Paylocity Holding Corporation

Good day, and thank you for standing by. Welcome to the Paylocity Holdings Corporation third quarter 2024 fiscal year results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 11 on your telephone. You will then hear an automated message advising you your hand is raised. To withdraw your question, please press star 11 again. Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today, Ryan Glenn. Please go ahead.

Good afternoon, and welcome to Paylocity's earnings results call for the third quarter of fiscal 24, which ended on March 31, 2024. 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's 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 measure to the directly comparable GAAP financial measure because the information which is needed to complete a reconciliation is unavailable at this time without a reasonable effort. In regard to our upcoming conference schedule, Toby will be attending the Callen Annual Technology, Media, and Telecom Conference in New York on May 29th. I will be attending the Jefferies Software Conference in Newport on May 30th. Toby will be attending the Baird Global Consumer Technology and Services Conference in New York on June 6th. Steve will be attending the William Blair Growth Conference in Chicago also on June 6th. And I will be attending the BMO Virtual Software Conference on June 11th. Please let me know if you'd like to schedule time with us at any of these events. With that, let me turn the call over to Steve.

Thanks, Ryan, and thanks to all of you for joining us on our third quarter fiscal 24 earnings call. Q3 represented another quarter of solid results with total revenue growth of 18.1%, driven by our differentiated value proposition of providing the most modern software in the industry, continuing to resonate in the market, particularly among the next generation of workers. With Gen Z set to overtake baby boomers as the dominant generation in the workforce this year, We have continued to invest in meeting the needs and expectations of the modern workforce to deliver the most integrative and intuitive experience in the industry. Most recently, we released a number of new enhancements to our talent acquisition suite to help our clients recruit, train, and retain members of the next generation workforce. In particular, our new text-to-scan and two-way texting features will better enable recruiters to directly communicate with candidates and receive key metrics on engagements, visits, application rates, and hire data in real time. Additionally, new AI-driven smart groups within community will help new hires automatically integrate into their teams, promoting collaboration and integration. All of these new features are accessible directly via our top-rated mobile app, which enables employees to stay connected, access essential information, and contribute effectively from anywhere. Our commitment to product development also continues to be recognized in the market, with Paylocity recently placing as an overall leader in 10 product categories in the G2 Spring 2024 grid reports. Additionally, Paylocity ranked number two overall on TrustRadius' 2024 Most Loved list, and once again listed as top 10 HR solution in G2's 2024 Best Software Awards. I would now like to pass the call to Toby to provide further color on the quarter. Thanks, Steve. Solid sales and operational execution in Q3 helped drive our total revenue to $401.3 million, or 18.1% growth over Q3 of last year, beating the high end of our guidance by $2.3 million. We remain confident in our sales team and go-to-market motion, as well as our strong competitive position in the market, and we continue to be pleased with our top-of-funnel activity and how our are resonating in the market. While we continue to see elongated sales cycles at the high end of our market during the quarter, we remain focused on driving sales rep and go-to-market productivity in Q4 and into fiscal 25. We also saw another strong quarter of channel performance, as channel referrals, primarily from benefit brokers and financial advisors, once again represented more than 25% of new business for the third quarter, as we continue to leverage this strong source of referrals. Our top-line performance, coupled with continued operational efficiency, helped drive adjusted EBITDA of $167.9 million, or 41.8% margin, which exceeded the high end of our guidance by $11.4 million. Lastly, Q3 represents our busiest time of year as we work to support our clients through all their year-end processing and annual tax form filing needs. I'd like to say a huge thank you to our more than 6,000 employees who live and represent our values every day and who work so hard to support our clients. The strong culture at Paylocity continues to be recognized externally, as we were recently named one of Forbes' best large employers for America in 2024. I would now like to pass the call to Ryan to review the financial results in detail and provide updated Fiscal 24 guidance.