Ladies and gentlemen, thank you for standing by, and welcome to Paycor's first quarter fiscal year 2024 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Rachel White, Vice President of Investor Relations. Please go ahead. Good afternoon, and welcome to Paycor's earnings call for the first quarter of fiscal year 2024, which ended on September thirtieth. On the call with me today are Raul Villar Jr., Paycor's Chief Executive Officer, and Adam Ante, Paycor's Chief Financial Officer. Our financial results can be found in our press release issued today, which is available on the investor relations section of our website. Today's call is being recorded, and a replay will be available on our website following the conclusion of the call. Statements made in this call include forward-looking statements related to our financial results, products, customer demand, operations, and other matters. These statements are subject to risks, uncertainties, and assumptions and are based on management's current expectations as of today and may not be updated in the future. Therefore, these statements should not be relied upon as representing our views as of any subsequent date. We also will refer to certain non-GAAP financial measures and key business metrics to provide additional information to investors. Definitions of non-GAAP measures and key business metrics and a reconciliation of non-GAAP to GAAP measures are provided in our press release on our website. With that, I'll turn the call over to Raul. Thank you, Rachel, and thank you all for joining us to discuss Paycor's fiscal first quarter results. We had a strong start to the year with revenue growth of 21% this quarter. We drove margin expansion of nearly 200 basis points year-over-year, while continuing to invest in differentiating our platform, which increases the value of our HCM suite to our customers and expands our future PEPM opportunity. The demand environment remains solid for our innovative HCM suite that empowers leaders to unlock the potential of their people and business performance. As we shift up market, clients tend to purchase a more complete solution, and average deal size and attach rate continue to expand nicely. Our deal pipeline is up year-over-year, and win rates remain strong. Our team is making significant progress on our two strategic growth initiatives: expanding sales coverage and increasing the amount we charge per employee per month for PEPM. We are on track to deliver on our full-year sales headcount growth target of approximately 20%, and sales productivity is progressing in line with our expectations. This quarter, we announced a new go-to-market channel, leveraging our industry-leading interoperability engine. Paycor has a substantial opportunity to partner with technology firms, such as vertical-focused SaaS solutions. Our existing software partners offer our embedded HCM solution nested within their platform for a seamless client experience. Legacy in-house solutions are ripe for disruption, as the HCM requirements continue to increase in complexity and demand for more than just a payroll solution. We are the only HCM provider with an embedded mid-market offering, and we have a growing pipeline of interested partners. The larger embedded HCM partnerships we mentioned last call will increasingly contribute to our revenue growth in the second half of fiscal 2024 and be accretive to margin in fiscal 2025. This quarter, we enhanced our modern, award-winning HCM suite with valuable new functionality that powers people and performance. Our list PEPM of $51 increased $9 or 21% year-on-year, which equates to a PEPY of $612. Further strengthening our suite of artificial intelligence solutions, we recently released a new generative AI analytics digital assistant powered by Visier. The new offering empowers leaders to quickly and easily consume people-focused analytics in a conversational chat interface. We are helping leaders save time and resources by seamlessly providing them with the answers they need to effectively power their team. We continue to see excellent adoption of the talent solution we launched in fiscal 2021, with revenues up 40% year-over-year. We're also proud that Nucleus Research recently recognized our talent acquisition suite as a market leader. I'm also incredibly pleased with the promotion of Brett Meagher to Chief Customer Experience Officer, where she will lead our next generation of serving, leveraging data and technology to best serve our customers. In this new role, Brett will unify Paycor's implementation and service and loyalty organization, further enhancing the company's relentless focus on creating an irresistible customer experience. Lastly, I am proud Paycor received several Culture Excellence Awards by Top Workplaces. This is the third consecutive year we have been recognized for promoting DE&I practices, and the first time we were acknowledged for employee appreciation, employee well-being, and professional development.... As a human capital management company, we know firsthand how important leaders and culture are in driving employee engagement and business performance. With that, I'll turn the call over to Adam to discuss our financial results and guidance. Thanks, Raul. I'll discuss our first quarter results, then share our outlook for the second quarter and fiscal year. This quarter, Paycor generated total revenues of $144 million, an increase of 21% year-over-year. Recurring revenue grew 16% year-over-year, slightly above our guidance, as labor market growth of 2% marginally outperformed our 0%-1% assumption. Recurring revenue growth is largely driven by increasing the number of employees on our platform and the amount we charge per employee per month. We have more than 2.5 million employees on our platform, up 9% over the prior year, across more than 30,800 customers. As we shift our portfolio upmarket, our average customer size continues to increase and now stands at 83 employees per customer, up from 78 a year ago, supported by even stronger growth in enterprise customers. In line with this shift, the number of employees in the mid-market and enterprise grew 11% year-over-year, while growth in the micro segment remained flat. Additionally, about a point of our employee growth this quarter is from our Embedded HCM solution. In conjunction with our transition years ago to being a modern cloud HCM platform, we price our solutions on a PEPM model. This pricing model has enabled us to simplify our pricing, employing a bundled offering approach, and reduce friction in the adoption of our broader set of HCM solutions. We believe our cloud platform and pricing model provides much better value and predictability for our customers and for Paycor. As our HCM suite has expanded, more than half of our revenue is generated from non-payroll HCM solutions, such as talent and workforce management, all of which is on a PEPM pricing model. Effective PEPM increased 6% year-over-year to more than $17 for the quarter. Driven by continued expansion of our product suite, PEPM growth has been fueled by a combination of cross-sales, pricing initiatives, and higher bundle adoption. We are seeing steady PEPM contribution from cross-sales and higher bundle adoption. However, we expect more moderate contributions from pricing initiatives as inflation slows and new business as we onboard larger enterprise and embedded HCM technology partners with greater pricing power, which will be offset by higher average deal sizes and stronger margins. While our primary objective remains sustainable 20%+ recurring revenue growth, we've consistently expanded margins as we scale the business. Adjusted gross profit margin, excluding depreciation and amortization, improved to 78.3%, more than 140 basis points higher than the prior year, while continuing to invest in differentiating our client experience. Sales and marketing expense was $47 million, or 33% of revenue, similar to levels a year ago as we increased sales coverage nationwide to capture market share. On a growth basis, we invested $25 million in R&D, or 17% of revenue, to enhance our HCM platform and expand our PEPM opportunity. On an annual basis, we expect to invest 15%-16% of revenue, similar to levels last year. We are driving leverage in G&A as we scale the business. G&A expense was $20 million, or 13.7% of revenue, an improvement of 120 basis points from last year. Adjusted operating income increased more than 50% to $16 million, with margins of 11.1%, up over 200 basis points from 8.8% last year, while we continue to make strategic investments to accelerate sales, elevate service and differentiate our product. As is typical in the first quarter, due to the timing of our bonus payments, adjusted free cash flow was -$40 million. We expect to generate greater adjusted free cash flow for the full year and for free cash flow margins to expand faster than adjusted operating income as we scale the business. We ended the quarter with $54 million of cash and no debt. For fiscal 2024, we remain focused on execution, scaling the business and driving margin expansion. The demand environment remains resilient, with higher top-of-funnel demand than we had a year ago. Our leader value proposition continues to resonate, and we're delivering compelling value for clients transitioning from legacy solutions. The labor market remains tight, and our guidance assumes flat organic employee growth among existing customers for the remainder of the year. For the second quarter, we expect total revenues of between $154.5 million and $156.5 million, or 18% growth at the high end of the range, and adjusted operating income of between $19.5 million and $20.5 million. For the full year, we expect revenues of between $648 million and $654 million, or 18% growth at the top end of the range, and we anticipate adjusted operating income of $102 million- $106 million. This quarter, we generated $11 million of interest income on average client funds of just over $1 billion at an effective rate of about 425 basis points. Based on current rates, we expect interest income in the range of $44 million-$45 million for the full year. The combination of labor market growth comps moderating year-over-year and larger enterprise customers and Embedded HCM partners starting provides confidence in our second half revenue growth accelerated. Overall, demand remains healthy, and our innovative HCM solution that powers people and performance is winning in the market. We are demonstrating margin expansion as we scale the business and believe there are significant opportunities to derive further leverage. As a mission-critical application still early in transition to the cloud, we believe there is significant runway for sustainable growth in the $38 billion HCM market. With that, we'll open the call for questions. Operator? Thank you. Ladies and gentlemen, we will now be conducting a question and answer session. If you would like to ask a question, please press Star and One on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star and Two if you'd like to remove your question from the queue.... For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Ladies and gentlemen, we request you to restrict to one question and one follow-up question per participant. One moment, please, while we poll for questions. Our first question is from Gabriela Borges with Goldman Sachs. Please go ahead. Hi, this is Kevin Kumar on for Gabriela. Thanks for taking the question. I, I wanted to ask if there's any changes in how you're thinking about linearity of, of recurring revenue for the year, particularly, any color on enterprise pipeline and overall timing of go lives would be very helpful. Thank you. We talked through a little bit of those enterprise and larger partnerships that were really gonna come live, and start to contribute more in the back half of the year, and things are looking really consistent. So, you know, no, no real change from how we were thinking about it just a couple of months ago, so. That's helpful. Then maybe just on cross-selling, you know, how should we maybe think about the cadence of cross-selling for the year? What segments of the market are there opportunities to drive further penetration in modules, particularly talent management? Yeah, we've had, Kevin, Kevin, we've had really strong, consistent cross-selling across all sizes of the enterprise. Obviously, talent continues to outperform the rest of the portfolio, as people are still looking to attract and retain quality associates. And so, we feel really good about our cross-selling motion that we have in process here. Great. Thanks for taking my question. Kevin. Thank you. Our next question is from the line of Bhavin Shah with Deutsche Bank. Please go ahead. Great. Thanks for taking my question. Can you guys just speak about what you're seeing in terms of the broker channel and how that's helping from a referral basis? Have you seen any kind of change there and any kind of further investments you're making into that opportunity? Yeah, we're really bullish on the broker channel. You know, the percent contribution to our overall bookings is still, you know, around 50%, in the field bookings. We continue to focus on our large national partners, and we're getting an outsized performance in those cohorts. So we're excited. We think we have a winning formula with brokers. We grew the number of brokers that we partnered with year-over-year, and we continue to see really solid participation in the channel. That's helpful. And I know during the quarter, you guys kind of unveiled your Embedded HCM solution. Can you just talk a little bit more about the longer-term opportunity here and how your go-to-market for this product differs from competitors offering kind of embedded payroll? Yeah. So first, we think that there's a huge opportunity. I mean, there's thousands of software players who could leverage a service like ours, HCM and payroll capabilities. Many of them are trying to offer their own services today and find that, when, you know, when they work through our offering, that it just makes more sense to partner with us. And we think that it's a great go-to-market from that perspective, to be able to create for them to be able to create a more compelling and differentiated service, really helps us to be able to expand more quickly, you know, across services across markets where we usually have coverage, but we'll be able to provide a deeper coverage across more of the market at a faster pace. In terms of the go-to-market strategy for us, I mean, it's really around finding those winning partnerships and making the right bets on great partners early. And we've had a really strong pipeline, a lot of really great interest, and some key partners that are winning already today. Thank you. Our next question is from the line of Terry Tillman with Truist Securities. Please go ahead. Yeah. Hi, Raul, Adam, and Rachel. Nice job on the quarter. So actually, I want to build on the, the embedded HCM question. That's my first question. It might be a multi-parter. Sorry about that, Rachel. But if, if I heard Adam, I think he said that it actually may have contributed one point of growth. I wanted to confirm that. And then on embedded HCM, it does seem like a pretty big opportunity. Is this something that would support kind of the sustained 20%, or could this actually help even maybe potentially accelerate or have growth drift a little higher? And then, and then add a follow-up. I think longer term, it has an opportunity to really continue to expand our ability to grow at a higher level. I mean, I think it's early, of course, and we wanna hit that 20% sustainable in the near term, but we think that it has an opportunity to really continue to accelerate. Again, there's a lot of market opportunity, and like we talk about, like, half of the entire market is really, you know, serviced by these in-house and regional providers. A lot of those are the software providers that we're working with and that we think that are a really great opportunity to partner with. In terms of the contribution, yes, it was—it was about a point of employee growth. That's gonna come on at a slightly lower PEPM, but it did already add about a point of PEPM or employee growth in the quarter. That's great to hear. And then just a follow-up question relates to sales and marketing. It was actually a little lower than what we were forecasting, and just kind of the trends year over year and sequentially, it's definitely slower. So I'm curious, like- ... I think, Raul, you did say something about productivity of the sales team. Any more color you could share there? And also just what about seller retention, how's that trending? Or was there something else with maybe just certain kind of discretionary marketing that we just didn't see? Thank you. So as far as the overall seller cohorts and productivity, they're operating, you know, consistently with our expectations. Retention is been consistent year over year. We haven't seen any changes there. Obviously, our objective always is to continue to increase productivity per rep. While you're adding a big cohort of new people, it's always favorable to make sure that you can at least maintain the productivity you had the prior year, while adding less productive people into the ecosystem. We feel good about that. Obviously, you know, we have to ramp, train, and grow the productivity of that cohort year over year, and that's what we're focused on, execution from that perspective. Yeah, I think, Terry, on the full year, we're still gonna... You know, we're planning to be in that 32%-34% revenue range, which will continue to grow at a good rate. I mean, I think there were some dynamics inside of the quarter as well. We moved some of our, a couple larger programs between Q4 and Q1, so there might have been a couple of points just back and forth between that. You know, no real difference in the trends, especially as we think about, you know, overall sales personnel and marketing programs, that we, we've continued to invest, you know, fairly similarly. Although, you know, we do expect to continue to get more scale out of the organization as we, you know, are really focused on hiring reps and, and our, you know, sales leaders. All right. Thank you all. Thank you. Thanks, Terry. Thank you. Our next question is from Bryan Bergin with TD Cowen. Please go ahead. Hi, this is actually Jared on for Bryan tonight. In terms of the demand environment, we heard your commentary about it being solid, but would you say there's been any change relative to last quarter? And then how would you characterize the current demand environment relative to pre-pandemic? Yeah, we haven't seen any changes. It's been really consistent. What I would tell you is that we're seeing really strong top-of-the-funnel performance, strong impressions, visitors to Paycor.com, first-time appointments, and win rates are consistent. So we feel really good about where we are at the top of the funnel, and so the demand environment is strong and holding up. Okay, great. And then in terms of generative AI, can you discuss the level of client interest in your gen AI functionality, and how we should think about the potential revenue opportunity there? Yeah. I think that it's still a little early to call, you know, the revenue opportunities on Generative AI. I think there's a couple areas that we're using it in the system, like job description generator, for example, we were able to roll out pretty quickly. And we've seen a lot of interest, rapid usage, but it's not something that we're necessarily thinking about charging explicitly for. I mean, we're using those underlying GPT models in Azure through Azure, and we're seeing a lot of success. We can roll stuff out really quickly. I think there's other areas, though, like with our recent analytics capability that we're gonna launch, where we are seeing pretty strong requests from a customer perspective, and there will be some opportunity to, you know, potentially charge and increase PEP for that. So I think it's gonna be a blend, and I think it's still a little early to call, but I think that that should take shape maybe over the next couple quarters, and we'll have a little bit better view going into the back half of the year. Thanks, Jared. Thank you. Thank you. Our next question is from Scott Berg with Needham and Company. Please go ahead. Hi, everyone. Nice quarter. Thanks for taking my questions. Raul, I have kind of... Maybe it's, or maybe it's a better question for Adam, but I have kind of an unusual question is: as I look at your income statement, your recurring revenue line item, the growth rate tends to bounce around more than other public vendors in the space and more than I've seen historically. Any reason why that is in a particular, you know, a quarter over time? Didn't know if there's some different dynamics going on in the business that would be helpful to understand. But it's a question I've received from investors more than a few times recently. Yeah. Hey, Scott. I mean, I think over the last, like, four years, we've really migrated to a PEPM model, the majority of our business on a PEPM model, and we've really, you know, driven more consistency in the, you know, ongoing growth rates and the recurring growth rates, and it's really been about addition of new business for us. Also, as we've rolled out new services, there may have been, you know, some lumpiness and whatnot, and then the ERC over the last couple of years coming in, but nothing like particular, and I can't speak to everybody else's, you know, business model per se, but we've been really consistent in our approach over the last four years, building to the model that we have now, and we've been able to be, you know, fairly consistent with it. Got it. Helpful. And then from a follow-up question perspective, your effective PPM or PEPM charge is kind of trending down from 15% a couple quarters ago, almost 6% in the current quarter. You know, how is- how's the cross-sell team today, maybe versus earlier last year? Is it, you know, similar than what you've seen from an expansion opportunities, or maybe it's new customers buying the same amount? You know, how should we think about that metric and how it's trended over the last couple years? Yeah, the cross-sell contribution to the PEPM growth rate's been really consistent, actually. It, you know, tends in that sort of 2-3 points of additional growth from cross-sell. And this year, as we've gone from really what I would say is a more normal rate, is in that sort of 8%-9% range. This quarter, we're in that, you know, just over 6% growth range, and really driven by the two dynamics of the, you know, the embedded channel growing a point, and then also our enterprise channel grew, enterprise segment grew a little bit faster. That's customers over 1,000. Both of those really, you know, accounted for the difference really between that 8-9 points of growth and the 6-6.5 points of growth that we're seeing this quarter. But the cross-sell motion's been really consistent. If anything, there's, I think, continued opportunity, especially as we've added a lot of great products and expanded the suite over the last, you know, couple of years. There continues to be a lot of white space there. Understood. Thank you. Very helpful. Thank you. Thanks, Scott. Our next question is from the line of Brian Peterson with Raymond James. Please go ahead. Thanks for taking the question, and congrats on the strong quarter. So, I wanted to follow up on the embedded opportunity. I just don't understand how quickly can those relationships ramp, both from a technology perspective in working with a potential partner, and then, is there a go-to-market motion? I'm just curious how to think about that and when we should start to see that ramp up. Yeah, those relationships take a while. I mean, from the time you initiate the first conversation until you're signing new business or building over or migrating a portfolio, it—I mean, it can take well over a year. And you know, that cycle is quite a bit longer, and you know, you're navigating a more bespoke service with the partner itself, right? We wanna create great technology and integrations that enable a better experience for their customers, and it's all about setting that up. It's about setting up the go-to-market capability, where we support them, especially early on, so that they can get up and running. And then once they board, whether that's through their portfolio or just signing new business, you know, then it has the chance and the ability to ramp rather quickly. But it's a long upfront motion from sale to close. Yeah, Brian, there's two different types of partners, right? There's partners with an existing portfolio, and they tend to take longer, because, you know, they may already have a solution, and we have to integrate and ensure that, you know, we meet all the feature functionality needs of the existing platform, in the formats that they are accustomed to. Other software partners that don't currently have an HCM solution or a limited HCM solution are easier to onboard, and you start selling new. So you have to, it's more of a, you know, a go-to-market motion every week, versus converting a large base. So there's two different opportunities. We started with the latter, with two larger installed bases. And we're, you know, our go-to-market motion, you know, has resources targeting both today. Understood. Appreciate the color there. And, maybe just, you know, on the PPM expansion, we're seeing more this quarter. You know, how do we think about kind of the annual pace of PPM expansion over a long-term basis? Thanks, guys. Yeah. I think that, we're probably in a more normal range, so in the sort of mid to upper single digits, you know, from that 6% or so. And you know, it's gonna depend on how pricing trends over the next couple of years. We're continuing to see opportunity to expand our pricing through additional services and expanding the suite. So we're wrapping all that together. And then again, you're gonna see a little bit more of this pressure from versus where we've been recently with the addition of some of the embedded channel and a little bit more in the upper market of the enterprise segment. But you know, I think that that sort of 6%+ to 6%-8% range probably makes sense for us. Thank you. Thanks, Brian. Thank you. Our next question is from the line of Mark Marcon with Baird. Please go ahead. Hey, good afternoon, and thanks for taking my question. I also have questions on the embedded solution. Can you give us some more examples, you know, of the types of software partners that you're, you know, partnering with? And how does it work in terms of, you know, the relationship with the client? You know, your, the platform is going to be with their brand. And so I'm wondering, you know, how does customer service work? How does pricing work? How does the revenue share work? And how should we think about the margin implications? Mark, it's Raul. Thanks for the 16 questions. I appreciate it. Oh, you're welcome. I'll try to remember them all. So I think when you think about it from a targeting, prospecting perspective, you know, think about vertical software stacks across many different types of industries that are going to market and delivering, you know, either a ERP or a workforce management tool, you know, are two good examples. What they're really looking for is something sticky and predictable inside the stack, and so that's what we're offering. So, you know, a lot of great targets for us are, you know, in that, you know, call it $10 million-$250 million in revenue that are looking to expand PEPM inside their base, looking to increase their stickiness. And so there's a whole bunch.... Of tech companies that fit that model, many of them are PE-backed, that we think are really attractive and excited about this type of opportunity. As far as the combination of who does what, you know, that's configurable by partner. Obviously, the payroll and HCM product is ours, and we're going to integrate it into their application. But ultimately, who does the implementation and who does the service, that really has an impact on the economics, right? And so we're flexible based on the partner needs. And that's how you should think about it. Adam, anything you would add? Yeah, I mean, on the revenue model, it's going to be pretty straightforward in terms of the way we will build a partner, and the partner will go to market with whatever their own pricing strategy is. So whether they want to build it into their own pricing or bundle it out separately, there's no revenue share. Great. And then as we're moving up market, in terms of size of client, how should we think about the fee gross profit margin, you know, exclusive of the float? How should that trend? I mean, the gross profit margin across many of our segments is fairly consistent, actually. So what we see is that, you know, once you get out of the sort of sub-10 employee, sub-15 employee range, the gross margin tends to be fairly consistent. And then it's really about, you know, the sort of services and the amount of products that our customers are buying really will ultimately determine the overall margin of that client. Because payroll ends up being the majority of where the operating cost, you know, goes into supporting the client between tax service and operations, and just general support management. Yeah, yeah, Mark, I think, you know, what's exciting for us is, you know, from the beginning, and you were with us at the IPO, our, our objective was to continue to shift up market. And, you know, our new bookings, you know, this quarter, the average size is double our current employee base. So, you know, we're significantly outpacing on average, you know, our pay size and moving up market. And so we're really excited about the progress that the sales team has made, the product team has made, and the operations team has made to be able to support that ecosystem. Thanks, Mark. Thank you. Our next question is from the line of Siti Panigrahi with Mizuho. Please go ahead. Hey, this is Phil on for Siti. When you guys look at the workforce levels across your customer base, are there any particular verticals that you're seeing weaker or stronger levels? Any kind of color would be helpful. Yeah, Phil, you know, obviously, you know, we're, you know, a broad, you know, solution that serves all industries. However, that being said, you know, in the four industries that we are focused on, I would say we've seen strength in food and beverage and professional services over the quarter, and, you know, slight moderation in manufacturing and healthcare. But on the average, it's delivered, you know, you know, our, our expected outcome. Thank you. Our next question is from the line of Mark Murphy with JPMorgan. Please go ahead. Hey, guys. Congrats on the quarter. This is Arti on for Mark Murphy. First question is, if you guys have seen any kind of divergences? I know you guys said the demand overall has been steady and solid, but any divergences in terms of segment, geography, end market, or kind of any other dimension? Thanks. Yeah, hey, Arti. I mean, not really. It's been fairly consistent, right? As we've looked at the macro market, and you look at broader non-farm payroll growth, you know, trending down, but still very steady, a little sequential decline. And I think we're seeing similar. I mean, we're seeing, it's really similar to that. And so consistency, you know, over the last couple of quarters, haven't seen any big divergence really in any of the markets or, definitely not inside of the portfolio. Then, just as a quick follow-up, as you guys are kind of, you know, moving into the tier one cities and being pulled up market, any changes in who you're seeing in competition or win rates or anything along those lines? No. Win rates are consistent. And from who we see, we still see ADP, Paylocity, Paycom, you know, would be the three competitors we see the most in the market. ADP, either as an incumbent, you know, or a competitor, but ultimately, those are the three we see. That hasn't changed. You know, when we started our journey, they were all national providers in every market. And so there's no real market differentiation within HCM from that perspective. Got it, and the win rates across those three, have been relatively stable as well? Yeah. Awesome. Thank you. Thanks, Arti. Thank you. Our next question is from Steve Enders with Citi. Please go ahead. Okay, great. Thanks for taking the questions here. I guess I'll ask another question on the Embedded HCM. But I guess I just want to understand a little bit more on, you know, it seems like really good strength off the back here, but how are you feeling about, you know, what's embedded in the outlook for the rest of the year? And then as we think about the margin profile of Embedded HCM, how is that maybe different versus the core, you know, the core payroll solution? Yeah. Hey, hey, Steve. We feel good about the guidance that we've shared, that it includes, you know, the future growth of these- of the channel, and, you know, performance thus far. So we still feel good, and that's really consistent with how we came into the year. In terms of the margin, and the margin profile will be a little bit stronger because you don't have quite as much on the cost of acquisition side, right? So we don't have to maintain sales distribution, you don't have quite the same level of implementation cost, and you're supporting the partner versus the front-end customer. So a little bit different model, and a little bit better margin. I'd say earlier on, like through this year, you're not gonna see any material benefits necessarily in the margin profile as we've invested in the channel. But that'll come really, you know, 2025, 2026 will continue to be additive to the margin, as we grow it, the channel over time. Okay, gotcha. That's, that's helpful, helpful context there. And then as you think about the, you know, the, the Tier one investments that, that you've, that you've been making, and I guess, kind of the geographic footprint today, I guess, what would you kind of call out the, you know, kind of any change in the pockets of, of strength or, you know, any areas that maybe were, you know, a little bit, a little bit softer out there? And just in general, how are you feeling about those, those Tier one, investments in, in the ramp up, ramp up there? Yeah, Tier one continues to be the bulk of our investment. It's also the lion's share of our performance and growth, so we feel really good about that. You know, we're seeing really good results from an average deal size, number of employees, you know, above the line average. So we feel like it's really good. As far as, like, individual markets, like, when we're performing well or poorly, it's all about the execution of the team on the field. It's really not... At this point, we've seen no macro impact in any market that we have. It's more about, do we have a great leader? Are we fully staffed, and are they running the playbook? And if they're doing that, we perform really well. When we are missing one of those things, you know, we won't perform as well as we are in the other markets. Okay, perfect. Thanks for taking the questions here. Thank you. Thanks, Steve. Thank you. Our next question is from Daniel Jester with BMO Capital Markets. Please go ahead. Hey, great. Good evening, everyone. Thanks for taking my question. You know, maybe we could spend a minute talking about your partnership with Visier and the analytics solution. I guess maybe can we generalize this? Is this a type of, you know, partnership that we might see more from you in terms of going to sort of best-of-breed solutions and seeing if you can use it to accelerate your own product opportunity? Or is this maybe more of a one-off, given you know, the need around the analytics today? I mean, we look at partnership opportunities just like we look at acquisition opportunities, and/or developing the solutions themselves. I mean, I think in this case, we really like the partnership with Visier, and we didn't think we were gonna be able to get to, you know, what they've built. They've been a great partner. They knew what they were doing, and we've been able to build something together. I mean, they work with us, you know, very well and directly with our product organization to, you know, to create this solution, to be able to take it to market through this channel rapidly. And so we really appreciate that partnership with them. I think, you know, we would consider other partnerships, but it's not like a change in the strategy necessarily. I don't think that you're gonna see one direction, one way or the other, you know, more or less. Yeah, I think it's, you know, we identified them as best of breed. It wasn't something we could do right away. Ryan is a great partner. We really enjoy the relationship, and we're developing stuff together, which is creating more power for both of our platforms. So we're excited about it, and we want to continue to, you know, continue to grow our relationship with them. Great. That's really helpful. Thank you. And then I think you touched on this earlier, but maybe we can just circle back to it. In terms of the percent of your revenue base today that's still being paid on a per check basis as opposed to PEPM, kind of where does that roughly sit today? Thank you very much. Yeah, we have about a quarter of our portfolio that has some form of a per-check model, although half of that revenue is that they're also buying other HCM solutions that are on a PEPM model. And this is really over the last five years, you know, migrated from, you know, 20% or less than 20% to nearly 80% of the portfolio is now on some PEPM strategy. And also, 100% of the new business that we sell comes on a PEPM strategy. Yeah, and I, I would just like to interject, you know, that 99% plus percent of our payrolls are already perfect, and so we have, you know, we don't really have, you know, an issue with trying to generate revenue from client mistakes. Thanks. Thank you. Our next question is from the line of Matt Pfau with William Blair. Please go ahead. Yeah. Hey, great. Just wanted to ask on the customer list acquisition that you made a few quarters ago, just an update on how that's progressing relative to your expectations in terms of converting those customers? ... Yeah. Hey, Matt. Things are progressing really well. We had a really great success with that portfolio and bringing it over pretty quickly. It's all really coming together here in the first quarter, so really nothing to add necessarily in the quarter, but on track for the expectations that we had sort of going into the year on that portfolio. Great. Then just to follow up on the Employee Retention Credit, I think you had a very small amount of revenue from that previously. The program's been paused now. Is there anything in guidance going forward included from that? Yeah, I mean, the program hasn't been paused in, in that, it's not still processing. I mean, the IRS still is processing. I mean, we had expectations to receive a little bit of, ERC-related revenues, and I think it's gonna come in close to our expectations. I mean, we're anticipating something around 1 point of our revenue for the whole year related to ERC, and, I think it's gonna be relatively consistent to that. Q1 was on track? Q1 was on track, yep. Perfect. Thank you. Appreciate it. Thank you. Our next question is from Kevin McVeigh with UBS. Please go ahead. Thank you so much. I wonder, can you give us a sense of how much pricing overall contributed to 2023 revenue, and how should we think about that, in terms of what you guys are looking for? Yeah. Hey, Kevin, you're a little soft there. I think the question was around, you know, price. How much did pricing impact FY 2023? Yeah, I mean, normally, the way that we sort of think about it is how much of our PEPM growth comes from pricing actions, and about a third of it tends to come from, you know, pricing. And so that could be, you know, 2-3 points or so, depending on the overall growth. And then we have some specific programs and some new services that we released also in Q3 of last year that we talked about that added, you know, up to that 15% PEPM growth, was a little bit more outsized there with some new services that were primarily around a year-end fee services. You know, traditionally or typically, we would see, you know, about a third of that growth related to some sort of pricing. Then if you think about kind of the realization versus kind of the book on the PEPM, do you see that narrowing kind of... Because I think you quoted $17 or something like that, realization versus $51, at kind of book, if you would. Any thoughts as to convergence there? Yeah, I think it's gonna take some time for it to converge all the way to the top end. I mean, the fact is, we're growing our product suite faster than our ability to, you know, drive 100% penetration and attach. And so it's gonna take some time. I mean, we're- you're growing the suite out and expanding really the bundle pricing model, which helps us at the point of sale on new business, which is part of what's helping drive, you know, up the continued PEPM growth. And then you got to go back and drive the cross-sell motion into the base, and that just takes a little bit longer. So, and then the team's been great at being able to add new solutions and products to the suite, at an outsized rate relative to, you know, the rest of the, you know, the competitive set and the other solutions in the market. So I don't think it's gonna converge in any near term, and I think it's gonna be, you know, steady over time. Thank you. Our next question is from the line of Robert Simmons with D.A. Davidson. Please go ahead. Hey, thanks for taking the question. So, your guidance looks like it implies recurring revenue accelerate something like 2 points in the second half of the year from first half. I guess, how much is that from those ramping partnerships in the embedded solution, and how much are other factors? Why would first half be slower than second half? Yeah, I mean, it was really, as we were adding some of these partnerships last year, and coming into the year, we really talked about. And there was a couple dynamics that led to, you know, a lower Q4, Q1 number and going into the back half of what is now FY 2024. And yeah, some of that's gonna be the enterprise, some of that is going to be the partnerships. And then there's also a little bit of continued same-store sales that we're not gonna have the same headwind going into the back half of the year as well. So most of it's just, you know, the visibility to what we're gonna see here coming up in January and, and starting in our fiscal Q3, which is the January quarter, and giving us the confidence, you know, to the full year, which has been consistent with how we thought about it the last couple quarters now. Got it. And last year, your seasonality was a little bit skewed, 3Q, 4Q. Should we expect that to normalize this year? Which would kind of suggest that maybe a lower 3Q growth rate and a higher 4Q growth rate, or what should we think? Yeah, I think you're gonna see 3Q normalize just a little bit. There was a little bit of trade with ERC between 3Q and 4Q. That's really not gonna be as much of a factor as you know... I think we'll continue to see 3Q normalize over time, just as the you know, the year-end fees become a smaller and smaller portion of our portfolio. Got it. Thank you. Thank you. As there are no further questions, I would now hand the conference over to Raul Villar Jr. for his closing comments. Thank you again for joining us tonight. We are encouraged by the underlying fundamentals of the business and remain focused on executing our strategy. We look forward to connecting with you at several upcoming events, including the TD Cowen HCM Summit. Have a great night, everyone. Thank you. The conference of Paycor has now concluded.