Paychex (PAYX) 29 Jun 232023 Q4 Earnings call transcript

Company Profile

Participants

John Gibson	President and Chief Executive Officer
Efrain Rivera	Senior Vice President, Chief Financial Officer
Ramsey El-Assal	Barclays
Eric Dray	Bank of America
Rayna Kumar	UBS
Andrew Nicholas	William Blair
Kevin McVeigh	Credit Suisse
Bryan Bergin	TD Cowen
Bryan Keane	Deutsche Bank
Scott Wurtzel	Wolfe Research
Kartik Mehta	Northcoast Research
Eugene Simuni	Masset Makinson
Peter Christiansen	Citigroup
Tien-Tsin Huang	J.P. Morgan Securities, LLC
James Faucette	Morgan Stanley
Samad Samana	Jefferies

Call transcript

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Operator

Good day, everyone, and welcome to today's Paychex Fourth Quarter and Fiscal Year-end Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. [Operator Instructions] Please note, this call maybe recorded. I will be standing by should need any assistance.

pleasure the my Mr. over now is to conference turn to It Gibson, and John CEO. President ahead. go Please

John Gibson

Thank you, and Stephanie. of earnings you, Thank the our us release. Paychex discussion for fourth quarter fiscal 'XX everyone, year for joining

me fiscal Officer. morning, Financial XX. year released financial ended before our fourth the we This results opened, May today for is market quarter Joining Rivera, our Chief Efrain the and full

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

of the Form July. XX-K end will before Our with SEC filed the be

quarter being XX This Internet it -- will will is the questions. an outlook the teleconference and broadcast our Efrain fiscal and our with year. our with up 'XX. fiscal be business fourth will then over on update We'll for 'XX available highlights website start on for the today archived days. for your open and call and for financial the approximately review results I for

year $X fiscal was $X go with the we was we when remind I during and major and X $X to from to $X $X to on 'XX billion year it reflecting that results It billion, go years and for were billion took to pandemic. X to with X hit financial took Total We revenue. over total joined in billion, night the billion. years billion, just billion for $X everybody full this $X personally X% company, to $X us us to go company the billion XXXX. years global but I finished grew milestone year last fiscal the solid into over a heading I momentum revenue to

proud of those certainly very So results.

we due to diluted operating tradition share we've of dedication on growth technology, to and digitalization $X.XX the what continue our in the XX,XXX business, at XX% of as focus are achieved benefit margins finished These our hard than X%, long proud revenue our to to at excellence. our our addition investments fiscal results from of aspects earnings very standing XX% per more continued adjusted and operating work driving this grew and of In all I'm employees. year. in

impact and has fiscal have employees. fourth Our industry made growth And continued with positive solid in year. technology their advisory our and continue annualized to us both clients and return, the solutions with a Momentum additional loyalty. their revenue for the and on sales in they leading full in new reward continued quarter business

double-digit and HR solutions with growth. of strength retirement particular were areas

year. levels into in rep well-positioned to staffing of retaining we the continue on our as customer heading are terms value the high tenure finished with and year our segments. share our record of focus wallet increasing We new Revenue near and retention levels

business, formed out due the revenue retention of higher impacted to businesses Client and by small losses the mainly was newly last in distress X lower clients. in years in concentrate financial

employee strong We to continue for worksite see HR outsourcing over with growth XX% solutions our year-over-year. demand

and strong level competitive worksite unique of advisory the proposition now tightening to leading market navigate complicated capabilities. we value our the retention labor our technology and credit. For of a to achieved environment, continue of year HR very employee due regulatory sizes Businesses all record a and challenges

employer the strong which HR deliver to offer for technology depth offerings, businesses of of comprehensive and for of to the our outsourcing designed the solutions for HR and leverages quality compliance need our retirement a Demand and the strength efficiency our remains to to and compete trained including talent. benefits outstanding our including for integrated experience professional organization technology, the due the HR and our employee, breadth both

With X.X -- of the from core and benefit legislation SECURE businesses. a offering state for Recent and or benefiting market expected well-positioned are retirement passages foreseeable midsized Act and various Our key requiring continue and for to retirement growing midsize services more state as small for opportunity. expect employers to retirement mandates to a advantage retirement strong for benefit small are to provide of future, the the to a as solutions a employees we take XXX(k) the take expectations of making the plan businesses. mandates leader the passage future, effect we this in

environment employee our demand service. has The for SMB credit tax continued credit feel retention to

gaining has they running and Our to funds helped keep of need ERTC their tax obtain tens and offerings growing. of service full thousands access businesses credits, businesses to

continue We opportunity this and prospects. to communicate clients to existing

the to solutions. strength competitive our recognition technology Industry reinforce of continues

Award Flex Paychex year, consecutive Solutions focused HR Tech Core the Small fourth and earned HR Best category. an the for For in Midsized Business

achieved Our consistency performance of the quadrant these of team, being speaks respected the in HR our placed and technology. and not proud leadership results only winning market rankings, analysts leadership how of I'm very the of we repeatedly in I’m equally technology results. in these proud these also to awards but

world's recognized the admired, most We innovative of most and consistently been ethical one have companies. as most

addition, way and as are we our looking the can better. for we a diversity, our for best and ways employees for testament in and ourselves investment get communities development. not make These employees to the been our job are done, how awards the do right one new In of women, but -- for and our to it for places we've people sales, in only constantly work ranked training place outstanding

positioned and midsize committed on a leading shareholders. on technology, move we'll our positive is fiscal that we small help businesses continue remain changing they our and to customers. We ever experiences focus deliver complex developing in our combine navigate year capabilities communities continually succeed. help employees, we challenges purpose, and superior customer advisory is value our into to to As and businesses have world. partnerships to to 'XX, our and our our And that our our our a and evolving clients, face will strive the impact uniquely to Paychex

and as well for Efrain, will who guidance results the our to take over the you fourth financial year it our fiscal year turn I'll fiscal through as 'XX. Efrain? Now quarter for

Efrain Rivera

Thursday. to on good remind by the thought results but of finish contain will Thanks, then that outlook. commentary our providing John, that we're a I disclosures of referred I'm financial past not everyone morning today's to to smoky and year make. forward-looking going you're you. a fourth summary I of I talk and review customary full start to like it, quite. quarter our statements hope all would this fiscal XXXX we results, like indoors about with

have I is of of VP Bob also Just Bob. that this the I morning room to Finance met add today, before us Schrader, IR. Many start, you the wanted in joining and

quarter, HR Okay, [indiscernible], total revenue and by increased saw ERTC a services, revenue currently mostly to X% over realization. billion. product penetration. Management the you bit fourth solutions also price additional which ancillary driven for little XXX $X.X was up

We continue to products. see strong attendance attachment and and HR solutions, of time retirement our

been and will demand half become It while Demand headwind. our ERTC a will and 'XX. as John of especially headwind continue become mentioned, for the fiscal to year, exceed moderate contributed along into where the year to continues full back this remains to service has service ERTC it growth for X% a Demand internal our strong execution X% that year we of with our in revenue next more expect a tailwind to it total the approximately year. for expectations,

average higher in tempered for per revenue increased medical employees. Insurance Solutions of this client to environment. revenue along ASO volumes in The by million growth and bit with by plan $XXX driven and worksite continued growth lower X% sales a and PEO rate was participant preference

QX. normalize I'll to in we won't will start as XXXX, trends We little about expect talk these that it though through necessarily fiscal evident, a in bit. progress be

on taken held funds the in average offset rates portfolio QX primarily clients losses into back Interest of $XX higher by interest this realized as we XX% due increased heading for the partially million, year. half to to reposition

largely Expense attributable operating year costs X% and of Operating of wage in higher income an to support expenses with XX% to rates million. $XXX to just Total general million $XXX business. margin XXX share headcount, increased the was share. diluted growth and increased growth XX% share the share $X.XX quarter XX%, point per adjusted expansion increased basis earnings to per for over Diluted per $X.XX earnings again under a XX% per to prior the period. increased

$X results. all increased $X and billion the billion. to service summarize revenue billion year. you total increased revenue X% and Management our up quickly year $X.X solutions expenses aware $X.X we to insurance X% times Total billion. $X.X are to during guidance number raised PEO me Let increased as to X% increased of X% Total were X% full a billion; to

Diluted portfolio. per adjusted pretty of share per XX% earnings increased higher corporate average Operating share the over expansion year. to the investment XX% and model income by due margin this The in the earnings the income, average to XX $XX million basis XX% share evident. at leverage within investment earlier, with Other balances XX.X%. $X.XX John rates a increased point for increased prior net interest over and was per share. diluted increased $X.XX per mentioned

XXXX. position of financial million borrowings cash approximately and of with $XXX $X.X of restricted remains solid, Our total corporate billion total and cash rock more than as investments May

operations our when of billion that when or the year income prior year, numbers, our and earnings it's capital. some fiscal we higher Cash I in billion really quality while strong note our $X.X increase gloss year-over-year. and an for is Free those of important flow flow to over working was to [ph] cash numbers, easy very, net generated was changes you. the cash by think driven from by the quality year, of And noted for it's that XX% as -- very report of from the XX% we $X.X

in up. equity the or with paid net a that. deliver XX bottom dividends an Not line, we we for of arrow intend the fiscal them a on return on We month quality way with continue of deliver the XXXX pointing out do our rolling we to to income, on billion total $X.X only top do but stellar and line, in during XX% XX%

year turn Now, May let fiscal ending guidance to the XXXX. upcoming me for

in to $XXX $XXX can is in on just to fact net current year. expected from of X%. quarter-to-quarter X% PEO of to clients to of and the vary funds as the be for insurance is of saw to Our year-to-year grow debt attachment the Solutions last Management X% you outlook million. expected accommodate is held Interest range the follows. on sometimes from range to to million range in the grow Solutions that expected as we [indiscernible] and X%, Insurance as saw

This be our range and X% effective margin to to Total of is income million, in $XX to expected expected be in Other of is expected income net to outlook to tax X%. XX% the XX% interest income grow diluted revenue some million grow in economy, Operating is X% the $XX then of income, in to of in rate you uncertainty in XX%. current the range the the per range earnings changes to of XX%. future XX%. environment, assume is range be to range expected surrounding has expected Adjusted share know, macroeconomic to the as which to rate

the in visibility better first half have XXXX. of We fiscal

As a each into year. the have quarters quarter little better the progresses, in visibility we remaining

bit of do low the your total approximately the quarter, on end expect XX% at to the XXXX for solidly we first quarter. That's first quarter, and approximately quarter and fiscal be revenue expect first of the a modeling. PEO range be point. will in help operating our to growth anticipate expectation For That's the And and then the Insurance it'll we range. first the half this be little margins for the first half first below Solutions be X%. We revenue to

we Before you business a of little will through PEO build year. we ask the be I the question, go a year the bit was year. as answer quarter actually the last strongest expect, the on as quarter consequence will than compare And first the tougher the me

our and call. Of you course, is quarter to change. subject this We'll current again on all they can the of first update assumptions

of There's we course, the it's when a number give guidance. of time questions because

if just question your ask for I something follow-up. say, So is forbearance which and one could a ask limit to on to yourself

questions, understand compound those compound but violated a will rules. that some of questions Now, I five be say will part the it's question I

get can excessively we the So long. without -- going but so call through just

slides for website information. our over back With to to all I'll And refer of call our that, on investor I John. you turn additional the

John Gibson

Okay.

out laid call Now will with Efrain open now questions. you, the all conditions the we has and restrictions that for for

Operator

Instructions] will Ramsey come Barclays. [Operator from with first Our El-Assal question

Ramsey El-Assal

a And feeling right now it much question of adjustments continual so steady more my window environment? now bit sort state, inflationary I on you trajectory pricing just is the of it that out this to Can for release. little environment? the is, a in aggressive kind given comment of pricing when are you're the this for -- Or the comes in Hi. pricing? sort of question called seeing a you are You you press sort morning. Thanks guess taking

John Gibson

question. in feel thanks Ramsey, Yes, where I Yes, about for steady I more say good state. we're the a would we are.

marketplace. ourselves we'll of and to do need this in of value a that. and been the to about avail our I think getting. pricing. And what rewarding be And when they're competitive us, to pricing services, market, price what year, And and I the customer in then the our think hey, we've we stable go inside through in new we believe and prospects think seeing competitive the we'll see of see, the year, as we base as I have did they're in we last environment, terms continue I clients we're do inside we to we a always value products base, power we continue in competitive talk

So any of side of change equation. I major the shifts see either on pricing don't

Ramsey El-Assal

wanted Okay. from think it retention. ask At formed was a headwind, seeing and bit business, same I think of you there to retentions of you at color other out I record And were Efrain was Obviously, I businesses, a little about that called newly from little provided. of also bit levels. the some where time, healthy out

a just could bit, appreciate you on little it. If that elaborate I'd

John Gibson

pretty think I probably prior we've consistent. been I as all we Ramsey, think on calls Yes, said, I've And the expected.

to continue particularly efforts outsourcing high-end the part our really our HR we of valuable clients, focus there. So in on

retention the things segments. business, from near from maintain value of the focus that customer have see overall and revenue record continue record We in we and we're across PEO the perspective because our we ASO, did client a both high Where there. doing and to retention we're driving value in that having again,

pull first and thought model, we ago. gone. expected, I whether business is And in we business that years I what the we're starts other see did times, almost bad years, a we'd of X you're half and some we X a see a times, very high exactly are care when had new recession, seeing As good back, every I them in business don't of what or number starts

even to we're surprised the were be and you if I'm so the retention case saw look saying we of retention when back again, to And levels. kind kind the But not on at side, that's client we of pre-pandemic that expected client we what side. we're where

nothing there. dramatic So

occur and we kind So expect 'XX. more of we're I'd kind stabilizing going kind of say of that's stable that more typical as client attrition into to

Ramsey El-Assal

much. so Got Thanks it.

Operator

Thank you.

Kupferberg Bank Our next come Jason question will from of America. with

Eric Dray

businesses about maybe collar, color among a groups. add you're kind seeing avoid white Anything call there? curious any landing. Eric may Hi. really seems you of high-level. had question. This is seen question a hard small Jason. Dray out for kind I taking of the of the to Thanks But collar different on be kind like versus We've just can trends macro client resilient for blue

John Gibson

Yes. that's of Eric, norm. Look, the I think, again, out not seeing anything,

the get I our to then really laggard. the course laggard company, probably the the the employment go also hospitality look small seeing through when really back are Hospitality has in to to we've to by ordinary. anything, level pressure recession. strong would for the kind a say a fiscal smaller of retention situation. they more other what back low us the there year end What credit, comeback, back credit and specifically of of half inability made being seen more of We is Leisure jobs been -- been of market, you index. we've have think the finding at instead and the [indiscernible] and continued and I've segments. the hospitality Certainly good in lot of seeing see levels you're were to price, the of back the the Not companies pass generally, what inflation, of getting this the relative on side. we said startups, out I

Eric Dray

then is And Thanks. -- for Okay, this great. on Efrain. one the

the question are the Thanks. every kind know parts. rates? On on managing What I'd about And two up of burn I comes your what thinking are but guidance, thought interest of call, kind thoughts ask. duration. you then, float

Efrain Rivera

how What of I in will in that the those don't 'XX half decline and previous two. first thinking, a rates that's managing, to happen. in this then year, was sharp we're end likely I calls break really concerned we're mentioned and the about calendar I year. I think

as the enter first at and the think point, there'll we're half year. our Powell's first rate going we of -- that go of increases, seem our we rate where in this growing. rate see calendar couple Certainly decreases that I a as assumption So our we of indicate you're half the Jerome comments thinking second to year, likely that's see 'XX, next But recently would some through is decreases. to year to think is half, be

So our net-net, guidance. that's in what's incorporated

So of while we'll year terms back are games we're year, in the that's our thinking through half we the that we update futures, could in of adjust where and get And where play as we of is. what with at. kind the

to rate bias the that. is is mitigate to be as what set I portfolio, along, in year a likely to go decreases. my closer can't through as to we in any than position it call the So of go 'XX

of of that that our scenario. support think numbers kind I kind

John Gibson

Stephanie?

Operator

you. Thank

with UBS. Our next question will come from Rayna Kumar

Rayna Kumar

morning. taking was? about Can Thanks Good for question. you my booking talk what

John Gibson

Rayna. Hi,

Rayna Kumar

customer about or quarter, Can products strengths out different sizes bookings talk and call you seeing the you're anything a Hello. that bit weaknesses? in little where on

John Gibson

Yes.

fact, solutions the of some back -- actually actually quarter look say, the been saw to the traction. It's again, that of pickup fiscal would year actually approach the the in at digital which and was the HR you beginning the strong We of PEO get had say when resonate which early they're quarter. leads very improvement half, a across rolling And saw changes end nice in I it. was the in first an fourth fourth strong which would that So, saw was with pleased which look, we we've part business the in some the we to our I retirement. pleasant first the and in see. key the continue demand And half saw into services, as to actually, of than well, are we HR in the is on encouraging the was sign second working QX that thing. it demand acceleration quarter, platforms. or continuing. stronger But a season quarter, that

I think products and market set demand strong of segments. we got through a the good this services environment across in all

Rayna Kumar

quick, contribution That a is the Can just ERTC quarter? just quick call very fourth Efrain's follow-up And up helpful. within to guidelines the stay here. really then you for

Efrain Rivera

that No, -- convert far as that's it's from year tailwind growth And so. going we think the stick to We with X% X% we didn't. year, a as a next headwind then into to we're full on for or go.

Rayna Kumar

it. Got

you. Thank Okay.

John Gibson

welcome. You're

Operator

Thank you.

Our from will with next question Blair. Andrew come William Nicholas

Andrew Nicholas

good kind for Paychex. was my I to M&A taking of first questions. within Thanks going ask morning. Hi, on

update just and an could question. your preference give and ambitions of definitely you on kind you PEO on But If medium-term. the This and us a HCM say both could compound in anything valuations? between near-term is

John Gibson

question. the Andrew, for Yes, thanks

in see more few for think in has to the market over environment, to to Our The opportunities and ambitions our objectives find with realistic I been change remain dynamics opportunities that is some we We're meet and us beginning years. are I'd at to began say pipeline to past the our latter sense think the the consider. same certainly expand But challenging I strategic financially. make time, the more same. trying

add look focus our to us or the going help tuck-ins. markets kind to expand in suite. changed. think We're of scale has don't That product for our I really continue

that value are really areas, evolve, HR that and are capability of to the medium them HR, that, enhancements, our adjacent adjacencies to looking particularly data, we're then We analytics. continues with help to suite in solutions sized businesses deliver for for numerous And succeed. digital new small, digital current market help again, platforms proposition looking the and continue to capabilities, at looking analytics, data constantly as us growth

enhancements of our good we're tuck-ins, growth of be going getting mindful deals making we're smart again, [indiscernible]. And So capability That's platforms. continue in sure the areas focus. to to

Andrew Nicholas

kind helpful. year. That's I the of then my Thank ask follow-up, And next margin wanted to on just you. for guide for

target I to of quarter points. to think basis last you XX spoke XX preliminary a

XX% XX% bit out put decent think, range is this to I you midpoint. higher morning a at the the

-- if there. what's So if to numbers? that as of outlook, kind of And bit a well, rounded it's get Thank that's changed matter just fine trying totally could what you in terms Or just of unpack just insight if you. little anything? your a a little more bit

Efrain Rivera

plan. I'd guess a March of haven't answer mean I Look, that couple ways. through that Yes, preliminary, in we is gone a

P&L. John's tradition continued is that which think we where the of find in in that had to sources can leverage that say, I a company, the we've

So on impact has that, aware. obviously, an mix Andrew, as you're

process more and would opportunity. to went As in you're were management get disciplined planning in I what see leverage solutions, seeing that to you you that there And the uncover the pretty opportunities that's them. But more opportunity say where guidance. through gives process more we

opportunities a And through because both side, really say we see planning other opportunities. quarter, challenge we thing on is days we to process and of one important. the side, the go ourselves cost investment also year it. those the for If activity. I'd first find XXX get we a The that's on

of find in go process. you planning [indiscernible] that the if year multiple theme to fact the need leverage think in into but think I a have So byproduct, levers those to the you'd so it. terms, byproduct a because to was addition We and with that that

any we're, potential up year. okay, we do better that in speak, as So issues offset the about we come how might can even thinking or

there's little and bit means a bit planning little a DNA. little of So around it a -- of that bit

Andrew Nicholas

Thank you. Perfect.

Efrain Rivera

Yes.

Operator

you. Thank

with will McVeigh question from come next Suisse. Kevin Our Credit

Kevin McVeigh

thanks. Great,

John Gibson

Kevin. Hey,

Kevin McVeigh

us and revenue a some revenue what historically, today, where an probably a up I frame high kind all-time of the I'll just kind you shift client. make a I retention despite to in you of there to one frame time. imagined, is Hey, help what talked that would client kind think, bit little delta is have of, But there more? pardon kind retention any little is I over Efrain it bit and versus little and think, Can of narrowed time. me, that's retention -- way being been hey, about

Efrain Rivera

Yes, yes.

So, look when and kind sorry, we it we some XXs were it's that the approaching X last year of was during XX midpoint mid in kind is and ways pandemic, an When are the like XX and post between really we the but reported of this the outlier. year, midpoint XX XX. the pandemic, pandemic, year of the between of

market. as some larger John the losses on That I nothing been saw second. about will end in the years, where XX, with prior that. unusual there's that in we've XX low one consistent So we frame is of mentioned,

normally during everyone And was has tell What than involuntary call I that been. it pandemic losses reasons, to about was obvious of don't much unusual the the call was on there's bankruptcies what number lower the need PPT. we or

So clients normalized What by to a now got higher a those of I of on the of up that of was bit of going had group being back that a through client we're clients, losses. to in funding base were kind very more a because in losses propped terms that. way some up And were point. environment think small was John's [ph] the lot pent you

make and different revenue among of from on lot pre-pandemic. what's is high it. especially a point important John pandemic different is revenue We emphasis put value I to retention, that higher not than want referenced what clients But was retention it or our is an and

lot from that's record where we're it, focus and highest but revenue, do levels -- go our retaining efforts our won't we many, -- where many our I put put a cite we on, So that's clients. that could into can I retention at of we

So important for approximately XX% deliver we That's number us. that's retention, revenue important. can an

-- valued was while wrong you you so the is we The becoming your unit you more a talk important retain that, reality And that. want that about that with become retention, lot much save, highest in past, and clients. nothing

retention has on pre-pandemic, while while area it and remained revenue retention higher what forward. our of is and line was it focus an in And going with be -- unit so higher, our was will

John Gibson

you I we our what thing Kevin, go the go you you had say last remind when that, hear transcript, retention aligned, historical to this in Yes, pre-pandemic I on levels, to look and is I we at to would 'XX X as the a we back that everybody back high client go X got -- also in client add retention, will actually would we 'XX and years, well. 'XX, over back were back

they buying we've rewarded they a by think the opportunity well given clients a So we're returning Paychex products out and of pandemic, those client had us us rewarded as that successful that. And highs I to what we would out, us. historical coming the challenging pointed rewarded services to enhancements high have because the as technology need to of through lot do our pricing very been they loyalty. then in that better giving value the to very reward times, retention -- They by on I us drive the see better the client to side levels focus to demonstrated advisory retention have on the more into of in think we've those that from terms as this historically, value our been value for with we've and we've they Efrain both support for segments and do and them

Kevin McVeigh

you. Very helpful. Thank

Operator

you. Thank

from Bergin will Bryan question with Cowen. next TD Our come

Bryan Bergin

on I here? .X see here of growth realization. here, look the give thinking in with that of client underlying sense a for this you're pricing pieces like guys, driver product citing you versus that? Hey us into we a how morning. increased Can you're in management more versus solutions to Can the kind product client good penetration, company year, growth assumptions maybe you. 'XX. you total price some dig the roll And about forward us across growth for wanted Thank 'XX. of here and a bit 'XX, When I

Efrain Rivera

would client is Bryan, I end going or have the low range. be that we expect X% in to two to that higher of typical We're in we say, yes, the said the things middle be Yes, growth year to that range, on X% next year. is

that's the So on range, X% although years higher X% We're of than to the part that. typically recent the pricing side. on equation in

We’re site. and that. additional perhaps are on you basic driving of the higher bit the mid-level on then to the mix mid a than elements, on the got of penetration little pricing and remainder product sort maybe Those

too. Now I'm the some solution side. if in you And from the -- ERTC, going see on headwinds start is, reconciling negative the me, you to management I negatives to got get which take will

So you get you that X% those where triangulate pieces, our all to growth. X% to that's when

Bryan Bergin

there? in Okay. How you 'XX I about specifically as for So client [multiple had employment speakers] well. XQ and then got XQ and

Efrain Rivera

started I [indiscernible]. talking Sorry, over

saying You XQ you QX, were and what saying were then?

Bryan Bergin

Yes.

as factoring was were -- that to different when how about out curious that you're XQ about guys So play was Did too? for But assuming that XQ. or you from think think you 'XX. also, employment, I client relatively flattish going be

Efrain Rivera

element of cause always mean, going they little would that share Yes, be I yes, -- rates. impact year, an have to level and their mean, next played say bit get now. of on to higher I that will caution to concern a that I right [indiscernible] the flattish. have into out expect have the you of we that, me I

employee an on growth. play would that definitely worksite we'll impact that to have And out. So have

at it's expecting manageable to point, not our we've change account going is and taken that into this we're think I sure. But plan. in [indiscernible] that

Bryan Bergin

you much. Thank sense. makes very Okay,

Efrain Rivera

Thanks.

Operator

Thank you.

Our come Deutsche question Keane Bank. next with from Bryan will

Bryan Keane

Good guys. how morning. Hi, doing? Hi, you

Efrain Rivera

ahead. Go morning. Good

Bryan Keane

growth function some that a of retention that clients sales as go then low it to you have the you or that of It up the higher expect won't range, sounds to seeing what during want bit, on just will it -- you issue year? channel the just same wanted bit the than into on this that turned go up. I off given just end to go a of pandemic, like yes, little client a of smaller you're the Is follow-up little was the is I question. it that and in maybe

Efrain Rivera

mentioned, as detail. back that's pretty we of John the unit we -- level year. half generally the as that, answer to Brian, But the saw Yes, a in growth strong of

remember So sales driven retention just that all explain a to the go the factors in And issue, call. of the the talked I about it. was level earlier issue [indiscernible] anomalies I it on more the one this to based really, that we completely it's business deeper, -- really pandemic could that wasn't in day starts driven we one really accelerated. a think of

we going to analysis out from of benefited of John business. after looked went those gone. but And and did the that said, stimulus once of we at, all clients unit a we I'm out did business and was stimulus other number government so know we that of survive that -- years, clients PTP [ph] go are sorry, lot growth as the X And a not once those that,

year. situation, our That's So get think of return a will, at that that next primarily to normal as traditional expectation. into somewhat driver, more patterns we I

Bryan Keane

consistent. pretty looks guidance the And it. Got

macro revenue off the second from should and key that the as into first at could wildly look half Any be change we that of the you maybe down, watching as and there. second the factors that or bigger could sometimes the there's not half, changes watch the we get margins, half think kind macro? As about move you up it we at least that you're

Efrain Rivera

with the 'XX. about on our there [Indiscernible] was a is to able Bryan, whether say, market dramatic talk environment, in I but it call the be we're not everyone we're to that and changes be mean, John what thing we that let appropriate in the exercise I'll we numbers. start look, that them to I'd look, we're too, caution to the environment now, And, seeing about did. crash seeing landing worried level was one to continues investors I hit which are as as of skepticism Yes, going [indiscernible] assured would factor the them conversations see with and and the

Small going have going manage happening environment inside And to is there's to I the macro would be these businesses on They The forever. we difficult, that. businesses, to if add pivot we pivot rates them. want external for we'll don't growth. manage at which a base important. we're So that, we inside be many inside to absorbing lot fund internal impact to I’ve base, stuff, anything? we really to will seem be the this getting the can the the be look, what's to that, opportunity opportunities point. said that to base, people the need of at do to give doesn't it's at John, you they Their say prove able their interest will what seem think to look what's last rates

John Gibson

other at we we'll I macro, keep about look months, Yes. to the a this small that, side, calendar No, start month. the macro little actually I the every the again, to in thing the index I at up think first went business X back the index, of went look year, mind I get bit our think

up for stabilized. then consecutive of So three sort went it months, and

So that. we continue to see

and quarter, we said, there and always sitting kind go waiting in the to expected Efrain [indiscernible]. As for of fourth probably down employment we're

So on actually, pleasantly at we where that where the checks had. clients inside I we were of growth would we on say were I and was surprised base actually worksite little a employee

to continuing is issue an issue. of to be also see our So an staffing, it concern. that And continues HR hiring

in to HR at look that be are are see our issues to we we an questions what continue the issue. to and consultants, So that coming

and several to And levels. probably staffing employment years are seeing. going of last their over I [indiscernible] something think you're business we by the back midsize not fought to owners do see get scarred to Small they experience

trying it enough going think to simply to not let they're very hesitant be just go, I going be think was remember like to labor they I find talent and what's is because supply what here. interesting to

wins kind to forth it's to war, think I interesting, of So very back who employment. this of and going tug relative be

we're small that labor a as the sprung business maybe by such will of I'm The nontraditional I be little permanent being a things other first With more up. to paying workers, they're a nontraditional it week, this -- that's [indiscernible] in see see And what try seeing thing to workers, about got, of we time. go. that go gig employment they staffing what out owner lot gig they've a is are those other to part bit that areas every is going tightening going as business to kind that let are curious write by to contract tapped

thing the market And for I people very, now. think So have and up us models traditional don't interesting built. study labor a think right I is sets very to for that it recessionary look at

we our what from hearing and based So in data. with my pontification upon we're what clients my that's just see conversations

Bryan Keane

Super Thanks, helpful. guys.

Operator

you. Thank

will Scott Wolfe next from Our Research. question come Wurtzel with

Scott Wurtzel

Hey, taking good morning, guys my and for thanks questions.

Just on you're into to the priorities if how some investment and can sort folding the over your XX well. months over next maybe about generative as wanted of what expense AI maybe incorporating guys top into you that, see side, just are go thinking your of business

John Gibson

AI things I'm and we're we've technology going in very happy very our growth investments Yes, digital, from office. sales been a the the in that the growth doing leveraging so what with lot two. terms I top making got we're digital with how are then those several And we're of perspective, you probably back of which a And and in the both area, mentioned and mean, pleased we've in are investments on. go-to-market

area this was, driving of size large So the keep the the our one data of several industry we've that of things AI actively for telling I few have. clients. of of players set been delivering one lot years we're the business, every in we across And a have leveraging to efficiency, people

it into types products. our it data large I we're using in have our retention risk, these We're it AI, finance, it using of in got capacity, think customer our building we're And set. in insights in it to outsourcing using and a you've service, HR we're advisory in using do we're products,

that investment front a terms lot of of the of making lot a how office kind of and front business. the learnings in we our office can of digitize and we're there's of have and house we back So the that

And continue to so area invest be those and an to are -- that we continue to that's going explore.

Scott Wurtzel

year? then very clarification growth could for maybe us And Got with how side the a with help if helpful. the it. Efrain on the balanced It's thinking [indiscernible] income you I'm guidance. quick you're client wondering about just out

John Gibson

wage balanced roughly with is Client in inflation, growth, say line to single-digit. which low

Scott Wurtzel

Okay. Thanks, guys.

Operator

you. Thank

from Mehta Our Northcoast Kartik Research. with next question will come

Kartik Mehta

Hey, good morning.

Efrain Rivera

you with Cleveland Kartik. smoke Hey, Are there battling too? in

Kartik Mehta

worse was is lot it Yesterday a today. than

for So it's thank better But little bit asking, Efrain. today. a you

John Gibson

You [indiscernible] Kartik.

Kartik Mehta

'XX, not you're and PEO levels. I anything [indiscernible] I'm just And high but do I'm pretty the wondering if your are FY seeing only come the if so. they've Will for what know control, payroll down expectations different? on from also Efrain wondering, obviously business, for

Efrain Rivera

Yes, two questions. good

in Don't what So much we the mix. growth for too flattish, to I terms base guess short 'XX. a answer is inclined expect that's of expect and

to doing fine. clients at I cases, some are And your look think clients factor anticipated losses our less adding in what larger you so we employees, it. are. and Smaller in then got

it's would your hiring, from lose in to tend probably won't out it worksite going don't always John do the said and higher you grow than were this to gain get were available people, to your aren't what then in many to environment little what businesses like perhaps base And you without employees. of but of less figured is I mentioned, there inclined just is also the how terms that hire where But rid who part simply people that you think incline, which year. John because So as to a that an bit the decline of earlier, expect to be, -- given robust a in be them.

say the worksite and worksite side, we the On I'd PEO, this our ASO year. employee, employee also have growth

year. to into that expect We continue next

question, driver not not growth be next perhaps see in You into could rebound overall, key think going going and growth, asked to But PEO, I a year. solid of on this side. the significant revenue the or as it's and works Bryan but that [indiscernible] HCM

Kartik Mehta

jolts of seems numbers your cautious. employee kind And job on become but then I'd openings. interested thoughts just John, all be numbers, see have these one We employers in like follow-up. --

we are what versus perspective on look So the see maybe customers really just your your openings job think as at in you what news. you

John Gibson

say I that And fill would Yes, filling that I change. I don't -- not they're go seen and filling clients we to are back I more said that being before, positions. positions. have successful open continue have wanting in what to those I to

a fiscal and I So in behind well recovery things you I we've got positions, did of the of like year which relative some the is seems here. really maybe and lot do that XX recovery. months [indiscernible] I I'm posted, when one assume forever lose which positions. we was think ago, leisure going potentially to few be tell would our the hospitality, every in back many had we've ago, business pretty have now, I've to thinking resignation, I because those as and great up to certainly seen I that think much position of was a seen happen needs mentioned, months also but that were probably in particular, were only opening half good to that owners

there and market being think disciplined looking were more on what in postings I that. am makes focus I contraction the sense for know jobs about little I hire are that people passively of helps being owners that going if and you. more a or seen actually don't to was out think the the some of So that business for. lot a of in postings And we've I

Kartik Mehta

you appreciate it. I It does. Really both. Thank

John Gibson

welcome. you’re Yes,

John Gibson

may are I using XX% and recruiting are that improvement a experience onboarding realizing inflexed individuals about time their add to our in that those hire.

there's phone. the So just any on customers if or prospects

Operator

you. Thank

with Simuni Masset Eugene from come will question next Makinson. Our

Eugene Simuni

Thank to wanted about ask you. I Hi. morning. the PEO. question a Good

kind the the health the expected you insurance highlighted of attach again, care insurance, is of rates And deceleration drivers. we So, one here.

of for in like what So in the helpful I PEO just looking over the would you're so be pivot was this it a wondering will are care months? and to be as much if there in care kind because attach? base, what health reacceleration think in that, of specifically you related little to hear next XX kind to client attached? feel that then that'll you -- we be this you And What industry softness there's I to elaborate terms around you seeing insurance are of the I And your there about gives guiding kind rate businesses on that hear as helpful of can the seeing. confidence PEO where insurance bit variability health that,

Efrain Rivera

Eugene. Hey,

And less a although the Let verticals, that me we through start flows in provide health care John more second. about comments. It's it's of revenue state caveat in and additional Florida. I'll that's really side on P&L. the about derive that where With will us,

talk So for you going and the relates that it's really, us know to about anomaly revenue, Florida, PEO health as game hospitality. [indiscernible] when index it immediately on you a Florida primarily, care, and over the to you're

new on health of not in probably fair, than issue going clients that's really more bit interested too hospitality Florida are much was is else. was that's a be care coming offering depends of a and But I than and regional what's clients it to a something say, customers revenue in the effected an So it in all it on it generalization. into of was would as to whether base clients. leisure [Indiscernible] and

And we it. Because not took guarantee saw put comfortable? as feel was aren't that. improve that talked in measures there prior that. that going we success. would necessarily evident of I quarter amount which to And I to But do on tremendous So be a going say beyond things focus in on, should say we that's why evident of first but again were we about calls, be more what have a repeat lot in to that won't we

wage health decided were some PEO we've taken from saw year. from that of a anomalous better number in that they think create pressure a decided people will thought hypothesis John not But We somewhat a next going going the insurance. that was let and are about care. We that care perspective they total perhaps want we actually talk offer we our I'll actions feeling compensation were health momentum to issue. perspective, they didn't

John Gibson

the which in we And one clients, insurance enroll to the the clients is we saw Not but just area, component that important part in Yes. that adding do insurance agency. to client also it's think here. they're Eugene. And not the it's to pay there's field, it, add, going second cases our a right. In share. much of points in I they're deciding fair and happen client, understand were saw insurance, benefits. just on particularly not trend benefits the to offer both One health decision going [indiscernible] two clients, was and deciding their is that's an an employee there

can their someone and [indiscernible], insurance You we an try should to -- certainly health get to option. insurance switch existing adding people insurance from go less saw as

it. that when the we found for then sign normal our you went of look period, insurance through elected we that And were employees to when offered up less inside, enrollment

and can -- sure the and plans, both is what said, go go exhaustive to us different every of so can Efrain went an review to just one every we at look our all you through one every And plan back. things. designs areas that to we of designs, those markets And you have can at saw [indiscernible] of at things back you look suite. happened plans, you broadest do in look our one your look core We plan of at happening caused the at peer can our of offerings look that all make

Now those decisions are made.

today, that in go out actively those July PEO the timeframe. our begins will. market, if timeframe, in for those clients July in And it enrollment you the through on really timeframe, the will remember, goes selling January We're

that of that up kind on. So going you want picked to of

it the at we at half outsourcing strong changes in we aspect some XX%. sense. the we've know We've the of makes of and think because made that And saw it's looked where strong value is every year. growing HR it. So proposition still second demand modifications We

retention is it value that afford can well. because the and proposition know PEO the are it clients We doing of strong that our have record and

in that we of So fiscal getting said we'll of third we go quarter the fourth the builds year. kind it of of the quarter signs, And have fourth there. this earlier heart coming that I as into now see and and second, we're improvement as some early into [indiscernible]

it have confident and right So, again, goes. the that plans and we got And that -- go marketplace we now in the we'll we execute feel in place. see how out

Eugene Simuni

comments on bookings, you made then and follow-up of Super earlier on retention client it. the tied And growth helpful. Got altogether. some quick

improved you and so level year, that about will for year. expect with when Efrain next client in that Would from retention improvement one that thinking result your client the other it primarily Or So and is growth to or X.X% guidance both a of fiscal sales? growth? improved of pick you this kind we're be mentioned up the drive

Efrain Rivera

on to got pretty mean, sure long incentives both both. powerful over to sides short, do you one make -- No, relying of that occur. that equation story I they

You don't always hit XXX%. it a

get more, right the you got number. sides both net work Sometimes hit gaining it -- but you to sides get to to both client to

John Gibson

losses I'll second stronger numbers perspective. on dig the to from to half a sales that. controllable first the under half. Again, you in our than I half, unit if And the And Yes, half improved first retention say would half was add second our second

at of terms can So, of the the on or or in I those us do do kind of of of control and out again, from whether feel them, system. are want and of flushed continue not X I looking ago can that we degree are what there's flushing we the financial of years what that believe to edge, out with confident we call clients a kind to things continue to bankruptcies business type

AI. base indications in And We've client lot that able inside the story. positive lot half very what have about inside we It and success back we year talks can deploying sophisticated risk. our been We've intercept a control, are and regardless been models our giving a we're strong investing and in control, of where turn very retention a those we organization, being AI to in the of of us do what may to the service can of environment. demonstrating client at the situations demonstrate those success of

when back good fiscal feel making So, look at I the story, last I about retention first half progress half we're there. sales and the the of story year,

Eugene Simuni

it. you much. Thank Got very

Efrain Rivera

Welcome.

Operator

you. Thank

Our next with from question come Christiansen Citigroup. Peter will

Peter Christiansen

Thank you. Good morning.

John Gibson

are question. doing? Thanks you How for your

Peter Christiansen

portfolio the is between float comment competitors as there I guess a portfolio to I and be not at to but to pricing be aggressive we operating large, faster. that layering then reinvested model there Any leeway maybe would to was on Thank expect prior relationship the side. of gives the outperformance be rates [indiscernible] pricing? future and cycles, becomes part more rates competitive bigger for maybe Efrain, curious should repositioning, repositioning imagine for you. looking helpful. more follow-up be about this may interest that a a And business income more I Good. would

Efrain Rivera

Those literally. absolutely I questions, wow. fantastic mean, are two

Okay.

need work one. take level, you your do, Part me are. of let the you of with So perform team to and have part degrees certain of understand understand surprising. freedom them at in more When freedom, degrees what you is a of what deliver you delivering to you what not what

because my it's I So all of struggle feel CFOs colleague there they sometimes freedom, the out have don't it. degrees who

that the When not NPV look of at NPV doing reposition opportunity the you figure we're because disciplined it than of here is to do to doing the and have you gives out, that that. pretty performance better option

is in issues approach. other a it max there fourth come thought want are duration we quarter, -- how NPV you time. and the you much what be, I play, have there's to in into which see do to we positive would so, that picking that do was right to the the [indiscernible] And When future, your

job. it But predict I done behaviors. you're that never a think right, good to we've trying other You get because

or XX concerned came is to is kind job attempt kind so interesting to can this we're because sense years now I of when Number To that about is, interest And of I on things ago. in give worry with that I wrestling can that you when the a pretty really two got be into extensively pretty of studied rates don't there. X%. aggressive we environment. pricing about to one your the you happens question be -- point, you I what know that get know

price it can the aggressive high. pricing find But overly a conviction rates our that 'XX, interest follows. And high, you what you going I take you're retention, at just did are it to I when signal least and was at you have. in a price if in that in when history that, as pay that's get So least it the 'XX, on

a gets which Now level of in terms on for but maybe some tipping even money them aggressively, I to trust table of there's the clients, the because that balancing create of that breached. a -- there you a not that by there leave and level that at point is think you're more you've value trying trust delivered act to pricing

that we closely. So to need look at

clients. as is, small now medium interest becomes businesses part more -- two help what to are determining creeping and where But help think off got high. second each by The got that rates base. that a we to sized financing way was an starts operate look those threshold look go are and over looking how at a example this now play up, navigate for great in very they closely, rates if price we the how you other why were the it we many we're other to that to one That's clients year. from interest ERTC options. how becoming perspective. within X% businesses to do elements to for of to difficult That's where we the so did environment thing it did well a They the

So answers hopefully that your question.

Peter Christiansen

Yes, balance. envy a thanks certainly don't But I challenge. would does, the the you. certainly helpful. it That's Very I for imagine, insight.

Efrain Rivera

Yes.

welcome. You’re

Operator

Thank you.

Huang next Our Morgan. Tien-Tsin from J.P. comes with question

Tien-Tsin Huang

John, Hi. Efrain. Thanks. Good morning,

understand I that How versus mix, it with versus quarter looking want ask simplify through again, in to You is know much I components? sure in for here, to the just some make from the of volume line PEO. peers talked rate want are coming acceleration growing Again, with the to acceleration? on you just Just was Eugene.

Efrain Rivera

Well, I will take that Tien-Tsin.

attachment something in of to want is the in employee relative have PEO. of clarify a start expect that just numbers to terms not we year. worksite growth couldn't was as than year. that last higher we which contribution strong I pretty we also be hit activity. to we're It's bookings in to [indiscernible] attachment health it the that difficult care be business from that the down challenging. last care [indiscernible] very hit will We We was health than was. The start, simultaneously at look, higher it though kind our off to last for year, seen in base think had area. least we going So, We contracted But actually

we clients the driving growth what's in I everyone, expect growth remind in think XXs really just we XXs. that's PEO business, and the of typically So growth our are clients, an of in Tien-Tsin, attachment that's expect kind Typically, issue. so [indiscernible] to less low less upper

really In go [indiscernible] terms clients clients, to going [indiscernible]. are But of to more not trying down it's come we're that from necessarily.

John Gibson

increases on or of pricing major side it's type And general really on the expecting side administrative well our any just be we're normal not to within health fee going either and course. the

side, the our mention that course Although far with care care is inflation. on health digits, single in I [indiscernible] on historical which the would basis normal an health

So that's a benefit a and retention clients. our benefit for

towards around talked saw The one growth, product. we things had that anomaly HR the the a if ASO of very have about, because a insurance other probably and we tilt is good we thing was thesis outsourcing of our haven't we

we just and [indiscernible] look back finding one that we’ve very outsourcing I And so going we the HR solid and -- other. and year, versus we health on the love say, have that now actually, at upselling We're towards love look actually PEO, aggregate, offerings, and our HR tilted solution the ASO now the PEO. into but our wait matter care technology, of clients a more them our and now right minute, I a it's and very,

we for on approach we that have are do concentrated value a think you so and list they paying really area existing think where computer help proposition And what from that underwriting using Actually triangulate a we a we the hey, on the AI that. can where actually effort to can then insurance. another to currently demographic within we us payroll save care. customers ASO data We analyzing money that AI-based that’s we prepackaged feeds health pretty can have are of give based we deduction says we're that clients targeted almost using your

our [indiscernible] we've model we're we and back to getting area we of value clients in opportunity that our if that join an already PEO, proposition that's go some part for -- so PEO there's X inside been months with over. just you client our working ASO insurance think of the efforts a and as you're If on to base see ours, our

Tien-Tsin Huang

And PEO. that's ASO Paychex the having beauty and of both

to your but answer change fully [indiscernible] ask So self And it model control maybe I insurance try I I'll appetite follow-up, you versus the can guaranteed question, that trick the insured Efrain the my the packages. better as on you consolidation guess the to any know to. PEO guys in whole extent

the So since it's side? X did right [indiscernible]. appetite been, to on PEO I do acquisitions you know years what

said You probably there's a news but consolidation, in tuck-ins, market I is I that been know some around multi part the question. know

I'm So the bad guys. on

Efrain Rivera

no No, Tien-Tsin.

Tien-Tsin Huang

you. anyway, thank get Just

Efrain Rivera

balance let [Indiscernible]. answer the me that Hey, question of one. sensitive sheet first I the get investors think are [indiscernible]. I to and level

risks. a sheet up this that excessive to taking of I we is doing just the years wrong on was by things were did be I mean the -- What originally we balance we want resourced. side. when number when I the [indiscernible] So I don't blew ago, said recorded quarters because insurance

in we because And help knows managed One hiccup what though get necessarily health don't that And play they PEO, company. have without never we risk, insurance, everyone it, we is the that make care very to things a us. We they incentive a money, on push little we So way even when two selling make game. as any don't money will we removes insurance. insurance play that invest fool's it. cheap don't a that's of

markets in for reason whether in we people doing a is forestall subject the that part as would not, risk for necessarily will to certain criteria. are, evaluate that, a the it sense, markets capture what other won't insurance know be would to same on at but revenue, get market look said [indiscernible] many call the us -- increase tight density we in the to would make Having of that we but big be to that share the And and and market. we not a it I very

So nothing process. imminent, but that's thought our

a got way. terms talk track in in of have it M&A. managing PEO let and we've I'll think an record that John to appropriate I

John Gibson

the saw that, to to in year. think driver Yes, just PEO to last insurance our to don't a approach current add that I was what we

don't necessarily And taking solution. the is think more so I risk

think without approach we grow risk. that additional demonstrated that rates exposing our ourselves industry at has to can current I

be so the And risk to Efrain's to we're point, see but looking something consider, that point to it could [indiscernible]. need degree the grow don't to I in I which to a not PEO value something It's at. magic as don't you way and think balanced. the we in that some Efrain's growth could that accelerate proposition thought

capability. We Oasis, got industry. get we we to there, scale I I with front, Oasis. significant looking for we made the the typically pay in years. which mean, done PEO a player not and we're of high very top equity at and smaller think capability. scale to were haven't on We in PEO regional for terms that much of attractive in much obviously [indiscernible] for X a -- When the were It's my M&A getting very in private kind the of PEO opinion, we industry those national multiples now acquisition

terms looking think enough we about of our for sense? every base in for be right, and inside is to are to Would invest PEO capability interesting. the think I I opportunity were deal the the when that's markets. a dollars. different in what we're add and to in going would value still tuck-ins involved almost capability, multiples high we forward But, that in If I again, the organic industry, and as So what see make a they us but in continue to something know a we continue bring little would have

Tien-Tsin Huang

for the Awesome. promise complete one question. Thanks guys. Thank I answer. just you

Operator

Thank you.

Stanley. Our Faucette comes Morgan next question James from with

James Faucette

Hey, good morning.

of thanks. a Hey, quick Just couple follow-up.

couple for Just me. quick a of follow-up

rate elevated kind normal? understand line business were just height be of conditions business that's would out especially as commentary, during below of of wondering, that pandemic, still, normalized. or and I'm the I the out the of the what is now kind it you into with more come would where right expect to you normal, more being kind back if On run characterize you of maybe there of

John Gibson

historically to reasonably, before you back for back low And which normal it's normal. I pre-pandemic levels say, us, back go went It's back at again if historically 'XX, to again, that. to were

models, start new knew not was there or rates our or interest them big to was at or number businesses, were whether a after of pandemic. survive were there those business we right And a not look, So, surge the in the starts, X%, X X% not in going of years. recession, whether fair

business kind of going to growth solid. and again the where to We're I going flush say we business knew starts. whenever again, our pandemic. are back we've business reasonably dip start what that pre-pandemic, very, to to I conducive And in more think solid back know before in think through, kind come, were very starter it's numbers a what still begin normal didn't seen were And Again, we which is to we're but so returned would not of seeing was come, now business I big the levels. for we've we spike,

James Faucette

HCM hit deteriorate management HR to solutions the that. sensitivities whether thinking which yes. sure we underlying a Appreciate Yes, sense. verticals, hardest most makes just make No, what then payroll, question And about software, If business to be we're it would be further, of that that be quick were retirement, versus correctly. see macro resilient. would

thinking I there. think we're we But have about sure I make that some ideas correctly. to want just

Efrain Rivera

the happened was surprised Yes, it. speed at -- PEO and was in our points side, during what 'XX did I'd of happened the on PEO shed I What saw then pandemic. say kind the pandemic the so more was that employees least, with PEO of two you a and base, comparison, quickly. XXXX, they by we client what during got which

not. should to I I what probably but pandemic, see then And But think if softness, clients it second, what the And shed we anomalous say, will them a didn't of Interestingly start a see huge enough, you saw employers, saw there employers client go variety shed pandemic more James, a little certainly did impact of more garden employees. during losses. and bit to see you'd we shed drop was back sharp on PEO, you employees. of it see downturn. due the an would

subscription that And remind our I'd so people when a -- see model, model people. everyone you'd not is impact, plus pure an then

what some on do And a pivot to so pandemic, in whole. levels as the during downturn unemployment to of in we economy event that in impact the fall. we have the overall last and And ability we mitigate which have insulation base, was caveat, the going did which there's a the finally, helped the

John Gibson

actually our perspective both capabilities inside Yes, and more than to effective I base our [indiscernible] digital say we inside we're and to terms would and of capabilities, the in a marketing probably services. in the very able in driving base, add -- be target sales with from effective of client where identifying very, set a product we value have and our products any and gotten of additional broad the pretty opportunities prior And the in base downturn. within we can just penetration were

James Faucette

Appreciate That's it. great.

Operator

Thank you.

Our question Baird. from Mark Marcon next with comes

Unidentified Analyst

for Thank for [indiscernible] you Its taking on our questions. Mark.

you mandates? tailwinds. Retirement taking by So measures SECURE opportunity capitalize on nice I'll of continues talk growth some strong clearly just to see the the and as to you're well as state it provided solutions Can one. has some about both the Act at leave

John Gibson

midsized we manage terms any leader plans Yes, so retirement as number of businesses you in know the company. of than plans a and in small we're other more

provider. other For the than actually we prepared more and businesses any [indiscernible] have supportive year, businesses,

in existing digital have already and our a the variety are customers, market. we marketing educating actively So of programs

see I the aggressive continue more think you'll in of to Paychex XXX(k). positioning

finding We're legislation employees, employees, it of money than can bundles $X,XXX your role to at we get again, payroll SECURE how you're basically working changes no some that you -- we're looking then up match a in well, can actually is at as make bigger state to as literally, plan, lower we're our to given to up that, and both the XXX(k) and can XX trying start drop with of all what cost coupled the SECURE on and back that it you to our well. provide a that even bundles, down a the because of Act mandate play and if X.X we're company and

have capabilities So this going benefit what of like your you it's you going proposition help can and attract the a when there's way. largest is like effective to started. a operational small [indiscernible] owner employees valuable employees, you of the have and this cost do to our get business we're already retain to efficient it not very a and anything say, said, -- and we value already can moments you value you already go sales one help think I capabilities We marketing we to to to powerful a We this. in how that's know proposition. ERTC those and And -- where do

we into continue to go And capitalize this so as going we're year. on this to fiscal

Unidentified Analyst

Great. the Thank you for color.

Operator

you. Thank

Our final Samad Samana question will come Jefferies. from with

Samad Samana

me Hi. -- for Great. Thanks guys. Thanks good morning, in. for hey, squeezing

different terms fiscal organization the looking maybe organization. sales just forward. couple maybe maybe fiscal help your How entering, strong you're to I versus your quota maybe performing that thinking just let's assumptions think on And in what So us last through us quota 'XX [ph] in sales being increases between of 'XX? of environment, years say, for quota around sales organization? for and a wanted then slightly you Can the ask own

John Gibson

we there, And The sales half the really performance given year year we in invested in a and had fiscal investments And training have out that and Well, marketing, happily half. setting higher we've support teams. work we're made I it's that were that lot would said, also coming as to is as the 'XX. I tools quarter readily we back fourth year said, on I effectiveness momentum off given team. sales the the for momentum, quarter, pleased team, It what the very in was of stellar our in the than doing entire was a our sales to the with my from fourth for record terms say hat's we front accepted of quotas we a things go-to-market stronger sales execution. the sales seen of relative sales perspective,

Samad Samana

another question, follow-up I'd ask I'll PEO Efrain, that. Appreciate you to but [indiscernible]. love

Efrain Rivera

will Go you ahead. give one. I

Samad Samana

going question. I’m joking. I’m to [indiscernible]

great a Thanks, guys. have guys day. You [Indiscernible].

Efrain Rivera

thanks. Yes,

Operator

Thank There turn are this for questions to you. it any closing back no now our presenters at like We'd remarks. to additional time.

John Gibson

year, I'd many billion with did new us into pandemic. a a you starting like job the to year to a want I year to milestone we the for July speed for it's company. and today. testament global support. great head of $X this are that the the Xth fiscal I for your with the it weekend. everybody work. as fiscal their CEO, to family. employees me. Well, in Coming about And do head hard did position navigating and really it, of is thank certainly or you the year, complex for phenomenal an -- absolutely The know to Okay. a company very to during reflect questions achieve Hope your time on being to a intended have past transition great probably you Thank or to again for

say, retention anchor go we back looked and there back this of was the in hard growth, to was over year X night something quarter better fourth myself I the outsourcing results better we to I statistics that sales and year last growth, rates pandemic are which full and quarter fourth growth when board that the across I our at better looked and profit you see It's are our fiscal I full the I go 'XX, unit and revenue, reflecting down fiscal fiscal is past new remember than looking had year year better was the last had HR year before 'XX. revenue metrics the of in new that and and sales metrics, as at year

the We Thank that July actually the weekend. of a very I weathered you happen. out much. not XX,XXX a across stronger want pandemic, the I came employees great all of we very a hope at position think just And the day. And board. Have Paychex nice to thank Xth in pandemic you have for only but making

Operator

conclude presentation. today’s gentlemen. and ladies you, That Thank

may You disconnect. now

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