Financial Data and Key Metrics Changes - Total revenue for Q1 was $408.2 million, representing a 12% increase year-over-year [6][16] - Recurring and other revenue grew by 14% compared to the same period last year [6][16] - Adjusted gross margin improved to 75.1%, up from 74% in Q1 of the previous year [16] - Adjusted EBITDA for Q1 was $146.4 million, with a margin of 35.9%, exceeding guidance by $11.4 million [18] Business Line Data and Key Metrics Changes - The launch of Paylocity for Finance contributed to strong revenue growth, expanding the platform's capabilities [6][7] - The AI assistant's usage has more than doubled, with over 1.2 million questions answered in the past year [8][11] Market Data and Key Metrics Changes - The company reported stable workforce levels at client companies, consistent with previous quarters [28] - The referral channel contributed over 25% of new business in Q1, indicating strong market demand [10] Company Strategy and Development Direction - The company is focused on expanding its AI capabilities across its platform to enhance user experience and drive product adoption [7][11] - Paylocity aims to leverage its broker-neutral position to strengthen its market presence and client partnerships [10][87] - Long-term financial targets have been increased, with revenue expectations rising from $2 billion to $3 billion [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the demand environment and the ability to continue driving growth [28][58] - The company anticipates a positive impact from recent tax legislation changes, benefiting free cash flow by approximately $65 million in Fiscal 2026 [20][72] Other Important Information - The company repurchased nearly 1.2 million shares for $200 million in Q1, reflecting confidence in its financial position [19] - Paylocity was recognized as a leader in multiple HCM product categories, enhancing its market reputation [9] Q&A Session Summary Question: Update on the macro environment and headcount assumptions - Management noted continued stability in workforce levels and maintained flat workforce assumptions for the fiscal year [28] Question: Long-term guidance and AI benefits - Management indicated that both natural business scale and AI benefits contribute to confidence in long-term growth, though it's still early for AI impacts [29] Question: Insights on the Office of the CFO and Airbase acquisition - Management reported strong early traction for the Finance product and positive feedback from clients [34][36] Question: Impact of Paylocity for Finance on long-term financial targets - Management expressed confidence that the Finance solution will achieve margins similar to the rest of the portfolio [82] Question: Competitive landscape and win rates - Management highlighted a differentiated product portfolio and stable demand environment, with a focus on execution [87]

Financial Data and Key Metrics Changes - Total revenue for Q1 2026 was $408.2 million, representing a 12% increase year-over-year [6][16] - Recurring and other revenue grew by 14% compared to the same period last year [6][16] - Adjusted gross margin improved to 75.1%, up from 74% in Q1 of the previous year [16] - Adjusted EBITDA for Q1 was $146.4 million, with a margin of 35.9%, exceeding guidance by $11.4 million [18] Business Line Data and Key Metrics Changes - The launch of Paylocity for Finance contributed to strong revenue growth, expanding the platform's capabilities into the office of the CFO [6][7] - The AI assistant's usage has more than doubled, with over 1.2 million questions answered, indicating increased product adoption [8][11] Market Data and Key Metrics Changes - The company reported stable demand across its target market, with workforce levels at clients slightly up year-over-year [28][58] - The referral channel contributed over 25% of new business in Q1, demonstrating strong performance in the broker channel [10] Company Strategy and Development Direction - The company is focused on expanding its AI capabilities across its platform to enhance user experience and drive business impact [7][11] - Paylocity aims to leverage its differentiated value proposition to capture a larger share of the HCM market while expanding into finance and IT [41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the operating environment and the ability to maintain flat workforce levels throughout the fiscal year [28] - The company raised its fiscal 2026 guidance due to strong Q1 performance and confidence in ongoing growth [24][25] Other Important Information - The company repurchased nearly 1.2 million shares for $200 million in Q1, reflecting confidence in its cash flow and business outlook [19] - The average daily balance of client funds was approximately $2.9 billion in Q1, with expectations to increase to $3 billion in Q2 [21] Q&A Session Summary Question: Update on macro trends and headcount assumptions - Management noted continued stability in workforce levels at clients, with flat assumptions for the fiscal year [28] Question: Long-term guidance and AI benefits - Management indicated that while AI is still in early stages, it provides incremental confidence for multi-year growth [29] Question: Office of the CFO and Airbase acquisition - Management reported strong early traction for the Finance product, with positive feedback from both new and existing clients [34] Question: Impact of Paylocity for Finance on long-term targets - Management expressed confidence that the Finance solution will achieve margins similar to the rest of the portfolio [82] Question: Demand environment across employee segments - Management observed stable demand across all segments, with strong execution from go-to-market teams [58] Question: Sales cycle changes with new product offerings - Management confirmed no elongation in sales cycles, maintaining a focus on efficient go-to-market strategies [78]

Financial Data and Key Metrics Changes - Total revenue for Q1 was $408.2 million, representing a 12% increase year-over-year, with recurring and other revenue growth of 14% [4][13] - Adjusted gross margin improved to 75.1% from 74% in the same quarter last year, reflecting 110 basis points of leverage [13] - Adjusted EBITDA for Q1 was $146.4 million, with a margin of 35.9%, exceeding guidance by $11.4 million [16][23] Business Line Data and Key Metrics Changes - The launch of Paylocity for Finance has expanded the company's offerings, contributing to strong demand across HR, finance, and IT functions [5][10] - The AI assistant's usage has more than doubled in the past year, with over 1.2 million questions answered, indicating increased product adoption [6][9] Market Data and Key Metrics Changes - The company reported strong client retention and a stable demand environment across its target market, with workforce levels at clients slightly up year-over-year [8][49] - The referral channel contributed over 25% of new business in Q1, demonstrating the effectiveness of the broker channel [8] Company Strategy and Development Direction - The company is focused on driving innovation through AI and automation, enhancing user experience and operational efficiency [5][11] - Long-term financial targets have been increased, with revenue targets raised from $2 billion to $3 billion and adjusted gross margin targets increased to over 80% [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the workforce levels and the ability to maintain growth, with a focus on prudent guidance [25] - The company anticipates continued strong performance in Q2 and throughout Fiscal 2026, driven by the success of its AI strategy and product offerings [22][23] Other Important Information - The company repurchased nearly 1.2 million shares for $200 million in Q1, reflecting confidence in its cash flows and business outlook [17] - The average daily balance of client funds was approximately $2.9 billion in Q1, with expectations of $3 billion in Q2 [19] Q&A Session Summary Question: Update on the macro environment and headcount assumptions - Management noted continued stability in workforce levels and maintained flat workforce assumptions for the fiscal year [25] Question: Long-term guidance and drivers of upside - Management indicated that both natural business scale and AI benefits contribute to confidence in long-term growth, though it's still early days for AI [26] Question: Insights on the Office of the CFO and Airbase acquisition - Management reported strong early traction for the Finance product, with positive feedback from clients and prospects [30] Question: Drivers for adjusted EBITDA guidance - Management emphasized a level of prudence in guidance despite strong Q1 performance, with flexibility to make investments as needed [33] Question: Opportunities in IT department offerings - Management highlighted the potential for leveraging employee data for asset and identity management, indicating early positive feedback from clients [36] Question: Demand environment across employee segments - Management observed stable demand across all segments, with strong execution from go-to-market teams [49] Question: Impact of AI on product adoption - Management noted that AI investments are driving broader product adoption and simplifying user experiences, leading to increased value for clients [56] Question: Changes in sales cycle due to new product offerings - Management confirmed that there have been no elongations in sales cycles, maintaining a focus on efficient go-to-market strategies [66]