Steve Beauchamp: Sure. No, it’s a fair question. I think we’ve been in this space for a while, but really more of the last three fiscal years kind of in earnest where we’ve been expanding more significantly. And as I mentioned earlier, we’ve ramped the reps up more significantly over probably the last two years with more hires from outside of the industry. So we do continue to learn. I think you see many people in this space talk about a long-dated sales cycle. So I think there’s a macro element to that. That’s certainly the feedback that we hear from our reps, which is just taking a little bit longer to get the decisions. We look at both top of funnel pipeline as well as late-stage pipeline, and we see pretty strong activity all the way through. So that gives us confidence that we’ve got an opportunity to be able to push some of those deals through on the back half of the year and have a better back half than we did on the front half upmarket.
Terrell Tillman: Okay. Thank you.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Brian Peterson with Raymond James. Your line is open.
Brian Peterson: Hey. Thanks. Two quick ones for me. So given what you’re seeing in terms of the sales cycles and the productivity ramping, does that change your plan on sales hiring, at least for fiscal year 2024 and how we’re thinking about fiscal year 2025?
Steve Beauchamp: Yes. So I think we got this question last quarter in terms of how we think about adding per segment. And I think the last couple of times we would say it’s much more even. So we’re not adding more in the upper end of the market relative to our core marketplace. And so we’ve already kind of made that shift. I think there’s an opportunity for us to be able to – we’re focused on an absolute new ARR number versus a specific number of reps. And if we have an opportunity to press on productivity to be able to get there, we always go there first. That’s always kind of our thought process. So we won’t make that decision until we go into next fiscal year. But I would say we feel pretty good about the staffing level that we’ve got right now. We feel good about the initiatives that we have to drive productivity, and we’ll give you more color as we kind of go into next fiscal year.
Brian Peterson: Understood. And Ryan, I’m sorry if I missed this, but any help on how to think about interest rate implications in the updated guidance? Thanks guys.
Ryan Glenn: Sure. So in the prepared remarks, I went through and gave you average daily balance and yield assumptions. I think we did bake in a contemplated 25 basis point Fed funds cut in May. The impact of that to the fiscal year, obviously very – in the middle of the fourth quarter. So muted impact, but it’s probably about $1 million or so impact to Q4, and that’s factored in the guidance.
Brian Peterson: Thanks guys.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Mark Marcon with Baird. Your line is open.
Mark Marcon: Hi. Good afternoon, guys. Just want to follow-up. The same kind of line of questioning as some of the others, but maybe a slightly different way with regards to the employment trends that you’re seeing, and thanks for narrowing it down to the hourly employees and some of the clients. The last couple of quarters, we were talking about employment trends kind of being flat year-over-year. Are you actually seeing them decline on a year-over-year basis now?
Ryan Glenn: We’re not seeing them decline yet year-over-year. They’re still actually up a touch in the first half of the year, but we’re certainly seeing softness on a sequential basis. So when we think about what we saw in the first quarter and called that out last quarter and what we’ve seen in October through December, we are seeing some of that sequential flatness. So they still are up in the first half. But I think if this trend continues, they will certainly turn negative in the back half of the fiscal year on a year-over-year basis.
Mark Marcon: And that’s what you’re expecting?
Ryan Glenn: That is what we have factored into guidance, yes, based on the fact that we’ve now seen several months of the sequential trend down.
Mark Marcon: Okay. And then with regards to the elongated sales cycles. Obviously, that always occurs when there’s macro challenges and if employment is trending down, then that would imply that. But I’m wondering, are there any other factors aside from the macro and also maybe some sales execution? In other words, if you talk to your more experienced sales folks and if some of them are not performing as well as they previously had, are you hearing any feedback with regards to, hey, maybe the level of urgency to modernize the solution isn’t quite what it was, say, three, four, five years ago because there’s a greater percentage of clients that have moved to more modern solutions and most of the large legacy players have become better and have improved their solution? In other words, is switching to Paylocity as compelling as it used to be?
Steve Beauchamp: Yes. So I have not heard that. We’ve had a lot of conversations with our teams internally and many of our top reps. It more comes down to more decision-makers involved, more stage gate processes that they’ve got to be able to do to get things across the finish line, a little bit of delay in that decision-making process. That’s the kind of stuff that comes up. We haven’t necessarily seen maybe a different competitive environment that’s caused that. It just – it seems to be on the elongated sales cycle comment more driven by the prospects.
Mark Marcon: Okay. Great. And then are you seeing any change in behavior in terms of just the number of either upsells in terms of modules or for new logos, number of modules that they want to take on?
Toby Williams: Hey, Mark. No, I don’t think we’ve seen any change in that. I mean, I think we’ve been fairly steady in terms of take rates for new logos. And I think probably just to add on to that, we’ve added a significant amount of product over the course of the last year or so. And I think we’ve been overall fairly happy, not just with the differentiation that that’s helped us continue. But with the attach rates that we’ve seen in some of the newer products, almost all of which are in early stage yet still, but I think we’ve been pleased with what we’ve seen so far.
