Welcome and thank you all for standing by. At this time, all participants are in a listen-only mode until the question-and-answer session of today’s conference. [Operator Instructions] Today’s call is being recorded. If you have any objections, you may disconnect now. Now, I will turn the meeting over to your host, Mr. Martin Mucci, President and Chief Executive Officer. You may begin.

Thank you and thank you for joining us for the discussion of Paychex Third Quarter Fiscal 2017 Earnings Release. Joining me today is Efrain Rivera, our Chief Financial Officer. This morning, before the market opened, we released our financial results for the third quarter ended February 28, 2017. Our Form 10-Q will be filed with the SEC within the next few days. And you can access our earnings release and the Form 10-Q on our Investor Relations webpage. This teleconference is being broadcast over the Internet and will be archived and available on our website for about 30 days. On today’s call, I will update you on the results of our business in the third quarter and Efrain will review our financial results and discuss our full year guidance. After that, we’ll open it up for questions. Our third second quarter results mark continued progress across our major product lines. Total service revenue for the third quarter grew 6% year-over-year. Our cloud-based HCM, human capital management services, continued to show strong growth. We are encouraged by the growth in small business optimism that’s occurred in the recent months and our latest Paychex IHS Small Business Jobs Index has shown an improving pace of employment growth since the election. With three months of improvement, we anticipate a continuation of jobs growth and the administrations agenda advocates for lower taxes and fewer regulations, which we hope will likely lead to a more robust environment for small businesses including investment in HCM solutions. We are confident that we are well-positioned to support our clients in successfully navigating through many future changes we expect on the horizon. On March 24th, House Republicans abandoned the proposed bill to repeal and replace the Affordable Care Act. Therefore, the requirements including the need for health insurance offerings…

Thanks and good morning to everyone. I’d like to remind everyone that today’s conference call will contain forward-looking statements that refer to future events; remember the customary disclosures. As Marty indicated, third quarter financial results for fiscal 2017 showed continued progress and growth. Here are some of the key highlights for the third quarter and nine months. I’ll provide greater detail in certain areas and wrap with a review of our 2017 outlook including a look forward to what we expect in Q4. Total service revenue grew 6% for the third quarter to $783 million and 7% for the nine months to $2.3 billion. Interest on funds held for clients increased 11% for the third quarter and 8% for the nine months to $13 million and $37 million respectively. These changes were primarily driven by slightly higher average interest rates earned. Expenses increased 4% for the third quarter and 6% year-to-date. The expense growth in both periods was impacted by higher wages and related comp expenses due to growth in headcount in our operations area primarily. Expense growth was moderated or tempered by lower variable selling cost. Our operating margin was 38.5% for the third quarter and 40% year-to-date, improving from 37.2% and 39.6% for the respective prior year periods. The improvement in the third quarter was aided by lower variable selling expense as I mentioned. We continue to maintain industry-leading margins while investing in our operations. Our effective income tax rate was 34.2% for the third quarter and 34.1% for the nine months compared to 36% and 33.9% for the respective periods last year. The lower effective income tax rates in fiscal 2017 are due to discrete tax items. In fiscal 2017, we implemented new accounting guidance related to employee stock-based compensation. This has resulted in discrete tax benefits…

Okay. Thanks, Efrain. Operator, we’ll now open up the call to any questions or comments.

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] We have our first question coming from the line of Danyal Hussain from Morgan Stanley. Sir, your line is now open.

Hi. Good morning. Thanks for taking the questions. Just on the mixed results in sales. Can you talk about how it came against your expectations? And then in that context, you called out, Efrain, the lower variable sales expenses. So again, is this a function of just a tough comp from last year on sales or is it lower sales versus your expectations, not [indiscernible] leverage in that line? Thanks.

Yes. I’ll start. This is Marty. I think what we saw, as I mentioned, was small market was fine and mid-market was a little slower than we anticipated. And I would say, certainly down -- decreased from last year, but we knew that there was a real bump in second and third quarters for Affordable Care Act sales, our ESR -- our employee, our services product there, and to help with ACA. And I think that drove a lot of payroll sales and other products as well. And that seemed to have some impact this year a little bit in slowing it down. So, I think down from last year because of the kind of the frenzy of ACA buying and so a little bit slower in the mid-market than we thought.

I think Danyal, the demand environment was different than what we thought it would be when we came into the year, to Marty’s point, as we were exiting the year, we thought not only would there be increased demand over what we saw with ACA but we built our plans based on that assumption. And what we saw in the -- starting in the second quarter with the comments that Marty gave, was we started to see more hesitancy; and then as we went into third quarter, it was clear that demand environment was different than what we were in, last year. And as a consequence of that, mid-market sales, the comments that Marty made about mid-market sales were what we saw. On the smaller end of the market, the market looked pretty robust; we did very well but it was a bit -- that scenario was a little bit different than what we had anticipated going into the year.

Okay, thanks. And then, I don’t know if you have much data at this point. But, has there been any change over the last week since the vote?

No, not really. What we were talking about there is that last year, not only did they drive Affordable Care Act product sales, but I think it drove decision-making in payroll -- in payroll products time and attendance kind of everything, it was at the same time, everything is well integrated from one service provider. And so, we saw that bump last year. So, not only did we have the Affordable Care Act product sales up last year as people needed to have the product in place, but they were making other buying decisions that I think actually got pulled forward to some degree. Then, what we projected this year, we, as Efrain just mentioned, we didn’t -- I don’t think we saw that as much of a blip because of Affordable Care Act as it turned out to be. And so, we’re kind of -- we got down to a more normalized kind of mid-market kind of buying and something plus. And I think you have the election on top of it and the new administration and it seems like in general, businesses is in the -- particularly in the mid-market size are being a little hesitant to what exactly do they have to do. For a while, they would have thought they would have a -- they would kind of drop their insurance, if they didn’t want to do it. And now of course that’s reversed. And so, I think there is just a lot of kind of state of flux right now with many businesses.

Okay. That makes sense. Thank you.

Yes.

Thank you. Our next question is coming from the line of Gary Bisbee from RBC Capital Markets. Your line is now open, sir.

Yes, thank you. And I guess on -- did you see in the year-end season, any change in the decision of your PEO customers to take your insurance offerings? And so, is there any revenue trajectory we should think for the new calendar year? Any impact of that like lower pass-throughs or anything?

Yes. I think you’ll see a little bit of it. I think there is -- that’s part of the reason why I called third quarter at 10% to 11%. So, we’ve seen a little bit less pass-through but I would say, it’s uneven, Gary. We’ve signed some pretty big clients that had healthcare attachment too. But, overall, the trend’s been lower attachment this year.

Okay. And then, you guys cited at the beginning some of the optimistic data, like your small business survey. And we’ve seen a lot of those forward-looking data points be very optimistic, the NFIB has been on fire. But yet I think a lot of a real hard data in the economy hasn’t really seen that optimism. How are you thinking about that? Do you think that your customers are going to need to see Washington get some of the pro growth policies done before they change or in the small end or you’re actually seeing those optimism surveys and you’re new hiring survey and all of that start to flow through into tangible bookings at this point?

Yes. At this point, Gary, as you said, the optimism has been very high off the charts, and our survey, or our index for the last three months has shown increasingly small business hiring is up. Now, it’s interesting when you dig into that it is -- we’re seeing more part-time jobs kind of coming back. Others -- what we would classify as other services, discretionary services and some construction in pockets where it’s like in the southeast and so forth. So, we’re not seeing a real big jump in our own clients other than the fact that it’s slowly increasing. And I do think that given especially the last 90 days or so, I think there’s just a lot of confusion as to, hey, is Affordable Care Act in or out? Is time and attendance -- think about the time and attendance, we had a lot of selling of time and attendance solutions, with the rules then they got held up, and I’m not sure they’re ever going to go into effect and on the overtime rules. So, I think there is a lot of confusion now. Definitely, we’re seeing, on the index, some employment increases, but I wouldn’t say it’s anything really strong yet that’s really showing up completely in the number.

Great. Thanks. And then just one last one, if I could. On the margins, can you size the impact of the benefit of lower sales commissions or the lower variable selling expense?

Yes, year-to-date, Gary, I’d say it’s in the range of about 50 basis points.

Great. Thank you very much.

Thank you. Our next question is coming from the line of James Berkley from Barclays. Your line is now open, sir.

Thank you very much. Could you guys just update us -- and I think you talked about this a little bit already, but just update us on how you’re thinking about your short-term versus long-term portfolio mix, the impact of the Fed rate increase on the yield curve that you’ve seen? Just maybe speaking to that $8 million number and updating that that you talked about last year, I think that will be helpful to start.

Yes. Thanks. So, just sort of level setting what we anticipate. Every quarter point rise gives us about -- the way the portfolio is currently configured, about $3.5 million of benefit. We don’t always see that, so we -- from a projection standpoint, it typically translates to about $3 million. The Fed rate rise that just occurred in March that would be expected to translate into about $2 million next year. But raises that have already occurred will add somewhere in the range of $6 million to $7 million. So, if I had to call it right now and there are no further rate rises, I’d be probably somewhere in the range of $8 million to $9 million with the current raises the Fed has done. That’s with no adjustment to the duration of the portfolio. So again, once again, as I said last quarter, I wouldn’t take that to the bank as we’re looking at how we configure the portfolio based on an environment where now it looks increasingly like there will be, at least this morning, a couple more rate rises by the end of the year. That increasingly seems to be the trajectory the Fed is on. So, we will take a look at that and then update on the guidance, but certainly that’s trending in the right way for us.

Thanks a lot. And then just two more quick follow-ups, if you don’t mind, as you’ve done in the past just on Advance Partners, just a breakout in terms of how that impacted you on the top line and then perhaps maybe expenses too. So, I think there were 22 days of Advance Partners in the quarter, correct me if I’m wrong there. And then just last…

Yes -- sorry go ahead.

And then, I was just going to say lastly, if you could just speak to the sustainability -- what drove that double-digit growth you saw in time and attendance, and then just the sustainability of that going forward, given some of the uncertainty around those rules? Thanks.

Yes. So, we netted the two, Advance -- and in my comments, Advance and the extra day, the combination of those two is about 1% year-to-date. So, Advance, and it’s a little bit more than half of that -- I’m sorry, Advance obviously contributed a little bit more than half of that 1% and then the extra day took out the rest. So, I hope that’s reasonably clear. And then, I’ll let Marty talk to the time and attendance.

Yes. On the time and attendance, I think one, the overtime rules came out in the fall, the proposed overtime rules and are going to take effect December 1. And so, I think that drove a lot of clients to discuss with sales reps about solutions. At the same time, we added to our time and attendance portfolio what we call time and attendance essentials, Flex Time Essentials, which was a lower-end product that’s more simple and easy for smaller businesses. So, we’ve seen a real uptick. I think one, driven by the overtime rules that were supposed to go into effect. And then once clients got into that, I think they’ve seen the need for tracking time better, and I don’t think that’s going to go away. That seems to have a very strong stick. It’s nicely integrated into our payroll platform. And again, as I said, we have multiple options of both Flex time and attendance and Flex time and attendance essentials as well as a number of different clocks that are now that are now available. So I think it’s just a bigger increase in the need or the want for time tracking.

Thank you. Our next question is coming from the line of Jeff Silber from BMO Capital Markets. Your line is now open.

Thanks so much. I just wanted to circle back on the discussion earlier about your small business index. But I know you’ve been tracking this for a while. But then, I’m just curious what the correlation is between changes in that index and changes in your business? How long it takes for you to see that and if you see that more on the payroll side or the HRS side? Thanks.

Yes. I mean, the correlation obviously is usually pretty good. This is a sample; this index is done on 350,000 of our clients and under 50 employees. So again, this is focused on the under 50 side of the market. What that showed was that we’ve continued to have small business, an improvement in small business job growth hiring over the last three months. We kind of peaked the last year around the April timeframe a year ago, April into May, and then that dropped off in the fall and then has come back and kind of recovered that. If you look at it on a full year-over-year basis, kind of March to March, we’re about flat to last year’s index. So, that’s pretty much kind of what we’re seeing, which is there’s some job growth but it’s fairly flat to last year as far as kind of employees per client type of thing. But it does indicate that it looks like it’s on a nice upward trend and that the optimism that like on the NFIB index, that’s off the charts is starting to flow into real job increases. But again, if you compare year-over-year, it’s fairly flat because we kind of recovered from where the job growth dropped off in the fall.

And I guess the pressure on the employees per client number, again, it’s affecting more the payroll services line item as opposed to the HRS line item?

Yes, that’s correct. And just to build on what Marty said. So, if you look at it on a same-store basis, we’re flat to down in terms of employees per clients, especially in the under 50 space but really across the base because it’s predominantly small market. So, we have yet to see in our client base, a significant uptick in client employees. We’d like to see it but haven’t seen it yet…

…which really ties to that index.

Okay. That’s helpful. And just a quick number’s question for you, Efrain. On the tax rate for the fourth quarter, are there any discrete items that we should be aware of?

Yes. So, if you refer to the press release, Jeff, you’ll see that we recorded, I believe, the amount -- look on the table, I believe it’s $3.2 million that we recorded in the quarter for discrete tax items related to stock comp expense. So, I called out $0.05 for the year, but in the quarter, it added about a $0.01 to earnings.

I’m sorry. My question was for the fourth quarter, the current quarter.

Oh, I’m sorry. Sorry about that, Jeff, automatic recording there.

Yes, it’s okay.

I don’t know yet. One of the things that’s interesting about that pronouncement is that it varies from quarter-to-quarter, depending on whether there are the amount and number -- the quantity and value of the shares exercised. So, at this point, I wouldn’t anticipate any, but I don’t know. I’ll have to see as we get into Q4, apologies for not answering initially.

Don’t worry about it. Thanks so much.

Thank you. Our next question is coming from the line of David Ridley-Lane of Bank of America Merrill Lynch.

Sure. The impact on the days to the payroll segment, the one fewer processing day, was about 100 basis points. Curious if you have sort of similar metric for the HR Services segment?

Yes, really pretty negligible, David. It really didn’t have that much of an impact. It probably does have a little bit of an impact but not enough to call it out.

And then, looking a little bit more closely at the HR Services, how much of the growth that you saw in retirement was related to those fee increases and perhaps market action versus signing up net new clients?

We had both in the quarter, but because market was up in the third quarter, we had a good bump. I can’t quantify it anymore than that. Overall, it’s not material to HRS results, but it was bigger than we had anticipated.

And then from a revenue perspective, was third quarter the toughest Affordable Care Act related comparison? And would fourth quarter be pretty much like-for-like or ACA-related revenue is still ramping up in the fourth quarter of last year?

No, just the opposite. ACA is going to start to now slow down after Q3. So, although you’re right that we had a significant compare in Q3, we were also carrying through because of the way revenues recognized in Q3, a chunk of that revenue gets recognized in the third quarter. And now we anniversary the uplift in ACA, and it starts -- the compares start to show slowing on the revenue, which is why I called out HRS being in the range that I mentioned. So that’s really driven by PEO and Affordable Care Act.

Got it. And then, did Affordable Care Act revenue grow or would you expect it to grow in the fourth quarter?

It will continue to grow in the fourth quarter and then decline; we’ll see when we issue guidance. So, I think we’ve hit the high watermark of growth in HR -- in Affordable Care Act revenue. We’ll still have growth in fourth quarter and then we’ll see as we go into next year.

Thank you. Our next question is coming from the line of Mr. James Schneider from Goldman Sachs. Your line is now open.

Good morning. Thanks for taking my question. I was wandering could you maybe just talk a little bit about, given everything you said about the sales momentum or kind of a little bit about softness in sales right now? And then what you expect for PEO and other trends. How would you roll that up in terms of kind of puts and takes as we think about modeling fiscal 2018 and the impact of these impacts relative to the long-term growth target of the company laid out previously?

Yes. It’s early but right now, in the absence of other factors, which again, I hesitate to quantify yet, we would see payroll service revenue trending the way we’ve seen it this year. Don’t anticipate that it will accelerate from where it is on that side. HRS will be impacted going into next year by the Affordable Care Act anniversarying that growth. So I’d expect growth to be lower. And then on the interest rate side, I’d expect that to be substantially up. We’re going to have to sort of put that in the tumbler and see where it comes down in terms of guidance. But I would say that that’s the thinking at this point. I’d label it as preliminary.

That’s helpful. And then, maybe if you could kind of give some color relative to ACA comments you made before. What are your clients telling you about the market lead out if there’s no changes to ACA and basically they kind of current attempt to modify or repeal it or kind of die, what would you expect in terms of new client decision making unfreezing or not?

I think it would be much stronger. Obviously, I think we feel -- actually, the way things have turned out when you think about it from a Paychex impact, the Affordable Care Act kind of being delayed now and looks like it may take some time to get to change, and tax reform kind of being moved up first now to be worked on is very good for us. One, it gives us stability and retention of the revenue for ACA; and two, I think it will drive some more sales in ACA as well for even clients who were still kind of new clients of that size but also clients who were holding on or decided they want to change for somebody else now that kind of the thing has settled down. So, I think that’s going to be good for us. I think the initial sales are kind of over like the clients or the majority of our clients who needed it, have it. But the good news is they’ll keep it certainly longer. And now, the focus will be on tax reform, which tends to be very good for us, if it comes up the way we’re hoping.

Thank you. Our next question is coming from the line of Mr. Rick Eskelsen from Wells Fargo. Your line is now open.

Just sort of building on your last comment there, Marty, specifically about the ACA module. I mean, I guess, you can define it more broadly, but how do you guys view that as competitively positioned? Do you think that, that module in and of itself is something where you have a differentiated solution that can drive takeaways or is really the value that you have it and you can provide it as part of your full sort of bundle and full stack solution?

I think it certainly is very competitive. We were kind of the first out to the market with it. I think a lot of competitors have caught up to a certain degree, but I think we have a very good monitoring tool and have made -- from the first year, a year ago, have made a lot of improvements in the way we handled the filings themselves and the amount of work that the clients had to do. We saw a very large improvement in not only what the client experienced, but what operational efficiency of handling the filings and in filing the forms, getting them to the client employees and so forth. I think it’s very competitive, if not more competitive, but it’s certainly -- probably the biggest thing is, A, it is part of a bigger bundle of an integrated package that we can sell for those mid-market clients, actually anywhere probably kind of 40 employees to above. So, I think very competitive, and we’ll continue to look to see if we can do more with it. But there’s not a lot more development that’s needed on that product. It’s now about selling it and maybe hopefully taking share from some of the competitors as well.

Thanks. That’s helpful. Then just the second one for me, you talked about the small business indexes and hope of improved hiring. Have you seen, at least in conversation with clients or maybe for the solutions that they’re looking for, a shift of focus from -- it seems like a lot of things were based on compliance, now your clients more thinking about growth and solutions that can help them to manage growth and manage potential increases in their hiring, sort of like a growth shift in their mentality?

Yes. I do think to some degree there is. The big change we have seen over the last few years is that need for HCM for HR support to come down in size. And so, where you wouldn’t sell that until clients were 30 or 40 employees, now you’re seeing it even below 20 employees where they are looking for some support in recruiting, hiring, on-boarding their clients, bringing them into their business. I do think there is more positive environment where they look to buy solutions that are going to help them hire. We certainly get a lot more interest and really our go-to-market approach is much more now, A, what is your HR solution that you need, do you need help with recruiting, time and attendance, on-boarding your new employees, background checks and the whole hiring phase of it. We have a lot of interest in that. So, I do think that they are feeling a little bit more positive about the hiring going forward. Compliance always does play a very important role though. The biggest impact when you’re trying to go over value with a client is being out of compliance with the number of changes that’s going on right now. And while it may seem like federal regulations are going -- are decreasing or going to be decreasing, we are seeing a big ramp-up of state regulation, which are going to make it even more difficult for clients to comply, if they are multi-state employers.

Thank you. Just the last one from me; first, a clarification. For the check for payroll, I believe you said it was negative last quarter and I think that in your comment, it was the same again this quarter.

Yes.

And then for the pricing, last quarter, you again said you’re sort of at the lower end of the 2% to 4% range. Can you give an update there?

Yes, same. Continuation of previous trend.

Thank you. Our next question is coming from the line of Mr. Mark Marcon from Baird. Your line is now open.

Good morning. Thanks for taking my question. Got several questions. First, I’d like to start off with based on what you’re currently seeing, what solutions area are you the most excited about selling do you think has the best prospects right now?

Well, Mark, I think overall, it’s the HR bundle, it’s having the ability to go into our clients and help them, not from just the payroll side but from a complete from the fact of how do they recruit, staff their positions, onboard their employees, handle time and attendance right through the total HR outsourcing. I think what we really like now is we build this bundle, whether you’re a small or mid-sized client that is fully integrated and allows you to have really kind of a seamless hire to retire, I guess, we’d say, and at all levels of the Company, and you’re on one platform. So, the fact that you can go from having 15 employees to adding labor distributions, to adding anything to feature functionality you want and grow to 50 or 60 and still be on the same platform without moving is we’re very excited about. We see a lot of, as we mentioned, a lot of interest in time and attendance, so we’ve had great solutions there, including the scale down essentials version for smaller clients. And so, we’re very excited about all the products, really we have the offer and the level of technology and Software-as-a-Service and the service options that we offer now, 7x24 web chat, et cetera, all responding to kind of how quickly the market has changed.

Great. And then with regards to that HR bundle as well as time and attendance, how much of the sales are basically going to the installed base or the efforts going to the installed base relative to trying to gather new clients?

A lot of effort on -- the go-to-market strategy is really to offer those products right up front. The old model for us was payroll, and then go back and sell. And now, we’ve trained the sales team at all levels to sell kind of the full solution right up front. So, we’re seeing more sales on the front end but we still, obviously, with that large base of clients, we’re going back and using a lot of more sophisticated data modeling to go back to clients who we think have a need now or that we missed upfront in selling those. So, I’d say it’s fairly balanced but we’re doing a lot better on the front end of selling the complete package as opposed to because that’s what the clients wants by the way now as opposed to, hey, let me sell you payroll and then come back in with other products later.

Great. And then, if I could just go back to the mid-market comments, how they relate to some of those preliminary comments with regards to how to think about next year and to setting up the right expectations? And then finally, just on the PEO side. So, the question on the mid-market would basically be, was it a particular end of the mid-market? In other words, was it the low end of the mid-market where you’re just getting up to fixed employees or was it more on the 200 to 300 or was it across the board? And is there any reason why that hesitation that’s out there would change other than maybe we just have some resolution from a legislative perspective?

I think it was kind of across-the-board, but I would say in the higher end. When you got up into the higher sizes, there seems to be a little more hesitation and less sales going on right there from compared to what we had expected and when you compare it to last year. And I think -- I do think when you have this administration and the amount of change we’re going through, if they had already bought last year, they don’t need to necessarily buy this year. They accelerated their buy. And this year, I think they’re kind of waiting to seek. I don’t think we’ve had a time in our history where you’ve seen kind of that much consternation in six months or so of overtime rules, happening, not happening? Got to have a solution, don’t have to have a solution? ACA, have it, don’t have to have it, now have to have it. So, I think there is -- does seem to be just kind of a very interesting kind of sluggishness about making a final decision in it. I would say it’s not necessarily hanging right at the 50s. It’s a little bit higher, might even be in that 100-plus type of thing. And sorry, and then a question…

Yes, and just related to that, just when we think about core payroll and HRS, you talked about some initial thoughts for next year. I just want to make sure I interpreted it correctly. In terms of for next year, Efrain, you mentioned kind of on the payroll thing where we currently are. Do you mean where we are here in the second half of this fiscal year or where we are for the full year?

Yes. So, I think you can figure out what the underlying run rate is, excluding Advance. That puts us somewhere between 2% to 3%. That would be my initial thinking about where we go out next year, subject to a lot of further conversation. And then, you had a question on the PEO, Mark?

Yes, I’m sorry, just on HRS, just to be precise. What were you thinking preliminarily?

So, what I said was there’s two headwinds we’ll battle next year. One is you won’t see the level of growth that we’ve been seeing on the Affordable Care Act compliance product going into next year. That now anniversaries and starts to look a little bit more like a run rate business, depending on how much we sell or lose in a given year. So, you won’t see that boost to growth. And then PEO is a wildcard. So, we saw less -- I forgot the last question. We saw less healthcare attachment but very lumpy, hard to predict, where. So, we saw some very large client attach healthcare and then we saw lots of smaller ones not attach healthcare. That we’re going to have to just work through the rest of the year to figure out what our assumptions are there.

And so does that mean like, okay, maybe 10 to 11ish?

It means we’ll have to update in Q4, Mark. I can’t call it yet, will be lower than this year.

Great. And then I think you addressed the PEO, which is basically that you’re basically seeing a little bit less healthcare attachment with some clients, but that’s really more of a pass-through as opposed to affecting your true underlying economics?

That’s correct. It will, but it does affect the revenue. So, I’m attempting to be responsive as I normally am to fair questions, understanding that we haven’t gone through, even a budget process yet. So, but I do think those are trends we are seeing in the business at the moment.

Thank you. And our last question is coming from the line of the Ms. Lisa Ellis of Bernstein. Your line is now open.

Hi. Good morning, guys. When you look out over a multiyear timeframe, can you just talk about a bit how sort of you think about the investments you’re making, either to grow your client base versus selling more ancillary services and add-on modules and gaining wallet share within your existing clients? Sort of how do you balance those? And then, depending on which one, what are some of the initiatives behind that, meaning additional modules you’ve got coming down the pike or specific initiatives to reaccelerate client growth?

Yes, I think it kind of -- the investment is spread by size and so forth. I think we’re feeling good about the products that we have, frankly very competitive. And we’re at stage where a lot of the investments we’ve made over the last five years, and particularly the last couple of years, it really integrated the product set and at all levels to allow that kind of full, as much of the human capital management solution as you want, whether you’re 10 employees or whether you’re 200, and we feel good about those. I think what you’ll see is a continuation of investment in user interface, in the interface and making it easier on the small and even easier to use the mobile apps. We’re going mobile first in everything that we have and we’re building and developing now. And so everything is going to be very easy from a mobile app. And you’re seeing everything kind of be mobile first from us, and you’re seeing a much larger adoption of our mobile app and the use of that, not only from clients but employees as well. And I think we’ve talked about this before. Seeing a large use of the FI employees has turned out to be a good retention tool for us as well because they get used to what they like to get the pace up there, et cetera and the employers less likely to change. But I think the investments are also at the mid-market level where you’re seeing more products set. I think we have pretty much a full-service solution there with everything that clients need but we’ll always be looking to add more as we see a changing market dynamic and what they’re looking for.

Terrific. Thank you.

Thank you. Anymore questions, operator?

At this time, we have no further questions.

All right. At this point, we’ll close the call. If you’re interested in replaying the webcast for this conference call, it will be archived for approximately 30 days. Thank you for the time to participate in this third quarter press release conference call and for your interest in Paychex. Have a great day.

Thank you. And that concludes today’s conference call. Thank you all for participating. You may now disconnect.