Paylocity Holding Corporation

always a little bit of timing within the fiscal year. And as we talked about, even dating back to last August when we provided our initial guidance for the year, we do want to invest back into R&D and broader automation efforts. And I think we continue to do that into the fourth quarter as well.

And so we'll end up seeing that in the R&D line and maybe also in terms of some sales and marketing. Is that right?

Yes, and I think you've seen that as we've gone throughout the year as well. So I wouldn't call it any specific one-time items in the fourth quarter, but the bias is to invest back into those elements of the business while also increasing profitability, and we've done both.

Great. And then just as a follow-up, you mentioned great scale and being able to charge for the AI capabilities. Can you talk a little bit about what you're seeing there? I know it's really early, and then Anything else on the office of the CFO? Thank you.

We're excited about the Grayscale acquisition. Just like prior acquisitions that are product tuck-in in orientation, we'll take the time, we're going to integrate that experience, and then we will launch that. We typically have done that. It could be in the 12-month or so range, so we're looking at that as a similar opportunity to get that to market. But we're really excited about the AI capabilities, and Grayscale really can fully automate all candidate engagement, so conversations and marketing, something that we think is really demanded in the market. And so that gives us an opportunity to have a bit of a premium skew in recruiting once we complete that integration and launch.

Great, thank you very much.

Thank you.

Our next question comes from Scott Berg of Niedermann Company. Your line is now open.

Hi, this is Ian Black on for Scott Berg. A couple of questions. First, on Grayscale, it looks like the company primarily targeted larger enterprises. How does the product convert to your kind of core customer demographic?

Yeah, I wouldn't say that it is targeted to larger enterprises. I think when it comes to candidate engagement, I would say you see customers with maybe larger hourly populations as being really great fits, or even companies with big salary populations that are in hiring mode. You basically are wanting to do a fair amount of recruiting and hiring, either because you naturally have turnover in your business or you're kind of in growth mode. And so we see a lot of our customers that fit that bill really nicely. And many customers that they have overlap perfectly within our average size target market of 150 employees. So that was actually one of the things that attracted us to the opportunity was we felt like it was a really nice product market fit.

Awesome. And then how does the acquisition boost your overall AI strategy outside of the acquired technology?

Our AI strategy is really to embed AI across the suite in kind of everyday processes, really driving an ROI to the customers and really saving them time, providing better insights, experience, intelligence. Grayscale is a great example when it comes to candidate interaction. So not only does it automate a bunch of that candidate interaction from a recruiter's perspective, but it provides greater level of intelligence throughout that process. And so it's a good example of ways that sometimes we will build and organically launch agents that will operate in that capacity and that could be in places like payroll and time or in some of our talent management suite like recruiting where we are enabled to do a product tuck-in to go after a space that we're pretty excited about. Certainly as we look outside and we think about opportunities to do product tuck-ins, it's probably more important that those capabilities result in monetization. And so that's another element that we're excited about this. It's great capability and functionality, and the AI interaction is very powerful, but it also gives us an opportunity to monetize.

Thank you. Thank you.

Our next speaker is Samad Samana with Jefferies. Your line is now open.

This is Jordan Barretts on for Samad. Thank you for taking my question. It was great to see the strong double-digit recurring growth. It outperformed the guide by a wider margin than in recent quarters. So I know you haven't guided formally to fiscal 27, but as we think about setting an initial recurring growth estimate, is it fair to look at fiscal 4Q guidance for 9% to 10% growth and kind of extrapolate that out?

Yeah, Jordan, I think, you know, as we said in the prepared remarks, we're really pleased with the results so far this fiscal year. You've seen, I think, a lot of consistency in recurring revenue growth. You've seen a lot of consistency in how we've guided each of the quarters. And obviously there's been some overperformance that have impacted the results each quarter and allowed us to raise the fiscal year by more than that quarterly beat. As you look at the fourth quarter, the recurring guide of 9% to 10%, that obviously is a data point as you think about next fiscal year, probably a little bit more so on the early part of the year. Our guidance philosophy has not changed. So as you think about the prudence that we would have typically in a full year guide, we would continue to have that level of prudence when we guide in August. And I think the other element that has been a bit of a tailwind this year is client workforce levels have continued to be up and be very resilient. And historically, we would not assume that level of increase year over year in our guidance. So that's been helpful this year. And as you think about from a guidance standpoint, likely would assume flat year over year, at least as a starting point.

Great color. I appreciate it. And then quickly on the capital allocation front, Nice to see the strong cadence of buybacks, the incremental $1 billion increase to the repurchase authorization. When I think about how that's going to be funded on the balance sheet, I see $300 million in cash. So how are you thinking about funding that, and what cadence do you expect to deploy that at as we think about next year?

Yeah, I would not think of our capital allocation policy changing. I think we've been really pleased with the ability to buy back stock so far this fiscal year, so $350 million in the first nine months. Dating back two years, we've repurchased $650 million while also being able to fund acquisitions to drive future growth and product differentiation. That will continue to be our strategy going forward. I think this provides us incremental flexibility, and we will continue to be opportunistic while maintaining dry powder from an M&A standpoint.

Great. Thank you for taking my questions. Thank you.

Our next question comes from the line of Jared Levine with TD Cohen. Your line is now open.

Thank you. I want to start in terms of your recent announcement, some of the managed service offerings. Can you discuss the revenue opportunity, whether, you know, that's TAM or potential PEPM uplift? And then, Ryan, any kind of margin headwinds for more of a service offering versus, you know, your historical legacy in software?

Hey, Jared. It's Toby. I'll start, and then Ryan can jump in. But if you think about how we serve our clients today, this is really just an extension of our platform to be able to provide a higher-level service for our clients across payroll and HR. And I think a lot of that is born out of the client experience that we have and a lot of the client feedback that we have. I think it will really be a competitive offering for us in the market that will deliver a higher level of service and meet client needs. So I think ultimately we're really excited about the TAM expansion opportunity, the revenue expansion opportunity, but at the heart of it, it's a need that our clients have, and I think we're really excited to be able to hit that. And, you know, I think the other part of this is we will be leveraging our platform to be able to provide that service, and so I don't think we expect any significant headwind from a margin opportunity perspective as we look at Q4 around in 2017.

Got it. And then in terms of grayscale, Ryan, can you comment in terms of the impact of that XLOAD guide raised there and then any headwind related to that implied 4Q margin guide as well too?

Yeah, completely immaterial on both the revenue and EBITDA front. So I think as we file our Q over the next few days, you'll see in the sub-event what the purchase price was, but small acquisition, all cash acquisition, and not material to the financial results.

Got it. Thank you.

Thank you.

Our next question comes from the line of Sati Panegrahi with Mizuho. Your line is now open.

Hi, this is Phil on for CITI. Can you guys talk a little bit about what you're seeing in the macro backdrop, specifically trends in employment and what's baked into your assumption for FQ4?

Yeah, I mean, I'll start. I mean, I think from a macro standpoint, we've seen relative stability both in the demand environment and, as Ryan mentioned a few minutes ago, we've seen relative stability from an employment standpoint, too, with that being up through the first nine months of the fiscal year against an assumption that we started with at the beginning of the fiscal of it being flat. And, you know, I think we have embedded that assumption across the full fiscal year. I think that's probably, as Ryan also mentioned a few minutes ago, the construct for how we're thinking about 27, but I think from a macro standpoint, for the first nine months of the fiscal year, we're probably pleased with the amount of stability we've seen, and I think that's what we're seeing as we go into Q4.

Thank you. Thank you.

Our next question comes from the line of Patrick Walravens with Citizens. Your line is now open.

Oh, great. This is Kincaid on for Pat. When you guys look back at the quarter and the competitive environment, what was winning you the most deals with new customers? And when you looked at renewals, why were customers staying?

Yeah, I mean, I think if I look back at the quarter, I think you saw strong execution across the entirety of the business. I mean, I think we had Really, anytime you have these types of results and that type of beat, you have really strong sales and go-to-market execution. I think that's a mix of the value prop and the breadth of our platform. Obviously, you heard the prepared remarks that the broker channel continued to perform for us, strong partnerships there, which I think we were really pleased with. We had strong service. I mean, this is the busiest time of year for our teams, and I think we performed really well. So I think the client interactions and retention throughout the end of the the calendar year through January were really strong. And then, I mean, I think you saw a really strong, you are seeing a really strong innovation from a product perspective too. I mean, obviously Grayscale is an acquisition that will now integrate, but the launch of the Elevate solutions. And so I think overall the performance was really well balanced and strong across every area of the business.

Great. And just a quick follow-up on Elevate, where do you think that that's going to take the margins? What's the impact going to be?

I mean, I don't think we have any expectation that there's really any headwind associated with the margins. It's certainly a higher level of service for our clients. We'll be leveraging our teams and our platform. And I think as we look forward, there is an opportunity to scale that right in line with the rest of the business and certainly leveraging all of the internal and product-driven AI capabilities that we're starting to work through the platform. So I think our expectation is that this is a TAM expansion opportunity. It's an opportunity to serve our clients in an even higher way, meeting some of their needs, and certainly a revenue opportunity. And I don't think there will be any incremental headwind from a margin standpoint.

Sounds good. Thank you so much. Thank you.

Our next question comes from the line of Brian Peterson with Raymond James. Your line is now open.

Hi, this is Jessica on for Brian. I'm kind of keeping in line with the question so far today. As you're thinking about further M&A opportunities in a market, should we be thinking that you're looking at more AI-focused deals, or will there be more traditional SaaS applications that you think could also be broadening your value proposition, similar to what you did with Airbase? Just some high-level thoughts here.

Yeah, I think from a product strategy perspective, when we look at M&A, we really want to make sure that it's accelerating the direction that we're already heading in. And so I think any software acquisition that would be kind of a product tuck-in that we would then be selling back to the customer would have to have some strength in AI. We think that that's kind of a critical component in terms of offering performance. great product to our customers. We're spending a lot of time embedding AI across our entire core suite. It doesn't mean that we wouldn't consider something outside of that, but it would have to fit into our existing product strategy, and we would have to have the ability to embed AI across anything that we launch to our customers.

Got it. And then also kind of follow along with elevate too. So, as you're talking about this 10 opportunities, revenue opportunity that this could bring, I know it's just launched very early days still, but how should we be thinking about the market fit of what kind of customers would be more inclined to be taking LFA? Who is being best served by having this increased service?

I would say it really goes after our core target market, so average customer size of 150 employees. In many ways, where the customer's perspective is, they maybe have an HR team or payroll team that's really stretched thin. Sometimes they have some turnover on that team and they're looking for an elevated level of solution. They're also looking for expertise that they may not have as an organization. You know, we know our products better than anybody. We have the ability to help them, whether that's from an implementation or HR or payroll capability. We also have the ability to automate a lot of this on their behalf. And so when we provide this extra level of service, we increase, obviously, the revenue opportunity for us. And in many cases, that customer can kind of redeploy that staff or other avenues, or we can fill some of the shortfall that they might have from a staffing perspective. But they get a much better result because our level of expertise is naturally higher. One of the exciting things about this opportunity is as we invest more in AI and things become more automated in our suite, we can do that in a way that doesn't have that margin impact. So we can provide the elevated level of service and get the additional revenue and do that just as efficiently as we do with any of our other products.

Okay. And also just a quick follow-on. So as you're talking about helping with redeploying Cillian, can we also think of this as like helping with eventual cross-sell? Is that part of the thought process here?

Yeah, it's a good question. I do think that as customers purchase Elevate solutions, there is an opportunity for us to help them drive utilization. As they drive utilization, it's easier to then get to those other products. It also helps them just from an implementation perspective. If they think, boy, I'd love to be able to take advantage of one of your additional products, I just don't have the time to implement it, Elevate can lower that barrier.

All right. Understood. Thank you very much.

Thank you. Our next question comes from the line of Terry Tillman with Truist. Your line is now open.

Hey, guys. It's John Carl Long for Terry. Thank you for taking the question. Just looking forward, how do you guys think your pricing model will change? And what have you been hearing from customers saying about a potential hybrid pricing model? Thanks.

Yeah, I don't actually think we've heard a lot from clients so far in terms of asking or, you know, requesting a different pricing model. I think if you look across the industry, the industry has been fairly stable from a pricing model standpoint when you think about how all the solutions are priced by some of the larger competitors in the market. I don't think we've seen any shifts there. Yeah, I think as we've talked about before, though, we think that in a situation where you have to think about a different pricing model, I think there's certainly different levers that we and folks in our industry will be able to pull if needed to be able to maintain revenue levels. I don't think we're at that point yet. And I think the important part of that question is thinking about how we go to market and thinking about what the actual client expectation is. And I think we continue to see strong engagement with clients and prospects. And meeting them where they are right now, I think, is a really important thing from a go-to-market standpoint. And meeting their expectations is exactly what we've done in terms of the consistency of our pricing conversations. So, I don't think there's any big change there in the market, at least not right now.

Got it.

Thank you.

Thank you.

Our next question comes from the line of Jason Salino with KeyBank Capital Markets. Your line is now open.

Hi. This is Devin Au on for Jason today. Thanks for taking our questions. Congrats on the acquisition of Grayscale. Seems like a Great addition to the portfolio. It seems like the AI recruiting space has kind of attracted a lot of attention lately. We'd love to just get a sense of how competitive is that market. I notice on the website of Grayscale there's a few notable customers being highlighted, so we'd love to hear what's Grayscale's secret sauce in landing these customers.

Yeah, I think recruiting has been a really good category for us overall. We've really been able to attach that across the various market segments at a pretty attractive rate, you know, since we launched that many, many years ago. And of course, we make that better every single year. And part of our strategy will be to embed AI across that experience. Many of those agents that we will be launching will be our own agents. But grayscale really ties nicely into the candidate engagement side of the equation, which we really didn't have. We had some capabilities there, but we didn't have some of the advanced capabilities that customers are looking for. And so when you combine some of our own AI investments with what they're doing, that's what gives us the confidence and be able to offer maybe a premium skew for the customers that need that type of engagement the most and really provide competitive differentiation to many of the players that we see on an ongoing basis.

Got it. Now that's helpful. And then maybe just a quick follow-up, maybe for 4Q, recurring guidance, are you still kind of assuming workforce level to be stable? And yeah, thank you.

Yes, we are. I think as we've said earlier on the call, workforce levels have been up year-over-year, continue to be very resilient, but very consistent approach from a guidance standpoint, assuming those are flat year-over-year in the fourth quarter.

Got it.

Thanks for taking our questions.

Thank you.

Our next question comes from the line of Daniel Jester with BMO Capital Markets. Your line is now open.

Great. Thanks for taking my question. Maybe, you know, one on sales and go-to-market. So in the last 18 months, you've added sort of an Office of the CFO product. You've added IT asset management, access management, now managed solutions and premium SKUs. It seems like a lot to maybe digest from a sales enablement perspective. So I guess, you know, how are you getting the Salesforce position in the right direction to sell this expanded platform?

Yeah, Dan, I mean, Toby, I think if you look at the growth algorithm in our business over a multi-year period of time, going back, I mean, for the last decade, I mean, part of the growth algorithm for us has been the ability to effectively increase ARPU by launching new solutions. So we have more than tripled the size of the portfolio since the time of the IPO. And that's been across moving from payroll all across the HCM category and now into finance and IT, as you pointed out. And I think one of the competencies that we've certainly developed over time with Salesforce is not just launching the new technology, but successfully launching those products internally to our teams, training them on them, and giving ourselves the ability to attach those products at the point of new sale for new logo acquisition, then also sell back into the base. And I think this is just another example of the same cadence, the same playbook that we've run from a product launch standpoint for more than a decade at this point. And I think were early days for certainly Elevate, but I think we've been really pleased with the traction that we've seen in some of those newer offerings over the last 18 plus months.

I think the other thing I would add, Toby, is that we've also developed during that time a pretty great way to look at how do you surface those products to customers without overloading those sales folks so that you're not losing productivity. And so we evaluate the products from a complexity perspective. Sometimes our sales force that's out there selling payroll and HR sells the entire thing. Other times we decide, okay, it's really a bit of a referral model. They're going to identify the need. They're going to pass that on to typically an internal person with much level of expertise, and they'll take that product SKU from initial discovery through to sale. And so having that two-tier model that we have really been using for many, many years gives us even more capacity to be able to expand the product portfolio into the future.

Okay. Thanks. That's really helpful. I appreciate it for both of you. And then maybe just as my follow-up, maybe any updated thoughts on the trajectory of headcount, either for the organization overall or for the sales force as we go into fiscal 27. Thank you so much.

Yeah, I think we'll look at that as we go through. I mean, we're going through the planning period now, and then as we go through Q4, we'll finalize the plans for fiscal 27. But I think the The theme remains the same as we've come into fiscal 26, and even as we came into fiscal 25, I think the effort has been to continue to be able to drive growth, recurring revenue growth across the business, and to be able to do that as efficiently as possible, giving our teams the capabilities, whether that's from a staffing or from a tools perspective, to continue to drive growth in new sales. And I think that will remain the focus as we go through Q4 and the planning process for 27.

All right, thank you very much.

Thank you. Our next question comes from the line of Steve Enders with Citi.

Your line is now open.

Okay, great. Thanks for taking the questions here. Maybe just on the I guess touching on both the financials product and the IT asset management product, just I guess what have you seen so far from an adoption perspective, and how is maybe the go-to-market around that translating on the cross-sell versus maybe what you were expecting there?

Yeah, I think we've been pleased with the performance in each one of those categories, and I think the the ability to convey to both new clients and coming onto the platform and then back into the client base the value of the platform from payroll to HCM to some of the finance applications and then on into IT, that value prop has really resonated both with new clients and selling back into the client base. And so I think we've been really pleased with the traction that we've seen in both of those areas. And I think it's been, you know, I think we've been pleased with the mix as well in terms of our ability to attach those products at the time of sale to new opportunities while also selling back into the client base. So overall, I mean, I think we've been really, really pleased with the traction that we've seen.

Okay, that's helpful. And maybe just on the margin side of the equation, it seems like you're finding more opportunities to automate and maybe get a little bit more leverage just Maybe what sort of work so far in terms of putting those initiatives to work internally and kind of where do you kind of view the next incremental areas where you feel like you can drive further leverage out of the business?

Yeah, I mean, I think we've been very active across every single team in the business, whether that's in go-to-market or in our operations and service teams or even within product development and engineering to try and find ways to leverage AI, leverage automation technology to take manual process out of the team's workload and be able to effectively provide a higher degree of efficiency. I think we've found... you know, categories in every single area of the business where we either have captured an opportunity to do that or we believe we can as we look forward into Q4 and into fiscal 27. So, I mean, I think going back to my comment a few minutes ago, I mean, I think a lot of the focus has been to be able to provide a higher level of efficiency and a higher level of productivity. And I think you ultimately have seen and will continue to see that flow through in terms of margin leverage over time.

I think just maybe to add on to that from a financial standpoint, I think across every financial metric you've seen leverage, whether that is adjusted gross margin up 60 basis points this year, gap EPS is up over almost 30% in the quarter, free cash flow is up 25% over the last year. So to Toby's point, we're seeing it across the business and we're seeing it very consistently quarter to quarter.

Okay, perfect. Great to hear and appreciate you taking the questions here.

Thank you.

Our next question comes from the line of Remo Lencho at Barclays. Your line is now open.

Hi, this is Sheldon McBeans on for Remo. Thanks for taking the question. I wanted to take a step back on the new Paylocity Elevate solutions, which certainly seems like an exciting opportunity. You touched upon this a bit, but it would be helpful to hear more around what the impetus for this offering was, particularly in the context of AI, as it's interesting at this point to hear clients interested in higher touch services when You know, there's some fear in the market that agents will be doing everything or apps will be bytecoded in the future, which, you know, is certainly not something we subscribe to. Nonetheless, are you feeling more confident around kind of the AI disruption fears, which I would think so given this offering, but would love to hear more on that.

Yeah. Yeah, so I think to answer the last part first is I think we've always felt fairly confident that the moat that we have around our business, high-touch service, the money movement, the compliance, so on and so forth, is very difficult to do simply by coding an application. And so that is probably less of a concern. I think, though, where we are seeing great progress from an AI perspective is if you think of payroll, HR, time, benefits. These are very step-by-step compliance, complicated processes, fair amount of training that's required on the client's end. And as we develop more automated solutions leveraging the intelligence in AI, it becomes easier to work through those processes. And so taking on some of those responsibilities on behalf of the clients that are absolutely higher touch, become much more manageable in an environment where we have the confidence and the ability to deploy, whether they're agents or intelligence or really automation across the platform, and take some of that responsibility on. There still will absolutely be a touch. I think that's really important to the customer. One of the things about payroll in HR is it's sensitive topics. It's people's pay, it's people's time, it's gotta be 100% accurate, it's their benefits. And so if we can insert ourselves, leverage the expertise that we have, continue to automate just like we are doing, It's a great time to be able to enter the market with that solution and really it came from demand from our customers and where it often comes from is a customer might have some turnover and they need some expertise or they're having a hard time filling an existing role or they're adding a position and they can't find the expertise that they need and they want to come to us and say, can you help me more than you've been able to help me? So from their perspective, it's kind of all services. But from our perspective, it's certainly more services, but it's also leveraging some of the full capabilities of the platform that maybe they haven't been able to do on their own. So I think it really is a win-win scenario.

That makes a lot of sense. And a quick follow-up. It was nice to see the recurring revenue acceleration in the quarter. Could you speak? more to some of the driving factors around that, particularly when you look at your new customer wins? Are you seeing larger land sizes from your growing portfolio? Maybe a little bit on any product categories that particularly resonated this quarter or velocity versus land size? Thanks.

Yeah, I think it's more a reflection of all the things working well versus one specific thing in one specific area. I think you get to that result by the go-to-market team's producing really well leading up to, you know, through the first nine months of the year and also in the quarter. And then I think you also have a significant impact from the strength of our – we had, you know, go-lives in January really strong, and then I think you also have a really strong performance from our services team driving client satisfaction and driving retention through a really key part of the year. And I think all of those things have to come together in a solid mix to be able to produce that result, and I think they did.

Great, thank you very much.

Thank you.

Our next question comes from the line of Jacob Smith at Guggenheim Partners. Your line is now open.

Hey, thanks for taking my question. Broker channel has clearly become a bigger source of differentiation as the landscape has evolved, and this past selling season was potentially where you'd expect that to start showing up more pronounced in the numbers. is the broker contribution actually accelerating and driving some of the real upside this quarter, or was the beat more seasonal with form filings running stronger than expected and the broker benefit still building towards next year? And also just stepping back, has the conversation with brokers themselves actually changed over the last 12 to 18 months? Are they bringing in deals earlier, maybe recommending Paylocity differently than they used to? Next.

I'd probably lean in part on the answer I provided in the last question, which was just I think the performance in the quarter was fairly well balanced from go-to-market production to implementation and service ultimately contributing from a new business start and then a retention standpoint. The broker channel is certainly a part of the success that we had going into the go-to-market category, and I think I certainly think over the course of the last 18 months, to your question, I think we have seen more momentum over that period of time with brokers, and I think that certainly continued into year end and into the third quarter. So I think we have always had a strong presence in the broker channel. I think we've had a differentiated set of relationships there. I think that continued into the quarter and for the first nine months of the year.

Great. Thanks for the call, Eric.

Thank you. Our next question comes from the line of Kevin McPhee at UBS. Your line is now open.

Great. Thank you so much, and congratulations on the results. Hey, I wonder, can you give us a sense of how the clients are, you know, absorbing the efficiencies that you're bringing to bear? Because it sounds like there's a tremendous amount of efficiency on your side, but even more so on the clients. So, you know, as they think about kind of you know, the delivery model going forward? Are you able to increase the pricing more? Is there going to be a shift in terms of the revenue just given the efficiencies? Because it sounds like there's a pretty meaningful amount of cost savings for the client in addition to yourself.

Yeah, I think we've always focused on delivering more value to the customers and trying to match that value with, you know, kind of an appropriate price point in the marketplace. There's times where we've invested in certain product segments, and as we've improved those products, then we've moved that price up over time. That's certainly a common occurrence. I wouldn't say that Certainly, AI has accelerated some of that innovation. We're still relatively early in adoption cycles for that from a customer perspective. So I think there's more to come and more opportunity in that category for sure. But we're getting great feedback from the customers that are using it. We're still driving utilization across many of the customers that is new to them. So I think we're really happy with where we're positioned. Great. Thank you so much.

Thank you.

Our next question comes from the line of Patrick McIlwee at William Blair. Your line is now open.

Hi, Toby and Brian. Thanks for squeezing me in here. My first question, as you increasingly build out the breadth of this platform across HR, finance, IT, and now a little bit of services as well, I just wanted to ask, how meaningful do you feel those adjacent workflows can be over time, and how much more room do you feel there is to continue rounding out this platform at this point in time?

Yeah, I mean, I think, you know, made this comment earlier, too. I mean, a big part of the growth algorithm over time has been our ability to expand our products and services, ultimately the chargeable suite, which we've grown to more than 3x what it was at the time of the IPO over a decade ago. So, I mean, I think that has been a core part of the The focus that we've had, and I think what you also see in that, though, is the evolution of the industry and clients availing themselves of either products or services that they wouldn't have had available before. I think you've seen an expansion of the overall needs that clients have, and I think we've been right there to meet those needs with additional products and services, which has helped us drive the ARPU up over time, continuing into fiscal 26. I mean, I do not believe that we have reached the end of the additional ways that we can add value to our clients, either in terms of products or services, as we look forward. And that certainly will continue to be a big focus for us. Ultimately, it's about being able to meet additional client needs as we look forward.

Okay. Very clear. Thanks. And now that it's been roughly a year since you launched Paylocity for Finance, I just wanted to ask for an update on how your success has been selling a bit more into the office of the CFO. And when you're winning deals there, how often is it more of a greenfield land versus a displacement?

Yeah, I think we've been really happy with the progress so far. So yeah, it's been about a year or so. And I think we've had... our expectations have been met in terms of what we thought we'd be able to do in terms of product attach both to new logos and back into the client base from a finance perspective, and I think that's been true across the set of products that we brought in-house with the Airbase acquisition. Ultimately, I think the value prop of having those products on a single platform across payroll, HCM, finance, and IT really resonates in the market, and we see that you know, day in and day out in our go-to-market motion, both in terms of new logos coming out of the platform and then as we engage with our client base. So I think ultimately, you know, really happy with how that acquisition has performed for us so far. Still, you know, relatively early, but, you know, I think we're pretty happy with the opportunity and how we've executed against it.

Okay. That's great to hear. Thank you for taking my questions.

Thank you. This concludes the question and answer session.

I would now like to turn it back over to management for closing remarks.

Yeah, I just wanted to thank everybody for their interest in Paylocity. Thanks for joining the call, and I also wanted to provide a special thank you to all of our employees who served our clients so well through the course of year end and helped deliver a great quarter. So thanks, everybody, and I hope you have a great night.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.