Earnings call transcript Q2 2023

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Operator

Hello, and welcome to the Paycor's Second Quarter 2023 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

It's now my pleasure to turn the call over to VP of Investor Relations, Rachel White. Rachel, please go ahead.

Rachel White

Good afternoon, and welcome to Paycor's earnings call for the second quarter of fiscal year 2023, which ended on December 31.

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

issued will our of website. Our our call the is on be conclusion can and Today's on Investor today, a our recorded, release following replay the of financial available available which the section found Relations call. being is be results press in website

our operations, risks, results, impact call and be this as date. subsequent expectations forward-looking related products, updated are as include of business customer financial statements other are demand, assumptions current future. not COVID-XX Statements the These representing may made these Therefore, on and and relied views of to statements based in be our management's should any uncertainties on of statements on our not matters. today subject and to as upon

and additional our non-GAAP We financial non-GAAP non-GAAP on also metrics measures reconciliation in a measures key Definitions to website. of our business release refer investors. of GAAP provide is to will measures metrics and to provided key press to business and certain information

over that, turn With I'll Raul. to call the

Raul Villar

results. record with and significant over to industries Rachel, all PEPM modern further ongoing is you, you bookings by as drive expansion. income driven believe quarter, second resonate with for points Paycor's basis to scale. XXX by expansion differentiated in this year-over-year margin to operating XX% increased continues grew platform quarter and market. joining Paycor's Revenue win Thank open opportunity tools we there Adjusted the thank for fiscal in us and discuss leaders and clients we

guidance, of are raising outlook robust once these on discuss detail. remainder our our optimistic will year, we the Adam more results in the again Based for which and

as relationships deal expand influential Our grow we continues coverage continue Tier X results leverage and average size. excellent go-to-market sales broker markets, in strategically to to deliver motion our

end level, we'll of the a our hiring for schedule additional We staffing in headcount evaluate We growth target to and year. XX-plus with the and of already seller continue sales half. sales are percent low second achieved hiring ahead our like

only to their frontline leaders by required develop platform, the to and source, tools providing offer be effective attract, insights the modern and retain We more employees. empowering cloud

Dashboard This team. introduced managers information The gathering provides the actionable they we real-time quarter, coach, Leadership and COR employee into by Leadership insights leadership help evaluates Dashboard that frontline transform and to feedback engage surfaces COR leaders. effectiveness their how on optimize well effective

to ongoing insights, Armed tailor with understand will these leadership effectiveness development. companies able be and leader

tightness finding continued clients' market, Given priority the in the top talent. remains our labor and retaining

quarter, we AI closed Interest frontline leaders simplify which base among is robust client Paycor This leverages feedback began to Sourcing, extremely and to and the diverse acquisition the sourcing efforts Smart streamline been our positive. and testing skilled has and early talent. of beta find Talenya

With the our is of comprehensive the addition of in market. HCM full SMB available solutions most suite is and $XX offering Paycor the Smart Sourcing, PEPM

XX different our for Talenya than provides nearly array API clients. available integrations, a with suite modern point public enables platform's Paycor rapid broad offers such of of Our that providers. modern integration power deeper interoperability the solutions endpoints partners to functionality traditional most as solution With architecture

underscores performance. benchmarks. This cultural top performance award against based brand our history U.S.A. XX Top help predict employees Workplaces best workplaces. are exemplify and incredibly as on are Energage's that by was million has XX the to to cultural engagement to commitment surveying are Top third row. program and a impact business distinguished a industry of year We proven Paycor associate Workplace build XX-year for proud in over practices Energage Results high that drivers the a

increase, to are remains unemployment openings the market revenue materially how early close levels, in growth reiterating and Paycor's payrolls about by solutions. adopting of modern tight confident impact outlook. labor are stages to continue of changes low. The at remains workforce business participation is as openings Modest me job in our as our elevated we derived Let market most cloud-based business are and unlikely the HCM still or is job from nonfarm new

Furthermore, our clients. highly on while attracting, compelling as retaining driving defensible a paying also for great mission-critical is value HCM our and is proposition return to talent, investment

and efforts success would this I all to our implementation, their Lastly, an especially during year, clients. associates for for busiest year-end amazing year-end, time provided our through of teams thank Paycor like who, experience our calendar support

our results call to to over guidance. With Adam financial that, the and turn discuss I'll

Adam Ante

our quarter third our Raul. then second discuss I'll results, share and fiscal year. the quarter Thanks, outlook for

As reminder, basis. my are on non-GAAP a measures comments a related financial to

delivering quarter, adjusted up continue the to operating as XX%, top revenues guidance end XX% of strong scale of income our recurring significantly of revenue year-over-year fifth million, exceeded consecutive $XXX we revenue and another had quarter revenue percent We total and the marking of growth. the XX-plus X% outperformed guidance business. by growth We our

of between X,XXX bundles, which cross-sell Effective well the companies impact of point bundle clients and higher XX% adoption see to we it our revenue our outsized derived such increased year-over-year, as XX% the to PEPM continues includes conversion be latest as the initiatives of where to also pricing revenue as with XX from of from employees, sale. majority new at wins. The is growth. our business product includes growth to of continue

the employees exceeded program we platform. we're with expand we're and across interoperability million, to partner increased as X.X our customers. the of year. addition, to continue number X% more pleased than In XX,XXX our platform progress The we our on seeing over prior up

XX to in the XXX we to focus from the customer end continue up at XX increased the our average prior employees in clients QX with resources as above year of size mid-market Our employees.

flat, customer basis, earlier sequential following a has essentially calendar strong on However, growth in been organic XXXX. growth

mid-market As and the continues and the see trend in enterprise in moderation micro we year-over-year, to segment, retention growth to of increased portfolio our upmarket, number the XX% segments we favorably. shift employees employee while continue net in

and Sales was expense excluding margin, XX.X%, to to ago. about $XX depreciation scale a XX% we million increase profit amortization, or points marketing comparable improved X.X as of year-over-year and levels an the of year gross revenue continue to Adjusted business.

We to marketing and X continue programs, but return, have to expand see demand flexibility the sales investments environment. current they spend Tier the pivot the change evaluate quickly continue and primarily we level an in of We if a markets. strategically in attractive to to teams our deliver like were ensure will that we to

invested with in our R&D a revenue, targets. XX% similar a long-term million last to basis, On gross we and line or $XX in year of level

platform focus leader organic our We or continue our to development, strategy, it's to through partnerships whether on on efficiently deliver modern enhancing acquisitions.

progressively was expense points G&A XXXX. revenue in the of from XX.X% second million $XX G&A or revenue, a of intend X.X to quarter We percentage of as as down scale drive we the down XX% business.

expanding building business. XX-plus also we percent we steadily scale to sustainable the on engine, While continue as a revenue are margins we focus

margin, This from marketing in than XX% quarter, basis income increased even the last adjusted continuing R&D. points XX% to while to year, operating up $XX and sales more a investments or and XXX profit million expand

cash balance Shifting and sheet flow. to the

was positive full in debt. our We $XX cash spend We remain the deliver negative $X cash and flow year. million for cash plan track free on million fiscal flow a quarter, the million on closed year. to to last no compared be quarter This a to $X free with

Turning to funds. client

of $X million $X under funds just generated over we about just average client an of points. effective of interest quarter, on XXX income billion, basis This rate

second In our HCM the the the remain environment. terms year, of we for fiscal outlook demand half of on optimistic

among environment or broader no demand year. assumes the and change customers existing consistent balance fairly been labor employee the in growth material of guidance organic for Our has which market, the flat

the of XX% the income at we million and of range $XXX high $XX and end million. expect For between third of and total adjusted quarter, million the between million $XXX or $XX growth revenues operating

XX% of For $XXX year, anticipate income million the at top full $XXX of we $XX end or revenues range, to we and operating growth the of the million. $XX adjusted to million expect million

we At still income fund the of just our portion in billion. accelerate year expand about road we've full quarter marketing With in programs this million discussed expect will rate marginally and of balances the infrastructure. increase rate, basis year for we to interest a We effective expect product reinvest to to interest income, range $XX million respect to today's be points. map the as third our $XX average client income to our on of and XXX in plan interest $X over to invest

full we However, income will to look margin incremental and on beyond interest outlook the will year line, to that cash bottom our flow. increase drop which any

to Overall, quarterly profitability strong we're performance raise consecutive guidance We've with pleased and quarters. increased our driven X ability again.

leaders to continues win platform the differentiated on market. Our focused in

expanding the the of opportunity we share in our As with market. $XX capturing a durability application, to believe billion mission-critical category continue and HCM the

we'll that, Operator? for With call questions. the open

Operator

from first Sachs. Gabriela coming from Borges question [Operator Instructions] Our today Goldman is

Gabriela Borges

Raul, of continues the perform in you mentioned all environment. to business in your ways this which

So question any I figure because impacts macro? directly. I'd ask Are you the or offsets the of negative seeing

Raul Villar

haven't they've segments. consistent sales To And been of fairly seen all fairly overall we demand have any in been consistent. environment. changes Things date, our our across

strong this to So demand. date, we've seen

Adam Ante

in in thing Gabriela, really organic I growth just XX else Besides segment small that we've there's customer nothing seen sort micro a the we're bit more little that under of X really say segment, employees. seeing. that softness would is that, that

Gabriela Borges

north that how growth. you're recurring XX% of follow-up know revenue now on difficult The normalized doing is Excellent. have very more on that comps. I been consistently thinking you've about even I

potentially So XX% do control? XX%? on that puts think think could are further? getting accelerating more you about Are growth. back bit down that and how a put you normalized out little about to potentially how about How think of just do you there your you hiring So to potentially takes your

Adam Ante

it's pace to think so the grow demand mean organization that the we do broader we've channel. the is is out sales drive ability profitability limit investment last couple across about and and to that sort which XX% natural about that of continue headcount we it return the there's in way I of the the at like feel that sales Yes. of been the environment, growth, it our And for years. targeting we a XX%, that what terms of overall well,

as right us is so plus complex, for -- comfortable haven't that growth. more diminishing it's think little so so returns. in our than of feel And a there's I ability we XX% to that, bit about we it that terms we drive where engine sustainable now we've a just sales faster grow And that of just point in that -- becomes range building that think seen to operationally, seen

the the to continue and of efficiency spend then expand that And that sales organization opportunity to will even be further.

grow. to that consistent being in in really about and it the last years X flywheel of been execution, that can we this way couple continue this has the the a talked sales years engine over ago about So developing now

And about just so next to I think. about stay of over the continued quarters XX%, it's execution couple

Raul Villar

Yes.

The way. is other continue dynamic, we'll the Gabriela, that along add PEPM to

long-term So to average really key think drive and ability sustainable ability add about to we to to continue X it growth to our is sales deal components continue headcount as PEPM and our size. our expand our consistent,

we've And into great feel to made execute focus performance progress to going to we confident to so obviously, over moving continue want percent we're XX-plus we our And time. and range. the continue improve and

Operator

Your coming next Samad from today from Samana is Jefferies. question

Samad Samana

maybe or either for first So one. Adam Raul,

factors and from effect us a which and maybe But of bundle if in really year-over-year, what know could curious the help change I'm those any Adam, adoption of higher quarter, cross-sell. PEPM such the think last seen the that's XX% factors, you as quarters? if of about the greatest few strong. contribution in Just you've growth you I had mentioned few good

Adam Ante

into the in it's would the of in. across Each consistent, to fluctuates I of of of conversion little really fairly mentioned, of it's see we But the items. X. couple and it's those mean, we X/X as is of we bit all see we adoption sort combination right, that quarters, that's combination a that And initiative on broadly, key depending pricing a say over see each close been that going last I the what go well point quarter, and like higher initiatives the things, subscription X at bundle, sale, Yes. that.

really So good X of not item sticks it's dynamics. across there's the been that pretty those other X X consistent, we've seen necessarily execution out, and

Samad Samana

you sales larger what expecting. Great. a trending, on track and for that And on and could maybe is more scale? as touch for onboard Maybe like productivity, It how that Raul, sales is just hiring to sounds you're more you metric especially you. is at

Raul Villar

Yes.

produce by we operating the the has productivity, at So a new hiring as X bucket But XX-year large, overall we really a Retention has a been years. would down on to excellent, perspective. tiers And our has bucket perspective, get think drag and us strong. productivity year our really from beyond been they and solid really our which lower or hiring. first expect, second-year people would slightly into as are helped and then based outsized rate

onboarding we execution. So really working. is flywheel And people feel on good successfully. We're we're that focused the

Operator

next Bhavin from Your Shah is question coming Bank. Deutsche from

Unidentified Analyst

evening. quarter. Nick on this on It's for the Bhavin strong Congrats

new those either composition change size, of on in there start say, and yes, any in back sales Looking modules in quarter, the industries deals, or bought there? was

Raul Villar

Yes. Nick. I above saw consistent traditional. would had we we that across would segments. I than Thanks, stronger say, again, say XXX results all results employees

essentially, saw operating that we're a newer of than is are seeing which little for that take designed XXX shifting, others. quarter. all we in that's us I primary really we mean, more And dynamic and product lot as is the segments and maybe So upmarket, a traction this our space. of the saw

continues a shelf, perspective, talent charge rates, we and the for we're high From off to module attach actually fly and it. seeing

it's market. opportunity So a been differentiated, us, excited for about It's it. we're in and really winning it's and the great

Unidentified Analyst

success are you with had, that forward? of thinking about your the just then And investments sports the of partnerships Great. marketing how some you've going

Raul Villar

new a the entry us really obviously, would continue a provided perspective, marketing significant expand really getting all awareness on streamline some these it's continuing of to we a focus air From engine positive marketing We're the all whole great to as partnerships facets markets. been I into help Yes. nationwide. helping we're sports as say to and and and Paycor for have looking cover.

so focused to TV and continuing And ads driving we're connected really that. online. focused our We're on on through traffic increase

those of funnel are top all think record paycor.com record We're and to seeing record of things the drive I so traffic helping And leads. impressions, awareness.

sure done that amazing ROI we're them. the the driving really that job we an in relationships making feel that taken good has these maximizing we've big our marketing brands and So actions team and on

Operator

is question from next Tillman coming Truist. from Terry Your

Terry Tillman

remarks the that guess prepared quarter? Raul, think is XQ? a your I that Or you first for that question it is I any Is bookings. was just, for said in record

Raul Villar

XQ. It a was for record

Terry Tillman

Got it.

Okay. time Texas, was kind whether curious of kind Tier about in spots? markets markets, Any it's are curious seller of what those of What your you've Tier any call-outs, new versus like specific California terms win since markets. was? rates are markets And expectation or you your and I of that other X in where X productivity I'm markets kind out in Florida Tier those some had now. versus And X or TFC traditional stand sweet

Raul Villar

Yes.

So we've the Francisco, and marketplace. L.A., South XXX% seen in Florida, significant growth, San growth over D.C.

organization. for whole, sellers those new sales are out us. win par are So on our overall rates our the And stand as a for our win rates X with for

and So up the the gate. sales them operations value of to people our a be enabling doing successful on team the job proposition of is fantastic with tools required getting speed out to

us. for component positive real a that's So

Operator

from is Next question coming Cowen. today from Bryan Bergin

Jared Levine

It's for tonight. Bryan on actually Jared

compare does And your FY performance, in relative of In that of net how to retention year-to-date change year-over-year? does guide, that FY revenue terms 'XX 'XX? embedded terms

Adam Ante

coming of metric of it's rather performing in good of So would trending It's the well. us I last was COVID we been QX 'XX, quarter necessarily And for year, the as on well. net retention -- sort yes, were while been going a QX any consistent fairly some actually over low been isn't X here retention. of that challenges. has say growing quarter-over-quarter.

consistent call a over technically quarters So but now. year-to-date basis, last been up, it, really it's on it's X the

are good and around we course, expectations feel So retention our included in net guide. of about that the our

Jared Levine

Q then form related of are quarter-on-quarter form terms terms outlook? a tailwind expecting those you activity mindful and in either the to be to year-over-year calendar year filings, X different in Great. there that filing anything this Okay. and basis the in And compare of year-on-year

Adam Ante

last expect where sort year. an mean I to it's if from with I'd consistent I bit it see acceleration, going would Yes. wondering going like be were a of it was little it's consistent that pre-COVID with fairly where be been it's say really but levels. to to We we of were looking

think it by dynamically year more which And maybe bit normalized our like and I customers, retention, So for driven retention, back a in has been line consistent it's right, it's that looks well. employee our customers' more overall little this with level. pre-COVID employee

-- nothing years. sort of expect So I has different anything any the of materially as don't that would we from prior to think look pre-COVID it

Operator

from Berg from & is question coming Company. next Your Scott Needham

Scott Berg

I a guess I have couple.

be these to well much other of this that First better and all extremely segments, of level I the at today up think on all, most cover. customer kind software HCM of least payroll than seems on call holding for general, demand in segment and solutions us

you others idea today covers, any the HCM that As look is at going that of what's softness? under seeing the why, on in kind great particular, -- versus environment are

Raul Villar

Yes.

it's I expand. One think things. of we're and some land a other your a couple not software, of like is

there's any to That's So add expectation that so going or one. seats, more to requirement you're speak. not

Secondly, I and employees. really changed around has last think a attracting, the really decade, whole added over some category retaining the it's powerful recruiting, as around around modules

of this in so market, tight big been I that's labor a And accelerated driver demand. think hyper

cloud would other some adoption solutions rate you Secondly, behind kind of cover. lag and that HCM of the solutions

gate And cloud solutions have our is that to this so we the can helpful I explosive the the think out that organization. be has and something didn't demand HCM their buy people eyes to helped up that really COVID of in open

space HR and again, traditional our XX% the more So our solutions modules of I and have attractive. powerful we're acceptance finance of players modern the combined more organization And in between X% the or the share. facets somewhere X other think that category, adding helping have are the additional really that made cloud the combination in traditional of outside

So legacy a available seeing strong pie there's over still convert really a demand for really think continue why I that's us more board. big modern solutions to you're of And the to solution. to across

Scott Berg

Got hiring range. then you've from on a it. end and your sales low of achieved your follow-up already And perspective, is track, Helpful. mentioned you the

you're at As cities you know you X but hires, in look the of maybe at or relative focus, Tier I than ago, individuals are these them placement the if seeing what those slight your looking have geographic are been X demand the current this different you year, trends customer putting just months to to locations X there's any segments change or strategy seeing?

Raul Villar

mean people what on focused on But we focused majority really No. early we're we're focused of we X,XXX still the are hiring to XXX in -- and cover that opportunities have on are fact ultimately, -- reps XX I that would have still employees have XX of the pockets in while above. to to we where segment, are add. we yes, call we coverage And X,XXX. to entire the the still the continue market, innings we're we

what our nearly sales consider opportunities have We to optimal would order current coverage. in organization double we to secure

XX long to Scott, And don't design, to look So your And ways to want go. look market. robotic at we XXX approach to and heads, at to to it's of you different can it. or we we'll to want lot a whether X,XXX different add the be If a There's or we X,XXX. runway continue that. do to markets to in have XXX XX

LTV maximize And options. to at look our to objective different our is we'll all CAC. So

Operator

coming question from is Peterson Your from James. Brian next Raymond

Brian Peterson

and are that of in kind what adoption? should just of what in to in terms But seeing you a bit the metrics of I have the to embedded a be everything growth given you're of understand X how PEPM me. terms that forward? if we kind to lot in And module at the Scott's pipeline and understand PEPM the expecting I'd It's question, pipeline, terms those and there's for in a love love Just opportunities else. looks? you of opportunities seeing look like bookings but follow-up of actually you the going of

Adam Ante

that everybody thing, I think And not everybody when Brian, sure continue any seen look sort the that at looks is and mean, it suite. big of we've yes, then what we've at point course, than expand now And of X our the pipeline, to that's the I we part platform, different payroll, buys I'm Table adoption talent HCM gets about. that bundle we core of sale the been of historically. talking

going Smart seeing and with and Paycor interest expand addition really really Now of continue days. that Talenya demand we're to the solution. to around Sourcing And is strong the early town acquisition already solution,

growth. the that's So I in lot where talent. a think of of we're We're come lot seeing a portfolio growth from seeing

the a PEPM the more drive to to talent We our for looking rate. customer end been ADS payroll up our and continue solutions, part drive of continue see that has of segment larger enterprise up where historically which and segment to continue that lower

same So grow that, I thing we for of more more excuse think solutions. inside pipeline, that's that to customers and me, what the is with talent continues see, looking

Operator

Walravens Securities. Our next question JMP is Patrick coming from from

Unidentified Analyst

Owen is into guess, bottom for line. quarter. interest previous -- all on back interest investment the income these This versus hikes? I interested business the Pat. the the rate And in Congrats mix to line to of I was strong straight what the what on was was

Adam Ante

Yes.

to when $XX we simply limit think consume can't we there what $XX that million more $XX we that where about of something targeting for look $XX were we looking And million to that going in at So incremental to And don't that spend of million year, that I were investment. growing comes $XX about sort range. or returns were the the million like like we half half, range, million. expecting just into a

funds. And targeting that's end. where to to we're going that of about in we or million $XX would on million range be income I half, meaning maybe year those probably a full think reinvestment $XX of been interest that investment we've So

see I looking we'll we're we invest the but to XX% we're case, as look mean, opportunities looking going the to that don't that look opportunities I not -- for for. increase to think at So this it, in we're necessarily to

naturally of sort will that fall down. so And

Operator

Andrew from Davidson. today from Warren coming is D. Our next A. question

Andrew Warren

And seeing success curious to customers, there? kind with existing getting seen in cross-sell modules through? we're along is are just was had if you of success how additional increases with doing any that, then I price

Raul Villar

Yes.

continue to focused talent strong On Obviously, a on driver. as base. our success modules into additional sales have the team side, cross-selling they're primary with really selling client we the

continue And grow time. thoughtfully growth, strong big we're the to there. play team where are so going excited that we've over And continues contribution to seen growth them. about overall team And and our we're to we a with to

As far as goes, walk that? you through Adam let the pricing I'll

Adam Ante

Yes. about that and We to they follow for around those intentional value really try be features price customers increases and the additional to make or continue service. either deliver functionality sure we

in we've support and a and of so And lot released organizations. released well that in lot our we've to customers, great product service invested heavily as pretty lot invested We've features our product. a as incremental of developed

we've jumping don't so to it. into intentional those incremental And And We price with of constantly on really able to we're take see we've able course, want been been increases them. be the good out that pretty to put with portfolio.

years a customers look nicely with revisit takes been pretty able couple client lot comes increases. portfolio since at And of years, new of quite before we've growing those So the last is a usually a it the over couple prices we to of price regularly. before in

Operator

is from from coming Citi. Steve next Your question Enders

Steve Enders

from strategy bookings instruction bit resonating to ask Anything that's and the I guess want verticalization little how quarter. in kind all here? to the been a of call particularly that's on I out,

Raul Villar

Yes.

the you key from of bookings XX% coming industries. from X is over as So our is mix slightly think it perspective about a

comps really years. For obviously lagging previous a professional quarter. I a was I quarter. food little little say this and tougher and say beverage kind had growing flavor, services, strong of results And and this would behind the would accommodations They're in we over from healthcare

I we've would the think about how that's about the progress We're excited really But industry. made.

We easily implementation industry. tools for invest so continue our for clients, for differentiation the can customize for we them into their tool product to and specific

Steve Enders

And helpful. guess, I That's question. just you. Got a Okay. housekeeping

what's rev of outlook the guess, what forward? from impact going Just on quarter And contribution? acquisition, in embedded a kind of Talenya the was I in the the there kind

Adam Ante

really It's the P&L. Yes. to immaterial

than overall we revenue the than like our So X% less it's see less -- well well year, for that. of

and there's about how no broader So suite. be impact that to take fantastic our platform going getting technology almost our we're it's really our market to to into the and more able But that financials. through to

Operator

Your coming Pat from from next question Walravens JMP. today is

Pat Walravens

Congratulations. particularly you off X Pat, doing a Pat caught well. follow-up, attention it reeled for that metro as we're Raul, my this areas time. when

I an was think example, are some L.A. place Like X success? the L.A. them. What that L.A. what where see would particular as drive taking make of like characteristics you that? would a of

Raul Villar

Yes. I our to we that what density, overall we're fact critical. obviously, business The think team the mean continued third I it's grow have year. And sales entering there. this is

up we've for modern a as of starting really lot legacy success. add marketplace. been when we've strong looking seen to we're entered And build a So something see that you marketplace large tenure just the there, dense that's in are saturated on solutions that

Pat Walravens

X? this And was said you year

Raul Villar

this really about be and started 'XX, We're in. our We Yes. X.X third will years in fiscal year.

Pat Walravens

Yes.

there you're So how out feel the of you just I here many there longevity are getting are on, of trajectory guys is or metro sort LA type at mean, you what I'm getting like this where areas right? growth big So started?

Raul Villar

innings. X/X about the way early metro San is I there's -- so X, in the you of Tier it, manage Yes. I largest would there. which into would the Francisco we're I Miami, Tier Tier say we markets. about Tier say mean, X. and XXth if which and L.A. and really the X think X, We're We includes them XX break And

think there. again, to opportunity to XX which covered about tons when X And are markets, continue expand. of next biggest We're you the we slightly have, Tier cities America, in more

of runway it's tenure that seeing through the long to productivity. continuing drive a headcount us, also for headcount, and mature so And that continuing cohort but

Operator

question Morgan. from Mark Murphy today coming Our is next from JP

Mark Murphy

how you're if Paycor pays can percentage first X trend in around it? what flowing are terms Anything the add I solution. solution pay off, seeing in of is believe revenue Or just your third-party speak I'll provider I your third-party much and between called with system my PayActive. own real-time there? wondering, the was of you congrats. to that is a using

Adam Ante

sort good it's see adoption, or the I continuing we mean, while -- growth just impact I overall in of is Mark, in the the -- materiality mean, still immaterial adoption it's revenue. of its on terms

using for that somewhere point in to think time are expecting or it really start to take own revenue or see years out on couple you that it, where to adopt card. the get that their away into the build I actually versus time a see When is it using this employees real usually are we're a using cash any drives pay sort right see downloading So to clients get company a card of the we then employees the are enabling the of card impact. card them economics that we most going card clients economics. of to really taking to is it some it What takes they're it and

And a so economics differently. the little occur sort bit of just

So with revenue I that runway just a it's to in mind, to I long going mean, be that there. think

benefit for terms benefit be to is able employees. their in enable of it's think to customers our I a the to

There's the cost their so customers And not huge feel employees. good it. a about to

table for future. the of to to it That becomes because too. put But that to can -- benefit lot do, continues and be that don't a revenue it give the they we so provide stakes it offering material And I their foreseeable almost really it's into employees. just competitors expect a core the --

Mark Murphy

versus interesting often Adam, taking are if about their of way that there understand fair it, cash card? describing I taking out whether is away of I they're right the a kind mean using you're percentage than cash on think pays But Okay. more some is the it that, basis? that right, the twice-a-month out to way

Adam Ante

benefit Yes, I definitely sure. using sure. Yes. for to it a there's absolutely. It's for people mean associates

Mark Murphy

Yes.

Okay. type And for in how you've we this managing, resonating in how regarding different at Is because just of then, they're a mean whether is how focus low, tangibly workforce. the that of within new environment? leading, ways wage retaining I'm for sort that organization, must high. have, where I unique is heightened in I now Raul, interested think, leaders of that a an is XX-year interest you different the had and companies that in the is long so kind on some a of they're unemployment, time perhaps this they're inflation something that have environment

Raul Villar

and they are, them our them goal recently, Clearly, helps effective, talent to leaders they coaching strong. and win understand win recently rate they in Dashboard find whether from is how longer. biggest better, employees going viewing perspective, help new an are where and a are of so source why making optimization we really opportunities, we are them reasons they it with most was continue stay engaged, faster. sourcing And X to smart leaders employees then the is their they invest with from and And or our setting perspective, making are COR to are Leadership

provides associates really real-time be from in it people And their leader. feedback order better a to

clients, deliver associate they're so drives for And obviously, more productivity believe successful. and to we associate going that that our can engagement clients. if drive for we leaders help be overall to continue engagement our And

And the resonating so definitely to people message. are

so them about help leaders going tools add where are. frontline more And we're more for be continue And to to to differentiated effective. we're we excited

Operator

Your Marcon next Baird. question is from Mark from coming

Mark Marcon

if terms terms targeted success you've how strategy little having end employers the people, bit Wondering your there have that of in standing the that's more the in with the employees. you're market? of helping about more than talk XXX any Is difference really upper you is what that strong of out Congratulations. you can a sales in

Raul Villar

Yes.

more we differentiated we're Obviously, believe as peers, the have of most going where solution added product those the we few from I itself prospects has in our would HCM. significantly sales more things. and that. The on over of feature think we years robust functionality, that. get perspective, last our we're it's a a focus from to And demonstrate combination PEPM put

feature of So our platform ultimately, and I ease market that use tools in XXX-plus functionality, the robust are driving it's success the far. that think that of the talent so

Mark Marcon

particularly functions from recruiting AI Paycor capabilities tight talk Smart And you of you And clients, little that and about with how your you in forward about that That's did the Can both terms helping, little AI and technology in could implications you a of then longer-term what is generative and provide? but Sourcing. view chatGPT market? you terms that's great. features service of a bit your labor -- to talk additional also like the what extent a leaping perspective, a bit

Raul Villar

Yes. I is less portfolio. in mean already XX And we've Paycor our on already we've had amazing an days. and technology Smart than to Paycor addition Smart Sourcing XXX amazing And in beta. clients sold Sourcing over clients

they it through prospects. of with asking on their instead essentially for of frontline or through see the the that and profiles stacked a desk, a timesaver. And first. so we're do that resumes them start leader list value. hundreds them view about of a -- provide to should kind And work we It's LinkedIn People AI excited

I'm a be to really going more about home share so it. the really we're excited call, On results. it's excited And we're really confident adoption. to our about and next to to that. continue going see run, And we're

HR across in customers. to our I AI, provide platform insights opportunity we to is think data have general, the that there entire the tremendous to leverage

product continuing that's leverage work of Talenya So team the our long-term the and through about we help and to our that evaluate will across on on. experts planning AI think with at strategic how acquired other us our team platform. obviously, modules And is are to this

a opportunities it can improve now chat to to have Internally, that functionality we obviously, whether there's plenty have you kind -- experience, user through use essentially, person. of with without person. a And already the of chat be

rest. Paycor think part solution it's so a not future help of -- means, but any it's from by the be-all experience end-all And a employee will separate that I user

Operator

SVB. Jackson coming is question Next from from

Unidentified Analyst

on This Jackson. for is Kyle

one. Just quick a

into the of that had $XX is change where kind rate Adam, mentioned for there factored no labor account year, think, you take Or the terms But environment that future million of does are that we full just or material guidance. in your was today? demand any in float I hikes? into

Adam Ante

on Yes, is where the rate environment it's today. entirely based

upside. in forward additional would So mean yes, any there's going rates increase

Operator

our session. management for I'd the question-and-answer We turn further to any to like closing or of end have reached the comments. floor back over

Raul Villar

in tonight. forward few all great executing connecting and weeks joining We're again for look the business Paycor next to we the We you strategy. our a the Thank focused over laser of remain we many with night. and by wish us evening. encouraged you Good you on momentum

Operator

does conclude That and teleconference you. today's webcast. Thank

at disconnect this your wonderful thank time, for may We line you and a You day. have your participation today.

Paycor HCM (PYCR) 8 Feb 232023 Q2 Earnings call transcript