PYCR - Earnings call 1 2024 | Paycor HCM, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to Paycor's First Quarter Fiscal Year 2024 Earnings Call. [Operator Instructions].

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Rachel White, Vice President of Investor Relations. Please go ahead.

Rachel White

to year call September XXXX, welcome quarter the XX. and fiscal of which afternoon, Paycor's for earnings first Good ended on

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

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

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

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

Raul Villar

suite customers expand basis opportunity. increases value invest differentiating PEPM which in of with growth quarter fiscal of our the nearly Thank had to you, revenue Rachel. And and this a XXX the thank joining HCM our our drove margin us results. We first year-over-year year points start you discuss Paycor's future quarter. continuing while for to all strong We to expansion our XX% of platform, to

and solid for performance. empowers innovative business of The people their leaders to demand that unlock the potential environment HCM remains our

upmarket, size purchase to and nicely. solution we deal expand As clients average ] [ a tape tend to complete and more a continues shift

strong. and is win up deal rates year-over-year pipeline Our remain

per PEPM. progress and significant initiatives: we or month growth expanding on our X employee making sales team coverage amount the per increasing Our is strategic charge

We growth XX% are with sales in on to full our approximately progressing productivity of line sales is headcount track and deliver our on year expectations. target

for HCM to a just we quarter, continue for demand such engine. than Legacy has industry-leading platform ] seamless vertical solutions experience. and solution. more opportunity complexity fast solutions increase [ to house Paycor within technology substantial nested are as a leveraging client go-to-market their with interoperability a our for the HCM in disruption partner This embedded as partners our software solutions. new announced right payroll the firms requirements cost offer Existing

We growing are the have offering, an a only pipeline we of with provider and mid-market embedded interested partners. HCM

and will embedded 'XX. of HCM partnerships fiscal accretive XXXX contribute last our second to mentioned be increasingly larger we fiscal in the half in growth The margins to revenue call

quarter, enhanced people our and modern This HCM powers we with suite award-winning performance. that value functionality

Our of $XX to XX% a of year-on-year, PEPM which list $XXX. or PEPM increased $X equates

leaders new powered visitor our to The suite and new a quickly interface. intelligence of conversational we assistant generative a Further empowers digital easily AI recently [ analytics released strengthening offering by solutions, people-focused ]. consume and analytics, chat artificial

We to are need team. effectively they power and resources save providing them the with by helping leaders seamlessly time their answers

suite research year-over-year. leader. talent the We launched talent XXXX, We're recently acquisition excellent XX% revenues to with our fiscal as see up proud of recognized market also a continue adoption solution we nucleus in that

loyalty will leveraging and an generation unify of experience. relentless of pleased lead and creating surveys, the our on Paycor's service Meager, incredibly with enhancing role, data Chief she model Experience to the focus irresistible I the this best where implementation serve new technique customers. further next and company's Brett our customer Officer, Customer And will organization promotion Brett

This is I consecutive acknowledged ] first ]. several received [ we employee recognized year proving Paycor DE have for proud been we am the I the employee time development. excellence And for appreciation, and professional Lastly, third practices. Topcore and by were culture [ awards well-being

how know capital important and leaders and human company, engagement business firsthand performance. driving culture a employee As in are management we

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

Adam Ante

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

X.XX% This market of month. slightly revenue Recurring as ]. $XXX of Recurring largely for of revenue growth growth quarter, outperformed charge XX% Paycor is we increase of amount guidance on driven the and year-over-year. grew by year-over-year, our import platform [ generated X% an labor employees of the our total million, revenues above XX% marginally revenue our per increasing number [ ]

have than XX,XXX than the our employees more prior year million up X.X on customers. across over platform, We more X%

As year ago, supported we by employees average increase customer, increase stands our size and [ to enterprise in upmarket, a [ customer continues at per from shift our now portfolio stronger XX% up ] ] customers. growth even

employees growth grew of while and the year-over-year, this enterprise the in flat. In remained with micro in line mid-market XX% the number segment shift,

of about quarter our and provides set to combine pricing our transition X platform, ago conjunction cloud being we our of on bundled a the solutions. pricing friction and to solutions point PEPM broader our our model Additionally, employee this years model and predictability from solutions. believe modern employing embedded us in a value reduce our growth In pricing, approach with has price enabled HCM better model. our of HCM HCM for This a is Paycor. for and cloud We customers much platform offering adoption

as work suite than half HCM solutions and expanded, more our has revenue from generated our of management. is such HCM As nonpayroll talent

is which on model. pricing of a All PEPM

expansion to adoption. combination our higher growth been fueled continued for X% the has by $XX more PEPM of by year-over-year product than of initiatives driven pricing a PEPM and fleet, quarter, Effective cross-sales increased bundle

higher steady adoption. We cross-sales are seeing contribution bundle PEPM and from

power, higher sizes with However, stronger will we initiatives new onboard deal technology flows which pricing embedded margins. moderate more offset ] pricing as from greater we by and expect larger inflation them and and business as contributions be enterprise [ partners average

sustainable and XX.X%. to objective We've growth. than plus our while as And Our mark, prior XXX Adjusted more in margins consistently to XX% than scale improved higher remains we bit. revenue differentiating a experience. client amortization, the recurring excluding basis year continuing primary points gross profit expanded invest depreciation

Sales similar year share. of gross a PEPM and million in to levels expect and revenue, R&D last revenue our expense increased invest XX% we million similar or enhance platform On expand basis, of market marketing XX% as we levels On annual revenue, HCM an our $XX coverage to of XX% invested a capital was we ago XX% $XX sales nationwide to to and year. opportunity. basis,

margins leverage the $XX was million improvement an Adjusted of XX.X% scale G&A income business. driving in and We ] of million points X.X% differentiate of XXX layer, XX.X%, products. we up XXX from $XX accelerate as from [ sales expense over we increased points or our continue while are elevate than to year. G&A basis investments to XX% strategic more service operating to with make last revenue, basis

quarter timing typical due free million. to adjusted negative the As statement, our cash $XX was first bonus in flow of the

$XX as and We generate margins expect million faster to expand We for debt. ended quarter and with free cash operating year the adjusted flow business. to than greater the scale cash of the no we income for adjusted flow cash free full

expansion. demand than business year scaling on focused higher environment remain had execution, margin we XXXX, we a fiscal driving and ago. top-of-funnel the demand The remains For with resilient

year. clients transition and for resonate to for continues proposition assumes market value to labor ] value flat legacy The the and to we're delivering leader telling among remainder remains our of [ organic the employee customers from high growth Our guidance it. existing

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

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

labor in interest quarter, current growth fund in $XX moderating for income and combination market second we million of to we billion team at and interest of provides revenue enterprise rates, $XX expect larger our million growth average year. accelerated. rate the generated embedded full client of comps Based about starting This points. basis year-over-year of over $X million confidence partner on half The the a customers on an just XXX effective income of range $XX

that healthy Overall, innovative and people our the remains demand solution performance HCM powers is and winning market. in

expansion scale business we We there as opportunity and to the demising margin significant ] leverage. further are is believe [ drive

in early $XX the applications believe As [ growth billion the so for we market. ] significant cloud, is wave in transition HCM sustainable ] mission-critical [ to the there

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

Operator

Instructions]. [Operator

Gabriela Our Goldman with first question Borges from is Sachs.

Kevin Kumar

and for changes Kumar overall there's I in ] enterprise Kevin particularly to would is any wanted revenue the of Gabriela. very on linearity how if helpful. of go This color on [ ask pipeline be any you're lives thinking year timing about for recurring

Adam Ante

little live and a of bit year come through large partnerships start more back looking contribute those and in the really are to and to that consistent. talked the half really of things enterprise going We we're

So months about of ago, so. we just couple no how real change were a from it thinking

Kevin Kumar

penetration should maybe opportunities segments drive think And That's are ]. on about What particularly cross-selling. cadence the cross-selling there we market further of the in helpful. then of just to maybe How the amend [ modules, for year?

Raul Villar

associates. looking the had cross-selling are all Obviously, Yes. portfolio. to to outperform -- enterprise. consistent of strong, we've Kevin, continues talent We've and people of retain had rest attract sizes the still quality really across the as

feel good our about in we process motion we really have cross-selling so there. And that

Operator

with Our next line of question Bhavin Bank. is Deutsche from the Shah

Bhavin Shah

[ you're any just any and you're seen that speak from some a of how into investments seeing the Have in of broker making repo that's of change Can the of opportunity? what ] basis. there? helping you And channel you about kind kind guys terms

Raul Villar

is to really Yes. bookings. in percent The the on XX% still broker overall We're around our channel. bookings field the contribution bullish

to outsized those we're on national large getting focus continue our cohorts. an partners performance and We in

solid brokers. a So brokers with continue to with year-over-year, we're really think we that channel. we the of the we have winning formula see and We participation partnered in grew excited. number We

Bhavin Shah

And about product helpful. embedded your how kind you differs your a during just and payroll. quarter, guys of HCM kind from competitors Can offering the opportunity longer-term more unveiled little know for you talk That's here solution. I of this go-to-market embedded the bit

Adam Ante

Yes.

first, who our capabilities, perspective able services service sense it's like we So that ours, be more a through that work go-to-market to offer opportunity. players from could of their they think trying there's us. offering are huge when that and it a find I merge a to them software thousands create. to mean, think many great of makes HCM just there's And and we to today that payroll

of at in For And a coverage really a had the we'll -- faster strong able are I differentiated partnerships be across pipeline, for them terms in really And really market to to lot us a around right of to partners markets deeper making it's today. us, on great a services create expand finding great those new usually partners to across be bets able more service to really have more able and pace. -- that already a winning mean, we've quickly go-to-market more strategy we key be helps of where some the and interest across early. a the provide

Operator

Our with next Truist Terrell question Securities. Tillman of is the from line

Terrell Tillman

and Raul job Nice Hi, Rachel. in quarter. the

build the want It That's may So be heard actually of Adam, you my if HCM that to on growth. might actually, But point contributed first X Rachel. question. I have a question. think I embedded said multiparter, I

the that confirm would I help accelerate little or pretty growth maybe then And does to a XX%? on potentially I support seem higher? embedded big something then follow-up. have this of like So a HCM, it is opportunity, And Or have could a kind drift actually even wanted this same that.

Adam Ante

expand think and we're term, want hit our longer higher continue a to at that grow opportunity we regional by sustainable mean an working a opportunity that Again, it with the and has are to providers. partner in accelerate. that to opportunity those great it's but market And a of to term, we ability an has to I and think of lot really course, with. entire providers market software these think think that service opportunity. there's we are really level. near we A really I the I about like XX% really the like early, to continue talk lot that of to in-house is half of

growth and employee In slightly point to that's PEPM, lower was of quarter. about contribution, point employee add X in it going did of already about at it on but growth, the terms a the X of come yes,

Terrell Tillman

it's of a question definitely and hear. slower. in little great the forecasting That's to sales It relates than year-over-year sequentially, trends was team just what to kind And [ then follow-up and actually ]. we just were lower a

how So maybe more discretionary that there? sales just productivity you about see. could you there also that seller retention, I'm trending? did curious like what kind I color think, certain Any about say was just And just the share Raul, didn't something with something we team. Or of marketing else of is

Raul Villar

So overall seller expectations our and consistent with as ] they're has far as cohorts been control year-over-year. [ the and productivity, operating retention

So continue Obviously, per we changes always there. haven't any rep. objective to our seen productivity increase to is

While adding new people, productive ecosystem. cohort it's while at favorable the make you're productivity that adding prior to a always you had the big can of you the less year least sure people into maintain

So what perspective. focused we grow have ramp year-over-year, and that Obviously, execution cohort the that productivity feel good from that's about and we that. of train we're on

Adam Ante

Yes.

in which XX% some well. a our be of Terrill, full -- range QX good couple rate. I the of still -- QX. inside will dynamics moved mean some on at of I grow of to think planning continue there I as to the larger we're and year, XX% to are quarter revenue think, between to programs a going We that we're

do have panel and we've So in on really difference our organization although real the of of points trends, invest programs continued we we about focused that a get that. sales sales leaders. hiring and and forth there we to as scale reps between as marketing been fairly are the more just think to No overall couple back similarly to expect especially continue out might

Operator

Cowen. Bryan Our next Bergin question TD from with is

Jared Levine

It is for Bryan. actually Jared on

quarter? about demand heard environment, change been it characterize your you last then you any of the environment solid, being would to relative but commentary we to there's the how say demand And terms current would relative In pre-pandemic?

Raul Villar

Yes.

with really really said we're haven't I consistent. visitors top-of-the-funnel first-time and appointments paycor.com, We strong are performance, seen consistent seeing rates It's been win changes. to any what impressions, on

at So about the where are we funnel. top really the good of

is demand and the holding so environment strong up. And

Jared Levine

the your then And Great. of think functionality? revenue level generative interest we how AI, of client Okay. terms in in you there? AI should can potential the And discuss about Gen opportunity

Adam Ante

Yes.

still it's little call that a opportunities to generative think on I early the AI. revenue

a I using ] we've example, generator, like description that And roll a using roll it's we're ], and so we think interest it pretty of to were the couple a there's system rapid seen for able job of in not out usage, areas something quickly. that we're necessarily [ but lot Azure, underlying thinking models can Azure I We and we're about those charging out success. [ explicitly for. of tour GP really seeing lot mean we're quickly.

analytics to increase I with other seeing recent there's we're from we where there some that think areas, that. request opportunity and like potentially customer PEPM be perspective, going will -- our to charge a though, are capabilities strong for

the of shape better half a year. back going think little couple but So call, that, into a next And we'll to quarters, it's and think blend. the going to I little I early should I it's still take think bit that view a over be have the maybe of

Operator

is question Needham Berg with Company. next from & Scott Our

Scott Berg

a in didn't I Any than the different and over received recently. have business -- of be your maybe question seen or an helpful historically. I from is look the question vendors but statement, going understand. maybe rate a more to the I've I line item, your at unusual more times better that for of it's public in revenue dynamics particular would other Raul, question have know kind space time? a recurring income Adam, than quarter growth kind the few some there's reason as more to is, why around investors quarter. I've bounce in tends Nice I that that if But on

Adam Ante

rolled the business last fairly X services, model se, X and to in been majority as PEPM over consistency think else's more new model,and really and addition really have everybody Also couple in. the us. been a last rates on Yes. have the we've rates. we may that it's and can't recurring particular, our Scott, model, I to I growth in ongoing really we've over the lumpiness migrated really for of a years, of the PEPM the that. building new business mean, we've ] the And per business about to I driven there and to out model be we've and ERC consistent our years whatnot nothing now, we've some over been approach [ but able coming the consistent with speak last been of But growth years

Scott Berg

or Is today amount. X% customers [ seen How cross-sell a trending PPF year? quarter. from maybe How then of is from of Got [ opportunities it. buying what it the kind last ] the ago, quarters your charge effective trended expansion cadence a you've or the over new versus current think metric we ] And from how Helpful. perspective. down is should XX% and last? in PEPM couple about maybe the it's similar than earlier that same question

Adam Ante

cross-sell contribution And range. points X that has the cross-sell. Yes. growth rate X% of to in sort I sort tends is from actually. a this normal to PEPM It what X of rate that in would gone really is say we've really additional X% consistent, been to of is growth The year more from

also to X X This driven embedded channel, growth in dynamics by of -- X,XXX. a range point or over little over enterprise bit just that That's customers the grew the and our quarter, a growing we're segment enterprise really and ] then faster. channel X% [

the X.X the products that be X great a anything, [ for There and this continued been between couple I think, we've has points of a the there's the of there. ] lot to expanded added as years. really difference to But over space And growth suite seeing so that of of lot If really consistent. quarter. last especially both and motion continues opportunity, growth points accounted cross-sell we're of those X really of

Operator

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

Brian Peterson

up quickly how I relationships those ramp to the and then start working I'm to wanted both think to how should that go-to-market curious how to motion? a there embedded met, from want up? can follow with I just And we just potential understand technology see partner? and is perspective a on opportunity. a about when

Adam Ante

they a the I you initiate experience can building for conversation mean or But take take up new the just I their And a relationships business signing capability you're close. early And through get go-to-market the right? or integrations on whether the them, quite ability long bespoke then itself, business And it then want [ portfolio up the the once quickly. the it's It's portfolio, ramp year. about sign and enable setting while. a time great up. over a bit where support setting partner that create customers. -- that service a and and from Those We or technology mean to until to board, first new sale navigating from they we is motion migrating cycle over upfront running. to more well that it's a you're rather a that's all better can with about ] a that longer, has Yes. it you especially and so

Raul Villar

because an solution accustomed and HCM in needs they a start that Yes, the Brian, to feature Other partners, all the don't selling tend currently have integrate the or onboard And have platform portfolio. types with HCM to. There's we existing meet they and take formats you a solution limited there's partners we have are solution, existing and and longer partners software new. of right? an X different functionality are may ensure that that already they easier to of

with it's go-to-market with versus we're different a our both installed to every X latter targeting has scale. week opportunities. started And -- larger have large more motion converting X a resources you bases. motion the We of So -- today. go-to-market There's

Brian Peterson

a just think the the the of of color we're basis. this PEPM more seeing Understood on expansion there. kind How long-term And do annual we expanding, over maybe pace quarter. about

Adam Ante

Yes.

probably range. I normal more a in think we're that

see next that So in digits from going through trends additional mid- expanding We're pricing opportunity it's or years. couple the continuing to of upper on X% the to so. expand spend and sort over to services how to single the our of pricing suite. And

of the more percent So a segment. And together. I we're [ embedded see wrapping versus in But for to of the versus recently that a again, little all makes then going X%, more sense of think little us. addition upper with where some of channel been X% ] X-plus we've that enterprise of range, bit bit and the a sort to market probably you're the

Operator

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

Mark Marcon

Can the it terms the you're that have types their I on of with examples platform some just be with with? of work us solution. also going to of Your does give and claims partner relationship -- embedded you the And in the software -- brand. more how partners the is client?

think how And work? customer work? implication? margin revenue so work? does how How I'm How the does pricing And wondering the share about does we service should

Raul Villar

Mark, it's it. all. appreciate Raul. Thanks for I'll the XX them questions. remember to try I

So predictable different it sticky a software think looking when PRP what many market and A, you is either stack. across [ are for and the delivering going prospecting examples. good stacks about inside think ] And X from industries to that are they're tool really or I about perspective, of workforce think targeting something types management a vertical

offering. we're what that's so And

looking expand in a million us into PEPM are to And for call in their of revenue that so their to great $XXX targets stickiness. are that, increase $XX base, lot looking million it, to

feedback And really fit that of think excited opportunity. we a type tech that about model. of there's so that whole Many and bunch this of attractive companies are

As anything an has what, think. is should far partner. on that's would how HCM so Adam, needs. that's and by ours, does you flexible it And on going But really Obviously, based partner ultimately, that integrate service, the economics, the the And application. to payroll we're we're who into does impact as and the their the combination product right? the add? of configurable does who and implementation you who

Adam Ante

will we is. their pricing the it's with partner, whatever be strategy model, will to on straightforward in partner mean to go I terms own revenue of going the market Yes. and pretty

it separately, they whether bundle it own build out share. revenue or to into pricing no want there's their So

Mark Marcon

fee then market we profit size of of Great. think should about And we're clients, the moving the trend? gross of exclusive how in terms the float as margin how should that

Adam Ante

I our fairly of many gross consistent, the segments profit mean margin is across actually.

subtle is that sub-XX see of we the get range, of sort really fairly tends amount what ] then once [ of margin to gross out that sort services employee will the you of determine So our consistent. the and products client support of really customers about between And operations are be it's because the the overall and tax where margin client of and management. ends payroll ultimately the that operating the buying into up being supporting majority the goes general service cost

Raul Villar

from Mark, I is, think bookings shift were average our And up with market. base. to the to us was the and Yes. us IPO, size new exciting employee our what's you our continue this beginning, at quarter Yes, the objective for double is current

outpacing So average. significantly we're on

moving up pay sizes market. Our

operations has progress the that the sales team really to team has and that to be team about support made, has ecosystem. the product we're excited made the made so And able

Operator

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

Unknown Attendee

on look When verticals levels base, Siti. weaker are levels? color guys the you This you're seeing would helpful. your or be particular Any that is there across kind of Phil workforce customer any for stronger at

Raul Villar

serves industries. a broad solution all obviously, that we're Phil,

the services the But outcome. [ over in said, ] care. manufacturing focused and and industries the slight and we've quarter in being However, on professional that would food average, say, it's seen on, that strength in health I we are beverage delivered expected our narration in X

Operator

Thank you.

Our with of Murphy question the is from next Mark JPMorgan. line

Unknown Attendee

This is for Matt Mark on Murphy.

terms guys and market overall but steady any guys you any been if dimension? other kind or segment of demand seen the have and geography is, divergences. question know First solid, said kind in has divergence any you I of of

Adam Ante

-- a not the payroll I to steady, Yes, at trending really. that. nonfarm broader right? seeing we're similar mean, but market and consistent, look I looked macro really little mean we're sequential you It's down, -- think And As still similar I growth, at seeing decline. fairly it's been we've very

so last or inside seen haven't portfolio. over not of the And in the consistency really quarters any of couple markets divergence the any definitely of

Unknown Attendee

are and rates into anything competition then as or cities along being quick pulled lines? of follow-up, market. as And or just kind up who Tier in you're you moving those a Any in X win changes guys seeing the

Raul Villar

No, we the national we in an But every be would we we are ultimately, those see the started either the market. as changed. were our still market. competitors competitor. most incumbent consistent. see, ADP who journey, or we the ADP, providers all in And from X, X hasn't a Paylocity, are Paycom, When see that they

no market within perspective. from And differentiation that so there's HCM real

Unknown Attendee

across it. have stable And Got rates X the win those relatively well? been as

Raul Villar

Yes.

Operator

Our next question is from Steve Enders with Citi.

Steven Enders

how more I just of really to Great. bit it But a the think embedded profile of there. guess payroll understand How embedded the then you on embedded on, the we year? core I'll maybe ask HCM. another the seems I But that little question solution? is about the And for outlook Okay. margin I guess want like rest good strength the as versus feeling of are in what's the HCM. about back different

Adam Ante

these the far. that growth the thus We of Hi, guidance feel includes -- shared performance channel and that the we've Steve. future it

still consistent that's we into good, really how with feel So and the we year. came

customers. bit margin the partner you front-end the cost acquisition the cost and on of maintain right? same a margin the you distribution, the So sales quite much the terms to have will versus profile In supporting ] stronger quite level patience have have you're be don't [ we and of little don't side, as of because don't

necessarily channel. bit material time. the say the we will invested in benefits margin continue different a So like in to margin the a over through not margin. that the will little and 'XX to earlier profile model see I'd little to additive on, 'XX, really bit any better come channel this as be we've as going year, grow you're But

Steven Enders

] then going in A how you up pockets in about are there? the That's that strength areas making, you [ where that I you you. as about kind today. geographic kind the to X investments feeling in think call Got Tier of helpful. And context bit couple there Okay. And out out there. ramp Tier been softer -- the little the guess the just guess, I footprint of of of there? you've were are maybe a X investments general, any or any change this and

Raul Villar

the share X also growth. continues our of the lion and our bulk be Tier It's investment. Yes. performance to

So size, seeing of the line We're good really an really deal that. results from average. about above average employees, good number

like good. it's feel we So really

we execution -- As we're it's markets, about really field. that individual have doing they And It's we the poorly It's of markets. that, the a in those macro playbook. we won't -- and when market like we we or have. at far any perform are not great are well fully as really no leader, about When performed well one this do as we of seen things, we as running well. more they're point, the we've staffed like are are all the in missing if performing on the other impact team

Operator

Our with Capital next from Markets. Jester question is BMO Daniel

Daniel Jester

this this solution. more with and your the talking can spend might of the seeing is and guess one-off of type solutions analytics around about to from it need you partnership best-of-breed partnership you of maybe can in given we product we sort a a to if a maybe or you today? accelerate I is Azure see more Maybe your going minute of generalize, use the can terms analyst that opportunity

Adam Ante

they've together. the acquisition to and/or And we with themselves. we think Azure. solutions at were look look just case, partnership They solution get the developing we opportunities our able to in knew they really like mean, they market we've we I opportunities, like directly able organization They've this be to and think built. build able very to I we it rapidly. through going to to mean create this been I partnership great didn't what mean what with something I well partner. to at take work were product And us been doing. to this channel a be with

we with so our really appreciate them. And partnership

one it's the partnerships, I I but consider think or to you're one necessarily. more would in direction, like going not think we or strategy less. other see don't way the other, change a

Raul Villar

Yes.

we creating something is the of platform. do away. great together, relationship could of and identified really power best we Ryan is stuff breed. it's I as we're both a right think wasn't enjoy which developing for more partner. our We It them

So excited to relationship our with and to we continue about want it, grow we're them.

Daniel Jester

touched can but to really think That's circle maybe I just this then on we back And earlier, Great. it. you helpful.

terms kind that's of of a revenue of on your as that percent the paid base where today PEPM, In to opposed still per check sit being today? roughly basis does

Adam Ante

Yes.

on of per model. X/X or our some And of strategy. XX% PEPM XXX% also on that although revenue about the have channel HCM new form of years, are they're migrated solutions this that also really of XX% over on, now We is has X other a of buying last that PEPM a PEPM half portfolio less than business from a strategy. And on to the some on we XX% comes the nearly is sell that portfolio

Raul Villar

to I our would interject of like already that just XX% plus And Yes. perfect. are payrolls

revenue from generate issue an -- so really trying to we with we client mistakes. And don't have have

Operator

line of Matt next from the Our Blair. William Pfau question with is

Matthew Pfau

Great.

wanted list Just that a the acquisition on quarters ask to ago. you customer few made

converting progressing of your how expectations relative terms in update an to customers. those Just on that's

Adam Ante

really quarter. things success pretty and Yes, progressing a really all had quickly. are It's great portfolio it over in really the here first that We bringing coming well. together with

that really sort on on for add the have of to So quarter, the that year into going necessarily we nothing portfolio. but track in the expectations

Matthew Pfau

And credit. then a the employee Great. retention follow-up just on

in from I anything guidance pause going revenue think that? you from previously a forward now. -- of that had there included small it's amount Is

Adam Ante

Yes. our and still for had in it's be expectations. to to I X not come it's receive I And IRS around relatively mean, I whole mean, been something the to I to in processing that. we going bit that revenues. anticipating related to point pause a think little is revenue expectations mean of our and of we're ERC-related the program it's hasn't I the processing. close to think going year consistent ERC, still

Raul Villar

And QX was on track.

Adam Ante

QX was on yes. track,

Operator

Kevin question from is with next Our McVeigh UBS.

Kevin McVeigh

going of sense overall a how that you you pricing to XXXX think we I us much what should contributed forward? And revenue? how wonder can embedded give about

Adam Ante

Yes, off there.

we the how our growth tends I it pricing impact PEPM to think -- way of 'XX. much that is how the comes mean, much of I was from price, around and actions X/X about of question think from it come sort did normally of pricing FY and Yes. pricing.

on growth. around X that year outsized And fee new last we also bit of that that new XX% added year-end services points we overall so talked up more QX some some then we with services to could about or programs that PEPM services. in some so was the were little released be growth there And X depending primarily a and have that specific to that

trader of some X/X would So about growth sort ], we related pricing. typically, of [ that see to

Kevin McVeigh

about PEPM. think you versus realization of the on of the book kind the if Then kind

kind as [ You see there? the or spoke you of I thoughts the quoted ] that like that if would, narrowing to something convergence realizes $XX [indiscernible] on any

Adam Ante

to penetration growing Yes, drive it's converge to it our product to all and is way think for mean going ability our take fact I than the to time suite think the end. the faster is, I we're XXX% I top attach.

the the what's expanding of to and us And just growing And mean part and then some longer. cross-sell that point on helps drive business, I got bundle is time. the so takes drive suite of new up the And ]. pricing it's really going the the motion take out which to back which sale at [ base. continued go model, bit a you that into forward little helping you're

to and to the set being -- new rate been competitive solutions So outsized at the solutions to of an able has team products market. add and rest then suite the the the relative and the at other in great

term. over to going in converge be think I steady to it's don't I near time. And any So think going it's

Operator

Thank you.

Davidson. line Robert Our is the next question from with Simmons D.A. of

Robert Simmons

looks would half? like accelerate in guidance I how recurring second half. points is like solution? the year it second embedded X And revenue it those of first So partnerships the from other maintain much from than much your the in something factors? that slower half implies guess, Why is how

Adam Ante

'XX. to last back FY be was of dynamics -- a And year, the enterprise. there yes, we partnerships going and I of into as some couple were these of the is what of a the really was that's QX, some adding led lower number we talked mean Yes. now it year about and -- going coming really QX to and half that into

also sales is to well. of little going the headwind half then going a bit that the into the as there's back partnerships. we're of that continued not same-store Some be And the same year of going have to

most about fiscal what and the just going in last which the and the in is thought here So quarters. see visibility up has of January consistent quarter us to to our year starting it the which it of January QX, the been how coming confidence to we're we is couple give with full

Robert Simmons

Got a XQ, was think? [ it. expect a skewed growth higher seasonality would rate normalize year, lower last we ] Should to which And year, or this and your suggest kind XQ XQ you then XQ. growth bit that what a little of rate maybe

Adam Ante

Yes.

It's the a much to smaller as smaller was think ERC fees normalize I portfolio. I just XQ think the as to you're of a factor see a [ really continue and time see not become XQ going little over trade XQ. year-end going our of of with portion we'll between to bit as little and ] normalizes be bit. a There XQ

Operator

would the closing questions, As Villar Jr. I hand Raul there no now his further over for are comments. conference to

Raul Villar

joining Thank us tonight. again you for

connecting executing great look including remain by HCM several the forward a of Cowen are night, Summit. with encouraged Have underlying everyone. We our the strategy. on We fundamentals the and upcoming TD to events, focused business

Operator

has Paycor concluded. of your conference participation. Thank for now you The

now lines. You your may disconnect

Paycor HCM (PYCR) 8 Nov 232024 Q1 Earnings call transcript