Paylocity Holding Corporation

Good day, and welcome to the Paylocity second quarter 2025 fiscal year results conference call. At this time, all participants are in a listen-only mode. After this speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Ryan Glenn, Chief Financial Officer. Please go ahead.

Good afternoon, and welcome to Paylocity's earnings results call for the second quarter of fiscal 25, which ended on December 31st, 2024. I'm Ryan Glenn, Chief Financial Officer, and joining me on the call today are Steve Beauchamp, Executive Chairman, and Toby Williams, President and CEO 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 measure to the directly comparable GAAP financial measure because information which is needed to complete a reconciliation is unavailable at this time without unreasonable effort. In regard to upcoming conference schedule, I will be attending the Wolf Software Conference, Toby and I will be attending the Raymond James Institutional Investors Conference, and Toby will be attending the Stiefel Technology One-on-One Conference. Please let me know if you'd like to schedule time with us at any of these events. With that, let me pass the call over to Steve.

Thank you, Ryan, and thanks to all of you for joining us on our second quarter fiscal 25 earnings call. Our strong results continued in Q2 with recurring and other revenue growth of 17%. as our differentiated value proposition of providing the most modern software in the industry continues to resonate in the marketplace. Total revenue grew 16% over Q2 of last year. Our sustained multi-year investment in R&D has resulted in strong product differentiation and significant expansion of our product suite, which has helped drive durable revenue growth and expanded average revenue per client. The recent launch of Benefit Decision Support and our expansion into the Office of the CFO with our integrated headcount planning product has increased our max PEPY from $550 to $600, achieving the target we set in August 2023. And this does not yet include any Airbase products. We also remain confident in our ability to drive further product expansion and further expansion of our average revenue per client across new and existing clients with new HCM and Office of the CFO products over time. Additionally, our new AI Assistant chatbot is now generally available to all Paylocity client admins, and we are pleased with early levels of adoption. Since launching in October, we have seen a 30% increase in utilization, and key features such as natural language search capabilities, which are available in our reporting product, have driven an over 20% reduction in time required for our users to find reports. We are encouraged by the benefits our AI-related investments are driving for our clients and excited to continue adding additional AI-enabled functionality and key use cases over time. Our ongoing commitment to product innovation continues to be recognized by third parties as Paylocity was recently awarded the Trust Radius Buyer's Choice Award and named overall leader in 10 HCM product categories in G2's Winter 2025 Grid Reports. I would now like to pass the call to Toby to provide further color on the quarter.