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

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Steve Beauchamp: Due to annual recurring revenue, we don’t necessarily break that apart by any specific segment. But if you think of our historically our kind of 30, 40 employees to 500 employees, that’s where we still get the majority of our new recurring revenue. The larger end of the market certainly is growing really nicely. We’ve called that out really over the last several quarters that continues to be success. And we continue to get traction down market as customers are starting to look for those new capabilities. So think about the majority of our revenue still coming from the core market that we focused on, really from the beginning.

Operator: Our next question comes from the line of Matt Pfau with William Blair.

Matt Pfau: Okay. Great. Just one. I wanted to ask on the employee growth within your customer base and the comments that, that was flat and expected to be flat. Anything to read into that in terms of the health of your customer base? Or is this just sort of a more return to what you would see in a normal labor environment?

Ryan Glenn: Sure, Matt. I can take that one. I think if you think about the guidance philosophy we’ve had all the way back to the start of the pandemic, Obviously, there’s been a lot of uncertainty over that period of time. And I think the approach that we’ve taken is we’ve guided to what’s in front of us, and we’ve done that here again this quarter. As I outlined in the prepared remarks, workforce levels have effectively been flat since August and up modestly in July, and that’s our expectation for the balance of the fiscal year. To the extent things get a little bit tighter, we see some expansion in the other way. I think that’s sort of the movement within the guidance range. But sitting here today, coming off of a really strong selling season and a great January, I think we feel good about where the overall revenue guidance sits and obviously watching the macro closely but have not seen any impact within the client base.

And likewise, from a sales perspective, continue to feel really good about the demand environment.

Operator: Our next question comes from the line of Daniel Jester with BMO.

Daniel Jester: My guess is that at this point, Blue Marvel is probably pretty well integrated into the platform. You’ve got Cloudsnap now out there. I guess it frees up potentially some bandwidth internally for inorganic growth opportunities. So Steve, Toby, would love to kind of hear how you’re thinking about inorganic in the year ahead.

Toby Williams: Dan, yes, I mean, I think just in terms of those two, I think the press release that we put out certainly feel really good about what we’re doing with Cloudsnap. Steve made some comments earlier just around what the capabilities that, that’s giving us from an integration platform perspective. And so really happy with how that’s worked out and the value that’s been able to add in the process. I think Steve made the comments on the last quarter call that we’re still in the process of fully integrating the Blue Marble capabilities into the platform. And I think that’s typical of how we would sort of approach any acquisition that we do, the processes that we bring something in and we’ll then spend the time which could take anywhere between 12 and 24 months to fully bake capabilities into our platform in a seamless way from a user experience perspective, from a data flow perspective.

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