Paycor HCM, Inc.

Thank you for standing by and welcome to PayCore's third quarter fiscal year 2024 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to Rachel White Vice President of Investor Relations. Please go ahead.

Good afternoon and welcome to PayCore's earnings call for the third quarter of fiscal year 2024, which ended on March 31st. On the call with me today are Raul Villar, Jr., PayCore's Chief Executive Officer, and Adam Ante, PayCore's Chief Financial Officer. Our financial results can be found in our press release issued today, which is available on the investor relations section of our website. Today's call is being recorded and a replay will be available on our website following the conclusion of the call. Statements made in this call include forward-looking statements related to our financial results, products, customer demand, operations, and other matters. These statements are subject to risks, uncertainties, and assumptions and are based on management's current expectations as of today and may not be updated in the future. Therefore, these statements should not be relied upon as representing our views as of any subsequent date. We also will refer to certain non-GAAP financial measures and key business metrics to provide additional information to investors. Definitions of non-GAAP measures and key business metrics and a reconciliation of non-GAAP to GAAP measures are provided in our press release on our website. With that, I'll turn the call over to Raul.

Thank you, Rachel, and thank you all for joining us to discuss PayCourse fiscal third quarter results. our team delivered another strong quarter with revenue growth of 16% year-over-year. Excluding form filings, recurring revenue grew 20% year-over-year, driven by continued success upmarket. Adjusted operating margins expanded 130 basis points over the prior year while we continued to invest in go-to-market and PEPFM expansion to fuel future growth. HCM demand remains healthy. We continue to see increasing top of funnel demand with consistent win rates. Our flexible open platform and robust talent solutions continue to resonate with larger SMB and enterprise customers who tend to purchase a more complete suite with higher average deal sizes. Our growth is fueled by two primary drivers, increasing the number of employees on our platform and expanding the amount we charge per employee per month or PEPA. First, we are adding employees to our HCM suite through direct and indirect sales channels. We have grown our direct sales force nearly 70% over the last three years and are encouraged by the coverage expansion and capacity we have built in the 50 largest US markets. Given that nearly three quarters of our field sellers are still ramping to full productivity, We are planning to moderate our sales headcount growth to the low to mid-teens in the near term as we continue to expand capacity. On the indirect side, we continue to build momentum with our embedded HCM solution. Leveraging our industry-leading interoperability engine, we enable partners to embed our HCM solution within their platform for seamless client experience. We continue to ramp this channel, onboarding our third embedded partner and signing three new partners. To effectively scale for an increasing pipeline of prospective partners, we continue to develop this channel by expanding our team capacity, establishing partner frameworks, and developing sales enablement tools to drive mutual success. While we're encouraged by the momentum, these deals have long cycle times, and the new partners we signed are smaller in scope. Second, we continue to enhance our award-winning HCM suite with new capabilities that add value to our customers and expand our future PEPM opportunity. We have the most comprehensive HCM solution in the mid-market. In the third quarter, List PEPM reached $53, an increase of 20% year-over-year, and achieved our $3 to $5 annual target of List PEPM expansion. We recently announced two product innovations that empower leaders to drive business performance by enabling cross-functional collaboration and addressing skill gaps. CoreSpace equips leaders with tools to communicate, align goals, and motivate cross-functional teams that span multiple departments or fall outside of typical organizational structures such as project teams, employee resource groups, social event planning, or work-based groups like a night shift at a healthcare organization. PayCore Skills leverages artificial intelligence to recommend skills associated with positions and people, which help leaders identify potential skill gaps in areas for skill development. Our innovative HCM suite continues to receive external accolades Nucleus Research recently placed Paycor as a leader in its HCM enterprise value matrix for companies with fewer than 2,500 employees and an accelerator for organizations with more than 2,500 employees. We were recognized for outstanding user experience and robust functionality. In addition, our core HCM and talent management solutions won four HR Tech Awards by Lighthouse Research and Advisory. This is our highest placement to date, and we are proud to have won the most comprehensive talent solution and the best solution for midsize businesses with 200 to 2,000 employees. Lastly, I'd like to highlight two recent cultural accomplishments. one associated with our customers and another focused on our associates. We recently held our inaugural customer conference, PayCore Connect Plus, aligned with our focus on creating an irresistible customer experience. Customers from across the country were able to network and provide valuable feedback to drive our product and service roadmap. I am incredibly proud we also earned a Top Workplace USA 2024 award from Energage for the fourth consecutive year. Results are based solely on employee feedback, including 15 cultural drivers proven to predict high performance. It reaffirms our dedication to fostering cultural best practices that not only enhance employee engagement, but also deliver tangible business results. This year's results highlighted the company's practice of listening and acting on feedback from associates, empowering leaders across the organization, and providing flexibility with a virtual-first working environment. With that, I'll turn the call over to Adam to discuss our financial results and guidance.