Paychex, Inc. (NASDAQ:PAYX) Q3 2023 Earnings Call Transcript

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We can grow without adding headcount, although there are places where we may use do that. I’ll let John talk to that.

John Gibson: Yes. I don’t tell adding expense to the business very frequently. So I think that we’re constantly looking to make sure that we have the right go-to-market strategies and the right go-to-market coverage. We are certainly focused on using our vast data sets and analytics and digital engagement as much as we can. As Efrain said, I went back five years ago, our digital, if you think about just in the U.S., I mean, including international paychex.com and surepayroll.com, probably a 20-point improvement in the percent — 20 percentage point improvement. And what we’re getting there. We’re driving analytics to make our sales force more productive instead of just cold calling across the market or inside and client base, we’re using data analytics and models and triggers of behaviors of people engaging our systems to give them active risk.

So, I think there’s opportunity for productivity. And we’re doing a lot more digital engagement inside our applications and actually creating digital experiences to drive more attachment of ancillary products and services. So, I think when we’re sitting down for the budget, we’re certainly going to add sales reps engaging our strategic partners, doing things that we need to do to cover the market and the market opportunity we have, but we’re equally balanced on making sure we’re making the investments in digital engagement and driving productivity and using the data analytics we have to make sure we’re making every rep as productive as they can be.

Mark Marcon: Fantastic. And then one last one. Did you say what your — how much pace per control ended up increasing over the course of this quarter or this year on a year-over-year basis? I’ve got some investors that are under the impression that your pace per control might be up by 300 bps and then they’re factoring in the ERTC and looking at the underlying growth and I’m not sure that the numbers are right. So just what did you see in terms of pace per control for this last quarter?

Efrain Rivera: So, we didn’t talk about it, but I will say that through the year. We have seen increases in pay per control or we would say, checks, and it’s moderated as we’ve gone through the year. So that — in some ways, it’s been a tale of two cities, the first half is port end up being different than the second half of the year.

John Gibson: And Mark, just keep in mind, remember, we’re Main Street small business was a year ago in terms of their ability to hire people. They were understaffed, desperate to get people. So you’ve got the benefit of that hiring up. It’s not that there’s a deceleration. It took — this has been an interesting year in terms of people getting and that’s helping them getting staffed up. Now they’re staffed up. I’m not expecting that they’re going to have another — a big group of employees, regardless of whether or not there was a recession or not, right? I mean they’re fully staffed. And we would expect a moderation of the growth in the number of employees in our clients.

Operator: Thank you. Our next question comes from Eugene Simuni with Masset Makinson.

Eugene Simuni: I just have one quick question to follow up on the comment on you made on Secure 2.0. always very interesting to hear about how kind of regulatory developments can help you guys. So can you elaborate a bit specifically on what the opportunities for Paychex might be from that act? And then what is the time frame for when we might see that flow into your financial results?

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