Paychex (PAYX) 29 Mar 232023 Q3 Earnings call transcript

Good day, everyone, and welcome to today's Paychex Third Quarter 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 will be recorded, and I will be standing by if you should need any assistance.

It is now my pleasure to turn the conference over to Mr. Gibson. John sir. ahead, go Please

you, Todd. our year joining for everyone, earnings Thank of the you, discussion fiscal for paychex release. us Thank third 'XX quarter

morning, our Joining financial our the February Financial Efrain today ending for market Rivera, quarter me Officer. we is results This XX. before third released the opened, Chief

access our our You release can Investor Relations on earnings website.

the Our Form next day. the XX-Q will SEC be within filed with

for Internet XX and our This of I'm questions. will will archived and and over teleconference fiscal 'XX. results any is the on approximately being then outlook financial and an the year start your website to We'll the for with update days. up broadcast going available Efrain today open business then our for be call review on highlights it

in growth we and and to of XX%. revenue year-end financial As delivered revenue with third and sales selling share the press X% the retention season the completed efforts you our release, with calendar per quarter. volumes solid of quarter strong earnings saw employees for results we of a total successful outstanding for Thanks adjusted diluted our

continue demand for environment to macro and see solutions. We our a stable

rising clearly constantly businesses changing the at labor market, resilience a resonating rates. proposition Small increasing and the market. interest last and midsized in index Our value seen in unique they as continue with contend is remarkable show job to in as our two regulations months inflation,

highly volatility closings. a as the market we publicized to Before U.S. third the recent two results, result to get into in bank of a minute want quarter address the I take banking

Silicon obligations to Bank, we've cash, employee services related restricted met or cash all remittances within Valley or Bank Signature fund no and tax agencies. and We to payment regulatory client applicable and investments have deposited

investment ready whose processing have we these fund situation meet the that were We believe remain crisis deposits was than are cash held funds or cash, help this existing as businesses equivalents closures. been obligations. to to payroll all employees direct continue our client their by client unfolding balances bank to monitor and impacted more We and sufficient when and may

a macroeconomic a all crisis, being demonstrated The environment. stable and employees very a and competitive record of revenue that during positive in types and both customers, selling long-standing has highly investors situations once in Paychex we place was track and season terms of for volumes again. for

in ASO PEO In particular, remained demand for of prior we we model. though the of levels our has to a uncontrollable of retention client continue low model the outsourcing market. reported over the as In third losses normalization revenue our and the HR very for preferences strong near solutions trend quarter, see at end we've quarters, shifting record remaining saw

in making difference focus The clients put in the continue we investment and is our customer the experience. high-value to

provide assistance In is our in clients times. addition, advisory these the critical challenging we

Our both at PEO retention for our ASO stand and high record an HR year-to-date. outsourcing businesses, all-time

rates and and This PEO are for continue PEO the softer part workers' that and market insurance lower those clients of the Florida property health impacting show insurance Solutions impact agency. in our enrollment attachment and attaching. is to inside our to compensation continue insurance casualty the specifically Insurance

environment. is help businesses fiscal continue these to normalize any designed with next the to We solutions into uniquely of year progresses. year the continuum and trends as expect a Paychex in early macro positioned

time are help the for on here focus drive them and provide as help to train to such benefit a to expertise, innovative within therefore their we and them technology, access packages Through and retirement. employees capital HR gain businesses compliance business. growing HR and valuable We frees efficiency recruit processes, insurance our which valuable

will signing the introduce remain I a to the benefit X.X, which want And challenge commend new a make introduce businesses more President workforce. SECURE employees value retirement their Congress retaining and employee of a and looking and proposition range today's competitive. opportunities for for for Act Competing to for recent

Paychex to retirement and that educate industry begun position X.X have leader the launch We campaigns to as plans the SECURE we the are. on in to continue market Act

working We to our strategies market capitalize this ahead. the opportunity in and in this on are leverage strength years on

and the interest to fully have financial by higher such as our and proactively we clients through of assisting and to partnerships government banking this for financial and them them prospects As available PPP the out non-traditional obtaining rates both and the many with have access program. help disruptions assistance capital programs cost through embraced in impacted system challenge and businesses, small midsized ERTC

the see new to flexibility in solutions, Stevie one ERTC for full-service leveraging such or are helped our plan, continue businesses strong a support. ERTC their with Award We Recently, retirement for our a to integrated as service our technologies. reinvest of financial demand we've financial solution. critical businesses was HCM Many obtain of recognized new helping

we trusted that the proud recently We recognized to of one Fortune's of succeed. one brands. them one Companies stable, ethical of most the advisers admired, times, one I uncertain and XXXX. innovative remain several companies look by as respected In help and for have most of most the most been Admired in people am prominent

is equity the most ethical This commitment And that diversity, companies by in companies select inclusion. world named and the and time, risk to including to governance of one and XXth performance we ethical for among compliance were a ESG strong commitments group and exceptional practices, the operations, show Ethisphere. of

culture. products, the list announcing have for way that are we processes employees who day. awards clients and of our and we've dedication And are of innovation right business due we doing XXXX succeed most today, Fortune's been helping them XX,XXX-plus America's and result daily in to the our companies supporting innovative of the to These named are the every shown our

proud and depend we of that that well-managed market Paychex. proud a I'm team, Very on. of leader no people There's the very are and stable question can

through they need are well us when and the continue most, We have customers whatever be to comes they them of challenges a and the future. in to being long-standing our there HR help facing their track way record we for positioned

results Now, I'll will turn the to our quarter. through for financial third Efrain you it over who take

morning to to everyone non-GAAP Thanks, our you going EBITDA, some I'd we're of XXXX for release things conversations, refer call. fiscal key I you remind and please I'll like providing to review quarter to these statements. finish points the the information more customary about talk topics. that a Items the press of John. the like during remind measures, our Good by on outlook. forward-looking on up these for with start

service product continue previously, driven by of largely attachment, $X.X see benefiting and to to additional product realization, solutions, It's revenue we for what HR HR the revenue in you rates. our Total we've Total revenue retirement billion. $X.X ERTC Management attachment time increase Solutions strong X% X% saw, billion, price to grew and and interest X% ancillary Obviously, products. to we're $X increased discussed increased quarter, services. attendance from as billion. our

year eventually Demand become with It and service headwind fiscal we eventually a been contributed year to while expect 'XX. will we quarter. internal a year. to through continue our for and as the -- approximately moderate our product become next will progress execution, ERTC Demand demand growth this -- and into have fiscal next our remains ERTC tailwind, continued revenue along strong for X% to in exceed has expectations,

by Beyond revenue medical The employees. higher volumes, in previously impacted growth Insurance per called average rate shift to out. client million, worksite growth and as Solutions the discussed, sales ASO along and revenue increased by was including X% of participant with plan to factors driven $XXX John lower mix

XXXX, through trends a expect ASO. fiscal as meaning normalize to between progress more bit these we We balance of a PEO and little

of for over held growth average headcount, rates. was with million. in attributable increased know, were year significantly largely prior XX.X%, clients funds increased to primarily support due, expenses X% to to up to course $XX Op wage million as interest rates Expense the higher in quarter, on Interest operating business. to our to an a slight expansion you period. $XXX higher growth million, general the X% $XXX in income margin Total

prior volume rates. was comp development in included stock-based of in compared period. software credit and rate The payments related that difference tax and for a stock-based to the generated of to client-facing prior -- XX.X% recognition tax effective quarter period of XX.X% higher Our the the a year the comp year our

X% $X.XX per to earnings share. increased earnings share per to diluted $X.XX income the X% for $XXX increased Adjusted per diluted quarter to XX% share. million and per Net share increased

up me Let billion. million. been nine has results for the billion. X% the PEO to Total X% strong. X% was Solutions months X% up to first $X.X quickly increased year. fiscal and summarize to $X.X Management was up to revenue of total Performance $XXX revenue $X.X Insurance and billion, service Solutions the

$X.XX and earnings diluted Adjusted Op per income both X% increased XX% a of adjusted income $X.X increased XX.X%. to billion net with per share share. margin and

cash and financial of operations, Our XXXX, for working in as billion. you XX, the increase restricted can again, than more of was first an at driven billion remains million with total with flow investments $XXX strong, by and position cash, borrowings corporate Total $X.X and changes priority months see, $X.X net February from as capital. from nine income higher of approximately cash solid

during We've had months XXXX our quarterly seller equity for was of for the a year XX%. rolling per fiscal of $XXX XX-month the nine total on share superb return dividends million at $X.XX

me our turn let to guidance. Now

view the year outlook For our for XXXX, results May XX, in environment. months ending of fiscal evolving our current the macroeconomic the our current incorporates nine first

on guidance guidance based We measures revenue this slightly certain to updated X%. X% although towards we to the a is unchanged above end on raised to Solutions X% performance range Insurance grow at now quarter, X%. outlook follows: We of of PEO as range. of guided expected have to X%, the is anticipate Solutions to Management past growth the in lower it range and be previously

Insurance much and the that below the QX Solutions about we've expect of due to to factors talked through We growth be year. PEO X%

net Adjusted to we share in $XX Remember, the We million Interest guided approximately expected to is clients Total the income met is previously growth million grow there interest $XX with now obviously $XXX Other income earnings expense higher be to per in $XXX on million, XX%. range rates. expected due to grow XX%. expected range to on million. to be of revenue the income funds interest XX% expense our XX% of is is to held debt. X%. now of diluted to of and for to expected to

left. quarter tightened the one So obviously, range, we

we rate. for are but end for are effective are and for effective year. in margins tax unchanged, lower and working operating on the our of and higher tax the middle fiscal budget for the anticipate being next of of currently end process range expectations annual the Guidance on We range margin do rates the

XXXX fiscal number is interest in environment. outcomes fiscal also know, fourth expected challenging you call provide are June. which final of guidance reasons, of this for economic in terms least for a and the during different As of not rates XXXX's earnings quarter We'll

got However, just the during of exit process thought preliminary do the to moment. to our quarter And there, preliminary basis, point, revenue share that for heavily we rates at some we think X% approximation On rate is X%. at a growth assumptions somewhere are range happen more And on but result And the total we decent our should XXXX. what conservative. fourth process let what is you interest XXXX. our the dependent in year. for this again, giving will with a me of thought it's around This the in fiscal believe

around way. It Management actually revenues. growth with higher and headwinds happen then PEO We year. lower we out the that also, to we as a some as do revenue result mix as And went moderation of in moderating to happen. called this attachment progress going other have year year primarily ERTC Solutions last the insurance called expected out to experienced think and it's year of trend is the Insurance to next be didn't shift ASO. We expected we is through

improving committed of basis will at that and stage points margin in operating margins anticipate to this We XX range for the we to XXXX. XX remain expand fiscal

we stage, to I'll if our assumptions, significant macro course, for environment, investor there not to at refer can more change, our current which especially on are of changes slides all subject this are which Of our seeing. you information. to website is this the

And the turn now, call John. let over back to me

up open you, any Thank we'll people questions call have. that Efrain. Todd, for With now complete, being the

first Kevin Our Suisse. Instructions] Credit comes [Operator question McVeigh with from

Congratulations.

lot around know, Efrain, pricing here. really Efrain, maybe there's Maybe bit I I'm to because, a more preliminary unemployment looks to little it's just from I and of underlying really Is John a similar maybe you us more. outcome. and just bit tend of the really, results And perspective. and -- XXXX conservative. 'XX, the that help know any base understand folks pretty but understand a puts Just there's crosscurrents or trying don't to takes? pretty assumptions it really, some again, be strong a and little maybe macro just

Yes.

bit the year. definitely. or tailwind of belief I we address fact We it some won't going level next sorry, John that -- assumptions of very -- year, from thinking me that let have this called kind plan. a I'll into Kevin, just Let is the going our I headwind But I'm to out happen talk kind but we of definitely say be ERTC wouldn't perspective. high what called see macro that say, more a the will of a go little that to not that the out higher the is to to degree was year I it. last

year see the in that first to than more the the the going you're second half of of half However, year.

first If uplift a the at we we started year, is as adds the and say. we're where employment is there's seems that its course. been way. back a other happened macro as the look nice terms started through that's I'd going we're thing employee stage, this have not we this moderation significant that's what But to in we thing, year. from So, the of run That seeing getting at pretty progress year. It

-- those through So, are become the things as two we go year. will headwinds

I rates Interest out. called

half are. some I got of think first the of we've where year, we sense The

that. in happens. market to the what steps no half interest we position But does on really start going year portfolio hard knows what understand to So, oneX deal is be able the of happens rates. with to where whether we're That's second in reverse and We're the there. at, taking what the too, to

to proceed It think well. we Now growth continues of does positives. We out, headwind. think been We year. strong, that's that John think HCM strong. which pointed better PEO, think that's to continues where bit to HR We little year. a all the to be do we think be tailwind No next stuff has as retirement a this continues

business anticipating of in insurance, we in out drives cost coming the PEO growth in as that the results Insurance PEO, business call And the to on year. think we that lot The into insurance go then the we rate a from that discipline the moderation normal starts we that have next of improve level we're XXXX.

talk overview numbers broad other put So I'll macro parts that's we've need to business a John and of any together. of, out. let we Kevin, the to call

Kevin, great and a saw type see Yes. believe keep we the reference from away. just mind in I another It's that in moderation. that seen Yes. expect that HCM. certainly we increase we expect to rates to of points basis expected interest last that some a don't the X.X hard resignation really mean, was year, we've the don't hiring year

staffing of the seeing So up. not had But moderation. certainly, contraction any benefit we've we're

been a we've January index, that look business what and if seen February has actually And both reported, in we've which health index. year. increase in seen great an the and kind job of small have all fiscal And through indicator that we not of in you our this fact, it's at of

these are index also So increase wage well. some we've months first really where seen in as two moderation inflation the saw the in an and

certainly we're it. not So, seeing

and the quarter-to-quarter relative really, quarter was better quarter I on to had not actually Demand periods. online see products from in our mean, the HCM even strong but we that third we're is effort We the that I XXX(k) we for HR second products, products, of anything you haven't tell continue a quarter prior the basis strong. yet, a March offering the can reported there. than products really sales

moderation I company. it's of small think noise weighted that we're very in still not system. other seeing I vertical seeing certainly basis, We're Valley. a have a but particular We're out say, there. demand fair midsized street in things. base. or closely not we're very point not focused all Paychex, And or the the watching say, we're not client the good So, one important We're think what I lot on to of would of -- a stabilization. one to it's diverse I macro heavily would main thing say, And and business Silicon we indicators, got we're a on there's the We've here

tend spending to spend so or And Main they think going or make. hiring we to represent requisite on what's than in more Main been business Street. I Street in don't small And have reckless able owners

again, so get they through been helping And through and struggle this we've it. them

well particularly both has retention again and products, levels. at our PEO our So, ASO advisory strong and accounts HR where in as been record

good next time again right to work a of assistance. year I is Paychex you've meet current and towards proposition products year, them ton conditions value we'll that resonating at still to to versus We further with have seen right the meets market ASO sure small whether we the provide doing base always got are way. inside talking confidence offering got or today. we've opportunity it we've benefits it's to of insurance to and are clients about try now our of this them their So, the until lot needs, a clients our PEO while that not whether clients. And the be right there continuum we're Those not a there's certainly of client make for or degree and our look think ASO businesses this

efficiencies for is don't going away. bodes think advisory away. challenge are of an is them this helping paying attract people from And go is manage complexities workers remote helping I HCM perspective, look, feel frankly, our that I big dividends. go not and and both I have driving ourselves, services hiring think the It's quite it's HR well positioned we've So to how people workers. technology that we labor And our like, going to

seeing. that So some gives I you hope on what we're color

Thank you.

Our Togut from next with ISI. Evercore David question comes

into greater a Just depth? season, which walk through, And you've through selling indicated some 'XX revenue year-end next of underlying it little the say, in guidance Could a just year growth start for the you Management fiscal strong. you've was to you critical Solutions drivers particular, let's with dig of bit more. if could and gone

kind like the kind small payroll could walk parts your you kind you of core on payroll in then and and also what that, sure of versus business, particularly year to for If addition strong next end if of retention client more were of the within expectations processing could through base, bookings your of client pricing? revenue for comment

Okay.

Let pieces, and selling the two on comment me John season. break it do then into let

So you've got to get got right. Solutions. dimensions -- you've for several revenue plan the David, put Management reasonably to look, together say I'd to

The What from a what saw expect perspective, and talk of growth growth is can season. to I the sales. is we obviously first client during we mean selling terms in unit what John

standpoint, what part from The expect But early -- or what do. also second of is we're next those into to both you and to also two going part talk and growth client do a exactly pricing components, assumptions too going pricing year. our

attachment, You products ancillary on the and growth HR administration. bundled want time the suite fluting to attendance, get continued in

we're strong a Management what years lot HR then return within said. Solutions, retirement based side John And partly on within drive the those on increasingly, products, assuming growth. both of of and And

insurance, then the next still in be of and PEO basis because in abate evident of and all put some expect the seen get So process as may feel that than that will year, we to we've QX. thought together, Management we into year of grow faster this Solutions. we although headwinds those around part you our And forms

we correctly John John like to our we'll a question out QX, selling obviously percentages giving the season. et sense but in the of in the come we out felt little detail seeing plan of about season, not of together, cetera, talk put some But the we You challenging we had that. talk selling about you framed for let bit during becomes I'll lot point. were objectives, it base, that fact after the we've gave season. selling haven't to had that if we and what the the thought more good 'XX and are We We think at we performance client a this called

production pandemic think, had level. HR continue Yes. new revenue business retirement we're started good insights. really David, the time in across No, accelerated were before to services, was see growing then this the pandemic And clip and out just core other our strong healthy and -- we the accelerate. both production offering growth we're come seeing point services, to and our is production I good they really there, hit, online a strong mean, key I We're and strong revenue that we growth and retention volume the businesses. when growing attendance, the bundles we

third of just quarter. in products a step-up the We're we services about the I second quarter, seeing and quarter. pretty lot it was second good saw and And a in third quarter the felt traction the our we said from

of So say products a our aggressive I and there, our think job -- environment. executing. lot and out I a on team there's sales did very and competitive great it competitors was highly a would

I'm I to advise to a nice people they go, clients preference that worries a safe if put to need and a hey, clients the resonating, be about are to beginning are think there, Also, place year-over-year but that I going I good as have feel going services quarter have of to from get only thing us not advising products is increase were our and think sell there. on, to we clients good about their are new what's strategic whether only partnerships, where come or had employees on lot of paid. my don't our to not going XX% we a maybe in again, other business, And our in I

in third us that's well. think quarter also I as the So, helped

are Fed interest to if How the the you the float pivoting Efrain. positioning rates? float short-term is almost Just raising done

levers you, But agree about what term time, rates. long long-term you have but have versus you so I lock you a of certain the the I there David. they're been have rates what cycle. wonder happens you raising point, where to interesting short -- can you I'm what over with where the percentage an it. that's tend lock interest whether on short is downside you term? so So, of percentage not period And do manage and almost

extend that of starting getting because rates Having to the duration not management going anything to now peak. prognostication anyone in to conviction close interest we're I sort the from we're do now So, of it's portfolio year. or seem on that, be skills longer some think said perspective, my this but bank, a should earlier take for the were probably start shorter better to We us. to

Thank you.

Our question Ramsey next El-Assal with comes from Barclays.

factors ask year. improve I terms little next can bit confidence insurance side that that PEO in are control the will a you the Efrain, of of you giving down

about Just expectation. of reasoning behind or the drivers curious sort that

Yes.

point obvious to at with people point, PEO, insurance health in Ramsey, clients. interesting. particularly the care point, some it's softness seen within more clients of PEO, year attachment. going health in We're start -- agency. the we add we've more been and health So, seen insurance, And insurance softness an two It's kind some at insurance. the the inside things, get in our care unusual sense that we've in that as I'd grow do need

if in that get in particular, you renewals you at you What's occur the don't in happened cycle, year. the And this year that have is that have fall you renewals then occur expected. in the and beginning of PEO what that the

all that if period start for process of to little basically You over of wait time we have a again. some

went with we wasn't to the we're as through the the was it but as -- year, we going the of half we of end it first -- robust insurance year, get we year what better, in the out okay, to expected. but the So, come year of

the moderating cycles then is been side, and lower gone And picks this up. as over we've attachment it gone it's seems On like the through agency year. through we've

immediate phenomenon but don't new put we that So we as think of fruit, is part initiatives is different of year. second it the we go part almost a fruit think that reversion we'll But will occur. next into bear number a bear we

versus preference that, really preference and said, interesting want permanent solution clients we're for ASO highlight to many more that because head a on to we for that of a benefit as into something want John which One thing John, see that's expecting final point year. they is of is this just PEO next we're the going that PEO eventually

performance, PEO year. been has the performance by while the It's decent highlight somewhat the just anticipated being which at year. I PEO than during very clip. business, been has been sluggish lower attenuated we what would the through It's very, still growing insurance So a

understand big think add lot I pass-through I PEO, of Yes. that, margin. remember, a lot on that's particularly it's insurance to would to But important revenue, it's a side the a dollar number. that attachment of in the not

the So an PEO, any a small revenue in percentage change in direction has probably over-weighted impact the on right?

X% going the that point, and you gravitate the X% cost people is participation and enrollment, to base, portfolio they to think, right and or portfolio X% the afford insurance extra you're open and want they're then and do. to opportunity to what that type this reset or I have every of X% plans have within critical. hoping to another so And you of Efrain's And your can

comes every up cycle that winter. fall into and And the

that it's a of that talking about making We're So reset up, We're in to health certainly, the competitive. talk at We're review already we're beginning taking for affordable lot line and an to market of looking taking process and clients. We're a clients. sure for insurance data. our reset. PEO the doing our every

into our right as of prior ASO base. upgrading PEO a confident that to sales the acquisition Oasis have lineup then lot the the right Paychex we're was clients really of inside and we'll Efrain opportunity, the So, and PEO coming business, from most of said, historically,

but Now it's the more have that inside still base. capability outside far we the base,

as to and lifetime plans to there's and revenue, we the us, them think our looking additional business, do the go it's increases well. that the PEO that we as to for we'll inside upgrade base So, the right next year not it also increases be to thing only do but to into at the opportunity of client value customer

me is I more Let question persist you there of there per seen should the overall important. revenue in aware just that it sort metric about do gains growth of business one per higher time, more out curious, the that, shift driver kind a a of follow-up, underlying to was And the we algorithm of expect the ongoing it higher is as quarter. be little client rev or of? something of client you guess sort sort lumpy have -- you is, I'm called sneak more such that over

No.

For of sure, look pretty it if I parse you data, fiscal -- public the get at I'm the get you you you not sure mean, all from close. all if

You've growth client. revenue seen in per persistent

I that attachment, but think new services ability create products both at very base client finding opportunities, with So also within skillful and our to revenue the drive new to we've been product higher.

yes, So about we around become that's and price, we revenue can talk really important, years. or has about that's certainly units about per five more last algorithm an client can the and client algorithm an in talk per revenue

additional advisory retention. power, technology pricing value it's mind, more and important, in think through add time. we're Ramsey, services driving driving services openness customer I products both value the well to an is as driving and states as to It's that our driving it's we're in keep and our where over and

able increases. to price traditional go old the always time the our into attachment. and over which drive increases to able base to had, is cover always we've been been We've So model we've drive cost

my seeing customers HR top so that our other the And on because continuum, the we focus now retention. much value of they're revenue kind Paychex. saying, proposition at other my on lay trusted value from driving insurance here that from of and with want they're in is want with I we're digital want looking my adviser Paychex, my benefit XXX(k) up would time time I I their I attendance and Paychex. want and I offerings as Paychex. us

Thank you.

with question next from William Blair. comes Our Andrew Nicholas

for today. This is Andrew Daniel on Maxwell

coming client in if And up-selling over to is from there? apart, and Is growth on just Sort ASO you existing PEO the much of been that increased but the base, has anything to there coming new last you expect attrition? that why any is reasons PEO? PEO how balance similar on specifically ASO clients the and in WSE in confidence question, of for break preference clients that versus color else there from can to a Or normalize? and

Yes, Daniel.

don't WSEs and them in but growth have growing. separately out, PEO. across healthy been seen We ASO we've both break So,

that so So, perspective, equation, you is it positive splitting impact of The reality dwarfs versus base WFE side base. loss. new when is new between we're from the results large, the it existing adds seeing a that consider adds on of because existing the especially out

good seen as preferences makes our advisory growth positive of about and the that we've a I'll shifting cross more given WSE through And general PEO. PEO. talk said, HR and us, like let on John year in ASO John so, ASO value both between services

Yes, Daniel.

or for seeing insurance XX you in of is insurance, insurance what the speculation our PEO that where again, your that and this enrollment -- that but now think we bought had no insurance you're I some offer longer part, to the and see insurance they clients and have on had our that have go see employees. when they is and your just we that had they going employees or clients decide XX through

given a the think some of just being in of you're where adding cautious uncertainty, benefit. position a I people

to it's have interesting, or they they know need Now retain to benefits attract employees.

well. setup when get now you a XX the through commitment. company, X.X, lower a It's million cost cost is a credits. a take person the we now very, benefit. very doing It's annual of have And technically, if and costs setup tax So, to can company, Act covered basically and lower SECURE you're XX the XXX(k) XXX(k) all a

it. those size fact and the expenditure are commitment once the is of of But a making. because the start you long-term they're the of insurance, matter health things So, offering It's you're adding. pretty

think our think I and can I more our I that employees care a teams we access and to affordable out that. more there's product for going again, are as on do looking of there's for And degree innovative to hesitance said, working access, that. gives health sets in

there, quarter through get the enrollment, to of and we the into fiscal be the calendar issue year new you'll that Does As have of help? year. we second But that's go our the enrollment. again, into this going fall

the few opportunities anything the M&A generally capital the then Yes, or that just buybacks that's any helpful. on become going pipeline? in on forward months more last of allocation, attractiveness And have attractive in

the be make the to to opportunities something our range We to But respect I able Look, And right have happen. evaluating obviously talked of powder opportunity, looking if we've with I'll a along. dry at think let John about general. we're opportunity talk philosophy to at. that, what comes and what perspective the right we're M&A in buybacks, stage, is this from an

Yes.

our think I on has position think, changed Daniel, this. I

and HR lookout and conditions opportunities think us capital human we're to HR changed to I the technology position our the leading provider. an accelerate on the changing and the and are leader be going continue digital have think continually as I leader from that management position market for

in would markets sure additional I'm starting I recent the to may some say seen So -- come create some valuations the we've financial down. disruptions opportunities.

ready as opportunity do to we haven't comes something. It's going not not for And Efrain overpay something are wanted stand but right the if we the said, around to trigger. pull we to that also

we're going we'll us more transpires. you're Paychex. the financial to to What from you've conditions if -- forward be M&A we to the same actually conducive market to So that see but front, on are see see that discipline the moving continued believe going

Thank you.

next Jeffries. Samana comes Samad Our question with from

and profitable, of smaller, those we the think acquisition through about about customer Maybe should How of one, just kind less as should about you're that that partnerships, to is more new of I be tend financials? how how think impact think what acquiring the coming costs customers the to profitable? impacts slightly the where from about number that strategic comment larger, we maybe customers

of just CPAs. about XX I XX% a think the Paychex it. have We're with I commenting partner been So strategic wouldn't our that's is have. from years. respected Over been association really more anything we come the alliances for would new always clients

a so And source big ours. been of always they've

tilted to just It season, during options how selling were think doesn't they other my I certainly That uptick acquisition. our in they referring was Paychex over comment. anything the cost have. they of do we good that saw a

to average And different maybe call so anything the customer it about very the Great. think down of out as bookings think micro as kind quarter, between we then the size. more sizes market in about and customers your customer versus Okay.

weakness? strength Just any of trends or or pockets

I Well, say have actually, strength. what we would is good

board. we what little during the pandemic, side, a Xs growth. And of saw a across that's the and that think, up which we small Xs not on I actually, is market, digital actually strength more lot the I just saw would where tell and the start-up, you is

We they've know in at still through starts that levels business the levels they're crazy comparison roof pre-pandemic. subsided to high

of we happening, at start-ups So a that insure do these time, lot payrolls. managed also, when payrolls, all were

So the as were of during hiring imagine, lot people you staff pandemic. a can household

of It's We strength to space. third would escalation a I and of traditional gotten back lot in saw say we a end for very saw that balanced Paychex. micro the more the was in what more balanced in quarter that's the out. world segments

Thank you.

Our from Bryan TD next question with Cowen. comes Bergin

And worksite Levine in expectations? for how to XQ will actually come relative is to employees and and terms How XQ? the expectation insurance revenue does today. employees PEO revenue then compare in Bryan of worksite Jared It's health for at-risk the your XQ what

-- PEO as function be yes, I at that. report QX. not year-end, into out to metrics We won't more insurance. say lower the operational this I get We'll won't get we've have revenue will topics we talking of as been to that Yes. level of for we than called ready in get point. into the that and any to further this point. to specific at And about that go Jared, I'm But to going we quarter dive so granularity through That's was the relative QX. a

for potential what margin expansion would you of that drivers XX can be? XX, the then to And Okay. discuss primary XX FY the expansion basis of points

mean -- We're to -- where more just Yes. the the budget an a through that emphasis start efficient. a we have after going But of efficient the we've get budget process Company this together. had. get our frankly, more it's call, can process, I it's we'll has we mantra done, putting

And comes some of operations. it from

sales. from Some of it comes

from Some comes of G&A. it

become but costs, we just trump simply about massivley It's important, doing it. it, many read do cut the that but where you to technology technologies we're of at across that deploy to more I better see really appropriate, Not what we opportunity say would doing. we in We business that's efficient. here, use. that and the obviously, an also become where don't

tech help And AI businesses. to services in we think of advances tremendous angle that like things can be

get the actively excited get how can better those about are at serving So technologies risk deploy the to efficient, and potential, more we're looking at the understand we clients. to

you. Thank

from Kupferberg of comes Jason Bank America. Our question next with

to of there's that a there So loans. They some the of the I credit, guess a thought one get out just banking could tend it with school of crisis tightening small of lot be businesses of byproducts find to harder bank fiscal next It I'm outlook regionals, a you what like year. start the really that in as this into guys on your cetera. are wondering doesn't to just look sound se recession for et preliminary assuming take per 'XX. is we

to just start. a to I reaction that So, to want get

be other small talk prime kind you there's Jason, I've I and any midsize reason of ERTC at on That's to tightening my in our mentioned doubt. remarks lot that centers think some bank the credit. and some I a think we've heard, Yes, regional seen business questions. why there's part us our a it and for of of and mean, customers product. I going to of I don't X% engaging

get a would some don't clients, about Main So it Street looking we're was -- they're our -- interesting, I again, clients out a of owners. I auditing as gun that. not clients of of lot shy for like, little stuff. talk of some not we been probably this -- business to don't handout sometimes approach a They're lot there's A they're say need and our really our small

and to us this a I it's client. per bunch can said, had have back that "Hey, $XXX,XXX average, We on come use of clients And money.

to take with So how helping our partnerships a to PPP from tax well pandemic, we've out and clients really of during advantage because them we're we've our programs to that. also trying created been become We trusted the fintechs that of when they're programs. government doing figure source as for clients help the perspective during

U.S. look combined. America, more you all loans you the PPP placed of than Paychex. JPMorgan Bank When at of X% was loans, That guys PPP the was and the of by in

funding to and we're support that think help and CPA them, of we another for help continue and think proposition are And access partners continuing I them our we'll our can part And non-traditional appreciating. so them to our that's that customers sources. look I ways value

Okay. Understood.

on all being, ask comfortably things, to about wanted enough wanted Fed the increased banks? far just material float been rates expect you case. on breaks I now side going on between of wanted just you realized any we I there. part pieces. But component? adopted just amount down so impacts up, know to confirm, short-term income make how just shouldn't And And if guys thoughts summer, the your do -- I just the any obviously, maybe coming just float this just follow-up, the see to tax losses? of by talk first then two-parter payroll any it's you obligations unrealized sure float meet can and potential obviously, a the a float that's but the said have As maybe to losses with date,

Yes.

did the Let pace and you're very take mentioned it in John securities, Yes, to the in see when X.X%, going some one, me rates interest holding see first part. of hold rising high-quality obviously, the that to Jason, have to take points our unrealized call, but you're the the basis as you going earlier take you're XXX losses going We interest maturity. rates securities at you our to -- portfolio. at

had had doesn't point, represent this with to $XXX do credit. really swings obviously that We've plus issue. plus an to million now from nothing So

why and the all understand ask the issues had. concerns that Understand all of So, there. others of there's no really you

portfolio so. the the will securities X.X people on roll those duration as is remind they average years just our or mature, to So, call, around

quick. relatively is this So

we A in no typically only really there. no So High above quality, and concerns there. or issues

part didn't the was Jason. on your second question, first I The part, I catch. much of too focusing

rails now out was asking coming about this sorry, real-time with summer. just Fed I Yes, those

how see lot any -- banks how if obviously it the of obviously, all breaks balances, could, I then and we'll thoughts float anything the that payroll Because income, float the like some between many hold a pieces? how float float know, adopt on but and longer. it impact on Just tax just income down you right, your it,

So...

question. Good Yes. Yes.

narrow. taxes the course, our and business been we've from very overnight measure what payroll, point, of A well. from you not which know not at is lot necessarily landscape float But of significantly to some you, that that anticipating yes, certainly of some current payments, windows, provides ACH that of Fed is one coming is income the So under have rules. coming float be should the impacted we

flip that of conversations be income. would if monetize opportunities there's will the there around even other that say We been of I that part not the stopped much is a really an you that in there and The opportunity future float lot we think to about some and be lose element do payments. may as lately real-time

the this materialize of as right point, of now, year you us think in so We're was when or Jason, the since now. in float depend through the future. income. expect to. the Final XX% way it the quite my different there a our it a We'll advertorial But breakdown it doesn't even pieces to we manage going if three I was XXth net is point impact that's world will that heavily business know, just on

you. Thank

from next question with Northcoast Our Research. Kartik comes Mehta

your the obviously, you and than was Do costs high well but pricing be Efrain, normal, that's I as it's Management will the normal? to side as as comment that pricing. impacting considering that than last payroll think in inflationary fair higher Solutions, back your environment higher to the payroll and not to maybe year, it on we're assume go wanted on

value think on delivered distinguish that customers. it to for comments I'll some to I pricing turn So, to John we over pure pricing because and between need think I

question. -- answer let me So your but

X% on to pricing So said on the and the as knows, realized typically that X% range we basis. have everyone know, a in you is Kartik call

some little it's it but maybe higher could clients, be So bit discounted. for a frequently sometimes or

too specifics to want don't pricing year. to talk the next around I much

will be environment not it the think as year. pricing same the was this I quite

just somewhat more that to a it willing we said them in add respect. on because an issue think I and think given to some think John that always comment let they're that situation about not customer that, to of there's pricing value. an then unusual want accept things value for I about to the charge think of that to how comment that. to I of do I'll limit opportunity the was Having inflation. and include

want want say our I the scientific don't gotten to willingness We fair about precise have talk we far based way series that that services, what it's about our think pricing But products and to and be base more future a better ability of that this about consume on customer the attach, served, certainly price see to attributes the of they and pay elasticity. and we call. way we upon Yes. they to stickiness

to And -- more those in lot Efrain data So as said, time. really lot to now the introduce our accustomed clients, engaging vast they're I of Paychex, for modeling only not regard. make product. precise we've their in a in but can for about quarter And way our a we very over of time to a approached mobile getting to of real employees are lot first they of XXX engage the then third doing over product. think AI, utilization products about Flex and a the the the Paychex them way our changes lot be with million of notification, we how uses been interactions employees, majority talk the a but value that us science, services. lot in that and We try And a to

seeing as time. And better a higher there margin experience, -- you see can is that and service do some benefit what the actually a it's and And we're there's value. higher at a that can as imagine, we it's that also people with same customer

we pushing lever understand another on. as that's So well been that that we're

those the bottom engage they increase what if So, our see value position, you're at competitive the going items, on customer is same what of line continue think I allow we things to from understand And because us around the Paychex. the to, them we time. more that get us need to I going to think, engage it's to value generate to

I'm and wondering ASO. Fair. And of could PEO talked as we've revenue if you context ASO? -- then bit per versus And to just PEO give about, obviously, lot a just little client a

way does Yes. general think it include in I'd not, is the to say, ASO insurances. Kartik, about

price all comp clients on you comes bit what so, of getting base do, the revenue And in benefit is little PEO they the and higher. end healthcare. the also when be a revenue but then health significantly on take up Not can care, from typically, attachment, product added that workers'

you. Thank

Our question Bank. Keane Deutsche Bryan comes from with next

where lag correct? Just U.S. impact the outlook would like I sound preliminary that fiscal a to up a expect in up you because actual recession, a that on Is show definitely do clarification in shows year financials? numbers, 'XX, guidance. if for the the see it it in recession we Efrain, there's doesn't how it And guess the U.S.

Yes.

everyone Bryan, So a all point, hearing. we chatter good obviously, hear same the and is

just after we've can the any I new. seeing fall of tell see that. of see So to At me moderation but you QX, don't see that been can right more let signs signs as move only answer now. little bit the I to a we what slowing. this we And since we say, point, significant progress earlier, we've said repeated That's we

three of maybe we been that pay on what of happening overview that, So the going to an incorporate. months, we to from the would John gave that hey, season, have got just to and needed through was something kind last signal selling a attention here

point, slowdown. our and that and in back could. we'd guess signs in To occur of seen things it and but of that slowing come this obviously, think are the season, we've it saw we down. incorporated will say, don't Again, haven't incorporated thinking, by way, what, I things our July, see extent that we've we selling that At we that the moderation I've through slowdown, seen signs thinking. a a

I've about the last years, this really The for the -- in said it's we year or halves. three two think probably and way is four

expect And of first enough that in say terms half I the So what are trending the by seems point, And absorbing off tight. said, in they got absorbing be should half else. see to where decent cliff anything John in and of fall is to by a higher much at more year. prime win confident this increases this our environment. than I to to thesis. not we mean, think something is we're we've the impacted are rate at rate the first Fed the going be The clients in seem at to rate stage, be

And I thing other that getting close say is the we're would that thought peak process our to rates. that short-term is

have. factors the if seeing produces So rebound HR, bit view of or at we the look what the in then all results we're those that the of and see and strength in into it is put business, it we a a retirement services, half progress PEO first on and good up gumbo strength micro and then factors HCM stir in in our

for trends the preliminary. to all at imminent. labeled have up point occur after We'll to I the this call point, that's to it's is now, anything air expected tough data is and of as occurring to Now Right see don't is know, out, actually that months materialized. that the November. we with but little the back is that a us or that we that, in it point, nuance this of would that I those is provide year the come the get half That's suggesting first through, we in the of end that At half. say a takes slowdown that's out, simply Bryan, nine you that our why words

of if go And were that XX that conversation to rates, cycle points a one happening. Fed it Now to quick. really basis have point. to the final back we're to see Don't different needs increased decide going a

we're treasury that looking the I shoring did resilient right hand, systemic in were economy weeks our the on seems a banking and banking two the system. we're three was when certainly going but wondering All call of on enough up things terms to at the or and we did have the say, should us ago of prices Fed like

more think that environment. that in -- we're that what about what go We having factors that, we through we'll We moderating. our about I we on talk talk have. something we year. half, as our incorporates obviously, said is outlook have best think So the thinking be -- the understand this environment And are the confidence the will -- second

yes, -- other you index reports every would point the Bryan. February, the in website month. at just months, our we at I fiscal months Paychex prior that didn't to And in and I'd We and it consecutive year. see index Yes. job look improved. on released our January job IHS any look Both

would Efrain a into see models So and recession. historical it what said, can while. what that would of I this for looks Efrain be leading signed, reiterate like already a And said, but we've even as certainly, been that we the don't see lot doing a benchmarks we we of have

put hear I what then you the try can is the office happening of moderation, every our papers their the I all clients pieces. challenge, it the this I employment, to perspective TV here what's labor And for walk what and signing in up we terms into in terms They're on that And of those. day. we're not hear seeing how saying, understand and and in lease from And just of any with rationalize again, stabilization. big the not in market,

even some two money put worlds. and And business do into lot in a there's we rationalized I've different I it comments could have respects, -- money, money a of way in them earlier spend said people to a have hire whatever lot could they is as companies, many for didn't of tech And that of small it people to needed make stuff to, I think to they think if do. the I there's didn't lot pay

you're dynamics I business is having the seeing bubble foundation those this being type bursting point, of reading that small same that that don't the and in I paper. see of Main you're think Street digested. at

other not in the just numbers. simply seeing just can't way, I put we're but it any it

banking to that and do trickle the Hopefully, certainly, was down. policymakers because Now to is a continue gets being are businesses things But make from sense. being impacted from thing be And impacted small there concerning last to actors going Street soapbox. that get help support off that can the Main things week certain irrational don't I'll to contagious. this kind doing of individuals that

Thank you.

question Peter comes with Citi. from next Christiansen Our

were of the are stuff there? get helpful be also business wondering shift filers, of would if of new a side Just what the regional exclude of things, funnel, sense kind if the we for from color seeing health and can to perhaps we sell share formation that some you top from the ERP

Yes. Peter, is to business again, I'll pre-pandemic back applications, go starts, levels. we business see on they're again, back. What

was when because doing that you in fiscal five other all always we're trying years this budget the on look you I to out -- 'XX back then when at people it now to points, fiscal almost I'm our going So years. see and entity because I look stands looking explain fiscal year

times, that down they in at two And that's most a that of even business. are times even later, small aren't I or historically. business doesn't where retention in look end, starts of surprise why them were small starts in good me Business some our years the bad because when from

third I When board. they it, look across the our I but sales at quarter, in looked across good not strong ERTC at a there's from just the board, new So when starts. business were the

there go again, issues that -- products I'm the macro really seeing I'll that we're I are to to anything and on back. so relative there indicate demand me offering. that macro And not or are services level a issues would

you. Thank

next comes Our with from Baird. Mark question Marcon

for would questions. improvement the margins that? or in what margin are to year. how And to basically guide regards terms is To preliminary of margins you thoughts see about in of terms expect of you the float income? One extent the the any next couple of A impact with thinking of sort ex

did an I to Mark, as this the question. as play big question. good a that I expansion it's on don't it will impact answer float margin will think Yes, hold year.

that because so have on will next process And in margin so end We it grow will a of modest next income impact where I've float the a year. impact -- positive on up terms year. for it it will depend I budget anticipate through the will on that exert gone

remember, that's that we other thing But ERTC a moderating, is Mark, force. countervailing one going exert out as to called

pull I operating likely two I'll when of think in be when the But So don't it together, there all on said answer QX. at I I is margin and will out the think those real figure -- day, end and done. improvement

Do not you be? think will there will or

expectation. I my that's Will, But done. haven't

-- sales terms the in business some increase to the then and and the of making know are of with anticipating headcount? terms process we technological continue you but are margin the And to the I But see same quote, you're improvement. to business? with budget now, regards ex then force should in -- Or innovations headcount basically the in within drive that you're overall the an sufficient

short his that in question. that. I'm give and likely sense But headcount two every Good to John answer let sales, headcount answer be he add the where John are I'll to do talk will makes in it that, because and I'll it let the is commentary sure ways Yes. then greater scrutinizing sales drive to we we're budget. to

and that a business, not are I feature in only growing think Europe, we but a minimum field lot of been least a has of also sales not in our have the But digitally our at increasingly of at the provides. you do Company, if force which also rightly you is identify involvement the done sales where the U.S. sales at look require level that something

where although that there adding not I'll talk to grow can John necessarily that. places is of driver growth or let at. would use to but know their think you're there So that don't adds be whether we I have I adds, do competitors headcount, may precursor headcount as know I we tout careful yet that. a a are we going our are quite are And where We mix. a without

very adding Yes. I don't tell the frequently. expense business to

that to So sure looking and the the strategies right right go-to-market go-to-market coverage. that constantly make I we we're think have

engagement digital We are as using we focused data and can. sets analytics on and much as certainly our vast

think getting including in our mean, the And As what we're paychex.com XX in Efrain percentage just five years XX-point you international and -- I probably said, went U.S., ago, improvement percent the I point surepayroll.com, a improvement. back about if digital, there.

instead or our We're active driving sales across inside them and of client analytics we're triggers risk. and people using make to analytics models of our calling data the base, of systems behaviors force give just more market and to engaging productive cold

opportunity actually productivity. experiences So, digital we're attachment our I And creating to and drive ancillary digital for applications doing of think lot products a inside engagement and more there's more services.

going to cover but we're the equally the making digital investments balanced driving our as do be. opportunity that data as market to the on to I productive when sales strategic we're need they we doing engaging budget, making using rep think productivity the add we're partners, we're make we reps we're the down making for sure things to and and analytics have, in certainly sitting sure every market So, and we engagement have can

pace you one. the last looking that I've not then numbers one factoring Did course impression then are per this the increasing the much bps -- your over growth and that some this at and and underlying investors per sure say a And pace or control on by basis? your they're the control year-over-year got that Fantastic. up of under XXX up might year in ERTC be are quarter I'm ended what how the right.

for So just in last quarter? what pace control see did of terms you per this

but I will didn't it, year. talk say we the through that about So,

per increases seen through it's or in control we gone year. checks, moderated have We and say, we've pay would as the

two the up second cities, half different the port some of So tale half end than it's ways, being a of the year. is been that first -- in

we're year to terms business in people. just Mark, remember, were ability hire their They of desperate mind, was people. And keep Main to a Street ago small in understaffed, get

been It's and deceleration. staffed terms there's an So getting that the up. in has that It you've interesting year that's got of them not benefit this -- helping took people a getting of up. hiring

whether employees, in there have clients. they're they're moderation a regardless the staffed mean of that or expecting not would in fully up. I'm And to the of or another we they're I of our employees -- big staffed. expect right? a going recession was group a Now not of growth not, number

Thank you.

comes Eugene Masset question with next Simuni from Our Makinson.

interesting help have developments about one comment very question just always to on to you can hear on guys. Secure of up made I on how follow quick regulatory the kind you X.X.

is specifically Paychex And can you see into time flow what when So results? your the from for bit act? elaborate that for that a opportunities what the on be financial frame then might we might

Yes. Yes.

some So we're out going the And X.X. said, we We budget want planning SECURE we'll and size I in scope we're in base in opportunity that. market something and what the to our of the the education, figure our as in certainly about we out really within started investment Act how our and do across we're determine we're next to call. approach think more trying talk to to figure the stages that's

a a means. labor value meet were to a continue. get to The I to think even X.X% lot it's are have pretty we labor a at don't the I I of go doing to participation we it working. unemployment. people recession, think is secular I is huge proposition. I their There's effort has lower going what -- on, think said, that demand enough not simply but understanding trying problem people surveys to get don't in Like education a just of powerful rate X.X%, enough just even where We're big

pretty and needing fee. to you XXX(k) plan, against because would an idea, nothing do XX that's continue, And employees, startup we literally is Paychex plan. benefit so, you a I I the I that's be an small a create say the and fact positioned And for start secular X.X, SECURE up going importer to Act think think businesses if the opportunity midsized It's trend to going typically for that. a employers, plan. going that you're to we're us you could just compete simple to large we to a XXX(k) richer with because pay give XX and you provide and pay And and much between have well

You we But pay there. have tax would back other us that through get that the you'd for fees all credit.

So a employee, it's $X,XXX each the well as to many basically, -- as to then can that credit you $X,XXX circumstances. want can in get you to add contribute up you plan. And if tax

government government with a participate to a or where like being the of business have midsized not owners Look, not some about same there's think these even whether I to on it So then ERTC. They're small awareness. and just reluctance lot the not, and skepticism they list. we want thing programs found programs exist of because lot have some we they and

trusted help positioning to adviser as this really facilitate we're And of ourselves kind and that. them help

programs how I so figure a And it's in the on to we're a doing great program trying small and Street small, that on for again, owners. hope big thing lot studies all support a of to there's it. to great and out the in We're and It's businesses. we partisanship come to like this them think opportunity years goes midsize I applaud the And this, Washington. the Main have business is certainly, Congress like see more

you. Thank

Faucette from Our James with next comes Morgan Stanley. question

from couple Just me. questions of a

And in this during a a but outperformed that can kind would both of little us fiscal to next? recap but thinking of it you course year? a in bit you why quarters, for bit and ERTC know that little thought about do it slow how talked you what you little First this then previous bit I now, we've think the could contributes

about was I we the Jim, we that What service. and when would further of understanding Yes, here. have we such year, already base, the to that clients actually widespread that to the anticipated. program educated into take and program little knowledge thought way entered lower and think to can that than as further constructive anxious the went and with John start, the program of to were found just them was made they I'll we ability the themselves there the the to and respect wanting of participate facilitate understanding be a hear access the to it works our their level we

there would into for that year had a talked many John turned than this out opportunity we realized. about reasons, much coming it bigger be and that

more it has relates to XX, running is in into next now months and of a period XX access get ability the we to As year, elapsed ago. more time have One, time out. programs will the that

within and think And general, of calendar round next will base into the in the both so moderated. 'XX, opportunity that as our beginning the we we have year,

half as want the there opportunity. And we be the year, or you don't demand So will anticipate that of to... back much any

example good reiterate, this Yes. No, we're is of again, I trying approach would a helping to I clients. just how think our

for PPP companies was first the about fintech a X% did that I I loan we the strategic package program. announced, all we've paired of a them muscle talked to think with and And that. simple with to clients and program our both through. able there facilitate an really solution and to be build lot our partner of go developed when educational an CPAs program for automated to

it about program of just think, When out, came kind to education. they we the do trying I were and ERTC general thought knew

don't qualify of other now, I And I this quite weren't of or or on not early frankly, in can't is think just thought learned lot they and right participating people need and just either some government a by of the to like, challenges that Hey, just they we was hassles didn't programs, sure, what felt other some tolerate. I resonating.

how pinpoint team and two a much data at about. accuracy, of look we're know is science had to that we client we kind say, to to began think talking actual we our started our able happen. and models to from qualify be One I to go data is things be this data you actually and able

you it check do education. for was then had more some you're now a process. and I very hey, can we a information simple and So what $XXX,XXX to saying, get There you with made

clients, few a the have a database high be with to We're we confidence and was get to us information. one you that now pieces were time. interest you started all of XX minutes That's saying, overcome had able going to a and to up, degree meaningful cost client of and rates get be started we So to go were capital simultaneously instead we analysis I a spend specific the broadcasting one. going to worth of of go think, specific your that all of a we our to would up. Then with we and obstacles, that, to check

the worth I a of owners concerned. need not be I are of who said my And don't owners worse may anything hey, program. most government out think lot audited. else. An audit time. owners, to business It's than put associated don't business business it, small And want would I I get business it. with small them

-- they avoiding they I So think it. were

need saw of that that the business. the that we as happening to think I to be inflation said, receptivity hey, bridge demand the bridge I now, to really capital $XXX,XXXto and able my cost grow

we there. expected. exceed messaging education think out we in what our think that getting were some then more being and I had of created terms so business pressures small And sales precise that macro things there and second, owners us our that teams our tailwind two on I And those

at talked just is, expand about on If some. Efrain, last think for That's margin past, planning targets the were back you've margins where in really least can talked I me initial about next you talked we stage helpful would then Or that. reflect kind what of color. thing can year stages, Are And you for maybe getting structure your that completing margin can happen towards end the we the start that of a past? above what the case? upper you've we at even to about in be to that the move have

James. question, good a That's

I've So that's said what listening benefit of of to a over period -- and time. the

would persistently, be there. me to initiatives If of because XX%. the have you I whether us we we would set could know didn't caution had I said drive could have all above of And that urged

great to bit, a a probably reset think technology. answer. I and we're have a of a closer that right of in I do don't answer have to it's ceiling, when saying short that bit the getting I it's been because been is sense you're that reset The

would or than automate that questions in a said if So we be technology XXX probably don't have good about -- know, chatbot not that. is XXX that -- answer And keeps XXX I years seven is question. would is to now better giving things know ago, said us I XX% have are could short want it's number that opportunities answering to that you -- of clients what XXX, as or

So the short answer set technology services to going business. is limit in especially is the tech

some have of more started it's become paid the pure taken. have of probably And so just And we but I efficiently. A we technology, actions not think have more these wanted John I with automated that dividends. think some developed lot headroom the that initiatives to we years ago

you. Thank

Andrew Our last question will come JPMorgan. with from Polkowitz

earlier mentioned wanted you it fairly -- just selling to to competitive a was that wanted season. ask, just

you ask that new the entrance if of or share whether balance call So different out could usual is from and anything coming I if suspects is wanted history to regarding to there regional where trade? it's from, like just competition

new it's say wouldn't suspects. the entrants, same any I

really and sales I'm we quarter for after our to competitive trying metrics think and I for strong of outcompeting the just market was very more everyone found was proud and very aggressive what go share, in the team grab I Look, were where are our market would one where to very segments very I of continue. that. market. that's think every think think we're all in I And positioned. going we a and proud And aggressive say I of

they're niches small I in feel our aren't little we're prospects focused to about value a our aggressive, doing. well as doing. clients, is to proposition strategic traditional hey, on, but partners, a lot put you as that And our somewhere sure competitors and know want is, doing are are is. maybe think a where market premium I and of business what I maybe more finding as I said, We'll those more think the get smaller what I'm be I beginning that where think I good our

and and term. to right their to over they're services going the to They're continue and they're doing it stable, financial be have long to in the able capability invest products

I shiny be as chasing go forward. objects so may there little less a think And we

mean out ago. follow-up margins. little on three bit XX%, this XX% quarter, had came I you the for out months ahead a one Got op it. just And it laid the I quarter, of

that wanted Just than expense months if three relating ago came better you to ask anything line? out the there expected is to

than than flow-through performance a of what little maybe drove drove obviously, margins higher in with a margin the our bit expenses anticipated. revenue, expected better lot we really line little think The we better of and was I were Well, is the bit quarter. and higher that a combination in

this call closing or further to remarks. I the no queue. Gibson questions have in turn for John any over I'll time, additional At back

call. appreciate Todd. you Well, thank we'll point, this very I the At much, it. close

approximately interested XX Paychex. on our And in webcast, your have in interest be to for replay day. If you're a will I everybody for everybody website. it the days archived great want of a thank

This concludes today's call. Thank participation. you your for

disconnect may any at time. You