Paychex (PAYX) 28 Sep 222023 Q1 Earnings call transcript

Company Profile

Participants

Martin Mucci	Chairman, Chief Executive Officer
John Gibson	President, Chief Operating Officer
Efrain Rivera	Senior Vice President, Chief Financial Officer
Bryan Bergin	Cowen
Jason Kupferberg	Bank of America
Andrew Nicholas	William Blair
Ramsey El-Assal	Barclays
Eugene Simuni	MoffettNathanson
Bryan Keane	Deutsche Bank
Kevin McVeigh	Credit Suisse
Jordan Bret	Jefferies
James Faucette	Morgan Stanley
Tien-Tsin Huang	JP Morgan
Mark Marcon	Baird
Unknown Analyst	Northcoast Research
Scott Wurtzel	Wolfe Research

Call transcript

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Operator

Good day everyone and welcome to the Paychex first quarter FY23 earnings conference call. At this time, all participants are in a listen-only mode. Later, you will have an opportunity to ask questions during the question and answer session.

You may register to ask a question by pressing star and one on your touchtone phone. Please note this call may be recorded. pleasure and today’s Paychex. Chief my Martin over now Chairman Mucci, Executive is to program turn to It Officer of go ahead. Please

Martin Mucci

our Thank joining first thank and fiscal discussion for quarter release. you Paychex of earnings you XXXX the Gretchen, us for

Ian Gibson, John thinking path Financial Officer, that Chief President and I all by of saying do the want of are and today Chief Hurricane Rivera, are Efrain everyone me in of our Joining off us our Officer. Operating is to this in our areas, This that at results clients, first ended and opened, we safe. for employees, Florida Certainly our financial quarter market August approaching time. are released the everyone those morning XX, our the we XXXX. else before hope start

our release Relations earnings Investor our access website. on You can

will a and filed next today’s We’ll approximately course being for that start SEC within XX-Q and teleconference and last highlights Form my I results internet available will the an since John role and executive Chief President call and archived CEO. then Officer, XXXX after the has with XXXX, remain member Paychex fiscal it the tenure. of quarter, of be fiscal the on be will announced will retiring is the will this with been instrumental of am as be our Chairman for broadcast this of update days, on few days. Our by we’ll XX, XXXX XX Efrain in financial open been meeting CEO for outlook however, out the acknowledging start for then your and and of will up earnings review I questions. CEO call and this XX my our President first John over business team in as the success the we On during October our assume - will Paychex. leadership Gibson role has today, role that’s August current of of of call the my effective Board. I annual stockholders; Operating

also, and interest is to Paychex, than term of long years XX you its of We have best Chief John for your next two plan and your Officer. on you to my directly of over to right all good Executive for a person you succession of and want many Really, of and some I want coverage thank confident ahead I’m thank I that days growth. decades, Efrain. executed feedback us. more publicly also questions for lead as Paychex phase into the

he’s we’ve who one in intelligence, of his a XX in best the business can and CFO, had calls our provides level great the sales on trivia You off both for knows start a but only has year. and outsourcing not mid in you executive of last strong is and team HR particular. the with sometime. We that leader to quarter double in known continuing same know, counsel compared been market, great and integrity, also than - try to quarterly with CFOs really the growth everyone together, and earnings a music Efrain his a out Fiscal revenue quarter XXXX trends first done more over record digit is retirement

address help many in a for time We efficient HCM technology our have in HR and products had to continued more selling complex from businesses of become issues innovative HR of that success suite the businesses. solutions challenging

any trends, to to the for signs monitor we not macroeconomic of some our key in leading we changes significant We continue key have moderation have seen while and seen indicators issues, changes. regularly yet

that Small wages. IHS benefit small Watch from Employment Paychex workers Business U.S. showed latest higher to the of businesses example, an As continue

resilient job to to face at even and have continue Employment market a continued businesses remains of existing pressures. more as our tight at a will John they’re surrounding he growth U.S. levels with people but call in jobs those to consistent turn finding pace over the increase moderated John? technology our of our and I clients now grow index. and you more small and product positions, New the will labor at findings provide fill to suite inflation results. some business small with highlights and these

John Gibson

businesses working good released be to and a to on Pulse talent, Marty, it’s recently of retaining obvious you pleasure sizes thank flexibility. It’s to HR financial their attracting and continue be increase our improving you. operational efficiency, challenged Based that Okay, and morning of with all survey, with everyone. their

combined experience, expertise the and faster unified us positions dynamic latest challenging simple deliver tracking utilized last clients to navigate Our continued X.X over year million is to month, a our significant showcased Vegas, Paychex was and this Flex in technology digitally technology allow HR innovative attended and which mobile to in leverage recruit, Paychex them and Earlier of use the unmatched by HR our enhancements once We experience. uniquely again on-board Already, experience to designed candidates businesses on-boarding help and in HR candidates businesses Conference small and applicant new very environment. to a alone. to screen to hires the we recruiting then digital demonstrated with our annual Technology the Las where in investments truly and innovations. midsized

such to provides and the latest enables includes Paychex capabilities to activated their and payroll Voice on have with and offer Assistant-capable we by verification manage their coupled solutions tasks natural I’m our payroll these. Paychex HR proud recognition employees in a HR device. really Paychex, that at to first to while and Voice now calculations HMC utilized allows payroll as which further innovation, pre-check is capabilities prior payroll and Assist, and is small through processing, voice Assist introduced payroll ever-growing also that our award-winning to Google a gross this net process business administrators that the and any experience Paychex go hands-free owners We reviewing participate of self-service voice security. offering extension the and Paychex provider This the expansive

the for mention an been largest year, owners also number plans total were us was of of recognized Our to repeat, an keeper analytics, business global recognition. they providers. platforms recognized want garner and number its once NEAT service the as we the benefit year XXXK firm, many recognized recognized and are the to added the strength nation’s the financial Paychex technology experience. as for to power efficiency in issue. - record service us of its new to their as our business the analyst Sponsor digital plans research consecutive a proud leader HR for consecutive enablement sixth key be focused that well the by as Plan sixth we XXth industry drive as is report technology and brings in It’s comprehensive We XXXX. NelsonHall, and area by Flex positioned that - again, also data as them obvious Magazine. I advanced in for one have of by a XXXX of that offerings a I benchmarking, operational improve wellness on for continue that employees employee to be most continues and as retirement national leader Paychex as by

to plans quarter on-boarded employer alone. pooled the during our new in continues traction X,XXX plan addition, the marketplace offering approximately first In gain with

combined demand service. see secure and helps credits thus tax strong paid To ERTC to We their eligible to clients date, This in provide more our maximize and for employee $X.X over financial billion credit we have over clients retention tax them credits. helped tax flexibility. leave continue XX,XXX

clients the We new clients. continue leverage service opportunity the more as benefit to the on of of service this existing have to to well our as educate attract

strong, macroeconomic there have to uncertainty macro We in We environment, our our the and started any business resilience. continue to in have the prove and the solutions year help off fiscal clients model and succeed conditions. past under their is today while ’XX

to processes. focus user continue them their to road map continue provide technology HR further simplify year our designed on releasing them anticipate digital We to clients the positive to of a utilize needs our help this and fiscal experience and enhancements product

turn to for me together. over personally to this over for Now but tireless years, I dedication you next friendship want for the and strong his say weeks, and and to to again before moment to Marty the working thank for a he and leadership and you his over - like decade to I’d continue to say and over couple his over yes, hear have the going that you’re call I thank mentorship been Efrain, nearly take Marty, company of the the I

I HCM and is tech as than a has Paychex know, a a at CEO, solutions new into alongside and work to Marty’s You XX,XXX pleasure a company team, revenue look of been continuing it’s technology doubled the employees relationship transformed the Marty, company roles. our because Marty’s leadership. and its under and forward now our it’s in nearly his leading Today, Paychex and company. to vision you, leadership tenure Paychex, tech more

times As a roles I’ve playing company, said know we collective great just little we’re same as the we’re the team, it’s people, great will help our I the many over same continue discuss financials. to past. first the to I’ll quarter move leadership it’s businesses in to and succeed, us great same each has many that turn employees, forward. to the midsized future and as is Efrain it which call small to purpose, our now drive on focus the our in different

Efrain Rivera

morning. good remind I’d the forward-looking everyone commentary risks. statements therefore to to that Refer and like contains involve future thanks to Okay, that disclosures. and events John, today’s refer customary

review me by providing Let quarter the XXXX finish fiscal for points key with outlook. a and start of

client and XX% the quarter total and product higher mentioned, John largely and strong QX realization. per increased was included XX% our Management to ERTC $X.X HR billion. employment to As driven increased service price by positively penetration, revenue revenue our million, revenue product, and Revenue Marty impacted for revenue client already additional solutions $XXX client. and levels financial ancillary by was and results per first services, that

attachment X%. benefited X% our ERTC that our first strong quarter We see continue to from HR to by and service and revenue attendance solutions, time about I’ll our note of the revenue solutions. retirement

revenue sales While fiscal service and both revenue allowed some the we earlier had the year. in in continue of in would XXXX, execution a us strong realize anticipated to ERTC bit

for a the first will tailwind to its as progresses. decline was ERTC year growth benefit quarter, the While

agency, a along to average of PEO growth. $XXX revenue enrollment growth rate full due driven primarily X% of funds XX% interest there. insurance really million, growth revenue for solutions insurance is clients For more the impact to employees million, rates focused The support our health on Total little by be with rates, quarter average largely impact softness business. and PEO rates, wage in on costs in insurance the the health million. at the and in growth revenue. that a higher insurance to in year, headcount, in bit and higher was of to increased worksite growth increased expenses increased Interest both insurance the $XXX PEO and by tempered XX% for agency, an so to the rate marginal together to compensation balances. Expense has with to was more continued investment held attributable general the $XX lower will workers’ growth

In the year. costs last anticipated period quarter. plan increased prior to in increased basis above medical being it $XXX a XX same to compared we addition, higher where due of an bit points PEO enrollments margin expansion with over of first XX% Op an direct XX.X%, operating income year, million to the

reflect income diluted prior prior and the adjusted year reflected XX% per in state was increased to million Our earnings $XXX diluted XX% increased million employee the year tax in increase to respectively. per rate for share earnings quarter and benefits per also net payments; share discrete Adjusted tax related share to however, $X.XX comp per for $XXX effective and periods increased $X.XX the share XX.X% quarter period. and respectively. to an Net income Both both XX% compared stock-based taxes. XX.X% the

first the of driven of million as at income, we Our net quarter. by first of corporate by operations end cash $XXX the working offset small during was remains financial $X.X are $X.XX from million the of restricted million from prior at higher capital partially and total $XXX position decrease flow fluctuations $XXX quarter, Cash with a out billion, quarter. quarterly per borrowings and in paid strong cash, a the in for the approximately investments share and dividends our total

was a return equity Our XX-month on stellar rolling XX%.

turn May for year I’ll guidance our the current fiscal XXXX. to ending Now XX,

sense we to per where our first our you view provide One want guidance, that the growth exception the in remains do the incorporates Our of of unchanged try I’d The current macroeconomic of with I keep give provided in outlook earnings an is walk and adjusted of anticipate guidance. increase mind. emphasize our that landscape. to I quarter quarter-to-quarter quarters guidance share. thing will through ask we results that June, as from we a evolving you What the so expected majority fall, for our in don’t

grow follows. the Let in grow towards end towards insurance upper XX% is solutions still me areas $XX anticipated certain guidance we earnings of share provide to said, to be in X%, but in grow range. is Management funds adjusted X% X% end the now X% XX%, range the million is the to an we on range Interest the to the of per range. but the upper on to from of in to to range, expected now to what the range the expected the range anticipated held some expected PEO anticipate of towards increase upper but, solutions X% to lower end range of based is grow be is be revenue as just revenue be clients to expected color I to the the in million to of in it is of for and XX%. and expected that previous anticipate to now of be to $XX again XX%, it X% of end of towards again to Total range. diluted now the but

adjusted I’m per diluted remember, to share. everyone want about Just talking earnings

approximately we quarter, thoughts our operating we anticipate are be approximately expect the growth revenue be will that current to and second X% XX%. to margins Turning

for service we’ll course, all investor to our to the can second your on I say on first, is you assumptions where you to changes current a shareholders that pleasure wish there company. could Of years like moment update which a I on the you so the to the to conversation for you, in to this for say his take the of that luck interests of was alongside moment, I also I’d are you and again website call. information. continue of It’s putting working come and leadership. never slides endeavors. under if quarter and never been macro best there a subject of significant our of change I environment, the shareholders thank call, know an the that Marty will incredible to future more all didn’t John’s refer

Marty’s not The to thing on that. a any relating say on investors closely. statement we’re you’d that is team to that take this ask on I’d a discuss Paychex proxy to investors filed the to for to other available in calls management where that week proposal. call, say available, position thing for like too our it I’m the We’d is read own the want look, the that today always that who like company schedule always pay that reporting One other today a without be we supplemental I simply is efforts. add would

it let Marty. back me turn over to with So that,

Martin Mucci

Gretchen, Thank and much open are Thanks your course who over and you our it tirelessly and comments We’ll for for very our as please. company updates, and now have a clients for so for Efrain. where questions we open of John wouldn’t XX,XXX worked up also up, comments. our the today without for we your employees shareholders. be and it

Operator

Bryan line [Operator is instructions] Bergin We’ll question your from our open. first from take Cowen. Bryan,

Bryan Bergin

morning. you. Marty, good John, Hi, Thank congrats.

Martin Mucci

Thanks Bryan.

Bryan Bergin

levels retention. if that the comment view on and changed client guide, fiscal the talk on thinking little on and ’XX moderation KPIs macro could assumptions more you mentioned a here, start particularly employee in some to Wanted about--really of bit we around any

Martin Mucci

so a of more last Yes, but to during - on in above kind business above there I way. revenue growth a of so. comment I’ll years few pre-pandemic. new lot of normalizing still go growth, seeing seeing I we’re heading business you’re John kind think couple few of the a think levels. I seeing we’re more pandemic, too, the On business moderation what expected new we’re is, still you we’re standpoint, We let retention, and that back that client out of you’re know, retention that a and of like from the those start-up pre-pandemic don’t of was retention, towards--we’re a think over back kind bankruptcies

be other when growth and growing than The is seeing thing levels we’re for are that the business a that we’re and small quarter wage sales while job that, other working taken going very and moderate first Fed moderation some side it, sales continue being to you strong, down of But moderating so great businesses, of sales the is in that look anything starting sign are so on strong. continue add while growth index John, up, record wages the they’re starting small employees, of employees to side at is the the We moderate, slow you will are slightly, good and adding maybe sales. very still some had actions and are to so that? maybe that’s by at in normalizing number improve. want the to still so the added probably of that clients being but a is retention more to to

John Gibson

see there would seeing I think anything this that at a sign don’t say No, as of is we’d recession. we’re I a point

this moderation our to at As I see continue market Marty we in pointed be employment labor continues per that The of year that retention employees out, worksite on levels customer. when business but see expected the in look going tight. we checks, we because increase, there into was charge, it, that to

the is would so revenue again to record I point at information. that continue the retention levels the to we we’ve Our before, business see fact watch those also certainly remaining seen showed products, our use clients value the creating are pieces, our stickiness and at underlying for when services those us, look customers. retention things are I taking from of high more that

Our pre-pandemic remain seeing, continue the price levels, significantly of saw even so below to during that the anomaly a pandemic. we what we’re I view as value normalization losses any of more moderation on going again

Bryan Bergin

the dynamics, thank can on and XQ, model on that you you. here, in in of course to margin a bit there growth the Okay, the for outperformance just back as about XQ Then in on provided that XQ XQ? think from little on Efrain, investments margin, dig moving the over are the you more XQ, added just year, just rough we targets the into first particularly then come

Efrain Rivera

bit. a little Yes,

Having that Let the obviously that, we we comments so the year. a cautious to the me in about bit that, the I little planned just so a the growth closer to half the half second what reasons, We’ll bit QX. a talk two QX, year quite by always level I’d because know we processing--for will--the the to way. a amount going bit to growth different. for said in the quarters quarter the important. are that This think we because the growth don’t continue In year is a lower. won’t ERTC of are and call get the a little ended about you bit get--you be little a in the being rate These the were that quarter, ERTC by the quarter. I’m called first first out growth that XQ middle back will of bit get didn’t and little in different I in won’t highest last uptick odd will when in idiosyncratic a of was process little don’t the about things, of up back anticipate talk level three more, because get, little We bit Bryan, but QX, could was happen contributed out little I think of

we’d higher that really volume first call is in we the our others that the anticipated had, what growth part discussion - second point--although been check we control, in there’s call in moderation, we pays - than plans. per what was quarter to The had is about interesting

are an abundance that out going cause reading, fairly was benefit First first as Out and to same a some trends continue healthcare we a we into in we’re will reading going it with so of won’t we step-down. it Then will actually QX be get we lower little that of quarter, that to think quarter the quarter, around--PEO in robust. respect think PEO, of the caution, drive called info bit was pronounced were. to second still but bit you as insurance, persisting are that’s a growth around some attachment than

were half year investment employment is really little a of lumpy ways was That’s you step-down you of Those in in of revenue little above bit year--in so year have create we that we little expense I - the and than when making pretty this a We’re in still quarter what’s get are year, the the QX kind a more fourth we you in anticipated. what of call. and normal the QX, of relatively marketing, we factors really the as have The change, last we’re in really in make normalize things then into - bit combines entered would at lower on in currently, challenge really and a no we a we higher QX. the and first driving it’s half what product were a levels terms as revenue year, levels a much the of with phenomenon investments back consistent it you some the are it said and or development, in line bit that of as that underlying to much for quarter, dynamics key QX, the in have step-down side. a

Bryan Bergin

much. Okay, thank you very

Operator

Jason Jason, of America. open. of Bank Our your from is line comes next question Kupferberg

Jason Kupferberg

and just mute. to you the is expectations? pieces I to congrats is Efrain, the this on and wanted have we a because just full Efrain, Sorry, margin I just start else make was of all, year both question higher unchanged, on apologies. for of John. with guidance want everything the kind of I Marty now end your EPS Well know did EPS. first sure there revenue to at so will for raise. be think

Efrain Rivera

for year, think a bit say. we’ll Yes, the I be ahead, full little I’d

think more to Jason, mix. driving it mix driven, revenue some there’s that’s to it it’s a the There’s I number. and component more component by EPS

Jason Kupferberg

it. got Okay,

of ’XX, unchanged float talking know for about magnitude - you I just it’s fiscal some hikes, people, through end. That the of guidance you’re I might think, being Fed consider. income have the Just duration the I bit there? Some a at the given maybe moving that the thought and other walk helpful. higher the pieces higher, variables that and there’s rate would can number be portfolio would obviously but speed guess be to

Efrain Rivera

little Well you’re but thank Look, I’m there, we accused could think absolutely I cautious of right. a some Jason, you. be bit and conservatism

That that. I duration? raising I’m the to meeting and more I one get other that and to point our what get the lock basically impact is say then raising, only will Just do we’re think to you that great that. little ’XX. long and on into the you at I based you’re Fed is on decide don’t week deeper not at bit number. issue level outlook a what looking see for question answer could the ’XX have us every

bit that at little do. actually and that expense a reading says the we the when and forecast figure second that down, going next cause thing--you X, rates want is the here than like long about know hit to the go a of of bit Then have we’re were short year, based that recession, that interest cycle wrote of cycle way with we looks could that, all it on appropriate that, feel what term to to we a You about, this we what so little I’m same the this at conservatism up the little had even hey, so bit avoid good balancing said a on bumpy upside to and someone enough level we all are stage that trying you’re trickier. concerned maybe I out. to second, so better of a One so info I can know

range the We’re of quarter. and that next end high update certainly at we’ll

Jason Kupferberg

just last picking conservatism. potential Okay, one, on quick just up one theme that of

at obviously with XX. looking started at X% year, sticking X% the solutions, Just management to for you you’re

talk You had but you to baked you’re little like of through that decel know some talking the in, lot maybe a of of still. bit. just but end, ERTC I about seems benefit, so a higher it kind want

Efrain Rivera

Yes, one. headwind I’d we it we’ll in of becomes revenues That’s this think I we - say the year, that that half you get ERTC same growth it up know, of as talk the ends of the one the with midyear, so that back because bake way the in more to things doesn’t happening kind in. a recur do,

Right now, not to there’s really We’re that it part we’re that’s about. of the point, At be the comps of close we’re the Could back see against the tough assuming that of year back year. half we adds we’ll in of half the then don’t both employment is sticking at know, wondering employee going a year. year, update then in this something so another so and lot than we issue, through other the we I’m with where go that’s we different beginning I call ways. the I the were that? can’t thought enough, as and

Jason Kupferberg

you Fair enough, Efrain. thank

Efrain Rivera

thank you. Okay,

Operator

Blair. Nicholas from Your next William question from comes Andrew

Andrew Nicholas

the else full-year or for I the the was dynamics make lower Is I guiding the you’re Thanks end the sure there in like you, my insurance to services and of bottom segment are morning. in the the anything know business some whether range, surprised good, end weakness to hiring PEO quarter. insurance quite there good still to to of now Wanted it well. within question. understand clients’ Hi, strong, that taking the growth full - are as year. all business range sales on want existing call obviously the sounds just came mentioned start downside? to out this It on so that upside activities you to

Efrain Rivera

versed well John what’s then He’s me in in Let business. the on let it, dynamics and terms frame the talk of I’ll obviously to it. of going

of to the doesn’t our largely numbers as we’ll and as have to half Look our the persist a side a and where where again most, what’s plan on down quarter the originally year. than quickly, outlook. driving we out where because around, the improve are will so get on sense relatively low bit of ended and the quarter those of impact out we up that it little in of a know, the started you terms be. think on start margin anticipating as a That’s quarter out into second we forecast half first the enrollments. margin, anticipated on moving we’re sense half a the know say but revenues, as insurance back an it out, terms year, of called in we revenues We than anticipated, then and that’s expected. attachment trend significant then see to little of--I’d really go change into and we lower going front and lower so issue had differences back can we we and better than end you primarily Andrew, through first the up guidance, really, of our that PEO we’re second - the year In really It’s in results, of have will bit we kind

pretty think about actually because strong. the business, let they the John talk fundamentals of are I’ll Now I

John Gibson

I Yes, I’ll we’re critical quarter. really PEO, I PEO season first, well feel enrollment so entering are Remember side, particularly of are also this. when going first we’re two time of open now that look out we’re coming periods where our positioned selling just season, look into the we at key - in those about talk the within on

is retention the are strong. some a quarter, accelerated. Really, in was pretty we is retention quarter. headcount and targets set first actually strong Sales had beating client we’re look proposition resonating, Our from those actually for the so at very we first were we I value - in the extremely aggressive sales targets strong. the so PEO where

quarter. in remember quarter, we we investments If made first fourth in you said the some the

there. demand because actually Some of adding the that saw was we

we’ve how we is retention our going execution that attachment things issue to relative great, and employees little of as be insurance have the are maybe able sales a The relative season seen, we PEO, team in kind insurance we’ve of our affordability we insurance we’re strong. attachment trends in to of that. insurance seeing, similar saw best our and well, insurance is of a health some is into to that, our an plan Efrain got our HMP in good of again particularly had in area, on I kind common attach the market to that Efrain’s steps participation theme then and this lower participation be design of is many client, of and completed there the terms and then as we agency, a we’ve once and in as and some up may we some of about, the move tenure drag our the forward. PEO be signing a lower We for than where there are seen We’ve working any actually said, think think headwind. historically good quarter, really carriers. PEO, in consultants enrollment we’ve the a just tenure To of to feel expanded so continually of selling but about out revenue, we done those, Our of in in engage some renewals the I is in we’ve divisions against enrollment. we expanded point, typically the cost both we’ve seen our first saw obviously who sales attachment than things taken part what repeatedly, soft of have plans continues and and quarter, I talked P&C our so little next this clients, the with we’re in the go first we’ve will the low to to

Andrew Nicholas

John, thanks super Great, comments were thanks Efrain. helpful. Those

For picture follow-up, my a I ask bigger wanted question. just to

make market changed rate now. Essentially, and right appetite new at amount it’s the release rapidly given the press I that’s think how if really that’s the the the gaining you buy, adoption? level space versus get the sense of your of M&A built wondering products, change build prepared You past and in mind, M&A products today you. in impressed by over the With just mentioned the the the years, about conference your all given on vendors sector. of the and the going number being think and again several that more Thank conference equation. new money HR versus Does of to for I come remarks. buy how of want are was Personally, in given into the number tech on just innovation thoughts across build in

Martin Mucci

it is an this I’ll interesting out. Yes, question. It’s Marty. start

I appetite still the there. is think

some are but more if down valuations we’ll and catch get up realistic. think I still they and see come high,

we only so to know, not to XX XX attendance product XX for we we’ve into products ago, the perspective, with M&A the built product adding which from use fastest technology, M&A and but many growing mean have is time from ago for a time actually one and know, growth probably don’t--you I don’t years I now so. attendance back now, first started then product You years But or I and that of been think able the perspective. always and our

really we we can at whether think very look that closely I build.

here, mobile that we team development successful add-on can we standpoint, John product we’re do a don’t a it decide product and that to development on the of management very a kind from see, product have We really to do Flex product and standpoint. have We into what a technology that the we bundled too, we mentioned and see--I do like suite, tech careful being much earlier, now mobile, that It’s the at such and--that use have. go we HCM and with perspective. feel M&A in HR--the suite would the as an John on have to large look more a out have we adding do have, would app. go The everything, combination to I of able being from the the what we and so comment M&A now from really an technology, so right missing out don’t we’re this

I gets big lot there’s much pick product been of That to processed, M&A really and model. to on a there’s still self-service employees appetite and but need a opportunities. which part M&A Paychex bring that mobile X.X good some of We’re their so self don’t you HR view also level have a and into our at Paychex when of own involved, just many making right view--as a the of better out it’s more payroll employees of has client pre-check, you which stars. before constantly the their important to and to them a from employees which tying X builds our for aspects think from more evaluating become app, changes, up add up has to, picture, the better self service, of if of retention to has Tech, we clients they that we’re still didn’t allows know, on-boarding, the and sign the

John Gibson

I’d actually good a call, talked the the on to works Yes, in is go here that announced you previously example probably and that give we I about one live. have

customers off that and and and into applicant also ago which and had on talked on a and it’s a our that and recruiting made technology of build, of we so an and together the We get got about unification for that build, acquisitions company using can experience addresses launched, Indeed problems. combination bought, of Flex unified of and that tracking we the we I a combination experience right think That’s on-boarding about side with experience. better help then the of with to it looking partnerships, applicant a talked the and resonates can we’ve we was that the partnership taken faster, on-boarding tracking constantly talent candidates numerous that some bolt we’re we put that’s a tremendously, we acquisition time kind times reintegrated. to

million went that through already Marty that’s hires example. have an As X.X so new process, mentioned,

Another user a add on a the products, this and small participating design us all our that more and with your question process really get currently we both and in from example we’re goes about an was a benefits technology, probably experience and little agency ago working of, bit insurance just and that of back in acquisition employees to great, the that insurance company perspective. the administration that to talent found little how enrollment could made to

to early our or can continue There’s in and think deploying that We’re getting examples our mobile and to enabled, to of insurance full going suite really employees, a actually employees experience. states in of help as tech enrol to so. we will where agency we’re of have That’s deployed what partners clients we for for it’s them that and speak the unified us their I and look to the participate see them to and and into trying our capabilities a will right a build to today, and as electronic bolt-ons benefits. where now, experience. do that way highlight for benefits, we’re improve them Flex this an to got electronically stages the we find build in ancillary either Again, couple being find PEO experiences launched going showing also be final that, of getting plan, is we’ve in right the really

Andrew Nicholas

thanks Great, again.

Operator

Ramsey next Our from comes from El-Assal question Barclays.

Ramsey El-Assal

pricing taking expect normally Should Hi, and my the through you’ve increases degree than for about potentially this of pricing price a this pass been morning. which to environment ask we to from environment bigger question given we thank to larger I able year kind backdrop. you wanted the would? contribution the this in inflationary

Efrain Rivera

for price getting on trying we are think that striking now Look, and that’s in think holding. what where issue. and strive constantly Marty to that’s on price, think I at towards higher that we Yes, mentioned right and I typically the pricing, think this between the that and we right balance what’s value point at terms of correct, I the end last that--I balance we’re quarter’s of Ramsey, I call of the we’re were think range

Martin Mucci

not therefore effective, being saving--we’re more the the have has at they’re the really you’re it big was very John price a saving a is saying. things big I more mentioned, we’re and lot of that good it’s they’re and and on-boarding able recruiting, issue price operationally, for that working so higher need feels as little Yes, hiring think all. John When realization particularly and discounting sticking, to clients solve employees, an technology, range been more a a and with on combination from is now, you hearing right of

Ramsey El-Assal

relative it’s helpful. follow-up A I the if business. the on sort parts of solutions relative there are curious expect feel handle also investors like that from longer resiliency you’d the the of you to better solutions quite make cyclically Okay, other. of I resiliency each from kind overall to on wanted the a curious as if PEO business. has two and/or factors that sensitive management just I’m of feel me, PEO management but question a that more have or ask segment, I’m just your drivers dated

Martin Mucci

I can John start and in. can jump

The able the John to I business, think, you now be that - I having midsized right just insurance hiring, not as pretty that to Ramsey, PEO PEO plans have definitely you know, strong. has talked and just all on mentioned continued things your does recruiting, or be own. a might small about

better real people enrollment we’re You a of the so PEO, I’m and want be plans, employees, portion do that? but season I I’m see up yes, plans, the insurance you in PEO as fluctuations and heading like this quite it into to enrollment, mentioned, insurance offerings. for resilient - selling management very has for solutions much continued very popular business I it question help those the to resiliency just and add time need I in need competing when so have didn’t the has for think think first is better also I in competing strong a we employees, we to Anything like signing very

John Gibson

a navigate employment out. we other compliance, situations would a are at without again of and to again these the assist explaining they complex part have helping this just business. No. client our because lot it and said - value clients well. complaints support, in maybe HR reiterate I HR comment regulatory to a in from attracted of risks way critical EOC-type HR they’re not where their I PEO that that very - had view clients we’re compliance a that them live couldn’t the or their when facing their proposition, on a macro, our issues step difficult there’s I just the look and small are that complex as having are they and business, Look, states multi-state, we person maybe of them support, client

at and to they increase, You look our fill nearly at HR checks how macro underlying did and ask going a for good our I clients we issues us and our complex look resiliency technology they’re I needing at what positions, HR trying solutions, survey, clients, in our look and only think see Pulse continue HR support, support, what employees them fill the facing positions. both still there’s forward. worksite is but the we employment--you are we so environment, side are can XXX continue really managed PEO consultants it’s the not and see to for open that Certainly open to see in our the solutions

Ramsey El-Assal

similar appreciate profile that, the both from performance for cycle Thanks answer. I so so I so Okay, segments, through much. what is your got

Operator

question comes next Eugene from Simuni from Our MoffettNathanson.

Eugene Simuni

hi guys. you, Thank

Martin Mucci

name. your wasn’t that know I Eugene. Hey

Eugene Simuni

from volatile, running to this not? times and not, and then provider where - wanted to a more even long at slightly of new seeing that metric, to or when numbers, signs company Curious so guys on wanted for I willingness customers seeing to tight if caution in why ahead, to like why back technology, real people invest and is, say, that’s I’m situations which that. experience problem macro. we small different legacy upgrades, across time, looking no just hearing if cautious labor would recession, as still any clear clear. remains incremental business employment very you slowdown expect market get in - come ask you’re okay, get little in businesses’ feature and or your get your that a a increase, guys maybe you let’s additions, that about a things to all. you That’s any a more I switching second saying, can as not you’re loud bit strong, are performance what for caution the

Martin Mucci

you’re so like so wages and it’s actually--I save the really well the little been do how there have are hire environment, this trying do efficiency, others specialists do say in, tight, how go through in you’re stage of been it’s yet kind biggest investing. the ways for to have, might they’re even okay, you’re and they’re while way them up, really they time other the to skittish, looking but benefits, and actually think doing I demand one much workforces benefits, products that people bit remote they macro Typically, they fact, to would point, their you offer, I to--the the in re-shuffling what to technology it’s larger midsize we in mentioned in we’re this a ours environment offer we’re I’d some say, is to very would to of deal being I I as has--you I of give more about in off I to businesses technology know, actually how it’s do the they things so don’t about a one where workforces, macro, I have for of can at companies, need so we They’re a they’re the and those surveys to do and able maybe do remote and operating to attract HR game. people, like handle in employees, of kind fill that this still how some at needing HCM talked stay. world XXX of people, offer this, depending in seeing lately, we’ve are money haven’t as need I because, about at these small market’s about that technology, there that with looking as better about that of app this, for think are positions, so they’re say John and midsized stage how which demand retaining the great this them, needing gotten any seeing all this some John retail guess need it’s if benefits, actually this about, a on been not more lay technology, because mobile here that have more needed I hiring things

Eugene Simuni

Got for touch bit, short of question a my dynamics on already a a We for the Efrain, switching margin it, gears longer second. over dynamics but Then downs the the Thank term talked actually okay. follow-up, term wanted are bit. the a through there to ups you. about I so probably for quarters, margin and understand kinds

model? now the the I’m state, how buying where more have COVID getting a part away business focused curious. a in structural are moving of model, we that bigger you become as your digitally from settling experience become digital digital pandemic of bigger that post-pandemic steady really and impacting are has seeing channels the more As maybe more part, we’re with margins

Efrain Rivera

we’ve balance that’s improved in that either think and basis in relentless business or more to efficiency--I’m efficiency improved talked with many operating and decide there long sorry, having I as goes going we may over solutions, the get invest more if it, we’re to driver business, Eugene, be few margins. or sustainable always know, so more sustainable you or drive talked the caveat it, where you conversation. but we points XX to margins have certainly we about growth, on XXX order pass to a the expect also weeks fully don’t operating of solutions very certainly have haul, for digitally-enabled for we XX over not a margins, productivity of time you business into I have that operating Well investment to the the so call, a part are in of of that of we create improvement automated in

I John’s driver to in continue over model think cycle. a around I been big making decade and that the the last work, that that expect

John Gibson

a on in company DNA jump I’ll business. being that, I best model the operators our the as is think around and our because business Yes,

we’ve think in with and certainly going to not over decades, that’s that me proven I this position. change

a what to what seeing earlier, is they’re relative to want - is not it you goes we’re There is really clients. expect if the whether from mean, and the their that not they asked to experience, because putting just when us employees that question recruiting, is employees an are their I demanding people, push demanding clients to have think are in big technology digitalization recruit that’s back technology. the going ad on paper. pull a to to they’re clients you’re I look trying you’re seeing technology

If you’re probably particularly looking not you’re the out to going many are people, find that, people for doing that employment.

So the big have of kind benefits, it not for they’re to as a compete for nice if today. year continue XX% pretty continues to benefit you and that customer something--it’s the our this their we really is year-over-year, our to talent not that a in and a go whether mobile it’s year must prior anymore, up looking whether it’s continues Paychex. clients drive to market with have see the so a a and that, employees. but had I want benefit to it’s It’s to out with being our finances, and also for that, that’s only usage, accelerate Digitization

HR meets You’ve what technology are of got have and use for. looking needs that employees an is easy really the full to solution to

Eugene Simuni

okay. Thank it, you Got very much.

Operator

from Keane Bank. from comes question Deutsche next Your Bryan

Bryan Keane

you kind in health mid segments. about just business seeing bit to just ask spend new market, there? lower any the you market retention of Good about in softness a of you’re know thinking the out little talk the Wanted so the different starts, morning. market, the that could market, in about guys called strength end in I

Martin Mucci

they small bad But still--they’re so that the and bit businesses have are is guess adding is we’re some demand business of from a still little people that still of needed a think were last was I leave businesses so normalize news and perspective, we and the period gone for couple business. out news strong small employees, know, small some at is of start we during in last year. that I end, new The starts a starting course, mentioned even to said and Well, retention not bit pandemic, of as postings clients, are started a from a our openings good business are as business--you business COVID have but fill. Bryan, employees big had of as more client the and beginning, small the to still and out businesses, the during of employees lot adding small we business the most lot because years

really think suite stronger only market mid from suite we’ve mid I I much, better much that of technology a the market, what in said and about is not the we’ve quarter market mid product being a think executed the but to the We team right through client, very offering growth and our we’re first good done with sales double-digit has hit stride what well. last that continued has year, there.

John Gibson

at the think I the PEO, HR would you that good only I you the levels. are get in look our add and - we’re you not you demand a the market that which is really mid technology, our get mid value positioned services, retention--when clients strong into HCM, get Yes, where still mid into the going market, retention well into you seeing know, getting quarter, digit full very forward, double first utilizing market

as in solid revenue As well. very, our had and well very we businesses our up performance also average in strong, strong. the in equation first market in with quarter I price-value holistically said, and think client really has revenue mentioned really that market strong is our our retention stellar the that mid well, sell-in quarter record our as held at to we’ve and called seen just retention particularly, HR retention, I is levels. has the PEO relative

Bryan Keane

that’s it, helpful. Got

quarter the margin, just issue quarter a margin? revenue But investments you want margin plus make it have to there. and margin. just out that the all in, drop just I the second about additional being flow the is on I some heard on the the cause for in Efrain there for clarification that one pieces in sure call-outs Just the XX% called lower, particular, revenue I second

Efrain Rivera

and what have exactly it, higher it’s that expenses. that’s with little a be. year, I quarter you the exactly little a revenue impact, It’s must said. so--no, heard lower on revenue, clear so in bit to you that, of what line it little Bryan, a partially of been I typically lowest the get anticipated we

Bryan Keane

Thanks Okay, guys. super.

Operator

from next Suisse. McVeigh Your Credit question from comes Kevin

Kevin McVeigh

so thanks much. Great,

my your add congratulations, so. on and too, share me Let we Marty, view Efrain

Martin Mucci

Try that music trivia sometime. It’s astounding.

Kevin McVeigh

initial guess one, organization your mean, obviously initial but in areas you’re you so Exactly. of might thoughts? is it’s Any as as same, great two any legacy, focus, taking of the initial maybe, to bit technology? just where little Hey, are mean, are, focus dial any John, no baton, building maybe just just thoughts more? capital or a I the super-super I higher on level whether CEOs where you’re to - strong, a the allocation areas I thoughts but

John Gibson

we’re I going to performer leadership continue mentioned to our on, total technology Well that, for expect team a expanding best Look, operators think shareholder of. terms consistently we’ve HR. decade of to working been know, highly I’ve in you a continue and leadership involved and nearly return. of things so be the and top focus really going it a to the going as and Kevin, business you supportive be on can of earlier, I’ve we’re thanks been I for on the been now, in in part the to lot a

to you tell accelerated, think I that believe. Marty’s quite think don’t they’re has with, because expand working are Look, got our they’re you I to to opportunities There’s to these done and question, change. expect no we’ve offerings think has that. always accelerate I I that. I I us three innovate and frankly, traditions continue plan would and mess that to leadership should under what continue Paychex and

ways clients continue and to we grow. going that platforms to look for to growth our can new We’re apply help

in improving We’re continue experiences going that, this the mentioned experiences. I to to word invest - using keep I’ve

is things a critical. service of package lot of those together have products, great great We How lot got a address to we business offerings. problems we’ve

product I look, think more use begun internal the other really of to with thing large of our amount to HR that for and used and you’ll our is, beginning that do insights, have a we’ve data really we launched apply clients. we’ve customers see retain we’re can that professionals of think more being I to to to with how retention, they customers, identify

then is example sales see talk to where need identify internal and get really to using--ERTC that. able a you’re and customers continue situation a force to us going have We’re I also needs that they data our a client can and into at has do productivity, we’re to moment who to that that using specific sets our drives where that good think

before think see to our to a at invest capital improve you’re like footprint to to company tech technology what see a company, can I we’re to and to tech - think capital going to I our relative I where we’re so and areas you’re applying utilization, us going we continue in said going help clients. continue continue look

Kevin McVeigh

what to Fed implied sensitivity can appreciate every for incremental now, us Fed That’s can then saying us - remind guidance that. the in right what follow-up, on helpful. you fund and just the terms XX BPs? funds, basis Efrain Then revenue of quick you’re think the the is what one XX just rate is you, the But points--like, tell if what in I super for outlook things like you

Efrain Rivera

at you the may it right called was that kind different economist is somewhere is of X.XX, give I’m and thing with hey, at could basis I this important. million around basis great what the wouldn’t expected, short bit out, think and little out of I potentially number and trickier in in a chief where the important, just million Kevin, up environment I Obviously it middle and the I probably that with a first right cautious that’s probably It so your somewhat it duration quarter of range I the X. have above, next out--and with got pointed to we’re terms year-over-year I XXX by year, we to am table to it’s X are. think bit that. forecast, what the necessarily, that so but think here now it about got because interest have called for that Jason only so and really so midpoint But relates in that we leave Yes, it so back rate my of little between really we’re push all-in to in volatile term X that’s net there X, quarter, terms want versus to a the in ranges working manage I’ve we’ve important. I’d want income, for and what figure I I go something to about specifically Fed and some the to $X income, why is interest a a way, the points one $X makes implications don’t looking a the X has the cautious a what’s the everyone’s in saying, in chips think can’t--I year point out call and range. be and portfolio environment, ’XX

So and of working have it’s on fixed way, here. at not take for counsel income us, business got some so the We’ve we’re looking minds side by and the we’ll that. the geniuses best on in the somehow discussion a it, like lot we’re of

Kevin McVeigh

you. thank Helpful,

Operator

question Samana next comes from from Samad Your Jefferies.

Jordan Bret

role. results. congrats on on Efrain, is for Hey, this the Marty, Bret Samad. John, new Jordan on also strong congrats the

John Gibson

you. Thank

Jordan Bret

already, Obviously I completely PEO. we’ve even I with by a not think management recovery that geographic double-click employee COVID, the on both or on was to you’re solutions spoken the but and area. growth in touched vertical wanted about lot

past that I is it from start based growth the area, the quarter, or this you out think was of at that or is a lapping in the Florida past, vertical saw specific what from I’m recovery saw we geographic we’ve called pandemic? maybe broad the coming the [indiscernible]. curious,

Efrain Rivera

mid is so then in was good Yes, hiring the improvement and that The coupled really color the of six partly different se, important, with and so let what market. to We’d we overall me work bit result good of have per work before that’s let add disaggregate larger environment a quarter the coupled that, I but in saw the and benefits [indiscernible] John we than that first the you’ve of little over last solutions PEO that’s always done clients, in management in adds a quarter. done quarters seen strength commentary. some four from last with, terms think in

that a is starts to look the employees, solutions, in because respect to bit. to PEO, but obviously was and in saw so management certain widespread. that we that expect relative State over-indexed PEO slow widespread, We strength business our With pretty verticals worksite at was pretty when we there, Florida of

in John little adds. client XX little client you’re getting roughly terms a little let’s is color. a the so Marty if it larger, of That’s that know PEO sense employees, bit average bit of has in don’t bit call more a to Now, about the different effect so comment. a or our I also or want

Martin Mucci

to range it X in kind seen client XX in seen and seen an we’ve we’re so adding of X think I XX Well, of going employees, board. particular, base has them course of be that. seeing we’ve probably across that’s the that to Most employees, but to in increase the

business where south, and and the in able hospitality, openings, so growth states Florida job in think that seen lot the and that’s job small are, been of particularly still that those I that John business people for Carolina and kind in as best. the Texas, are a growth we’ve doing have the index because even them small kind strongest areas people, the we’ve leisure there’s the of they’re checks, that’s they’re North and fill Georgia, where mentioned. job the to our - to Florida, add adding obviously that’s of overall, But businesses able areas, businesses best so small seen

John Gibson

number ago do When and we’ve time faster We that and with the struggling technology they more checks surveys the business when HR think I and what more, [indiscernible] market the were reiterate, segments we’ve also owners a the read look reinforced both it were that support. and better the who help pretty our where recently to we’ve little I mid a owners the would benefits offers this in has for advantage I those fair more looked and on there. data. product, in lot business we I point, worksite the recruiting our much that full company recovery, that’s a them we the the to a this products, across doing say, think recovery, or Efrain’s PEO HR are know couple that able general have have think certainly focused seen a of to we’ve in our just small small interesting is at it, do just I trim, seen survey ASO came whether we and but seen our was the and seeing, that helping all our data, in when faster. levels decelerated technology outcompeting to one market, we is built all advantage. I that at improvement again been was were less where Yes, partnerships midsized another days employees that’s the our why again staff have than customers because know certainly to we’ve I and and talent, built think a and really advisory down up in employment, employment recovery, paper our both in that’s service product and than they of areas did, board still, we that accelerated there in are companies, more for so we’re

Jordan Bret

color. very all that’s helpful Awesome,

same along difficult lines, at this the to the wanted forward This we there any you know, is were if quarter, and of quarter? this ability about in expectations, I business, or the track, margins hiring curious changes your I own hiring of throughout change plans on cadence were your end. follow with--you seen that’s think staff and pull Just ahead the your on you’ve obviously or lagging year. and impacting time, incremental up hiring past was initial any support to hire sales there talked that throughout

Martin Mucci

No, hiring is really here a a took perspective, machine and actually hiring retention very did off recruiting from better. the and well. we The

I particularly overall hearing you’re for market, larger in businesses. the think that

Now, else, I things done wage Yes, quarter year. that’s We’ve as lot to of well and the for start on like employees, we’ve starting of changes some we’ve we’re just off. of companies, well did some think paid the improved made a for of and some other and some rates, front at existing that. the very ready we’re everything and hiring ready staffed, ready rest of to fully so the are for we’re sales go--actually, the the and our

Jordan Bret

congrats John, new Great, taking Again my questions. well thanks for role. on the

John Gibson

Thanks.

Operator

Your next James question from Stanley. Faucette comes with Morgan

James Faucette

later, so I the etc., follow my really congratulations you I the that expect just much, lot plan, quickly impact and our PEO for Marty of Thank understand addressed else in wanted both well. adjustments course changes just is to--you’ve year, to questions, mentioned John wanted but there? of I a you that to as expected improvement expected to is to up. and can the of have the you quickly PEO something Marty, talk and some of cadence or the things John because key the there during again an very sales, to

Efrain Rivera

let James, me talk Hey that. to

under at started I The a we think on a margin an first the the what little perspective of softer year pretty from is beginning were the bit said we little we than attachment and expected in insignificant. as call, anticipated. impact half I insurances the

the revenue the that the quarter, going we that explanation back that on. quarter, the back in employee and half as the the year--look, people for make if our you in see worksite That’s PEO coupled those materialize They’re decisions the are it this in the future are out accelerates back coming the of assumption basically of decisions, quarter, don’t As we making of quarters. they growth through you year. in get those in on get growth that things this if making should, of see first decisions healthcare year, part you better half year, then pretty it expectations of the growth accelerates is attachment half what’s so with strong had

James Faucette

there. seeing that you the Paychex’s you’ve happening keep are space? touched done terms up able help not regionals, a How the but the and this over guess t is on the with obviously where to perspective that’s it, helpful. also how improve, everything a provider winning reason tech, can highlighted question you on you, landscape but are I you’re you’ve the and further time from address clarification being in Then real in to regional Thanks. primary ability what’s from I and customers what to its guess incumbents, and from expect of perspective, call they Go you technology continue do on consolidation? for more Thanks that?

Martin Mucci

we’re Actually, doing very regionals. the against sure. Yes, well

change competitors, keep I but haven’t They think certainly to competitive it’s--we that environment. big have think viable it is in a up. I hard the been seen

to I offered Google, else clients. on-boarding John if jumpstart the with we we’ve recruiting really combine mentioned just one think we’ve to anything, continued for offered, no work and Voice you we feel like Assist our the done that know, - has that

regionals, may the think I be there some consolidation. know, You

as we to have there’s standpoint overall track a of kept because mid of pie we’ve support the the done--you I half we been tech in a lot pretty some they’ve confident, market, particularly have obviously We’ll to that’s be grow, everybody well. The there they’re big think very get this we kind changes very of back think great not I know, competitive a done well. think continues everybody’s investment going to more lot but that all and so a forward goes of continued performed in I into forward happy. but any of so has see record year, environment, demand, the is--the from how for doing, looking probably that feel pie

James Faucette

a lot. thanks Great,

Martin Mucci

Okay, thank you.

Operator

next from Morgan. Your from question comes JP Huang Tien-Tsin

Martin Mucci

mute, Tien-Tsin? been or be dropped. might He on might have he

John Gibson

Gretchen, are there? you

Operator

Yes--

Tien-Tsin Huang

I’m guys I’m sorry, me? Can here. hear you

Martin Mucci

now. can you we hear Yes,

Tien-Tsin Huang

with had I apologize, some my trouble headphones. I

Sorry Quick you. you waiting. so. of calls, through but our if you’ll Marty, thanks sure definitely course to appreciated we’ll conversations - these miss the miss Not to always guys chatting years, keep with

Martin Mucci

definitely! Oh,

Tien-Tsin Huang

more. look there you John, forward to go; working Yes, and with you

right, your someone you and embracing what caught given or see were legacy opportunity where - if services I just background your and in that, for to on starting Paychex remarks, the further further? company. Paychex, You to think of balancing to tech more before curious the vision or improve little services and services think and in tech bit focus curious be curious, the same terms technology, you about you but and your Marty’s I’m asked of the between it for is here I’m just two tech, complement you I about did, things, blend services might credit one I’m how those a John,

John Gibson

as a about think very right, our Marty one you’re industry why with and vision I having having Yes, My my interview what from look I consistent experience the the view about Marty’s me, and prior going was mine reminiscing here best technology were and Tien-Tsin, was I I experience. and attracted is my see think reason I the where and and probably my same, really that’s it saw know that employees to not going want. outside customers critical area. of they unified efficiency the That facing issues customers user how operational customers said, that need particularly for what to is the are use solve, drive to be also only I items and being to HR that in but are technology the and think complex experience tool, and want, demand to going can

put position I I in kind hey, to as an really for to you, able something think reposition a unique opportunity. be more a that position system we advisory services, of and traditional our have

It’s sets I with way can think the we’re and say, of us fact in retention things we insights. benchmarking through data, going a be. a to mass what we we client about have, even walk the the really service up that do you That’s is have the a the not going talent can brings problem, analytics, for you your call service and talk that think the you. doing it data more let going workforce, to that the we than and complex multiple service complexities in states to this companies can’t company environment. do compete the that employees and technology end resonate, remote for in having would historical are before solve sense up to that regulatory see ever that’s about. believe More just to see that I going we resonating you’re

I technology that and invest continue think and the as think in uniquely invest and you’ll going us You’ve to in in we’re see and position do really HR marketplace. ourselves think to HR, this, do to got digital positioned I the about so how you’re leader

Tien-Tsin Huang

I when because to I that, has of through going just basics know, course taken it so you and think still Appreciate it--you there, I so thought always a covering tech it. wanted for Got thanks to that. and get services over of back digital as Paychex, everything, started about company,

you Is in - follow-up outlook quick the keeper. know call’s I mentioned come breadth modules the that you down my I function the on thinking the piece, mind, just those any understand general, is questions. the of the getting and the of plans Thank and also services, have know don’t being enrollment just clarifying, mix if lower you two of I is a long attach mind competitiveness don’t in issue? the bit. sure or of mind, want that, you make just to or If a a little equity two healthcare record XXXK you. don’t about Paychex I markets having clients questions just here, one, it your enrollment influence largest if

Efrain Rivera

Well, got disparate ones two there. you in

Tien-Tsin Huang

yes. trying to take Sorry, much time. too I’m not up

Efrain Rivera

I’d many lower Marty third healthcare John retirement of healthcare from about asking minimis No, for de on a of the just - a has you balance the bit the business, It’s of I’ll mean, terms a year. want, talk significant color I’ll in what’s point, there Then to so and little it more bit, enrollment. second. the driving as in I’ll on it and our derived you talk of terms on we do drag let really of as In services you’re revenue I John a modest first have let know, not is revenue. a put little enrollment, if it on that, touch basis

John Gibson

the think--I perfect I answer look, that. I wish had to Yes,

- customers, have that benefits of doing. and in capabilities can recognize options a second digitalization of these I trying tells clients. of but can why products every our of offer doing needs PEO We me right be wellness outside right entire at economic more the as to we’re looking their Looking out have, designs plan H&B we their we client, product situation, point afford benefits employees, can’t so said, type We suite to have deciding really kind that’s and lower business to created economic that so that’s of benefits. what’s the the some some of that, lot development in the you the in out person where plans, what particular, into now, my to rolling a situation the now I in be some in, benefits it data, match is. what’s that employees employee that the suite We that price do mix can that recognize average the meet there, clients is really actually all a out would quarter, certainly economic they’re cost at non-traditional of the really of worksite of and and services economic the having the earlier, mentioned an marketplace. rolling and given also drop a the rolling regardless we plans. we’re our also are needs, they getting also of the a and benefit lot their in with make experience of focused of Again, broadest of of and cost We’ve both spectrum may of full my expand we’re I a wage sure driving we’re for what industry lot has a from situations perspective offerings

Tien-Tsin Huang

Got for sorry it. thanks, the That’s extending helpful, call. and

Martin Mucci

worries, No, Tien-Tsin. no

always are appreciated. questions Your

Tien-Tsin Huang

Thanks for the time, guys.

Operator

next Our from from Baird. Mark question comes Marcon

Mark Marcon

Good Marty, over CEO; to accomplishments John, you’ve with morning. forward the been that look tenure tremendous just and congratulations on you. working

Martin Mucci

Mark. Thanks

Mark Marcon

did at program you the extent the the regards are little are improvements? and dial impressed voice I environment, How mention solutions, business solutions? of lower. pipeline with recognition you some of Google, With to for management what bit the the those macro charging can and tech small sales marketing to types thinking to HR you a more formations are strategy HR by highlight about really was for I was Tech, you

Martin Mucci

Mark mean, take getting we’re at really--I marketing the there. - it’s that, let’s exactly side doing Yes, of it. the being it’s word It’s out Tech, HR

it’s folks sure be Google you trying do that we to with We’re with have the to free. it only--we’re the able totally with that Google can partner lot doing have known do hands their to and that that like a Assistant and only be one

we’ve well, been then get think important so that’s we the been through years and know, message for podcasts pretty very the pushing--you conferences, course webinars, of think out, and done, We’re work the of I has to marketing through the online us that’s that and to through been tech good. just that’s that all the aggressive all worked and

there’s still I the--so huge earlier, go think and up. the John on continue a rates mentioned, we demand, to penetration think think product I

that businesses of tech and out course, many on than the really about were, from up, less we’ve product new that they’re even the numbers as and are additional were d ran when we’ve starts lot seen they need, during if up think a s the started I and the talked not businesses. word penetration, this still COVID, call, gotten what business they has everybody--or big they’re small just large people there

additional the So penetration product think with obviously start-ups, make I of existing better the they’re suite to still base. well very even we’re but doing the we’re up, the client still doing on

Mark Marcon

so seeing robust, the much management way the what reading the a as not I’m pipeline taking it, a sounds relates it and Right, solutions, we’re macro to of terms like be PEO of of really from you’re for it well in perspective that? to selling season about as terms key change headline in continues as

Martin Mucci

a still it selling we should but feel good It’s feel We it. be early, Correct. about good season.

Mark Marcon

talk that you about can then have and winds a bit you How that ends Great, of of impact? ERTC any being kind little sort down? Does up retention? as think impacted do

Efrain Rivera

Hey Mark.

a Marty’s little call. So we you in of know, gave color bit

out One that so and sense. I but that near out a on seen mentioned, is, very call I’d lower called from record things. little revenue is we’re John two Marty bit standpoint, highs, makes at one into where retention be the of it’s really a what we thing is that we’ve significant end, on impact on ERTC going positioned balance given to feel is think market retention. now, expected more not should a so right think well two, - client the the we’re year. the churn have pretty I those

I think Paychex. doesn’t our a--if anything, A is that it of there. their add to them competitors that just talking lot are of it about not positive demonstrates allow because, model sense candidly, in the it value it’s the get

from about was our think I a are we level that that John really should it, expertise Some giving but mentioning a and clients of doing earlier, consulting retention not have that impact. standpoint, it significant think so

Mark Marcon

thank you. Terrific,

Martin Mucci

Okay, thanks Mark.

Operator

comes Research. from from Your next Northcoast [indiscernible] question

Unknown Analyst

around congrats morning want and great a portfolio. get your Good gentlemen, color I to some quarter. just float on

portfolio? As be of the rates, Fed float your there think do been continues any management you to hike changes, the there will any changes or has in

Efrain Rivera

interest position the changes dynamic of not in but we more term real progresses, and year short ’XX for rates what’s the are huddle continue to think expect for time of and between the I we think we’ve I balance believe to they adjustments the earlier to in Hey, the adjust and and answered think do, change what on bit when based we the figure environment, long take ’XX. going on out about make see time the would just the what another we become going and portfolio, little what that as say do we’ll I what duration in a peak every is is terms implications Fed to are, what advantage to landscape. to happen trying portfolio is, the to is makes we’re the pronouncement we’re

Unknown Analyst

in question. that any re-answering of right, have return shareholder strategy? your to Do on you capital All you for thank thoughts change

Efrain Rivera

is short no. answer The

look continue and will think which in at builds a pretty about back this, will value little terms in that dilution, portfolio, sense, if a we’re is of if offset makes to buy capital Marty obviously I so going we it of from dividend, significant it to to changes. John pay standpoint, bit no we and shares deployment the M&A strong talked

Unknown Analyst

much. so you Thank

Efrain Rivera

Okay.

Operator

from last Wurtzel Research. from Our question comes Wolfe Scott

Scott Wurtzel

Hey, good guys. morning

things. know a trending on just called you to if think had resonating John give the and exactly levels, so with products, bit high mentioned still above I just you of side color retention of me, from can question I base. one products continuing it’s Just rates revenue you’re attach pre-pandemic little just maybe most what see wondering value more client on are the out

John Gibson

products. our suite of really it’s Yes, HR

of automation I our recruiting attendance other. technology mentioned products, the online demand keep in then right now, around anything on. just kind area, retirement the ever see online and applicant to continue the they’re are looking is the time and now. high popular popular, put I employee-employer and very really operational XXXK to more You tracking very leveraging that of and People is the what’s are efficiencies, before, track than relationship workforces of dispersed demand, going right very for their those in high

Scott Wurtzel

it, Got that’s guys. Thanks helpful.

Martin Mucci

you. thank calls? it, for that’s right, Gretchen, Okay,

Operator

Yes, further questions. no

Martin Mucci

the more employees All results thank call. right, over XX,XXX we’ll for well deliver this all. of to close Paychex At one who the point, us great the you

CEO If you’re the for given hands. interested know great will approximately would XX replaying conference Have in it role I as you. you thank I’m day, I a be years, in over like webcast in have you all days. you call, your and me thank archived good to support for leaving of the this my all

Operator

and Ladies today’s you. this Thank conference. gentlemen, concludes

may now disconnect. You

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