PYCR - Earnings call transcript Q3 2022

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to Paycor’s Third Quarter Fiscal Year 2022 Earnings Call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. [Operator Instructions] I would now like to turn the call over to Rachel White, Vice President of Investor Relations.

Rachel White

Good afternoon, and welcome to Paycor’s earnings call for the third quarter of fiscal year 2022 which ended on March 31.

On the call with me today are Raul Villar, Jr., Paycor’s Chief Executive Officer; and Adam Ante, Paycor’s Chief Financial Officer.

be available our section on website. can today, release of results is which the financial found press in issued our Our investor relations call call. will a website Today’s the recorded, on following the available our replay of conclusion being is be and this on include forward-looking on other our financial business to statements the and may demand, customer and products, operations, call impact made related our Statements results, of COVID-XX matters. of management’s today risks, uncertainties, may and and current are expectations in statements on as updated subject to be These and are not assumptions future. based the not Therefore, these relied statements our representing views of should date. be subsequent upon as any as

metrics will refer non-GAAP to a measures also to the and additional With reconciliation is financial measures GAAP information to press turn our I’ll provided website. key call business business investors. our Definitions We over measures release Raul. and certain to that, non-GAAP on provide to of metrics of in non-GAAP key and

Raul Villar

Rachel, third the Total joining Thank end up driven you, all growth. years. of discuss by quarter revenue highest revenue a in continued five by results. $XXX It XX% record growth delivered quarter guidance Paycor’s than more growth, year-over-year, recurring client was for exceeding robust to X%. us our We was revenue and million, thank you our fiscal top

shifting and The human dynamics, drive solutions. human sustained revenue that businesses $XX early seeking now have demand year with us innovative gives and industry, designed regulatory and to increased Labor management tools momentum for confidence describe their This industry strong stages is HCM process cloud will Resignation differentiation guidance, capital in medium-sized sustainable the for for leaders. their cloud-based modern cloud complexity, detail. to demonstrated such leaders by still our to solutions is to quarters. are billion as growth. Great full market the Small extensible and We more for open, for the market. continue capital accelerated in modern win again management configured the consecutive continues purpose-built and in revenue profitability growth runway which increased simplify three once raise platform significant and to industry of Adam and profitability Paycor’s

HCM we coaching, management employee tasks client differentiation, and so Furthermore, elements experience, and their and Our industry that community. development. automates on program can business such and solution align the SaaS management talent capital focus modern as resonates product leaders human with routine drive setting, goal frontline our clients industry-specific performance engagement, as with vertical provide key

to During that four deliver enable progress the we long-term to will all growth. quarter, continued make against strategic we initiatives sustainable us growth believe

as teams First, Tier America. to X XX our largest we in which the continued expand markets, sales into successfully define cities

fiscal sellers We the of have Tier from year our in end coverage sales X XXXX Tier expanded with established markets. all X significantly

We by we and consistent year, given this are Tier impressive X market. metrics with track on to the higher which XX%-plus win and sizes. believe expand labor tight seller strong deal rates deal competitive remained headcount is

our Tier on and support market great and West. finance XX,XXX Pac-XX over a Pac-XX Our The X with there CEOs is over HR the as that executives delivering fit encouraging in started has associated expansion already are results Pac-XX XX,XXX partnership the strategic LinkedIn.

markets. We brand our Pac-XX generating in are from awareness are of building millions and campaigns marketing views large these

about account revamped we strategy established national XXXX, our expansion partnerships channel results. When we in focused broker brokers of today sales that deliver quarter to for our our firms broker opportunity. with significant and playbook on the revenue a Second, five continued outsized with

markets. new to a by expansion channel sales supports strategy expanding and broker providing Our X access in our Tier immediate

co-branded marketing our We and platform guided portal provides with cultivate leadership implementation business to flexibility, partners that administration, of benefits designed a and mutual have broker our supplemented with value expansion. proposition thought

industry-specific which Paycor. choose of key about We our solutions configure our one XX% of for industries, approach four clients Third, represent reasons top TAM. the is

beverage, Our developed healthcare, human solutions the unique services, value and of proposition challenges we professional is capital driving outsized solve and tailored these win the that understanding help rate. have most industries. food manufacturing, By pressing for requirements

industry differentiation, to develop empowers winning Our program experience, teams leaders community. and product through client

example, job our their modernize visibility is we postings a referrals. manufacturing, in Through increase and For manufacturing differentiation, recruiting incentivize challenge. skilled of pages, leaders big labor career product employee help

as technologies third-party such systems. We also manufacturers that partner ERP and integrate with need,

Our starts training adding our experience. how and which overtime content, and with differentials, set a enhance such shift how works, union experts code, client experience manufacturing targeted industry-skilled blended further up customer as implementation to industry

We knowledge sharing also compliance facilitate on industry and top leaders stay the in in of issues trends help communities. our latest

continue functionality depth expanding our to we and by and our to enhance the Lastly, HCM our suite have industry-leading $XX. of breadth PEPM increased

the provides of experience, a stay Our of that to additional time-to-market evolving extensible advantage capabilities user to and modern software ahead add an platform seamless has integrate and a dynamic needs our enables clients. rapidly It partners. us

access clients easier This portal of critical support it released to their and and tools. developer The XX third-party developer innovative data and we addresses to even making quarter, resources between partners integration seamlessly enhance over for teams. Paycor portal and interoperability, leaders our integrate real-time points an enables to sync and to data

to for is our especially relevant beneficial they verticals all integration to greater While the tend it since needs. portal is have developer four clients,

integrations feedback beverage, we essential. scheduling launch partners. is For example, February, the in food in healthcare, both clients outstanding integration are received Since and whereas and have from critical, in point-of-sale

income process. clients history Companies what matters: applying burden administrative or and verification addition, this leaders’ for services, cost, verify who developing loan can no Equifax that quarter, other to employees reducing their simplify further they will this are for focus In partnered on financial past to associates. current often so income employment employment a partnership with we at or automated and provide services and

Management, unified to easily reimburse management, streamline and administration We to manual enabling platforms expense and we provide the Expense and onboard, extensive streamlining their for an to more HCM developing the also Paycor leaders we time Furthermore, used work to expenses, utilizing with same clients. Fidelity between company’s pay, our leaders like By integration time-consuming mutual employee grow, resources teams. to recently tasks launched empower talent. manage, XXX-degree platform hire, recognize into and invest XXX(k)

product testament rapid development, are to Paycor’s its our Nucleus a clients. deliver As that for proud ongoing time-to-value to we Research highlighted ability

for investments improved Our year-end platform cost thank our reflects and to our I support. of like experience This continue for is ease to client period, enhance customer in associates commitment record. we which our to year, platform. deployment, and would on delivering stood and to usability, out significantly all Calendar year-end its the efficiency, busiest make our strong their strongest we Paycor

experience, call we about Over have to see are in years, to investments we client Advanced wait excited enhancements been about This focused third bronze tool tax results during starting these this to and and the in get our impact. to recognized but Congratulations over from the has service The last is and resources chat first our Support made client full the our enhance two are quarter Adam Stevie technology a we with live, quarter. prefer of this for improvement acknowledgment a of our volume clients, financial support With an had method. directly year channel. and best discuss our our team. their to share through we And also quick XX% quarters. outstanding guidance. handled support over year and the Tax these is that turn that, second was as time response we we new our of Team Award customer to result XX% times the enhancements, the Customers this I’ll communication

Adam Ante

then results year. our our Thanks, outlook quarter and Raul. I’ll fourth review quarter for the discuss third fiscal

processing a revenue than was X% are revenue nearly growth revenue is we million, base are Consistent a XXX-plus the non-GAAP year-over-year growth low year-over-year, expansion, by reminder, teens and XX% more five employee resulting growth the our exceeding By continued was driven growth in recurring by XX largely go-to-market The and top demonstrating our to of related and close clients. quarter financial growth to segment to of As on income to year-over-year showing us our comments fastest end, percentage X,XXX in outsized my Total with accelerating high the XX,XXX in adjusted segment. than basis. X% our revenue growth PEPM years. $XXX single-digit measures recurring guidance guidance operating customer in target end increased had strategy, XX%, our our more with XX%. employees by

averages. XX target the clients. segment total revenue of remains Our of in levels, XX% our digits, revenue market to while of the consistent of our represents continues market organic with about contribute low micro employees single the still labor representing clients. historical growth labor pre-COVID nearly Overall, and below of and market single-digit XX% is XX% under In over just contrast, our percentage

customer rebound XX% in just employees as a segment continued continue XX%, investments combined increase attribute from clients continued amortization growth than is We customer, year pre-COVID about client as we’ve client our XXX to margin is year-over-year and average contract to due This with our micro trend expectations. levels down line increased in employees’ related service. ago also per organization among well in levels. consistent ensure in service XX a software an to that with increased retention great with XX.X% slightly has Our capitalized shift change favorably more costs, to to and to size experience. made our we Net implementation accelerate of employees. away with and largely and gross from under profit acquisition clients’ this Adjusted as investments was to and the

continue compared returns expectations. revenue, continue R&D investments, revenue a shareholders. capitalized and are we meaningful the early including especially Tier and invested market have or business. or impact XX% in of cloud X% to and improvements marketing profitability. of similar the R&D was to XX% gross X and $XX we to strong our quarter, both for of year or Taking to and stages million, quarters in $X expense transitioning we to costs basis cost labor will this is capture year-over-year. delivered X% expand was to still we recapitalization, of continue our sequential of was material million drive our In share with XX% points the And the and scale generating In sales we programs, development in some ago. teams million of period or the acquisition line seeing excluding $X in our on for value year-ago strategy, invest and depreciation compared margin, it line associated had are we our three to go-to-market XX% amortization our has adjusted into the million expense profitability on of the Apax increase amortization, $XX aggressive margin an ago. marketing as revenue metrics, XX a not last for a While consideration pressure, we of with revenue consistently with significant Since revenue massive market Sales markets. million year to $XX

capabilities opportunity, revenue, consistent the Our expand improve million XXXX. team portfolio that product of their quarter for or insights continues was and delivering leaders their our and expense to XX% teams PEPM to new G&A of develop $XX business. with third build

drive quarters. However, have revenue, to continue our we goal percentage for down to done a of and consecutive G&A so is as three

shift we manage technology-related higher year-over-year expenses future anniversary G&A a toward Overall, as and as we spend our to see efficiencies also We scale investments. to drive company are we of mix driving operations. public continue strategic a leverage

has year. like over and margin to reflects investment and ending $XX This business We to $X and increased proven to that of income profitability earnings no be next in million the sheet. balance from exiting The profit million, profitability virtual-first remain a quarter recognized with scalable cash impact emphasize levels or model accretive drivers our quarter, was embraced will fully strong Shifting described. in attractive top-line We balance change in expansion debt. I a and million the this our I’d facilities model, confident cash deliver million growth certain over the we loss our $XX to on beginning by growth compared that last time. $XXX modest our XX.X% Operating quarter. strategy will we XX.X% leases. no as

interest income rates average are This we of on of see impact income, Overnight $XXX,XXX over and to $X the to to generated willing approximately pay. interest funds rates an our interest the yet just billion. quarter, we banks have of remain primary client driver

to Moving for the guidance quarter. fourth

to to $XXX income XX% about expect of and $X.X million revenue million growth adjusted million We year-over-year or operating total million. $XXX of $X.X

in mind year, we to few third in things the raising guidance million anticipate end to to A at For $XX.X between the we volume our outlook. of to keep about a of regarding XX% processing full quarter. $XX.X And income range. million, drove operating few adjusted million. $XXX $XXX million are revenue points growth Year-end of our growth or the our year-over-year top

Following of and rate success growth benefit on in with remain revenue A our optimistic We and while overnight that expect funds about seasonal quarter XXXX of us momentum To our guidance. the to benefit steady our year-end expansion from the the single go-to-market the about interest million peak, those enthusiastic fourth business. has rise, about labor continue experience marginal pleased without early in impact estimated year our the this of continued in And such, wrap HCM remained in as of decline suite, the digits we and would execution opportunity front $X.X to little expect of our XX-basis-point are investments. sequentially rates income strategy, low to client we generate interest revenues. customer Employment our up, realized we market increase growth. quarter. of expect fiscal in we’re

longer unique Operator? And continues to open resonate call capture improving and share on and we about leaders questions. Our profitability with while term. market focus meaningfully ability we’ll in that, mid-market to industries for our remain the excited our customers,

Operator

you. Thank

now the Jefferies. begin first with session. QA The the of Sahler from will Jeremy is [Operator Instructions] We question line

You may proceed.

Jeremy Sahler

for Hey, float Samana. is actually first income. on on Samad I’m guys. question My

So know are sounds last that you over in commentary, that’s on like and overnights, based mentioned your of client I funds still it true. quarter XX%

before for into kind duration waiting all? longer environment at quarter outlook changed out you Has securities. flush to of your move last mentioned rate You on that the you’re that like

Adam Ante

No, really it hasn’t changed.

going We of think still – Again, be rates. be where we movements is to biggest the it’s to the continue the the small going make it’s overnight prudent. interest to impact overall income

more have in rates have not just those than just overnight We materially XX% accounts. moved still do so And yet.

biggest a to to So I going overnight bit again, begin rate quarters. be the see flow-through think a driver we’ll of there But little begin the the couple – over you’ll of next sure. for is

Jeremy Sahler

makes to I you pricing. next you. Got additional maybe the guys on I increases know one one guess And increases. pressures, inflationary a sense. with quick the price increase? size are price annual considering change or you That But any more do of

Adam Ante

and portion value our fair No. I we increases. think other improve adding and launch doing our capture critical mean support is of just functionality, additional inflationary that wouldn’t and of appropriately. trying just model, and we customers it take really those then And in products in that to we’re or new I we necessarily about bundles. think still way outsized that to that a about as the drive continuing intentional products annual improving a creating being invest expanding portion I foresee need anything then environment of things value to that through because that that than those

We have not annually more done thus increases far. than to clients

Jeremy Sahler

you. Got

congrats and time the the for Thanks on quarter, guys. Okay.

Raul Villar

you. Thank

Adam Ante

Thanks.

Operator

Stifel. Thank Brad you. the with of from The next is line Reback question

proceed. You may

Brad Reback

A been much. think on to strategy, change M&A focused in there? as I it’s your about deals. know high-level very philosophy you question Any Raul, historically Great. Thanks smaller start with.

Raul Villar

don’t Yes. There’s haven’t – change in had any – we significant we philosophy.

small been that to that? historically on enable to and and anything broader would focused Adam, have that’s vast acquisitions us what a We leverage to want we’ve you our distribution on. been focused add bundle, sell tuck-in

Adam Ante

continue and in focused with to IP-only scheduling, for looks. then a more where as the mentioned, advanced that distribution. the product of just No, lot really been small like applicant like space that’s – opportunistic technology. And really acquisitions we we’ll through acquisitions sure. success – it’s is had last mean, some we’re well. getting of focused But We’ve Yes. take be I finding couple we that out world-class And had and tracking, our Raul

Brad Reback

And switching great. quickly. gears That’s then real

greater portal, On retention is the opportunity is it via developer usage more that there monetize and Or directly? an there rates? higher to Thanks. indirectly

Raul Villar

HCM more the tools is with to monetization. future behind be any it’s our their mean HCM believe to the that able run to of with is efficiently. and help indirect customers the portal, link business Yes, really the them the ability I interoperability we premise around for portal

can open some in have be modern and HCM. may there been that more about partners experience But because so platform clients us, for And winning we client we most monetize. it’s the

Brad Reback

Thanks much, great. That’s very guys.

Raul Villar

Yes. Thanks, Brad.

Adam Ante

Brad. Thanks,

Operator

is Terry line Securities. the Thank question next with you. of The Truist from Tillman

You proceed. may

Terry Tillman

Rachel. quarter. Yes. Thank the you, Raul, Adam, on Congrats and

on the Now moving year. from of obscure reference the

that had First anything either of question Raul, anything I could pause and inflationary anything back, I around Or of or recessionary talk – launched about folks of regions you that’s coming you maybe of verticals. or on observing you you’re say XX just quarter, pressures. from think was seeing services. think you different in is Because those gen just demand healthcare just kind pro for anything Could maybe macro kind last said or relevant top about kind country cities? a share I you, or question the anything pressures,

on little and verticals. So macro you. Thank into just a maybe bit double-clicking more

Raul Villar

the when throughout seen But impact Yes, macro But COVID haven’t they deal the in that, outside or have we that demand markets the haven’t so no, based experienced perspective, of seen perspective the we on throughout inflation we or the inflation stable a overall Obviously, of Terry, had market on remained a big recession. year. decisions more or close The have from the segment metrics we a any that demand date. year, we anything to pressures, delaying seen market open from anything that market overall recession without or there. question. a in haven’t

Terry Tillman

have about seems will talk launched this interesting. Thank Expense Adam just is since hear. this quarter products, interested public, just in model Management. a actionable How you gone one the it’s the kind or like question terms seems you’ve larger PEPM for It of realizing positively, CFOs be just that in and or and that new in of that It something would follow-up the through we how serving. model? of maybe should I filtering as leaders of net about you and the like expectations whether affecting just you. It’s think Okay. is – this sizes, Raul. That’s the good to first think, how the Maybe deal

Adam Ante

Terry. of add thanks, that to sort as that and the Yes. Hey, digits we base. business think that cross-sell really we it drive about continuing The PEPM into overall back in expansion single our is new high ADS and way

expect continued growth continue that’s show of think PEPM to overall that sort it just like in I in range. model we it’s up as I single-digit So additional where not but is high products of to this, that. the would definitely part expansion grow that just It’s

Terry Tillman

Very Thanks. good.

Operator

Mr. you, of is Thank Bank. from next Bhavin Deutsche Tillman. with The line question Shah the

You may proceed.

Bhavin Shah

any Awesome. Thanks the and relative sizes just the plan? provide questions, for specific insights And taking you bookings as on your trending than better performance have markets well. maybe Can congrats or on trended any others? my how that are customer to

Adam Ante

the Yes. necessarily a necessarily details helpful. They’re We bookings don’t plan not quarterly to share on basis.

and us, the continue really our work X key we those into we business continue as positive be for fundamentals expand momentum. of Tier demand, we’re we’ve across strategies and we driving that toward, remain that continue industries across markets strong to see to the of that mean, brokers. to see Those the our markets that way demand see the I is terms through gen year that demand In to seen strong. continues We

do strong. win winning of these win are going markets? drivers Where think as markets? remain us rate. – do we into new we about our heavier do one in really see we these how competitors winning that How the we the against So rates is And see us key we

the expanding X. all So the continue that Tier in operating the and that specifically to markets play we’ve including ones been products into those see we’re in in we well

markets. seller pace In so hit our for to in the those terms still with headcount in overall to to of we markets, the we’re on those that of continue year, growth the and headcount, And been year, the right? headcount new demand we’ve XX going also into toward the majority this full full add driving for XX-plus

Bhavin Shah

of ramp terms with there. Got was of maybe hiring. the that it. you’ve Is that of give just follow-up update insight Helpful us it you these question Can what trending would terms my be in plan, on hires? the well productivity just X plan? Any Tier And ahead additional of helpful. an actually, seen just in

Adam Ante

about are, to we definitely adding to on that as this the portfolio. Yes. overall basis expecting is I many mean relative as a productivity year in per going as sellers we we’re overall seller slightly the think decline

And early it’s so, they’ve still I’d come for cohort the as in. say

who in the average these performance which we deal But – You size is of that year, the at and the and months six of across size win to have sort are rate. the of those new still opportunity key a continue the of handful actually sellers see relatively the into and of the size including clients, measures, size deals the we’re early. selling

the to continue seller cohorts. feel good we’re progress we So new that the about making with

Raul Villar

by Yes, to we cohort, ramp their the their that think about second get when of expect interject and them full to one end we seller year. thing really to is

outlined, nominal adding from will help new be sellers So to we’ll that for which against markets. rate our as in impact sellers continue – into Adam build of core year will we’ve levers And bookings execute is said, growth year. growth next us X really that we Tier the it have new

headcount, marketplace. pace rate leverage good And to the feel in the big our they’re an well, XX-plus broker differentiator the be executing win we and continuing industry seller outsized in so on leverage momentum growth a and achieve to channel to market. in at very all We’re percent about to

Bhavin Shah

Great to my question. taking hear. Thanks for

Operator

next The line from question Shah. Kevin the Suisse. Mr. of with McVeigh is you, Credit Thank

proceed. You may

Kevin McVeigh

Raul, when drove initially or what to the think relative congratulations upside Thanks the guess, results. Great. you What much of expectations, where guided? so Was drove that? X% the I kind you that upside? and relative on about Adam to

Adam Ante

a form anticipated. big is fees I over filings or a than little bit in had big mean the I the Yes. quarter came annual – here saw that think additional during we and stronger a just lift year-end we

were up they little had than they a pre-COVID where fees upside So bit I’d but definitely pick And we back more to in beyond quarter levels, the aren’t projected. improved what say those we year-end client January, we PEPM the quite driver. did to as in where at terms base growth were coming well see continue expansion. continued in the That in here then as the them And of upside company quarter. was anticipating for primary we the the

So just the board, performance little tighter, just was It across a bit X% reached X.X% top bit to really end or that lift. better. the of a the little

Kevin McVeigh

That’s the think then that you expanding announced great. as the been you what Or And providing? you be the and traditional pay of about quarter, Like that beyond you’ve of kind continue would to do additional a continuous this the solutions scope nice it PEPM. is Equifax, additive PEPM? with job partnerships in of outside that

Adam Ante

revenue, number couple that dynamics surface we I mean share right? there’s over employees P&L total a on Yes. just of example, here And be our it. reoccurring the on way the the that. so would the in of the to I PEPM revenue really mean is for Equifax included platform, or the

other revenue be number. included it’s and that, blended a would in Our partner

in strategy, our price client. there those partnerships pricing of we wouldn’t actual I some necessarily are think to – the wouldn’t of that terms we

for individual that Equifax, pricing back have a clients. goes example, So, to not does strategy the

the we some additional suite how $XX suite opportunity. partners, mix PEPM offer, in the and like bit services about So, overall Equifax, go-to-market of additional terms from as as of a little our it’s expanding creates that specifically well of a think we

Kevin McVeigh

you. Thank Super.

Raul Villar

you. Thank

Operator

Cowen. question from next Bergin the McVeigh. The you, of is Thank Mr. with line Bryan

You may proceed.

Jared Levine

the you about NRR, Hi. Is not? Based of today. sense quarters, your actually overall goalpost This Why potential environment, than past Levine X the sooner for see think FY longer-term over demand potentially XX%-plus Jared can and there you and is the or growth? on a growth two to confidence give early traction, on how Tier improving ‘XX us your Bryan aspirations? why market

Adam Ante

and the driving we’ve been really we’re growth. sustainable Hey, Yes. toward excited about XX% this growth,

we good the accelerate percent And on we’re XX-plus can long-term and those additional a platform. to is in see the But to growth. the You game about guide them feel quite bookings trajectory. guide to not drive the continuing bookings, layer around to ready it that

‘XX our to share for So close we’ll full of the intend FY year following year guidance ‘XX. updated

to about progress, good feel about So right and good we’ll in execution the We’ll press that QX share close. continue the in, now. the feel guidance

Jared Levine

you employer then size the have terms in whether And that based of any market segment tier? differences, noticed on competitive or environment, be

Raul Villar

any with haven’t we or seen we’re either competing winning market on in from. constant. we’re the differences Yes, who where remained They’ve

So compete from which And in-house Paycom as we most of our we providers, Paylocity, service and ADP, regional on Paychex, with we ADP, and bureaus. legacy transactions. take define the wins XX%

the been and differences of seen that’s in of strategies the So over consistent any years, past few we haven’t any competitors. go-to-market real our

Jared Levine

you. Great. Thank

Raul Villar

Welcome.

Operator

with you. is Scott Berg from Thank of the The question next line Needham.

proceed. may You

Michael Rackers

Hi, everyone. Congrats the Michael is Scott on quarter. This for Rackers on today.

Can on maybe you excited you’re modules lot and about about management some opportunity Thank other past. Just deeper little adoption go then term? in one quick talked a the question for me. you. you’ve the a talent I longer know there

Raul Villar

Yes.

with And of attach talent, charge we’re We’re it. we’re our mid-market and seeing point-of-sale rate really in talent of attachment the space upwards excited about actually any product. highest for and we at management, new XX% seeing

And is demonstrates I what the and of we’re So pretty really product exciting. empower that’s to it think build value accomplish, trying the winning leaders teams. which to

leaders inspire their can for and and employees So clients. better engage they outcomes coach drive we end motivate enable so their to and

we’re excited market differentiator. it as So on and going press in we’re continue the about about to a excited to talent is it,

Michael Rackers

you. Thank Great.

Raul Villar

You’re welcome.

Operator

James. the with from Brian Raymond Peterson of is question next The you. line Thank

You may proceed.

Unidentified Analyst

account Chase that about Raul, revenue. now the This you for for XX% is had from for taking I five of Hey, national Brian. thanks question. think partners on mentioned the partner the the strength

opportunity national ability small to kind the to do kind grow broader program how partner see of both curious you partners, Just but the with five regional and also of the grow partners? those

Raul Villar

five Obviously, our of opportunities. contribution with, there’s overall over national the XX,XXX-plus And That contribute we channel. the from It’s partners huge across work XX% broker the over little and Yes. have opportunity. a partners a U.S. we X,XXX

significant a really impact go a have So this the in long we in segment. to mid-market exciting has that way channel

And And X our are we so the press are continue markets, Tier market. because add dense to located to helpful going we’re as X akin Tier really sellers obviously, in markets, which brokers in. it’s to in

great new our bat. a sellers and place right it’s So of out for the build to start relationships

in. to going we’re So to press continue

we’ve We’re for channel and excited it’s about progress a Paycor. great the made,

Unidentified Analyst

And just helpful. then follow-up Very on it. hiring. a sales the Got

kind marketplace, seen to wage some that broader you Thanks. we’ve to the are heavily kind the in of as of in As sales move guys invest you headcount? seeing inflation continue how

Adam Ante

see some engineering in key we those wage I mean, of and so the a I’d in little hedge side. sales them of is a just impacted our I say. overall comp roles impacted there say, Yes, there our commission hasn’t guidance has the I’d implementation, broadly, primarily like across – not variable materially side or has Less it inflation bit bit or I across natural – impacted country. mean, development the mean per been board, the it in se. But a or for little business, the of and

been of for So, a there sure. bit little has it

to it’s in material hasn’t just But – been it not fact, it. immune We’re yet.

Unidentified Analyst

a on quarter. and Thanks good congrats

Raul Villar

Thank you.

Operator

with next Mark of you. Baird. The question Thank line Marcon is from the

You may proceed.

Mark Marcon

with what trend November have quarter. seeing terrific expectations? in What client add you through bit little that your January How seen? on of me the you you retention can congratulations regards up a period? sort about to talk Let a key Wondering, to my changes did time relative ended

Adam Ante

Yes.

– is it, that long is I to way retention there’s would it. a I really think tail say Mark, the

positive ‘XX for ‘XX – and So of us. But off some of service service we the ‘XX. made the and lot has product coming in improvements really certain a demonstrated expectations ton through just in year and implementation that momentum a shown has model invested we have

So product. the way seeing period the more revenue. see the around longer the reflected, improvement, come all course, you’re longer takes retention continued shows us. It we’re big up fully terms And gross of in time is or to shows experience. but the clearly net you nature for in just customer It positive a service time. for it trends January, seeing in through, And some up that could the in it It play the of through that. retention tail of just

we revenue through year-end, good coming reflected growth for felt see about the you and the in it overall sure. So can

Mark Marcon

of then, the can be a Raul, initiatives over ones And which Which excited that Management mentioned, initiatives, great. two? next you solution. you developer are year Fidelity, the impactful the about? most all Expense portal, you Equifax, the or Of mentioned ones That’s number most

Raul Villar

with our and portal. portal APIs, I our the you partners able to mean, without – if believe gateway And it’s to the of future clients modern like about of I developer in we then question, of power power you what the integrate us Yes, believe enabling HCM. the mean developer in it’s the delivered. we’ve it’s of and platform seamlessly about a do. reach expand our to And the

for that platform extensible important most to them And we want the business open, way do is enables that that can believe we manage their an thing so the they have customers our to. specifically

And so being technology is open question, available without of that’s today, a with changer. the the game power

Mark Marcon

through? real from that impact That’s that great. actually And coming we’d would you see the when anticipate

Raul Villar

see we think our today. win I it Well, rates in

to XX press will continue next it, to think to growth. ecosystem that. continue we as continue expansion, accelerated is will And bookings, forward. the I you’re and our out in, seller we’re seeing XX Obviously, it drive to over supplement which help accelerating months revenue driving supports that building so, partner it a And

continue So, for exciting innings, top in I potential think I on early the is But to to us. we’re layer Mark. the think

Mark Marcon

Can XXX-plus what a you away bit employees. that Or Who That’s should you about – clients from you most the we you’re clients rates of talk great. that are that? the think and companies are that that group about attractive increased And are also taking and win little functions from? you switching are clients seeing? to you away success in with same taking how smaller regards what more are are And were XXX particularly terms then about talked that with larger features the to employee clients driving that those behavior? previously those the over

Raul Villar

from coming providers. the it Yes, wins I legacy mean consistent. XX% I remains are our think of

I our segment winning is are so in industry the why easy-to-use so think differentiation, reasons coupled them. with component, then expanded that has And simple, modern the HCM we’re experience is we’re with the platform talent winning. what as a for expansion we’re we’re what significantly a that over few getting And of faster last force, years. more sales we’ve seeing And an

of So at industry. we because the we look thing is when a first win-loss win report,

is with win the our use is functionality. And win most we second talent. third of product the is The to because the we because easiest

Operator

you, Thank Mr. is of line Marcon. JPMorgan. The from the next question Mark Murphy with

You may proceed.

Mark Murphy

is or very demand you’ve management seeing. just to from they urgency the slightly any talent wage product more that covered as shortage inflation of But try forgive or customers Yes. with be whether engagement you the suite sensing please side grapple employee any they on this. first this all might skilled joined any labor be wanted just I thing might side the me out Thank ask and to I there if much. of more you of late, the the

Raul Villar

to an Yes, develop we’re between management, Talent engage I and XX%. employee, seeing XX% and enables one-on-ones coach in and rates both those seen mean, acceleration we attach significant have which and really with and do – categories. us connect is

also strong We’re of within or core between bundle. whether chat other. rates each seeing the that’s engagement, And recognition to it ability be our attach

So that kind of with is all our clients. of included

that’s strong all all we think seeing it’s for someone select Paycor, unified those. deliver customers this because these why to about of easy we’re in we demand of experience as undertake. really for And So

game-changer, so And been very us, it’s for a powerful.

Mark Murphy

Okay. Great to hear.

happening effect? for a that wake customers important outage not off I the think, some January? question Is there there any you they just in of might seeing to I in had or reason suffered, be anything is, forced that second and of UKG real move are December of The that that unfortunate flow back

Raul Villar

wins year able Yes, say of But of clients in I we market few slightly the process to we – I were I that – got where majority calendar would payroll where week of compete. mean, is the two. had target a or that mean, them a we end think had and outside in we the to started I get

be employees and a clients lot X,XXX day-to-day isn’t above, which of those So may a really on where basis. hunting we’re

that easily were to win, So, go we to the clients we can up X,XXX. able

able were range we so, win over. to help convert in and clients pay that And them

Mark Murphy

I see.

Just remind PEPM clause in there annually your a your with maybe inflation. terms living pricing terms something of Okay. there a standard or of upon One in is one. for allow of contracts in that kind with increase pace to keep would renewal? just us Can seeing cost last you customers, of what they’re

Adam Ante

Yes. and It on reserve do sure has that right So, our practice you’re see way not any to to been And Most in The contracts and clients change our appropriate. is where greenfield, do annually, they that about of it necessarily going value I’m talked that come to a for we term. don’t prices. around our that the change the right? significant are up strategy. capturing then value just we creating

so, strategy. like increase that that But there’s going not to And continue we’re a a mechanism cost-of-living really you mentioned. forcing

Mark Murphy

results. Understood. Thank you and the congrats on great

Rachel White

Thanks, Mark.

Raul Villar

Thanks, Mark.

Operator

Thank you. is of line Davidson. Simmons Robert The question with from D.A. next the

may You proceed.

Robert Simmons

year more reasonably Hey, guys. a questions. two or talking the talking productive? the I sellers? your new quarter is taking ramp or what we Thanks for to Are of time a for was for wondering, get typical them like

Raul Villar

they is throughout comes year. month-to-month through the six Yes, productivity think second they stair-step first months, first months. full so the and after through up But the it the XX way to – about ramp

continue to they through productivity hit XX-month accelerate that At in of XX months, So there. full they’ll end the period.

months. increase the and it next start think about months, So in three productivity they throughout they selling producing XX then and

Robert Simmons

much makes in it. That to then base Got a typically your sense. how back selling? of quarter are bookings And

Adam Ante

you... Could sorry. I’m

Raul Villar

the base? Back to

Robert Simmons

Yes.

Adam Ante

Back base. to the

Raul Villar

about the bookings into are XX% the Yes, base. back of

Robert Simmons

That makes very sense. Thank it. Got you much.

Raul Villar

you. Thank Yes.

Operator

Thank you. to for turn That comments. to concludes call like closing over I session. would Villar back Raul our question-and-answer the

Raul Villar

again, in us We you, tonight. joining appreciate Thank for interest your Paycor.

We forward and conferences year-end. at of you of a business great many with connect to de and Mayo. heading in Have touch the excited person We staying this the are to and JPMorgan, quarter. trajectory good about into hope a Baird, in look upcoming Stifel our Cinco night fiscal

Operator

joining for your you the Thank of call rest day. today’s and enjoy

Paycor HCM (PYCR) 7 May 222022 Q3 Earnings call transcript