Paychex (PAYX) 30 Sep 212022 Q1 Earnings call transcript

Good day, everyone, and welcome to today's Paychex First Quarter Fiscal '22 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. [Operator Instructions]. Please note, this call may be recorded and I will be standing by should you need any assistance. pleasure Executive today's Officer, my President over now Chief and Martin is to call turn to It Mucci. Please go ahead.

Thank us for first you for of thank XXXX Paychex year quarter you. the fiscal release. our And discussion earnings joining

Chief XX, me morning, Officer. XXXX. released financial before Joining first the we This results opened, Financial for Rivera, market quarter is Efrain our today our the ended August

within website the review earnings results for our and today's filed and access on business start available our over release highlights next SEC our an with XX-Q will can the Investor broadcast quarter for website, the financial on and on This quarter, days. on approximately You Relations will will guidance. for provide fiscal days. the be Form will 'XX the being I Efrain and update call with teleconference the few our be is update archived Internet an first XX and the

open diluted with questions. QX results up then Management increased by while with expectations. revenue Total total Insurance We for our and growth share Adjusted start expenses is XX% in PEO increased Fiscal off a X%. Solutions both strong above earnings will Solutions it per double-digit to very and XX%. declined 'XX

retention. strong from continued results While been our marketing benefited momentum last improvements first execution in quarter internal year client with a and and has pandemic-impacted the compare to economy, in sales, the

clients, macroeconomic our trends existing worksite per offering. our quarter, particularly This employees During checks in outsourcing payroll the ASO of positive the increase in HR with base evident net first continued. was in and growth within

businesses of expertise. our provided of by solutions unique the reflective Our HR of client levels, value near retention both and and the software blend resilience remains small record

our new Our sales and first in our digital measured momentum sales, with sales revenue, mid-market by quarter sales outsourcing strong HR divisions. solid as reflecting annualized performance performance continued

HR our expertise software prospective with continues capital combining clients. most Our comprehensive to deep of with unique value platform human resonate management the proposition

marketing to generation and We our digital and lead sales through increased continue force initiatives. in invest support them

upcoming well are positioned for the We selling season.

investments leverage of our Flex. to our Paychex development continue to We the research in industry-leading capabilities expand software, and

payments, investments and recognition their technology, Our efficiency deliver and to automation voice and us allow specifically analytics, intelligence artificial to cutting-edge and both offer designed machine wearables learning employees. in to self-service, and administrators

Our hiring retention software automation recent survey the identified gain all industry Pulse to of efficiencies of reported HR facing trends reported -- top businesses as sizes. and

of help who first may retain introduction employees and at identify retention their leaving, manage and clients currently being candidates who to they introduces for for insights, of workforce. looking businesses strengthen to Hiring integrated options to clients and making retention example. pool X tracking employee fall technology for connection, a search world's the a jobs, via our to of environment, for recruiting API clients offering a to decisions power designed with talent, fully and application. mobile to insights in designed them offerings significant process. for we've in a hires introduced offer was clients series Flex issue We and Flex our with enhancements software of to predictive self-onboard in challenging entire further Flex. digitally informed to applicant several The Paychex job for the with made provide attract Our be enhancements largest are their comprehensive looking applicants; board We a allow to release this of tools Indeed, for need connection recruiting both called enhancements analytics post risk the our provide With client-facing integrated new

report Google they compare are retention. to individual our impact compensation a Statistics or or We're our Pre-Check of which HR compare a gross an address issues process performers With are by employee on to announce before and day. Shortcuts. provide amount processed. advanced position by their can to Assistant, check The and leverages against details to analytics their offering Paychex pay employers pay conversational employees excited to the compensation of -- exceptions Amazon expands watch Paychex their Labor employee attendance Flex to also tool, on pending automate issue. industry-leading averages ensure prior time to for their with Alexa, ratings benchmarking, their our their pay X-star focus to further performance payroll opportunity management paid digital of Paychex Connect Siri confirm including With tablet, our advanced employee our phone, to Pre-Check, case employers smart their called electronically easily leverages and to and net Flex confirm review offering, is are fully integration national notified capabilities, Issues that compensation new to employees routed of and Pre-Check equitably. is Second our our rated review. the app period module, mobile the calculation have their top and Paychex clients an channel allows UI technology, either provided payroll and smart the speakers, Bureau officially to offerings, allow payroll proactively to through choice, employers

for in major and to first Top the of a Award, been HR recognized these additions, Magazine X HR HR Product product is innovator an With has as year a Exposition consecutive Tech. application marks driving that Paychex Tech the recognized spotlights Paychex that Executive recently Conference HCM HR of Year top the the offer Flex market. by assistant technology platforms. with award the the was voice third HR HR integration with by X-peat the Paychex Pre-Check is innovation This us,

able the innovative on our to to and we're matters provide apart. addition In us sets clients HR advice technology, really expertise

plans uptick uncertainty potential the vaccine COVID important handling Our HR mandates. navigate very pandemic and in the helping return-to-office clients current professionals around recent to have been and ASO rates, transmission the through and with in PEO in

HR are Capital from Award work the of proud with The providing to many recognized a HR HR expands, program. the and a our Group use recognized program to we're consulting instructor-led for Brandon our outsourcing learning Hall honored of provide category exemplary Excellence to was be professionals do, our Management training Excellence obligations. training Services compliance the best prepares combining to professionals clients new We assist activities. for and our in services gold blended This Academy of the company's by winning offer with HR clients training very their program technology-based also Human expertise resources we clients

over over Protection since can over reporting COVID-XX billion PPP regulations, changing loans with X% where Biden clients its mandates. the release real-time information our businesses and been XXX,XXX That's reports near their the of regarding loan of in provided. COVID businesses $XX vaccine industry-leading our We been And access accessed Our tools key help now times response loans. initial center, in continues to PPP total including recent Paycheck our proposal updates assisted receiving forgiveness have XX% and forgiven. has administration

claiming response also Tax been file enhanced employee wages through Service over to amount employer as well in new claim employees. retirement for the have programs, and available offering or a On the our eligibility growing in over in a state on as in offering, make state-mandated pandemic We clients number based crisis credit. paid thrive billion PEP and Credit help and paid business, sense or tax substantial launched stimulus credits. helped financial and traditional clients that Pooled credits, helping our businesses retirement in The ways Employee is the funds an returns $XXX,XXX $X We for have a small plans secure Retention retention the this already survive average, Employer In the Paychex clients recently America. Plan, amended has midsized to exacerbated states leave that identify are pandemic. tax mandates them and instrumental credit retroactively introduced of handle have helping in only Paychex

the consecutive the total the XXX(k) Paychex as keeper a earned serving XXX(k) by XX,XXX For more record of than number year, plans, largest plans. XXth distinction has

find that continued their plans clients. retirement helping to retain have employees' and suit needs success We attract help and seen clients them in

We given the about rest first and are the environment macroeconomic performance of the quarter but very year variance. around of the uncertainty our during COVID-XX proud fiscal the the remain vigilant

growth, anniversary. again U.S. like comprehensive, we my development beyond. From remainder have product our strong $X,XXX very by few comments and continued capital margin to operating with financial in into for with during us XXth across over marketing, and a of start start founders' XXX,XXX and clients, company management software clients transformed technology-driven company's have the human a sales, and base the Europe. and the and close client recognizing best-in-class well continued year success increased Our 'XX I'd generation positioned investment lead in operating fiscal

country's XX top In among the addition HR worksite the providers we keeper, XXX(k) U.S. largest the outsourcing private and million of XX a agency employees. record X.X X sector employees, paying in to American U.S. largest over every supporting in insurance are

way. the and midsized thank all our the during the their dedication our and now their and I'd will mission was I our to Efrain? review true investment over of commend businesses. us faced important to of first original challenges commitment driven financial serving the needs the like While our turn of our for past for call And XX Rivera mission clients. along to growth years. have the over results with serving employees changed, we company size months. our They over the to the breadth has the tireless and to XX to innovation small we these remain unique thank the That for shareholders, more quarter. them Efrain

which information that refer points I'll can you questions. not of investor to so included I'll Thanks, as revised relatively you to roadmap the and these start through I'll terms then EBITDA, greater periodically operating the Please I'll for of my make. refer income, cetera. remind especially the in what's conference the to sort upwards. our on detail to adjustments measures areas. like was call to finish I'd the what's press on if customary statements providing quarter morning your presentation saw have quickly investor refer outlook, contains want today's of review in a to with XXXX comments key we measures, you as disclosures. to some Marty, forward-looking we everyone. clear good release, some too, non-GAAP for move et fiscal a and on by presentation, adjusted more get with and such follow our to

happens execution, was against fringe counts direct said, costs Growth and higher period. offset across rates first first of total higher increased PEO for when increased to first Marty by million. revenue, all to information improved as also of But on balances. benefits were pandemic. were XXXX, from important increased internal expenses we quarter had XX% and XX% million, out occurred average quarter compares Management fiscal strong back the increased to the insurance levels, economic strong by client Solutions development we that started prior as impacted in as $X.X the employment to million PEO benefited $XXX higher thing quarter. balance was in quarter. growth the to that and the clients reflected year modest lower favorable during compare go by Interest you gains insurance to and of the decreased to in And funds I'd X%. rates point the revenue excluding quarter in bolstered environment like $XXX partially realized X% held million. to we continued higher. service strong solutions. The more One product XXXX, easy X% costs, Both and First is by our very billion onetime as Total what expenses rates have investment that's here to impacted service Within if technology. revenue increases and even the move that improved for performance expenses in investment against quarter $XX measure decreased of We'll interest the quarter prior interest our execution a year was see revenue XX% average $XXX

I first have year, basis $XXX with prior this margin XX%. transformed COVID-impacted for tax the So says margin quarter go a to strong during an million about of increased the think you'll the XXX income of also was XX% operating with an against to expansion for it XX.X% company XXXX, a points. X Op important did last compares years. see Adjusted compared but was this XX.X%. how And Effective we has something compared operating XX.X% income more XX% quarter back and not only over to fundamentally overall. than the was strong quarter, quarter

an based benefits. periods provisions. related in state net first tax stock by tax Both increase to The benefits discrete reflect impacted quarter was compensation

income you we as income, and optimize adjusted As $X.XX to the XX%, know, for and Investments you per principal our calculation. purposes of quarter and million those net is increased to adjusted for protect earnings increased Adjusted liquidity. know, exclude per respectively. our share XX% diluted primary and goal, share, $XXX

credit yield of X.X% in X.X has of quality continue securities. average long-term an We invest portfolio duration average high years. to and The

Our combined in portfolios the return earned of down quarter, from for an rate X.X% have of X.X% prior average year. the

over at position. pretty corporate total cash and nutshell, remains a strong. financial our billion. strong in Now with It's let's look investments It restricted $X.X

$XXX last robust period increase Cash year. was Our cash flow XX% from million August flow the operations the was a first generated Free from during borrowings were of same quarter, of $XXX $XXX million XX. changes per working as capital. the quarterly dividends increases during higher paid million, The were year-over-year. of income for $XXX a in quarter. XX% million $X.XX of driven by up We and first total net share

return XX-month equity Our rolling was stellar XX%. a on

me quarter, especially This reflects outlook Now the the current for June and improvement to XX, the ending year turn which environment, in May current saw July. guidance in XXXX. fiscal macro let

all First several quarter Nevertheless, of remainder the know, quarters. results trajectory as exceeded of uncertainty the of there's about next the expectations. you

this of into remainder incorporated we've expectations So for the our the year.

spring and Our we near ball into we is little as and of go crystal and next clear less now bit we're year. clear the out, are a

Insurance it approximately to it's to XX%, is That's from range Interest Adjusted now X%. I to adjustments that on in of be all XX%. of grow is XX% and is in X%. is approximately X% from the X% Management similar million. really, income held grow expect XX%. operating are up still the said income to to expected range from said, approximately upwards -- again, in guided year-over-year. PEO upward X%, Solutions, expected grow Total now be revenue of expected pandemic, funds point lot we made of Solutions with range to X%. the to guidance in clients, So operating a up what $XX be strong. margin XX%. expected previously. to expected for Adjusted returns we to guided of is flat really expense guidance EBITDA expected net and Other the that to previous margin, went approximately approximately XX%, a be and million approximately $XX we this, from our to simply if make previous of there's a And through we would That's

in on fund. me that in invests early-stage technology let We just the was on mark The before quarter. non-operating then to I to guidance we previous received Our which income the of $XX the question that, in recognizing million a invested a certain specifically range And that first is technology received change have due $XX companies. during ended million. say get in up income technology us fund, that

to Our per is adjusted of XX%. range of to in XX% range grow share XX%. of and be to diluted to effective XX% in previously guided growth income the the earnings tax to is XX%, to We expected XX% expected

be to anticipate of adjusted the Turning to -- X%. second is quarter. revenue be the XX%. the operating total will of X% range range to And We it's expected growth in XX% adjusted in remember, currently margin to

second everything, in obviously of crystal environment because on there's on part an beyond, all-weather a we're impact in happened say just we quarter conservatism and say, to the does don't what in will I call, and ball forecast. when the we macro get have I create Before an it -- trying element the

change call. to of current now, assumptions, said given investor to more again what website you turn to it current for I'll the update on all is over the that, you second subject We'll refer of And course, I of the on can I'll environment. quarter all with just which Marty. Now slides information. our

Efrain. you, Thank

Ashley, we for please. will call questions, open now the

from our David we'll take with And ISI. question Evercore [Operator Instructions]. first Togut

$XX noted the annual revenue and in the EPS for million earnings revenue by the year, $X. rest XX. outperformance but the increase exceeds on by first Duly and quarter of in conservatism guidance about adjusted the actually the

X thinking perhaps talking say, X conservatism So be next the the bookings flesh below outperformance? remaining and besides can employment the outlook that quarter where they keeping out might might quarters, of for quarters you your on your any other year, about the let's have given been factors first

Yes.

me Let David. handle that,

see in I look the think we half what there's see we pieces the and the year, what to X we the half. way back at in first

So I which the factored bit as expenses. a add assumptions hiring respect our progresses, would say EPS, to to we've year additional with will into the

that's think I the first equation. the So of part

second The going to the significantly. in point that unemployment our we picture not, at this guidance, that part contemplate do is change is

obviously that. standpoint. extent on think happens We estimate in the are the have that to because Those for are, it. from a really this investors get all-weather the to of employees year What is come the investors a improved does, what assure terms get to the and scenario. So the the say that into the The we a simply questions to quarter would completely the in account. on what of to, There first on we've we in call in -- had half point conservatism feel of macro And better that quarter. knows, QX first want taken I account payroll. that That a helps where sure forward, at back simply it the the we is would we we of everyone do of a we’ll to taken be is a things that have or reasonable, strong it's where are significantly upside and better. as it nice and into we from that kind year uncertainty where as there that rebound number half we've case. out about our driving in it were completely very I environment then on to make we understand X of try I'll we revenue going back of see it, said, are things could number But guided is

mouthful that all So the forecast. of was in

QX? a bookings Just stronger out an Is Or in quick that share mid-market mid-market is gains? Efrain, generally where expected that industry quarter. the strength was called a market follow-up. as in you in phenomenon function of than

think Marty. I -- it's Well, Dave,

were fairly second than last in slower really of expected think in been we we quarter. -- and going I nice had first we year, pickup it's the the half a really

I think the necessarily environment. I think it's really -- don't it's

success I number sales. in a training. was think this in of We much had more really done things

Of course, the been the technology product we a adds from doing software. have that standpoint to

it well. I We're in with prepared the mid-market, well really think really really more as So selling was performance. think we for pleased season we're pickup and

We from our with take next El-Assal will question Ramsey Barclays.

I know you I'm the prove to understand made of mentioned adjustments. wanted of what which you sort margin will be made you some pandemic-related degree drivers you see I lasting? impactful expense most to nice to trying of and the in about ask the beat as the biggest to quarter. just of sort this adjustments those

Yes.

about which Ramsey, and the a -- think So important. I me prepared let to during compare comment that's I XXXX, made comments my

You can of These are go public back. matters disclosure.

is are and is which flat is nonrecurring, one what very X pretty part of our recurring our one with look expenses, things, There's you of expenses strategy. XXXX. likely If against of happened which at but

that and can on evident harping in not So evident provider. been speaks And it's wants keep on look, I as P&L, to, if that can services say itself. technology-enabled say if I journey a the not and he in the it's to, whatever want Marty transformation I but we've for the whatever this idea

If XXXX, our expenses, they're you essentially look quarter with flat X. at

should why somewhat is up. Now be that? Obviously, they

easy or get So It's market element The people deferred this the to in labor delayed of has that of there's really that do all is an not place. to you want with tight. necessarily hiring.

the Part as is we're even answer rate on looked hired, is but in perhaps we company driving would at in not expect restructuring at why it previously, when quarter. efficiency, quarter, at hired we a -- quarter. benefits bit what question and adequately investment our more expected that yielded less efficient short those in first what's XXXX. be and of the we little flow-through? to are at this go is that have that at see but were we today The are that where higher looked quarter And we areas that we point. of have you're the wouldn't frankly, that this David in of the business is point, earlier to the that seeing sorry, we of year, delivered. you asked seeing. it charge headcount rate the When metrics at is the a first yielded But through you're would we year, that needed, a behind -- to We last a than that lot in the is a not benefits the the I'm than are leave this took more of a that driving other reality we as first certainly hire More investment side, technology, efficiency results

see. I

on the sort presentation, the backdoor think same as competitive curious, have of for opportunities before the opportunity I to or there's environment mentioned environment the pandemic? to we slide emerge opportunity the you pricing negative amount from changes side positive pricing follow-up and modify In some it's you about under of seen more I'm Solutions, realization. or Management guess way any One asking Okay. a just me. prices. where I less And the of

that. on we I pricing think power very have still based good

the we've them we've more and well. revenue go products per client sold think as up, seen I

and from huge bring do much for prospect For they're that to during hiring a changes. we get aware were a to I it's, you when really to retention a -- you the of difference me, a the employees prospect right current to provide from we now, this were to standpoint, you of great we've an this don't tax as them point, difference. work our support able makes though -- products to clients get is fashion, credit, could perspective we get new What have example, seen we've that standpoint a you them show automated whether help to this from and a aware with them think know that were loans "Hey, to even made you from to I able able even can going and during get tax how or think them and and clients, competitive difficult that you we them, that retention a provide to retaining retention we perspective, So are employees?" them your support credit, current has of do competitive for lot level a time demonstrate seen a very really excuse help help just in the the were really the COVID, employee seen

have environment the do, just we've had think So even as strong, an and to position what than been have given I I we think we then beforehand. would it's stronger us -- opportunity think competitive that's I can and able have shown an is but

We'll take from next Cowen. Bryan with question our Bergin

as the But to June due exited you in are and July positive if variance? or how curious certainly even the demand relative August on account quarter? here. to trended comment and I'm you results into commentary any view, the deterioration conservative Can maybe you September So actually did taking see within

seen really haven't And -- have Digital we good again, we're that also and Bryan, really pretty year. outsourcing, we anything. not. prepared. It's been so or and not prepared ASO. the through Yes, of We side, well over results PEO end mention our -- up think to the season toward any kind But have on think We we're from picks strong. mid-market selling really of HR sales our the well quarter. seen both month next digital the were was sales we we the think very We very consistent strong. here I'll

sales it's as been and actually pretty and strong we retirement the So across there's been went from And of actually the the strong not it started months the a in beginning month retirement, next over this It like and opportunity think board, down. summer has has some consistent. including well. very perspective few

Bryan, And I June want looked we July were what softer. anticipate was. micro, I were really your I I indicators you're strong, that these that want -- the question and we were don't if macro August to to seeing, and think was at But and clear. July would base mean -- -- June I strong. the aren't say not make

September. this we Marty's when see But we'll the come So it's out at business. of to stage, point, impacting not

Okay.

sense versus Any units these and out Okay. that stand Understood. Management than can you of the cross-sell more a Solutions of volume the versus that And on pricing? others? of new drivers mix growth, then XX% outperformance? recovery give we in the us of How should check think about

a Good Yes. point. fair and question

thing back respects, services of, a sort is X HCM so retirement say and payroll So to game. not the pieces, the of take important kind part, is a got outsourcing. I'd entirely because Management step first HR Solutions really -- step It's in

big major the on Management anything the are those that you wasn't buckets, I PEO in Solutions. I revenue digits. couldn't will, So if up see X double say line was would a that

So pays per we side, on control. from benefited upper the HCM single-digit

that So helpful. was

decline quarter. was client there pretty addition big not base the We that, also and But first growth. in had a pricing that's surprising. to in Now

those that of result. were all driving So

it gaining worksite had services country, multiple that services, from then states and with served, is on steam the had and we last more year drove Marty across year, benefiting a outsourcing we that the On that. retirement simply certainly side, great And result. Retirement employees are mandates HR now. in talked about

we and we're are positioned. we -- feel believe it, it we don't see that Our pet I it feel and well product,

that drive it getting benefited all and those think to in is the way, which terms an we X So when HCM the an X, that from we've earlier, And made point sell that to of at client. story. It per Marty better we're fact result. in you that wasn't solely of revenue all integrated took look those I it plays of

McVeigh question And our we'll Credit next Suisse. Kevin with take from

you Efrain, call and going that's growth, case. retention new bump is that? I one that's continues you where -- going of just picked think to highs. it to that. at but help I growth. clearly, ever frame just mean -- XX% the the firmly fundamentally mean, the you transformed weave kind believe you XX,XXX I made comment maybe just the us you've to that range client on a company I'm record like that. you're right, see if think clients, the wonder in sounds question, you a to could I I there don't Is done ask I for mean

the higher I where So the I of poised mean, but structurally myself ahead can margin business side us seems don't that want leverage on understand it help far the you like here, to growth. given too well? as for get sits, is particularly

Yes.

the in is to directionally, had So We Marty talked high growth the over But up we strong a Kevin, our the the to XXX disclosed your impacted XX,XXX digital and above I'd that XXXs period over part probably move client point, about. year we been by years, were past this in several before. say of been years. that has

So part. that's one

it the you're The is with of the seeing that the what move second P&L. efficiency, to operate to at levels in brings is digital part which higher ability

colleagues to company. phenomenal IT shout will the happen, group of have in say to also big who a other all way. the that would I And can't happen any job operations within who a and product and done emphasis make my So that's out

on the call, on than that We that. more the point, that's I growth Previous to -- build my point, to mentioned that of is rapidly revenue that can to to goal. say point, of pandemic, we colleagues were terms revenue up. last XXs hope last in clients I amount year, in the clients, line of And all in were markets sorry, natural in the And Mendoza of tend have and your then Kevin, that retention year, final larger a that folks high the -- the ceiling we meaning smaller would new retention. of second that's third moved the retention. I'd operations say So There off the beat the attrit beat of in, we because to share I'm point. XX% that, of operate and revenue range. we XX% ended we some to we all as for the but

They in I talk artificial in clients, Kevin, business is you changed when and the our years making think can Pre-Check They that that much mobile so phone. analytics information the intelligence we're They employees just software about think their how today their their really on transformation, period. it's that that. speaker. and for also, this XX chance here in providing about pay dramatically, alerted talked it about to our Paychex answer allowing them consistently front having is about data the it the smart providing enhancements about of pay can be we're hear that so with to there hear from and

tied major company only -- voice-assisted now in tied we're the platforms. and -- that we're the X into of all meaning So

paystub checked. if saying, respond have you is check can you'd to it's like it," So that "Your and you ready

continue and some and it employer the this helping well of that Efrain it point, is really and small we at the is work is that tax that a the and retention to big though efficiency clients. really analytics that really the think the administrator give difference. making business the update like on employee highest levels of there's data ability to the -- as is COVID is that at efficiency talking through support of to at the now provide of and credit of employee really brings the taking them is this dollars about. company us top to employer level. software-driven a level, And a Even our the tremendous a failures that artificial different using amount client retention I and the in It keeps And some business company. our intelligence very it's is did

of Bank will question our with Jason Kupferberg America. we take And next from

what Mihir Jason. market right I on in the just of you're ask a now. similar seeing staying in wanted for terms on This to -- is maybe just topic

or win talking compete can that recent any the of your You've about percent you provide, there And we've businesses pretty creation formed quantification months? type -- recently. of business then new businesses? as a continued new your for for terms in from healthy Has rates been your newly these is of coming talked you bit little just in example, being wins

last Yes. XX% bit up a are XX% I from from from strong pre-pandemic 'XX. down would over say new to pre-pandemic little levels. business formations year up but up they're now, They're still levels very

of big in They the frankly, first business about think last -- year, our were first a half as it, XX%, and up new was quarter, XX%. like fiscal formation. jump we there Now

XX% years. And Now the to well very they're businesses. certainly do brand-new do over with well. we XX% really We previous up pandemic

sales in our sales that. sales is digital online on bigger right a -- brand-new performance CPAs As of real to but go referrals. voice look a that digitally anyone. pride I ability still and digitally Obviously, really but sales mobile demo also of we're as product do of as up as a also in telephonic actually starting the we or very able our sales mentioned, proud have force, field onboard great positive to well certainly getting our digital with and and very we're becoming doing part mid-market, well up phone of starting we've our all clients with obviously, We lot even at themselves up. the picked to the then are without online, businesses, We're some product, go well in have relationships to lot as set and their as to improved or clients through banks the brand-new these talking force for our it

driven if line increase investment to for I being your the scale expense And that been ask some the the by the the plans then underlying growth could guidance. line margin flowing just top year? in or and efficiencies about growth just Or also changes any top from of there Is are through?

Yes.

just answer me Let that.

I on done than And you top revenue. on would so we or do that benefit able side, expense you always the more line things more both. even by improvements get is been we've to there have the because But it's we flows of dollar driven a think think some when I element otherwise. I would have now that actions have the through, say taken

knows, have Although, as we margins everyone begin industry-leading with. to

from Andrew question next with William our take Nicholas Blair. we'll And

the the the of PEO any remainder expectations line performance change versus there insurance I the terms underlying you're level touch And in at Can your of know you quarter? the in on but growth in that aggregate, performance through on that maintaining to revenue year? your guide is

actually say are the think both as side in I quite HR say would back well. well, total is picked growing very ourselves would outsourcing ASO. I PEO growing the more recently. No, PEO we've I on side positioned and as has up well well

about talked now out last at that because there. pandemic. market it sense back is maybe as and last the know, it's employees of you -- quarters we wasn't competitive through of That that your in think couple a the employees. a I demand insurance of time to retention because of starting your as come more of year, It's getting hiring very

market et offering retain attract health they're insurance the becoming employees that those cetera, your much competitive a to and you your a voluntary tough have. in insurances, so now insurance plans, And your dental, very

has insurance in interest the up. back picked So

very growers first in and both well PEO, are done have double-digit frankly, the our So ASO and quarter.

digit that Andrew, still it question slower, not reason XX% you than for well. your expected that do the the versus pretty growing but at of probably slower the PEO the we short where continues part the it X% to why is arithmetic, so when be, year. anticipate why simply above insurance increase double PEO to is is also you're guide, is do we and answer growing And to

that that Now this, everyone make quaff to I then are that going line. ones both that and the and is to be a this And QX, gauge against incorrect. a QX is at tough bottom with we little had had -- the prove we quarter would to Everyone are just good QX. struggle first the bit top to could completely, strong other a the very had compares on point the point

go of We but view have refine we'll need the a as that year. through we to it,

from puts that consider takes how and Is a digital and or success could with really could PEO some you're there to the that PEO involved too sales. helpful. you longer maybe you be middle more your ground process? Or the that's make that is wondering apply hoping a capabilities to efficient a in that term on to longer-term the No, and part target front. that about approaching market? question, sale? the Just is that And of strategy something lot Or then the that strategic can talked learnings maybe

it. makes doing and the of get, the a to of onboarding to digitizing clients, It's including in they're the more basically is more you're it employees help prospect the sure. client to underwriting to in easier PEO, looking we're as what the that onboarding. and No, and them on involved already and We're actually go self-onboard -- itself you lot process information and automating also have

own information the automation it PEO so and say, in faster. employees -- me over think, makes the in the link to "Hey, to side, side And load a process certainly give make which underwriting That transform, sending your information, your I and will was to get will started." whole

standpoint. going the digital is you able -- no to the to a set where be way. So, and glean to certainly, -- People yes, that allow do going or everything easier find already continue the have have themselves for employees steps can of to to insurance make still a to we're made ways exactly and strategically, so on some client number complication at product oh, be want always them selling for going buy limit sales look anything themselves to to involvement that plans rep we've their to of we're looking a do forth, and that themselves from but digital online, to automated may up, the there's are for and

question And we'll next our Mehta from with Kartik take Northcoast Research.

for I I point, distribution. bit a be about it sales but little might to little a dated, one at X/X. wanted know ask accounted this Marty,

acquires clients bigger Paychex I sales the all accounted of sales think distribution how has about changed then you've of result being direct I'm X/X others. and all talked lot And at digital kind changes? as for a or a sales a part. wondering, the and improving

clients and us, accountants give for as percentage. that well. as them Yes, it's many pretty Kartik, still and gone steady has digital Accounts But their with will many, a it would and banks change, come that in give and support has. assistance for even are particular, to and we great the down say it a percentage, relationship expect been we I up them accelerate. a has definitely years them probably as definitely important I

comes now a their just the very become view clients of decide much So of leads and make, and investments sales how online frankly, sales then from and how marketing the and part us in and gets important function our come generation then, lead has buy. more that we marketing to

and product and website clients I demo many even and seen SEM and As the to into or mentioned, in, we're an up. online advertise under come buy us set XX now certainly expert our the that know in they've SEO the through product can because at product, employees compare themselves this come least field, somewhere start

has So a Efrain efficiencies yes, that of talking it's course, to about. that it. a becoming certainly bigger And of been leads bigger -- part

to up inflation we've how to on any the manage And that float, imagine little rates couple And the changes XX of wage obviously, kind bit over Any portfolio? over I might the move the X you you'll last weeks. anticipating of to from float next a just And the benefit seen, inflation wage then, are Efrain, help you months? on portfolio.

offset on concerns from and in Yes. a short No, that and we in do. of a And is largely market a interesting based in when look case, our is I expectation pricing from stagflation. it you the to some the think perspective. the The ways moves inflation drag. clearly kind at help of positive float But about quarter that some it's first answer

scrutiny aren't So on the on to in the portfolio us, position investment state I to we're credit side. how seeing say based markets and necessarily on would negative what we're a of those where heightened in

We'll Silber Markets. Capital with take question from our next Jeff BMO

unemployment see potentially of folks some kind Did hire easing your go I any a easier? back in bit is of things school, quarter have any last subsidies and when to impact? the from out. bit you about to easier Earlier, talked impacting labor peter little about Or up about getting recent of bit rates ability you tightness impact a a September we you the know bit. seen that little own maybe childcare talked on it a

macro From I not say up standpoint, it's a would showing yet.

the difference not small the it's unemployment and I back business doing some that think to data going extra I are index, us see it's demonstrated in from here work it's this our started big through teams of what was it you to -- making -- the the our the had just some of is benefit could wasn't -- analytics unemployment a cut states was see really out, not because and to work. who it that

And still stage, think high, that about in just market. can getting certainly they're -- couple or people out. not? take that see because It's to high it's good I to now. benefits I haven't you're out. People Is tax there's sorry, masks? finding money, a a there shake hiring in a still gotten Do gotten what more balances, to. it's you to It's pretty child everyone think And spent are this that child right care it's I'm cash think or better. to trying accounts or they're hiring tough back test other wear healthcare also going data, it the they they are or worries checking a has have a have definitely think businesses I are going whether stimulus either Plus, the balances still and child I think I market. they're longer bit -- little their months take to going the is So cash mandate

much sectors there's hiring in in stronger hiring But other in index there months, business out last small -- couple in still challenge growth the hospitality of -- growth services Our our the it's leisure gotten is hiring. and sectors. in a especially and has the

up, bit made be to it just the it's not going -- just expect difference. it's benefits So we longer little a than but to that pick the unemployment

question our Samad with next take We'll from Jefferies. Samana

think a ask a can hiring. maybe the about know on own which organization? broadly? you're I side? behind. playing side? talked tell being wanted Just should is that with Or us bit of Is the question where on we quota-carrying about it is inside I R&D maybe hiring? the little you sales it guys catch-up But part how reps the you to your Or

Yes.

and any of but it's sales frontline more and spread, service it's There's side in an division. think it's I sales, large not number overall some service. in on the kind

we So about that. feel good

it's services, the Gibson, back find work shifted our and home great probably ways, We all hardest team a the done job runs who the up. abilities, John HR with on has really very picked though had service to frontline hiring also creative providers. number in other -- schedules, some they new work to the employees and have. that benefits certainly in, to a can different We've get tools and of from to different they encourage different that ways support come of

we the service we're now, calls response and questions So the particularly done, to response. out the job it's driving to to said, retention. as frontline we the XX% automated very automated client of which and time more just there but market being picking service bot, We're our back a by hire are website, our questions certainly Efrain answered the chat other getting still seeing XX it's days, strong are as in said, particularly people. last up tough But

certainly X someone but and week, again. a starting reach days XXX very always pick live back creatively, for at And can efficiencies, a we it's You and looking up hours -- hiring by to XX Paychex are days we're year.

a know how expense melt controls and But Efrain, then up have talked And that Helpful. headwinds revenue. gross I also nicely margin continued some the of to the about high-margin structurally. lot call PEPM it, to with, we've of margins benefited even kind that's

how maybe much software there the margin gains that's the on the tech how on gross stack maybe and stack on think side Just and -- more about driving margin the on gross drive Flex should is I how room to gains?

a It’s Samad. Yes. question, great

in let X So me answer ways. it

Management we question job your right our the gross you Solutions: have margins. the when retirement, what in seeing operating against look our that is mentioned, at who say response for our second good margins are sales buckets ignore compare about the to -- the proposition. proud To I'd it say. Ramsey's "pure And the And question, that. strength power value data, X,XXX. earlier and company that's still entirety look the of and entire, that. I to when them get at gross that's what when that. client, We call, of if the of look would industry, software top. of We're I selling is through the of value the we are we a people our players." of So at we we I and front first proposition want point, And compare a really the understand might and idea widespread think But I call The at at that manage Solutions, you the that against sell HR margins We notable what been what team that in in HCM. data, X look Management done is that we're was really was it major about across has a was of an

on that Now just one point. small digression

got integrated ancillaries. do You not an only but integrated that you've can if HCM, system, just

that's So drive really that. when you low a there's helping sell see. and to to costs that upgraded essentially And we very, module, what's associated very what variable with proposition you've now

like been We have selling we more size, are bit importantly, on -- selling high-value a but more modules have of we in HR. client been especially terms ancillaries higher

So you're right.

is the of driving that that you're All seeing. improved margin performance

question with Deutsche next our take will Bryan we Keane from And Bank.

from different Just slightly managed maybe ask solutions wanted on to a angle.

points think look basis it was better Street your at revenue it and I up expectations. than you If was the estimate, growth, XXX for

quarter repeat was figure next the in strength So figure wouldn't quarters? maybe exactly out you trying what why out guys to for few I'm just the to just surprising in the trying and that itself

this, I'd say Bryan. Well,

The single-digits. first upper They as pays per were I that control were up, solid. said, thing is

that You see quarters. think that we future -- in you'll won't don't see

better a of the did issue. little the going had last have versus we that's compare pandemic-impacted than present So quarter We pricing year. a bit in quarter to

we that breather on is last -- hold until price what to quarter steps that quarter. then started clients a the let So our to year happened was as significantly up that had first in the had we our of off And were anniversaried last unique the count to did customers we take increases where chance that a it, year. was we client third And helped. take is year thing versus

But really important. saw in All have in the HR. year. we're the made in as in of The those it bit And got on the go element HR factors that's don't when strength certain repeat conservatism And going up, why, the that quarter, through had of through that you remainder in repeat quarter off to the the numbers. QX quarters. talked We'll last balance took We were of that that Bryan, through, year. there it and impact Hey, second factors else, some -- But you the are in same the that other won't see this rest about underlying now things the conservative first confluence the in the call growth those everything addition revenue a an finally, strength of where QX. not we've we quarter. things first we're really year. but know end we saw of annualized of then we little of full will there's of our to

helpful the you When how you be that Got originally, to But forward. guided expected for it. that's about don't the strong. quarter it itself? going think I No,

have basis. a those comparative just known you would you would outlined, some factors And on about been that have of

to what surprise that could trying figure possibly in the much? the So surprise just quarter, out

short Yes. me better almost categories. is answer all it those that down The was as of pressing in you're

it. of short the that's So

it. reasons thoughts see seeing macro is we're out Got compared why stronger at the basis? trying data the metrics to little I figure the your of more some global your or just showing on seeing be question have in to any to a employment your only And other what Got kind strength more just there's seem it. bit is of than if factors and we're than I'm some metrics metrics you overall. of be what a might looking

growth ones? which Like type the Bryan, employment things? of

particular, Yes. Yes, in employment.

growth in the midsize, in small is to small employees. clients on and XX that think it business think do And business piece I of under well, remember, there's nice -- are back. that been index, our service think I hospitality small struggling a many people, focused and enough places I hospitality, the particular, the you're getting been still recovery growth summer in in to Even find very restaurants the leisure the recovery though has and some over strong.

so And work, and to there, been been have has back getting people demand certainly. the

little might -- seeing as remember well. So and I think we bit they a be fell harder

you harder XX took hard on below. and larger a general. I they compare to Many would they faster recovering So lot a closed fell hit They year, had businesses. focused and hit. study last of now year, really is our than And last they're when say, because in more them a bigger

So...

Moffett. Simuni with question from our take next We'll Eugene

broad-based down I quickly up. retention up, think, activity levels. to might I the really to as wanted a first, expectation the start to pretty retention There's levels come picks been, back as The economy come across opens industry that

in that Are retention. indication of maybe retention? conservatism? And the quarter, are Is first the of out expecting picks of you into churn guys high you you're like seeing still in the the you rest of some looking very activity deterioration achieving any Sounds up? levels kind high of part still as year, as

their the them away. average it here's of earlier, huge we that the It's right as with think can time retention, and were have turn find now we did, an a of cash of we clients and do you very tax lot that of in from their the all provide pocket in have last And have with Yes. forgiveness. We business, we year. how credit lot, that to really fintech again have on don't made helped saying, at happy very loans. the clients gained you paperwork continuing get it not loans months. partnered is able to have the what in they forgiven. $XXX,XXX were like help I hear A can with automated the waiting fashion. loans out We for it easy to we dire and have you XX% time And loans. -- have a a your in can them. record XX mean may the ability we Then very for worth their you you our levels get happen. to for been "Hey, we're this cash And them going is employee obviously, I said to them. work do yet to I last we're we source it, We've and I We them been of that point helped retention them COVID -- companies the think we've to do from another X them you repay It's coming a back government." to stimulus can for hitting

also support Efrain as has opportunity those It that, on of of of HR show full then of not I the on as well, more an just more but the I do do I do power work, handle us from hybrid, top think gave our to help do clients they And HR kind mandates, I coach need it policies, how And side, home vaccine bring us people them to really helped with really employees. the saw in retention. through work now Paychex. support. and how payroll then said, still So I back what the to do how

really some things retention them, and a all business us All to show so your give can their do to the given we're standpoint has to pocket, retain, digital It do here's chance even great for from phone. showing technology there "Hey, things some cash use mobile helped really of you them, hire has that and employees grow has can a really and that that out are the a you in the from their that them of come your deal.

at see point, the that of We that your to in impact mean, course I great the we year. Eugene, Yes, over we anticipate you that will retention a level, be of don't the retention. too, year had

assumption. some We'll has we of a We're that are get retention to nor love QX. Where level up? that planning on have sense anticipating, We'd get the be we on to at last not to. but not impact we're going realistic probably where it, we when that better planning through same end of a that So we do were will year. idea we the

to secondly, quickly potential opportunity. upsell And then wanted about ASO, ask PEO I the

mentioned growth, quarters clients PEO couple that to that providers. it to pursuing ASO to convert some past some it is to in clients opportunity strength more of greater now the PEO You switching in opportunity ASO be the are And of you there convert there the interested results? more with folks Are record or that initiative? open Is yielding to might growth? there insurance

first. There's as to Sure. -- how has we one, -- to coming comp, in, The as then base the said, in in insurance in double-digit just is growth #X efficient. on how you quarter and of with mentioned, and had an an people, and but do them issue the into it get that retain is more and lot client you're really not HR back. PEO as and we've become been success environment good hire We we've insurance, in #X But where or able had And well. just and I product go has that the clients ASO outsourcing a about both PEO. is I benefits as noted, retain do become I get seeing #X it meaning and issue side hire the pay, about a

that been it's so from very important standpoint. And

and clients So as ASO we our success and upgrade PEO to well in are certainly both brand-new on current continuing clients solutions. sell some having

with from Baird. our we'll take Marcon Mark And next question

occurred? just the see the a they questions, negative trends regards to Florida, when as weekly with in of you conservatism spike of one to impact Delta, spike any sort revenue going see states, the did Just did in some such where

growth the South. actually, best has in the say, would I job been

Texas, there's right, Florida, demand, but of even more up people Georgia, they some our going great in best that's cases, standpoint everyone job sales of in the more there, function growth you're there, where And seeing from our also is knows. is a obviously picked -- macro from So there. migrating -- as had in that they there some while -- a more and

there. you're up so And seeing more open businesses

You're that's payroll, seeing more of people available thing. that increasing kind to fill checks jobs, that's helping more per demand

that I have positive. had been say, overall, I'm no, would Florida impact. quite actually like states sure But some has So

Yes, Mark, dwarfed it's as more Marty were in been in you'd a in in has that. see think recovery of said, recovery by data, if the leisure we the probably I just state, the But Florida. steady hospitality been that and plus

them up heating a load when a And didn't during for weeks from perspective, case it things the have so even started dent?

no. see we didn't it, No,

then attach I Paychex your highest the insights, Great. mean, Which ones whether of And seeing to has rates? active it. Okay. regards launches, revenue? excited relates the the go ones periods to the most pay which we are list, this are through the with you as most about? ones And retention products can for probably so on I'm been benchmarking, forth, yielding wondering recent Pre-Check, most -- are so one dashboard, and leading it's which are incremental the technology it and you when

Yes.

per not out big lot We're a will -- Pre-Check hear in are I it's that -- things it's to kind it's you will charging think that gains for now, from like client, of more we have But will a that get staggered the the revenue like -- that, efficient, when something the that of opts service I be for that's revenue clients approach I trying really efficiency think just clients, that, going help as the and help retention so price for but retention. the on cost going for. that. a are which part Paychex think and client not ability what additional that, to we're looking on

very We're to employer" with check than voice say, as insights, your that's deal. Alexa employees it just we're company paycheck things to these be better only really is tied It's much way speakers. retention artificial to the for So their you kind mean the clients to paystub?" a employer anything. standpoint, for new really whole example, is today," an an the the is like of just technology. tied X that have assistant things uses Would your tied about This that X all "Hey, tying excited platforms. "Hey, things you, telling Also smart you ready. intelligence get I Or do one. handle to it, to major are you to able that a from to great retention to And

software check not can can pay, at are look You rating XX your this indicators the XX, but that different system, that only in will like in in say, look at of payroll, person. "Here's performance the you -- the we

can't pay to us. of the this," mobile it's things app of been have directly is like don't the national from as clients without want easy They job a many saying, [POS] standpoint. -- this of much pay like so software, app their five-star the from they start that mobile it's that because retention may that can Hey, about watch Here's When "I and is do has retention from the have for it's employees on just to leave that, company. on to great use themselves, live below a based this the be you." average own it's not rest the below revenue leave team person category that out seeing your dashboard, their and the likely

and we're technology about excited and enhancements retention. the to and of level So company we're more that speed software that much leading company really putting the being a strength out of of that's software

in about you Great. introduction, retention? offset fall mean, could possibly you're some of the noted terms it given of the headwinds recent the I thinking when

It help going could. there. to it keep is up certainly It Yes.

just earlier, on of I always Mark, and so think, mentioned natural well, of as there you smaller know is businesses Efrain midsize. level -- the there's a turnover to

some to down have year. this retention not it's "Hey, of come a But saying, this going said, to where to that last hitting line get hold we up very able ought we're as of and But we be there. we that is a we're record expected proud Efrain level of kind it." year, So Mendoza to

last one. And Great. then one

takeaways? Is some sounds the the you Where are like all greatest know sensing who are about? companies? you you're it against? big doing public it on of mid-market, much some Is seeing there, you're Just the it of better recently better regionals? doing competitor that that Would it the more be

it of board. we're Yes, the seeing across kind

So show enhancements, major think be doing well well, to enhancements the of other in-house also I still The them, doing so very very with the you well that and all just think I And against the as technology what well software of some we're we've that to competitor and is. that. the doing mentioned, we're competitively. we've ability against well know able

provide service I in show of think one solution, competitors, right When mentioned, sometimes extremely you to HR fully to people against a of company, payroll. so still think enhancements that we to technology we're retirement we us well. the a able come and but years, perform introduced as up from the know on as more we've Flex, other service integrated, the technology. great we're we last insurance, Efrain and company, not few everything And can

to that says, pass pass might retirement team somebody this. to of else to who are Not specialists do where my opinion. to do a there it's you really go you in not last you XXX in else to competitor that the somebody or couple necessarily over nobody like has been going to I'm to a "Hey, the else mention So have HR years,

So...

with We Stanley. question will Morgan final our from James take Faucette

hiring area? wanted highlighted. the Clearly, just strategic is, we even already I though you've help there to thing one on that ask that that doing look lot as The of as the with a customers Paychex tools and as things can are that environment, are answered. hiring in incrementally well your opportunity. struggles the beyond? efforts more there like should been kind there when love your be you've emphasized to And have there of get questions would my doing your things your of Most you're thoughts of at help But be you can or to customers, be the are to a own

things I helped the mean I think we've clients. Absolutely. talked that about many have of really

pay is employee more dollars existing a go their giving can which credits, to to financial or employees attract from for right You retention pocket perspective, in them the employees. tax

help even retirement their have to, go HR HR the with And we be which Indeed. they So standpoint, mentioned how plans, employees guidance support still all I these have important Many partnership benefit really plans, with I the product Then at really to this things, companies, that XX great is support. financial right don't you had situation. haven't need of at do one we've that to knowledge from you XX, look when own and them able them re-attract. today, is

a for fully applies over put post largest largest very go of Indeed, if partnership system first world's our job the API. they job a the have couple with get postings. on and actually that client out We they're -- again. because their obviously, no that board, They the with application. demographic the accepted, they which we over posting integrated give with system. out that then And credit for in go Indeed, job, -- is It through Paychex need actually Indeed can on -- with that that to comes that's can information, post If transfers into a someone

somebody system self-populates it system we've helped through place getting it system hired from set. on by think it job post into So is HR is comes front of really biggest posting to we and them Indeed, payroll in and also applies, if them back the the the their and them the Flex, for making person everything Indeed, easy job

to forth as keep the we and and so much it to easy So clients hire them then employee. can we've retain benefits for giving as that made by

very them for employees partnership companies incentive sometimes to post. does, job. really a them a what and the makes with some And little Indeed for post and we're discounts X where are struggle to of that only not to gives that on financial postings, these it So proud it still easy their XX but even

close -- more Efrain there's we out. no statement does if a he to Ashley, wants make before have that

no Are more there questions?

at There are further questions time. this no

wanted and the Thanks. to FOR our that supplemental recommended materials relating we with engaging on shareholder out feel support. the shareholders call, point proposal vote Should to would the us free has after. or to to just on in I on issue, your a please to mention Lewis we meeting you Okay. Happy with interested the proposal, about filed reach on prior be Glass recently the proxy Final say-on-pay. you chat to appreciate it.

So that, will it with to back Marty. I turn

Great. point, call. this the At we will close

rest participate and -- If week. of you're Paychex. approximately will press press interested XX conference a in first Thank archived quarter our your call conference your replaying for be in conference for interest the you Have webcast call, release the in days. this for for great

for Thank does you. your this And conclude program. Thank today's you participation.

disconnect You time. at may any