Paychex, Inc.

Good day, everyone, and welcome to the Paychex First Quarter FY23 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, you will have an opportunity to ask questions during the question-and-answer session. You may register to ask a question by pressing star and 1 on your touch-tone phone. Please note this call may be recorded. It is now my pleasure to turn today's program over to Martin Musi, Chairman and Chief Executive Officer of Paychex. Please go ahead.

Thank you, Gretchen, and thank you for joining us for our discussion of the Paycheck's first quarter fiscal 23 earnings release. Joining me today are John Gibson, our president and chief operating officer, and Efren Rivera, our chief financial officer. I do want to start out by saying that all of us are thinking of everyone in the path of Hurricane Ian that is approaching Florida at this time. Certainly our employees, our clients, and everyone else in those areas we hope are safe. This morning, before the market opened, we released our financial results for the first quarter ended August 31st, 2022. You can access our earnings release on our investor relations website. Our Form 10-Q will be filed with the SEC within the next few days. And this teleconference is, of course, being broadcast over the Internet and will be archived and available for approximately 90 days. We'll start today's call with an update on business highlights for the first quarter. Efren will then review our financial results and outlook for fiscal 2023, and then we'll open it up for your questions. I will start out by acknowledging that this will be my last earnings call in my role as CEO of Paychex. On August 24th, we announced I am retiring as CEO, effective October 14th. That's after our 2022 financials. fiscal 2022 annual meeting of stockholders. However, I will remain in my role as chairman of the board. John Gibson, on the call today, our current president and chief operating officer, will assume the role of president and CEO. John has been a member of the executive leadership team since 2013 and has been instrumental in the success of Paychex during his tenure. We have executed on a long-term succession plan, and I'm confident that John is the right person to lead Paychex into its next phase of growth. Really many best days ahead of us. I want to thank all of you also, you directly, for your interest in coverage of Paychex, some of you for more than two decades, and for your good questions and feedback over my 12 years as Chief Executive Officer. I also want to publicly thank Efren. You know, everyone knows he's one of the best CFOs in the business, And we've done over 40 quarterly calls together. And more than a CFO, Efren has really been a leader on our executive team and who provides not only great counsel but is known for his intelligence, his integrity, and also music trivia. You can try that out sometime. Fiscal 2023 is off to a great start with a double-digit growth in both revenue and earnings compared to the same quarter last year. We have a record level of first quarter sales with strong trends continuing in the mid-market, retirement, and HR outsourcing in particular. We have had continued success in the selling of our suite of innovative products from HCM technology to HR solutions that help businesses become more efficient and address complex HR issues in a challenging time for many businesses. We continue to regularly monitor our key leading indicators for signs of changes to the macroeconomic trends And while we have seen some moderation in key issues, we have not yet seen any significant changes. As an example, the latest Paychex IHS Small Business Employment Watch showed that workers of U.S. small businesses continue to benefit from higher wages. New jobs continue to grow, but at a more moderated pace, and job growth at U.S. small businesses remains resilient, even in the face of a tight labor market and inflation pressures. Employment levels at our existing clients have continued to increase as they're finding more people to fill those positions, consistent with these findings of our small business index. I'll now turn the call over to John, and he will provide you with some highlights surrounding our technology and product suite and results. John? Okay. Thank you, Marty, and good morning, everyone.

It's a pleasure to be with you. You know, based upon our recently released Pulse of HR survey, It's obvious that businesses of all sizes continue to be challenged with attracting and retaining talent, improving their operational efficiency, and working to increase their financial flexibility. Our continued investments in innovative HR technology, combined with our unmatched HR expertise, truly and uniquely positioned us to help small businesses and midsize businesses navigate a very dynamic and challenging environment. You know, earlier this month, we attended the annual HR Technology Conference in Las Vegas, where once again, Paychex demonstrated the latest of our innovations. We showcased significant enhancements to the Paychex Flex recruiting and applicant tracking experience, which is designed to digitally deliver candidates to clients faster and allow them to leverage mobile technology to recruit, screen, and then onboard candidates in a unified and simple-to-use experience. Already our digital onboarding experience was utilized by over 1.7 million new hires in the last year alone. We also introduced our latest innovation, Paychex Voice Assist. And really this is a natural extension of the expansive and ever-growing and utilized self-service capabilities that we have at Paychex. And coupled with our award-winning Paychex Pre-Check offering, which allows employees to further participate in the payroll process by reviewing their gross-to-net payroll calculations prior to payroll processing, Paychex Voice Assist now enables HR and payroll administrators and small business owners to manage their payroll and HR tasks while on the go through any Google Assistant-capable device. This provides a hands-free experience that includes voice recognition and verification security. I'm proud that Paychex is the first HCM solutions provider to offer voice-activated capabilities such as these. Our technology offerings continue to garner national recognition. Paychex is proud to be recognized for the sixth, I repeat, the sixth consecutive year by Nelson Hall, a global analyst and research firm, and they positioned us as a leader in its 2002 NEAT report for service providers. Paychex Flex was recognized for its comprehensive technology as one of the most advanced HR platforms that brings the power of benchmarking, data analytics, as well as digital service enablement to drive operational efficiency and improve the employee experience. I also want to mention that we have once again, for the 12th consecutive year, been recognized as the nation's largest 401k record keeper by total number of plans by plan sponsor magazine. We were also recognized by them as an industry leader in the number of new plans that we added in 2021. It's obvious that our retirement business continues to be an area of strength for us, as many business owners and their employees are focused on financial wellness as a key benefit and issue. In addition, our pooled employer plan offering continues to gain traction in the marketplace, with approximately 4,000 new plans onboarded during the first quarter alone. We continue to see strong demand for our employee retention tax credit service. This helps clients maximize their eligible tax credits and thus provide them more financial flexibility. To date, we have helped over 45,000 clients secure over $8.6 billion in combined ERTC and paid leave tax credits. We continue to have the opportunity to educate more of our existing clients on the benefit of this service, as well as leverage this service to attract new clients. We have started off the fiscal year 23 strong, and while there is uncertainty in the macro environment, our solutions and business model have in the past and continue today to prove their resilience. We help our clients to succeed under any macroeconomic conditions. We continue to focus our product roadmap on the needs of our clients and anticipate releasing further enhancements this fiscal year designed to continue to provide them a positive digital user experience and help them utilize HR technology to simplify their processes. Now before I turn the call over to Efren, I'd like to take a moment to say thank you. And yes, Marty, you're gonna continue to hear this over and over again over the next couple weeks. But I wanna say thank you to Marty for his tireless dedication and strong leadership of the company over the years, and for me personally, for his mentorship and his friendship for the nearly decade that he and I have been working together. You know, under Marty's tenure as CEO, Paychex has more than doubled its revenue and transformed into a leading HCM technology solutions company. Today, Paychex is a tech company, and it's a tech company because of Marty's vision and his leadership. Marty, it's been a pleasure to work alongside you, the leadership team, and the nearly 17,000 now employees of Paychex. And I look forward to continuing our relationship and our new roles. As I've said many times and to many people, we're the same great company. It's the same great leadership team. It's the same great employees. We're just each playing a little different roles as we move forward. I know that our collective focus on our purpose which is to help small and mid-sized businesses succeed, will continue to drive us in the future as it has in the past. I'll now turn the call over to Efren to discuss our first quarter financials.