Paylocity Holding Corporation (NASDAQ:PCTY) Q2 2023 Earnings Call Transcript

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We don’t think that, that goes to the moon, quite frankly. We’ve just increased the target market about a year ago or so, and we’re having success in that marketplace. So it’s possible that, that stretches a little bit over time, but I would be more focused on what Toby just said, which is we’ve got a really big opportunity in the market that we’re in very low market share. And so we plan on focusing on capturing many customers in our existing target market is possible.

Operator: Our next question comes from the line of Mark Marcon with Baird.

Mark Marcon : Congratulations on a strong quarter. Steve, Toby, you talked a little bit about CloudSnap just in terms of prepared remarks and in the press release. Can you add a little bit more dimensionality with regards to how that’s helping in terms of getting new clients? What are you seeing from a sales productivity perspective? And what are some of the integrations that are the most common that you’re seeing that you weren’t able to do before that you can do now and that’s really adding to the sales momentum.

Steve Beauchamp: Sure, sure. So Mark, we’ve had kind of a marketplace where our clients can connect disparate applications to the employee data that we have. And certainly, we can do that in a real-time fashion from an API perspective. And we do that with some of our larger providers that get asked more frequently. On the flip side, you’ve also got customers who may have vertical market applications or whose applications may not be quite ready for real-time API capabilities. And then it takes a while to build those integrations, and we’ve got a team with technical services team who’s been doing this for years. Cloudsnap really enables that team to operate so much faster using the low-code capabilities that they bring to the table.

And so we can configure integrations so much faster, and they also become much more scalable on a go-forward basis using that technology. And so for us, it really opens up the landscape of number of providers that we can integrate with and it also gives us increased speed to market for those integration and longer-term scalability.

Mark Marcon : Great. And does that help you more in the upmarket or the mid-market? Or how would you describe that.

Steve Beauchamp: All the way across. Certainly, upmarket clients are definitely demanding integration into their disparate system. But even if you’ve got 35 employees, you’d love that connection into your accounting system as well. And so the scalability portion really helps downmarket in terms of us to be able to scale that to a broader set of customers. Upmarket, we may find vertical market applications that don’t necessarily have horizontal penetration across all of our markets. Using Cloudsnap, we can get those vertical market application, ERP integrations up relatively quickly as well. So I think it’s really helpful across the entire target market.

Mark Marcon : And so are the ERP integrations the most common that you’re seeing now? Or what would be the most common?

Steve Beauchamp: Yes. So I think broadly speaking, ERP applications would be one of the most common areas and certainly, the accounting portion of that is a key integration. But if you think about it, employee data ends up being kind of at the center of many workflows and processes at an organization we know when people are hired. They know in the term, they know the supervisory changes. We know a lot of information about the employees that, from a workflow perspective, you can power into other applications and create even more automation for clients. So although we’re seeing a fair amount of demand in ERP, point-of-sale systems is another great example, vertical market applications, another great example. And so we’re seeing a fair amount of demand, and we’re excited about fill that demand with Cloudsnap capabilities.

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