Thank you, everybody, for joining us for this session. We have the CFO of Paylocity, Ryan Glenn. Ryan, it's good to see you again this year. I'm sad we didn't see you on the golf course, so for 2026, I expect you out there. We are going to go through it this year. I appreciate you joining, and it's great to have you as always. Yeah, absolutely. Happy to be here again, and I'll do my best to make schedules work for golf next year. Appreciate that. Maybe we'll just kick off. Macro's on everybody's mind. We are not that far removed from when everybody in the space reported, including Paylocity. Maybe let's start with, how would you characterize the current demand environment for HCM, especially in light of what I think is a pretty choppy macro backdrop? There's some positive things going on. There's obviously some concerns. Policies are changing every day. What are you seeing and hearing from customers? Yeah, I think consistent with what we said on the earnings call a couple of weeks ago, continue to see a stable macro environment. Obviously, we've been really pleased with the sales team's performance so far this fiscal year. We're three quarters into fiscal 2025, and we've beaten and raised both revenue and profitability. Each of those quarters, we've raised the year by larger than the beat. A lot of momentum from a sales standpoint. We're really happy with that team's execution. As I said, I think it's been a stable macro. No question that, to your point, there's some level of volatility and consternation out there and continued questions against the macro. Haven't seen that show up to date. Certainly something that is showing up in certain customer conversations. As we look at our client workforce levels, those continue to be stable, both sequentially and year- over- year. Top of funnel activity, we haven't seen any impact. Certainly something that we're watching, but today it's been a pretty stable macro for us. Great. You on the earnings call, I think at some point there is a mention of maybe some signs of a buyer caution. I was wondering, we still saw a healthy recurring revenue beat. Can you maybe just contextualize why mentioning that? Could you maybe tell us more specifically what you meant to signal with that? Yeah, I think for us, we're a pretty open business as far as what we're feeling and seeing. I think that was really a reference to just qualitatively, as I discussed, I think that is something that is in certain client conversations, in certain prospect conversations, hasn't shown up into anything quantitative yet. Obviously, as we said, the results have been strong, and we felt good about the momentum in Q4 and into 2026. I think that was really an acknowledgment of, yes, as we all watch the news and see the volatility out there from a market macro and policy standpoint, that is something that certain customers are talking about, but has not impacted buyer behavior yet today. I wanted to maybe pull on that thread just a little bit. You guys obviously started off in SMBs. You've continued to see more and more upmarket traction. Are you seeing any difference in the conversation between maybe your smaller customers versus your more mid-market, call it 500-1,000 employee segment? Any differences in the conversations right now? We're not. I think throughout our target market of businesses between 10,000 and 5,000 employees, I think each of those teams has had strong success this fiscal year. I think there is that level of questions that we're seeing throughout, but that is more of the exception versus the rule today. I think we've been pleased with really the entirety of the sales force execution and nothing that I would call out today in one particular pocket of that sales team. How about maybe priorities within those two different types of customer cohorts, right? Are they looking at different solutions? Are they treating deal cycles differently? Just how are maybe priorities of organizations evolving by size? Yeah, I think the nice thing about our software is we're able to meet the client where they are. If the client is concerned with costs or being able to automate or thinking about, are they spending their dollars in the best area possible, we're able to pivot that conversation to really articulate for clients how our software can drive automation, how they can reduce manual efforts, ways that, whether that is through integrations or otherwise, that we can reduce some of the things they're doing from a staffing standpoint and a cost standpoint within their HCM product suite. Now, to the extent the client is wrestling with a business decision, maybe they're struggling to hire, they want to be an employer of choice, they need to be able to expand their Learning Management software, we're able to have that conversation around what our product can do to help solve that need. I think our ability to have that conversation from both perspectives, I think, has been helpful. I know it's a little early, but you guys are inevitably going to get the question around fiscal 2026. It came up on the earnings call as well. As you think about what you delivered in F3Q, as you think about what's going on with macro, how are you thinking about sales hiring and particularly quota carrying reps? Any thoughts about that ahead of fiscal 2026? Sure. I think that's a number as far as quota carrying reps that we give on our Q4 call each year. I think we are well into that planning process as we close out fiscal 2025. For context, we increased our sales rep headcount by about 8% this year. We'll work through where that number trends next year. I think that's probably a reasonable proxy for where 2026 looks. The process that we go through is really bottoms up. We look at segment by segment across each of our territories, work with our sales leaders. I think at our size and scale, coming up on 900 sales reps, we continue to feel like there's a lot of opportunity to add to that team. At the same point, we're looking at how do I drive months on board? How do I drive average rep productivity up? Am I investing in the people, process, and technology to put each of our reps in the best position possible to win? I think we combine all those elements to deliver what we think our rep headcount is going into next year. We'll probably be able to provide more details as we get to Q4. I think over the last couple of years, the growth of the industry has evolved. I think there's certainly been more of a focus on durable growth and ramping up profitability. I ask this question with that in the back of your mind. How are we thinking about maybe the growth algorithm going forward? Have there been any changes to that? How do you think about between new business, cross-selling, and then productivity? Sure. As we talked about earlier, I think we've been really pleased with both the growth and profitability from a revenue and adjusted EBITDA standpoint in fiscal 2025. We've guided to roughly 14% growth in recurring revenue. We've guided to 100 basis points of operating EBITDA margin, ex-float. We've more than offset the impact of the Airbase acquisition, which was about 100 basis points dilutive to operating margin in the year. Seeing a significant amount of not only strong revenue growth, but also organic profitability as well. As I think about setting up fiscal 2026, you think about the guidance philosophy that we had coming into this year. I think we talked about wanting to set reasonable but prudent guidance, certainly a strong desire as we have historically to be able to beat and raise. As I look back, we've certainly overperformed those expectations. As you look at the recurring revenue guide for Q4 of roughly 10%-11%, that's a reasonable proxy heading into next year. Obviously, we take any macro uncertainty into account. Certainly, when you're guiding for a full year, you've got a level of execution and macro uncertainty that you factor in there. That's generally how we've thought about guidance. We'll be able to provide more details in Q4, but directionally have felt really good about the results this year and where we're headed into 2026. I appreciate you not making me ask the question about the growth proxy for Q4. I want to maybe switch gears a little bit. You guys made an exciting acquisition late last calendar year of a company called Airbase, moving more into the office of the CFO. I think it's something that differentiates the company versus some other operators in the space. Can you maybe help us understand what the, just for those that may not be as familiar, what the logic behind that deal was? I have a couple of follow-up questions. Sure. I think we've thought about in the medium and long- term what our business can look like over time. Obviously, the focus on how do you drive durable revenue growth, not only as we move towards $2 billion of revenue, but beyond. I think office of the CFO is something that we have viewed for a period of time as an interesting adjacency. We acquired a business called Trace not too long ago that has resulted in our headcount planning product. I think Airbase is a business that we knew for a number of months prior to that deal closing. I think for us, as we think about office of the CFO opportunity over time, whether that is through spend management, expense, procurement, as well as some of the broader offerings within Airbase, as we work through integration and we are several months into an integration across product operations and go-to-market, getting to a spot where on a single pane of glass, our clients and prospects are able to have not only their holistic labor spend with Paylocity, but all of their non-labor spend as well with a deep integration across their ERP and general ledger. We think that's a really compelling value proposition, not something that our competitors have. As we think about, as I said, again, thinking about longer-term growth prospects, that's something that we think is interesting and moving towards what that can look like over time. I think that's a product that we think we can get to 10%-20% adoption on a multi-year basis and something that we can not only upsell to existing clients, but also attach at a pretty healthy rate for new deals. I want to ask a follow-up related to you mentioning this differentiates you. What I get asked by investors a lot is, does this change who the buyer motion, who's buying the product? How does Paylocity think about either the type of salesperson you currently have, or do you need to change the sales motion to meet that buyer? Sure. I think today, as we sell payroll and the human capital management suite, oftentimes that does roll up to the VP of Finance or CFO within an organization. Paylocity, for instance, the payroll team does roll up to my organization. So we do have a fair amount of experience with a financial buyer and what that persona consists of and how that sales process may work. There's likely some level of incremental focus and attention we'll receive from the finance function. That would be in the elements of things that we'd be working through as we go through integration. As we go through the integration process with the go-to-market teams, I think back to the acquisition of BeneFLEX that we made in the 2017 timeframe, and that's integration that has worked very well. It is part of the product suite that our sales reps are able to sell. We have a sales team that is able to come in with a level of expertise across that product and across that industry, being able to have conversations with prospects around trends, whether that is an HSA, a TPA, or one of the other products. That may be a similar process we have with office of the CFO, where our reps are able to sell it, get it in the door, and then we can bring in expertise to work through that part of the sales process with the finance leader. Maybe just to round it out on Airbase and the office of the CFO, I think it would be helpful to understand, what is your core customer base doing today? Are they taking a platform-level single pane of glass view? Is this more of a greenfield opportunity? How should we think about that perspective? Yeah, I think a lot of our clients today are not using a traditional provider. There is a fair amount of greenfield opportunity. Many of our clients today are using a homegrown method, which is typically Microsoft Excel to be able to track payments. They are using email to be able to look for approvals, which is, as you can understand, very difficult to track, very difficult to make sure that the workflows associated with each of those approvals and the spend limits are tracked. Many times it is elements of Excel and email as well as staffing. They have a number of individuals who are tracking payments and spend and approvals. There is a level of automation that does not exist there. There is a level of manual effort. I think our view is, as we go through integration, to be able to have all that labor spend and that non-labor spend on a single pane of glass, be able to work through the workflows, work through the approvals. I think that's a very compelling value proposition and one that we're pretty excited about. Innovation has been a really important focus for the company. I know we just talked about Airbase being done by M&A, but you guys have also talked a good bit about AI in recent earnings calls. I know it's an important theme in software overall. Can you maybe just help us understand what's driving the usage of the chatbot functionality that you guys are rolling out? What are maybe some of the key AI-powered features that you've rolled out in the platform? Sure. I think today we have elements of AI embedded in nearly every aspect of the products. We're seeing increased adoption and usage. That's certainly an area that we have invested in in fiscal 2025 and definitely an area that our product and broader teams within Paylocity are investing in in 2026. I think it is something that, again, as I said, is really embedded throughout the product suite. We're seeing benefits in things related to workflow. Being able to reduce the time and attention that an HR admin is to answer questions. Being able to use AI to help answer for an employee what my vacation balance looks like, what my sick balance looks like, what type of holidays do we have, reducing really that manual email or phone exchange that that HR team has. Being able to leverage AI in a product like Time and Attendance. Being able to curate a specific recommended schedule based on ways to reduce overtime levels, ways to make sure that you are staffing based on availability and based on any certifications that are required. Being able to leverage AI within our Learning Management product. On an employee-by-employee basis, how do you curate a learning path based on not only the role that that employee is, but maybe based on their development plan as well? We think there are a number of interesting use cases. I think relatedly, over time, we think that there are ways to drive efficiencies within our operational and back office team to be able to make that client relationship stickier, to be able to reduce manual effort for our teams as well. It is something we are excited about. We think it's absolutely a multi-year benefit, but one that we're absolutely investing in. I'm going to put you on the spot. I've done this to everybody that's been on the stage over the last two days and in one-on-ones. As a CFO of a public company, what's an AI feature, you don't have to name the vendor, that you've liked using the most that's either been impactful in your day-to-day? You can talk about both at work or at home, but what do you like so far that you've seen in the AI world? I use ChatGPT every day. Yeah, I mean, I certainly use some level of ChatGPT as well. I would say from a work standpoint, we obviously use all of our own products. Being able to use AI for some of the announcements that I make to my teams within Community. We had some interesting promotions within our organization. I was able to use the ChatGPT function to be able to help me write that announcement. We used it for job descriptions as well. If I'm hiring for a new role, rather than opening a blank Word file and seeing that cursor blinking at me, being able to actually leverage ChatGPT to be able to help write that job description. There are a bunch of interesting things my teams are doing and using AI from a legal and from an accounting and from a tax planning perspective as well. It's, again, something that our teams are investing in and definitely one that we're excited about. I felt the anxiety about job descriptions. I have gone through that process, and it's difficult. I'm glad you guys have some tools for that. Maybe if I shift gears, go away from product more towards strategy. You've introduced ARPA as a metric as the business has evolved. How should we think about ARPA progression, and why is that the right way to—why is that the right measurement metric going forward? I think as our business has evolved over time, we've really anchored to per employee per year, per employee per month pricing. All of our HCM products are priced on a bundle per employee per month basis. I think that callout was as we move beyond HCM into the office of CFO over time, the pricing construct likely looks a little bit different, and you have some user-based or some transaction-based pricing in there. Being able to anchor to a PEPM number is probably less meaningful over time. I think this will continue to evolve as we get larger. I think our view is, how do you increase average revenue per client across both HCM and office of CFO? I think we have the ability to be able to do that, whether that is with Airbase or with headcount planning or some of the broader opportunities with an office of CFO. I think our growth algorithm continues to be adding client count, right? Last year we added a net high single- digits in net new clients, increasing average revenue per client. I think you'll see us be able to do that in a diversified way, both across HCM as well as broader CFO. As you think about maybe a little bit more through that lens of ARPA, any changes in either packaging or sales incentives or customer segmentation to align with that? Yeah, I think those would be in the category of things that we would be working through from an integration standpoint. I think there's tight alignment between our sales organization today and the overall success of Paylocity. Today, the more that our reps sell from an ARR standpoint, the more that they're able to make from a compensation perspective and would not expect that to change over time. Certainly some interesting things we can do from a pricing and packaging perspective as well as you think about cross-sell opportunities within Airbase across our 40,000 clients today, maybe some bundling and packaging opportunities for net clients or new clients as well. Those would be some of the things that we'd be looking at as we head into 2026 and beyond. Great. One of the areas that you guys were early on was the international side with the acquisition of Blue Marble. I know that there's so many different things that are going on that maybe the spotlight hasn't been on the international side quite as much. Can you maybe bring us up to speed on what those efforts are? I know that's more focused on U.S. multinationals, but how are you thinking about the international side? Sure. I think it's a few years past our acquisition of Blue Marble, and that's an international payroll aggregator. That's been a business that has performed well. I think we've been really pleased. I think the impetus for that acquisition was we saw more and more of our clients who had remote and hybrid employees that were struggling to find talent in the U.S. There was an incremental focus on looking for talent overseas and being able to have, again, back to the single pane of glass concept, having an ability to have both their U.S. as well as international-based employees on a single platform. That's a product, again, that has performed well for us. I think that's been a piece of the success we've seen in the enterprise space or at the upmarket team over the last handful of years. I think it's been a differentiator for us and one that I think we continue to see it attached at a pretty healthy rate for new deals. If I think about an area where some of the other payroll vendors have moved into, it's more in that HR outsourcing world. Is that something that Paylocity would explore? Is that something that customers are actually asking you for? Yeah, I think for us, the bias is really towards software and tech investments versus service-based investments. I think in the normal course of business, as we look across the competitive set and we look at products that are resonating with clients or things that people are asking about, we certainly would look at things like that over time. I think the bias is towards really technology or software-based products versus really service-based. I want to maybe, with the last few minutes that we have, talk on the margin front and then capital allocation. On margins, you guys have done a really good job of driving leverage over the last couple of years. What has allowed you to achieve that margin outperformance? How should we think about margins and the balance between margins and growth? Sure. I think we've driven north of 500 basis points of operating EBITDA leverage just over the last two years. I think we've pushed hard on efficiencies to make sure that the investment we have across the organization is really prioritized to things that will help us drive revenue growth. We've had a pretty consistent playbook for many years, which is to say driving gross margin and G&A leverage, which we've done this year, and I think continue to invest back into the product and into sales and marketing investments, but probably doing so at a more normalized rate based on our size and scale. I think it is everything from some of the AI and automation opportunities that we talked about earlier, being able to reduce manual effort, taking advantage of the scale of our business, taking advantage of maybe some of the pricing power we have as our business grows. I've been really pleased with that result, really pleased with the profitability profile of our business, not only with the strong revenue growth, but 22% free cash flow margins over the last 12 months, expanded adjusted EBITDA margins as well. I would not expect that level of margin expansion to increase year in and year out. I would not expect margins to go backwards, but 2026 may be a year where you see margin expansion at a more normalized rate just based on how strong we've seen margins increase over the last two years. I think within that, a strong desire to be able to invest, particularly back into product as we head into next year. Helpful. Paylocity has been buying back stock. You guys have a strong free cash flow margin. How should we think about the priorities around capital allocation? Should we think about buybacks as something that we'll continue to see, or is that just to offset dilution? How are you guys thinking about repurchases? We have a $500 million authorization that we put in place. We've repurchased $300 million of that $500 million to date. So roughly $200 million remaining. And that $300 million we've repurchased really in just the last 13 months or so. We've been able to do that through, I think, through 10b51 plan. Doing that in the normal course of business. More than offsetting dilution, we've actually reduced diluted share count. I would expect some level of buyback activity to be core to our capital allocation plan going forward. To what amount and when, I think, is certainly dependent on timing and share price. To your point, I think we're in a strong position, which is to say we're seeing increasing cash flows. We have a very healthy balance sheet. I think we have the ability to potentially be opportunistic with M&A, but also to be able to aggressively buy back stock. Great. Ryan, we'll leave it there in the interest of time, but appreciate you joining us as always, and look forward to seeing you here next year. Absolutely. Thanks so much. Thanks everybody. Thanks everybody.