Good day, everyone, and welcome to today's Paychex fourth quarter and fiscal year-end earnings conference call. At this time, all participants are in a listen-only mode. Later, you will have an opportunity to ask questions during the question-and-answer session. You may register to ask a question at any time by pressing the star and one keys on your touch-tone phone. Please note that this call is being recorded and that I will be standing by should you need any assistance. It is now my pleasure to turn today's program over to Mr. Martin Mucci, Chairman and Chief Executive Officer. Sir, please begin. Thank you, and thank you for joining us for our discussion of the Paychex fourth quarter and fiscal year 2022 earnings release. Joining me today are Efrain Rivera, our Chief Financial Officer, and John Gibson, our President and Chief Operating Officer. This morning, before the market opened, we released our financial results for the fourth quarter and full year ended May 31, 2022. You can access our earnings release on the investor relations website, and a Form 10-K will be filed with the SEC before the end of July. This teleconference is being broadcast over the Internet and will be archived and available on the website for about 90 days. We will start today's call with an update on business highlights for fourth quarter and the fiscal year. Efrain will review our financial results and outlook for fiscal 2023, and we will then open it up for your questions or comments. We are very pleased to close out our fiscal year with yet another strong quarter. Our successful fiscal 2022 results reflect strong execution across the company. This includes our sales teams highlighting our value proposition, our service teams in retaining clients, our cross-functional partnership to get new products in front of clients quickly, and a solid success in HR outsourcing and in the mid-market. Our adjusted diluted earnings per share growth of 24% reflects both strong revenue growth and margin expansion to an operating margin of approximately 40% for fiscal 2022. Our focus on cost control, lower discretionary spend, and operating efficiencies has allowed us to both invest in our business and expand operating margins. Macroeconomic trends have been positive this year, but with inflation at a 40-year high, there are concerns for potential of a recession in the near future. We continue to monitor key leading indicators for any signs of a change in the macroeconomic environment, but have not seen any signs of deterioration at this time. Typically, the first signs of a macroeconomic recession would be a decline in employment levels at existing clients, an uptick in non-processing clients, or a slowdown in sales activities. These indicators continue to trend in a positive direction. The latest Paychex IHS Markit Small Business Employment Watch reflected 12 consecutive months of increasing hourly earnings gains, though we did notice a bit of slowing in the pace of job growth in May. However, this is more reflective of being near full employment and the difficulty of finding employees. Job growth at U.S. small businesses remains strong in the face of a tight labor market and inflation pressures. Earlier this year, John Gibson was appointed President and Chief Operating Officer. John has been leading our service operations since 2013, and we're glad to introduce you to him on this call and have him participate. I will now turn it over to John, who will give us an update on our sales and service performance. John? Thank you, Marty. I'm happy to be joining all of you today on this call and provide an update on our performance both for the fourth quarter and full fiscal year 2022. We finished the year with over 730,000 total payroll clients, with growth driven by both strong sales and retention. In addition, we now service approximately 2 million worksite employees to our ASO and PEO offerings, with 18% growth in the fiscal year. We had a record level of new sales revenue for both the fourth quarter and full fiscal year. Our sales teams truly executed across the board, from digital sales in the low end and continuing momentum in the mid-market, and very particularly strong demand in HR outsourcing and retirement. This reflects the strength of our value proposition and was aided by the improved sales productivity by our continued investments in demand generation and sales tools. Our service teams have worked tirelessly to both support our clients and our sales growth throughout the year. We are very pleased with our revenue retention, which was comparable to our pre-pandemic record of last year. We have continued to make strong progress in hiring, and we actually accelerate some hiring into the fourth quarter to ensure we are fully staffed and ready to execute our goals in fiscal year 2023. We believe that by partnering with our clients and remaining agile and flexible in how we meet those needs, we will provide them the ability to focus on running their business and increase their success in navigating today's very complex business environment. Their ability to rely on Paychex to make the complex simple will result in their continued success and will, of course, then lead to continued elevated retention that benefits everyone. I'll now turn the call back over to Marty. Thanks, John. We continue to help our clients deal with the issues they consider most pressing. We were recently recognized for doing just that by receiving the HR Tech Award from Lighthouse Research & Advisory for the best SMB-focused solution in the core HR workforce category for the third consecutive year. What stood out about Paychex Flex was our ability to rapidly respond to changing conditions, delivering a product that is consistently up to date on the latest requirements. We have been able to help clients navigate challenges, including recruiting and retaining talent during the great resignation, gaining access to government stimulus programs like the Employee Retention Credit, enhancing benefit offerings, and transitioning to a digitally enabled distributed work environment. Our strong and resilient product suite of HR, payroll, insurance, retirement, and PEO have been strategically designed to help businesses maximize every opportunity presented to them. We continue to see expanded utilization of our recruiting and applicant tracking solutions designed to help businesses find talent in a low unemployment environment. Our deep integration with Indeed is helping our clients gain access to a strong set of candidates. Over 70% of the client employees hired through our Flex recruiting and applicant tracking module were sourced from Indeed, the world's largest job posting site. Our retirement solutions are also experiencing record demand due to state mandates and the need for differentiated benefit offerings to retain top talent. The introduction of our Pooled Employer Plan further differentiates our solution set. We now help over 104,000 businesses and over 1.3 million client employees save for a dignified retirement with industry-leading mobile technology, which allows employees to enroll in their retirement in just four clicks. HR has historically been tasked with helping businesses stay compliant and manage their talent. With Paychex HR, we deliver on these goals while also helping businesses operate more efficiently. Paychex HR helps businesses replace paper with modern, easy-to-use digital processes through our cloud-enabled Flex mobile technology. Given current challenges with hiring and the rising costs brought on by inflation, we address head-on the need for businesses to operate more efficiently. Over 1.7 million client employees were onboarded through a completely digital experience during fiscal 2022. Maximum gains and efficiency are obtained when the leading technology we bring to payroll HR and time collection and scheduling are brought together. Paychex PreCheck debuted in January, and the early adopters of PreCheck have benefited from the proactive approach of letting their employees preview and approve their checks prior to processing. Prospects have been excited about the time savings and problem avoidance that comes with PreCheck. We also continue to innovate in the PEO space. Paychex PEO offers a continuum of benefits that is unique to our clients, from traditional health, dental, and vision funded by the client to comprehensive employee volunteer packages, including options for employees to purchase anything from critical illness policies to pet insurance, to new and emerging benefit offerings like student loan subsidies, robust benefit offerings designed for part-time employees, telemedicine, and mental health counseling. Our Paychex PEO provides a differentiated approach to benefits designed to help our clients attract and retain top talent. Managing cash flow is also a top priority for businesses as they are struggling to address the impact of supply chain issues and rising inflation. We continue to find ways for customers to access government stimulus, including helping our clients gain access to over $8 billion in employee retention and paid leave tax credits. This builds on the momentum of our $65 billion of PPP loan program initiative in 2020. Our award-winning PPP forgiveness tool has been instrumental in helping our clients transition 96% of those loans to full loan forgiveness. At Paychex, we know our employees are critical to who we are and what we do, and I believe that our focus on employees and their well-being has helped us manage through the competitive labor market. We are identified as one of America's best employers for diversity by Forbes Magazine, and we're recognized by Business Group on Health for offering one of the nation's top health and well-being programs with the Best Employers Excellence in Health and Well-being Award. As fiscal 2022 came to a close, I'm very proud of the excellent results we had for the year and excited about our continued growth. I wanna thank our 16,000 employees who are key to our success and have done a tremendous job in this ever-changing environment. With that, I will now turn the call over to Efrain Rivera to review our financial results for the fourth quarter and fiscal year, as well as our guidance for fiscal 2023. Efrain? Thanks, Marty, and good morning to all of you. It's great to join you at the end of one of the most successful years in the company's history. Despite the success, what you have from us and will always have is a team that's grounded and will continue to work to deliver shareholder returns that lead the market. I'd like to remind everyone that today's conference call will contain forward-looking statements. Refer to the customary disclosures. I'll periodically refer to some non-GAAP measures. Please refer to the press release and investor presentation for more information. They're pretty modest adjustments. I'll start by providing a summary of our fourth quarter financial results, quickly hit on full year results, and then provide some guidance for fiscal 2023. For the fourth quarter of fiscal 2022, as you saw, both service revenue and total revenue increased 11% to $1.1 billion. Management Solutions had another strong quarter, increasing 12% to $845 million, driven by higher revenue per client and growth in our payroll client base. The higher revenue per client reflects product attachment across our HCM suite, higher employment levels within our base, pricing revenue from ancillary services, including our ERTC service. ERTC revenue reached approximately 1% of total service revenue. That's for the year. While we do not anticipate this revenue stream to continue at that level, there still remains a significant opportunity both inside and outside our base. PEO and insurance solutions revenue increased 10% to $284 million, driven primarily by higher average worksite employees and health insurance revenue. Interest on funds held for clients increased just 2% for the quarter to $15 million, due primarily to growth and average investment balances. Note that while recent rate hikes did not have a significant impact on the fiscal quarter, they will provide a tailwind for next year. Total expenses increased 11% to $750 million. The growth in expenses resulted primarily from higher compensation costs due to increased headcount to support our growing client base, wage rates, and performance-based compensation. In addition, we continued to invest in our products, technology, and marketing. I just wanna call out the margin in the quarter. We made very deliberate choices in the fourth quarter to invest back in our client base and in our, among our employees. That's why all of the flow-through did not go down to the bottom line, and that was a deliberate choice that we think leads to the future sustainability of the business, and we think we're positioned very well as a result of those choices. Operating income increased 11% to $394 million, with an operating margin of 34.4%. Adjusted operating margin was flat for the reasons I just said, and we anticipated some hiring and marketing spend and pulled that into Q4. Net income increased 13% for the quarter to $296 million, and diluted earnings per share increased 12% to $0.82 per share, despite all of that investment. Adjusted net income and adjusted diluted earnings per share both increased 13% for the quarter to $295 million and $0.81 per share, respectively. As I said, the adjustments were relatively modest. Full year fiscal 2022, let me touch on that quickly. You saw total service revenue and total revenues both increased 14% to $4.6 billion. Expenses, including one-time costs incurred during the prior year, increased 8%. Operating income and adjusted operating income increased 26% and 23%, respectively, to $1.8 billion. Adjusted operating margin was 39.9%, an expansion of 310 basis points over the prior year, and I just call that out. You will search high and low to find someone, companies that are at that level. We delivered that. We delivered that while investing in the company because we think that we're not playing a game for the next quarter or the next year, we're playing a game for the long haul. That's what you do when you're that kind of company. Diluted earnings per share increased 27% to $3.84 per share. Adjusted diluted earnings per share increased 24% to $3.77 per share. I'm really proud of our financial position. We delivered all of that, and our financial position remains rock solid with cash, restricted cash, and total corporate investments of $1.3 billion. Total borrowings were $806 million as of May 31. Cash flow from operations was $1.5 billion during the fiscal year. We translate earnings into cash. That's what we do. Free cash flow generated for the year was $1.3 billion, up 20% year-over-year. Earnings and cash flow were really strong this year. Given the strong performance and our commitment to returning capital to shareholders, in May, we increased our quarterly dividend 20% to $0.79 per share. As many of you know, we have one of the leading dividends, certainly in our sector and industry. During fiscal 2022, we paid out a total of $1 billion in dividends, and we also repurchased 1.2 million shares of Paychex common stock for $145 million. Our 12-month rolling return on equity was a superb 45%. Now, let's talk about 2023. I'm going to turn to the upcoming fiscal year, and our current guidance is as follows. Management Solutions revenue expected to grow in the range of 5%-7%. PEO and Insurance Solutions is expected to grow in the range of 8%-10%. Interest on funds held for clients is expected to be in the range of $85 million-$95 million. Let me just call out that this reflects increases in line with what we understand the Fed is saying through the end of this calendar year. What does that mean specifically? It means that we think that interest rates by the end of calendar year 2022 will be approximately 3.25, give or take, and we are assuming that in our plans at this stage. Total revenue is expected to grow in the range of 7%-8%. Adjusted operating income margin ex-ERTC is expected to be in the range of 40%-41%. Not only did we deliver a 300 basis point increase, we are committing to additional leverage as we go into next year, despite having made a lot of investments in the business as we've gone along. Adjusted EBITDA margin is expected to be another stellar 44%. Other expense, net is expected to be in the range of $5 million-$10 million. Just so you all remember, that is a combination of both interest expense less the income on the portfolio. That's why it's $5-$10 million. We expect that we will see income from the portfolio offset some of the interest expense. Our effective income tax is expected to be in the range of 24%-25%, and adjusted diluted earnings per share at this point, we expect to grow in the range of 9%-10%. This outlook assumes the current macro environment, which, as all of you know, has some uncertainty. We, like you, week to week, struggle to understand sometimes what are the signals that are coming out of the federal government. I wanna reiterate something that Marty said. The indicators in our business are strong as we exit the year. That's not a concern certainly in the first half of the year, in as much as we see it right now. Second half, we will see. Where's inflation gonna be? Don't know that. What is the Fed exactly going to do? We think we have some indicators. We will see what they end up doing. We obviously, given all of those comments, have better visibility into the first half of fiscal 2023 than the second half. Here's what we think about the first half. In the first half of the year, at this stage, we expect total revenue growth to be in the range of 8%-9% with an operating margin of approximately 39%. That's what we think will happen in the first half. Then for the first quarter, getting a little closer, we currently are anticipating total revenue growth will be in the range of 9%-10% with adjusted operating margin in the range of 39%-40%. Of course, all of this is subject to current assumptions, which are subject to change. We'll update you again on the first quarter call. Let me refer you to the investor slides on our website for additional information. With that, I will turn the call back to Marty. Thank you, Efrain. Operator, we'll now open it up for questions or comments. Yes, sir. At this time, if you would like to ask a question, please press the star and one keys on your touch tone phone. You may remove yourself from the queue at any time by pressing the pound key. Once again, that is star one to ask a question. Our first question will come from David Togut with Evercore ISI. Thank you. Good morning. Appreciate all the helpful call-outs, Efrain, on fourth quarter margin impacts. Could you frame in your fiscal 2023 revenue and margin guidance, specifically three things. First, what impact are you assuming from inflation on wage and other expenses? Second, if you could quantify your fiscal 2023 price increase. Third, if you could bracket for us your expectations on client revenue retention. You know, we're coming down from the pandemic-driven peak. How should we think about year-over-year change in client revenue retention FY 2023 versus FY 2022? Thanks. Okay. Hey, David, thanks for the questions. By the way, that triple header there could take us about 30 minutes. We'll try to make it. I'm gonna let Marty talk to the inflation question because I think that's a good one and kind of how we think about it in the year. It's baked into the numbers, obviously. We won't quantify a specific number, but we'll tell you about what we're thinking about with respect to inflation and how it's affecting us, how we expect it will impact us. Yeah, I'll touch on it, David, now, and Efrain can jump in any place. I think, you know, from an inflation, most of our expenses obviously are wage. We're not really impacted obviously by a lot of material impacts, which is very good for us. The wage stuff we've captured in these numbers, we think the wage increases are a little higher. As Efrain mentioned, we took some steps in the fourth quarter that some were one time, other were wages that we built in a little bit higher from a competitive market standpoint. The one-time things were some year-end bonuses and so forth that we did given our very successful year for employees. We think we've captured it very well. Wages are a little bit higher than we would normally go. That's expectation. That happens in this first quarter, basically, that the wages hit, and we think we've captured them well. Other than that, really not an overall large impact. We've controlled expenses very tightly, even coming out of the pandemic. Things that we learned and experienced there with working from home, having sales remote, much less T&E costs. We've been able to continue that trend, yet still invest in the business. I think the guidance you have there is very strong from a financial standpoint that we've got those inflationary numbers in there. Yeah. I think the thing I wanted to call out that Marty mentioned is that we in the fourth quarter took a lot of actions that we think position us very well for 2023. I think we've captured as much as we know right now. There's always some room to make further adjustments, but the adjustments from an inflationary standpoint are really around wages for us. I think we've captured that. On the price increase, we have always said that we're in the 2%-4% range. I would say this is a year that certainly was at the high end of that range, and it varies depending on the product. I think the key thing there is to get the right mixture of value and price, and it's not just about raising prices, it's also about delivering better value. I think we're good there. On the client retention, we had a really good year. John mentioned earlier that you know, our pandemic high was approximately a record, and it was approximately 88%. When we closed the books this year, we were at approximately 88%. We had a really good year from a revenue retention standpoint. There's lots of elements to that, but I think we've made a lot of strides from where we were probably three, four, five years ago. That's those are the answers to your question, David. Efrain, what are you assuming for FY 2023 client retention? Can you sustain the 88%, or are you assuming some step down? I think it's comparable. I gotta say that, you know, it wouldn't be surprising to see a little bit of slippage from that number simply because I think we're transitioning into a more normalized environment where you're gonna see lots of competition. Our assumption in our plan is that discounting will go up a bit because of the level of competition. Everyone's come out of the pandemic swinging. I think some people are in better shape, others are wobblier. We think we're in pretty good shape, and we we're in a position to defend pretty well. The other thing I would say on that's really helped us in the year is we had a really strong year in the mid-market. I'll let Marty talk to kind of what happened there because that's really helped us, too. Yeah. On the revenue retention side, it's a good point to make that we'll make probably a couple times on this call. The mid-market really picked up. You know, as we said probably a year ago, there was kind of a pent-up demand that we saw a year ago where people had not made some decisions. That opened back up, and we've been winning a lot, mid-markets. The strongest year we've been in mid-market probably in our history. I think it's a great combination of sales execution, the products and the full suite of products that we're offering that is really tailored to exactly what clients are looking for now. We've had a lot of success there, which certainly helps on the revenue retention from a go-forward standpoint. Not only are we selling better in that mid-market, but we're retaining in a very strong way as well. Understood. Thank you very much. Okay. Thank you. Thank you. Our next question will come from Kevin McVeigh with Credit Suisse. Great. Thanks so much, and congratulations. Hey, I don't know if this is for Martin or Efrain, but clearly the retention feels like it's structurally at a higher level. Like it may ebb and flow within a higher level of range. Maybe just help us understand kind of what drove that. Was that kinda just the service post-COVID or a more robust product offering? Is there any way to kinda think about what drove the structural? Again, realizing it probably comes off, but it feels like you're in a structurally higher level clearly than where you were in kinda 2007. Yeah. I'll start. I definitely think, Kevin, that it. You know, there's consistency there. I think structurally you're right. We've seen really better from a controllable perspective. We've definitely seen a trend of continued strength there. I think part of it is really the product side. Certainly, I'll take it from the product side and then have Jon talk about the rest of it. The products have just been very responsive and the continued use by the clients and their employees have made the retention stick. You know, we've talked about that for many years, but I don't think that's ever been stronger, and it really accelerated during the pandemic as people were much more distributed in the workforce. Remote workforces really got to use and had to use the technology more, the mobile app, for example, and online use as well. The mobile app really got clients and their employees to use it more. That leads to better retention because clients and employees don't wanna give it up because they have things like PreCheck. They're seeing their check before it's cut. Hey, they are seeing what their time is that they've turned in. Everything looks good. They know what they're gonna get paid. They're able to change their retirement or see their retirement funds, you know, on the mobile app and change everything. They're able to onboard in a paperless fashion. They're making their own direct deposit changes, their bank changes and other things. All of that, as we talked about over the last few years, I think has led to that structural improvement, which is, hey, the employees of my client want to stay with Paychex because they're invested in us, not just the client's payroll or HR person. I'll ask Jon to add to that as well, but I think that's a big piece of it. Yeah. No, Marty and Kevin, I would say this is probably a multi-year story. You go back before COVID, things we've been doing in our service model to differentiate our service focus, things we're doing relative to competitive retention triggers, using AI and analytics to anticipate where we may have issues. All of those things have really led to us be getting a better handle on our controllable losses. If you look, you go back to 2018 or fiscal year 2019, you can really begin to see that dramatic piece. I would tell you, particularly to Marty's point, not only what we've done from a service perspective with relationship management and the upper market, things we're doing there in our HR outsourcing pieces, but we know that product attachment, particularly in retirement, particularly in HR, particularly attachment and utilization of our Flex product and technology tools lead to stickiness, and we've been very aggressive in introducing our clients to that capability. That's also creating a degree of stickiness. I mean, just. You know, I look at this all the time, and in fact, our price-value losses were actually less this past fiscal year than they were at the record year. If I go back to 2018 and 2019, it's about half of what we would typically have seen historically. There's a structural component to this that we're gonna continue to execute. There's more we can be doing there, and I feel good about what we can do on the controllable side. The uncontrollable is always a thing we're monitoring and watching. Got it. Just one quick follow-up. Efrain, I'll ask, I don't know if you could tell us, like in terms of the fourth quarter investment, it sounds like it was a little more variable. Is there any way to kinda frame what that was? I'd imagine it was more kind of variable as opposed to fixed costs, that would kinda repeat in 2023. Is that fair? I guess so. Kevin, let me answer it in a slightly different way, and then hopefully it's responsive to what you're saying. There were a mixture of one-time things that we did that were variable. There were things that we did structurally to increase wages in certain areas, and then there were things that we put in place for as long-term incentives. You know, I would say one of them was one of those with respect to employees was more one time, and the other two were structural and will be there longer term. There were some other items that were not wage related that were also variable that we did in the fourth quarter. It was a mix of both. I, you know, I wouldn't characterize it one way or the other in terms of percentages, but there were three buckets there that ended up being part of the expense base. I think as Efrain said, you know, all of that obviously is in the guidance of increasing the margin. Even though some were more structural and ongoing wage expense or bonus expense, that's all in the increasing operating margin over 40%, you know, next year in the guidance. Yeah, that's important. Super. Thank you all. Okay, thanks, Scott. Thank you. Our next question will come from Bryan Bergin with Cowen. Hi, guys. Good morning. Thank you. Commentary on Q4 is broadly positive here, but I'm hoping you could dig in more specifically on some of those key leading client indicators and what those have been telling you in recent weeks. Can you give us a sense on what you're specifically measuring there? Yeah. Bryan, what we did was we kind of dusted off forward indicators that we were looking at during COVID. We go down to daily punches by employee. What are daily punches? I'm talking about daily hours clocked by employees at our clients. Obviously we have access to that information. We're looking at that on a daily, weekly, monthly basis to understand what are the trends. We look at sales, and we look at losses. That's pretty obvious. Then we look at other micro indicators in terms of engagement with our systems and platforms. We put all of that together and look at those indicators to tell us are we seeing any sharp changes. On top of all of that, Martin mentioned we have the I... Not the IHS employment index that we're looking at 350,000 clients, what's happening with that base. When you put that all in the blender, at the moment it doesn't look significantly different than the trends we've been seeing in the first half of the year. You know, look, you guys are looking at a ton of different pieces of information. All I can say is with respect to our corner of the HCM world and our corner of this part of the economy, things are looking about the way they looked. At this point, neither inflation nor the beginning to be sharp rises in interest rates seem to be slowing things down. Having said that, I will temper, as you all know, with a note of caution. Things could change, but at this point, we're not seeing it. Yeah. The thing that's consistent, Bryan, is the demand, you know, that small and mid-sized businesses still seeing a great demand for products and services and it's finding people. So job growth, if anything, if it's slowed in the index, this is under 50 employees, as Efrain said, you know, the growth is still there, but it's slowed a little bit. It's more because you're not being able to find the employees. Everybody knows that you're hearing, particularly frontline leisure and hospitality and other service functions, trying to find people. The demand is still there, so there's a hunger for the need. You'll hear it over and over. The reason that ASO and PEO have performed so well in sales and in client retention is because there is such a need for HR support in recruiting, in hiring, in engaging, in training. I mean, there is just a huge need for not only our technology in the HCM space, but our over 650 HR specialists who are there to help them with those things. Okay. As we think about fiscal 2023 and the forecast you built, can you unpack, you know, within management solutions specifically, are you still anticipating ASO retirement and some of these other areas to grow double digits versus kind of the payroll and HCM? Can you just help us with the underlying business areas in that segment and how you're thinking about growth in 2023? Yeah, that's about right. I think that you know we see strong demand in those areas continuing through 2023. Obviously on the HCM side, which we haven't said specifically, but which is implicit, you're not gonna see the macro uplift in terms of the number of employees on the payroll. That just is part of the recovery from the pandemic that's normalized partly based on some of the things that Marty has said. Demand for all of the other management solution services is still very, very robust, I'd say. We're very bullish on all of those other businesses. The other thing that we hadn't mentioned yet is that the work that we did. I mentioned Employee Retention Tax Credits and the paycheck protection loans. The Employee Retention Tax Credit service, you know, that we really, the teams really got this down to a very tight process, and we were very successful in getting $8 billion between those credits and other credits to our clients. That has helped actually spur additional sales where they said, "Hey, now that you've given me all this value." I think the average, you know, Employee Retention Tax Credit was around $180,000 per pretty small business at times. You know, that generated a need to say, "Hey, help me try your HR service. Let me do some other things. We see that continue, that we'll be continuing to have success with the ERTC in this year. We're already off to a good start this year, so a lot of clients still finding a huge benefit from getting that government subsidy. All right. Thank you. Okay. Yeah, you're welcome. Thank you. Our next question will come from Ramsey El-Assal with Barclays. Hey, thanks for taking my question this morning. I was wondering if you could give us an update on the sort of mix of your sales channels. I know that digital is clearly a highlight of the model. I'm just curious in terms of how the various contributions from your different sales channels have trended over time. John, do you wanna- Yeah, yeah. Ramsey, yeah, as you can imagine, we've continued to see digital sales continue to increase, particularly in the pandemic. What I would tell you both in terms of our surepayroll.com and paychex.com, we've seen good attach rate there and good traction there. But I would also say really across all of our sales channels, we've seen very strong demand characteristics. We're finding clients doing more hybrid shopping, so starting off maybe on paychex.com and then ending up in a discussion about how we can help them with ERTC and then other products and services. I think our sales team has done a very good job of pivoting when the pandemic hit, adjusting to the new reality of how people are buying, and we continue to see and find ways that we can adopt that to drive not only more sales, but also sales productivity. That's the other thing that we've seen really increase through this. Okay. Also, if you wouldn't mind commenting on the competitive environment kind of coming out of the pandemic. I'm curious if you perceive any changes, whether you're running into fewer competitors out there in the marketplace or more, or you know, how would you characterize how the competitive landscape has evolved? Yeah, it's Marty. I'll start. I think we're seeing it fairly consistent, although I would say that things like the ability to offer the PEP plan and retirement, you know, we were the first out of the gate with the PEP plan. We've had great success with the Pooled Employer Plan for retirement. You know, other competitors have not offered that yet, not all competitors, so we've really jumped the market on that one and did very well. I think, again, if you go back to us going to the client and prospect and saying, "Hey, we have Employee Retention Credits that we think you can receive, and let me go through that with you," we've jumped the gun over a lot of competition with that. I'm surprised at the lack, frankly, of participation in that market. We've done very well with that, which has helped our sales and bring value to prospects and current clients. I think generally the competitive environment is the same, but I actually, but I also think that some of our product improvements and introductions have really positioned us a little bit stronger. I think particularly in the mid-market, you know, mid-market that we haven't been as strong, I think, if you went back four or five years ago, as we wanted to be. The introduction of the products over the last three years really positioned us to have a really strong sales response this last year, and it's continuing into the first quarter. We're feeling very good about the mid-market in particular. Got it. All right. Thank you very much. Okay. Thanks, Ramsey. Thank you. Our next question will come from Jason Kupferberg with Bank of America. Good morning, guys. Just wanted to start on HR management. I know you mentioned increased attach rates there, and wondering if you can provide any quantification perhaps on that front for certain products that are driving that dynamic. Yeah. Hey, Jason. Hi. We'll update the number of clients in the 10-K, so you'll see that. We're approaching. We're between 40,000 and 50,000 clients. You'll see a pretty strong double-digit growth in the number of clients there too. We'll give you an exact number that you can look at when we file the 10-K in a few weeks. John mentioned, I think that, you know, we've hit over 2 million worksite employees in the HR space between our products and HR outsourcing. Also, you know, great attachment in things like time and attendance. You know, we've been, you know, even something that we don't talk about as much, time and attendance, we've introduced the new latest technology, iris scan clocks. These are clocks, whether you're wearing a mask or not. They're non-touch. They're kiosks that you just use your iris, your eyes to scan. Between that and the mobile punch in and punch out, we've seen very good attachment in time and attendance. When you have time and attendance and Flex, you now can use PreCheck. PreCheck is now sending a note, as I said, to employees and saying, "Okay, you, we've got you recording this many hours of working. This is your check. Do you see any issues with it? If you don't see issues, let us know that you confirmed it. If you have issues, let your employer know." We're seeing about 5% of the time. They're finding some issue that the employer, their employer, didn't catch something right, and that's resolving the issue before the payroll's cut. That is huge benefit. You're seeing more attachment and use again by employees of clients. The attachment of time and attendance and PreCheck and retirement, all those things are making better retention, and we're seeing attachment go up. Okay. Thanks for that. I wanted to ask a follow-up just on float income. It looks like that's forecasted to be up about $30 million year-over-year, and assuming you get 100% flow through on that, it looks like that would drive about 60 basis points of margin expansion, if our math is right. That would basically get you to the midpoint, or roughly the midpoint of your margin guide for fiscal 2023, which would kind of suggest flattish margins in the core business. I wanted to check on all that, see if you agree with that general assessment. I guess just wondering if you can remind us a bit on duration of the portfolio, just, you know, given the magnitude and trajectory of rate hikes, you know, perhaps some would have thought even a, you know, a bigger increase in float income for this upcoming year. Thanks. Yeah, interesting math. I think I wouldn't probably dispute the math, Jason. I would say that the only comment I would make with respect to looking at the business that way is that when you put a plan together, what you're doing is making choices around a lot of different investments. Even in a plan where we choose to increase margins 50 basis points, there are investment choices being made in that process. While I think your math is probably not far off, that doesn't indicate that there isn't leverage, underlying leverage in the business. It's just that we chose to deploy that in different parts of the business. Could have had greater flow through. Some of it was some of the choices that we made with respect to wages and other items that we discussed previously. The second thing I'd say on everything we do, especially in the area of how we look at the portfolio, there's an element of conservatism in the way we think about it. This is an unusual year in the sense that the Fed has said certain things. They change it, but they've been saying certain things, and we have to incorporate the outlook that they have given. To the extent that that changes, then we'd come back and have different discussions, which could, in some ways, impact other parts of the P&L. We'll have to walk through that when we get there. We have ways to get more leverage if we choose to use it. The final point is that right now the duration's a little bit over 3, and our portfolio is positioned about half and half short-term and long-term. We have a lot of levers to pull there if we want to adjust duration on the portfolio, either to go longer or even shorter if we wanted to. I wouldn't quibble with your math. I just would quibble with your conclusion a little bit about the underlying leverage in the business. Good call. Yeah, appreciate that. Thanks, Efrain. Sure. Thank you. Our next question will come from Bryan Keane with Deutsche Bank. Hi, guys. Good morning. Efrain, how would you compare the preliminary guidance for fiscal year 2023? I think you gave last quarter high single digit revenue growth to 50 basis points of margin expansion with the detailed guidance. Just wanted to figure out if there were some adjustments you made either due to macro or some other factors. Yeah. I'd say, Bryan, kind of if I was looking at it, you know, I think we said approximately 7 or so. This is a little bit stronger. The thing that, you know, I called out at 3Q was we knew ERTC was not gonna recur. I called that out as 1% of this year's revenue. That was a little bit of a hurdle that we were gonna have to overcome. I think we've overcome that to a significant degree, although it won't be as high as it was last year. You know, the other factor really was around what happens with employment levels. That really is the tough part. Marty called it out. There's demand there for people, but there are unfortunately not as many people to fill those jobs. What we're seeing, by the way, in the market is more creative use of things like part-time employees to fill jobs that otherwise would have been filled by full-time. That's not a bad thing for us from a wage perspective, but it's a little bit different than the way maybe we would have thought about it two or three years ago. The final point is that, look, the Fed and you are looking at this just like we are. There's a lot of variability there. Let's just put it that way. We haven't assumed anything beyond about 3.25% increase. The back half of the year is gonna be very interesting from our perspective, just in terms of what happens with whether there's a soft landing or not. We've tried to create a plan that gets us through what we understand the current environment to be. This guidance that you see here is a little bit stronger on the interest side than we were when we said this in March, April, but because the Fed's changed some of its thinking. Having said all of that word salad basically says a lot of stuff could change. We'll update you. I would say in terms of the macro, it's probably as changeable as any of the, you know, 11 or 12 plans I've been involved with here. Got it. Just at a high level, as you know, there's a lot of worry about a movement towards an economic slowdown in a recession, how does the model hold up just on a high level in the recessionary environment? Or, you know, what are some of the variables that could impact the model if we do see a recession in the U.S. and globally? Yeah. I think we called that in the comments, I think in Marty's. You know, where we would see it, obviously is you'd see less clients processing. That's the first part that you'd see even before you saw slowdown in demand. There's an interesting offset, Bryan, that we saw during the pandemic, is that it actually sometimes retention picks up in those kinds of environments. What's the net-net of that? I don't have a crystal ball on that. I think it would help to offset some of the softness on the revenue side. It depends also what's happening with interest rates. If interest rates remain at current levels or because of a slowdown, the Fed decides, well, we're gonna just ratchet them down, that would have an immediate impact from a revenue standpoint. I think if it's gradual, we'll manage through it, and I think we certainly will manage through it. We have a good shot at managing through on the bottom line. I think that we're prepared to handle that. If it's abrupt, it's really tough to manage through those kinds of situations. Got it. Very helpful. Thanks, guys. Okay. Thanks, Bryan. Thank you. Our next question will come from Andrew Nicholas with William Blair. Hi, good morning. Thanks for taking my questions. I wanted to follow up on that last comment you made, Efrain. Maybe spend a bit more time, if you could, on the flexibility of the expense base in a more challenging economic environment. Where are some of the areas where you have a bit more leeway to manage that bottom line relative to an environment that you've been in here over the past year or two, where margins are at very strong levels? Well, I'd say three things. The first thing is, in an environment like this, you have to have the appropriate level of areas in the P&L to go if you see a slowdown. We assume that we'll manage through the current environment as it is, and if it gets a little bit worse, we can handle that. We've taken appropriate precautions, is what I would say on that. That's the first thing. The second thing is that, you know, we have a unique model where we and we do this quite a bit. We don't talk about it, but we do it. To the extent that the client base doesn't flex up in the way we do, we simply don't do the hiring that we expect to do. If we don't do the hiring, then you get the benefit of the 60%-65% of the wages that are in the plan. The third thing is we have flexibility in terms of adjustments on the portfolio to address duration, depending on what we're seeing in terms of the macro environment. I think with those tools, if you will, in the toolkit, and there are others, by the way, we should be able to manage through at least any of the environments that are right in front of us. Now, there are certainly environments that could prove a lot more challenging. I just point this out. One thing is that history is no guide. In terms of precedent, I remember being here in April of 2020, when everyone was gone and the stock went down to $48, and everyone thought that we were not gonna be able to manage through. I would say history has shown that to be incorrect. Yeah. I think the other thing, you know, during some of those times, depending on the recession, there will be a need for even more, for some, many clients for HR support. How do I manage my cost down? I think we showed during the pandemic that we could respond to that very well. We're really quite broad in the way that if economy is going fast and you need to hire and you need growth and you need help with your HR, we're there to help you with the technology and the people to support you. If things turn and it's a recession and you gotta manage people out or cost down, we have the products, the technology, and the people to help you do that as well. I think we showed that, as Efrain said, in the pandemic when people thought, "Geez, I don't know, will they be able to keep their margins?" We did extremely well. We've learned a lot from that, and frankly, probably got a few more levers out of the pandemic that we could use during a recessionary period, which is one, obviously not hiring, as Efrain mentioned. Also drive some other costs out through the fact that we have very remote hybrid workforces now, that give you more flexibility even than before, and where you hire, too. Great. No, that's all very helpful. Thank you. For the fourth quarter, just a quick question there that I want to clean up. Can you talk a little bit more on kind of the performance of the PEO business, specifically relative to the insurance within that segment? Thank you. Do you mean insurance in the PEO or insurance as part of the PEO revenue stream? Yeah, the latter. Thank you. Okay. Do you wanna talk? Yeah, you wanna talk? You wanna take it? Okay. Yeah, I think. Just so I understand the question, you're talking about the attachment of insurance within the PEO and how the insurance is performing. Yeah. I guess I'm just within that segment, if you could just kinda break down the PEO business relative to the insurance business on standalone basis. Yeah, yeah. that would be helpful. Yeah. I would say this. I think in the last call we talked about it. The PEO business continues to perform very well, double-digit growth. Insurance slightly below that growth rate again. That's really the tale of two cities. I would say again back to what we said, strong demand for clients to increase benefits to attract and keep employees they have. Particularly in the small segment, where they're trying to compete against larger employers, they have to be able to put together a portfolio of benefits that are going to attract and keep their employees. We're in health and benefits, we continue to see good growth there and good demand there. P&C, again, it's been a soft market for a long time, so that's a little bit more of a rate issue. still see good attachment there, historical attachment that we've always seen in our base. Still strong performance at the PEO, insurance right behind it, predominantly led by the health demand for health and benefits. The other thing I mentioned in my comments was. You know, in the PEO, we worked really hard, you know, John's team to broaden the PEO offering. It's not just about health and dental, and vision now. It's really this, as John said, this broader offering that the PEO can bring to small businesses in particular, to say, "Hey, you can offer other things in insurance, and you can offer more mental health support that is very hot right now. You can offer other plans that you would not be able to do by yourself." That has really supported the PEO growth with the creativity that the team has shown in the offerings that we can give them. Yeah. That's what I thought maybe the other part of the question was. The attachment that we saw in the PEO and the attachment in general that we're seeing from our clients, as Marty said, 401(k), health and benefits, gravitating towards these technology tools that they wanna be able to provide their employees, those things have really been across the board very, very well received. In our comments, we stated one of the things that we've seen now, the opportunity for us to even add to that attachment. When you think about now we're gonna add a whole other set of voluntary benefits that we're gonna go back and be able to offer to all of our PEO and all of our insurance clients over the course of the open enrollment period, which will start in October, and those all will generate revenue. Again, offering more benefits to the clients and their employees is another way that not only does that help the retention, but it also helps the revenue as well. We're seeing good demand in the marketplace there. Yeah. Sorry, Andrew. As John said, the revenue growth on the insurance side obviously was lower than PEO based on the fact that workers' comp continues to be a very, very soft market. Right Over a number of years. Yeah. That's helpful. You did a much better job answering it than I did asking it, so appreciate it. No. Not at all. Thanks. Thank you. Our next question comes from Kartik Mehta with Northcoast Research Partners. Good morning. Marty, maybe I know you talked a little bit about recession, and Efrain, you gave a good answer on how you might manage a business. I'm wondering, Marty, based on, you know, some of the slowdowns you've seen, would you manage Paychex any different? I mean, would you think that, you know, if you could continue hiring or investing, would this time be different than in the past based on, what you've learned? Well, Kartik, right now, you know, as I mentioned, we're not really seeing that slowdown. Yeah, I mean, we really, you know, got behind at the beginning of last year in hiring 'cause it was difficult on the service side in particular. We actually made great headway in the last half of the year, John and the HR team, to get ahead of that, and we're actually overstaffed right now a little bit going into the fiscal year. We're very pleased with that. We're making still strong hiring decisions. The investments that we made in compensation and benefits are attracting now. We're getting back on track and attracting more not only service, but sales individuals, and our retention is looking better. Yeah, I don't think... You know, I think what we learned, as I mentioned, out of the pandemic though, was that we could manage in a lot of different ways and more remote and hybrid work, handling sales differently. There's more flexibility in where those sales forces are and how they're selling. More digital sales are coming in, you know, through the marketplace, and we're well prepared for that. Yeah, I think, you know, you're always learning, and we certainly learned during the pandemic, and we were very successful. It's all about having the right people in place and making those right decisions, and I think we've made some good ones. Obviously, we're very pleased with the record-breaking year that we had, and we're certainly well set up for fiscal 2023 to have another one. Just, Efrain, you know, one of the areas I think you've had success in is programs like California kind of retirement mandates that they've had for SMBs. I'm wondering, you know, how successful that plan has been, and maybe you can talk about if you continue to expect growth in that business. I'll take that, Kartik. It's Marty. I think that was very successful. We were a little early on some of the advertising last summer because the mandate. You know, businesses don't always respond to mandates that are gonna have a penalty effective really this month. We were a little bit early on that. What we found was the advertising that we did had really generated a lot of understanding that Paychex is a retirement provider to small business. Even fighting against free, California had a very basic retirement IRA plan for free, we've done very well. Retirement, we've had the fastest growth in retirement sales in California obviously in our history. We see the approach that we made there, maybe we've learned a little on timing of marketing and advertising, but the approach that we made there has been very successful, and we think that will certainly carry to other states and maybe even a federal mandate if it comes out on retirement as well in the SECURE Act and so forth. Thank you. Thanks, Marty. Appreciate it. All right, Kartik. Thank you. Our next question will come from Peter Christiansen with Citi. Good morning, gentlemen. Thanks for the question and real nice trends here. I just wondering, I know you called it out a little bit before, activity in the staffing industry, your staffing clients. I know sometimes that's been a leading indicator, but at both ends of the cycle. Just wondering if we could dig into a little bit of the color you're seeing there and maybe some implications that you're thinking about around that. Yeah. That's a really interesting question, and some of you are staffing analysts, so I defer a little bit to you. But here's what we do just to level set with everyone. What we do, and we've had a very, very successful year of doing it this year, is provide funding for typically small, medium-sized, some larger staffing firms. So we have a window into what is happening with staffing trends in the business. Right now the staffing businesses are doing very, very well. So there's a lot of demand for services. You can argue, well, why is that? It seems that in portions of the economy, certain portions of the economy, in skilled labor, you're seeing a lot of demand. I... Many of you probably know this, but skilled occupations like nursing and other technical disciplines, there's a lot of temp labor that is used in that part of the business. What's been surprising, I would say, over the last 3-6 months has been the rebound in what's called light industrial. That's more typically blue collar work. The demand is robust. It's projected to continue to do that through the end of the year. It could be argued that perhaps people are starting to position themselves for more flexibility on the workforce, but we don't have any indications of that. What we know is that the number in absolute terms of temp workers is up, and that we're benefiting from that demand. That's helpful, Efrain. Again, back on things like the PEP plan, where you just have phenomenal growth there. I realize, like, products, attached products like that, you know, certainly help things like retention and value-based pricing for sure. Is there any way you could frame what type of contribution like a product like that has had to overall growth, I guess, in the last year? Yeah. I called it out because I think it's fair to say. I'm gonna characterize it two ways. The first way I'd say it's been a little bit above 1% of revenue for the year. It obviously was a great product. I would highlight something that Marty said. The great thing about a product like that is the profound impact it has on clients. We had a review of it. If you saw the stories, they're really important. They're important not just because you feel good about them. That's good. It's good to feel good. The reality is that it had a lot of impact on the clients that got it, and the testimonials are amazing. I think the second part of it is, Martin mentioned that, there's still opportunity in the base. We expect that this year we're going to continue to get a benefit. Not the same level of benefit we got last year, but we'll continue to get. Efrain, just to clarify, I think you're talking about ERTC. He might have said PEP. Did you say PEP, Peter? Yes. ERTC? I was talking about the PEP. Okay. I'm talking about ERTC. Yeah. I apologize. Sorry. Yeah. PEP is a little bit different. The final point I would say on that simply is that whether it's PEP or ERTC, there's a set or a suite of services that we provide to clients that really are very important in terms of cementing the relationship with Paychex. This year it's ERTC. Last year it was PEP. We're constantly on the lookout for opportunities to cement that relationship with clients. That's what I'd say. Sorry. Yeah, I know. I thought you were talking about ERTC. Apologize. Yeah, no, but I would also probably add to that, Peter. Those things are cousins in somewhat of an innovation machine that we're driving with our nearly 700 HR professionals who are out there talking to our clients on a daily basis. I say that because for whatever reason, other companies are deciding not to be as supportive in these tax credit areas and in the PEP plan, which is really resonating with small business owners because of some of the complexities that it reduces from a traditional 401 plan. Again, I look at this very closely. Those are two products that when I look at the clients that are attaching those, we see a measurable improvement in our overall retention and more ability to price. Price, as you said, the price value package that we can get from those clients is much greater as well. They're appreciative because there's not a lot of other places they can go to get that assistance. It's a combination of us leveraging our technology and then also having the individuals in the field to help really advise and support them in building a package and getting that done that's really resonating. Again, they're just real appreciative. Marty, I mean, Efrain mentioned the stories. I mean, I have people calling me and thanking me for saving their business with ERTC, and we hear the stories about how well the PEP plan is helping our clients. Sorry about that. I heard PEP and Yeah. I interpreted it to be ERTC, Pete. The other thing I would say is that the quantification of that is that it's part of the growth and management solutions. If you take what happened to our retirement business pre-PEP and post-PEP, we took that business from kind of mid-single digits to upper single digits and approaching 10% growth on a revenue basis. It's been really driven on the back of the ability to offer a PEP solution. Sorry about the digression into ERTC. No worries. That's great color. John, I really like the innovation machine, cuz. I might steal that. Last one from me. Efrain, you mentioned it earlier before, or maybe John did, you know, price to value losses have been really minimal, but you are seeing ramping up discounting promotional activity from some peers in the market. Just overall, your sense for across the market for pricing elasticity and whether that's different pre-pandemic versus today? I think it feels, you know, we feel pretty good, optimistic about prices. I think Efrain mentioned earlier on the price increase, it's toward the higher end, but it depends on the product and the bundle and so forth. I think we feel very good about the fact that other than how strong the recession impacts that. Right now, we feel very good that the things that John's talking about, you know, and that we've been saying, those products are driving much more retention and less focus on price. The price value losses have come down, as John mentioned, and it's been very much because of the value that we're adding, I think, with the other products, the value that we added by bringing an Employee Retention Credit to them or helping them get their PPP loan forgiven very quickly and easily. You know, those things have really impacted the price elasticity and the fact that this is driving value for me, and therefore, it's well worth it. I think we really, as a company, seized the opportunity during the pandemic to show much more value than we probably had in the past. You know, we took that opportunity that we were given that we could be there for them through a difficult pandemic time to help them retain people, hire people, handle their teams remotely with paperless digital solutions. You know, all of that really benefited us and is continuing as we kind of come out of that period as well. Okay, great. Thank you, gentlemen. I appreciate the detailed color. Thank you. Thanks. All right, Peter. Thank you. Our next question will come from James Faucette with Morgan Stanley. Hey, guys. It's Jonathan on for James. You know, how does your strategy around M&A change in a recessionary environment, particularly if we, you know, were to get a material drop in private valuations and you see attractive opportunities? Well, we'd love that. You know, we're always on the hunt. You know, I think the valuations have not caught up on that private side at all that we've seen. We're still seeing some nice opportunities in various markets that we've talked about in the past, but the valuations don't seem to quite happen yet. You know, typically it does kind of follow behind the public side of it. We'll see what happens. You know, with the cash that Efrain talked about, we're well-positioned to take advantage of opportunities that come up, whether it's a recession or just you know kind of a repricing on some of the valuations that I think will happen because you can see it already in the private markets where there's a lot of cost-cutting and a lot of you know much more conservative approaches to things to get themselves positioned better to make sure they don't lose so much on the valuation. You know, we're watching very closely. We're continuing to you know talk to those companies that we've talked to in the past and we'll keep an eye on valuations, but I think it gives even a better opportunity. John, I'd appreciate that perspective. You know, you called out further investment, product development and IT. You know, where are you focused on improving from a product portfolio or a tech perspective? Yeah, I think it just, you know, continues to be from a digital standpoint, particularly I think on the sales side. It is obvious that the buying process is much more about being able to do it themselves. I think John mentioned earlier that it is still a combination of doing the research, some going through and buying themselves, and we have that availability, whether it's Flex or SurePayroll. There's also those that go so far and then need a sales rep or want a sales rep involved, whether it's digital format, whether it's on the web, or whether it's in person, or bringing in a sales engineer on the web or in person for a demo. I think those investments, you know, will continue. Product investments also, you know, roadmaps are planned out for the next, you know, two years, to lay out much more flexibility on the way we pay, certainly from a pay access and pay on demand. We offer that today through partnership as well. I think that will continue to expand. You know, earned wage access is something that we see continuing to expand and just the overall product availability and the ability also to choose who you wanna be connected with. We're very busy from an API standpoint, expanding our set of APIs to, if you wanna keep certain portions of the business, but really gain the power of Flex HR, you know, you have that opportunity. A lot of investment levels have continued. You know, actually, we're very proud of the fact that we can produce the margins that we show and that Efrain has talked about and guided to, while we're still significantly investing in a digital product set. Thanks for the color, guys. Okay. You're welcome. Thank you. Our next question comes from Mark Marcon with Baird. Hey, good morning, Marty, Efrain, and John. Wondering, you know, this question's been asked a little bit, but I want to ask it a different way. If you didn't see all the macro headlines that are out there, and you're obviously all experienced, all aware of, you know, the impact of higher rates ultimately and from a macro perspective. If we didn't see higher rates, and if you didn't see all the macro headlines, how would the guidance have been different? Well, you're more on the I would say this, Mark. If I just kinda disaggregate that question and say, I'm looking at the indicators, or we're looking at the indicators, 'cause it's not me, it's a team of people that are looking at. We say, these are the indicators we're presented with before we put together a plan. It's just hard to say that the plan would be that much different than the plan that we saw. You'd have lower interest rates. You might push a little bit more on the operating side, but it wouldn't be significantly different. I just remind people, I share this with the leadership team. Pre-pandemic, leading into the pandemic, we were at about a 5% CAGR growth rate. Actually, it's a little bit. We were trending up. If you take the end of the pandemic, our CAGR was about 5% on the top line and 10% on the bottom line. We've come out of the pandemic, growing faster than that. Because going into the pandemic, before all of these things occurred, all of the pandemic-related impacts occurred, we had made a lot of investments in automating, digitizing, you name it. We did it all, and we're still doing that. The business was on an uptrend, and so I would have expected if we were looking at this year, that a lot of those actions that are part of the DNA of the way Marty and the team has operated the company would continue. You'd deliver something like upper single-digit growth and pretty close to double-digit bottom line, which by the way, there's a long track record of doing in the company. I guess that's my answer to the question. Yeah. I would just add, you know, Mark, when you look at it, if you assume interest rates go up, and obviously there's a tailwind, as Efrain mentioned, from the interest rate. On the other hand, that could slow the housing market some, and there's a lot of small business around housing, so that's offsetting it. There's offsets that we had to take into account that we take into account as well. I think overall, as Efrain said, we've, you know, we've really come up through the pandemic and out of the pandemic with a higher growth rate that's been consistent, whether before the interest rates were changing. We'll take the tailwind, but we also know that there's some risk that comes with that for small business development and growth. That's great, Marty. I mean, my sense is that you probably took into account, you know, the macro headlines and, you know, probably were a little bit more conservative than you would have been had you not seen all those macro headlines. Is that a correct assumption? Hey, Mark, let me answer it this way, just to be more specific. The challenge that we have, and I think we've been very transparent with the Street, is that we tell you exactly what we know when we say it. When it isn't right, we call it out. I'm not saying other competitors don't. Of course they do. The issue is we have a fair amount of consistency and predictability in the business, not just because that's the way the business is, but that's the way we run the business. The specific answer to your question is, we can see the first half of the year. We feel pretty good about where the first half of the year is. Here's where it gets cloudier. It's the second half of the year where it's a little bit cloudier, and there's macro factors that will impact that. To Marty's point, we had to take into account the fact that we're not gonna have the same kinda second half of the year. The macro isn't lining up exactly the way it was this year. We looked at the first half. We feel pretty good about that. The second half, as we go through the year, we'll update it. I think we've got a pretty good view of what it looks like based on everything we know now. You know, I don't need to remind you that even the Fed is struggling to understand what the macro indicators they're looking at. Yep. Understood. Hey, with regards to bookings, can you break down the bookings that you ended up seeing with regards to the fourth quarter and how the pipeline's looking? Specifically, how would you characterize, you know, micro versus SBS versus mid-market? To what extent are you seeing growth in terms of, you know, new logos versus upsells? Yeah, I think across the board, pretty strong. Mid-market in particular, though we've called out a couple times, has really been strong. I think we've done very well, you know, in last fiscal year and starting off this first quarter as well, has continued. I think the execution on the sales side, the product and everything, has really driven very strong results in the mid-market. We feel we're doing very well across against the competition, that I think might be struggling a little bit, you know, with the things that we're putting out. On the small market, you know, continues to be okay. I think, you know, they're the ones that are probably struggling a little bit more. Then on the micro, you know, continues to be very strong. SurePayroll in particular continues to have very solid growth. We had growth on the Flex side. Really across the board, you know, I think in good shape and heading into the quarter, frankly in good shape. Sales so fully staffed, a little bit of growth from the rep side. You know, across the board, I mean, sales had their best year ever, and that was pretty much across the board, whether you're talking about the payroll side, retirement, HR, ASO, PEO, you know, really most every area, so. Great. What percentage of the bookings are upsells versus new logos? I would say, you know, particularly on the payroll side, it's still about the same. I'd say roughly half is new business. You know, we really haven't you know, new businesses have slowed somewhat, but we've still had a very good track record on winning new business. It's still about 50% of the sales coming in on the payroll side. Terrific. Thank you. Okay. Very well. Thank you. Our last question will come from Scott Wurtzel with Wolfe Research. Hey, good morning, guys. Thanks for taking my questions. Just wanted to ask on margins. We thought the guide for the full year was pretty encouraging, but just wanted to look at the first half. It looks like you're guiding for adjusted operating margins to be down a little bit relative to the first half last year. Just wondering what the puts and takes were on that. Is it mostly due to sort of the wage inflation and increased headcount that you've sort of taken, or are there any other impacts there? Yeah. What you're seeing, when you dig underneath that, is that in the first half of the year, our margins were stronger in part because our employment levels were lower. I kept saying last year that we were adequately staffed and not fully staffed. We are fully staffed in the first half of the year in addition to the wage actions that we took. That has an impact of driving margin in the first half down, and then you get the benefit in the back half. Got it. Thank you. Just sorry if I may have missed this. I don't know if it was discussed. Is there any way you can maybe unpack on the client fund interest income guidance, just what's the puts and takes between sort of like balance growth and what you're expecting on yield? Yeah. We're expecting modest balance growth. We've had pretty strong balance growth this year. That the growth is really being driven by our anticipation of what the Fed's gonna do between now and end of year. It's really more interest rate driven. We are expecting client balance growth too, based on wage inflation. Got it. Thanks, guys. Okay. Yep, you're welcome. Thank you. This does conclude the question and answer session of today's call. I would like to turn it back over to our speakers. All right. Thank you. At this point, we will close the call. If you're interested in replaying the webcast of this conference call, it's archived for approximately 90 days. Thank you for taking the time to participate in our very strong fourth quarter earnings release conference call and your interest in Paychex. I hope you all enjoy a safe and happy summer. Talk to you soon. Thank you. Thank you, ladies and gentlemen. This does conclude today's conference call, and we appreciate your participation. You may disconnect at any time.