管理層發言
Good day, and thank you for standing by. Welcome to the Paylocity Holding Corporation Third Quarter 2024 Fiscal Year Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Ryan Glenn. Please go ahead.
Good afternoon, and welcome to Paylocity's earnings results call for the third quarter of fiscal 2024, which ended on March 31, 2024. I'm Ryan Glenn, Chief Financial Officer, and joining me on the call today are Steve Beauchamp and Toby Williams, Co-CEOs of Paylocity. Today, we will be discussing the results announced in our press release issued after the market closed. A webcast replay of this call will be available for the next 45 days on our website under the Investor Relations tab. Before beginning, we must caution you that today's remarks, including statements made during the question-and-answer session, contain forward-looking statements. These statements are subject to numerous important factors, risks, and uncertainties, which could cause actual results to differ from the results implied by these or other forward-looking statements. Also, these statements are based solely on the present information and are subject to risks and uncertainties that can cause actual results to differ materially from those projected in the forward-looking statements.
For additional information, please refer to our filings with the Securities and Exchange Commission for the risk factors contained in other disclosures. We do not undertake any duty to update any forward-looking statements. Also, during the course of today's call, we will refer to certain non-GAAP financial measures. We believe that non-GAAP measures are more representative of how we internally measure the business, and there's a reconciliation schedule detailing these results currently available in our press release, which is located on our website at paylocity.com under the Investor Relations tab and filed with the Securities and Exchange Commission. Please note that we are unable to reconcile any forward-looking non-GAAP financial measure to the directly comparable GAAP financial measure because the information which is needed to complete a reconciliation is unavailable at this time without unreasonable effort.
In regard to our upcoming conference schedule, Toby will be attending the Cowen Annual Technology Media and Telecom Conference in New York on May 29. I will be attending the Jefferies Software Conference in Newport on May 30. Toby will be attending the Baird Global Consumer Technology & Services Conference in New York on June 6. Steve will be attending the William Blair Growth Conference in Chicago also on June 6, and I will be attending the BMO Virtual Software Conference on June 11. Please let me know if you'd like to schedule time with us at any of these events. With that, let me turn the call over to Steve.
Thanks, Ryan, and thanks to all of you for joining us on our third quarter fiscal 2024 earnings call. Q3 represented another quarter of solid results with total revenue growth of 18.1%, driven by our differentiated value proposition of providing the most modern software in the industry, continuing to resonate in the market, particularly among the next generation of workers. With Gen Z set to overtake baby boomers as the dominant generation in the workforce this year, we have continued to invest in meeting the needs and expectations of the modern workforce to deliver the most integrated and intuitive experience in the industry. Most recently, we released a number of new enhancements to our talent acquisition suite to help our clients recruit, train, and retain members of the next-generation workforce. In particular, our new text to scan and two-way texting features will better enable recruiters to directly communicate with candidates and receive key metrics on engagements, visits, application rates, and hire data in real time.
Additionally, new AI-driven smart groups within the community will help new hires automatically integrate into their teams, promoting collaboration and integration. All of these new features are accessible directly via our top-rated mobile app, which enables employees to stay connected, access essential information, and contribute effectively from anywhere. Our commitment to product development also continues to be recognized in the market with Paylocity recently placing as an overall leader in 10 product categories in the G2 Spring 2024 Grid reports. Additionally, Paylocity ranked number two overall on TrustRadius' 2024 Most Loved List. And once again, listed as a top 10 HR Solution in G2's 2024 Best Software Awards. I would now like to pass the call to Toby to provide further color on the quarter.
Thanks, Steve. Solid sales and operational execution in Q3 helped drive our total revenue to $401.3 million or 18.1% growth over Q3 of last year, beating the high end of our guidance by $2.3 million. We remain confident in our sales team and go-to-market motion as well as our strong competitive position in the market, and we continue to be pleased with our top of funnel activity and how those are resonating in the market. While we continue to see elongated sales cycles at the high end of our market during the quarter, we remain focused on driving sales rep and go-to-market productivity in Q4 and into fiscal 2025. We also saw another strong quarter of channel performance as channel referrals, primarily from benefit brokers and financial advisers, once again represented more than 25% of new business for the third quarter as we continue to leverage this strong source of referrals. Our topline performance, coupled with continued operational efficiency helped drive adjusted EBITDA of $167.9 million or 41.8% margin, which exceeded the high end of our guidance by $11.4 million.
Lastly, Q3 represents our busiest time of year as we work to support our clients through year-end processing and annual tax form filings. I'd like to say a huge thank you to our more than 6,000 employees who live and represent our values every day and who work so hard to support our clients. The strong culture at Paylocity continues to be recognized externally as we were recently named one of Forbes' best large employers for America in 2024. I would now like to pass the call to Ryan to review the financial results in detail and provide updated fiscal 2024 guidance.
Thanks, Toby. Total revenue for Q3 was $401.3 million, an increase of 18.1% with recurring other revenues up 16.8% from the same period last year, and we were pleased to come in $2.3 million above the high end of our Q3 revenue guidance. Our adjusted gross profit was 75.9% for Q3 as we continue to drive focus on scaling our operational costs on an annual basis while maintaining industry-leading service levels. We continue to make significant investments in research and development and to understand our overall investment in R&D, it is important to combine both what we expense and what we capitalize. On a dollar basis, our year-over-year investment in total R&D increased by 13.4% when compared to the third quarter of fiscal 2023, and we remain focused on making incremental investments in R&D as we continue to build out the Paylocity platform to serve the needs of the modern workforce. In regards to our go-to-market activities, on a non-GAAP basis, sales and marketing expenses were 19.2% of revenue in Q3, and we also remain focused on making incremental investments in this area of the business to drive growth going forward.
On a non-GAAP basis, G&A costs were 8.5% of revenue in the third quarter versus 10.4% in the same period last year, representing 190 basis points of leverage in Q3. Our adjusted EBITDA was $167.9 million or 41.8% of revenue for the quarter, which exceeded our guidance by $12.9 million at the midpoint and represented 340 basis points of leverage versus Q3 of fiscal 2023. Briefly covering our GAAP results, for Q3, gross profit was $285.3 million. Operating income was $106.3 million, and net income was $85.3 million. In regard to the balance sheet, we ended the quarter with cash, cash equivalents, and invested corporate cash of $492.7 million and no debt outstanding. We continue to be pleased by our ability to drive increased profitability through leverage and adjusted gross margin, adjusted EBITDA, and free cash flow while also maintaining strong revenue growth. Our increased adjusted EBITDA guidance for fiscal 2024 represents 35.2% margin, implying 330 basis points of margin expansion over fiscal 2023 or 190 basis points of margin expansion when excluding interest income and client-held funds.
As we look forward and acknowledging the uncertain interest rate environment, we also remain confident in our ability to drive continued margin expansion when excluding interest income on client-held funds in fiscal 2025 and beyond. As a result of our strong profitability and cash flows, the confidence we have in our business, and our focus on driving shareholder value, our Board of Directors has authorized a $500 million share repurchase program. In addition to managing dilution through our newly authorized $500 million share repurchase program, we are also increasingly focused on driving leverage and stock-based compensation expense on an annual basis with a target stock-based comp level of less than 10% of revenue, which we expect to achieve in the coming years. In regard to client-held funds and interest income, our average daily balance of client funds was $3 billion in Q3, and we are estimating the average daily balance will be approximately $2.8 billion in Q4 with an average annual yield of approximately 450 basis points to 455 basis points.
Please note that our fiscal 2024 guidance does not include the impact of any future interest rate changes. In regard to client workforce levels, year-over-year employees in the platform growth was in line with our expectations in Q3, and given continued macro uncertainty, we are taking a measured approach to Q4 expectations. With that said, I'd like to provide our financial guidance for Q4 and full fiscal 2024. For the fourth quarter of fiscal 2024, total revenue is expected to be in the range of $347.8 million to $351.8 million or approximately 13% growth over fourth quarter fiscal 2023 total revenue. And adjusted EBITDA is expected to be in the range of $104.1 million to $107.1 million. And for fiscal 2024, total revenue is expected to be in the range of $1.393 billion to $1.397 billion or approximately 19% growth over fiscal 2023. And adjusted EBITDA is expected to be in the range of $489.5 million to $492.5 million, implying an adjusted EBITDA margin of approximately 35.2% and representing leverage of 330 basis points versus last fiscal year.
Based on the interest income assumptions provided earlier in my prepared remarks and our total revenue guidance, our implied recurring revenue growth for Q4 is approximately 13%. Our focus remains on driving strong revenue growth, increasing productivity and profitability levels on an annual basis, and continuing to drive shareholder value. Against an uncertain macroeconomic environment and with guidance of nearly $1.4 billion of revenue this fiscal year, our focus is aligning all aspects of our organization towards achieving $2 billion of revenue as the next key milestone of our evolution as the most modern HCM provider in the industry. In addition to aligning our focus on achieving $2 billion of revenue, we are reconfirming our other current financial targets as follows: our adjusted gross margin target of 75% to 80%, our total research and development target of 10% to 15% of revenue, our sales and marketing target of 20% to 25% of revenue, our general and administrative target of 5% to 10% of revenue, our adjusted EBITDA margin target of 35% to 40% of revenue, our free cash flow margin target of 20% to 25%, and our newly added stock-based comp target of less than 10% of revenue. Operator, we are now ready for questions.
分析師問答
Thank you. Our first question is going to come from the line of Scott Berg with Needham & Company. Your line is open. Please go ahead.
Hi, everyone. Nice quarter here. I guess, probably two brief questions here. But Steve or Toby, I wanted to start off with commentary on the overall demand environment for net new sales, not necessarily the cross-sell opportunity. But what do you kind of see in the quarter relative to your expectations? And how do you compare Q1 versus maybe a year ago? Thank you.
Hey, Scott, it's Toby. I mean I think overall, I would say that expectations were met in terms of the demand environment in the quarter. I mean, I think overall, our value proposition and strategy continue to resonate. I think we were overall pleased with what we saw from a channel contribution perspective, still maintaining north of 25% of new business. I think the top of funnel activity was in line with what we thought it would be. And I think overall, continuing to attract and retain strong talent from a go-to-market perspective. So I think, overall, probably in line with what we had seen last quarter and what we expected to see in this quarter.
Excellent. Helpful. And then given kind of the state of the environment where your growth rate is, how should we think about your hiring and ramp of maybe new sales reps as we get through the balance of the calendar year? Are you still looking to hire or expand your sales force on a roughly 20% year-over-year basis? Or if you maybe tweaked what those assumptions are? Thank you.
Hi, Scott, it's Steve. No, I think building on our comments from last quarter, we definitely think there's an opportunity for us to really drive on productivity. We talked about some of our new financial targets. We've had a really good year from an adjusted EBITDA expansion as well as a focus on growth. That is the number one priority, but a close second is driving profitability targets. We think as we go into the next year, we have an opportunity to not hire quite at that same rate. We'll give you the exact percentage as we go into the next earnings call, but to really focus on productivity improvements in the sales force, which we're happy with the initial performance that are in place.
Great. That's all I have. Thank you for taking my questions.
Thank you. And our next question comes from the line of Brian Peterson with Raymond James. Your line is open. Please go ahead.
Hey, congrats on the quarter and thanks for taking the question. So Steve, I know you've been asked this in the past, but does now potentially feel like the right time to focus a little bit more on the back-to-base motion. Any thoughts on that sales effort?
Yes. We do get that question fairly often. I think we have made improvements in our ability to go back to the base. That has grown faster than we've grown kind of the new ARR revenue consistently for the last several years. I think that opportunity is still ahead of us, and we'll continue to do that. I don't see that being an order of magnitude change. We've expanded that every year. That's worked pretty well for us, and that team has done really well this year. They continue to do well, and we expect to be able to grow them above kind of our growth rate of our outside field organization, but I wouldn't call it any type of giant step function. It's about gradually adding product, making sure that product is adopted by our clients, and ensuring that we've got a nice cadence and rhythm where we're pushing the products back to the clients who need it, but not necessarily going overboard because it becomes really scalable for us over time to be able to continually gradually increase it.
Got it. And maybe just on the share repurchase authorization, the $500 million. I'm just curious why now? Any update to the potential M&A strategy that you guys might be looking at? Thanks, guys.
Yes. I don't think there's any real update from an M&A strategy perspective. I think we've been fairly consistent with that over time. We've been focused on product-oriented or technology-oriented deals that we've done that have mostly been on the smaller side. I think in terms of the timing, I mean, we ended the quarter with almost $500 million in cash on the balance sheet, and you can see the strong progress we made from a free cash flow perspective. And obviously, we also have a ton of revolver capacity. So I think we felt like this was a reasonable time to put a repurchase program in place. And I think when you look at the trading multiples and where those are right now sort of at or around multiyear lows, while the business continues to perform really well. I think it's a decent time to continue using that lever to drive shareholder value and doing the buyback. And I think you also get some offset from a stock compensation perspective, which we're also obviously focused on with the inclusion of stock-based compensation as a target. So I think those are probably all the things that went into the mix.
Thank you. And our next question is going to come from the line of Samad Samana with Jefferies. Your line is open. Please go ahead.
Hi, good evening. Thanks for taking my questions. I wanted to maybe ask one and just getting clarity on the long-term outlook. I just wanted to understand on the 20% long-term growth target. Is that just for looking in the near term? Or should we still think about 20% over a longer period? Is it still comparable? Is it against the $2 billion target previously? I just wanted to make sure we had clarity on that.
Yes. I think if you look at where our growth rate is this past quarter and then what we're guiding to in the fourth quarter, it is definitely below the 20%. And so we've been below that target for a little while. I think where we think the business is, we are still prioritizing growth as the number one priority. 20% is probably not the right target in terms of where we sit today. We'll focus on growth as that number one priority, and at the same time, we've introduced stock-based compensation and really focused on the profitability target. So you see a little bit more of a balance than maybe where we were three or four years ago. And so setting a $2 billion milestone for the company certainly is where we're going to stop, but seems to be a better way to focus on growth versus that 20% target that probably isn't really the right fit for us in terms of what we've seen recently and how we think the business will evolve over time.
Okay. Great. And then maybe just one more question. As I think about where you guys are in size and scale, I'm curious if you've started to see in the pipeline or in deals that you're winning, where it's more replacements of potentially other cloud solutions? Or is it still that mix that we've seen historically where it's replacing maybe some of your larger incumbents that were there or if you're seeing more of maybe your cloud competitors losing share to Paylocity as well?
Yes. I think that's a question that we've gotten before, and it's really just a function of our growth, plus the other cloud competitors' growth. We still have a relatively low share of the market. Everybody does payroll in some way, shape, or form, and they buy some subset of the HR module. So all of our sales are replacements for an existing method. Sometimes that software is from big players, the legacy players that have been around a long time. And then as we grow and the cloud players grow, we do start to run into each other a little more. The take rate to and from still isn't a very large percentage; it's still relatively low. We probably see each other more competitively in deals than anything else.
Okay. Great. Thank you so much for taking my questions.
Thank you. And our next question comes from the line of Andre Childress with Baird. Your line is open. Please go ahead.
Hey. This is Mark Marcon, not Andre. Good afternoon and congratulations on the strong quarterly performance. I was wondering you've posted a number of quarters here with really strong growth. I'm kind of wondering a little bit about the guide for the fourth quarter. Are there any hints that you can give us in terms of thinking about the next year? Because it sounds like productivity is improving. The pipeline continues to be robust. You continue to win share. Any thoughts – preliminary thoughts in terms of factors that could impact the growth in fiscal 2025 just as people start setting expectations.
Maybe I'll start off. Mark, it's Toby. I mean I think overall, when you look at the environment overall and how we performed so far throughout the course of the fiscal year, and then overall, the guide in Q4 and the guide for fiscal 2024, I mean I think overall, we're definitely pleased with the mix, as Steve was saying a minute ago, of growth and profitability that we've been able to deliver. I think we're really happy with the level of innovation that we've been able to deliver over the last 12 months, launching so many new products and getting over that 550 mark in PEPY. I think then overall, just again, focused on productivity and still driving growth, focused on productivity, focused on profitability, and the authorization on the buyback. I mean I think there's a lot of good things that we've been able to deliver throughout the course of this fiscal year and that are coming with Q4. And I think to some degree, Q4 is probably the starting point for when you start to think about 2025.
Yes. I guess, Mark, this is Ryan. The only thing I would add to that is obviously, as I referenced in the prepared remarks, I think we continue to be fairly thoughtful on expectations and impact from the macro standpoint. So the third quarter came in consistent with what we expected. So we're still expecting some level of softness in Q4. We'll see if that turns out, but that's one of the variables that we try to be pretty measured on given the uncertainty in the environment. More broadly speaking to Toby's point, as you think about 2025, obviously, we'll provide formal guidance on the August call. But we continue to see some level of elongation in sales cycles with larger clients. I think we're seeing progress there. We're certainly happy with some of the things we're doing from an up-market standpoint. But I think we'll take all that into consideration as well as update where the macro environment sits when we guide fiscal 2025 in August.
Great. And then can you talk a little bit about the talent solutions that you're rolling out? Or would those always be sold with the full platform? It sounds like they could end up being pretty interesting as stand-alones as well.
Yes. So we've been really pleased with our talent category in terms of the penetration rates that have increased every single year. Some of these new recruiting features that we touched on will allow us to drive higher penetration and also be more competitive at the upper end of the market with our recruiting platform. So those have been really well received early on. If you think of what we're doing with things like community and driving collaboration and communication, that is available for all of our clients and is not an extra fee for a lot of those capabilities. That really is a core part of our differentiated story about being the most modern platform in the industry. I think you're going to see us continue to add additional modules that we can monetize. At the same time, we will look to add new interesting features based on our client feedback that create differentiation in the sales process and allows us to drive strong win rates, really in all size customers across our target market.
Great. Thank you.
Thank you. And our next question comes from the line of Raimo Lenschow with Barclays. Your line is open. Please go ahead.
Hey. Thank you. Thanks for squeezing me in. Two things. First, Can you speak a little bit of what you hear in terms of AI, and I'm sorry to kind of ask this kind of very generic question. But like in the context of HR, is that kind of for you guys an opportunity in the short-term? Or is it a hindrance because people are focusing on something else at the moment, and you guys kind of are suffering from that? And then the second question is on as you broaden out with the talent offering, et cetera. What does it mean for your go-to-market motion in terms of going back to your installed base, upselling, cross-selling potentially, and as you have more products driven?
Yes, I'll start with the first one. I think from an AI perspective, there are certainly lots of moving parts. It's a fast-changing market. We do think there are many opportunities from an HR perspective when you start really taking advantage of the capabilities that AI can drive. We have embedded AI capabilities across our product suite. Sometimes that appears to our customers in terms of personalization and recommendations; other times that appears in terms of writing assistance. Other times that appears in forecasting models. We think there's plenty of opportunity for us to be able to continue to innovate, and that really will help us reinforce our value proposition of being the most modern platform in the industry. We also think HR platforms can be challenging at times for users to find all the different modules; they're buying more products from us. From a serviceability perspective of the product, we think that represents a big opportunity from an AI perspective that we're also investing in. The feedback we get from customers was more uncertainty in the economy than anything else, but it certainly could be a factor.
I think maybe on the other part of your question, just relative to back-to-base sales or cross-sell or upsell. I think the team has done a great job of being able to take both the products that have been in existence for a while but also take the new products that we've developed and rolled out over the last handful of years to add that value back to our existing customers and sell and cross-sell back into the base. I think that's a multi-year effort that really started after the time of ACA. I think we've continued the traction with that as we've launched and delivered the incremental products we have, growing the PEPY from 200 at the time of the IPO to 550 where it sits today. It has been a growing but fairly consistent motion over the last handful of years.
Yes. Perfect. Yes, makes sense. Thank you.
Thank you. And our next question is going to come from the line of Jared Levine with TD Cowen. Your line is open. Please go ahead.
Thank you. Can you help us with sizing the Q3 annual form filings revenue to give us a sense of that sequential headwind for Q4?
Sure, Jared. This is Ryan. I think we've probably talked about it in the past. We haven't given a specific number there. I guess, obviously, as you're aware, that is priced on a per-form basis. You have an idea of the number of clients and employees we have. There is an impact relative to turnover at those clients. The way I would think about modeling that is if you look at where that has moved sequentially over the last several years and what that tick up is and then down into the fourth quarter, I think you'll get a pretty good idea of what that impact is, but we haven't disclosed the number specifically.
Okay. And then in terms of the Q3 excellent revenue guidance, can you discuss what the primary drivers were of that? Were there any assumptions that came in below your expectations?
I think all in, a solid quarter across the board, certainly from a profitability standpoint. Specific to recurring revenue, we probably saw incremental upside across the board. I think we felt good with the sales execution activity in the third quarter. You saw that flow through to revenue. We were happy to be able to raise the full-year by the beat in Q3 plus a little bit into the fourth quarter. I think workforce levels came in as expected. Overall, it was a pretty solid quarter from top to bottom.
Thank you. And our next question comes from the line of Pat Walravens with Citizens JMP. Your line is open. Please go ahead.
Hey, there. This is Austin Cole on for Pat Walravens. Appreciate you taking my question. I wanted to follow up on a comment made about what you guys are seeing upmarket specifically and just about how competitive dynamics are changing. I know kind of at a high level, the competitive environment may not change all that much. But you have companies like Workday that are moving down market. I'm just wondering – I know their customers might look a little bit different. But I'm just wondering who you're running into what win rates are and how getting new logos is going up market.
Sure. We have been expanding upmarket over the last several years. We expanded that target market up to 5,000 employees a couple of years ago and have seen great success over the last couple of years. If you look at the growth rates last fiscal year and the year before, upmarket would have been one of the segments that was a real strong performer for us. This year as we entered it has gotten much bigger. We expanded pretty rapidly because we saw great receptivity. Our customer perspective is we are really happy with our win rate, and we expanded that segment a fair amount. That said, we did call this out last quarter: it took a little longer for some of the new reps to ramp up than we expected. We just saw elongation in the sales cycle in the first couple of quarters of the year. As we sit here today, we're feeling really good about the initiatives we have to improve that throughput. We're not all the way through that, but we certainly are in the middle of it. You saw the performance in the quarter. We wouldn't say the competitive environment is such that we can't be successful. Our win rates have been consistent over time, and we feel really good about the investments we've made in product and the feedback we're getting from customers in that segment.
Thanks.
Thank you. And our next question comes from the line of Adam Bergere with Bank of America. Your line is open. Please go ahead.
Hey, thanks for taking my question. Just digging into the linearity a bit this quarter, were January through March, all fairly consistent in terms of demand and as a brief follow-up, did you see some incremental pressure towards the tail end of the quarter that's informing the deceleration to 13% for Q4? Thank you.
From a bookings perspective, there's a natural seasonality to this business that occurs. You typically see clients start at the beginning of each quarter. So January ends up being a big start month for us. April ends up being kind of a big start month in July and October. The months in between can be relatively even. No real callouts on those, and we didn't see anything abnormal from a seasonality perspective in the quarter.
Yes, I would just add that if you look at what the implied Q4 guidance is when we guided in February, it's probably come in a little better than that. Nothing that was a surprise on the fourth quarter. You see that flow through from a guidance standpoint.
Thank you.
Thank you. And our next question is going to come from the line of Daniel Jester with BMO Capital Markets. Your line is open. Please go ahead.
Great. Thanks for taking my question. Maybe a couple for Ryan to start. Just on that last point about what's baked into the fourth quarter guide, if I remember correctly, you had a rate cut baked into that. And so I guess, one, correct me if I'm wrong, and two, how are you viewing that now in the fourth quarter guidance? And then on the third quarter gross margin, you've had basically two consecutive years of really strong expansion year-over-year there, but it looks like gross margin was kind of flat year-over-year, and so anything you'd call out for investment or how should we be thinking about gross margin going forward? Thanks.
So I did reference in my prepared remarks that we do not have a rate cut now assumed in the fourth quarter. You are correct that when we guided in February, we did call out a Q4 rate cut. We have taken that out based on the latest forecast. You saw that flow through from an implied interest income in the fourth quarter. So we took up total revenue guide by about $8.5 million, and call it, $6 million or so of that was an interest income raise. So that is certainly the performance we saw in Q3 within interest income as well as the removal of that rate cut, which helped the fourth quarter. I think relative to your question on gross margin, it can move around quarter-to-quarter. Year-to-date, I think we're up about 40 basis points on adjusted gross margin. Obviously, we've seen some headwind year-to-date relative to some of the workforce level headwinds we’ve seen for the first nine months. If you look back and sort of think about that holistically across a 12-month period, we'd expect to drive leverage year in and year out.
Not always linear; you're not going to get the same leverage each year. But as you step back and look at it on a longer-term basis, we continue to believe there's the ability to scale adjusted gross margin. You saw some significant leverage in G&A, not only this quarter, but year-to-date. We raised adjusted EBITDA guidance by about $15 million and almost 100 basis points. We feel very good with strong revenue growth and execution, as well as free cash flow being up 50%, large ranges in adjusted EBITDA and the ability to return value to shareholders through the buyback.
That's great. Thanks. And then if I can just sneak one more in. You've added a lot of new products to the platform over the last year or so. Maybe just an update in terms of customer uptake of the new iterations of products and compare and contrast with some of the things you launched in the past. Is the velocity of attach rate similar or different? Or anything you’d call out there? Thank you.
Yes. We've been really happy with the products that we've launched. If you think about this past fiscal year, you've got Scheduling Plus, which is an advanced scheduling capability. That has certainly been well received, probably skewed slightly towards the larger average size customer for those capabilities, but that has really helped us in that market, and we are continuing to develop new features for that Scheduling Plus skew. Employee voice and rewards and recognition have been great differentiators for us in the sales process. We always talk about trying to make sure we build something that can get to 10% to 20% market penetration within a reasonable time. All of those products are on track to hit those targets in relative terms to what we've seen with other modules we've built in the past. We feel really good about the receptivity. That said, it’s also about creating and adding value to the differentiated story we're telling in the market.
Great. Thank you very much.
Thank you. And I am showing no further questions at this time. I would like to hand the conference back over to management for closing remarks.
Sure. Thank you so much. Just wanted to say thank you to everyone for your interest in Paylocity, and I also wanted to give a special thank you to all of our teams across Paylocity and especially our operations team for a great job supporting all of our clients throughout Q3. So thank you, everybody, and hope you have a great night.
This concludes today's conference call. Thank you for participating. You may now disconnect.