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

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And so the teams are still working on that and feel good about the progress so far. Certainly, we continue to have the overall bandwidth to look at acquisitions that might be interesting. I think our point of view historically remains the case today. We would prefer to always develop the next capability that we want to push out from a product perspective. But I think we’ve also taken advantage of, in certain instances, the ability to accelerate things that might be really strategic to us, that it might be on the product road map by way of what’s largely been, I would characterize as smaller product-oriented or technology-oriented tuck-in acquisitions. And I think that strategy and that viewpoint remains the case.

Daniel Jester: Got you. That’s helpful. And then — maybe just a quick one on the integration. What percent of your customers actually have an integration today connected through Paylocity? Just wondering to kind of see what the overall penetration and how that could actually look over time.

Steve Beauchamp: Yes. I don’t know that off the top of my head, quite frankly. A lot of our customers have integrations for a wide variety of things. So 401(k) integration, as an example, Benefits integration would be another point of integration. And then you get into all this stuff, I mentioned prior ERPs and so on and so forth. So I think there’s an opportunity to expand the number of integrations to the way I think about it. I would imagine we would have to see a future where every client has at least 1 integration. And over time, we want to actually drive the number of integrations so that they can really leverage the people data that we have. And in a real time, workflow capability. They know when something changes about that person, that will then enable 1 of their processes to create automation and create an opportunity to have higher levels of engagement.

And so our viewpoint is clients, we want to integrate with all of the systems that they use to run their business that lever people data. That’s the goal and objective.

Operator: Our next question comes from the line of Arvind Ramnani with Piper Sandler.

Arvind Ramnani: Good set of results. My first question is really about this kind of investments you have made over the past few years on making your HCM solution more employees intact and driving engagement. You’re certainly collecting a lot of data. Are you able to sort of feed back some of the data to your clients? Are they seeing value in it. And down the road, do you expect that may drive some revenue growth in the longer term?

Steve Beauchamp: Yes, it’s a great question. We’ve been investing for several years now kind of in machine learning, artificial intelligence capabilities. You see that surfacing our product already in a few different places, and we do see many more opportunities as well. So one is our modern workforce index, where we look across our clients, and we score customers based off how engaged they are in our platform. And we know the higher the score, the more employee retention they have. And we do that even by vertical markets. So we compare hospitality to other hospitality. And then as they start to use more of the product, they see their score’s going up, so the recommendation engine behind that starts to give them ideas on how they can get more value out of the product.

We also will surface recommendations even to employees around people that they might want to connect with, that they might want to communicate, that they might want to follow a community that’s certainly another place. And then lastly, I would just say our dashboards and insights is another place that we try to surface that. But as technology continues to advance, we see this being another opportunity to modernize our suite in pretty much every single module, leveraging newer technologies and artificial intelligence and machine learning.

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