Paylocity Holding Corporation

Good day, and thank you for standing by. Welcome to the PayLossity Q4 2022 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during the session, you will need to press star 1-1 on your telephone. I would now like to hand the conference over to your speaker, Ryan Glenn, Chief Financial Officer. You may begin.

Good afternoon, and welcome to Paylocity's earnings results call for the fourth quarter and fiscal 22, which ended on June 30th, 2022. I'm Ryan Glenn, Chief Financial Officer, and joining me on the call today are Steve Beauchamp and Toby Williams, co-CEOs of Paylocity. Today, we will be discussing the results announced in our press release issued after the market closed. A webcast replay of this call will be available for the next 45 days on our website under the Investor Relations tab. Before beginning, we must caution you that today's remarks including statements made during the question and answer session, contain forward-looking statements. These statements are subject to numerous important factors, risks, and uncertainties, which could cause actual results to differ from the results implied by these or other forward-looking statements. Also, these statements are based solely on the present information and are subject to risks and uncertainties that can cause actual results to differ materially from those projected in the forward-looking statements. For additional information, please refer to our filings with the Securities and Exchange Commission for the risk factors contained therein and other disclosures. We do not undertake any duty to update any forward-looking statements. Also, during the course of today's call, we will refer to certain non-GAAP financial measures. We believe that non-GAAP measures are more representative of how we internally measure the business, and there is a reconciliation schedule detailing these results currently available in our press release, which is located on our website at Paylocity.com under the Investor Relations tab and filed with the Securities and Exchange Commission. Please note that we are unable to reconcile any forward-looking non-GAAP financial measures to the directly comparable GAAP financial measures because the information which is needed to complete a reconciliation is unavailable at this time without unreasonable effort. In regard to our upcoming conference schedule, I will be attending the Wolf Research TMT Conference in San Francisco on September 8th, the Stiefel Executive Summit in New Jersey on September 12th, and the Piper Sandler Tech Conference in Nashville on September 14th. Please let me know if you'd like to schedule time at any of these events. With that, let me turn the call over to Steve.

Thank you, Ryan, and thanks to all of you for joining us on our fourth quarter and fiscal 22 earnings call. Our sales team continued its strong execution in the fourth quarter with total revenue growth of 36.7%, marking our fourth straight quarter with more than 30% revenue growth as our differentiated value proposition of providing the most modern software in the industry continues to resonate in the marketplace. For fiscal 22, total revenue was 852.7 million or 34.1% growth, our largest annual revenue growth since fiscal 16. Our strong sales execution was driven both by adding new clients and increasing our average revenue per client. We ended fiscal 22 with 33,300 clients compared to 28,750 at the end of last fiscal year, an increase of 16%. The 16% increase in clients in fiscal 22 was also aided by very high client satisfaction as revenue retention once again remained greater than 92% and at its highest level in a number of years. Average recurring revenue per client was over 25,000 in fiscal 22 compared to just under 22,000 in fiscal 21, an increase of 16% as a result of increased employees on the platform and rising product attach rates across our client base. We continue to attach more product at time of sale and have realized increased success selling back into existing clients as our products focus on the most modern workforce resonate across our entire client base. Additionally, community usage continues to increase with the total number of monthly users growing more than 40% in fiscal 22, while video creation is increased by over 80% during the same period. These increasing levels of engagement are driving tangible business impacts for our clients. with our proprietary modern workforce index showing that higher engagement scores correlate with 15% lower turnover and faster headcount growth. Our commitment to product development continues to be recognized in the market, with Paylocity ranking high on the G2 crowd summer grid reports during fiscal 22, while Community, our social collaboration hub, was recently named the best culture-building solution within the employee experience category of the 2022 HR Tech Awards. Our strong culture, industry-leading software, and exceptional sales and operational execution would not be possible without the dedication and commitment of our employees. As we close out a very strong fiscal 22, I'd like to thank all of our employees for a fantastic year. I would now like to pass the call to Toby to provide further color on the quarter and fiscal 22.