Steve Enders: Okay. That’s helpful. Maybe just to slip another one in here, I guess, maybe ask it differently. Just I guess if we think about the guide today versus 90 days ago, like maybe how are some of the underlying assumptions different today than they were before.
Chad Richison: They’re not. Not changed.
Steve Enders: Okay, all right. That’s helpful. Thank you.
Chad Richison : Thank you.
Operator: The next question comes from the line of Kevin McVeigh of UBS. Your line is now open.
Kevin Veigh: Great. Thank you. I don’t know if you said it on the call if you did — I missed it. How much stock did you buy back in the quarter?
Craig Boelte: Yes. We didn’t call it out on the call. It was a small amount, I think like $3 million.
Kevin Veigh: Okay. Great. And then it seems like the margins really overperformed. Was that a function of maybe not being able to hire certain folks you wanted to or just better expense management? And how should we think about that if possible, over the balance of the year?
Craig Boelte: I’d say better expense management for the quarter. I mean, we have given the full year adjusted EBITDA guidance, we will continue to look throughout the model for efficiencies. I mean, yes, right now we are like 39% adjusted EBITDA margins. And so still best-in-class and looking at additional efficiencies.
Operator: Your next question comes from the line of Alex Zukin of Wolfe Research. Your line is now open.
Ryan Krieger: It’s Ryan Krieger on for Alex. Thanks for taking the question. So first one, just to touch on margins again. You kind of previously talked about leaving a little bit of room for potential incremental investment this year. So I’m just curious what are the top investment priorities that, that optionality could be earmarked for. And then on customer cohorts, can you just give us a quick update on kind of the down market attrition that you were seeing last quarter and how the upmarket cohorts are performing now?
Craig Boelte: Yes. So on the cost side, I mean obviously we’ve continued to spend aggressively in the R&D area, as we announced the launch of Ireland this quarter. So that’s one area that we’re continuing to spend heavily on. And then obviously — the one that you can pull some levers on would be the sales — or the marketing side of the sales and marketing.
Chad Richison: And from a customer attrition standpoint, we did call out last quarter when we reported retention, the impact that the small business group which we got into really in 2020 that, that had on our retention rate. We are not calling out any — updating the retention rate today other than to say, I don’t — and again, the small business represents 3.5% of our overall revenue-ish. So — but I don’t know that you would necessarily see anything that would have changed the impacts with the small business and they’re just traditional ways of attrition. And again, I’m talking about the small business portion of our revenue.
Operator: Thank you. Your next question comes from the line of Siti Panigrahi of Mizuho. Your line is now open.
Phillip Leytes: Hi, guys. It’s Phil on for Siti. I just wanted to ask — it sounds like you guys are heavily investing into the product to several enhancements. What are some key features that you’re working on? And when can we maybe hear more about them?
Chad Richison: Yes. So we did roll out GONE fourth quarter and we continue to put people on that. From an automation perspective, I mean we’ve got several things rolling out throughout this year. We don’t disclose what we’re developing and/or what we’ve done until it’s actually out in the market. But — we’re having a lot of success in product and really around automation. That’s very important and I believe that’s wins. So I mean, it’s 2024 and to think that any company would buy or implement a system, whereby the payroll department inputs and imports data to do the payroll, I mean, it’s crazy. I mean if a company wants to do that, they might as well drive to the office throwing money out the window and run every stop light because they don’t care about liability.
I mean to me, it’s all going to automation. That’s what’s important, that’s how you do something consistency, the same way and actually achieve value. And so that’s what we’re doing over in product. I did call out on the call that we did put out more product this quarter than we had the two previous quarters combined, and we are just accelerating from there. So it is an exciting time to be in product because you’re able to really utilize technology today to make an impact. And I believe we’ve been at the forefront of that, and we are accelerating it.
Operator: Your next question comes from the line of Jared Levine of TD Cowen. Your line is now open.
Jared Levine: Thank you. My first question, how should we think about the sequential headwind to 2Q revenue growth from the annual form filings revenue recorded in 1Q?
A – Chad Richison: There wouldn’t be any headwinds in there into Q2.
A – Craig Boelte: Not the Q2…
Chad Richison: I don’t know that. That sequential drop versus last year, is that — I don’t know –.
James Samford: Yes. Obviously it is factored into our outlook. And as far as the sequential drop, we’ll see there. And then as we probably could comment on forms filings, we are in-line with expectations.
Chad Richison: Yes. But we have called out for the last seven years, eight years that over time, the percent of the quarter that your forms filings would have, the percent of revenue that it would represent over time is going to be lower and lower because we’ve added additional products and additional services. But we really haven’t added anything to our year-end forms filing. I mean, it’s been substantially the same service types. We added one thing to it in 2016, and that was the ACA form. But other than that, it is been the exact same services since 1998. And so it represented a larger percentage for us in revenue during the first quarter can go way back. And then over time, that percentage has dropped not because it’s going down or we are charging less but because of the other fees, services and additional products now that just represent a larger percentage of that revenue for the quarter.
