Paychex, Inc. PAYX
Q3 2012 Earnings Call Transcript

Operator: Welcome and thank you for standing by. At this time, all participants are in a listen-only mode. After the presentation, we will conduct a question and answer session. Today's conference is being recorded. If you have any objections, you may disconnect at this time.

Now, I would now like to turn the call over to your speaker, to the President and CEO, Martin Mucci, Chief Executive Officer.

Martin Mucci - President and CEO: Thank you, Tanya. Good morning and thank you for joining us for our third quarter fiscal 2012 earnings release call. Joining me today is Efrain Rivera, our Chief Financial Officer. Efrain will review the financial results for the quarter and our guidance for the full year after my opening comments, and then we'll open it up for any of your questions.

Paychex made good progress in many areas during the third quarter. We continue to focus on our strategy as the leading provider of payroll, human resource and benefit outsourcing to America's businesses. We are driving growth in revenue and profits while providing industry-leading service and products to our clients and their employees.

We were pleased with many of the key business indicators in Q3. Our checks per payroll has improved for eight consecutive quarters. Growth in checks per payroll continue to be positive with the third quarter, comparable to the second quarter. Client satisfaction results continue to be at strong high levels, indicating excellent operational execution and I find this particularly rewarding and telling of our employees the great work they are doing with increased complexity of regulations at the federal, state and local level. And our client retention continues to improve with payroll client losses down another 5% from the third quarter of year.

Our third quarter encompasses an important selling period as you know. Sales of new payroll clients excluding SurePayroll during the third quarter increased moderately compared to the same period last year. While we continue to experience the impact of a challenging environment for new business formation, we find that in the third quarter period in the last two years we have seen – this is the first third quarter period in the last two years where we have seen an increase in sales compared to the prior year's same quarter.

We are experiencing favorable results I think from our focus on CPA referral channels and search engine marketing, and we also did well against all of our competitors.

SurePayroll sales have also performed well. Our results reflect the sales force that is doing a great job communicating the strength of the Paychex brand and our product and service quality. With a solid sales leadership team, this year's new compensation plans and sales support tools in place we have continued to also experience a decline in the payroll sales representative turnover, a statistic that had increased the same period a year ago.

Investing in our business remains a priority. We are excited about our achievements during the third quarter, which include the following. We launched additional enhancements to our Software-as-a-Service product offerings, with our Paychex online mobile applications or tablet devices with our Paychex Android app. This will permit clients and their employees to have full access to products and do anything they do now over the web or on a PC or laptop. This is a continuation of our aggressive technology introduction this fiscal year that started with our single sign-on in landing page in October, our iPad app in November, this Android app just released in February and our smartphone app anticipated in June.