Ladies and gentlemen, thank you for standing by and welcome to Paycor's third quarter fiscal year 2024 earnings call. At this time, all participants are in the 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 zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to Rachel White, Vice President of Investor Relations. Please go ahead. Good afternoon and welcome to Paycor's earnings call for the third quarter of fiscal year 2024, which ended on March 31st. 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 third quarter results. Our team delivered another strong quarter with revenue growth of 16% year-over-year. Excluding form filings, recurring revenue grew 20% year-over-year, driven by continued success up market. Adjusted operating margins expanded 130 basis points over the prior year, while we continue to invest in go-to-market and PEPM expansion to fuel future growth. ACM demand remains healthy. We continue to see increasing top-of-funnel demand with consistent win rates. Our flexible open platform and robust talent solutions continue to resonate with larger SMB and enterprise customers who tend to purchase a more complete suite with higher average deal sizes. Our growth is fueled by two primary drivers: increasing the number of employees on our platform and expanding the amount we charge per employee per month or PEPM. First, we are adding employees to our HCM suite through direct and indirect sales channels. We have grown our direct sales force nearly 70% over the last 3 years and are encouraged by the coverage expansion and capacity we have built in the 50 largest U.S. markets. Given that nearly three-quarters of our field sellers are still ramping to full productivity, we are planning to moderate our sales headcount growth to the low to mid-teens in the near term as we continue to expand capacity. On the indirect side, we continue to build momentum with our embedded HCM solution. Leveraging our industry-leading interoperability engine, we enable partners to embed our HCM solution within their platform for a seamless client experience. We continue to ramp this channel, onboarding our third embedded partner, and signing three new partners. To effectively scale for an increasing pipeline of prospective partners, we continue to develop this channel by expanding our team capacity, establishing partner frameworks, and developing sales enablement tools to drive mutual success. While we're encouraged by the momentum, these deals have long cycle times, and the new partners we signed are smaller in scope. Second, we continue to enhance our award-winning HCM suite with new capabilities that add value to our customers and expand our future PEPM opportunity. We have the most comprehensive HCM solution in the mid-market. In the third quarter, List PEPM reached $53, an increase of 20% year-over-year, and achieved our $3-$5 annual target of List PEPM expansion. We recently announced two product innovations that empower leaders to drive business performance by enabling cross-functional collaboration and addressing skill gaps. Core space equips leaders with tools to communicate, align goals, and motivate cross-functional teams that span multiple departments or fall outside of typical organizational structures such as project teams, employee resource groups, social event planning, or work-based groups like a night shift at a healthcare organization. Paycor Skills leverages artificial intelligence to recommend skills associated with positions and people, which help leaders identify potential skill gaps in areas for skill development. Our innovative HCM suite continues to receive external accolades. Nucleus Research recently placed Paycor as a leader in its HCM Enterprise Value Matrix for companies with fewer than 2,500 employees and an accelerator for organizations with more than 2,500 employees. We are recognized for outstanding user experience and robust functionality. In addition, our core HCM and talent management solutions won four HR Tech Awards by Lighthouse Research & Advisory. This is our highest placement to date, and we are proud to have won the most comprehensive talent solution and the best solution for midsize businesses with 200-2,000 employees. Lastly, I'd like to highlight two recent cultural accomplishments, one associated with our customers and another focused on our associates. We recently held our inaugural customer conference, Paycor Connect+, aligned with our focus on creating an irresistible customer experience. Customers from across the country were able to network and provide valuable feedback to drive our product and service roadmap. I am incredibly proud we also earned a Top Workplace USA 2024 award from Energage for the fourth consecutive year. Results are based solely on employee feedback, including 15 cultural drivers proven to predict high performance. It reaffirms our dedication to fostering cultural best practices that not only enhance employee engagement but also deliver tangible business results. This year's results highlighted the company's practice of listening and acting on feedback from associates, empowering leaders across the organization, and providing flexibility with a virtual-first working environment. With that, I'll turn the call over to Adam to discuss our financial results and guidance. Thanks, Raul. I'll discuss our third quarter financial performance, then share our outlook for the rest of the fiscal year. This quarter, Paycor generated total revenues of $187 million, an increase of 16% year-over-year. Our monthly recurring revenue grew by 20%. Recurring revenue growth of 14% was weighed down by form filing. Most year-end form filing revenue, such as W-2 and ACA forms, is collected during the third quarter, representing mid-teens' share of our recurring revenue and growing closer to employee growth. We saw some year-end form filing pull forward last quarter, and volumes were slightly lower than anticipated, representing a three-point revenue growth headwind in the quarter. Also, as expected, ERTC claim processing slowed as the program winds down and represented another three-point revenue growth headwind in the quarter. Our recurring revenue growth is primarily driven by expanding the number of employees on our platform and the amount we charge per employee per month. Employees grew 9% over the prior year, primarily from new logos. In line with expectations, same-store sales growth continued slowing, contributing less than half a point of revenue growth in the quarter. At quarter close, we had over 2.6 million employees across approximately 30,600 customers. As we continue to enhance our product capabilities and customer success motion, we are seeing outsized growth among our enterprise customers. This quarter, customers with more than 1,000 employees grew at nearly twice the pace of overall employee growth, demonstrating the success of our product and service investments. Our Embedded HCM solution continued gaining traction and contributed two points of employee growth again this quarter. While we're encouraged by the early momentum, these larger embedded deals would begin to contribute more meaningfully to our revenue growth in fiscal 2025 and be accretive to margins as the partnerships ramp over time. Effective PEPM increased 4% year-over-year to nearly $22 this quarter. Excluding embedded HCM deals, effective PEPM increased 6%, driven by expansion of our product suite. Effective PEPM growth has been driven by cross-sales, pricing initiatives, and higher bundle adoption. We expect more moderate PEPM growth contributions as we onboard larger enterprise customers and embedded HCM partners with volume discounts, which will be offset by their higher average deal sizes and stronger margins. Revenue from our talent bundles continues to be a bright spot, increasing nearly 40% year-over-year. In addition to delivering steady top-line growth, we have consistently expanded operating margins on an annual basis. Adjusted gross profit margin, excluding depreciation and amortization, was 80%, in line with our long-term targets. It decreased by 30 basis points over the prior year due to the slower growth from form filing revenues. However, we are still anticipating expansion on an annual basis. Sales and marketing expense was $50 million, or 26.7% of revenue, down 200 basis points from a year ago, largely due to lower marketing spend with the Pac-12 as we wind down our partnership, higher lead generation investments leveraging interest income last year, and driving productivity as we scale and moderate sales headcount growth this year. Comparable to prior years, we invested 13% of revenue, or $25 million, in R&D on a gross basis to enhance our HCM platform and expand our PEPM opportunity. We are gaining economies of scale in G&A as we grow. G&A expense was $20 million, or 10.8% of revenue, an improvement of more than 100 basis points from last year. Adjusted operating income increased more than 20% to $48 million, with margins of 25.5%, up 130 basis points from last year, while we continue to invest in service, sales expansion, and product innovation. We generated $28 million of free cash flow at a 15% margin, and we ended the quarter with $90 million of cash and no debt. The HCM demand environment remains steady. However, we are updating some of our macroeconomic assumptions for Q4 guidance. Based on recent employment trends, we are updating our guidance to account for potential negative same-store sales growth among existing customers, and it assumes no ERTC revenue. In addition, while we are pleased with the embedded HCM progress, these deals have long cycle times and will have an immaterial impact in the fourth quarter. For the fourth quarter, we expect total revenues of between $160 million and $162 million, or 16% growth at the high end of the range, and adjusted operating income of between $21 million and $22 million. For the full year, we expect revenues of $650 million-$652 million, or 18% growth at the top end of the range, and we anticipate adjusted operating income of $108 million-$109 million. This quarter, we generated $15 million of interest income on average client funds of approximately $1.3 billion, at an effective rate of nearly 480 basis points. Based on current rates, we expect interest income to be approximately $51 million for the full year. Even with the tougher macroeconomic backdrop than when we started the year, we continue to execute against our strategic growth drivers and gain market share. The HCM demand environment remains healthy, with higher top-of-funnel demand than last year. Most U.S. Employees are still being paid by legacy systems, and we're delivering a compelling ROI for clients to switch to a modern cloud alternative. We are pleased with the progress we've made, expanding sales capacity and our product suite. We have the most robust suite in the SMB market, and we continue to have outsized success as we expand upmarket. We are demonstrating margin expansion as we scale and believe there is significant opportunity to drive further leverage. We believe there is plenty of runway to deliver sustainable revenue growth and improved profitability over the long term. With that, we'll open the call for questions. Operator? Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your questions from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. The first question comes from the line of Gabriela Borges with Goldman Sachs. Please go ahead. Hi, this is Kevin Kumar on for Gabriela. Thanks for taking the question. I wanted to ask about Embedded HCM. Adam, I think based on your commentary, are you seeing some of these deals get pushed out? How is that impacting kind of the guide there? Just a little bit more color on kind of the pipeline there and kind of how you're thinking about timing of these deals. Yeah, hey, Kevin. No, I don't think that embedded is really impacting the guide as much. We didn't expect a ton in this year, in FY2024. We'll be considering more as we get into FY2025 and beyond, and the long-term growth rate for sure. The deals, it's not necessarily that they're pushing out. It's just that these are large deals. Usually, the deals that we've been that you're hunting at the top end of the space, they just take a long time to come together. And so we have signed a handful of deals this quarter. We're really excited about that. They are on a little bit of the smaller side, but that's to be expected as we continue to ramp the program. Got it. That's helpful. And then maybe just if you can give an update on Paycor's move-up market. I know that that's been kind of in progress. So how is the pipeline converting relative to your expectations? Where are you having success? And can you speak to maybe the talent solution, which is helping you kind of land some of those larger customers? Thanks. Yeah, Kevin, it's Raul. We continue to have success moving up market. We continue to win deals at the upper end of our target segment, which is 10-2,500. So we're seeing really strong success there, and I think it's continuing to flow through the organization. And part of that success is a combination of three components. One is, as we mentioned on the call, we have the most robust platform with the most feature functionality available in the category. Talent, by and large, pulls us up market because the larger the company is, the more dynamic their sourcing, recruiting, and then more importantly, talent management, talent retention needs are. And our talent platform meets those needs. And then lastly, being the most open platform, the ability to integrate our platform with the other systems of record that they want to integrate with is really proven to be a differentiator. Thank you. Next question comes from the line of Bhavin Shah with Deutsche Bank. Please go ahead. Great. Thanks for taking my question. Raul, I noticed in your presentation, you guys switched up the language regarding sales coverage expansion, kind of now targeting low to mid-teens as headcount growth versus 20% prior. Can you just maybe elaborate on rationale for you guys rethinking just the amount of headcount growth going forward, and how do you then think about the levers to kind of achieve your goals of 20% sustainable growth? Yeah. It's a good question. We want to grow 20% headcount growth. And we had some elevated churn that we've talked about previously. Throughout the year, we had a structural job issue within the organization that created this elevated churn. And so we didn't want to force hire in the fourth quarter to get to the 20% target. We felt like it was just too much to consume in the quarter. And so we've fixed the structural issue. We feel really good about our go-forward progress. And as we continue to onboard the people that we have in the organization, we'll begin to re-accelerate hiring. We don't see any reason why we can't hire 15%-20% in the future. We just wanted to make sure that we weren't overhiring or hiring too quickly and hiring poorly. And so we essentially just ran out of room in the quarter or in the year to get to the 20%. It has nothing to do with demand in the market. It's all about internal execution. I appreciate the clarification. So it sounds like it's more of a fiscal year comment more so than a go-forward comment, if I'm understanding that correctly? And then I guess. Well, I was just going to provide a little commentary there. I think it is a current state of the current sales hiring. I think over time, we think we can increase productivity and maybe not hire at the top end of our previous range and maybe hire towards the high to mid-teens and still get the same growth levels as before as the organization ramps up and gets the full productivity. Appreciate that. Adam, just quickly for you. I appreciate the help on the headwinds from ERTC in the quarter. How do we think about that headwind in fourth Q and then going forward into next fiscal year? And then just kind of the assumptions on float revenue in fourth Q would be helpful. Yeah. So I'll start with the last one. On float revenue, we're expecting rates to remain the same, clearly, through Q4. And you'll see a little bit lower volume. So the rate will be close to the same on a little bit lower volume as you head into Q4. As we look out into the guide for Q4, we started to see well, with ERTC first, we've seen effectively little to none in Q3. And so we were expecting on the full year closer to a point of growth headwind, and it's looking closer to a point and a half, almost two points of growth headwind on the full year. So really expecting that ERTC is gone here in Q4, we were much lower than what we had anticipated on the back half of the year, even though we're not expecting new filings going forward. Just the revenue has sort of slowed down a little bit faster than we had anticipated. Thank you. Next question comes from the line of Terry Tillman with Truist Securities. Please go ahead. Hi, this is Dominique Manansala on for Terry. Thanks for taking the question. So I just want to go back to the embedded channel and just one from me. After activating those first two partners and now this new partner and the customers, how does incremental revenue and new business visibility look with them and then also other partners in terms of new relationships? Yeah. Hey, Dominique. Yeah, the revenue visibility is really around—I mean, there's two dynamics. It could be around a portfolio that they might be bringing over. Most of the small firms that we've run into don't have portfolios or at least not material portfolios to bring over. So you're not going to see a lot of revenue opportunity in the very near term in terms of a portfolio conversion. And so you're really looking at net new business. And of course, we're diligencing those companies in terms of the size of their portfolio or the size of their customer base. Currently, what's the opportunity to cross-sell back into that base? How much new business do they look at? So that's the visibility that we have is really as we go through diligence, we review the go-to-market motion with them. And then based on our experience of go-to-market, what's the ability for them to sell into their space and add payroll and HCM solutions? I think there's not perfect visibility, just like there's not perfect visibility into our own pipeline. I mean, the pipeline still turns pretty quickly. So you're looking at 30, 60 to 90 days, really, on the long end. And as we ramp up partners, that's the sort of diligence and rigor that we try to have with them is establishing what that pipeline looks like and how quickly you can turn it. Great. Thank you. Thank you. Next question comes from the line of Brad Reback with Stifel. Please go ahead. Great. Thanks very much. Raul, can you walk us through some of the changes you've made on the sales force churn side and what's been the early success there? Yeah. So we had previously created a segment of the sales organization that was 50-250 employees, and it just had a lot of elevated churn. And so we reverted back to the way we used to structure the organization. So it was a territory structure component. We did the change April 1st. So we have one month of visibility, and we've seen one month of significantly better retention. Now, one month isn't a trend, Brad, but ultimately, from our perspective, that was the driving force behind our attrition. And to put it in more visible terms, if you think about we have a mid-market sales organization. And when you segment the job to 50-250, it probably didn't give them enough opportunity to sell enough dollars that a normal mid-market seller would want to sell to earn what they wanted to earn. And so self-inflicted, as an organization, gets much larger. That segmentation is fairly normal within HCM. We're just not at that scale today where it was necessary. We rolled it back. We think that the worst is behind us from a churn perspective. By the way, while we've been working through this, what we have done is elevated our more tenured sellers. Our average month's work continues to increase, and it's at its highest point in the last five years. We are keeping people. We were just churning new people at too fast of a rate in this 50-250 job. That's a lot of detail. Great. No, it makes a lot of sense. And then, Adam, on the forms filing business, what changed over the course of the quarter versus your expectations? If you could just give us some specificity on that, that'd be great. Yeah. When the program ended or when they sort of rolled it back a little bit earlier, we were still expecting some Form Filings at that point, and it really stopped. So new Form Filing stopped. Now, that's not when we recognize revenue, so that theoretically shouldn't hurt us in the very immediate. But then the actual processing of the forms outstanding I mean, we still have a handful outstanding that could generate revenue, and we just have not seen the processing come through either. And that's when we recognize the revenue is after the customer pays. And so that part of the processing and customer payment has just been a little bit slower than we anticipated in the back half of the year. Thank you. Next question comes from the line of Brian Peterson with Raymond James. Please go ahead. Hi, guys. Thanks for taking my question. So I just wanted to follow up on the sales dynamics. As you're thinking about making the changes back to more of a territory model, does that maybe make it easier or broaden the number of candidates that you could potentially bring in for sales hiring? And has there been any update, I'd say, over the last month or so on what you've been able to do? I know we're a couple of months from the end of the fiscal year here, but how do we think about that hiring trend kind of into fiscal year 2025? Yeah. I mean, it hasn't been a supply issue. So I think what it does is it provides the sellers that we hire an opportunity to meet the success criteria and the earnings criteria that they're looking for. So we believe we're putting our sellers in a better position to be successful. And success, obviously, drives retention in any sales organization. Got it. That makes sense. And Adam, just a clarification. I know you were talking about the embedded channel. I think you said that there wouldn't be any growth from that in the fourth quarter. Are you talking about an incremental step up, or should we still expect kind of the two points of employment on the platform to continue into the fourth quarter? Thanks, guys. Yeah. No, I was saying more from the new embedded partners are not going to add anything incrementally to revenue in the quarter. And so yeah, the lead time to revenue is too long for that. Thanks, Brian. Thank you. Next question comes from the line of Scott Berg with Needham & Co. Please go ahead. Hi, everyone. Long time no see. Thanks for taking my questions here. I guess I got a couple. Adam, wanted to start with the guidance for the fourth quarter. I know you all have mentioned a couple of different kind of headwinds to the revenue and assumptions, at least for the quarter. But if you were to kind of stack rank those, what's having the greatest impact, do you think? Yeah. I mean, you have the combination of the lower ERC and some of the impact on seller hiring to a lesser extent. But I mean, really, more of it is on the macro and the potential impact of the macro. I mean, we've seen just like others have seen, and you see in the broader market, the same-store s ales has seen a steady downward trend for a while now. And as of late, we've seen some more early signs of potential negative growth. And so that's what we were trying to care for here this quarter. Got it. Helpful. And then, Raul, as you think about fiscal 2025 I know you're not guiding to fiscal 2025 on this call at all. But given what you're seeing in some of those changes that's impacting the fourth quarter, does that impact how you think about how to invest into next year? And that's independent upon how you're kind of making some of these subtle changes or fixes to the sales organization. But does this add a new component or dynamic to how you think about, I guess, investing in the business and your tier one territories next year? No. I think it doesn't. We want to be able to improve our seller retention. We believe that we've done enough on the onboarding, training, enablement, and now territory structure to do that. And we're growing a lot of territory, so I mean, it's complex to begin with. However, we remain committed to continuing to expand in our tier one markets, and we'll continue to invest in expanding our direct sales organization. Obviously, we've also invested in our indirect sales organization through this embedded channel. And so we believe in the market, the opportunity. We're winning share. And so outside of our own self-inflicted issues that created some elevated attrition, we feel really great about our value prop, our position in the marketplace, our win rates, our broker channel. All the components to win are there, and we're winning share. As we stabilize and prove out our changes are working, we'll put more gas in the car, so to speak. Thank you. Next question comes from the line of Jared Levine with TD Cowen. Please go ahead. Yeah. Thank you. In terms of client employment levels, just want to clarify for 3Q here, were they sequentially down relative to Q2? And then in terms of the 4Q guide, does that assume a sequential decline there? Yeah. I think there was, well, there is some seasonality in Q3 that leads to some sequential growth, actually, quarter-over-quarter, although, again, the year-over-year, it continues to slow. And so we do see a little bit of sequential decline into Q4, more of a sequential decline into Q4. But again, on a year-over-year basis was more of my commentary where now that year-over-year growth is potentially flipping negative. Got it. Then in terms of ERTC, just given the lower expectations, any updated thoughts in terms of what that would present in terms of a headwind for FY2025 now? I mean, no, well, it's going to be less of a headwind in 2025 just because the revenue number will be lower here this year. But expectations would be that we have less than a point of revenue this year in ERTC now. Thanks, Jared. Thank you. Next question comes from the line of Mark Marcon with Baird. Please go ahead. Hey. Thanks for taking my questions. So if we were to strip out the ERTC and the form filings, which you had talked about last quarter being pulled forward, if we just took a look at recurring, would that have been more in the 15%-16% range for Q3 on a like-for-like basis relative to a year ago? No. Actually, we noted in the prepared remarks that it was actually 20% for the quarter, which is up from 18 points or 18% growth in Q2, so slightly faster this quarter if you back out the year-end form filings and the ERTC. So that's where a little bit of the continued bullishness comes from and positivity as we think about that growth and the underlying portfolio. Okay. But you're kind of guiding to recurring and other if we take a look at the midpoint of your guidance range for this coming quarter and then we factor in the interest income, it sounds like you're looking more towards $14.5-$15.5 of recurring and other in the fourth quarter. Is the math right? Well, I mean, just like I mentioned, Mark, I mean, there's a couple of other headwinds as we're going into Q4 that we just noted that are slightly different, including zero ERTC, which, again, has been part of the low couple digits or points of contribution over the last couple of years. So you're seeing some points there, a little bit of the seller hiring that we talked about, and then, again, the macro with some of that same sort of sales growth, which is now going to be potentially dragging as we look at that number in Q4. Thank you. Next question comes from the line of Daniel Jester with BMO Capital Markets. Please go ahead. Great. Thanks for taking my question. So Raul, you talked about your user conference, and I'm sure you had a lot of opportunities to connect with customers. You presented a bunch of things about improving integration speed, new technology, customer success. I guess, could you just expand on one or two of the things that your customers are most excited for leaving the conference? Yeah. I think two things. One is clearly interoperability and the ability for them to continue to connect all the data from the HCM system of record to other tools is critical. Obviously, in HCM, people care about having a success team that helps them leverage and optimize the utilization of the bundles. And I think that's probably the biggest takeaway I got is over the last five years, the HCM bundles continue to expand. The number of products people purchase continues to increase. And most people are initially focused on getting their workforce management and their payroll and HR system live. And then how do you bring about analytics, critical reporting, integrations, talent management, benefits? How do you bring those live after the initial event? How do you continue to change workflow with the customer? So more change management. I would say that's the biggest takeaway that we got from the conference. Obviously, we're focused on providing them tools to be more successful in that area, and we'll continue to work with our clients to help them with that change management as they continue to buy more products from us. Great. Thanks. And then maybe just another one on the sales force and maybe more from a productivity angle. I mean, if you exclude the portion of the sales force which you talked about with regards to churn today and you just focus on the rest of the sales force, maybe any sense about productivity levels and your confidence that you can continue to sustain improved productivity into next year? Thank you. Yeah. So even the entire field sales organization, despite our elevated churn, we are increasing our tenure, and we have increased our productivity. And so we actually feel really good that it works. It's about graduating people into the next year. And so our overall productivity continues to increase as we're growing the sales organization and despite the churn that we have, which is why we're bullish because we have a winning value prop in the market that resonates. And we just had some internal execution issues that caused a slight delay. Thank you. Next question comes from the line of Steve Enders with Citi. Please go ahead. Okay. Great. Thanks for taking the questions here. I guess maybe to start, understand the factors going into the guide for 4Q. But I guess as we're thinking about the models moving forward, how should we be thinking about those factors maybe impacting the quarters after that? Well, yeah. I I mean, we clearly haven't given any guidance for 2025. I mean, we continue to be bullish on the embedded channel. And we have a couple of partners that are not even boarded yet, right, just booked, haven't added anything yet. And we're going to be in the process of implementing those and standing up those partnerships over the next couple of months. And those will begin to be additive next year. And then we have a partner who's going through the migration right now. And they're coming online here this quarter and next quarter. And the whole process, when you bring over a portfolio, takes six to nine months usually and maybe a little bit longer with some of the tails of the portfolio. So I think we're expecting an ongoing ramp probably for a while. We'll love to share, I think, more at Analyst Day as we sort of onboard these clients and new partnerships. Really, we can start to unpack them in a little bit more detail as we step into 2025 and beyond. Okay. That's helpful there. And I think you called out seeing continued healthy top-of-funnel activity, or maybe you said it was better than it was a year ago. I guess any segments or geographies or anything to call out there for maybe what's helping support the better levels there? Yeah. I mean, we've been focused. We've had really strong execution generating MQLs and first appointments. So our top-of-the-funnel growth has been excellent. And that's growth on a per-seller basis, so not just overall growth but growing as we continue to grow the sales organization. So our marketing team has done a great job of generating top-of-funnel demand. And so that gives us a lot of confidence that as we continue to fix our tenure and increase our tenure, that will drive FTAs through the pipeline into close one. Thank you. Next question comes from the line of Matt Van Vliet with BTIG. Please go ahead. Hey. Good afternoon. Thanks for taking the question. Curious on how much you feel like you were able to add to the pipeline and sort of to the overall opportunities coming out of the user conference. Obviously, not a like-for-like comparison year over year, but that's to your benefit, I assume. So curious on what the key takeaways are in terms of business development. Yeah. I mean, on the user conference, obviously, it's a huge opportunity for our client team. We have an amazing client sales team. And for them, they have the ability to spend time with our clients there. It does generate more opportunities to cross-sell folks, some of our great solutions like talent and workforce management and benefits and analytics. And so we're excited about it. But it was a relatively small conference. And so we'll continue to grow that conference. We've got great feedback on it. We'll hopefully double that conference next year and continue to increase the number of clients that we're able to touch and impact. But it's a great lead generator, obviously, for our client sales team. Then you called out enterprise as being particularly strong. Curious what the trends were at the lower end of the market. We've heard other companies continuing to struggle recently on the SMB side. So on the smallest area, how much of a headwind is that now and sort of baked into the fourth quarter? Yeah. I mean, we definitely see in the microsegment, I mean, is declining marginally. Now, that still only represents mid-single digits in terms of our total revenue, but it grows at a much smaller pace. And then in terms of the number of customers, it's actually marginally declining. And that's been the case for a while. So that's not necessarily a new trend, but it's definitely persistent. And we've seen some lower growth really up into the 50, so the sort of 10-50, which we would call the lower part of the small market. That segment is growing much smaller or much slower than our mid-market. And that's from either a turnover perspective but also like on a net new business, of course, we see a lot more growth in that mid-market. So the same store sales growth in that segment's a little bit slower. We see the losses at a little bit higher rate, of course, in that micro segment. Thank you. Next question comes from the line of Mark Murphy with J.P. Morgan. Please go ahead. Hey. This is Arti Vula for Mark Murphy. Thanks for taking the question. One area I wanted to double-click on, I think you hinted around it, but some of the kind of incremental headwinds you're seeing in the same source excuse me, same-store sales. Can you talk about how that looks across the different kind of enterprise mid and small end of the market, please? Thanks. Yeah. Hey. So the same-store sales growth, it's fairly consistent. It's not as much by size. I mean, we see a little bit more pressure on the smaller end of the market for sure, but it's a little bit more distinct by industry. So we see a little bit more like on the food and beverage has slowed down considerably. We see manufacturing sort of flipping a little bit. Professional services has been a little bit stronger, actually. But those are more the dynamics that we see. Things like arts and entertainment, the same-store sales has slowed a little bit and started to flip and drag just a little bit more. That's very helpful. Thank you. And then if you're kind of thinking about the talent solutions, is that something that could be kind of potentially affected by some of these variations, or is the fact that there's reskilling and upskilling kind of make it a priority for the customers anyways? Thank you. Yeah. Hey, Arti, I missed the first part of what you said maybe if you were saying if that's an optional product. Is that what you were saying? No. I was wondering if the change in kind of the hiring patterns is affecting the interest in the talent solution suite or whether that's kind of being offset by the fact that there's reskill and upskilling and other factors of that that customers are purchasing it for. Yeah. The labor market doesn't have a huge impact on talent in the sense that even in a tight labor market, companies have normal organic churn of their employee base. And so they're always looking to recruit employees. So that tends to be fairly stable on the front-end recruiting modules. And then I think in a tighter labor market, people do focus more on, "Hey, how do I retain the great employees that I have now?" And so some of the talent retention modules that we have are really popular and helpful there. Thank you. Next question comes from the line of Austin Cole with Citizens JMP. Please go ahead. Great. Thanks for taking my question. Raul, I'd love to get your take on how you view the AI opportunity at this stage. Are you hearing more or less interest about AI from your customers over recent months, or about the same? Thanks. I think there's a lot of excitement on this call about AI. I think there's a lot of excitement on my leadership team about AI, the opportunities to continue to enhance the insights that we provide our customers, the opportunity to develop product faster, be more efficient with marketing, continue to provide better service with AI tools. All those things are really things that we're diving into. Each area of the business has unique projects going on. At a customer level in the mid-market, there are users or they're experiencing it, but they're not really asking about it, right? They'll take the benefits of it. But most of them are consumers. They read the articles. They get worried about the pros and cons of AI. We have to clearly explain in the product how we use AI, etc. I would say in the segment we serve, people aren't saying, "Hey, can you walk us through what you have in AI in the product?" They're seeing the benefits in the product versus asking for it specifically. Okay. That's helpful. Then maybe just as a quick follow-up, do you think that in the enterprise space, that might start to change a little bit, or no? I think where we're operating the enterprise space, it might come up a little bit, but it's not going to be that prevalent. I think as you get up into 10,000+ employees, it becomes maybe more of an opportunity for them to think about how they can streamline their products and platform. But ultimately, we're not seeing it at all. Thank you. Next question comes from the line of Siti Panigrahi with Mizuho Group. Please go ahead. Thank you. Raul, as you see some of the payroll companies, results and the growth guidance raise some kind of concern about growth of this cloud payroll industry. There was some concern about saturation. How do you respond to that? And what gives you that confidence you can accelerate revenue from here? Yeah. I think it's more of a point in time than a trend. And when I look at the overall category, the three modern cloud providers in our space, we have about 15%-20% of the eligible market. And the lion's share of the market is still on suboptimal regional service bureaus, ERP systems, or legacy providers like ADP and Paychex. So we view that as a ripe opportunity to continue to grow and continue to focus on disrupting the category. Thank you. You're welcome. Thank you. Ladies and gentlemen, we have reached the end of question-and-answer session. I would now like to turn the floor over to Raul Villar for 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 J.P. Morgan Technology Conference in Boston, the Baird Technology Conference in New York City, and the William Blair Growth Stock Conference in Chicago. Have a great night, everyone. Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.