approximately QX across season; the impact total expected are We our is 'XX on

EBITDA on adjusted our guidance updating we Additionally, key factors. are X based

profitability 'XX. our the impact is increased And QX First Airbase. in fiscal and results organic for second, strong dilutive expectations of

to margin growth our EBITDA While by driving dilute points XXX increased Airbase business, adjusted profitable expected approximately are fiscal to we in helping this this year, across success realizing impact. offset is basis

expected second to million of of or and second over $XXX.X the With quarter in for approximately fiscal 'XX fiscal revenue XX.X% $XXX to growth total total And million the second quarter be or 'XX revenue. is the recurring growth is revenue said, 'XX, of be revenue. that million other XX% expected fiscal to $XXX recurring over in million to range $XXX.X approximately quarter range

adjusted the million. range EBITDA, million the to to interest of of income held expected clients, million on $XX.X million, is in Adjusted range for excluding to EBITDA is $XXX and to funds $XXX be in expected be $XX.X

range $X.XXX $XXX and million billion recurring or EBITDA of on to to expected million and EBITDA, to range to now guidance, range growth to $X.XXX approximately over increasing And adjusted the to increasing 'XX, the XX% revenue excluding for is we income billion million. be Total million $X.XXX is in revenue. of $XXX interest 'XX. XX% fiscal also which recurring $X.XXX held for $XXX fiscal 'XX is billion fiscal growth be and clients, over is of revenue of the expected are in and funds billion to range Adjusted in be is $XXX guidance other in or expected expected be the approximately to other

we pleased year. our the enter conclusion, time our momentum busiest QX In we of with have operations across the and are the and as team results we sales

ready are now we Operator, questions. for

Operator

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

Scott Berg

Airbase. Toby, here. with Steve, wanted to off quarter start I nice Really

sales You've had type kind be, this? motion we go-to-market sell effectively will Or initial think for specifically then you've much now. product and really of a this the of will do this can sell Maybe force? separate and about the observations sales had to XX it? of since around how sales sale And about asset any your you force days need the Airbase? force also a existing How different your enabling

Steven Beauchamp

think like I We're a And far, days. with stages XX been with kind time it's We we've of Scott, the the mentioned, spent very so really the go-to-market team. early acquisition. over integrating you as things of think come product happy started . motion, strategy. that's I Well, bunch in team

the So all I we now. don't answers think have right

be very the to And thesis, our back to I we think which is the solution with that able insights. many able the back feel on spend the ability we to to of the data management automate end where sell leverage still of really much really being then leverage employee the spend the activity. confident data of customers workflows, to

feel conversations with of their that will value. a together, we really teams our amount and that, offer tremendous think our I confident teams

the has you have and market. fully product is look in months this think This at taken to approached I it typically We'll how us to stand-alone. to somewhere stages. in a if we've acquisitions, integrated bigger do XX historically obviously XX

the with entire value like the start won't we many other leverage base we be to the solution. gaining go-to-market that Airbase some time we've feel from it. so thing products we to motion back able do to And as of and But our can sold internal client wait same

Scott Berg

Helpful. it. about a And Toby, season. Got the talked start then, you to selling strong

if seen with about is in and know of selling activity this look expansion net date. position didn't or in I thinking QX pleased season, to the You're you've versus busy deals ago? I what some seeing new from that maybe viewpoint. you're year more that the at pipeline a the transactions fits you're versus how today guess, different maybe kind you of customers as

Toby Williams

are our think Yes. say, feel team selling relative beat was is from we're big about good Obviously, the with definitely I to the of how seeing, perspective. pleased far, in in our a And overall, momentum I to the performance sales we of heart a part executing. and we're season. go-to-market so would QX ability

good. feels selling think that good. I momentum So feels season that of carrying The into

And channel us. from I and good. then I feels the go-to-market the demand our perspective think then stable both relative of to and performance also the team, also good environment to feels think execution a

mix seen we're and of a think consistent to new last business with seeing and I base last quarters. have we And quarter the both few would what back over

-- So also that of all of that the I think momentum all strong. feels feels feels and good,

Operator

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

Samad Samana

I'll one see good echo quarter. to Scott's comments. next maybe the It's you. for Ryan,

guidance the through few think environment. beats terms past the increase, we Just going it's what was of uneven of the in about in flowing in as just I macro quarters as digested on been

I maybe seeing? So gives have there to flowing you Is Just us help the the that help what understand selling green a you the season? it Are maybe me full the then beat forward, understand that, can shoots you're follow-up. other and confidence? start

Ryan Glenn

Sure. Yes. Samad. Thanks,

increase, increased guidance about by $XX the particularly recurring So guidance the as million. side, we you on think

the of of guide momentum that Airbase, as your this impact in balance year. are force. plus we're sales quantified think that's of the point, beat, upside. think is And of some roughly think I off roughly seeing of I I X/X on the X% of of the driven And the the the really you call, QX incremental the as entirety that revenue to

have I think be levels. we I those point, think levels, of obviously And are been Toby's strong. looking items activity at each to continue -- demand to

to incrementally we pipeline So our all required we are back relative that of look as execution well as at in relative felt we hit were that very QX numbers able something through. we to pass beat in where the as confident to half, January to and

Samad Samana

single the on how take? And to this the it side, X of or that can you integration And on for Steve and should about Great. product for think part look on Airbase for or through products there, we some pane how it'd then be maybe soon But the what that, of should perspective glass it sides long a in the was on you efforts firms take make both walk of you a when particular could think have Toby. product it from product like maybe product?

Steven Beauchamp

sure. Yes,

our to we truly we I take the solution. acquisitions that want product approach time So prior generally of is experience deliver towards deliver and definitely the right think can integrated user just level so an

which be about. in clients that we starting head count, with feel our which see product You can launch, good on can January, really

I think little bit a bit because little a different more this they've base. stand-alone got client of is

incrementally, And attack Marble. this we so to there is little maybe an how opportunity for us a more attack like Blue a little something bit more bit

I And so continuing and get to see better. would this integrated more

As really months, to goes make year of improvement XX but those you'll first XX in believe that come and some solutions. integrate we'll between we think continue on, acquisition, that even see that the I certainly and to improvements we'll time greater having

truly those, reporting, So that little insights you you you and platform. delivering workflows once really start of the things integrated think and might But the get longer. bit a of like take value

important us. deliver be feel it, to we solution focused big We're to going the able confident we're for and customers. So It's to on right it's a us. to acquisition our

Operator

question to the next line of Marcon is W. from Mark going with Our Baird. Robert come

Mark Marcon

what on you're the your clients? Congratulations initial I'm hearing. of from you've sort are gotten? Airbase, regards feedback Wondering just performance. to what's reaction Any with you them? strong wondering What that from hearing the existing

Steven Beauchamp

have clients don't end and Yes. of have them. of at impression how the to will terms I and They day, a that lot good exposure necessarily release the the probably press mean, in the some I don't of existing impact think the news see it. of a

and organizations idea, leverage the is then to that that challenges able other the our be in ability help though, they I disconnects are record already. to their understand employee think

a disconnect So between of financial heard that an communication we've from is HCM and platform a customers. point our

same approve addressing pretty that solution, planning spend to us a where of me approving head as I see in You the It's ] manager, interesting [ them. can, the count we're time the to manage off. with that data, spot concept

out So getting. clients. time current conceptually. the we're it rolled in the We we're reaction at that to anything excited where are But I not point we've think get concepts certainly they the and about

a I second but to think It's spent time customers. are even you mutual I of say that have not those to continue excited and the opportunity integrate we have platforms. to us subset the they will the thing about number, as a providing would is mutual huge we do talking feedback are and customers, more have they

Mark Marcon

the bit you the little just can course year. the -- to then the during I that of wondering impressive. improvement quarter, you the about if with mean, expect And really about more a regards talk Great. leverage over the performance I'm margin would is areas

saw G&A, the sales You leverage float? and and marketing in how we thinking and then terms and profit we marketing certainly ex the always expect. of sales gross are about G&A. But margin

Ryan Glenn

Mark, it's Ryan.

So the I XX flow points look XX%. add, leverage margin last EBITDA you about on of XXX with at ex cash pleased I'd months, adjusted really as over too, flow think to your free QX, results basis cash float. point, in of free the

that's the same So nicely over period the over prior up year.

Where saw leverage largely expect we with in I'd to what see consistent is QX.

points margin So of basis leverage. XX gross

see area to an as we that's general both automation. opportunities well think as continue through efficiencies scale I to that

to think areas that point, annually customer size where see marketing towards acquisition we're $X your would R&D that sales as on be at would of expectation those each prioritizing because moving revenue that and costs investments items. you're scale, certainly of billion, of mindful and billion we $X.X thoughtful and think to expect one not is approach I And we are we think to I G&A, leverage. But leverage and I drive well. look necessarily as

we wouldn't there some those I necessarily, forefront at as efficiencies but wouldn't did surprise see put if it the me So well.

Operator

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

Daniel Jester

the attack theme with stick from to and little bit a different angle. Airbase Maybe it maybe

new try into think get base goal I to when XX% it past, you in years said think So to of in to the I of launching. the the products, customer launch is a you few XX%

to at differences should the As same momentum Airbase, that that is think of we in ability have push does terms about think cross-sell velocity? how about the significant the I of in characteristics future? same Or there

Steven Beauchamp

Yes.

between you very several penetration to definitely So over target and years. XX% think like stated I accurately, we it XX%

I think company a stand-alone Airbase is base. a substantial has more and customer

But opportunity that to that. an so sell the we believe is certainly XX,XXX to. And can back we the opportunity continue nearly customers to grow there's big definitely

so were now, that several saw that that a we we but years, to feasible going if time we're into from definitely a And success. that XX% think little than several that longer forward And over XX% be something and would XX% is certainly to focus fast -- or years might penetration we take plus it on. big number, target that getting

Daniel Jester

think us That's Okay. just forward? Maybe on that how the of the revenue. ability forecasting Ryan, they're then, great. help sort transaction your the component subscription about of component, maybe business and maybe does And versus Airbase the And how going maybe affect growing.

Ryan Glenn

Sure.

think doing we're spent lot work them with month. is with the of over a that FP&A last obviously Airbase working the closely think So part and I I have the integration of at we team time

we're incorporate our all planning comfortable feel So how broadly, of model guidance. truly able relative very about to and business but certainly that into to

point to there So relative I concerns. nothing out would

so. or XX the over continues grown so. has to call historically nicely do about days it, business talked we as think I That last, and

year, further the to profitability and factor go able incremental both think into color of into guidance. business able provide revenue to we I date, the be to trajectory the we'll as So in but some

Steven Beauchamp

business other is versus manageable. with think largely comments Ryan's industry, thing might makes note you which more . software to think familiar the models other I in that even the revenue I that fee-based be is

Operator

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

Jared Levine

billion talk terms much In HCM incremental drives? you of TAM can about of expansion the Airbase, how existing your this XX.X

Toby Williams

which which think mean standpoint. that's the twofold from office -- one the think I mean, of has points. was the couple CFO, I TAM I is -- a category software a talked the about, -- of Yes. been been into an has expansion one been area I think of keys, we've attractive I as of really a so the

as set bigger And take both give and we've I think think us the going back ability Steve's that then into clients closed to back into time to to to that the the I noted, platform our some add product integrate transaction on of the ability our opportunity new the going will now the comments, platform base. of to, customer

that CFO But to things opportunity standpoint. other I is expand the revenue different certainly of products we've have the The also an is of to to into and done PEPY office of we we the believe one TAM opportunity a building is focus of platform. as PEPY the from the a we acquisition from -- think the and have going those model of HCM about then talked a perspective. I into expand focus the continue Airbase the slightly

we're factor course effort. -- And I of we both from so I finance from how integrate that in think we'll things standpoint an doing and the model TAM terms and work think one are is be business that the standpoint. focused spend the we're we or through of about to how from look working that in, that as the what integration in of the HCM a the part management we'll And that a talking that's application of like pricing that on does

Steven Beauchamp

certainly think this the than more meaningful would is the that a I only the I we've terms meaningful had past. is opportunity, per add thing in addition any revenue product customer of module in

excites So put the that what to is also it part opportunity. of

Jared Levine

large do Got Conference. derive medium it. highlighted an currently? the become And the can think at your then area Can you it over Marketplace revenue material was Elevate how And term? you discuss is Marketplace how partner partner

Toby Williams

Yes.

important a I has a mean, one industry. perspective, platform think, I think our of approach we from think I couple is it's us differentiated the to I integration ways. been -- in in different

data platform that's our an really or products, the for where integrate carrier see ability a third-party example, significant from -- client is that have standpoint, a something product between, open platform you valuable. moving clients another and a related whether I to it's is benefits that add our think can value as

really our think important channel for that's also partners. I

more large -- partners, business from part, us channel than of of XX% brokers. referred our plus is, is which Again, XX% than more our new to in

are I from strategy important efforts in our broadly. so that we've a us there's to things a really of perspective marketplace And think integration terms number more our of how approached and I and And just that's a to to, revenue impactful the growth, satisfaction been been our think really a client that not we've but differentiation contributor competitive from our perspective. able to drive

Steven Beauchamp

would one point. I add other just

about other you As I Marketplace, of times paying Toby are client streams. points. we times of partner There's highlighted for There's where lot revenue via clients monetize think where value think functionality. may a that some

so core the customers some a certainly separate mix carve-out solution really of and that of a part selecting stream view from versus it's a that, perspective. of we that sort And . as are revenue

Operator

James. Our of with Peterson Raymond next going line to come is Brian the from question

Brian Peterson

another most customers the on at to the customers at look look what are about greenfield I'm XX,XXX as today, opportunity ask wanted your way strong I to quarter. any of how that you to Congrats perspective on or that? think have curious you Airbase. using

Steven Beauchamp

core size of we a still and kind our part marketplace that processes Yes, manual via perfect of have maybe of before we data, is the spreadsheet managing the space. amount certainly customer. fair think as a understand this and There average market through you think our sure. don't but whole I'm about I entering

be then using ERP may different software get solutions, some to customer an manage either be separate size, larger you to to solution that. they able to add-on or As

definitely mix. it's So

when data. We think real combine be the able really with provide HCM that a there's to opportunity you differentiation to

customers, to might to have try attractive single a together that can of those that as them not to of the and objective idea obvious automated are And same platform, so a certainly, get put the we also well. yet series to coming have think, solutions several but to the be

Brian Peterson

map or makes is on just Is at the of is AI. That as point? kind this nice point follow-up road competitive in dynamics. factor stakes? have the a this how of a becoming really features And at of this this sense. to I'm terms swing a element table maybe big viewed still curious Or

Steven Beauchamp

That's a question. great

you the practical across I they value from being think have customers. AI your down of platform, the examples down and implementation for really to driven get to to that's get really

So that easier system. I get for questions save the it that able is find I to across writing time Can me fast to be be to than the have much the assistance might you on. before. super embedded have really easier reports I providing going answers and to me I the Are

your conversations can And have think I there's broadly it's lot but of around a big an AI evolutionary so how really and change. snap fingers a change, giant

to of capabilities experience. use ways improve they our all that try platform So product teams could to and really about AI really think the client

from value to the just their think I to And differently having chatbot incremental insights -- the got then all while when the where you derives it's they maybe of does time seeing appear start get that's start can it, demonstrating that, those experience they to customer. customers savings, that and versus the

is to And get answers allow to create customers. fingertips. of it better and to a to customer really there's their want chatbot. most their you where that about offering, with trying the that them to going introduction satisfaction. that's of We going questions. a take but right at service really and recent think for embedding component capability we self-service our convenient just don't to is the times value the way see the platform to this drive back It's So across our away

on AI just an embedded not is we own, product think of a part our but And so that its platform.

Operator

with Our of Terry Truist next Securities. question is going from to the Tillman line come

Terrell Tillman

makeup first very customer different anything of a season, target of maybe the guess, size size. got the of terms your into over kind the customer looking in I Is years? in of there the versus quarter. you're of And average selling from building versus the persona terms employees crossed of large maybe this a on pipeline years? is, deals of pipeline the year follow-up. XXX-plus of in kind pipeline. a season terms you've then you prior have sales like kind the that's different selling in question as Congratulations anything in force, think average these the Is all a of last you couple I

Toby Williams

I be which I call continued made just -- And mean, that be years where Yes, think -- mean, lot callout success I it, traction performance think and -- And think there's last we've I continued I to fundamental over to I traction the -- the of we see the pretty don't to we're we've is I we've over and from to see which difference, there. last, the about. think to don't extent I X slightly true. that to any and continues think been, X talked upmarket seen quarters, we've one the consistently we've a case we've number continues seen Terry.

less X trend anything. of on persona the and or a that that's I new trajectory X out over we've involved a quarter different think in more call to the that this course seen last pretty consistently of And any there's even So of the pretty don't years.

over -- I the that be to of trend is continues case the last couple and it's just think the years.

Terrell Tillman

do about products are at a side Is new coming of balanced XX-XX rate well higher pretty the follow-up. time, this year? I per when versus deals, you're last from just even other really Okay. balance, year? the of thinking same terms year? revenue point then in on a signing think customer Got assume at sale attach these And you and How growth it a this the it year, it. Last average the customer. was of is where And you

Toby Williams

relatively was And I did think that essentially the year-to-year would coming -- balanced fairly But quarter-to-quarter. it it's bit would stance fiscal well changes a balanced in year. assumption was changes Obviously, and year. think this fiscal also see that fiscal I well trend balance, our see little again. it last a year we into little it been that think from that we be bit . I last on continuing

Operator

Lenshow Our Barclays. from question to is going with of the next line come Raimo

Sheldon McMeans

this engagement wanted compared ask out and This the you McMeans conference. is Sheldon about I on last to event Raimo. Can to speak Elevate activity for and perhaps to coming the of year? how

Toby Williams

of first is think just I great event. a all, Yes. this -- always I mean,

I we from pleased breadth or this the from across we're from role think a perspective. up really teams had terms of in attendance year, clients also with the are which HR, finance, attendance, year. pleased the We really I'm really that our HCM from represented. last it -- again the operations was spectrum of had with attendance roles and was

into higher our it's and be level And of on with the just doing give our products different and our clients, all And of went new work which from pleased focus what the that's connect appreciated a year. new the activity had all for think great drive and conference really view year, engagement able attendance to the connect out customers all we're always the both overall, a was for clients and opportunity also employee an how it a with we and I from overall, -- this with to turned of a them standpoint.

year. success So pleased it of with overall, again really this the

Sheldon McMeans

Is of earlier up there your help customer wondering, your move Airbase. that the was wanted It comments from whole to base is also particular, I perhaps ask seem to did if or size market. target you within I Airbase a And terms spot about could by addressable. in industry? sweet But Airbase, Great. in

As using I larger solution, your imagine, a some customers would would be perhaps. of

Steven Beauchamp

Sure. Yes.

the of our of tell customer. in we So Airbase the really overlap I about terms would customer is average things size you, sized one liked

our So obviously, you have close of number at but average very we customers average when it size, they they're don't the their do, look size. -- was

meat that's next the of us of That years. terms we XX% kind those several over that penetration part to milestones can of so confidence in what the to our XX% of where obviously gives is get lie. And customers

that's so good. And

move say journey other would by thing been also customer that I the start advertised you And has is feedback. you as you Airbase make typically, up off see even feedback, is with they products similar get after very you market. you products on a they that those based better, which they And get get that going customer better. think we've customer, released, that I stronger would any as

with pretty released. we've much every that We've module seen

been Airbase same exact also I think has that on journey.

time be over opportunity over we have other think we we'll core the I that then products, up to with move execute marketplace. So same the able at time, our the is as playbook size gradually of And if well. near-term

Operator

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

Unknown Analyst

for This Siti. is ] on Phil [

but existing so when coming with traction your versus is cross-selling was much And seeing versus genuinely -- base? to this asked, to if the growth -- I'm are Just that you're new sorry already how of base? you're from existing the certain more selling there products

Toby Williams

Yes.

ago, clients think in seen then last stated pretty this -- and we've ARPU. in year new a a coming year balance through think and I but into this increase even minutes terms we've I of few seen I

we I you and as through that's also of been QX. well look the we've think both consistent solid balanced. of the remainder QX, I back So expectation the into And new And the think year, course I business base and that's seen that's fairly came out remained fiscal through including it mix, think contribution 'XX. to say, also as fairly our relates last as I would through to from just

Steven Beauchamp

Yes.

if at last so, the penetration add, that of we're last pretty would products board or the with products I they that of we think you for of I as kind the over ramp across performance I into added target look the think we've the zone months XX them. had those happy cohort

Market really whether . that's or So us. nicely or really Pay voice, ramped all employee Plus Recognition & or Rewards those have Scheduling for

Operator

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

Jacob Roberge

products learnings that market buyer deal office the the that earlier this that the influence Just talk the address in the ability type can do you of on differently to just about the front, your some had CFO, of or time as with may enter you you of you've around? your and actually Airbase

Steven Beauchamp

the to HR. the Yes, It's often than that a is would is person different meetings final you CFO see . you oftentimes makers. It's sure. in core XXX sign that HCM, decision us. persona involved the in you are employees, as the they might to our new Obviously, they demonstration going those through somebody deal. certainly for persona market, the or be a not our XXX comes it When think -- and of and very key sit much

ROI. not of an payroll controlling CFO. reports that into to times Obviously, an idea going primary of it's costs that So are that for to domain there of the you There's be There's they're maybe us. running, products sure that's their the brand of But able office of they're and not expenses. an to new element making definitely there's the get element adoption drive see value. although certainly managing the

CFO all things really focused think those are key we important so elements Airbase And a is that key what on offering. of is of

think bring buying can We've pretty customers base. we can to of as don't it's client first new confident feel whether process. know one going how had success well kind that is us. that to So and persona process. time with client back in that nicely products, work we pretty much we how that selling we But pretty the tie CFOs brand-new the a back we the pretty figure We for great so is happen to we it much base, confident of feel at of to selling out. decision-making going our isn't on the We going integrate into and to that be

Jacob Roberge

for SKU shoots just can it that And with not as you productized front about sold but forward? could on then Okay. Is the feedback know the talk moving a seeing I ROI be are early customers any seeing just you've being today, gotten Helpful. And that? green AI? are it's AI your the you that separate

Steven Beauchamp

create many in part a add really to and monetizable suite marketplace. we've differentiation the AI to last we've think from be an AI focused embed on so across first. The And the don't solution is to capabilities perspective. reason seen our trying develop I able really opportunities I Yes. think entire value and

couple see a opportunities. perspective, And big so chatbot a from of we

the really for quickly ability to questions answer it's customers. first, our So

And sometimes, direct do call a feedback need for, maybe normally fast, the easy, first something how time. to I much for just quick they very questions doing forgot very answer. super gotten. I'm I that Super we've it's wouldn't the something. is

beauty of is And know, get customer. AI, all as from we feedback you the the of

to continues our you rate -- interactions to that more the the So add get the we with we continue improve to data get answer model. customer and the more

So we're of the really excited about that early trajectory product.

about think about you think we as also opportunity, longer questions. term, employees' second The can answering

So get HR from questions of lot a employees. departments

you well. an And value so offload think that can add more a that questions as HR can perspective, you from the the more we from customer

customers. the X use positive are feedback So primary we've cases those gotten from

Operator

with Kurosawa George Our next question ] comes from Citi. the line of [

Unknown Analyst

Maybe you on in Steve players more is generally? elongated on called how comments guys cycles ask front? your space anything wanted earlier morning. mid-market deal for on just I I'm Enders. the of Are seeing to productivity any this that trending one rep out

Toby Williams

at point. top Yes, I over market. certainly started I think time X probably at our that at we've that last, comments the the particularly or of think topic talked that's X end some sales the the had cycles, had we elongated back about going see a this quarters been And to

think as into had And comment there. that that stability seen I we've comment came today. was And our be we I QX, think would the -- probably still

seen basis call quarter-to-quarter been we in we really point. QX. at on and a to stable would it's that, not but any where out versus pretty have I think this make have

Unknown Analyst

you feel and mean, of to I And office Great. space, the bought moving this that set you this the as broad pretty like of about already. just the we way then in do has think asset bigger the step of you ambitions Okay. Or vision products When this on in should first a long-term gets CFO, you Airbase kind journey? most about an there? your think

Steven Beauchamp

Yes. points that a pain I number in broad of that customers category. for platform handles mean, it pretty is a

driving customers back and the then driving integrating think volume mission that. and us I first value obviously after for to platforms is the

so that. focused to open pretty though. opportunities, we're And on new think I . We're

co-creator. I think if you always as a think been journey client our client has

find opportunities. open present we're to I opportunities that feedback But step. M&A new we opportunities But certainly that of being much this opportunities. going top themselves. if an on organically they at we're and as selective external building important very first Those be look think will new through focused right now, to we're on new get customers, we're to at looking So and going scale largely highly

that module solution launched January. planning headcount our have also in We

product give category that in well. So that as does us another

to to on providing opportunities it's focus leverage. It certainly, one expand. the really a HCM big category, data we So where want is and

Operator

Our Piper with line Ramnani coming next of is question from Arvind the Sandler.

Arvind Ramnani

of Or -- than you ask kind just incorporating year XQ Airbase I more have been of year that? full full Was to to the performance? and raise your raise. the want full raise kind able about largely

Ryan Glenn

Arvind, it's Ryan. Yes.

think of noted couple I the year. raise factors earlier as prepared and there I remarks a on as in think well, the the was mentioned I to

we saw the headed . one certainly, million And season. a further side the into the raise $X took sales selling be of we're third on the the recurring momentum across So then would Airbase. organization the seeing beat piece And heart was for then QX. in we

raise, be to think size would I and we those the on that the would year. X/X be X/X of revenue so organic Airbase the raised to recurring million the of the remaining roughly raised X/X $XX

Arvind Ramnani

continues, this an good shape. guide, environment from kind Right, could understand you Would And terms good. of your environment feels macro environment upside? you of in also perspective, right. full mean year then what's of a Channel that kind also perspective? assumed the I'm is in just to like from kind see demand if then Or highlighted of trying performance further

Ryan Glenn

Sure. Yes.

beat we across here in and 'XX I about a to out we our the obviously the think provided momentum cadence. early business. did to raise fiscal initially when that was guidance think we feel in QX and called good I back And August as that desire get

move our be we that . to to as see in view think the be and to continue I year. throughout So where guidance beat be position would if raise continue we we solid a able execution we'd

modestly I in think came a expectations. standpoint, QX than macro from better

earlier, we sales beat expectations. driven that of than QX in better momentum, really but I vast mentioned was majority modestly the As off saw of the

relative into that the in macro. to factored pretty to we be think guidance, continue thoughtful I we although we're where being prudent spot and So a

aggressive gotten not particularly there. have So

in bit continued we result see upside if So well. of balance we as a the in as that trends the saw of may fiscal QX, over

Arvind Ramnani

AI, last just on good And here. really question, updates just Perfect.

feel of with to able out the a you'll years, pretty would good kind similar your kind couple expand over with in of like of offering you look you anticipate you level? meaningful Or AI look your making year, the investments spend As be to step-up next to that you continue clients? as

Steven Beauchamp

a R&D. be not need look place for product I think much spend continue in had a able to in consistent we've necessarily differentiation. we that Yes, we feel to It's Sure. We leverage. level to like pretty invest

science X data our We offering almost started team that AI produces the years ago.

we've it's And seen and it's one so incremental new as that investment we've for not a cases. obviously brand and us, use

think And the that so created step-up of provided I sort have and outsized don't think at forecast some expense. to can we already internally. we've capabilities that the innovate to rate any a into that We we existing foresee continue we've that pretty what fit reason we we our need can and AI based accelerated investments off

Operator

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

Jason Celino

on it have the about curious you've further are see you for yet, through talked but a of what kind think did you terms don't in then quarter? what the And the year? there. accounting I levels employment of Just platform degradation in you

Ryan Glenn

Sure. Jason, it's Ryan.

I we QX. in modest think versus upside saw expectations

workforce from base think client to see within standpoint. a continued I level the we've resiliency

provided bit . little So of into the quarter. that a upside

assumed acceleration the really not over year. of have We any further the balance

obviously guidance throughout as So to I we'll so year further quarter. far, you approach of year-over-year, the second we'll see feel update update about think take QX, but extent the the and levels continue fairly we where workforce in we stability. a after and up you'd But likely get go good modestly, evidence that and trended to prudent obviously cautious we

Jason Celino

then question, talked are you these competitive sales if when about you've seen different were And companies Arvind's in the good conditions environment. Curious answering Obviously, execution. current Excellent. any navigating you differently. changes Okay.

changes there? anything rates any win So to or

Toby Williams

our marketing But before, initiatives really our go-to-market from I execution to say XX% channel that of with times as and teams again, more think with also new and I business I and been environment mean, continuing continues than the has with across competitive mean, coming sales drive then we've seen our channels. I be. always we've I many will said pleased mean, the to

selling we we in now, of we encouraged I that in I go of at really into selling our provided October. through feel see we that's we're the the by at the so as about what of execution really think saw the sit season upside And now, right execution core what And and the QX. we're That's of the And season. here end the heart think right really quarter. think I I terms to as overall, good focus as

Operator

management hand the over to would remarks. closing I back any like And for to conference

Toby Williams

Halloween happy very Just a thank wanted thanks interest and to quarter. to all much much. deliver a so of for for your to again Thank strong in say everyone, and our very you you Paylocity, employees helping

Operator

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

You may now disconnect.

Paylocity Holding (PCTY) 30 Oct 242025 Q1 Earnings call transcript