MET MetLife Inc

Human-resources startup Zenefits is seeking to put its troubled past behind it, launching redesigned software at its first customer conference on Tuesday in an effort to jump-start sales and repair its corporate image.

Zenefits said the new software, dubbed "Z2," enables its small-business customers to manage more human-resources tasks, like employee payroll. It also now works with 17 business apps made by other software makers, including Intuit Inc. and Salesforce.com Inc.

Zenefits, incorporated as YourPeople Inc., gives away its software free to small businesses, which use it primarily to manage employee health-care benefits. Zenefits makes money by collecting brokerage commissions from insurance carriers. The new payroll feature—which costs $35 a month, plus $5 monthly per employee—is among the first services offered by Zenefits for a fee, following the lead of rival Gusto Inc. which already offers a payroll service.

"This is the culmination of everything the company has been building for the last three years," said Chief Executive David Sacks in a statement. Mr. Sacks was scheduled to speak Tuesday morning in San Francisco at the company's Z2 conference alongside insurance partners such as Aetna Inc. and MetLife Inc.

It has been a volatile three years for Zenefits, whose rapid growth was plagued by missed revenue targets, management miscues and regulatory compliance failures.

Founded in 2013, Zenefits grew quickly out of the gate, securing $500 million in funding at a $4.5 billion valuation in May 2015. It used the cash to add hundreds of salespeople to meet aggressive revenue targets.

At the time of the funding, Zenefits told investors it was on pace for annualized sales of $100 million by year-end. But Zenefits ended the year 40% short of its revenue goal, and since last fall has reduced its staff by about 40% through layoffs, attrition and buyouts.

Along the way, Zenefits ran afoul of regulators, as many employees weren't properly licensed to sell or manage health insurance benefits. Zenefits has since settled investigations with a handful of states including Tennessee and Delaware, paying only nominal fines.

In February, Zenefits co-founder and Chief Executive Parker Conrad resigned and was replaced by Mr. Sacks, previously the chief operating officer. Since then, Zenefits has rolled out new internal controls, worked with regulators on compliance and even changed the corporate motto from "ready, fire, aim" to "operate with integrity."

Zenefits struck a deal in June with some investors to cut its valuation by more than half to $2 billion, giving them additional shares in exchange for releasing the company of potential legal claims. Early investors including former employees and Mr. Conrad saw their stakes significantly diluted in the process.

Write to Rolfe Winkler at rolfe.winkler@wsj.com

(END) Dow Jones Newswires

October 18, 2016 12:25 ET (16:25 GMT)

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