Paylocity Holding(PCTY) - 2021 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q2 was $146.3 million, an increase of 10.5$3.3 million [9][20] - Recurring and other revenues grew by 13.6% compared to the same period last year [20] - Adjusted EBITDA for the quarter was $35 million, representing a margin of 23.9$7 million [12][22] - Adjusted gross profit was 68.8% for Q2, with continued pressure from COVID-19 [20] - Cash, cash equivalents, and invested corporate cash at the end of the quarter totaled $232.3 million [23] Business Line Data and Key Metrics Changes - The company saw a year-over-year total client growth of 19.5$1.5 billion in Q2, expected to rise to approximately 1.8 billion in Q3 [24] - The company continues to experience double-digit headwinds on recurring revenue growth due to lower client employee levels on the platform [25] Company Strategy and Development Direction - The company remains committed to product development, with sustained investment in R&D, which accounted for 15.9% of revenue in Q2 [21][13] - The acquisition of Samepage aims to enhance collaboration functionality within the Paylocity suite, reinforcing the commitment to delivering a modern workforce solution [14][52] - The focus on digital marketing efforts and virtual selling has been emphasized, with improvements in website performance and lead generation [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about starting more business in January compared to the previous year, despite ongoing COVID-related challenges [10][24] - The company anticipates a COVID-related headwind of approximately 3.5 million to $4 million in Q3 due to lower hiring levels across the client base [27] - Future guidance for Q3 includes expected total revenue in the range of$182.5 million to $186.5 million, reflecting 6% to 9% growth over the same period last year [29] Other Important Information - The company was ranked Number 9 on the Fortune list of 100 fastest-growing companies and received certifications as a great place to work during Q2 [18] - Management highlighted the importance of adapting to new use cases driven by remote work trends and the need for modern HR solutions [99] Q&A Session Summary Question: What lessons have been learned in terms of selling and onboarding customers during COVID? - Management noted that the sales team has successfully pivoted to a virtual selling environment, maintaining engagement and interest through digital means [33][36] Question: How has customer engagement and retention been affected during the pandemic? - Customer retention remains over 92%, with increased usage of modern features like community and video capabilities [40][41] Question: What segments have driven better net new customer additions recently? - The company has seen consistent growth across various segments, particularly in the under 50 employee market [43][45] Question: How does Samepage impact guidance? - The impact of Samepage on guidance is minimal, as it is a small business with no material revenue impact [102] Question: How does the company view the competitive environment and pricing strategies? - Management indicated that the competitive landscape has not changed significantly, with a focus on product and service rather than pricing [83] Question: What is the outlook for the impact of COVID relief bills on business? - Legislative changes create challenges for clients, but the company aims to support them through training and content [64][65]