PAYX - Earnings call transcript Q1 2020

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Operator

Good morning and welcome to Paychex First Quarter Fiscal Year 2020 Earnings Conference Call. [Operator Instructions] Thank you. I would now like to turn the call over to Martin Mucci, President and Chief Executive Officer of Paychex. Please go ahead.

Martin Mucci

Thank you, and good morning and thank you for joining us for our discussion of the Paychex first quarter fiscal 2020 earnings release.

Efrain Chief is Officer. today me Rivera, Financial our Joining

released market results August This the we XX, our ended morning before quarter opened, financial first for XXXX. the

first and on can and the with review approximately available be broadcast Efrain the X today’s This website Investor business your You over XXXX, earnings days. within XX-Q release on few fiscal month. is our our will highlights for quarter will quarter, will it Relations be we open first our discuss access the about review for SEC webpage our and archived teleconference our call, next for filed the Form and On will will our results being Internet, then questions. up I for financial guidance

the with XXXX. pleased the year to start solid fiscal are We

to Our high we revenues from progress and financial sales. Insurance the continue ‘XX, while only to off grew to X%, we and growth start, was operations quarter, Outsourcing PEO for back Solutions Total revenue December Oasis incremental acquired Group, revenue and including results And the at client we in first solid good XX%. XX% results start Management financial be this record in and fiscal are a but continues satisfaction reflect as not sales our of grew perform Services well retention levels year. which

key Tech, which human longstanding markets. analytics. and and the this These to excited a our wearable devices, and see capital and happening our several integrations, at in new is their developments into and payments, are of space, introduce employees HR in enhancements insight management have We needs this in and we Las technology new solutions week in address leader data as trends Vegas, clients solutions

can they makes work and that with potential increasingly the This allow simple leave Flex easier the Paychex their remote making is attendance It we to also geofencing employees for the workforces solutions out remind capabilities, utilizing in many their on worked be will with which as solutions to track locations. time smartwatch, watch. wearable a available wearable of tap users time out of users. enhanced time clock use Flex cases punch employees and new Our with the first tracking

also financial the are clients Americans payments Paychex can pay-on-demand be excited the living of flexibility their to access of in scheduled We paycheck, calendar to advancement With date. needed. a introducing employees by check allows when many this XXXX. pay paycheck and technology before portion allow earned end year real-time to

early this account offering in earned real employee’s of enhancement, XXXX, our deposited bank the have in option Following in then technology. payment is an an be extension Real-time we market-leading innovative time. funds will to

employee real-time or direct We to will continuing the leader a providers space. position first be offer payments as of deposits, tech this our in one

While keep services integrated HCM in that they Paychex offers the to solutions clients across some place. prefer spectrum understand use the platform, Flex into may full we breadth of our

with simplify the on to partner marketplace and Paychex Our market today. to accounting, a HR, process connect that the is the further, point-of-sale, Paychex takes company’s productivity customers continuing the integration step some most integration product private applications for a of strategy popular Flex looking

within with determine or scheduled the – to when on Flex regularly Clients integration based how an can it their happen time, deploys and action real ability for platform. to an

of and HR solutions. with flexibility set data reliable services interactions clients of Data rich APIs of choose and their the provider areas Paychex or they from by are to using allows robust increasing continually and a receive various clients. one evolving analytics focus. integrated Our through how depository gathered has

chatbot introduced before. introduce intelligence Assistant, discussed which and This is feature customer which this year, to Paychex the One to pleased engine. we last Paychex service Flex continues of have are We be Flex the is evolve aspect enhanced. our

Our Through away written in in interaction, the to our video, tour. to for options flexibility. via during company their service machine provide service users Paychex base questions. to providing continually any our Paychex expands every its learning chatbot chatbot personalized will asked a a them click the data a allows customer agent and is on frequently guided knowledge through December, to space, preference to tutorial-style personalized the live answers these formulate Flex and X/XX/XXX. interactive the provides leverage and the with collected X/XX/XXX to vignette learning that documents, set Coming Assistant time, more short offer option how only elect experience context a based a offer days bot interactions in-app videos, is year. or a just ultimate robust At learning,

past Assistant, questions, and that asked the bot X.XX quarter, the million During address growing. sessions interacting we approximately the with approached to able is XXX commonly Flex is number

app centralized performance our in electronic and policies, grid documents this enables also is we proprietors, designed a enhancements collaboration In with plan, our set and that view a the digital a between specific to common repository exciting to module incorporation employee of document which solo solve meet staff; during Solo, addition managers, new designed Tech, is and for onboarding, of management customizable, I-X to and entry solutions our challenges provided during forms, services, conversations, a – that secure common payroll, HR HR needs these offering paperless to company for management, references, bundled payroll the help Paychex a new certifications. employees, and file includes quarter, and including and and Form integrated processes HR HR retirement introductions tool a sole a payroll, E-Verify

needs, thrive focused customers to are to our HR but to cyberattacks their singularly a evolving on growing cyber not help threat all innovation employees’ simplify sizes. businesses only also and offering solutions continued and are we offer Also, complexities meet We grow. are of – them

Agency Paychex fail now data business and making X,XXX Access a of solution financial mitigate, than our Insurance employees the impact and available are offset to is – impact of owners businesses It since potential with protection months and lack insurance to and to the resources online ransomware breach. helps fewer cybersecurity Insurance leading the through breaches, We banking Company, of within our due cybersecurity a carrier. This liability XX% particularly of hackers, six cyberattack for fraud. clients critical

Shifting PEO. the to our our business, our PEO the of largest number and in Oasis serve employees the acquisition we work acquisition double was site in history of

our we we their and We employees are PEO. integration is the focused service clients comprehensive, solutions integration for Paychex are our scale on making most Through product efforts, brand stage branding development. plans of important, can focused new total at solution meet that the including conveys progress needs our on launched of teams. their a new and solutions. every sales on We PEO This HR and power steady the what these of business HR flexible, One growing outsourcing of and our and our now all remain serving any of ASO completing and Paychex our

to for will plans. by enhancements as retaining for which only in of to retirement annual proud the increase is complexity our the the of of enrollment, package Paychex XXX-K part clients the integral enrollment contribution was with the year participant record retirement make survey leader very has talent, the in published as PLANSPONSOR possible defined being in part already the number mobile now, for Recent also the consecutive distinction earned to lead talent. ninth solutions new part total our plan of an clicks. remove of ranking saving improved We’re that the use client industries We announced This recruitment well an is This provide number Magazine. well as to as for and keeping app to four retention. retirement led as one of this

list sellers our have Sell number and sales providing to For on three best in Selling also every year list to XX This on to consecutive is our ranked ranking reflects appeared opportunity succeed. our we the Power commitment teams We XXXX. seventh companies the

May, return continue quarterly shareholders, $X.XX value in increase our our XX% announced in per We to an of $X.XX dividend exceptional or we share. to and to

leader market. remains during this common in X%, X of dividend the shares And first of Our million stock. we quarter, yield a repurchased approximately

the our to and their great In and our want, growth the our they want, to service summary, they of value clients continue employees our client allows way convenience to focus technology when on where we want. our state-of-the-art business, providing they

efficiency focused service business to We’re clients’ and improve our meet providing on needs. technology-enabled

commitment full offerings continued to that making suite growth. their HCM combination clients, our and our a Our product of world service powerful is sustainable difference. class a positions and efforts employees of for is The us

and will Efrain? over financial turn first call to Efrain for is to I the Efrain quarter. the our now review results Rivera going

Efrain Rivera

as and call the conference Marty and such, you statements refer good that Please refer I remind risks. today’s thanks, future to customary would to events Hey, like contain forward-looking involve disclosures. to morning. that

measures per share, of measures adjusted such GAAP income quarter press periodically related earnings to as non-GAAP a adjusted sorry. refer and for to presentation diluted I’ll their addition, the our and In investor reconciliation Please discussion a net EBITDA, refer first these diluted for operating release to – and measures.

the wrap by the detail our for up then highlights review XXXX I will with areas. in fiscal start of I of the providing key follow and with will some greater quarter certain some outlook.

total first saw, the revenue both service you and grew total for As revenue quarter. XX%

assets Operating direct the million. growth X%. insurance increased PEO the X% XX% to for increased mix costs, and by EBITDA driven in the was for and compensation-related the was of margin quarter. acquisition the growth Operating first Expenses Oasis. technology Increases And expense income quarter. primarily intangible Margins first and increased XX%. the operations. for by contributed of to to excluding $XXX due approximately growth and to XX.X% were first total $XXX accelerated sales, Oasis between investments for margin was XX% in first X% PEO quarter amortization costs Our in moderated EBITDA business quarter, business million.

includes $X related for borrowings. of net long-term million interest of first $X expense our expense to the Other quarter million

for X% the $XXX during a to exclude private quarter, increased approximately fund Net from $X.XX and of X% income adjusted tax $XXX Diluted increased portion EPS. same $X.XX adjusted for bonds of to quarter to compared placement we received of payments XX.X% million first for in for to We net $XXX As to benefit increased we and the quarter Oasis diluted XX.X% increased rate used adjusted reminder, million EPS period which first million price. $X.XX. compensation X% purchase was to X% Effective income income EPS year. first the diluted the our stock-based last first a quarter. the the

revenue additional revenue our per to services client, first many The was and fee earned participant a client result which our some the the increase of for the Solutions Solutions, also provide revenue strong across in Retirement of price in a asset primarily guide increases I bases in net from value on now had discounts. asset Management we for will gave quarter improved selected increases revenue $XXX Services recall increase I of and as you in an you driven benefited by million funds Management quarter. areas. QX. if color growth increased X% in

XX% and PEO Services the for Insurance million quarter. increased to revenue first $XXX

was increased Oasis, on quality quarter growth funds increased primarily, primarily clients and high to Interest acquisition Insurance and rates same combined revenue for year. the and by across as $XX the of of million, offset the held last XX% for interest benefit of applicants. client to the period first addition higher In in was increase average number clients earned. interest clients quarter and we an Services clients workers not securities. but funds increase This credit continue health employees primarily a in PEO business. – worksite for result on in was driven balances Average the in held moderated Investments first comp our for premiums. income, partially by compared high existing in softness invest the the for X% to to by

currently an duration X.X% has an years. and average average long-term X.X of portfolio Our yield of

up Our average rate have an the year. combined X.X% for first portfolios return earned X% of from of quarter, from last

August day-to-day quarter. of August billion equity with clients held last financial quarter. corporate of XXXX. as $X.X strong of cash, year, was a paid first end held of million shares approximately cash of August May XXXX. $XXX million will $XXX funds XX, million XX, million during that of investments XX, reflected the net Total $X.X now investments the for of held gains walk as million XX. May highlights corporate funds and for It with basis $XX $X.X as the billion our and $XX and Stockholders’ consistent you clients unrealized for repurchased including the of remains position. I in reflecting as on available-for-sale worth were billion, of total clients XX, balance of $XXX for averaged restricted with compared and Funds dividends the vary I’ll investments as fiscal through remind widely

was return Our equity months XX for robust XX%. on the a past

operations from adjustments income intangible the from largely by and year. increase flows first was higher net changes expense, increase Cash The acquisition for the were same X% operating increase of period an primarily non-cash liabilities. higher in by $XXX amortization non-cash of the was assets offset through and driven to adjustments in by quarter, last due acquired million Oasis. The assets driven

me trends let you view and trends based with of and that balance is significant the outlook year. about remind talk conditions Now, upon guidance for our of business current no I changes. the continue economic

year. impact the interest the two that of reflected have fiscal already cuts rate we have this occurred So

cuts; including happen about at we this of we’re rate the So not in uncertain the balance further additional year. guidance will on what are point

and a guidance. couple our areas. provided in the provide will color We I add current to then of updates outlook

you QX, previous a first Management anticipated a out quarter revenue And strength of the if rate a which to quarter contemplated. interest remember now of million, As referred slower of XX%, bit little as is thought $XX interest expense. guidance million was actually be approximately range to now end and the sequentially due saw, to income expense provided a in Solutions started We guidance is of to of gate previously anticipated range to on little the interest originally a X%. would we XX% net the the stronger. million X% more we PEO had modest strong to of change that reported above revenue Insurances of at on $XX to to in from expense, little is, previously range we we that million you net, the that previously grow weaker; XX% to interest of and be think lower grow got approximately a changes. is Other $XX come combination what here is of but a $XX anticipated than

So rate effects earn the in corporate what on interest we decrease portfolio. the changes will

revenue range anticipated approximately in that of to clients XX%, a although full for guidance growth anticipated range for to cut approximately ever in sticking the income is the range expected And good the fiscal per is same funds the are to approximately on increase XX% so of the adjusted probability grow we’re expected year the to inching X% year range remains of total now income to at XXXX there will of would toward and earnings that of as X% the and XX% the above diluted although rate XXXX of anticipated XX%. both beginning tax range that of X% said guidance slightly be a there to to we approximately of of anticipated and income a and unchanged. prior grow in was fiscal second the in diluted effective and earnings X%, happened be with. anticipate the rate Total XX%. to share what Interest it share the now Net X%. above for held the was guidance. EBITDA of revenue that to our to high-end. expected that’s be percent range net Other up. be We X% our X% both adjusted grow XX.X%, margin contemplated Operating in to that’s per be income what guidance we are previous assume

revenue of the Solutions previously into range. lower provided by will anticipate the partially of immaterial anticipated be provided approximately and Insurance after of XX% PEO year We PEO for XX%. to growth of indicated growth be the range second revenues an classification of XX% services in the XX% stream are to and we Insurance the at half range the last in grow within Oasis growth I was Management revenues XX%, out that of second now to Insurance but guidance. and in quarter that impacted change PEO As end will fiscal and

make right a you So it’s we look the make at sure sure number; as big beginning you’re your the you models. not you look updating got presentation but working off that at that posted difference, number when

a started workers’ moderated in we have the was that rates we but attachment little eases at we as revenue. go than and if PEO don’t addition, anticipating year, Management in not for Solutions, our us, it risk the we bit risk we anticipate experienced services insurance trend compensation based business on current at the are We in growth. there had it’s It as lower recognize modestly little and through anticipated also slowly trends number softer our insurance, insurance lower a insurance QX.

at will So looking bit having insurance had lower significant do attachment. very our be can originally trends, without little the at well We business projected. it risk think than we a

due Now Solutions our growth in seen the approximately trends increased of from previous approximately to during guidance guidance to contrast, quarter. favorable X% Management growth was X% we’ve first

In partially classification have and of the negligible remainder quarter negligible immaterial Oasis change first addition, of effect the and stream increased Management had year. a in revenue for effect due the has the will the to Solutions of a

probably year, to the XX% be in at to them of see expect to models year. X% growth back XX%, then anticipated the which year and between to and Operating half at the for margins, you and the full approximately second we we your expect quarter, very X% for approximately approximately XX% margins as of in the captured the XX%. For in X% quarterly for expect QX, be are range the we fiscal half of second

margins point I that is second year the asked and expect So got the in we higher of XX% lot answer a the after back yes. the at guidance margins. half to anticipating half see the in we this approximately are

Now, back will refer Marty. to information. it slides our with more I you And our to all on for that, I investor website turn of

Martin Mucci

Maria, open you, please. will now to we Efrain. questions, Thank the call

Operator

Our first comes the question Instructions] line of Ramsey El-Assal [Operator from Barclays. of

Ramsey El-Assal

I general due always a of you about my with happening. question to prices am raise new raise for you a moat your trying I product? addition Hi, to just tied kind it innovation you just to or to understand prices, to kind you When competitive a can in something underlying guys. and ask just of Thanks whether kind competitive of to due innovation able of product that’s interesting strategy. able still is wanted just to conjunction of you taking through kind underlying kind of really stickiness lot on the pricing moat a renewal or in are value, it’s you question. are of to or have? the pricing Marty, really enhancement the walked is leverage

Martin Mucci

Yes, think both. it’s I still

the I think bundling have more that only we price innovation normal up are seeing the in things increase on together, also pretty consistently, is not well. but we given guidance held for pretty

we solutions normal our up you of that’s pretty increase, I -- are seen well. kind we have projected, than So, originally we management it’s annual where that. hold of because that is seeing had of is and part And think better price holding

So, actually power point. the feel ways, this I pricing both at we have

Ramsey El-Assal

and there there to to deceleration the of disaggregate implied from sort the the are quarter, for segment and quarter us? more of on PEO just both few ex-Oasis – due then in the the and of you speak rate in insurance of sort kind PEO softness PEO And solely the is side. Can the the insurance of you that of underlying softness mentioned, Okay. in growth really the mentioned, just in takes performance the insurance the you on there or PEO sort – the puts and quarter so insurance deceleration

Efrain Rivera

thanks, Yes, Ramsey.

be the I PEO growing just solid has So, to would been say, clear, double-digits. business

quarter. So, at-risk the knew in fiscal, impact, of last very we it impact margins. pronounced because than the and in that was half there coming was a grew softness occurred PEO, then back workers’ anticipated; compare part the We more I well the is, tough on up of comp the that’s should bit attachment two a workers’ little in say so revenue; And of is it the it comp against insurance no in impacts very has part one. little much

a the to that, saw bit little would insurance we So, mention attachment that quarter quarter. I at-risk varies just quarter. in from widely less

has but the revenues So, has for lot lot that a you am really big doesn’t go line. – margin, sorry, attachment, it much of I can do find – the work of a changes it client healthcare a bottom does up. that It your

So, of bit a on saw little those. of we both softness

Ramsey El-Assal

Thanks great That’s so much. color.

Martin Mucci

Okay.

Operator

question line McVeigh Kevin of Credit next Our of Suisse. the from comes

Kevin McVeigh

Hey us give opposed what Great, Marty. Nice job a that was to of how the thank retention around better kind any drove of you. Solutions. Hey, Management of much you Efrain. on sense just Can that thoughts upside? as

Martin Mucci

Yes.

will I level. of to to think client the be let has but some retention continued highest Efrain too, I at it, speak our

So good. very the high, record right are through quarter. We with continued feeling we first a we and ended last year

other very there feel it about a we to. were wants that changes and retention of So, few speak good client to piece the Efrain then

Efrain Rivera

Yes.

in employees which would saw, quarter, we of sticking the had helped. first had was combination in the things standpoint thing other but a from a coming important performance quarter. though is that I in point the significant that to were it coming relative bullish. strong sales we employees would softer, mentioned, Marty us client We revenue good. get are I also and of even we very two PEO the lot segment a increases our growth little worksite strong discounts – strong We worksite It say a good final more We about contributor, pretty good half on just incrementally we happen question, those we the year. increases incrementally Kevin, that, a where in that back the saw quarter And good out that the us of base. rate made on the the So, feel had make also bullish the before in really price sales other is By that I retention our at. are of was – side, say out saw strong employee going way, more the not was the things quarter. into performance of worksite mid-market the meaning the business as results

Kevin McVeigh

seeing it because the payroll your it’s seems years business that And the the slow, Great. the is you company you like benefit obviously fundamentally accelerating. last just are are or interesting that? of of investments kind or overall is of Marty, repositioning then from couple kind any thoughts on

Martin Mucci

been in that out. clients. and only things Well, perspective, past, standpoints. in much all their This yes, the well company listed employees are of off also clients and I definitely than we impacting couple value of company technology paying retention I tech a One think not have the company from of it the the much and investments and the really is from is more the but been satisfaction, is providing repositioning like it’s now their is Paychex service a as has the more the a –

So, and timing very a midsized introducing that’s hire our employees, for and it’s on we retain the perfect of are employees businesses. for market small business and kind much and focuses difficult the to products that

app have on for XXX(k) can rated for for that the – clicks example app a easy a sign up. sign mobile a fact it makes sign So, is X-star up and you up you that can that’s to participants

and clients. better better That the retention drives of drives that XXX(k). retention employees up for also the participation is double-digits it’s That of as

X,XXX to sales services, for certainly that look is company suite people. call needs but basically the in the X,XXX then that value We of much them full positioning the PEO use positioning about the to The the power upfront company of or whether and product very HR by payroll offer The upfront. can we is it’s sell sales overall of today more and people is sell through sales other been HR payroll have the through back at kind it frankly of an HR. Paychex of old for those power way than need other over process their the necessarily not way itself

been – has a of have a company less HR type – HR become that more the more the client generalist. the been of thing more side difference has of definitely much and HR the has big has made of side about of and it and the repositioning payroll technology or the as retirement, need So it been commodity we

serving We and have out employees changes the ASO. there in need PEO generalists regulations serve HR either worksite a that the we complexity. now It’s in given XXX huge now

Kevin McVeigh

much. so Thanks

Operator

comes Evercore Our David next of question from Togut the of ISI. line

Rayna Kumar

Good morning. is Kumar Togut. for David This Rayna

Martin Mucci

Hi, Rayna.

Rayna Kumar

Hi.

out discuss maybe and in strong market could you in sales products quarter, called You segments bookings another saw which the growth? best you the

Martin Mucci

and a we mid-market been strong challenge in in first couple and investments in solid that Once for product particular, very well team we don’t out have get we of much and past of we the or leadership there, we us. we quarter break the in years growth more also mentioned the quarter. we saw sense that has got in very extremely have in mid-market performed down sales last this when Well, technology that too next a of the it but better so season selling the year, Efrain definitely, as

business, we to as be real in and couple quite thought been first I this ended where mid-market PEO, but well, to we positive So, as as pleased the over needed the the we years, And look certainly etcetera, that’s very would was last the but start last actually year the say the stands us we as and quarter of at certainly really when you year the hadn’t because mid-market. of out are strong from retirement certainly we had, strong with we a out. started

Rayna Kumar

helpful. Great. very That’s

you number a out the You rollout called timeline of for payment products? and revenue real-time model these with maybe associated can discuss products, the

Martin Mucci

make this we of end so calendar we to that are have that. sure kind on will the of Well, clear year, the pay-on-demand

first, obviously pay-on-demand payments. more We employees be the early not a today. if accelerate take day – to ability etcetera, same period real-time in real-time see the some really is think XXXX. one X-week of we offers than wages offer coming we will we This clients earlier So offer the of first, to payments of out for or ACH the their waiting

some minute charges If you and you expect to there last make last takes in for need to will that is do some have funds if and for so if payments a charges are something wipe you and be real-time real-time the changes, which ACH to has the a be immediately it in your from will payments of minute real-time. sure same-day change available. that and limitations Real-time there there we really at payroll, basically level some need and kind the in ACH – and will able next employees’ you out of funds get timing limitations making some forth your of perspective has be banks accounts most those on depending to

Rayna Kumar

Thank you. Great.

Martin Mucci

Okay.

Operator

question Jim from Goldman next Schneider comes Our Sachs. from

Jim Schneider

around how put in great? also if follow-up talk out called force Good terms and channel about my that’s much with wonder color enhancements morning. and for being the a improved just be Thanks of question. can more is maybe you both you could made mid-market, color that taking you in you by Paychex Management the of function have also that? will provide sales that Solutions any And I that the Flex, any on of the improvement Anything around strategy? enhancements

Martin Mucci

sure. Yes,

little a both. it’s think I bit of

their providers team suite I that grid great only it, interface we We and HR use but it and also on and and the about it to that as we offering you other making products approach first options more from integration the Flex in and that fully enhancements the at and sure system HR you payroll we just many make on-demand are some side think set then an product payroll broader think the of the that like APIs for And the all, and if others and the in not but an and an have want of I is can so sales but effectiveness the to today or of well. significant, pretty full integration discussed Flex offer Paychex. with payroll you features see even thing leading offering to have side, easier as That’s to certainly of from we is do a instead of set. HR as the today one much the you that all full coming getting and more products certainly I mentioned a – of them that payrolls HR We the the integrated products about being I products think sales solution have the Flex, standpoint, well. into into offering to sales, comments accounting offer. a accounting been you want keep if can have services

time and to attendance, Jim, us. not think off up mid-market all up to particular in signing setting adding off on pay and the for signing I available mentioned I changing their is app the their that of we stub, W-Xs, more seeing in value schedules, that things of that employees, approach. a is making the your that XXX(k), are that doing lot also think approach, their I mobile So self-service really it’s check employee earlier, with only

very with are the first we quarter start. So pleased

Jim Schneider

core any about Oasis PEO how demand and there And factors either what follow-up, to standpoint called several from clear talk was maybe PEO, is a just relative reduced the expected maybe in of terms going that slowdown in but of seeing competitive Great. in business. positioning the out I of growth you or sure idiosyncratic on to thought guidance am the I these on then there you insurance you are terms doing the be? what to market the want as side, Is a make

Efrain Rivera

Yes.

that. So, Jim, so two parts of

no, but to because So the me is, it’s important explain why understand. let answer short

are clients, some So, growth to employee – was to worksite clients. I with within did employee deeper to within to going dive seeing started calls rise worksite you questions what understand existing to seeing a relative on respect started are and existing get we solid when growth what

and was that an issue on. that So, up commented was came

one. seeing we any are So not that. of That’s

Second, if growth solid the quarter. again worksite I worksite has at look employee employee in growth, been

there. anything seeing not are we So

ramping order side, optimized side for in I that process efforts get Oasis ongoing. Oasis, we the fully us think there and process the for the our sales to On in of is sales on are

the it no not the – is it it’s slight – for that agree but there in guidance, reasons it’s So, in underlying indicative or this, modification market. just the changes has really – any idiosyncratic of the the somewhat I both out it’s and sales will revenue multiples If demand called say in patterns PEO rate in on growth. I of growth I

pretty where why one about we reason that’s comfortable feel So we are at.

Jim Schneider

And Yes. you Oasis seeing? trends are the in

Efrain Rivera

Yes. Paychex well growth. the the going family I of process into was integration just in it talking primarily we on the is sales are side, pulling and the

Martin Mucci

finalizing the and feel teams but are combination just feeling service about it. the the we gone very at all the the are teams, of of has integration sales we we and point good like Yes, well

the are that and with We Paychex insurance have in the with we XXst of largest agency, also, country. the course, integration,

to have that’s doesn’t getting the that So of that going the as changes if take the as that well. it insurance some through when them more fit Efrain agency option are mentioned agency we we insurance PEO, that and underwriting, through well,

had many So them turn move turn to we to times can want now to possibly the you a over the through don’t insurance agency them past that down Oasis in offer the client, agency underwriting, itself. and down

So, start is the here on good about the we integration track. and feel certainly

Jim Schneider

Good Thank very you to much. hear.

Operator

comes Berkley question James Wolfe of next from Research. Our

James Berkley

more PEO Thanks said Not it. on dead horse guys for just the double-digits but then be the a double-digits it’s Appreciate ago you guys beat bookings range? it digits, confirm, still And in think of side, you last to couple quarter? in can I still low-double like time. on that like Are still quarter, PEO guess the employee you for trying to was direct. trending I you the quarters space worksite growth, this are

Efrain Rivera

said was I that, James. strong. It think I

James Berkley

about then rule, And XXXX? a just hear for okay. guess play talked be new that I days just on guess ago, thoughts Yes, the investors your few could helpful Efrain, it we there into January in HRA to just coming I it’s impact

Efrain Rivera

Yes.

new around the for the HRAs course on on healthcare it’s but until we can’t ledger way, that it PEO the impact looked investors it growth this are of should is and up employers from in HRAs for XXX%, pretty not and questions growth. we as have the comfortable a and makes advantage funding use impact come easier annual this alternative plans have and an legislation So will to that of PEO side the have opportunity say feel in of different it’s people – place take to having you actually at impact a of significant that

Martin Mucci

have going and through we like doesn’t it so the plans don’t run I employers think legislation support some had even gives HRAs funding. that seem have Yes, traditional to insurance we – some from offered think time, I to are credit, with for the – do

have and have We – I those great seen uptake. said as offered not time for some seen a

happen that’s I businesses we that there but there some that, would that, shift are don’t be will to traditional HRAs. to that the over plans insurance do I think major any going think expect from

James Berkley

Okay. Thank you very much. I that. appreciate

Operator

comes question from of Ellis Lisa from the next Our MoffettNathanson. line

Lisa Ellis

color rates, little small growth, look you Hi. into ask I Good can obviously morning, inevitable seeing on are business around like guys. Thank the of you. services etcetera. I macroeconomic you guess employment there? color survival unique question. benefits, Can give very some will environment? the like a the I but dynamics sort order things also second us rates, the give a macro you what you Marty, on attach have know like value-added the

Martin Mucci

an only job of month. not to less the where job or we growth from up Yes, a it’s these September it year about we X% reported job XX years the seen doesn’t month had moved actually we still actually last under and growth year, or to employees uptick in One and time growth in trend, but from an it a down first were I we August. yesterday business think have up some but this couple growth, uptick improvement saw our small was businesses a ticked index bit month and make

worked We up. wages hours also in saw

from So, wages pushed went and up. increase, X.X% the X.X% about hours looking up wage worked

and think for services there their feeling to small people good economy fulfill the generally businesses and a biggest to demand. but demand shaky little happen, still are I product So, the getting enough overall on still hiring they going challenges what’s their is are

felt and from positive, X easier months that had would the get easier ago little be So that was did them bit capital. them for little we a hire, to everything X to everything business also report to sentiment report them for previous easier a up it a – to for gone probably

getting the I they they So good are a product I are demand and biggest is think think economy that itself their feeling little cautious, challenge them like makes while hiring. now right

raise employees. demand they working to because go hours wages up they the the So and they trying wages more are you as the to fulfill saw get are the going to pickup up, with are have to

pretty our overall report yesterday. So, latest out that actually positive with just came

Efrain Rivera

mentioned thing in impacted this SMEs are Marty yesterday and less we other global The typically little trade. said a by slowdowns is

and So that to are obviously starting larger enterprise segment of the companies pinch. level feel multinationals economy the

much as feeling not down count. the employee that are You of lower

not see concerned another one in So, to the this economy where part segment impossible it’s of have and you more in pessimism economy. of results like the

Martin Mucci

Yes.

supply three office, doctor’s They about quarters the that are are than regional impacted are would quarter and they of a lawyer’s their the three etcetera, and have really forth, our, in changing quarters talked contractors, have not a them about tariff but the by companies, the they Generally, issues We and don’t chain time have be the restaurants, clients office, or are trade impacted. tougher don’t XX%, of businesses. serving little tariffs they found of leverage that we larger they The bit trade impacted. small feel not issues businesses, so issues. like

Lisa Ellis

PEO also perks because component a for that macro business small I argument if and an And see my so you value perspective and actually hand, best on Efrain, is Alright. businesses, up there the other know got as proposition how mean, is then tick it’s but on it. is your the should PEO give economic anticipate and strong follow-up, the your performing we maybe this cost or slowdown. a when you can – to I perspective then

view Thank your on what’s you. Just that?

Efrain Rivera

Yes.

thing in the to I is understand for a average size, base, our So PEO at in our employee what’s least first question world think in the is, PEOs the that XX XX range. and typically to

to an what the impact of business see by from above, lot where event you macro more would out from XX to specifically and in under-zone a you’re I XX So and tend less a impact and is a slowdown see mean start you the downturn. failures of comfortably of that

you the as go employee count. Increasing that see down You

a kind demand for demand about of demand and for you’re an less your tend workforce to think So balance the lies you event downturn. slowdown. in greater see it, area lower question employers do of of really where services then have HR kind when is, from on managing in economy in have macroeconomic HR a you – the an where the And impact now or environment, greater of you services, of a a do the you the that for

would wouldn’t I be as so impacted. go far to not say it So

I be will think there’ll be some business be. impact, certainly impacted than would typical but it small less a

Martin Mucci

used are we impacted than less we to And be.

that of more primarily you also kind last recession than area. went non-payroll really services I a were and the in payroll our If think, a that we from half back half and to we as to recession coming the feel impact and revenue moving company from to company, changes a non-payroll of us

Efrain Rivera

by the recession float. is time, float last that, ‘XX was we were dependent the when point XX%, we which was and final of important, somewhere on generated which almost raises, went between income; net on heavily in one frame, XX% Marty our And time XX% into income

I argument We’re that heard – think I but suggests make people the the like do a and completely different were like else’s, look now. argument company anyone And hey, I’ve data good different.

Lisa Ellis

Thanks Terrific. guys.

Martin Mucci

Okay.

Operator

question from comes Bank. next of Deutsche Our Bryan Keane

Bryan Keane

was to get PEO and the get of Hi, quarter contribution an in just clarifications. trying first growth Oasis in to growth guys. the the quarter? I the number of couple looking revenue Insurance in to a organic was What

Efrain Rivera

between a was X% called out than Organic less I Brian, little XX%. growth and it So, as X%.

Bryan Keane

of and Insurance? Inside PEO

Efrain Rivera

PEO the double-digit. quarter, split PEO for didn’t that revenue. – total the caution that in We solid no, to was it and know just out want growth that. you PEO rate was like I it No, not Insurance, if what

Bryan Keane

Yes. I a versus the million to in It PEO was sounds about numbers was $XX in I Street like… think trying just Insurance gap get and there actuals.

Efrain Rivera

at different. people just would bit classification Yes. to up called caution so and I picked that, you change, it part made made the some small numbers, I the quarter, but a staffing end little of that of is and picked revenue, we not change point in everyone I’ll could out; some back Bryan, you that of through people which the not. We walk me come Yes, a part the did it offline was up. that fourth starting

I part it. So that’s of think

I there. part think generating that’s of the change

difference. And so probably accounts for part of the a Management good Solutions. that moved chunk into of That

Bryan Keane

then And change. you that little helpful. toward a be the that XX%. longer XX% make just Okay, Is end expected? to of and workers sure I Just on guidance than trying that lower to in comp PEO the Insurance will understand the drag to

Efrain Rivera

started comp and than Workers’ first on insurance in attachment saw based we a anticipated called Yes. rates bit quarter. the out more slowly And healthcare what I we at-risk had QX. in

three it. the a rate up ended on then higher. little precision, much a pieces are a lower, number going now that about we’ll It’s nail next bit walking bit thing just that but have little with would that of think to all that is the attachment be could hey, but say, actually of PEO really of impact updating that is and thing through caution We being and second one margins. keep to with come bit back And an I that I it the we doesn’t little quarter tough

Bryan Keane

Okay, Thanks guys. super. Got it.

Efrain Rivera

You’re welcome.

Operator

of Our William next comes Andrew Blair. Nicholas of the question from line

Andrew Nicholas

morning. my Hi taking questions. Thanks guys. for Good

quarter, with last Oasis, I $XX stick on which $X in million or million the my Oasis to maybe million $X think I think was below math briefly, quarter. or did just based so maybe So

wondering seasonal down, and to highlight step if consider, last to line on if that there’s factors the as is earnings anything with your expectations was Just if any call? there of in

Efrain Rivera

our would expectations. I on don’t much say was – in it pretty Yes. do with always I the spot math. that our line

go set using that numbers. So make sure you are right the to to you I’d that of with have through

Andrew Nicholas

curious in just to respect with competitive any then landscape seen And I’m enough. fair the the recently. PEO you’ve market, Okay, changes

another factors you’ve what going are recognize for Thank relatedly, conversations which I when pricing business? as as specifically when and winning you’re more seen head if those is or but are, curious important pricing in in about determining well? you think any I’m I to And isn’t dynamics PEO, frequent, the losing head the how changes you. with

Martin Mucci

changes market really a lot I the haven’t PEO, I fact, giving and in in really we’re in with standpoint. markets, of competitive for comes any and times us Yes, down Oasis markets, seen some it new a from think new competitive some

specialist. you the good we at you’re the part we’re feel And HR we’ve I little demonstrate outsourcing. plans the largest, something and both business So having either plans, and the I think HR been now that point and second think is new this this time it’s of able I for a obviously and them I PEO that it’s way, you provide being seeing can bit a the insurance competitors insurance our larger course brand branding the the really not think in One Paychex competitors with long to we’ve offer the ASO, which and of the same about very been by more really one service of think of that’s we – of

for go can us. you business So this ASO XX you in years. can with been We’ve go PEO,

model, to service continue what ability service. The the that’s offer, that what’s it to And changed you to that down We history the have XXX plans there what offer what’s the really and specialists out have expect great we much. insurance HR hasn’t have we to competitive plans and those. in comes nature is, your insurance

positioned think in this I win well market. very we’re to

Efrain Rivera

offline. and of that half in your with quarters. the higher saying that the certain can question revenue in I other Hey, point quarters And earlier in typically year, would the sequential caution half you call cyclicity back PEO; first one you year. have to there’s is me than back the of revenue

it’s to bounces preferred at around because it So look compare not, now. quarter-over-quarter it

Andrew Nicholas

I That’s asked. that’s that’s why assume, of kind I No, helpful. what

appreciate it. guys. Thanks, I So

Operator

Tien-tsin Our JPMorgan. next question comes from of the Huang line of

Tien-tsin Huang

Good morning. Hi, thanks.

difference your couple reclass there, maybe a X%. HCM on What of maybe another pricing was a lot the but the payroll side clearly Management raking you on that contribute bit, but little comment for. reasons you Just out questions versus the and can a Solutions to HR better X% was laid

Efrain Rivera

Yes. We the would have still X% had the of in absence re-class.

down So that I QX the And due hit other of in clear. us. to call I to the to composition sure thing want is that’s that days that in issue a just did clear did quarter make make I want

So we of combination had just stronger a through both. performance

client than sales being of As combination had for stronger performance up anticipated stronger of the we good ended just us. side; a on pricing, growth, which we discussed the all earlier, mid-market those turn was

Tien-tsin Huang

mentioned It the mind? in is. quarter That’s think quarter first in quarterly low And recast This great. if growth. I Efrain, came you income single-digit Can ahead. second on help would you versus maybe last then net second just us run the half, don’t EPS, half, you

Efrain Rivera

margins we what be guidance be. Tien-tsin, expected gave on Yes. the guess say, a good to what Well, in I going to I and I’d going fairly as was we revenue quarter what were thought

decent I out you give a XX% that saying at that back year. So QX QX for being of approximately margins expect would number was in I it’s say, we the implicit and were QX we operating the called to we for what half

conservatism there is going it’s So an to this guiding. point, at be we’re to and what element better, of

environment. rate interest uncertain an in still We’re

if we the the of cut So wants continue without guidance. to a preserve want to that little decides to bit flexibility Fed altering it

stronger be pretty back half, I good off So the year, even start though going the should first the half an say. half we first of got is to than standpoint to from a EPS in

Tien-tsin Huang

sure, roles that and for smaller know interest to No, Yes. tax I there. played some

second last so ‘XX? as there and I margins, XX% Efrain, or any fiscal that’s for baseline one, the that So is think, using you a there, mentioned change half

Efrain Rivera

let Yes. why. me Tien-tsin, big There a is danger explain

So cyclically that quarters. that is a recognition, moving margin was what quarter, stream you simple. cyclically, adopted a what going and be ends very a where is to previously your you into it QX of is do revenue that reason number been create the up situation wrong had that – highest – when we always word, happening had when When across the you revenue effect we QX did spread

with no You simply costs. greater revenue associated have more

seeing, not in to back drops out QX. the it’s bottom the and of will for going although I’m typically and QX. not to for XX% to be line quarter, be higher XX% are that be All uniform the called sorry, it’s going I you QX half, QX –- XX% than

that’s the so danger. And

do and run trend higher – the into forward, equal, margins we’ll we a that that, is that think going now as that the forward. not of opportunity back think I’m all take Having as in the just you’re will you said QX be kind that account rate of year sorry, to taking improve margin hopefully down things from If being all QX we but quarter of for we some going margins XXXX; expenses to where believe, we go hard half that’s have to are helpful. into the going

Tien-tsin Huang

bit it. obviously is. benefit I to for your as clues appreciate looking of going Thank investments. little you It get just guys you, No, was some I from are guys. a of

Efrain Rivera

Yes.

Operator

comes Our the from next Stanley. of of line Morgan question Wald Steven

Steven Wald

like thing were improvement think lane? conceptually just of think reinvestment out on starting call how if than back, following there keep should that what from things up you or of the toward about conceptually? that you less mix perpetual to like As tech one of payroll expected model about more shift, it’s how couple a we about morning. just you we that a Maybe notable something should like could and margin margin model, faster in good would Hey, a whether in moving you or hold margin talked question, the XXXX

Efrain Rivera

that if were because we’ve haven’t and high or we to Yes. complete point but any I’d our half unusual relatively had trends I year the taken charges. to is the a to to spending like I one kind been of performance become of more will evident, answer second guess, defer better thing, about what’s more

of that changes the and context we We programs EPS double-digit have the have done the we run. fly, that all we’ve within growth made of on delivered kind

question the and understand year of the we’re better that is decrease, working the So as that we that, through second we sense the we spending some much how of will know that exit of that actively, year. we have on as we’ll half go

have investments off. paid The

of results seeing mentioning that I investment, reflect are all that technology think but at Marty improvements the fruit I the that that the accelerated that that and was you continue advances pace. we’re and don’t to accelerated invest of really think

down. You pull back some of it

go anticipate as we ‘XX, you what we into see. So that’s would

Steven Wald

and being of Got the away tech it. And this a products then thought comments follow-up, talked all quick traditional the out, in offerings payroll-driven model you that just makes macro just think about you it of implement? being your Paychex shouldn’t in think your and as maybe that heavily and sense. of you perspective from guys I ADPs are macro just sort I we of sort as about guys think we we data, of seeing levered have guess, a the earlier and as what data broader shift mind toward or to one prepared been from all shift rolling

Martin Mucci

can earlier payroll new business the Efrain now. small of obviously for you’re lay do It’s mobile is support, maybe more clients. and are because of impact, perspective, clients basis an Well, recessionary do a going or going in going a losses much focused to who a period a ago, how employment, need to from app employee retain and out have products not for now by more start-ups very like much going if on you want an of how off your I I more to because on hey, saying, by think – better call etcetera, have, better them saving deductions, It’s and how think attendance do as don’t save there think to you to it people, in and economy. structures. to or and impact specifically we’re etcetera, PEO, and down – call so want etcetera. need a a make in I need turn When they self-service. and didn’t as and us They HR, change themselves had smallest do HR time if or you their all their have just a question I bigger lot change a their in especially through, we have retirement non-payroll services the a I changes years have and on you’re businesses change of was address payroll I about our can of the phone probably self-service huge we XX% productivity was, a levered. tied technology certainly other employees clients on tough These all business of HR to XX but not mentioned business money go When – cost from some giving different that it and

a certainly the us and and So businesses business and I to is just impact our mid-sized the much and be positioning pretty dynamics you and time. hey, moving – recessionary there is toward certainly think complete an going can’t you company, a need ago have was clients of has started small if what and and a an to many we to changed years of dramatically payroll less for that HR that company the small they outsourcer say, got be to that that

Efrain Rivera

to since of terms in Marty, over of certainly add the three the we’ve what last fiscal is I just end sort years seen this the of concretely ‘XX. of other One thing would

XX% from HRS. our of we it the our revenue of have look of at end would about was what at you ‘XX, If payroll, fiscal came XX% financials, called

the this we’re trend that where deliberate, obviously, that’s to you at depends of using, is look XX%. now something on not what forecast, you is being payroll That is happening in with If it else us. mid-XX%s something are model everything but

very is do and positioning As the numbers evolved focus than we and much have a more have tech-enabled and to clearly he think was Marty it management said, the adopted that ago. out that that I bear three the is HR services that team years company it

Steven Wald

Alright. Thanks.

Operator

the from Bergin next comes of question Our Bryan line of Cowen.

Bryan Bergin

for I’m you to comment of follow the to curious and you. there and rollouts I on-demand rolls Thank as you. offering offering trying in if offering good account model. well. be that pay Hi, that or those? morning. the the partnering Thank real-time just who strictly I’m you’ve. it up Can mechanics how deposit card the may on wanted your with on

Martin Mucci

make is a too before there everything same of publicly we’re thing; the we it the Yes. competitive Bryan, into everything guess payments, to of much I want don’t major to is; get And just we’re – closer bit out be there fairly the little the I announce feel year partner I solid from part quarter think and in the probably relationships, sure have too into early, year both, first give we’ll for standpoint, as but wait that a we it’s I is want together with. partners in as like one months it and payments. would for pay-on-demand roll get real-time last next then is we all on of it be I announce just this will then and because later now a place. certainly that the announce more in will partner until I just early out; those I the calendar doing would to be we in who we’re the next real-time that quarter to sure of one really October we couple one banks, XXXX

Bryan Bergin

follow-up a moderation your half The out on Is workers’ just the pressure then Services from And outlook comp the second rate you it still went fair. through abates. comps? there, go the business. the just Okay, Insurance on as just

Efrain Rivera

Yes.

planned. in a little bit So had we it’s than lighter quarter the

was And year. little as a cautious so I bit went more we through the

is and ‘XX, expectation then fiscal but back past. year, the keep be ‘XX the to Our I that by it saying we should fiscal of in that, abate half starts

Martin Mucci

– comp workers’ and is rates the this that lower rate out, it we’re in that just continuation is and cycles It’s rates solid. OK. of where is in are pretty a cycle attachment and So the there sales

back around. year to the for the clients, rates fact, kind the revenue and just last driving In the from you are and of cycle down wait in lower that but on up attachment is got

Bryan Bergin

much. Thank Okay. very you

Okay, Bryan.

Operator

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

Samad Samana

think more to their morning or maybe how the competitors your taking about question. of it organization inbound an to I’m and for is. got and wanted Solo maybe about type for model direct terms go-to-market the to Paychex of curious of good of opportunity some thanks ask to question Is is still the should it be similar in what model Hi, new customers? have just we sales of of offering going small I just curious. my size and I’m

Martin Mucci

Yes.

a I force. field certainly sales and the They of bit can be going to think referred sold it’s little both. be by

web also will need that and has micro, from We and sales the for a out that nice force offering, it proprietor market sold for got retirement really direct a It’s to But found a as telephonic well. big for proprietor lead, seems sales after retirement It proprietor then there a a want of through going then from a sales this product can think we incorporate we selling a to web can marketplace leads it new. from but the that and be and a – services, telephonic and we’ve field or quarters. find but of from think the an the it. incorporation We’re got and from simple nice as When standpoint. it the market – start, to we opportunity I good whole it’s incorporation, couple payroll, sole you course be be is product we think there. see you it needs pretty if off is sole payroll that

So across will we that tight some have it a the got opportunity forces product we’ve us. there field we for and clean think nice think got covered we’ve sales

Samad Samana

lot upstream customers in the maybe a technology end company how curious commentary today of question what view the the similarly on that of maybe you on has Great. been to spectrum, larger about company’s investments on focused that And technology and other made or move invested its a you’ve then think guys the the has and is. I’m mean, the based I starting potentially on that. targeting significantly

Martin Mucci

Yes.

technology this when still over mean, X,XXX that I to a well that X,XXX view I we big But market XX and a think employees. mid-market, under very or – we XX that think you we’re well market very is personal – down is over have positioned some X,XXX think is the four really our big last been have need employees focus there about those have those services much and clients so we’ll from also think in in a of in services breadth perspective that. three perspective, we HR I we’ve years but for been service perspective, from the the Certainly, to for. from for service now the come size positioned very

looking taking specific API offerings off and handle So set we into there’s is a XX, very we’re focused That’s to really to well margin that is, can value, under product handle in to X,XXX to successful there, X,XXX get best what best our think really stay need XX and that a positioned and is how a of the at. technology XX from specifically that on experience us breadth very provide. of that’s for not we we be where think approach best we how what’s I X kind generally unless the we to and margin X,XXX fill best but plus that from

Samad Samana

to taking at my today. questions company for look and Thanks visiting Great. forward Tech HR the

Martin Mucci

. Okay

Efrain Rivera

Thanks.

We forward it. to are looking

Operator

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

Mark Marcon

going being year. Good and unfolds as this furthering morning, expenses that that end and wondering, this how Efrain up is and and of the for regards we to into with just rationalized Marty. contributing should Oasis, I to was much about quarter next how think year

Efrain Rivera

as we mean expense of expense release and in I mean, is out Oasis. operating call the it I Mark, particular, press Yes, lot in a in driven with associated by amortization the Oasis, the

be You know, X% our would there, combination somewhere – but growth X% expenses, combination lot Oasis there ex going of in on the expense is of a the range. to

Mark Marcon

something about quarter, was then what a should with then seeing being interested that that improvements put terms regards the about implementation results and there? online the And of that? new online in from you you’ve what X And you the sales, to the the we all talked particularly perspective seeing have you in are initiatives that competitive vis-à-vis how helpful. some what to that in that you’re last of of of terms during I’m very think together, early market, are viewing That’s technology XX-employee

Martin Mucci

X both then sales the generation, to the with Mark, inside leads pretty to driving that particularly get we’re of start, web on were sales demand a those good doing lead those success frees had moved much that. handling that our that nurture we focus because of to out larger the to off very the and them in virtual customers to of telephonic those frees the those teams We we for say the leads to inside the and and Yes. a for also X leads, as sales solid, telephonic look X reason, the lot the more leads year. we up inside XX, I’d majority They and leads same field way up to the or X the sales that, leads. speed built we to sales rep business last X We on say, forces sales team from do that small teams internally get in close lead to of let’s under in XX

that’s Competitively, players. seen that So to start going year I haven’t of seeing at haven’t there talking the that seeing – there one we’re we all. that. they’ve the been down really know is we’re seeing same kind much impact an big a market. really I of not on about any good changes

the that under reputation well bodes I that in really for service technology, think the the have us. very we to investments made we again for XX

we’re pretty start a to actually, So I off environment we haven’t we a the good big competitive and think seen change it’s, in feel.

Mark Marcon

obviously, with then actually than done overall Fed And you’re were going like things, the a some we regards Great. different now in placing does but compare take the to to on yield your have that now? look how is at incremental what relative rates, us rates they are basically effective you targeting. interest what terms what of the effective portfolio, When percent right has

Efrain Rivera

probably, which requires Mark, think question, in a boy, I layers layers explanation. you’re of – somewhere great you asked of

it. Unlike portfolio invested I summarize will is other So try XX% short our XX% of to term. to people

the the an does. So you the part short-term by whatever immediate get portfolio of decline Fed on

range, if bps, have of mean, you if bps portfolio, if to lose you’re XX you then that’s or you’re getting XX – XX going immediately and I immediately, decline days then you’re the you so. X.X% that on So the the XX lose what but bps a in short-term drop,

short-term happens. the portfolio, of that’s what on So, portion the

really frankly that effective trickier bit long term, portfolio notes, of I the of which your is and because depend of on little bit that the the I some above you X%. but XX curve, turning when script. a you’re to started little out in our that a the you about XX% XX Current a below were anyone’s guess, turns investment called it’s that above kind ways on little rates would On now say, over we yield the shape over in bps bps you’re year. where there portfolio bit think It’s yield will

then to have shape or I the if we yesterday. anticipating articles the of the go caution third want we to, we and do the And that’s puts see so yield extend Now, opportunities the and duration to what if is an just the flexibility not about kind final is read all now, so – X.X the where yield thing part article depend which the read takes. we indicator but I of had doing duration, to it taking is said those sure was where I’m right do of are the Fed bank, curve doing longer you we I are. curve of about we same

Mark Marcon

invested I that’s incrementally to thinking over. would that be That was XX% about relative – specifically rolling

Efrain Rivera

Yes, said. Yes, I what that’s

bps XX XX So to you’re bps probably in below. the

Mark Marcon

that yield relative the we’re currently But effective to getting.

Efrain Rivera

Right. I’m yes, sorry, Yes. yes.

Mark Marcon

rolling and of initiatives you start going that to regards Tech, they’re these for at the what Okay, out demoing plans you’re force? of ‘XX contribution some the of I’ll size impact HR today to great. be how you with making having that do sort think that new does sales end And then up as the

Martin Mucci

Yes.

I’m everything demo Tech. excited I is out HR think you’re group The at to glad there. from –

to growing. how to with us the with always does we’re impact I it start it’s I think and sales rates with ramp well I we sales continued force up ‘XX continued attachment growth of as I From think could number but things it’s get for rates. there But penetration and perspective, think a have, we small see looking these bode think a productivity force. be there, for also we’re clients a

for I looking leadership completely. the finding the in We to we’re products, way that not have we always coming or sell of a X,XXX of we’re reps where the back more first mentioned and talented whether is payroll small sales success, very of market it’s approaching of the and earlier is in the all those products kind just much would have the for power that and more the is they traditional sales come team our way mid-market the force value, that as selling kind client overall, yield sell plus looking looking needs and selling

and have field we perspective. continued increase inside there’ll be sales reps, probably a sales opportunity and as also may So some from see and outside increase we in some telephonic

Mark Marcon

Thanks.. Great.

Martin Mucci

care. Take Mark. Okay,

Operator

line Bank of of Kupferberg next question Lynch. of Our the from Jason comes America/Merrill

Jason Kupferberg

Hey, guys.

the is think on that like to It the wanted sustainable. Just around trend mid-market certainly follow sounded you sales, bullish you commentary sounds up there.

I wanted while. something kind So continuing your standpoint to think from that’s perspective you be that to gain get is this if share a just of going for

overcome strides like like it maybe feels some highlight to more market where now that. you some it historically sounds making So would is competitive intensity you’re and clearly

Martin Mucci

Yes, I think perspective, I think one, has market to a couple of things; continued a the from grow. share

doing when news we’re good rate the itself growing. while there, close are from certainly think I a well the So competitive in is is we market

need continued the employees. or or so were looking has XXX solutions employees come XX at clients those for XXX, at in looking employees XX are So size, different XX XXX for HR to to now down that for

and attendance, when say, wearables the if client even be out just working than Clients focus you solutions. a on you see working that smaller changed another you all can more the all think technology track home over-time on of their make afford can viable came rule hey, used time location, and watch, they’re And they to they thing. you kind over-time. And and more client they’re can just attendance time and and things and for put to needs full could those that meaning it now looking So the to have will of very smaller or from it. remotely do geo-fencing

a competitive is perspective, much. hasn’t So and itself don’t weaknesses. really what beyond. I the model there have, I first we HR very new the an changed the been technology feel we between momentum and strong, good and strengths now competitors; I market for think like the and the service different environment the and the think I there service we full growing certainly And their from – the about rest and have quarter then do year very think and is think of I competitors feel it’s right hasn’t

Jason Kupferberg

any been Okay. Is in within fiscal to two could Oasis And now suggested the million And a still third it the way might $XXX where right. if quarters that right may most of in had you’re Efrain, ‘XX, you got do revenue ago, have that $XXX year? million on thoughts I be that through range? the think range that I’ve about likely

Efrain Rivera

on end but the that the recall streams side; part not just don’t reporting that I of ASO streams caution revenue of those the we we’re in PEO one been a of revenue part specific there but one, the amount, revenue thing of I that Yes, range, one in classification was are think of it’s total. The would is I at that’s made reported provided. that change few that It’s a had year part huge and not we total, Jason. there’s Oasis the

Jason Kupferberg

buybacks quarter. one, Okay. And pretty last uptick materially quick then just this real

of the on any or update in an what left should and what’s we might ways in be Just the that M&A there authorization on interpret pipeline? implications context your

Efrain Rivera

I Well. That’s good good was a there. – one, Jason. that a That’s was good, tracking

crept the keeping shares shares look, flat. bit and had that’s Shares crept one, a would So, was up the – day. and just a share our we’re question I to that committed was say; Yes, up good a it up – of count bit a it no, had clever, crept because

then still be So lot We’ve a looking we so finally, we dry and got about on with no it bit or think million left got of opportunities more, that I sense we we’ve implication It made authorization. M&A. we thought the aggressive. the that to got little needed we’re extent a on whatsoever conversation of that powder have of to a the has more And $XXX lot look Board. at. get course to really But, could

Jason Kupferberg

Got it. guys Thank Yes. you,

Efrain Rivera

welcome. You’re

Operator

of Our McVeigh last question comes Kevin line from of Suisse. the Credit

Kevin McVeigh

belabor a for revenue the the back but in. to kind the attrition, on incremental new longer-term to of switching Marty, disruption Hey, versus of side think attrition payroll. not way HCM tech-enabled the there kind to any contributions? is the would thanks letting Great, Does about reset of what you from term, go longer the that more suite of me be opportunity and target with kind full

Martin Mucci

Good Yes. question.

degree, some I you think think clients. although about it still to to of does the mix got the

market, a mix more using certainly the is majority end services clients better us and a they’re gives susceptible of XX and start under we’re that degree about dramatically, XX how but and the really that start-ups of are that The that app you large our won’t the of gives kind a turnover to definitely base with more of too retention to still retention. under us to the still thing. direct when fresh mobile on the employees with that So our to much the But also and app toward and growth that kind that think in and tool tied still low it selling employees. change mobile

on overall, I we to of I it. client better can records given will don’t the the always base. it we’re retention think certainly looking get So though, be break huge makeup

Efrain Rivera

so retention opportunity would to bit you better certainly retention, retention client Hey, report stick, we of running in and hope different to think and client see your so I said, revenue have these while goes that. Kevin, Marty as do that revenue a and what more question retention has an revenue mid-XXs we materially products really if one more so have retention build even been to a of on the not is

Kevin McVeigh

gets way that versus And about, to a wider think that is history? that tend probably fair retention versus Efrain, revenue client,

Martin Mucci

That’s correct. Yes.

Kevin McVeigh

you. Thank

Efrain Rivera

Okay.

Operator

And question. our that was final

Martin Mucci

the Operator, that’s this I will think Alright. call. it, close At we right. point,

be release for webcast Paychex. Have this the archived to participate in a our interest interested call, time of conference you’re day. the days. taking Thank it’ll you your for conference call first in in press and approximately If XX replaying quarter great for

Operator

does Thank you. Ladies this and today’s conclude call. conference gentlemen,

disconnect. You now may

Paychex (PAYX) 2 Oct 192020 Q1 Earnings call transcript