Paylocity Holding Corporation

Hello, and welcome to Paylocity Holding Corporation third quarter fiscal year 2025 earnings 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 the session, you would need to press star 1-1 on your telephone. You would then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. I would now like to turn the conference over to Ryan Glenn. You may begin.

Good afternoon, and welcome to Paylocity's earnings results call for the third quarter of fiscal 25, which ended on March 31st, 2025. 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 the information which is needed to complete a reconciliation is unavailable at this time without unreasonable effort. In regard to our upcoming conference schedule, we will be attending the Callen Annual Technology Media and Telecom Conference, the BMO Virtual Software Conference, the Jefferies Software Conference, the William Blair Annual Growth Stock Conference, and the Mizuho Tech Conference. 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 25 earnings call. Q3 represented another quarter of strong results with recurring and other revenue growth of 15%, driven by our differentiated value proposition of providing the most modern software in the industry, continuing to resonate in the market. Total revenue grew 13% over Q3 of last year. Our sustained multi-year investment in R&D has resulted in continued product differentiation and a significant expansion of our product suite, which has helped drive durable recurring revenue growth and continued expansion of our average revenue per client. In addition to our entrance into the office of the CFO with the acquisition of Airbase and the introduction of headcount planning, we have continued to build on our HCM industry leadership position on AI with a focus on driving a better client and user experience. For example, our AI assistant can now leverage a client's employee handbook to answer policy-related questions, such as, what is my organization's PTO policy? Additionally, our AI assistant is able to reference publicly available resources to answer common compliance-related questions, like, what sick pay laws apply to my organization? These automated, instantaneous solutions are examples of the early AI use cases that we believe will drive tangible efficiency gains for our clients. We also recently launched several new features to connect and streamline the employee recruiting and onboarding process. Clients can now embed background checks and skill assessments from third-party vendors into our recruiting module through seamless API integrations. We believe continued investment in our broad ecosystem of third-party partners will provide our clients with the tools needed to run and grow their business. Combined with our ongoing investments in both HCM and finance, we are confident we will continue to drive higher average revenue per client over time, which is now how we think about the economic opportunity associated with our product growth, given that not all of our new products will be priced in a PEPY model, but all of our products will contribute to a higher average revenue per client over time. Our commitment to product development also continues to be recognized in the market, with Paylocity recently being named to TrustRadius' list of best love software for 2025, and an overall leader in 10 HCM product categories in G2's Spring 2025 grid reports. Additionally, Airbase by Paylocity was named a visionary in the 2025 Gartner Magic Quadrant for accounts payable applications. I would now like to pass the call to Toby to provide further color on the quarter.