ULTI
#I think we've always had a great enterprise team and they've delivered for us multiple, multiple years since the beginning when I started.
This was just an exceptionally great quarter for them.
It wasn't like they weren't delivering right up to this point.
I think on the mid market and strategic, it's a build ---+ the enterprise sales team the average tenure is eight years.
The mid market sales team the average tenure is 3.4 years, and the strategic is 10 months.
So you build it over time to get people tenured.
We have very low turnover.
Competitive dynamics, I think remains the same.
We're seeing the service bureau 65% of the time.
We're seeing ERP is about 35% of the time.
Our win rates tend to remain the same.
With the service bureaus we're up in the 80s.
Win rates, ERPs, I'd say we're right around 50% win rates and the opportunities we get.
So everything is about building the pipe, getting in the right opportunities and trying to win.
Did I answer it <UNK>.
Hello.
My goal for 2018 was about 135.
Again, the acceleration is in the tenure of the people.
Like I mentioned, the strategic channel first half of the year we only had 11 people on quota because we [quota] a person after we hire them in the seventh month, so the goal is to try and get, over time 41% on quota.
We're at 36% right now, probably next year we will be at 41 there.
I think that's how you build it.
You build tenure, you build average annual productivity per person, and you get as many people's quota as you can and then you try to get keep the quota [carriers] ---+ try to keep 90% of your people on quota and keep your retention rate in your sales force under 10%; and that's how we were able to produce what we produced with a sales force of 120 quality, quality salespeople out there.
Rich, as you call it the acceleration services revenue is tied to the stronger sales production we're talking about.
It does mean we expect to have more lives in January and the service revenue will proceed it.
On the strategic staffing we've ---+ our plan this year was 36 and we're at actual 35 right now.
We had one term.
Hopefully, within a week we will place that person ---+ person coming down here, so I believe we will be full staff in another week in strategic.
Every year since I can remember we've been going into visibility in the mid 90s or low 90s when we guide in October.
I don't see what would change that based on ---+ well, it's not going to change.
We are going to go on with visibility into next year in the 90s.
And then depending on what happens the second half of the year, hopefully after Q1 we can say what we said this year and will be 99% visible into 2017.
I believe it's business as usual.
I think the opportunity for us is that there will probably be more people paid.
As there are more people paid we will get more [PEPM], but I think it's business as usual from what we have to do regarding compliance of it and the reporting of it.
I think it's been pretty consistent at 50% for awhile.
I think one thing we like to try and get into deals that we believe we can win.
I will give you the exact numbers in a minute.
We're about 55% ---+ in enterprise and global about 55%.
Our business the first half of the year came from service bureaus and the other 45% came from ERPs.
<UNK>, I think we can ask that question a lot of times and each year ---+ again, remember, we went into workplace back in 2008 so we were selling down low.
The gross margins have grown modestly each year.
When you take everything in aggregate there's still something I would think is going to happen going forward on the recurring revenue, whether it goes up 50 or 100 basis points as we expand into these different areas.
If you think about ---+ we do have a higher percentage of what you would ---+ new stuff, mid market strategic, than we had a year or two ago yet the gross margin has gone up a little bit.
Although it is small, but I think that's kind of how it works out.
We do have different activation strategies.
I guess the long ---+ the short answer to the question is, I think when you take everything combined, we will still see some modest improvement in gross margin year over year in recurring revenue.
I think when people have global employees and they put in UltiPro, it increases the firm's [employee] for months.
And I think, we're not looking at going gross to net around the world anywhere other than North America and we do partner with [Vellargo] for people who do want to produce payroll in other parts of the world and then that gets uploaded into UltiPro; so a North American company would have access and visibility into the worldwide workforce.
Workday remains pretty consistent.
We (inaudible) about 10% of the time.
In the quarter, there was really no change from when we saw them and we were pretty consistent about 50/50 in our win rates with them.
In the sales force, the enterprise sales team is 100% staffed.
The mid market sales team is down one person from 41.
We are at 40.
The same thing, we're looking ---+ we have people in the pipe who we can higher fairly quickly and, as I mentioned, strategic which is 36 and we are at 35.
And hopefully by next week we will fill the 36 slot.
And then we have managed services which is three and we are staffed in managed services with three.
That gets you to the 120.
<UNK>, the impact of [Vetrucs] is fairly nominal.
It is a matter that we are hiring people in support, activation, ahead of time than we would've normally and that's on the heels of the strong sales growth.
So that's why you see a little bit of a dip in Q3.
On the operating margin growth in the fourth quarter, as I mentioned before because of the higher live units, we are going to end up with higher services revenue kicking in, in the fourth quarter getting ready for January start, so you do have a ramp-up in revenue in the fourth quarter.
And we would have already hired the people so we have the cost in place.
There are some other minor adjust things that happened in the fourth quarter for labor costs around how we account for PTO and benefits and stuff like that.
That pretty much explains, what has been in the past, kind of a normal trend in the fourth quarter to see the margin improve.
And on NetSuite, it's been a great partnership.
We mentioned before last year 5% of our annual recurring revenue that was sold was somehow related to our partnership with NetSuite and the first six months 12% of our business that we sold was somehow related to our partnership with NetSuite.
And I believe, well, I know on the NetSuite side that dollar amount they got equal dollars on their side that we got on ours; so I am really happy with the partnership.
I couldn't be happier with partnership and I believe and hope [Zach] feels the same way.
I would say the second one, I think it's normal business for us.
I think anything in compliance helps us.
The more complicated it becomes it helps us.
ACA helps us on these sales.
On large hospitality, I believe it's going to go live sometime the first half of next year.
I don't know exactly if it is going to be January 1, if it's going to be April 1, if it's going to be May 1.
But it's a large deal.
We'll work on it.
It's going good.
I'm sure it will be the first half of next year.
You're referring to sales and marketing.
It's going to run around 21%, which is pretty consistent with where we've been.
We get leverage in, we pay commissions once, we keep the 97% retention rate and that gives us leverage, but we're always going to invest in sales and marketing if it's going to drive business the way it's been driving.
I don't see it as something you would dial back.
Rather, I think it's something you would invest in to generate more revenue.
Let's put it in perspective.
I think that was our fourth acquisition ever.
So, it is 33% more, but it is the only one.
So the product development team, product management team is looking, as <UNK> mentioned, how do we get $40 in PPM exiting 2018.
So you're always going through that analysis of buy versus build.
Vestrics was a great opportunity.
We have people out there that we're looking at.
Again, small stuff, great cultures from companies, people who will fit in, something we can leverage and bring more value to our customers.
That's the decision tree today.
I love the strategy.
We pick up a great team and great people, great opportunity with products and technology.
So that is something I believe you will see more from us in the future along the same lines as Mitch said.
This is only our fourth, but I think around the ones we've done, we're looking.
Mike, I think in the past I've said it was hard to have a correlation and I looked at that thinking that question would come up.
It's probably a couple percentage points away.
This year the backend is driven by the stronger growth.
If I had to guess, it's close to being the same.
I will feel more comfortable answering your question after we do our preliminary guidance in October and we take a look at how that's going to layer out.
No.
We still use third parties, or somebody asked before, you know, SIs to handle a certain percentage of our business.
It provides elasticity in some respect.
It's in that 10% to 15% range.
And it's something that we like that relationship.
We have not made any changes.
This is a result of strong sales production.
You're welcome.
Season was in line with our expectations.
I have no additional comment on that.
I don't know the answer to that but I do know that $1 billion we'll have less than 10% of our addressable market in North America.
I think it's ---+ we are investing 20% of our resources into R&D and 50% of our people remain in services.
We keep making that better.
We've always had a quality sales force.
I would say of the overall market I don't see why we couldn't double that over some time and then go from there.
It's taken us 26 years to get here.
Who knows what we will be able to publish in the next 26.
74.
As always, thanks for your time and appreciate the support.
We'll talk to you next quarter.
