Q2 2024 Paycor HCM Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to Pee Corps second quarter fiscal year 'twenty 'twenty four earnings call. If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
Operator: Thank you for staying with us. I would now like.
Rachel White: Good afternoon, and welcome to PayCor's earnings call for the second quarter of fiscal year 2024, which ended in December. On the call with me today are Roel Solare Jr., Paycor's Chief Executive Officer, and Adam Yancey, Paycor's Chief Running Tool. Our financial results can be found in our press release Issues Today, which is available in the Investor Relations section of our website. Today's call is being recorded, and a replay will be available on our website following the conclusion of the call. Statements made in this call include forward-looking statements related to our financial results, products, customer demand, operations, and other matters. The statements are subject to risks, uncertainties, and assumptions and are based on management's current expectations as of today, and may not be updated. Therefore, these statements should not be relied upon as representing our views as of any... We also will refer to certain non-GAAP financial measures and key business metrics to provide additional information to investigators. Definitions of non-GAAP measures and key business metrics and a reconciliation of non-GAAP to GAAP measures are provided in our press release on our website.
I would now like to turn the call over to Rachel White, Vice President of Investor Relations. Please go ahead.
Good afternoon, and welcome to pay Corp earnings call for the second quarter of fiscal year 'twenty 'twenty four which ended on December 31st on the call with me today are rules of our generic P course, Chief Executive Officer, and Adam After you pay course, Chief financial officer or financial results can be found in our press release issued today, which is available on the Investor Relations section.
Today's call is being recorded and a replay will be available on our website.
We shall have the call.
Statements made in this call include forward looking statements related to our financial results products customer demand operations and other matters. These statements are subject to risks uncertainties and assumptions are based on management's current expectations as of today and may not be updated in the future. Therefore, these statements should not be relied upon as representing our views as of any sort.
Quincy.
We also will refer to certain non-GAAP financial measures and key business metrics to provide additional information to investors definitions of non-GAAP measures and key business metrics and a reconciliation of non-GAAP to GAAP measures are provided in our press release on our website without I'll turn the call over to Raul.
Raul: With that, I'll turn the call over to Raul. Thank you, Rachel, and thank you all for joining us to discuss PayCor's fiscal second quarter results. We had another strong quarter, with revenue growth of 20% year-over-year, and margins expanded 130 basis points over the prior year, while we continued to invest in sales expansion and in our innovative HM suite. HCM Demand is helping. Our deal pipeline is up significantly year over year, and our win rates remain strong. We continue to excel upmarket, especially among the higher end of SMB and enterprise customers with thousands of employees who tend to purchase a more holistic solution and are driving higher cash rates and higher average deal sizes. Our results demonstrate our consistent execution against our two primary growth threats, increasing the number of employees on our platform and expanding the amount we charge per employee per month for a pet.
Thank you Rachel and thank you all for joining us to discuss paid course fiscal second quarter results.
We had another strong quarter with revenue growth of 20% year over year margins expanded 130 basis points over the prior year, while we continue to invest in sales expansion and then our innovative HCM suite.
HCM demand is healthy.
Our deal pipeline is up significantly year over year and our win rates remain strong.
We continue to excel upmarket, especially among the higher end of F N B and enterprise customers with thousands of employees, who tend to purchase a more holistic solution and are driving higher attach rates and higher average deal sizes.
Our results demonstrate our consistent execution against our two primary growth drivers.
Increasing the number of employees on our platform.
And expanding the amount we charge per employee per month or purple.
Raul: First, we are expanding employees on the platform through a combination of direct and indirect sales efforts. We remain on track to grow our direct sales force by approximately 20% this fiscal year to strategically increase our sales coverage in the largest U.S. metropolitan area, as the Expander Sales Program. We are also increasing our broker coverage. We increased the number of active recurring brokers by over 25% from the prior year, and 50% of our field bookings in the quarter were broker-influenced. We are also experiencing great traction with our embedded HCM solution, the indirect go-to-market channel we announced in August. Leveraging our industry-leading interoperability, we enable software partners to embed our ATM solutions within their platform for a seamless client experience.
First we are expanding employees on the platform through a combination of direct and indirect sales efforts.
We remain on track to grow our direct field force approximately 20% this fiscal year.
To strategically increase our sales coverage and the largest U S metropolitan areas.
As we expand our sales coverage.
We are also increasing our broker coverage.
We increased the number of active referring brokers by over 25% from the prior year and 50% of our field bookings in the quarter where broker influenced.
We're also experiencing great traction with our embedded HCM solution.
Indirect go to market channel, we announced in August.
Leveraging our industry, leading interoperability engine, we enabled software partners to embed our HCM solution within their platform for a seamless client experience.
Raul: In Q2, we had robust e-sales among existing partners and expanded our pipeline of interested parties. Second, we continue to enhance our award-winning HCM suite with new capabilities that increase the value to our customers and expand our future PEPM opportunities. In the second quarter, our list cap was $51, which equates to 16% growth year-over-year. This month we introduce two powerful data-driven analytical tools that empower front-line leaders to unlock the potential of their people for business performance. Paid Benchmarking enables leaders to optimize compensation strategies and pay decisions based on industry standards and market data. We also launched Labor Forecasting within Workforce Management to help customers plan optimal staffing schedules for their businesses based on key demand drivers such as revenue, sales volume, or customer foot traffic. These innovative modules will contribute to future expansions. Paycor recently received 5 Brandon Hall Technology Awards, which honor HR technology fairly. And we were acknowledged across our agency. The core leadership framework that we launched a year ago won gold for the best advanced and online coaching tool.
In Q2, we had robust new sales among existing partners and expanding our pipeline of interested partners.
Second we continue to enhance our award winning HCM suite with new capabilities that increase the value to our customers and expand our future pets home opportunity.
In the second quarter, our list Pep, almost $51, which equates to 16% growth year over year.
This month, we introduced two powerful data driven analytical tools that empower frontline leaders to unlock the potential of their people and business performance.
Hey, benchmarking enables leaders to optimize the compensation strategy and pay decisions based on industry standards and market data.
We also launched labor forecasting well didn't work force management help customers plan optimal staffing schedules for their businesses based on key demand drivers such as revenue.
Volume or customer foot traffic.
Innovative modules will contribute to future expansion.
Pay Court recently received by Brandon Hall Technology Awards, which honor HR technology Trailblazers.
Well, we were acknowledged it crossed our HCM suite.
The core leadership framework that will be launched a year ago, one goal for the best advance in online coaching tools.
Raul: The framework enables customers to evaluate the efficacy of their leaders, reinforce leadership best practices, and trigger development paths based on areas of growth identified. These tools are already making an impact in helping educate customers on how to transform their managers into effective leaders. Since joining Paycor in 2018, Ryan Bergstrom has been vital in driving the company's growth and shaping our HCM fleet into the market leader it is today.
The framework enables customers to evaluate the efficacy of their leaders reinforced leadership best practices.
Triggered development path based on areas of growth identified these tools are already making impact they're helping to educate customers on how to transform their managers into effective leaders.
Since joining <unk> in 2018, Ryan Burks from has been vital in driving the company's growth and shaping our HCM suite into the market leader it is today.
Raul: Under his leadership, risk supplements increased more than 75% since Fiscal 2019, and I am thrilled he will now oversee our product and technology group. Combining these functions will enable greater synergies and strengthen our capabilities to seamlessly power people and performance for our clients. I would also like to acknowledge our product and engineering teams for their unwavering dedication to building our award-winning platform and enabling its rapid expansion. We continue to strategically incorporate AI to add value to customers within our HCM suite, elevate our customer experience, and improve our efficiency. In our customer experience organization, we deployed AI agent-assist technology that empowers advocates to resolve customer inquiries faster and ensure consistent, high-quality experiences as we scale.
Under his leadership list that permits increased more than 75%.
In fiscal 2019, and I'm thrilled he will now oversee our product and technology groups.
Combining these functions will enable greater synergies and strengthen our capabilities to seamlessly powered people and performance for our clients.
I would also want to acknowledge our product and engineering teams for their unwavering dedication to building our award winning platform and enabling its rapid expansion.
We continue to strategically incorporate AI patent value to customers within our HCM suite.
And our customer experience and improve our efficiency.
And our customer experience organization, we deployed AI agent assist technology, which empowers advocates to resolve customer inquiries faster and ensure consistent high quality experiences as we scale.
Adam: I would like to thank all PayCor Associates, especially our implementation, service, and success teams, for their contributions during our busiest time of year. Year over year, we improved execution, truly making it the most efficient and best year-end experience for our customers. With that, I'll turn the call over to Adam to discuss our financial results and guidance. Thanks, Raul.
I would like to thank all <unk> associates, especially our implementation service and success teams for their contributions during our busiest time of year.
Year over year, we improved execution truly making it the most efficient and best year end experience for our customers.
With that I'll turn the call over to Adam to discuss our financial results and guidance.
Thanks role I'll discuss our second quarter results and share our outlook for the third quarter and fiscal year.
Adam: I'll discuss our second quarter results, then share our outlook for the third quarter and fiscal year. Paycor delivered another strong quarter, with total revenues of $160 million, an increase of 20% year-over-year. Recurring revenue grew 18% year-over-year, an acceleration of 2 percentage points sequentially, driven by continued success in the market and strong year-inflow. As Raul mentioned, our growth is fueled by expanding the number of employees on our platform and the amount we charge per employee. Employees grew 10% over the prior year, primarily from new logos and, to a lesser extent, organic labor markets. We now have approximately 2.6 million employees across more than 30,000 jobs.
<unk> delivered another strong quarter with total revenues of $160 million, an increase of 20% year over year recurring revenue grew 18% year over year, an acceleration of two percentage points sequentially driven by continued success up market and strong year and form filings.
Raul mentioned, our growth is fueled by expanding the number of employees on our platform and the amount we charge per employee per month.
Police grew 10% over the prior year, primarily from new logos and to a lesser extent organic labor market growth, which has continued to slow we now have approximately $2 6 million employees across more than 30000 customers.
Adam: As we continue to expand our product capabilities and move up the market, we are experiencing outsized growth among customers with a hundred to multiple thousands of employees. In the quarter, we grew customers with more than 1,000 employees by 18%. Highlighting the success of our product and service, we gained momentum with our embedded 18 solution, which contributed two points of employee growth this quarter, up a point sequentially. The average size of customers within our embedded channel is more than double our average customer size. While we're encouraged by the early momentum, these larger embedded deals will begin to contribute more meaningfully to our revenue growth in Fiscal 25 and the increase in margins as the partnerships rank over time. Effective PEPM increased 7% year-over-year to more than $19. Including embedded HCM deals, effective PEPM increased 9% ShareProvider's expansion of its product suite affects the type of grocers that are powered by a combination of cross sales, pricing initiatives, and higher bundled revenue.
As we continue to expand our product capabilities and move up market. We are experiencing outsized growth among customers with 100 to multiple thousands of employees in the quarter. We grew customers with more than 1000 employees by 18% highlighting the success of our product and service investments.
We gained momentum with our embedded HCM solution, which contributed two points of employee growth this quarter up a point sequentially. The average size of customers within our embedded channel is more than double our average customer size today, while we're encouraged by the early momentum these larger and better deals will begin to contribute more meaningfully to our revenue growth in fiscal 'twenty, five and be accretive to margins.
At the partnership's ramp over time.
Effective pepper increased 7% year over year to more than $19 for the quarter, excluding embedded HCM deals effective platform increased 9% driven by expansion of our product suite effective pet from growth has been powered by a combination of cross sales pricing initiatives and higher bundle adoption, we expect more moderate growth contributions moving forward as we on.
Adam: We expect more moderate peplum growth contributions moving forward as we onboard larger enterprise customers and embedded HCM partners with volume, which will be offset by their higher average geosizes and strong. In addition to driving steady top-line growth, we've consistently expanded margins as we scale the economy. Majestic's gross profit margin, excluding depreciation and amortization, improved to $79.
<unk> larger enterprise customers and embedded it seemed partners with volume discounts, which will be offset by their higher average deal sizes and stronger margins.
In addition to driving steady topline growth, we've consistently expanded margins as we scale the business adjusted gross profit margin, excluding depreciation and amortization improved to 79%, a 110 basis points higher than the prior year, while elevating our client experience sales and marketing expense was $50 million or 31% of revenue similar to levels a year ago.
Adam: 110 basis point hires in the prior year while enhancing our client base. Sales and marketing expense was $50 million, worth 31% of revenue, similar to levels a year ago to achieve our salesforce exchange rate. Comparable to prior years, we invested 16% of revenue, or $25 million, in R&D on growth and differentiation, and differentiated our HCM suite with valuable capabilities first. We are gaining economies of scale in GMAs. G&A expense of $22 million, or 13.5% of revenue, and an improvement of 100 basis points per year, just about burning income increased more than 30% to $23 million with margins of 14.5%, up 130 basis points from last year, while we continue to make strategic investments to expand our sales force and deliver product. He generated $15 million in adjusted pre-cap growth, or a 9% margin. We ended the quarter with $62 million in cash and no debt.
Go to achieve our sales force expansion targets.
Comparable to prior years, we invested 16% of revenue or $25 million in R&D on a gross basis to differentiate our HCM suite with valuable capabilities for our customers.
We are gaining economies of scale in G&A as we grow G&A expense was $22 million or 13, 5% of revenue an improvement of 100 basis points from last year.
Adjusted operating income increased more than 30% to $23 million with margins of 14, 6% up 130 basis points from last year, while we continued to make strategic investments to expand our sales force and deliver product innovation we.
We generated $15 million of adjusted free cash flow or a 9% margin. This quarter, we ended the quarter with $62 million of cash and no debt.
Adam: As we look ahead, demand continues to be healthy for the modern age. However, the labor market remains tight, and our guidance assumes flat, organic employee growth among existing customers for the rest of the year. The combination of steady labor market growth and our backlog of enterprise and embedded HCM deals provides confidence in our future. In the third quarter, we expect total revenues of between $185 and $187 million, with 15% growth at the high end of the year and adjusted operating income of between $45,000 and $46,000. For the full year, we expect revenues of $650 to $656 million, or 19% growth at the top end of the year. And we anticipate an adjusted operating income of $104 to $118 million. Each quarter, we generated $12 million of interest income on average client funds of approximately $1.1 billion, an effective rate of death in their four hundred and fifty. Based on current rates, the expected interest can come in the range of $45 to $46 million.
As we look ahead demand continues to be healthy for modern HCM solutions, the labor market remains tight and our guidance assumes flat organic employee growth among existing customers for the rest of the fiscal year. The combination of steady labor market growth and our backlog of enterprise and embedded ECM deals provides confidence in our second half.
For the third quarter, we expect total revenues of between 185 and $187 million or 16% growth at the high end of the range and adjusted operating income of between 45 and $46 million for.
For the full year, we expect revenues of $650 million to $656 million or 19% growth at the top end of the range and we anticipate adjusted operating income of $104 million to $108 million. This quarter, we generated $12 million of interest income on average client funds of approximately $1 1 billion, an effective rate of just under $400.
50 basis points based.
Based on current rates, we expect interest income in the range of $45 million to $46 million for the full year.
Adam: We remain optimistic about our opportunity. There is plenty of runway for sustainable growth as the vast majority of U.S. employees are still being paid by legislators. Essential capabilities for any business, and we're delivering compelling ROI for 5 years. Adding to our opportunity is the continual expansion of our HCM suite, which has increased over 75% since fiscal 2019. We are demonstrating margin expansion as we scale the business and believe there are significant opportunities to drive further leverage. We believe we are well positioned to deliver strong revenue growth and improve profitability over the long term. With that, we'll open the call for questions. Thank you, and Abby Konducka.
We remain optimistic about our opportunity in HCM, there's plenty of runway for sustainable growth at the vast majority of U S employees are still being paid by legacy systems. It's in a central capability for any business and we are delivering compelling ROI for clients to switch, adding to our opportunity is the continual expansion of our HCM suite, which has increased over 75% since fits.
2019, we were demonstrating margin expansion as we scale the business and believe there is significant opportunity to drive further leverage we believe we are well positioned to deliver strong revenue growth and improved profitability over the long term.
With that we'll open the call for questions.
Operator.
Thank you we will now be conducting a question and answer session.
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Operator: Thank you for joining us. Thank you. Please.
Mark: Thank you, and time. Thank you very much, and congratulations on a nice, consistent performance. I wanted to try to double-click on the embedded HCM solution.
One moment please.
Thank you. Our first question comes from the line of Mark Murphy with J.
P. Morgan. Please proceed with your question.
Thank you very much and congrats on a nice consistent performance.
I wanted to try to double click on the embedded HCM solution, you mentioned it once or twice.
Raul: You mentioned it once or twice. I recall the announcement last summer. I think you've been refining the product in the go-to-market. Do you have any line of sight into maybe some larger partners that might take it live and start generating bookings for you maybe later this year or as you get into the early part of next year? Yeah. Hey, Mark.
I recall you know the announcement last summer I think you've been refining.
On the product in the in the in the go to market do you have any line of sight into.
Maybe some larger partners that that might take it live in.
Start generating bookings for you a baby maybe later this year or as you get into the early part of next year.
Yeah.
Yeah, Hey, Mark.
Raul: Absolutely. I mean, we have a pretty strong pipeline right now for new deals, as well as with the existing partners. Just the number of deals that they're booking has been really strong and has already beat our expectations early. Of course, it's still relatively small, but relative to the rest of the business, but we've seen some early success. We're really excited about how the pipeline is building on both existing clients and future partnerships already. Yeah, Mark.
Absolutely I mean, we have a pretty strong pipeline right now for new new deals as well as with the existing partners. Just the number of deals that they're booking has been really strong and beat our expectations early of course, it's still relatively small, but a relative to the rest of the business, but we've seen some early success, we're really excited.
About how the pipeline is building on both the existing clients and.
Future partnerships already yes, Mark what I would what I would add is that you know the signing the partnerships is lumpy right. It just takes a lot of time.
Raul: What I would add is that signing partnerships is lumpy, right? It just takes a lot of time to get those through. And so we've built up a really nice pipeline that we're hoping will start to go from pipeline to deals closed over the next 60 days.
To get those through and so we've built up a really nice pipeline that we're hoping that we'll start to go from pipeline. Two deals closed you know over the next 60 days.
I see okay, and then just to double check on this we think that that's we think that's going to be a kind of margin neutral or slightly margin accretive once that gets going at the gross margin level.
Adam: And just to double-check on this, do you think that that's going to be kind of margin neutral or slightly margin accretive once that gets going at the gross margin level? Yes. I mean, we are really excited about the market opportunity here. Between the gross margin and adjusted operating income, I think you're going to see a little bit more favorability on the overall adjusted operating income over just the gross margin side of the house. But, you know, that's primarily driven by really low sales and marketing costs.
Yeah.
Yes, I mean, we we are really excited about the margin opportunity here between the gross margin and adjusted operating income I mean, I think youre going to see a little bit more favorability on overall adjusted operating income.
Over just the gross margin side of the house, but that's primarily driven by the really low sales and marketing costs. I mean, it's like multiples lower in terms of the sales cost 222 to bring the clients on and depending on the size of the kind of if they're bringing a portfolio on you you still might see some more implementation costs associated with that and that's what we've actually.
Adam: I mean, it's like a multiple lower in terms of the sales costs to bring clients on. And depending on the size of the client, if they're bringing a portfolio on, you still might see some more implementation costs associated with that. And that's what we've actually experienced thus far. So, when we talk about margin expansion, really into 25, it's because there's a little bit more upfront costs associated with bringing those portfolios over, but the ongoing sales cost is significantly lower for the new business. Okay, thank you for that clarification.
<unk>, thus far so when we talk about margin expansion really into 'twenty five its because theres, a little bit more upfront costs associated with bringing those portfolios over but the ongoing sales cost is significantly lower.
The new business.
Okay.
Thank you for that clarification and one final one I noticed you mentioned that you're strategically incorporating AI into the business, which is great to hear are you seeing efficiencies from.
Raul: And one final one, I noticed you mentioned that you're strategically incorporating AI into the business, which is great to hear. Are you seeing efficiencies from, you know, those products or initiatives that are significant enough to allow you to cover more ground or write more code per developer, you know, provide more support per person, that type of thing?
You know there's products or initiatives that are significant enough to.
<unk> allow you to cover more ground or write more code per developer provide.
No more support per per person or that type of thing and I'm. Just wondering if the I'm wondering if you are sensing any kind of noticeable uplift that might either be helping to drive some of the margin expansion or alter hiring plans or even just kind of change your growth algorithm in the next year.
Raul: I'm just wondering if you are sensing any kind of noticeable uplift that might either be helping to drive some of the margin expansion or alter hiring plans, or even just kind of change your growth algorithm over the next several years. Yeah, I think we're still in the very early innings, and I think we're leveraging technology in all those areas, and I think, you know, as we move forward, we'll start to model that into our, you know, future guidance from that perspective, but ultimately, it's helping us. Our number one priority is to deliver a better user experience. The number two priority is to become more efficient, and we think both are, you know, in line of sight, but we want to make sure the user experience is great, and then, ultimately, we think, as we continue to grow, we'll be able to do it more efficiently. I understand. Thank you very much.
Yes.
Yeah, I think it's we're still in the very early innings and I think we are leveraging the technology in all those areas.
You know as we move forward, we will start to model that into our.
Future guidance from that perspective, but ultimately it is helping us are our number one priority.
To deliver a better user experience the number two priority is to become more efficient.
And we think both are in line of sight.
But we want to make sure the user experience is great.
And then ultimately we think you know as we continue to grow we'll be able to do it more efficiently.
Understood. Thank you very much.
Thanks Mark.
Thank you. Our next question comes from the line of Gabriela Borges with Goldman Sachs. Please proceed with your question.
Gabriela Borges: Thanks, Mark. Good afternoon, thank you. I want to stay on the topic of the growth algorithm, and specifically the delta between how you're thinking about hiring, I think you mentioned that 20% benchmark pretty consistently versus the 18% recurring revenue growth this quarter and where that can go over the term. Maybe you could comment a little bit on how you're seeing tenured sales direct grants within the sales force, how you're thinking about improving churn, and any other data points that we should have as Thank you. Thank you. Yeah. Hi Gabriela.
Good afternoon. Thank you.
On this topic of course algorithms and specifically the pulse of this room higher thinking about hiring I think you mentioned that 20% benchmark pretty consistently.
The 18% recurring revenue this quarter and where that can go on the comp maybe.
Maybe you could comment a little bit on highest tenured sales reps ramp up on the sell through how youre thinking about improving churn.
Any other data points that we should have as we think about your overall sales force productivity over the next couple of years. Thank you, Yeah, Hi, Gabriel trouble.
Raul: So, you know, we just see such a big opportunity in the marketplace in Tier 1 and also in Tier 2 and Tier 3, that, you know, we believe 20 percent is an optimal number for us to hire. And, you know, as we've talked about previously, VETS, their productivity increases with their tenure. And so, you know, we're excited that we're seeing our average tenure grow, you know, year over year.
You know, we just see such a big opportunity in the marketplace and tier one and also in tier two and tier three.
That you know we believe 20% is an as an optimal number for us to hire them.
And you know as we've talked about previously our reps you know their productivity increases with their tenure and so you know we're excited that we're seeing our average tenure grow yeah year over year and we believe that's what we're focused on is continuing to grow our average tenure.
Raul: And we believe that, you know, what we're focused on is continuing to grow our average tenure, which will drive more productivity, which will drive long-term sales and marketing efficiency. I want to follow up. In the past, we made some interesting observations on hiring and labor trends within the S&B ecosystem versus maybe slightly above in the mid-market and enterprise. I know you mentioned broadly that the commentary on the demand environment is healthy. We'd love to hear a little bit more within that, any vertical specific color, and any contrasts between the low-end of the market and the mid-market. Thank you.
To drive more productivity, which will drive long term sales and marketing efficiency.
Great that makes sense from them as well.
Follow up I know in the past you probably made some interesting observations on.
Tiring and labor trends with somebody ecosystem restaurants, maybe slightly above in the Midmarket and enterprise I know you mentioned, probably the commentary on the demand environment is healthy with love to hear a little bit more with them that any vertical specific color Antony comparing contrast between the lorena market on the mid market.
Yeah.
Raul: Yeah, I think, you know, we've seen demand in all three of our segments, the low end of SMB, the mid market, and the enterprise market. We've seen really strong top-of-the-funnel demand, so that's exciting. Nothing's changed there.
Yeah.
You know, we we've seen demand.
And all three of our segments.
You know the the low end of SMB, the mid market and the enterprise market, we've seen really strong top of the funnel.
Demand. So that's exciting nothing's changed there I think you know when you break it down from an industry perspective, we've seen some unique trends and new bookings like we're seeing real strength.
Raul: I think, you know, when you break it down from an industry perspective, we've seen some unique trends and new bookings, like we're seeing real strength in food and beverage and professional services. We've seen, you know, what I would say, you know, a modest year over year performance in manufacturing. So, you know, from that perspective, it kind of mirrors some of what you would read in the newspapers.
In food and beverage and professional services. We've seen you know what I would say you know year over year modest perf.
Performance in manufacturing so you know from.
From that perspective.
It kind of mirror some of what you you would read in the newspapers, but overall.
Adam: But overall, you know, demand's been strong across all three segments that we serve. Thank you. I appreciate the book. Yeah, thank you. Great, thanks for taking my questions. Starting with Adam, just looking at kind of guidance for the back half of the year, can you maybe just dive into the assumptions that are embedded in terms of the numbers? Seems like there's a little bit of a deceleration in some HPU that might be just a type of complex form, but more broadly, as we think about embedded payroll, kind of continuing to take off, looking at how you perform in the quarter relative to the raise in the Yeah, and hey, Bob, we try to keep a consistent level of conservatism, so we're not really changing the philosophy here.
You know demand has been strong across all three segments that we serve.
Thank you for the question on the books.
Yeah. Thank you.
Thank you. Our next question comes from the line of Bobbin Shah with Deutsche Bank. Please proceed with your question.
Great. Thanks for taking my questions.
So with that I'm, just looking at kind of guidance for the back half of the year can you maybe just dive into the assumptions that are embedded in terms of the numbers. It seems like there's a little bit of a deceleration in <unk> that might be just a tougher comp but forms but more broadly as we think about embedded here all kind of continuing to take off looking at how you performed in the quarter.
So the raise in the guide it seems like there's a little bit more conservatism here can you just provide more insight.
Yeah, Hey, Hey, Bhavan, yes, we try to keep a consistent level of.
Conservatism and so not really changing any philosophy here, we do see that unexpected in Q3. The forms filing generally is going to drive a slightly lower growth rate right because form filings are going to grow more at the rate of employee growth plus or minus sort of any pricing changes that may be happening and we.
Bob: We do see that and expect that in Q3, the forms filing generally is going to drive a slightly lower growth rate because the form filings are going to grow more at the rate of employee growth, plus or minus sort of price changes that may be happening. And we're seeing less related to ERC, of course, so that dynamic is going to slow down slightly in Q3. And then we also just had a little bit of overperformance in form filings that came into Q2, which is part of the guide as you look at the total beat from Q2 into the full year. A portion of that is related to form filings, and so we are going to see upside to the full year for that, which we think makes sense just given some of the performance. So just a slightly slower growth rate in Q3 with form filings, which are outsized in Q3.
We're seeing less oh related to ERC of course, so that dynamic is going to slow down slightly in Q3.
And then we also just have a little bit of over performance of form filings that came into Q2, which is part of the the guide as you as you look at the total beat into Q from Q2 into the full year a portion of that is related to the form filings and so we just we are going to see upside to the full year for that which we think makes sense just given.
Some of the performance so.
Just a slightly slower growth rate in Q3 with the form filings, which are outsized in Q3.
Adam: Just one quick follow-up. It's good to hear about the additional broker traction. Can you just dive into a little bit of your efforts here and what's driving the increased kind of adoption within the active brokers that are kind of referring clients to yourself? Yeah, I think we just really focused our direct sales team on the best targets, and so we have four national partnerships that we're really focusing on to drive opportunities. As we expand our sales headcount, obviously, it gives us an opportunity to expand how many people are reaching into the broker network, and so I think the value proposition works. They love the platform, and it's just about us continuing to focus on the benefit brokers that have the most clients in our target market. Hey, thanks for taking my questions, and congrats on the song.
It's about there just just one quick follow up it's great to hear the additional broker traction can you just dive into that a little bit of your efforts here and what's driving the increased kind of adoption within the active brokers that are kind of referring to yourself.
Yeah, I think we've we've just really focused.
Our direct sales team on the best targets.
And so we have four national partnerships.
That we're really focusing on to drive opportunities as we expand our sales head count obviously it gives us an opportunity to expand you know how many people are are reaching into the broker network and so you know I think the value proposition works are.
They love the platform.
And it's just about us continuing to focus on the benefit brokers that have the most clients in our target market.
Great. Thanks for taking my questions and congrats on the strong okay. Thanks, Bob.
Yeah.
Thank you.
Our next question comes from the line of Terry Tillman with curious Securities. Please proceed with your question.
Tom: Yeah, thanks, Tom. Hey, good afternoon, Raul, Adam, and Rachel. Solid execution here in the quarter. I did have a question in the follow-up. I would say the first question almost might be a two-parter, but hopefully, it counts as just one question.
Hey, good afternoon roll out and then Rachel solid execution here in the quarter I just have a question and a follow up I would say the first question almost might be a two parter, but hopefully that counts as just one question.
Perry: Raul, in terms of, like, do you need a little bit of an evolving or different go-to-market and kind of product requirements for 1,000-plus employee deals? And then the second part of that first question is, I mean, if we're looking at 3Q and even the early part of 4Q in terms of signing business, will you actually not maybe even see that much recurring revenue this year for those kinds of bigger transactions? And then I had a follow-up question for Adam.
Raul in terms of like do you need a little bit of an evolving or different go to market and kind of product requirements for a thousand plus employee deals and then the second part of that first question is I mean, if we're looking at <unk> and even early part of four kids in terms of the siding business, something where you're actually not maybe even see that much recurring revenue doesn't it this year for those kind of bigger transactions.
And then I had a follow up for Adam.
Raul: Yeah, and on the enterprise side, you know, the product, the clients are pulling us into the enterprise. So the platform offers, you know, in the enterprise space, lots of functionality on the talent side, which is really attractive to those customers. And so, you know, that's what's taking us there. We also, you know, have, you know, reps. Our most experienced reps are really focused on, you know, the enterprise account. So, you know, we like to slightly segment Salesforce from that perspective to make sure that we have the right skill level that is calling on those accounts. Okay, got it.
Yeah and on the enterprise side.
You know the product the clients are pulling us into the enterprise. So the platform on you know in the enterprise space lots of feature functionality on the talent side, which is really attractive to those customers.
And so you know that's what's taking US there. We also you know have you now.
Reps you know our most experienced reps are really focused on the enterprise account so.
Slightly segmented the sales force from that perspective too.
To make sure that we have the right skill level that are calling on those accounts.
Adam: And I guess maybe just a follow-up, Adam. I kind of relate to the prior question, looking at the full-year guide and then the overperformance in 2Q. Has anything notably changed for the full-year form filing assumptions or any kind of delta in terms of your internal recurring revenue assumption? Thank you. Yeah, hey Perry.
Okay got it and I guess, maybe just a follow up Adam it kind of relates to the prior question looking at the full year Guide and then the over performance in two Q has anything notably changed for the full year of form filing assumptions or.
Any any kind of delta in terms of your internal recurring revenue assumption. Thank you.
Yeah, Hey, Terry No no nothing has changed I mean, we we see its really theres a bit of operational performance that goes into getting the W. Twos craft and shift and we just we had some over performance there towards the end of December where we were we were able to be a little bit more effective at getting those out the door and that helped to the or.
Adam: No, nothing's changed. I mean, we see there's a bit of operational performance that goes into getting the W2s prepped and shipped. And we just, we had some over-performance there towards the end of December where we were able to be a little bit more effective at getting those out the door. And that helped with our over-performance here in Q2.
Performance here in Q2, so nothing on the full year that we would expect it to be any different and in fact, that's why we see the continued feel good about the continued guide and raise for the full year on both the recurring and an overall.
Adam: So, nothing on the full year that we would expect to be any different. And in fact, that's why we see the continued, feel good about the continued guide and raise for the full year on both the recurring and overall. Okay, thank you. Thank you. Hi everyone, really nice results this quarter. Here I have. Thanks guys. A couple questions.
Okay. Thank you.
Thank you.
Our next question comes from the line of Scott Berg with Needham and company. Please proceed with your question.
Hi, everyone really really nice results this quarter congrats.
Thanks, guys couple of questions a.
Scott: Yeah, a couple questions for me. Let's start with the broker channel. I think you said 50-50% of your bookings in the quarter were a contribution from the broker channel. How do you think about those contributions going forward? Because 50 seems like a very high number.
Couple of questions for me.
Let's start on the broker channel I think you said 55 zero percent of your bookings in the quarter were a contribution from the broker channel there how should we think about those contributions going forward because 50 seems like a.
A very high number.
Raul: Do you expect that pace to continue, or will it moderate? I think, you know, we've continued to think it was slightly moderate, Scott, but it's remained really strong. I think, you know, as we think about our, you know, three-year outlook, we think, you know, high 30s to mid 40s is probably where we'll be as we continue to scale bookings. But that being said, you know, we're still in the early innings.
Do you expect that pace to continue or does it moderate from there.
I think you know we.
We've continued to think it was slightly moderate Scott.
But if you remain really strong I think you know as we think about our you know three year outlook. We think you know high Thirty's mid Forty's is probably where it will be as we continue to scale bookings, but that being said you know we're still in the early innings, where where you know there's tons of white space in the.
Raul: We're – you know, there's tons of white space in the broker opportunity. So we're kind of just getting started, and our execution, you know, has gotten significantly better this year. And so, you know, the team that we have, you know, driving these programs for us has done a phenomenal job, and we're really proud of the results. I'll pull them in from a follow-up perspective, sitting on the sales kind of route. Can you just see how much you're making in progress on DEX and base selling, selling to your existing installed base?
Broker opportunity. So we're kind of just getting started in our execution you know has gotten significantly better this year.
So you know the team that we have you know driving these programs force has done a phenomenal job and.
But we're really proud of the results.
Got it helpful. And then from a follow up perspective same thing on the sales kind of routes.
Q can you give some commentary on progress here on back to the base selling selling to your existing install base you mentioned, you're at your pet bums up 75% over the last several years gives you certainly a lot more to sell but any changes with the way that existing customers or maybe.
Raul: You know, you mentioned your peplum's up 75% over the last several years, giving you certainly a lot more to sell. But any changes with the way that existing customers are meeting, you know, what their appetites look like for buying? No, we, I mean, it's been consistent.
What their appetite look like for buying additional modules.
No. We I mean, it's been consistent where were continuing to steadily improve.
Raul: We're continuing to subtly improve, you know, modules sold. Obviously, talent has a significant attach rate. Workforce management also has a significant attach rate. And so we feel good, both at the point of sale that we're delivering a bigger bundle, but also, our cross-selling team, you know, continues to really hit the ball out of the park. And so, continuing to work with our clients to make sure they're optimizing the latest technology that we offer. So it's been really successful, and, you know, we still have, you know, a lot of opportunity in that channel. Great, thank you for taking my call. Thanks guys!
Male modules sold obviously talent has a significant attach rate.
Workforce management also significant attach rate and so we feel good both at point of sale that we're delivering a bigger bundle, but also our cross selling team.
No. It continues to really hit the ball out of the park and so continuing to work with our clients to make sure. They are optimizing the latest technology that we offer so.
It's been really successful and you know we still have you know a lot of opportunity in that channel.
Great. Thank you for taking my questions. Thanks, Scott.
Raul: Great, thanks very much. Well, obviously, in fiscal 23, you increased, or we'll say entering fiscal 2040, your head sales headcount was up about 22%. You're going to grow high teens this year, all ups, there's about a five point delta. How should we think about those converging, you know, on a go forward basis? What needs to happen to get those two to meet?
Thank you. Our next question comes from the line of Brad Reback with Stifel.
Please proceed with your question.
Great. Thanks, very much Rob.
So obviously in fiscal 'twenty three increased store both entering fiscal 'twenty four you had.
Sales head count was up about 22% youre going to grow high teens. This year all up so there's about a five point delta.
How should we think about those converging.
On a go forward basis.
What needs to happen to get those to me. Thanks.
Raul: Yeah, it's really about us continuing to grow the tenure in our sales organization, and as we continue to focus on driving that tenure, which is really growing the person-month work, which has grown year over year and is moving in the right direction. Tenure drives productivity. So as we anniversary these large, what we call headcount classes year over year, we're going to see improved productivity. And so it's really about us driving them from year one to year two to year three. Great, thank you very much. Yeah, thank you. Thank you, and Joe Biden. Sorry, I'm bamboozled by the mute button.
Yeah. It is.
Really about us continuing to grow the tenure in our sales organization.
As we continue to focus on driving that tenure, which is.
Really growing the person months worked.
Which you know has grown year over year.
And it's moving in the right direction, you know that you know 10 year drives productivity. So as we anniversary. These large you know what we'd call our head count classes.
Year over year, we're going to see improved productivity and so it's really about us I'm driving them from year, one to year two year three.
Great. Thanks very much.
Yes. Thank you.
Okay.
Thank you. Our next question comes from the line of Brian Peterson with Raymond James. Please proceed with your question.
Brian Your line may be muted.
Sorry, I'm I'm bamboozled by the mute button, sorry about that guys. So just one for me on the embedded channel. So I'd love to understand as you think about the 2% of lives on the platform already or is that fairly concentrated within a couple of customers or is it maybe a little bit more diverse and then there's kind of an opportunity to expand.
Brian: Sorry about that, guys. So just one for me on the embedded channel. So I'd love to understand, as we think about the 2% rise of the platform already, is that fairly concentrated within a couple of customers, or is it maybe a little bit more diverse, and then there's kind of an opportunity to expand with some of those partners over time? Thanks. Yeah. Hey, Brian.
And with some of those partners over time, thanks, guys.
Raul: Yeah, I mean, it's just with a couple of partners right now. It's still really early for us in terms of the number of active partners that we have on our platform. So, yeah, there are only a few partners that are really generating that sort of growth for us. And, of course, as we continue to find new partners, we're going to see a lot more expansion. There's not really a concentration from an end customer perspective, but they do look a lot like the customers that we have today.
Yeah, Hey, Brian Yeah, I mean, it's just with a couple of partners right now it's still really early with US in terms of the number of active partners that we have on our platform and so yeah. There's only a few partners that are really generating.
That sort of growth for us and of course as we continue to sign new partners, we're going to we're going to see a lot more expansion theres not really cuts a concentration from an end customer perspective. They do look a lot like the customers that we have today, they're strong middle market and enterprise customers.
Adam: They're strong middle market and enterprise customers. But the partners themselves, there's still just a few. And Adam, maybe a follow-up.
But the partners themselves are still just a few.
It it out and maybe a follow up.
Adam: So how do we think about the land and expand in that channel? So when you kind of get launched with one of those customers, does it get fully implemented across the customer base? Or is that something that gradually folds in over time?
So how do we think about the land and expand in that channel. So when you kind of get launched with one of those customers is it does it get fully implemented across the customer base or is that something that gradually folds in overtime.
Adam: Yeah, every every every agreement is unique. The ones that we have today had existing customer bases that they're converting over to new, and so we've been really pleased with the cross-selling ability of our partners to sell new, you know, on a go-for basis outside of the existing base. And so that's kind of, you know, exceeded our expectations.
Yeah.
Every every agreement is unique.
The ones that we have today were had existing customer bases that they are converting over.
And then they sell on a go forward basis to new.
And so we've been really pleased.
With the cross selling ability of our partners to sell new you know on a go forward basis outside of the existing base.
So that's kind of exceeded our expectations.
Brad: Great to hear. Thanks guys. Yeah, thanks a lot Brad. Thank you. Bye. Bye. Bye.
Great to hear thanks, guys yeah.
Yeah, Thanks, a lot Brian.
Yeah.
Thank you. Our next question comes from the line of Jared Levine with TD Cowen. Please proceed with your question.
Zach Azerman: Hi, thanks, this is Zach Azerman for Jared. First question on demand: any change in the pace of prospective client decision making relative to prior quarters? And further, any change in the tax rates on new client sales? If so, what modules and functionality are, a change in attachment.
Hi, Thanks. This is zach even at all for Jared first question on demand any change in the pace of prospective client decision, making relative to prior quarters and further any change in attach rates on new client sales. If so what modules and functionality are witnessing a change in attach rate.
Raul: Yeah, um, as far as, um, you know, the deal cycle timeframe, you know, I'm on the entire base, there's no, no change. However, if you break it down by size, I mean, there's a subtle elongation in the enterprise space, um, year over year, but you know, we're on a smaller sample size, um, so, you know, but ultimately, our core, you know, overall base, the same, no changes in the mid market or SMB space, and as far as models go, um, we continue to slightly pick up, so they They're actually, you know, we're seeing slightly better attachment across the board. I got it.
Yeah as far as.
Deal cycle timeframe you know.
On the entire base Theres no no change. However, if you break it down by size I mean, there is a subtle elongation in the enterprise space year over year, but you know we're on a smaller sample size. So you know, but ultimately our core you know overall base the same no change.
Is in the mid market or SMB space.
And as far as module scale, we continue to slightly pick up so they're not taking down there actually you know, we're seeing slightly better attachment across the board.
Adam: And a follow-up on retention. How did January's gross revenue retention compare year-on-year, and if it was consistent, were there any underlying changes based on employer size segment or based on controllable versus uncontrollable terms? Yeah, I mean, we haven't shared specific month retention results, but gross retention has been consistent. And January, of course, is a big month for us, both on the charts and losses, and I'd say that it's been in line with our expectations broadly, especially as we think about guidance for the full year as well. So no significant changes one way or the other on retention broadly. Very helpful, thanks.
Got it and then a follow up on retention how does the January gross revenue retention compare year on year and that was consistent where there any underlying changes based on employer size segment are based on our controllable versus uncontrollable churn.
Yes, I mean, we haven't shared like months specific month retention results, but a gross retention has been consistent in January of course is a a big month for us both on the starts and losses and I'd say that it's been in line with our expectations broadly, especially as how we're thinking about guidance for the full year as well so.
No no no significant changes one way or the other on retention broadly.
Very helpful. Thanks.
Thank you.
Thank you.
Our next question comes from the line of Matt Pfau with William Blair. Please proceed with your question.
Raul: Thank you. I think it would be helpful if you could just help us understand the cadence of, you know, when a partner is signed, how long it takes for them to build the pipeline, and then how long it takes for them to convert that pipeline so the partners that are currently converting, when did they originally start using the embedded ACM functionality, and then how long before we start to see material contribution to growth from the partners that are in the pipeline and the ones that you Yeah, every deal is slightly different in the sense that some have existing client bases that need to be converted, and so that may take a little longer upfront work on the implementation side. And then others are looking to sell new, and that's a quicker go-to-market motion, so it really depends on the type of partner.
Yeah, Hey, great. Thanks for taking my question just wanted to ask one on embedded HCM I think it'd be helpful. If you could just help us understand is it.
The cadence of when a partner signed how long it takes for them to build pipeline and then how long it takes for them to convert that pipeline. So the partners that are currently converting win.
They originally start.
Using the embedded HCM functionality and then.
How long before we start to see a material contribution to growth from the partners that are in the pipeline and the ones that you're currently signed.
Yes every every deal is slightly different.
In the sense that some have existing client bases that needs to be converted.
And so that may take a little longer upfront work on the implementation side.
And then others are looking to sell new.
And yes, that's a quicker go to market motion. So it really depends on the type of partner and so I think you know from our perspective.
Raul: And so I think, you know, from our perspective, we're looking to continue to expand the partner base and then continue to expand the penetration of existing partners. And new partners, you know, once they're up and running, you know, they make contributions on a monthly basis, so the speed to success is relatively short. It's no different than, you know, the sales cycle of, you know, a normal mid-market rep in the industry. Perfect, thank you. Yeah, thank you. Hey, good afternoon.
We're looking to continue to expand the partner base and then continue to expand the penetration of existing partners.
And new partners.
You know when when once they're up and running yes. They have contributions on a monthly basis. So.
It's the speed to success is relatively short it's no different than you know the sales cycle of normal mid market ramp you know in the industry.
Perfect. Thank you.
Yes. Thank you.
Thank you. Our next question comes from the line of Matt Van Vliet with B P. I G. Please proceed with your question.
Matt: Thank you for taking the question. I guess one more on the embedded channel. Just curious, I know it's early, but what kind of attach rate of multiple products are you seeing? Is it drastically different than sort of the overall average? And then maybe how do you see that trending? Is there something that is maybe more specifically needed in that embedded channel that maybe is less common or more common?
Hey, good afternoon, and thank you for taking the question I guess, one more on the embedded channel just curious I know, it's early but what are what kind of attach rate of multiple products, you're seeing is it drastically different than.
And then sort of the overall average.
Maybe how do you see that trending is there something that is maybe more specifically needed in that embedded channel that maybe is less common are more common. So I'm just curious on how the the number of products as per customer.
Raul: I'm just curious about how the number of products is per channel. Yeah, when we entered it, it was really, Matt, primarily payroll, and that's what we were focused on. And what we found is that people also want, you know, workforce management and some of the other services. So it's actually, you know, a broader suite than we anticipated when we started the venture. So payroll definitely is the driver of the conversation, but many are focused on workforce management, reporting, analytics, you know, a lot of the other ancillary services that our clients, you know, talent, that our clients are purchasing, they're wanting as well. Because the end client doesn't really, isn't any different than the end client we sell. It's just a different way to go after the end client. Okay, very helpful.
Yeah, when we entered it and it was it was really matches up with the primarily payroll and which is what we were focused on and what we found is that people also want you know workforce management instead.
And some of the other services. So it's actually you know.
Our broader suite than we anticipated.
When we when we when we started the venture so payroll definitely is the driver of the conversation, but many are focused on workforce management reporting analytics, you know a lot of the other ancillary services that our clients talent that our clients are.
Purchasing their wanting as well because they the client doesn't really isn't any different than the end client. We sell it's just a different way to go after the end client.
Okay very helpful and then when Youre looking at a roughly 20% head count growth that you're looking for on the go to market team any any particular focus around you know whether it's the top 50 markets that you're targeting is it a little more top heavy.
Raul: And then when you're looking at the roughly 20% headcount growth that you're looking for on the go-to-market team, any particular focus around, you know, whether it's the top 50 markets that you're targeting, is it a little more top-heavy? Are you trying to kind of reach out and further the breadth there? Just curious where you have, you know, a need for more capacity across those key markets. Yeah, I mean, we can add sales reps in almost every market in the US. There's so much opportunity available. The way we think about it, and the way we've allocated our resources over the past few years is that about 70 to 75% of the hires go into a tier one market, which we define as, you know, the 15 largest cities in America. And then the balance goes into tier two and tier three, which are the next 35 largest cities in America.
Are you trying to kind of reach out and further the breadth there I'm just curious where you have a need for more capacity across those key markets.
Yeah, I mean, we can add sales reps in almost every market in the U S still there's so much opportunity available.
The way, we think about it and the way we've allocated our resources over the past few years is that about 70% 75% of the hires go into a tier one market, which we defined as you know the 15 largest cities in America and then the balance go into tier two and tier three which are the next.
35 largest cities in America and that combination is kind of the formula that we're executing against today.
Raul: And, you know, that combination is kind of the formula that we're executing today. All right, great. Yeah, thank you, and Steve M. Hi, thanks for taking the question. This is George. I'm for Steve.
Alright, great. Thank you.
Thank you.
Thank you. Our next question comes from the line of Steve Enders with Citi. Please proceed with your question.
Hi, Thanks for taking the question. This is George on for Steve.
George: I think first, you know, there's been some noise from some of your peers in the parallel space. I'm just wondering if that's caused any incremental shifts in the competitive landscape and where you're sourcing bookings from. I didn't know there was any noise going on in the category, but that, you know, we compete against, you know, everyone in the category, and we take share from everyone in the category, and you know, we'll continue to do that. You know, in a quarter, you don't really see any material changes that bounce around.
I think first you know theres been some noise with some of your peers in the payroll space.
I'm just wondering if there's if that's caused any incremental shifts in the competitive landscape and where are you sourcing bookings from.
[laughter] I didn't know there was any noise going on in the category.
But that we compete against.
Everyone in the category and we take share from everyone in the category.
And you know, we'll continue to do that well you know in a quarter you don't really see any material changes.
Yeah that bounce around most of these decisions take.
Raul: Decisions take, you know, a quarter or two to happen, and so we'll see as we go forward if that changes. But, at the end of the day, what we're really focused on is our value propositions of delivering a perfect payroll every time, that's not that complicated, and really delivering tools for leaders so they can power their people and performance, and that's what we go to market with. We have a modern tech staff, we deliver the most pep in the category, and so we're going after all competitors; we're not focused on any one. Great, that makes sense. And then just a follow-up on embedded, you know, I think you've talked about how each of these deals tend to be somewhat bespoke and there's a bit of an onboarding process, but I'm just wondering if you can talk about the learnings you've had from the partners that are ramping so far, if there's any kind of commonalities that you can leverage to kind of smooth the onboarding process for future partners Yeah, for sure.
A quarter or two to happen and.
So we'll see as we go forward if that changes.
Well, we're really focused on is our value propositions on delivering a perfect payroll every time, that's not that complicated.
And and really delivering tools for leader. So they can power there are people and performance and that's what we go to market with we have a modern tech stack, we deliver the most pepper them in the category.
And and so we're going after all competitors were not focused on any one.
Great that makes sense and then just a follow up on the embedded.
No I think you've talked about how each of these deals tend to be somewhat bespoke and theres a bit of a you know an onboarding process, but I'm. Just wondering if you could talk about you know the learnings you've had from the partners that are ramping so far if theres any kind of commonalities that you can leverage to kind of smooth the onboarding process for future partners and you know kind of speed up the flywheel of the product.
Thanks.
Raul: I mean, I think we're starting to understand the framework. You know, while every partner is different, they do get bucketed into what type of partners. And a lot of that is what type of partners. Is it a workforce management solution? Is it a vertical software solution? Is it an ERP?
Yeah for sure I mean.
We're starting to understand the frameworks.
Well every partner is different.
Do get bucket it into what type of partners and a lot of that is what type of partner.
Workforce management solution is that a vertical software solution is an ERP those type of things. They all have slightly different needs and we're building playbooks bye bye partner type.
Raul: You know, those type of things. They all have slightly different needs. And we're building playbooks by partner type to help make the implementation more efficient and to make cross-selling more effective over time. Thanks for taking the question. Yeah, you're welcome, www.globalonenessproject.org. Hi, this is Kyle Hrabowski on behalf of Dan Jester. Thanks for taking the question. I'm a student who is launching benchmarking and forecasting. I'm wondering if you could provide any further color here.
To help make the implementation more efficient.
And to make the cross selling more effective overtime.
Thanks for taking thanks for taking the questions.
Yes, you're welcome.
Okay.
Thank you. Our next question comes from the line of Daniel Jester.
M O capital markets. Please proceed with your question.
Hi, This is Kyle Investor Ashford, Dan Jester, Thanks for taking the questions on the two new launches benchmarking and forecasting I was wondering if you could provide any further color here are these two new modules.
Raul: Are these two new modules, are you targeting them? And then how are you thinking about the growth opportunity relative to other modules? And then my second question, just to dig a bit deeper into the booking conditions you saw during the quarter, maybe any shifts as 4Q progressed. Yeah, so, you know, the two new products will each add an incremental PEPM. I believe it's a dollar PEPM per for each of the new products.
Are you charging for them and then how youre thinking about the growth opportunity relative to other modules and then my second question, just if you could dig a pizza.
A bit deeper into the booking conditions you saw during the quarter, maybe on shifts says <unk> progress. Thank you.
Yeah. So you know the two new products for each.
Added incremental pepper am I believe it's a dollar per pump her.
For each of the new products.
Raul: And it's really a combination of taking our data analytics capabilities and providing insights for frontline leaders so they can be more effective with computation strategies and scheduling strategies with their employees. And so it, you know, fits right in line with our strategy and where we're trying to help our customers. You know, our second quarter or calendar fourth quarter booking was consistent. You know, consistent across, you know, all of our segments. And, you know, we didn't have anything that, you know, jumped off the page from that perspective.
They are really a combination of taking our data analytics capabilities and providing insights for frontline leaders. So they can be more effective with compensation strategies and scheduling strategies, where they are in place and so it fits right in line with our strategy.
What we're trying to help our customers.
You know, our second quarter or calendar fourth quarter bookings were were consistent.
Consistent across you know all of our segments and yeah, we didn't have.
Anything that jumped off the page from that perspective, and so you know it's kind of what we expected.
Raul: And so, you know, it's kind of what we expected. Good afternoon, and thanks for taking my question. I'm wondering with regard to, you know, the enterprise accounts. You've talked about them a little bit more, and I'm wondering how far up market you could be pulled and to what extent are you, you know, managing the sales force in terms of making sure that they, you know, stay within the target market. Or how are you thinking about that?
Thank you.
Our next question comes from the line of Mark Mccrone with Baird. Please proceed with your question.
Hey, good afternoon, and thanks for taking my question.
Wondering with regards to you know the.
Enterprise accounts, you've talked about them, a little bit more and I'm wondering how how far up market could you be pulled in and to what extent are you you know managing the sales force and in terms of making sure that they stay within the target market or how are you thinking about that.
Raul: Yeah, I mean, as a savvy, longtime HCM analyst, you know, while we define ourselves by size, clients don't define themselves that way; their needs define, you know, what kind of platform they can use. So it's really a needs analysis that we look at, and we sell into the thousands. You know, we have clients with over 10,000 employees, and so it really depends on what the client, what needs the client's looking for, and we present it that way. Obviously, our most tenured reps are the ones that are focused on the enterprise accounts.
Yeah I mean.
As you know Anthony as.
As a savvy long time HCM analyst you know well, we define ourselves by size like clients on to find themselves that way there needs to fine you know what kind of platform. They can use so it's really a needs analysis, you know that that we look at Ann.
No.
We sell into the thousands.
We have clients with over 10000 employees.
And so it really depends on what the client what needs of clients looking for and we presented that way obviously, our most tenured reps are the ones that are focused on the enterprise accounts. So they understand the power of the pay core platform.
Raul: So they understand the power of the PayCor platform, and they help, you know, the customers to make sure that we can meet all their needs. So it's, you know, obviously, we're in the early innings here, but, you know, over the last, you know, four or five quarters, we continue to get pulled up market based on the power of the platform, and, you know, we've continued to educate our reps and segment our reps to be able to meet the opportunity. That's great! And you mentioned the tenure of the Salesforce.
And they help you know the customers you know make sure that we can meet all their needs. So.
It's you know obviously, we're in the early innings, you know here, but you know over the last you know four or five quarters. You know we continue to get pulled up market based on the power of the platform.
And we've continued to educate our reps and segment our reps to be able to meet the opportunity.
That's great and you mentioned the tenure of the sales force can you talk a little bit more about the sales force and just in terms of.
Raul: Can you talk a little bit more about, you know, Salesforce and just in terms of, you know, your increasing effectiveness with regard to selecting training and, you know, and keeping them? Yeah, I mean, so, you know, that's the number one priority. And what I would say is we've increased our person month's worth by, you know, over 15% year-over-year, and so that's really positive for us. And we're really focused on onboarding and activating the reps and making them successful. And so, you know, that's an ongoing process. We could clearly do better there.
You know you're increasing effectiveness with regards to.
Selecting training and you know and keeping them.
Yeah, I mean, so you know that's the number one priority and what I would say is we've increased our person a.
A month's worth by you know over 15% year over year, and so that's really positive for us and we're really focused on onboarding and activating the reps and.
And making them successful and so that's an ongoing process, we could clearly do better there.
Raul: We want to do better, but, you know, I think we're making good progress. And, you know, if we continue to see this kind of progress, it will continue to drive productivity year-over-year.
And we want to do better.
But you know I think we're making good progress and if we continue to see this kind of progress and will continue to drive productivity year over year fantastic.
Raul: Fantastic. Thanks a lot, Earl. Yeah, basically. There are. Yeah, thank you again for joining us this evening. Demand remains healthy, with plenty of runway for sustainable growth, and we remain focused on executing our strategy to capture market share.
Fantastic. Thanks, a lot rule, yes.
Yeah.
Okay.
Thank you there are no further questions at this time I'd like to turn the floor back over to Ralph for closing comments.
Yes. Thank you again for joining us this evening.
<unk> remains healthy with plenty of runway for sustainable growth and we remain focused on executing our strategy to capture market share. We look forward to connecting with you at several upcoming events, including the JMP Securities Technology Conference in San Francisco and have a great night everyone.
Raul: We look forward to connecting with you at several upcoming events, including the JMP Security Technology Conference in San Francisco. Have a great night, everyone. This concludes today's telecast. Please disconnect your lines at this time.
Yes.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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Operator: Thank you for your participation and the other people who are in the world. Thank you for watching. I hope you enjoyed the video. If you did, please leave a comment below. Also, if you enjoyed the video, please like and, For Better or Worse, www.starAshconversations.com The End, Music
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