Q1 2021 Paylocity Holding Corp Earnings Call
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And gentlemen.
Today's conference just comes to begin shortly please continue to standby again. Thank you for your patience again todays conference is concerned can shortly please continue to stand by thank you for your patience.
Remarks, including statements made during the question and answer session contain forward looking statements. These statements are subject to numerous important factors risks and uncertainties, which could cause actual results to differ from the results implied by these or other forward looking statements also.
Fiscal 2021 earnings call.
We are off to a nice start in fiscal 2021, all things considered with first quarter total revenue of $135.8 million, an increase of 7.2% versus the same quarter last fiscal year and coming in 2.3 million above the midpoint of our guidance. Despite continued coated related headwinds.
Good point of our guidance by $10.9 million, we are pleased with our ability to be efficient with operational and DNA costs. While we remain focused on incremental investments in research and development and sales and marketing initiatives in fiscal 2021 in order to ensure we are well positioned to regain our growth momentum once we return to a more normalized macroeconomic environment.
In September we held our annual elevate client conference, where we hosted a record number of attendees will shifting to a virtual format that provided more flexibility for clients to take in all aspects of the conference.
General sessions included discussion of our product roadmap and how our platform can help companies overcome HCM challenges, while breakout sessions focused on the needs of the modern workforce, including employee collaboration communication learning and other trends in the HCM industry. The key theme of the conference was our commitment to providing innovative software that appeals to the mass.
That facilitate an assessment of symptoms and wellness. We believe the addition of these next generation time clocks to our workforce management suite reinforces our commitment to helping clients navigate the COVID-19 crisis, well, providing flexible solutions that work best for modern workplaces.
The non-GAAP basis sales and marketing expenses were 24, 5% of revenue in Q1, as we remain focused on making incremental investments in this area of our business and fiscal 21.
On a non-GAAP basis, G&A cops were 13.6% of revenue in Q1 versus 15% in Q1 of last fiscal year and we remain focused on consistently leveraging our G&A expenses on an annual basis.
Are adjusted EBITDA was 39 million or 22, 7% of revenue for the quarter, which exceeded our guidance by $10.9 million at the midpoint.
We remain committed to progressing towards are adjusted EBITDA target of 30% to 35% of revenue once we returned to a normalized macroeconomic environment.
Okay.
Total revenue is expected to be in the range of $141 million to $145 million or approximately 7% to 10% growth over second quarter of fiscal 2000 total revenue and.
And adjusted EBITDA is expected to be in the range of 26 $5 million to 29 5 million.
In conclusion, we are pleased with our Q1 results, particularly in the context of the current operating environment and we remain committed to investing the business to ensure we are well positioned to regain our momentum once we returned to a more normalized macroeconomic environment operator, we're not ready for questions. Thank you.
The fall in terms of the number of employees per client.
I am imagining in areas like Chicago, where.
It can digest that on their own schedule and then we obviously inserted into other use cases recruiting for for job positions as an example.
Onboarding new employees and so the clients that have started using it I think are still early in that kind of lifecycle of taking full advantage of it but we've gotten really good feedback from them so far.
Great and then one last one just what are you seeing just in terms of the highest level of activity small and medium or large or delebarre.
Well, we came into the pandemic growing 40% year over year in terms of new sale. So we came in with a lot of momentum it feels like we're heading back towards that same type of moment and as we're going into selling season, I think it's a little more across the board to be honest with you.
That is potentially some clients going out of business at a slightly higher rate, but I would say that's pretty small portion of that.
Okay, great. So your record the results.
Thank you and our next question comes from the line or Alex.
Okay with RBC capital markets reminders milk.
Hey, guys. Thanks for taking the question. So just two quick ones I guess, one thing we're trying to understand her better appreciate is given the incremental on an aggregate basis on a macro basis kind of stronger employment trends or a bigger bounce back why is that what what is there a bigger disconnect between that and maybe some the employment what the tailwind that you.
Who would be seeing.
Sequentially versus let's see and 80 Pier Paychecks and then I've got a quick follow up.
Yeah, I I guess I think overall, we can tell you. What we think we are seeing with with our client base and I think as we've looked at maybe some of the competitors that you're mentioning there's there's a fair amount of consistency in terms of what I would call.
A quick little bounce back post it early spring when we really went down to the depth and then as that that bounce back happened you see kind of Salt August September and October b mild improvements and I I think that's been fairly consistent kind of across the board in terms of kind of what we're seeing maybe it's a little different month by month by.
The HR department questions, we have a whole bunch of announcement capabilities that you allow you to to a segment your audience and be able to reach your audience and look at analytics on the back end of how effective that's been and so as we continue to enhance the product we definitely seen utilization increase and then of course, you you take the impact of the pandemic with.
<unk> also increased utilization and so I think clients are really taking advantage of that I'd say the ability to run announcements whether that sending videos whether that is you know emailing announcements and being able to see people comment and react is probably the most popular feature in the product.
Oh, that's really helpful. And then maybe just came back on some comments made earlier about relative strengths download get below 50, I'm. Just curious when you think about the buying patterns at the small end of the market has there been any changes in terms of the types of the number of module that these businesses have been selecting or an depend on it. Thanks again.
I would say Downmarket community has become a more important part of the conversation than what we saw before because oftentimes with the smaller clients. They don't necessarily have maybe the time to go and pick four or five different products. So the the idea of having a singular platform to be able to do everything in it I think it's powerful across our entire segment, it's particularly.
Power powerful and that under 50 marketplace and so now they're trying to figure out how do I communicate in this ever changing environment with people, who are working from home and have different schedules and the ability to have everything in the employees hand with the mobile App is really key and important and so I think that has resonated even more.
Because of some of the changes that we've seen in the macro environment.
Really helpful. Thanks again.
Thank you.
Thank you and our next question comes from the line of city parents pantograph with Mizuno someone's milk.
And I apologize if this has already been asked this is random prosper interested a.
Just wanted to ask about characterizing the competitive landscape Covid Nadph's said their attention ready to sort of improved.
And I will take on trying to go down market have that under 50 employees segments. So I just wanted to see how you would characterize the competitive landscape. Thanks.
Sure Yeah. So I think I'd go back to the fact that we've got about 25000 clients, there's more than a million dollars in our target market and so I'm not sure slight changes like you are talking about in the competitive landscape we feel.
We've seen our activity levels increase at a very healthy right going into a key selling season, we've seen that across all of our our sized segments that we focus on and so and we're competing against the kind of the same folks that we would normally compete against and so I wouldn't say, we see a big change in who competing with we haven't seen a big change in terms of.
The players in the market or how effective we are against them.
Thank you.
And our next question comes from the line of Oregon right.
Alright money with Piper Sandler your line is alpha.
Thanks for taking my question I just wanted to.
Ask about this comforter environment as well yeah from a product perspective are you seeing some of the traditional players.
And answer technology to become more competitive.
Or Italy.
Product enhancements.
Continuing products and instruments is able to keep maintain the distance between the traditional is and then you are offering.
Yeah. So I would say first of all it definitely a competitive environment, it's always been a competitive environment and we certainly have competitors that have been in this business a long time, and clearly are making investments in technology as well, which is why we go back to our investments and R&D in our ability to innovate and stay ahead of our competition. We think is really extremely important part of our.
Our strategy and so I think the second part of your question is yes, we do believe that we've got a lead in the marketplace. We do believe that we continue to gain share you know.
We had 20 plus percent unit growth last fiscal year.
And we're continuing to build momentum into selling season. So we're seeing our solution resonate.
Okay.
Thank you very much.
Thank you and as a reminder, ladies and gentlemen to ask a question leads crestar one and to draw. Your question. Please press the pound key.
One moment, while we could probably 20 roster.
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