Sheldon McMeans: Excellent. And a quick follow-up if I may. It looks like you picked up a little bit of yield still quarter-over-quarter. And as you may be thinking about extending duration as rates are staying higher for longer do you — and with the reiterated guidance between 4.5% to 4.6%, do you expect that to continue until rates go down around those levels?
Ryan Glenn: Yes. I mean, I think, we gave a fair amount of details in prepared remarks relative to average daily balance and yield. And I think we guided in a fairly tight range from a yield perspective between call it 420 basis points and 440 basis points of yield for the year. So I think we’ll be in that range. We’re certainly looking at the yield curve. We’re looking at duration of the portion of client health funds that we do have invested. And I think as we go deeper into the year we’ll update guidance accordingly if we see changes there.
Operator: Thank you. One moment for our next question. And that will come from the line of Jason Celino with KeyBanc Capital Markets. Your line is open.
Jason Celino: Great. Thanks for taking my question. It’s nice to see the PEPY go up to 550 with the two new modules. If I’ve got this correct. This is kind of the second quarter in a row where we’ve seen that current PEPY increase. I guess what’s giving you this ability to accelerate the new offerings here? And how should we think about trajectory going forward?
Steve Beauchamp: Sure. I think if you go back a couple of years ago, you can see that we’ve made some incremental investments in R&D. We obviously had a little bit of tailwind in terms of interest revenue increases. So, we made some platform investments. We added a whole bunch of folks. We kicked off some new projects. And I think you’re seeing the fruits of that labor come to market with four new recent product SKUs. I would tell you we feel really good about the pipeline from a product perspective. You probably have heard me say many times that we have lots of ideas that we have that we think can really help our customers and we get a lot of those ideas as customers a co-creator. And so the pipeline from a product perspective is pretty strong.
And I think on the flip side, you see that we’re able to do that while at the same time kind of normalizing kind of those R&D investments in the quarter and that’s probably the right way to think about it is just a bit of a period of extra investment and you’re seeing the benefit from it. But I feel like the investment level that we’re at in terms of size and scale now really allows us to really balance investing in the client experience and making sure we’re reacting to their feedback still funding all sorts of new products and making platform investments so that we can stay being the most modern platform in the industry.
Jason Celino: Great. Excellent. And then really nice EBITDA beat. Any change in guidance philosophy? Is it fair to think you might be focusing more on margin expansion this year versus prior years? Thanks.
Ryan Glenn: Yes. I think that really happy with the performance in the quarter and the ability to raise the year as much as we did. I think we’re guiding to an adjusted EBITDA range of about 34% — call it 34% or so. So, just about 100 basis points short of our updated target. So, I feel really good about that progress. Nothing that I would call out as far as one-time or additional areas of focus. I think it’s really a function as the business gets larger that we’re able to continue to drive scale, while at the same time investing to drive growth in the future.
Operator: Thank you. And that will come from the line of Alex Zukin with Wolfe Research. Your line is open.
Alex Zukin: Hey guys. Thanks for taking the question. I guess maybe can you just talk about from those workforce levels were there any particular verticals that you saw either seeing anecdotally weaker workforce levels or that anecdotal commentary around taking longer around sales cycles or go lives. Anything there would be helpful.
Steve Beauchamp: Yes, I would say again I want to just make sure that we talk about that as being kind of a small change in the workforce levels being a little bit less than we expected. So, just from an order of magnitude, this is not a huge impact. We definitely looked at other factors in terms of trying to figure out was this a pocket from a geography perspective or a vertical market. The reality was it’s pretty much just across the board. As Ryan mentioned, if you look at it on a year-over-year basis it was up we expected it to be up. It just was not up the same amount. And then on a month-over-month basis, it was actually down two of the three months in the quarter. And so still a relatively small impact but something that we’ve kind of factored into the guidance. By no means that we think there is a whole bunch of client behavior that would be a sign of a very different environment than we’re in but we definitely had that blip in the quarter.
Alex Zukin: That’s actually super helpful. And I guess to the extent I know that this question has been asked, but as we think about it from a guidance particularly for the full year and even maybe just commenting on long-term targets that you guys gave at the Analyst Day, still feel — do you still feel really good about those targets? And in terms of the full year moderating of employment levels. Is it just fair to assume that you’ve taken that — the slight difference into account? Or have you been a little bit more conservative in the employment levels for the full year?
Steve Beauchamp: Yes. No, I mean we have not forecasted some different employment environment or some recession into what we’ve guided. We took what we saw in first quarter. We took the early look into October. We factored that into the balance of the year. That was certainly one of the biggest drivers in terms of just maintaining our guidance for the year versus taking that up. It’s kind of all factored in. We feel good about the fact — the execution in the business. And we’re still focused on obviously those long-term objectives and we’ve got a rich product pipeline and a lot of momentum.
Operator: Thank you. And that will come from the line of Daniel Jester with BMO Capital Markets. Your line is open.
Daniel Jester: Great. Thanks for taking my question. Maybe to kind of continue on the same. Philosophically, if you do see the economy start to weaken as we go into calendar 2024, what steps are you going to do to alter your business strategy if any?
Steve Beauchamp: Well, I think we’ve gone through many cycles in our history in the past. These things don’t typically fall off a cliff quickly. It is a very gradual impact in a recurring revenue model. So it does give us the ability to kind of make adjustments in terms of what we’re seeing in front of us. So that’s the first thing that I would say. And we do have a fair amount of variable cost that really is assigned to the volume. And so it’s relatively easy for us to adjust in any kind of down market if that’s what we’re seeing. We’ve actually had a lot of success selling in down markets in our past history as well. And so part of the value proposition that we’re offering customers is efficiency that they gain from using a more modern platform.
That value proposition does become pretty important in a tight market. And so you definitely lean into that. And I think even if you went back into COVID and the fact that we were able to sell through that which was certainly the biggest drop you’ve ever seen economically. So yes, I wouldn’t say it doesn’t affect us but I think our industry and I think the investments we’ve made in our product make us fairly resilient to that type of market fluctuation.
Daniel Jester: Great. And then I don’t think you’ve touched on this yet but in terms of new buyer behavior, are you seeing any change in the demand levels in terms of taking new modules at start relative to the past call it 12 months or so? Thank you.
Steve Beauchamp: I would tell you that average revenue per customer increases. It has been a core part of our growth equation for a long time. And we have obviously added significantly to the product. It was $200 at the time of IPO back in 2014. So we continue with that momentum. I already called out earlier in the call that we’ve had great ability to sell back into the client base. The attach rates for the new products used we’ve been happy with and we’ve got a pretty rich product pipeline. And so that is and continues to be a big part of the equation and we see these new customers continuing to adopt more product.
Operator: Thank you. One moment for our next question. And that will come from the line of Adam Bergere with Bank of America. Your line is open.
