PYCR - Earnings call transcript Q4 2024

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Operator

Greetings, and welcome to the Paycor Fourth Quarter 2024 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce you to your host, Rachel White, Vice President of Investor Relations. Thank you, Rachel.

You may begin.

Rachel White

to year call June XXXX, welcome quarter the XX. and fiscal and which afternoon, Paycor's for earnings fourth 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

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

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

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

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

Raul Villar

and us Thank to results. thank for you fourth quarter you, Rachel, all full discuss and joining year Paycor's

to value of growth XX% continues leaders unique the Our proposition business helped of drive revenue for drive performance market and people empowering to quarter. and win in the

this year our growth our employee adjusted our the operating XX% per the increasing For we platform expanding revenue team and flow strategic while average in month strategically customer initiatives, X% We income amount margin number platform per by our experience. against and significant cash executed in X%, employees delivered by fiscal the of on PEPM resulting year, or earn investing and free fiscal expansion growth.

elevated rates Demand year-over-year, of struggling sales our market. metrics the win increased incomplete as resonates proposition Top significantly appointments employers our most and tools. value and as funnel with in leads remains remained are and HCM antiquated including first-time healthy

XX We marketing opportunity. in continue focus America, where to investments the see most sales we hiring largest cities in in the

sales to seller Our increased professionals, XX% tenure field X% in our U.S. XX%. which from year sales XXX to increased the team sellers. Average which XX XX% cities among drive sales grew productivity, largest our coverage this

A strategy core that our component help partnerships field us influence. go-to-market employers nearly brokers of our with developing year. is centers influence of are maintaining legacy their and dissatisfied Benefit bookings key with this tools and identify half HCM of

product, and increased pay last mid-market average investments the off size year. to size XX%. average customer our our new XX%, Since the average Our to the helping mid-market expanded third deal customers our client few the and experience consecutive grow by years over IPO, as of continued size sales average size deal for

efficiently distribution embedded are We earlier we announced extending this channel indirect via fiscal year. the our

strategic Our offering retention their customer and partners clients client prospects. by to enhance HCM embedded a and per solution their revenue modern

X announced quarter, we partners began selling. last our continued partners quarter this new the past and portfolio In we third converting

partners over indirect last also We the our this quarter, partners several year. new tripling signed

Our our customers. capabilities with HCM also team new platform continued award-winning valuable expanding for our

and released Paycor product Pass the such to suite of Our enhancing platform. labor our connectivity and increase $XX. of by our on talent our leaders value core year, solution This Pay benchmarking, remains platform, $X as the further investment enriching focused we our that deepening and technology forecasting empowers

to adds another a Within pay $X cycles solution we our our budgeting new streamlines launched recently that core suite. and compensation management and platform,

engagement. alignment within Our teams, driving collaborative tools and foster helping leaders budget while ensure compensation across equitable competitive employee

tools, business results. our business drive XX% frontline proposition top and leaders validating outcomes. to to again fiscal improving unrivaled talent coach, helping suite year, talent retain of empowering robust this optimize by engagement, better retention talent which our from employee is XX% increasing Revenue are drive nearly and leaders unique value Using employee increased our

interoperability our According most not and half platform more are advanced year. inefficiencies. other approximately integrated, business year, these leading significantly API this applications of also extend demand software on or to strategy systems, to to professionals this HCM We our employment Finch, and applications. fiscal leveraged of X demonstrating growing errors to XXX% HR use increased

to tasks. enabling systems, data We time-consuming, provide manual seamlessly and customers unrivaled error-prone to automate flexibility their leaders connect

create increasing XXX-plus our developer number have our made the API marketplace custom fiscal by prebuilt We year. to by of portal more and endpoints it integrations and XX% this in easier integrations than

May, continue connect HCM and to The platform what focus In we've winning business X office, management empower workforce automate in them and developments and talent. Titan driving spanning HR, tools to recognition. garner back won to their analytics, on up results. industry made freeing Paycor leaders building teams matters, innovative our These awards Business

we on 'XX, IPO. fiscal enter since our strategy reflected we As execution progress the

increased Over grown than income revenue generated by million XX%. than XXX% expanding nearly and PEPM in industry-leading in and last sales adjusted years, greater have by flow our operating advancing by platform, more more free HCM list XX%, capacity cash the our XX% X over by over $XX while we our growing

we growth have tremendous and and given there opportunity is ability of to our market durable expansion. growth to XX% remain attractive drive while success confident billion of ongoing path the had to the our us We is bookings. margin $X made size believe solutions On in long legacy progress displacing significant. before We represents deliver which we in opportunity the a our runway accelerating revenue, have our

and are how our fiscal go-to-market Our targets and trending. as we momentum has motion retention to strong by sales tenure staffed are encouraged deliver 'XX

sales and room leverage significant scale, and accelerate conversion. top cash drive priorities drive our efficiency as to we are have to We

new are we of a target introducing flow XX%. margin than As adjusted free such, long-term cash greater

our increasing that through employees and innovation. through growth do invest expansion continuing will We product namely strategic initiatives while in sales to PEPM adding

results. the team like for possible thank the strong This their have to dedicated progress in support wouldn't without and been our associates. hard of work made delivering these efforts I'd

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

Adam Ante

Thanks, next and fiscal the Raul. fourth our financial our full then I'll year outlook share first performance year. quarter quarter and discuss and for

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

We delivering of revenue had XX% solid quarter, prior revenues the increase an year. of total XX% Recurring grew year-over-year. $XXX another million, over

were increasing year, For revenues XX% total $XXX year-over-year. the million, fiscal

recurring employee revenue growth the is the Our and our primarily expanding month. of employees driven on per by we platform charge number amount per

from prior This by quarter, growth. X% with the business new driven grew over contribution market modest a employees wins labor year,

revenue XX% our revenue Net contributes growth environment, with X year, our line labor In labor typical point or as growth. of a market the in macro was expectations moderated. market growth this retention a

market slightly U.S. points over X X, last moderated of the months XX now historical has remained highs the growth contribution, labor of it positive. to While revenue closer from to X

this finished XX,XXX to with customers, We and retain our employees. utilizing coach, quarter platform million help nearly approximately optimize X.X

customer size last to to increase revenue. continue with as size contributing of the see X% upmarket, average our of year, enterprise and represented micro and we continue XX% mid-market the product XX% our average success contributing just demonstrating Similar under XX move of employees our investments. customers to portfolio, of deal We service segment and

to PEPM nearly this X% Effective year-over-year increased quarter. $XX

to suite. demonstrated strong effective increased has cross-selling XX%, and of bundle initiatives rates, The rates Excluding traction. cross attributable attach higher PEPM fueled PEPM attach and sales, product embedded consistently is deals, growth our pricing expansion and in effective HCM by talent

to employee continued again points channel HCM Embedded quarter. this growth and ramp contributed of X Our

demand pipeline quarter. for partners We sequentially grew have increasing consecutive from the and our fourth

materially before and Although take it pleased 'XX, fiscal progress at some embedded time will we double are our the least with revenue. impacts it expect to in revenue our

capacity, continue offering capitalize our tools to to our success. to and on and expanding enablement sales We invest opportunity by drive mutual scale this

quarter, basis billion, points. effective $XX client funds average up XXX million This on we income of generated approximately rate of $X.X an interest

to top expanded continuously an line have addition on consistent In achieving margins operating annual we basis. growth,

XX% profit depreciation gross amortization, was and quarter excluding the Adjusted for year. margin, and

XX by macro points due points decreased basis by for year. however, it full year headwinds, quarter, to over basis prior the XX expanded the This

or and This ago, on our a scale. basis sales more XXX marketing points and nearly focus by moderated driven expense sales efficiency $XX down of quarter, revenue, million XX% growth headcount from and year largely was

For the revenue $XX million R&D On in of was basis, XXX we gross points or marketing an a improvement $XXX of of expense year, or XX% million invested revenue, sales and basis XX.X% this years and prior quarter suite our expanding of opportunity. with XX% invested to and the line our all to We similar long-term revenue HCM differentiating in in targets. year-over-year. PEPM year. continue our R&D for

we an improvement As have $XX revenue business, driven XXX we expense scale year. the from basis million quarter, G&A this G&A. last XX.X% points in or was of consistently of leverage

year, G&A. leverage of points achieved On full the XXX basis we from

of Quarterly with over XX.X%, to adjusted XX% income operating last from up million XX% $XX year. margins XXX basis points increased

service up and XX% rose income operating points adjusted year, full while our to XXX million, basis the differentiating $XXX For solution.

margin, we quarter, points. of $XX at adjusted up million X cash the flow During nearly free generated XX%

For in points. Free X% year, margins year income of efficiency. basis the million We $XX and debt. $XXX margin, cash scale improvement rate operating we to XXX we ended cash the twice flow margins the business adjusted expanded the full generated as continue and focus at on or of an no with million

X% compensation stock-based dilution. our than less XX% of addition, with less revenue In decreased share than expense year-over-year to

are 'XX, to cash fiscal efficiency conversion. and top priorities drive our Entering sales accelerate

top remains profitability approach we value. balanced maximize more believe our While priority, growth will shareholder a to

growth target mentioned, to XX%. the and year, margins. are flow roughly income achieve by continuing we introducing than margin adjusted continue twice sales adjusted we drive of headcount to a this to the Similar plan of efficiency with expanding free go-to-market sales productivity dynamics improve to leverage we cash this long-term margins Raul balancing to flow as expect new G&A adjusted As scale. cash at operating free We in pace greater

expansion. remains and a drive opportunity Our environment outlook fiscal to demand on 'XX based continued healthy positive PEPM for

our and year. a rate the a some in market declining labor However, this headwinds and, macro reflect conservatism fluid course, of guidance backdrop, environment at does point including

range, expect of $XX.X over XX% And at million. and between For the end high which $XXX million $X interest is income million billion. total million average just to funds be adjusted we quarter, of growth and the between $XX $XX.X balances or first expected on of the of million $XXX income client includes operating revenues

including And XXX XXX adjusted improvement we fiscal For million which points or full year, million we of end income over million interest a $XXX million implies in more $XX to XX% total to income, range. points to top margins. the of to expect the the the $XXX cuts million up $XX income year. $XXX of million. adjusted of operating recurring basis contemplates that of operating basis, $XXX at On expect next growth basis rate than revenues

remain our business and people that performance. HCM. Demand for to we summary, optimistic about innovative leaders of opportunity remains healthy empowers HCM their potential solution unlock In our in the

to Our great attracting, is talent. retaining solution mission-critical paying and

deliver to playbook in strategy sales free confident our greater executing on are a go-to-market focused margins. We flow efficiency and and proven cash

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

Operator

Instructions] comes [Operator first line with the Truist Our question from Terry Securities. Tillman of

Terrell Tillman

question Raul, hear Adam Rachel, I per a and okay. hopefully, can me follow-up instructions. a and you had

is of on of looking close businesses? enterprise the second a question strong finish maybe, of about first your slower for for I in rates? And Are heard something And bookings segment, report both the The was assuming what Raul, of a employee Or part kind those activity Adam. you've excited first is did follow-up just around on year the ending that then kind those -- are which expectations? mid-market, what you I what's been bookings had X,XXX-plus like conservatism. you a about assuming in card segments? bookings, how kind And then of the question key the versus

Raul Villar

-- of The we and trajectory guidance, and Terry. the the we're bookings deliver positioned really were about quarter FY consistent, our thanks, for the the feel to Yes, good organization. 'XX bookings well

Terrell Tillman

to was we just follow-up, that duration, terms cash interesting you bit commentary bunch Adam, leverage then or Okay. on could a like well? any the there get of I unpack dynamics? -- size terms little that business of free target. hopefully on and flow to maybe what progression, of acceleration bit maybe a that, And of to XX% and marketing as little unpack look get G&A to a terms on the more a just an those in in would it's of more notable anything is when sales that guardrails Just get some there then of hoping target? in And to more

Adam Ante

of frame think sort be continued no structural we as Terry, going yes. of sort to other us going XX%. mean time get long progression. medium that than not to are term about to There's to our explicit pops any I

driving you I think think of on about to this to it's conversion. faster as continued looks cash And and going it year, expand continuing be free like expansion. that point clearly, inflection sort flow we're

sense So makes I think trajectory that us. for

of of across going see gross think come cost opportunity still And I we're across to there, G&A think that to it, we across the there's I board, you're acquisition. But time, in real there's R&D majority the going think course, over out the some of and opportunity going to difference terms see like further the getting is of margin.

our implementation teams, leveraging our really investment. between and it's So go-to-market around

of And now. that we're drive efficiency starting to some

seeing you're up. But a free margins. that we think to probably the to So flow next plus will that X some have couple of cash years of points show more to be I go XX big contributor over

Operator

question of Gabriela comes from next Our Sachs. Borges line Goldman the with

Gabriela Borges

do aim XX%-plus flow the XX margin? quarters? some the the being Raul free cash being in newer you've and of and of normalized of of on we've how about long-term when last options I'll you cash flow embedded company. the for and XX% growth your long-term different Do in revenue way. a you about marketing Paycor think in delivering given the Adam, sales talked finance company about question free rule before couple changes Meaning, ask slightly that Terry's spoken fair margins of growth like some profile in a the a conviction plus

Adam Ante

huge. the Gabriela, the mean good right some macro feel product positioned in opportunity. still market, I a the in we to about We it yes, sluggishness be continues we opportunity. see now We're the huge achieve really been see that really last in recurring XX% of that basis. consistent couple is growth over close harder, going actually here this and we've didn't target years But the to year. last the to on clearly make well a the

So target. it's still our long-term

in rule labor both requires of It's achieve require flow revenue do going And and growth. and I grow that is are. little point, bit free continuing sort we stronger it your some that structurally us XX from than to we think on way that the nothing But where cash -- think macro to market the to a of target. the

lean good So that right And a to of into that about feel term. sure the to setup balance sales we perspective, I what And think we're is we as long the 'XX. market term, we're think well now. long and in about We going see going into set We're really that up off productivity opportunity. good not right we We'll our again, make product from in. the we're about now. over so coming positioned feel

Gabriela Borges

ability That Talk enable bit I'll near makes follow-up sense. ask a you're And the how the about on about term. little and train your to us salespeople. feeling to a

mentioned have year. of You towards bookings end that come the nicely the in

how count a sales to So trending sales and do do expect update churn is us ads you you 'XX? on sales expect? how fiscal the status how grow Or give in many capacity the year in growth much counts

Raul Villar

Gabriela. Thanks, Yes.

earlier we redesign at capacity, was like capacity and feel QX, plenty we to we're in achieve sales the territory And and well received. think looking a obviously, in tenure I point, retention improved, 'XX have gets today, perspective hiring that better, macro Adam's FY of capacity achieve we'll sales well from our as our feel feel our positioned both and balance executed to we targets. more well we a perspective the targets. but And to and

Operator

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

Sitikantha Panigrahi

tough market. Very in this good execution

base your the compensation. year? we this guidance? additive you product that's been seeing customer What's PEPM maybe I in effective logo the expanding So about in impacting you adjunction are talked and new you and understand Raul, cross-selling sluggishness question How should know my customer the when in acquisition. the think is, But your to what you footprint the of about have new I the products terms efficiently growth

Adam Ante

acceleration, saw mean, was actually cross-sell QX Yes. was a Siti, opportunities. little the slight actually of what we in I overweighted some some which bit from

enterprise these the in more We're growth. lever partners. slowdown in So add more as we bit a as QX. PEPM add into we a to less to and see saw forward, we really I we PEPM a little the going little bit bit here expecting we're growth, the as more expansion employee success think see PEPM little embedded And space in go really less

But I little might more bit term, and on side, this further. the in think the little some the PEPM balance maybe up in success in actually, see a you bit as we've pick expansion even cross-sell quarter that near seen of a

good rates, So out we're and like seeing attach good we success called that that earlier talent progresses the or on continues.

Sitikantha Panigrahi

Yes. few a launched. to And you since then follow-up embedded I been know it's HCM. a that quarters

so customer? progress kind what base is far? partner you So And even of traction and among how the seeing your their through are

Adam Ante

Yes.

continued each it been QX, added of has mean seen number growth this traction tripled partners the really in strong. the pipeline I in we've announced we We've we've the that quarter. So year.

of go of the through our to continue We larger well. some migration partners

still think X.X so a portfolio, -- relatively grow there's It's revenue traction. of overall becoming point term. long but that the and XX million our double small the We more here portion the we'll continue to over meaningfully gaining really lot it's And a room it's than 'XX. revenue into overall in a to less of impact

So about this we're still and channel long-term optimistic potential. really

Operator

Our next Jefferies. the question Samad with comes from Samana of line

Samad Samana

on have can there us terms already contracts Just visibility the their minimums? software the in inked helps anything you Are How that of expect your on the ramp? that those Siti's of versus Maybe to embedded intended, as kind and that what follow-up a you're about view of that work? additional growth us first, and the embedding that that there? And ISVs guaranteed between question. double remind fiscal embed you adding of, pun get revenue in should no just you On any how 'XX existing you've foresee you embedded partners will we in comment a you that your to think kind just guidance. side

Adam Ante

haven't our partnerships we include that Yes. Samad, necessarily wouldn't inside we guidance. signed new of

So going include to business reasonable all what's of include is revenue what in as is is expectation course, would going and their of new to they're exist. already those And the be be about from our -- that think we really partners, we going into and that partners portfolios the existing signing guidance 'XX.

In structure of but and to sure. on -- of have that on portfolios there of it the of much size some balance terms for need need come in We over our we those are more to may some we to and much those based the depending the sort is deals, the now. try really platform it needs minimums. business have that as minimums to partners are how and the necessitate work much include and how of do structures the Most do adding usage to how of

Samad Samana

then question maybe And just Understood. you. a Raul, for

sales upmarket call some In continue been in terms the mix. I should to larger it's the of program organization's to type composition about opportunity? changes a fiscal different It's that of out. organization. talked success, think reps to looks how of type as we there And customers? that that the you well sophisticated you're attack hire? how different and know you've prepared kind And about about of gaming guys today 'XX, target in increasing sales a is training Or larger, think is customer to there more How you those

Raul Villar

the needs enhance training of our we a the From perspective, thanks. have. Samad, continually that Yes. we different to different segments training obviously, meet

market. best for qualified us pointed think we we're up that benefits seeing at it against us now think segment the pulling do we're below. our about that's X/X those really And really way Seals tenured is really type And So the optimal best organization platform the of mix reps continuing the a our And to Navy good X/X XXX-plus we're is pointed of that. of opportunities. our pointing are to of and And today.

success so And seeing we're there.

Operator

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

Scott Berg

nice Raul, little reconcile that slowing public a to wanted competitors, about. a help more view all Everyone, you market private maybe talk market bit can other quarter. versus and I on of your talked see if you than us about the both

be help healthy sales pipelines maybe But others in you a why really least described marginally market. You was thought you than your at what can view space? us different and the robust seems dissect to and pretty

Raul Villar

at look mean when platform velocity our key I of the XX% pretty And market, transactions. and strong. And at would we headwinds, components at look in revenue we first process, just we year close we that of have Yes. in what, the think the growth. the with market finished been our it, appointments, the we market deals are we to And and when look know the recurring XX%. you without position the

we on attractive. product, some modern market incomplete percent like still big so would that's XX-plus solutions. consider we a legacy feel antiquated have what the with we tools really with of it's And opportunity robust great great macro a And

really and So we and and for strong us, to it's just the continuing about execution robust. execute, see market

some the in And and transformation. to compared still the outside of it the market of we of Scott, others. think big that, size of But Paycor is could be, really early innings

Scott Berg

Understood. about guidance, rate XXX points then, in you the Helpful. And year. basis cuts talked of Adam, for your

we're seeing You to certainly side But C-counts guidance? to usage But what view on You that about about metric today, how you how in nice of which a year-over-year. [ the is conservative talked existing tailwind appropriate. thinking should probably went flat at we are view from a customers? that ] more there relative out how the

Adam Ante

Scott, our growth in intentionally didn't guidance. Yes. labor we include market incremental any

to flat contribution effectively we're 'XX. So market in what we a saw labor assuming similar

'XX thing So -- here 'XX 'XX there we're slight into and same but 'XX, now. me, 'XX, the wasn't in be there to excuse assuming a might headwind contribution much 'XX into

Operator

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

Brian Peterson

quarter versus So Did above Any the close top the the in a fiscal year? unpack to encouraging earlier that you out comment funnel you what that saw the as expectations was of Or year. way really actually your for improve? fourth that sounded bit?

Raul Villar

the consistent year. been it's fairly mean I Yes. throughout

would slightly against for us, And we the it all, continue say quarter, how it's consistent the in throughout can but execute opportunities. I was pretty so all And to been year. the elevated fourth in

Brian Peterson

the owners saying, anything share are has some on, to But that the some and legacy of ] changed players. changes we the all [ bringing players regional course in hit of at over you business the And of mix the new of year? terms on the you're guys any that

Raul Villar

mean changes ADP, we XX% bit. little bookings moves Paychex. from in-house, slightly. what still Paychex ADP legacy It would in previous consider And a it quarters. incumbent around quarter, are little had bit I the a from than more we our regional of quarter-to-quarter contribution and

Operator

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

Jared Levine

Can how were changed gross during your you discuss or there revenue -- segment Were size thoughts underlying any your consistent. controllable retention churn? changes based employer on uncontrollable versus

Adam Ante

Jared, yes, consistent. it's I been fairly mean It does around. no, pop

a You it smaller space. little impacted is pressure market, in see more than little think the a more have for we end more sure. the like on I the market success But bit bit really labor anything. of actually, the growth overall, seen And

around otherwise expect couple So and of down you fairly of we to year. what the in consistent on some really saw end softness success the last which of But points, would saw you the it market relative and again smaller a slowness tick comments space. given all the was the upmarket that labor enterprise that of

Jared Levine

terms it. in for XQ And then of is? headwinds And and was that assumed if in then the what headwind update that the you or and Got us ERTC, 'XX any assumed revenue of any can represented? there

Adam Ante

And QX. ERTC in 'XX. QX. immaterial was and we're in in guidance it not It effectively the for anticipated it including in for anything -- so me, guidance. our We in out, was come Yes. excuse immaterial

relative about 'XX, point just point, excuse excuse be as that's X about headwind headwind. to X.X will completely of me, me, it So gone

Operator

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

Bhavin Shah

about just of Raul, means macro And is about kind capacity level just the of sales read just clarification. way one good want the that I right to the new until it? no hires that Kind of talked today. to Is earlier feeling you net clarify about improves.

Raul Villar

FY And add We're No. continue year. the throughout 'XX. we'll to for staffed fully

But plan have increase will We market add. conditions. on based a either to to or that decrease continue

that So in area. make that flexible we're properly going we're to to investing sure be

Adam Ante

going clear, increase thinking we and are to Bhavin both just productivity be capacity into through as to hiring about 'XX. sales growing we're

we to today. are continue So we'll grow where from

Bhavin Shah

Perfect. some these more you in other Do appreciated. And the a existing can kind of the in like what demographics of of you Can pipeline the have the already you bit signings embedded back opportunity. little migrate of over? insight recent in you you today just circling provide that kind customers? the of have they or from terms any on Are terms would what a be in of platform? Just still have businesses profile insight the

Adam Ante

for we're Yes, so mean, been of that new some the I sure. sign. able partnerships excited about we've to really

style in service Some then companies. are them a terms like bit specific different of little more and payroll POS-type of like ERPs but fintech bureau partners, some software vertical

already So that I think off we've that shared. what there's seeing some building success continued we're of

space think workforce I to going you're So as that continue to see within the ERP that vertical-specific management, and well. softwares

-- those of the than little and those. portfolio few partners than a about quite excited have They're of a sizes. that we've partnerships signed bit are earlier a little some bit we're smaller smaller some more employees So that

as are think large that will them of all And not so to portfolios. to in I we balance be progress, going have a continue

And we that. the type the similar bit little balance with be in over it itself choppy just partners. to in of we'll types pipeline up. that probably continue continues terms next But of the bring those a this grow we So to will year partners scale as

Operator

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

Mark Marcon

I'm how your bit And with you about solution. I penetrate in further you've employee applicant the obviously you Wondering can had questions compensation can with the mean, sales and more if great up come a inside force. existing then talk how tracking client modules. little a little out wondering fitting base? can of some in? bit much you And I if terms with about models the of traction that you've some that to new the follow-up newer ends regards had talk

Raul Villar

Raul. it's Mark, Yes.

continue available have and have our of continue a of obviously, invest to happened years. base a client We PEPM can to team, X we some saw to fourth large white tremendous cross-sell overperformance. we that to of continue majority space the we that in. cross-sell. we success cross-selling And has grow our The last amount And in quarter the and expansion over

And so continue do that was that. we'll nice to And to see.

really retention. a frontline ability continuing Obviously, compensation equitable, enables across during perspective, leader and teams our is be both to to that and within provide and an really increases attraction on broad fair we're the more talent frontline leaders And compensation From a portfolio, effective significant. It's talent a the budget equitably to solution. press giving just process.

and winning that right we strategy really into leader teams. our so to fits empower build leaders think And helping frontline

Mark Marcon

a about internal the to particularly the could talent, little sales big stand talk does force it's that seems bit existing XXX? relative you that's cross-selling Because on where a -- base? mean, of great total I the size Can solution. how that become? And And into the of it

Raul Villar

we're I the at pointed assets we're -- mean hunting more focused clients. still large, of on are and as you new new. By know, Yes. still majority our

and been white However, in I continue big because see about a is growing space there XX% press think is year-over-year. that's us opportunity. such cross-selling, on of to there our organization focused And you'll

Operator

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

Arti Vula

to of patterns to A Vula the on by any is quick Arti on This or or divergences customers Congrats terms terms any geography relevant quarter. for end out in one, in market of other call demand Mark just Murphy. mention?

Raul Villar

by Demand been market, consistent really has No. by size, by industries.

We that Arti. perspective, haven't from significant seen changes any

Arti Vula

to targets of top FY that last about fits about think accelerate 'XX year coverage the among deliver on going kind staffed how have And XX% forward XX%. And you Is that at force fact metros framework into fully you're kind 'XX, sales whether your year then XX reached to slide of XX% a in should your we that. there before or of How will and targets now? now then -- deck, looking not? the that FY you that the

Raul Villar

going throughout dramatic say Arti, we'll I Yes. continue enhancement. coverage expect we're to increase to add to that continue the wouldn't year. I heads. coverage would

we're our the intentional of count said I existing to sales be about As head acceleration earlier, capacity and leveraging organization. trying

add of to markets While each XX we appropriate. in where continue reps those

be this we'll time continue and will grow, number that So next to higher year.

Operator

with comes question of the Citi. line Enders next Our from Steve

Steven Enders

kind prior of of there? shift shift? And top previously a maybe of point kind that coverage, that the thinking following I I away XX does up Tier you've what maybe What's on, a and signal bit reported guess how just about sales X seems I the that from that at last guess. the number it guess like of on opportunity driving you're coverage it's

Raul Villar

in add finding look and growth, will markets that right ongoing It Yes. continued percentage Steve, We all over a Raul. it's based we always that XX continue shift and Tier to really person. or X, opportunity or time. as the just And and be having isn't a opportunity on at XX for seller XX. barren focused been It the were right the top continued available up. will in on in we've to we the extremely strategy. change the move We've person

sellers So headcount think strategy. sit a today. markets. the We I in fit comprises that's add to all where We're don't it's cities. change continue still top XXX in going our XX love to what And

it like the to felt was top more we just that from understand and so cities directional for And we sit perspective. XX where everyone

Steven Enders

free out flow And just you. I Got in that performance cash the That's or timing the to I is and for shifts pulled guess, anything just that there's of cash mean, there? I fiscal free call kind But guess, helped that flow what performing solid in like dimensions looks I to here I seems side, on indicated -- anything well guess Okay. kind pretty tier there? quarter. add some it of forward maybe that then pretty helpful. 'XX the as and like guess

Adam Ante

quarters, working capital there's mean, changes. net the a Yes. clearly, of bit quite I on

trying the it's the So bit full this year. but manage to little year, to look we're within a to harder at, like

But G&A. that of out benefit still and think productivity on the out the cost of overall dynamic of acquisition the really we're case expansion year is cash flow important. full net the smooth this of the I capital the of this those that items primary seeing And driver to expansion over time. The So we're same out free is getting in in thing year. working

the is net operating working and So it the you of of quarters, by most have capital driven within those items.

Operator

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

Daniel Jester

us but the clear why come mix are modern like legacies, bookings, win to circumstances? in moment solutions remind Maybe you could relative are of talked you more just Can which does from the about relative why we you It's to new. modern XX% other a or winning? Paycor when the solutions, spend those

Raul Villar

as and the open FY think mean most the strength and from and competitors a I platform I platform, a our win of Yes. share mix. percentage in high continues our cloud platform, of 'XX most modern robust reach to up rates are increase and winning

We the especially against So we really well legacy positioned compete against really compete It's modern. functionality. feature in ties which a platform. deep and PEPM, offer to most feel to theory to

So have platform. we robust most ultimately, the

open We the platform, why we're have winning. and the most that's most it's platform, modern

Daniel Jester

maybe the call remarks. Okay. gross year-over-year. down I out remind there? there Adam, that you with But prepared were us It can going on they this margins? what's in looks And missed Is profit you'd anything then, like

Adam Ante

bit to continued There's here be filings pressure 'XX, that's of Dan, actually the show coming see -- and that's to filings those, that case high-margin that of form expansion primary just 'XX. that really rest Yes. operating leave some margin drag revenue for to through underlying that, pressure a that out. sort good saw from apart little continue we'll in this form to press we'll able really more in the going was that but from We going saw and expansion, the that work we year to margin we'll expansion.

Operator

BTIG. Our next line with from of question Matt the VanVliet comes

Matthew VanVliet

the you areas that, most the the modules you think feel at put as add I the R&D you're guess as the for of attach so and to seeing budget? some of And at are some of there? where momentum demand do are additional behind the look look like you're seen portfolio additional looking when you've M&A, prime sort you you and that behind of there rates capabilities to attachment much the

Raul Villar

Yes. Raul. Matt. It's

enhance which platform about to it. open I platform, X about X And most our talent deepen obviously, in, our continuing we the really we to R&D it investment in to solutions, invest then in continuing core continuing our think are big to think continue buckets; areas feel those and make we the good are where category. best-in-class the and already,

of say perspective, area thousands that surround or one evaluate. looking there's one looking gap to of no M&A in platform always an hundreds, cottage to fill. the if we're kind we're there's not From that HCM categories I would the ecosystem that

And for so process. that's always our ongoing great solutions that can teams. an winning help build looking leaders We're

Matthew VanVliet

your make across to seems you more the some a market-ready, in Very really success and the to partners, embedded maybe use ready? around it as at then AI a might look training as little software to of be verticalizing helpful. talent All GenAI to your as side how talked the right. about And able and offering lot well broaden of auto little you've of solutions be employee a to box product your of it specifically be and help you engagement more verticalization but out

Adam Ante

the the sentiment a you're Yes. the description Matt, we're generator AI of the I capability the of seeing that talent of and mean, suite. functionality. actually, it is inside There's up inside sort talent sort show job majority driving now, lot of like where solution

for don't so the of those building more those easier around just recruiting. to And proactive to there, and inside are critical can lot functionality and more management opportunities as continue much the that sort focus performance nudging, but those on of of to and that talent system the look a workflows not workflows to of inside there's -- tasks through organization. attraction those are we'll then folks for as clients have more spend look working So the around navigate, quite making opportunities, opportunities they time and of leader some of that, their the

just sorry, through additive not think chat functionality but GenAI type the some be it that customers at at looking we of we're for And working going of our well. that looking some as to even in again really are and

Operator

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

Jacob Roberge

partners they have wanted with to an that partners, throughout follow partners you the pipeline up any at of existing embedded are on first few just you been at I looking look on are the side this are you've there well? the been When new motion the more now portfolio? ones Or strategy. year? onboard And for able to learnings sourcing then that that as primarily

Raul Villar

Raul. Jake, Yes. it's

I doing companies that we more they the And And portfolio portfolios, think, engine Investor fall then ramp mix. portfolio, XX obviously, sales months And looks converts There our that our existing hey, they in and so much look ultimately, getting how up would in without postmortem. be is people pipeline candidates Day, learnings, and early have. say can model think our today units with fast from their is sell our portfolios with for give then both. embedded XX% can perspective, much a with both, I some are going portfolios. metric at XX% and many to muscle we're the they portfolio can we're of a -- And without how how it. how will I for portfolios. what memory how Obviously, probably people

Jacob Roberge

concern for for you brokers, how types looks of bookings talk for half the those and benefits then you. adoption sounds not too multiproduct of relationship? retention may And Helpful. Okay. it Or any Can now that customer nearly about of like those getting logos? a source see fully new given booking drive channel own there continue like large the you is that to happy you climbing? be And be would might

Raul Villar

I love Jake, Well, bookings.

to definitely essentially relationship I partner relationship. more we're bookings own own the So benefit we benefit HCM owning would client side. we great up own mutual the benefit like side. continue -- like client brokers. to No, But they own side relationship and from on the we they the just don't the on relationship and a where client it's the we grow. been going side, They've end the client a They

grow watermark Jake, we far. between XX% organization, be a And But the it happy. should I going the get XX%, short And dollar and it's longer we're is to being benefit brokers anticipate think somewhere don't be XX% so much we can high we in -- and pretty it XX% we every continue term, booking as to take term. what at from

Operator

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

Kevin McVeigh

rate XX% way any revenue or as is as to kind kind versus to in anything about at in 'XXis just growth deceleration? to the of 'XX. dimensionalize midpoint Great. for conservatism like that of opposed environment delta this XX% components the how opposed Maybe the percentages Is much maybe Adam, the It of there of Adam. else? is looks round

Adam Ante

seeing you're from is right? terms nominal reverse income points Interest likely down this slow yes, Kevin, of a total couple Yes. year. in and income, the dollars interest of to

at pressure based or of you're then And bit just from that. year, the and intentional, little point in from the X to of seeing we where mean market back a of And to about trying filings seen, contribution I that -- the the get and seeing couple philosophy want conservatism. the form from point on some to you're sort you're then not we've a still. we're points be the this change. So labor seeing we we're expecting any are from we

guide longest that of our So out we point sort we're still heading to seeing sluggishness macro broader about to and the of sort intentional be wanted curve. in this

Kevin McVeigh

of And impact it you maybe it. that. in have know just -- there? following just Got much up on any if pricing of don't I How

Adam Ante

similar to we to how and I been experiencing pricing balance in. to we're see in of going intend PEPM I here sort mean, a we've continue much between think to growth growth persist 'XX. put of Just to employee would is that in terms what likely something

you're been employee we'll that going couple years. XX%, to to be to where So that's it's the I of or probably going over the half closer XX% to half. that we've lend But itself and mix see then think side with I time. to consistent think and last for a start more

Operator

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

Patrick Walravens

I first. about more bit productivity. Raul, little talk want sales a to for you

about vendors about that have announcement you and efficiency talking applying of ] customer in AI had are engagement. [ sales an might Marc agent increased of force seen area CRM sort So the then And to many the yesterday. Benioff

sort have guys technologies you you AI it improve actively So using any today? reps. XXX working? sales efficiency Are of Is to

Raul Villar

Yes.

to we're create lot to say a the are the demand optimal likely We that and we're innings. the on prospects marketing point demand end sales in early side on front our most would purchase to I it reps. the able to use the So best from the

in the most but sellers. our the to say prospects, would purchase early best pointing I to likely So we're innings, we're that

Patrick Walravens

if is But right. you, 'XX, And think recurring total if Cool. how we me for it. missed revenue? growth XX% All I revenue then, forgive about Adam, in do

Adam Ante

Yes.

for So I the a on income little gave interest bit mean, we specifically breakdown quarter. of the

for to a So recurring million $XX for quarter, we're the in guiding faster the about the which on points growth then implies quarter and year. of couple full

a So $XX it put that million would which to $XX We income, at on of couple broke our full of million again recurring. the all you. points year on faster interest for in terms

Operator

to Thank at you. are this further pass closing There questions like time. no back the remarks. I'd call to over any for Raul

Raul Villar

Executive the Tech and look ability margin support. growth to great for our We everyone. expansion. and Technology Sachs accelerating Las the upcoming your Valley deliver you in at Vegas. the and Francisco remain with Have in interest Stifel Conference in fiscal We're Deer in about night, Communacopia Thank Tech HR in confident while Conference Goldman Summit a attractive forward XXXX continued San events, including optimistic to connecting you

Operator

teleconference. today's concludes This

this your for you disconnect lines Thank your time. may You at participation.

Paycor HCM (PYCR) 14 Aug 242024 Q4 Earnings call transcript