PAYC - Earnings call transcript Q1 2018

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Operator

Good day, and welcome to the Paycom Software First Quarter 2018 Quarterly Results Conference Call. [Operator Instructions] Please note, today's event is being recorded. I would now like to turn the conference over to Craig Boelte, CFO. Please go ahead.

Craig Boelte

Thank you, and good afternoon.

future I this to not within conference including regarding started, statements that historical the get expected of those during and XXXX. Private made call our Reform meaning we of would forward-looking Securities note like certain facts, performance, the Before are objectives Litigation statements Act plans, that are These call. conference date of forward-looking statements this represent our outlook only as of the

These and XX-K with Form differ including uncertainties. reasonable, materially and risks our and made Exchange believe Annual in our the or are for we filings the to make actual Securities Commission, and any results risks presentation this XXXX. uncertainties year on are discussed we ended based Report could the XX, While are have December are because expectations statements on forward-looking in current statements our subject

You and should update and as issued Officer. over our it our certain available of turn to the we such is of statements, today's not we when now by forward-looking speaks we relying and during investors.paycom.com. showing Also course otherwise, forward-looking close or the call do Any required the measures. which will non-GAAP refer factors new of is at Paycom's today on date A result versus results after Chad on Chief as these applicable call, press President only I is obligation that the Executive the except release to forward-looking whether events to non-GAAP financial market GAAP schedule on reconciliation disclaim which or website will Richison, included any future statements and as of refer law. information. information, a alter consider made expressly to undertake in

Chad Richison

provide and joining software or Craig, the quarter, will Thanks, speak question. at quarter before market, Paycom. Then of our thank We update year then results. into will period. line comparable developments payroll capital for with kicked revenue XXXX you address our over We another management on HCM numbers. Craig representing XX% financials I new human our first and recorded performance perspective year the prior call million some start this robust everyone an $XXX.X to on our off some our growth of call comments review to exciting to the and opening with

represents year, performance Our industry's both our XXXX and adjusted demonstrate most Awards. $XX.X honored HCM metrics high margin. range. the EBITDA popular to continues & in at the the with guidance of one above XX% were Excellence of million organization also Leadership We Development leadership that pleased of in Earlier publications this came HR.com our Paycom sector. the end a our

and the training leadership lead program of on this of our is strong training leadership innovation a winning testament for forward one This towards with Our developing a dedication deployment and towards recognition is and I'm which and development. programs. to workforce a focus core foster culture Paycom's acknowledgement of values. award proud development to continuing won the very look

recognition. initiatives receive continue our marketing positive Additionally, to

within strength our software branding leaders industry with and recognized for national service together at and to standards accolades, help increasing influencer testament brand prospects. also validate clients our of culture won content to In the marketing power These recognition a addition of to and earned and and successfully Content our campaigns, market the message the national We which tapping Killer awards our credibility brand an of XXXX American campaign, number to for television a Awards. our worked advertising to influential growth. category winning our Paycom the

gain in converts marketplace. to database Our single HCM solution continues the

many HCM multiple others. but also benefit payroll large to recruiting, management, have typically areas, needs including enough and significant talent are just to clients not administration span perspective Our

lead Paycom flexible is highly into system best yet Paycom With actionable solution accurate allows a the workforce. for executives data their that believe We system; stellar. easy-to-use these workforce to for from possible to improve software highly satisfaction are the employee companies it to use productivity, higher the to that on redesigned employee today's employee to intuitive insights of increasing best places believe because our looking Paycom solution, leverage our potential. enhancements importance and employees feedback mobile easy an system clients on job the that the employee retention. been HR employee the obtain self-service can our to providing preference, At and engagement, their focused app HCM and We makes We experience. easier Technology increase of our improve system HCM provides an user we employees option we believe powerful even use drive recently and full receive desktop Having to power their Paycom to released clients HCM it's has and this organizations.

employees is apps onboarding, HR take where generation of convenient. most our to Today's and Our and their employees to to provides virtually app activity access mobile client's our enrolling easy it's and in using benefits when accustomed product, control more, functions. every especially solution our training, mobile for empowers much

in it to addition this lead. monthly system-wide offering constantly are our our remains our to order client best-in-class. to of maintain In and and solution competitive to we every ensure release, improve to updates We continue also preserve our aspect improving base that publish

of improvements features the view offers crucial clear enhancements operational released drilldown examples now This a and that and Some to functionality data dashboard. improved this can drive tool chart into employers at our we include help analytics decisions. quarter

the in functionality employee's inclusion profile. to clients for tax geolocation; an Additionally, appropriate debut we by automatically suggest this taxes jurisdiction tax use

employers of fuel the by quarter that mileage relentless money programs mileage value of the to model many on tracker along save at enhancements with of customized creating introducing and the reimbursement enhanced our part with costing; few allows by current to a that and also an the this the client lower reimbursement combined smart driving make launched cost vehicle our just employee's factors which were focus in in These our clients. to for a region We used rate. other of mileage employee's allows year as

efforts; we've new brings our to New Turning opened in recently February addition York. sales total Salt that in XX. and to our the This in opening Rochester, Lake announced count we of sales our City office office is our sales office teams to

to to We Rochester clients perspective our are excited bring area. solution in the

strongest sales relocated We you sales believe city success. at a know, many our a building unique chance of or to this a and greatest that team new the possible region gives the and new manager approach a future expanding and As manager. we by very deliberate take organization successful around moving then to foundation new teams

team. Directors. experience some Corporation. our of a Paycom, Janet and February, most insight developments like for While we continuing operational experience believe beyond, our I'd and most which to is we do sales our priority. Janet revenue and of allow grow. that and are will brings among added pace we to recently we our to wealth leadership from her business to Unisys appropriate as we growth committed first will a to us continue Board achieve the greatest our benefit expand serving XXXX CFO financial In Paycom organization to of at Haugen will the that is as the address so through

his of to operational four has both, John Chief and in years contributions. joined Senior we has and very Operations look forward over the in we to are Operating He to continued operations few were our worked Paycom promoting past driving pleased that John ago and we departments. been Next, announce important Officer. VP instrumental finance Evans years from improvements

leading Additionally, our we their also his vision are congratulations of time to promoting Development John Information Brad Brad now, developments Smith has software some like for extend both Chief to and and I'd have and greatly we Brad from Director been dedication. benefited for promotions. Software Officer. to from

I'd several moving and many her Pezold to Stacey Finally, are is grateful years roles for different Stacey Paycom service. for on we of like in after contributions. from thank years her

her the With will conclusion, call to Craig start a we financials the strong best year XXXX. future for and success Craig? a and to We In very in review through look of guidance. that, wish had I I over continued to our forward will turn the her endeavors.

Craig Boelte

quarter full comments second to to first will the my our related be results XXXX for for also and that outlook review on XXXX, everyone measures remind financial like our I certain I'd quarter year Before a and basis. non-GAAP

from recast As new ASCXXX accounting a method January using reminder, XXXX the prior the of standard, to full retrospective X, presented. us adopted we a which required period transition

for income call compensation comparisons EBITDA, We discussed as supplemental use EBITDA, Our those adjustments issued for the this expense non-GAAP our income performance assess that review measures in today purposes. are stock Adjusted that expenses reconciliations and net are Non-GAAP and exclude certain non-GAAP also to taxes, transactions our financial earnings not discussed measures earlier non-GAAP effective non-cash and net GAAP are non-GAAP operations. income reflects and release to today's press core in net the of planning adjusted income to measures included based afternoon. other the reflect adjustments.

revenues Chad prior pleased representing growth comparable with year $XXX.X As our total over quarter of were first XX% results mentioned, the million we of with period.

of revenues continued growth and performance. primarily total Our to quarter recurring by quarter be million, an from revenue $XXX.X for of prior continues of total pleased representing comparable the $XXX.X XX.X%. representing profit margin first year adjusted wins gross for with Within XXXX XX.X% are period. was for growing and revenue quarter excellent the XX.X% adjusted the first million gross we revenues our Total driven business the new was

administrative to quarter capitalized $XX.X million anticipate gross XXXX million. EBITDA Adjusted sales $XX.X compared first million or margin XX.X% XXXX compared of adjusted. in XX% revenues for adjusted Total or of total R&D within $XX.X quarter marketing the year first XXXX million of first million was first quarter in $XX.X a R&D or was the the the total to expense expenses portion to the first Adjusted adjusted the XX.X% and our in XXXX. as XXXX of of in that X.X% we million total XXXX for quarter to Total the million expense $XX.X of prior the the as period. of XX%. $X were XXXX compared $XX.X year million revenues was including of For in quarter range the quarter first $X.X was cost adjusted quarter be full will of in Adjusted revenues.

or period. million, approximately approximately first on million Our $XX.X $X.XX income million the or million per in was share quarter based the XX GAAP prior $XX.X year per XX diluted based share for shares shares $X.XX diluted versus on net

that prior Our the enactment primarily Jobs & of effective result over Cuts this rate investing with the XXXX tax federal the in stock income based XXXX. the quarter was year rate subsequent increased the due income stock into corporate the effect non-cash tax based in In Tax to our rate tax period and of lower restricted $XX first the the effective by for of went was quarter decrease XXXX the with of Act issuance market December first conditions. compensation XX%, million

For XX,XXX our basis. share based an $XX.X income impact GAAP a year rate in income a less shares per was value prior million XXX,XXX diluted by we we the the the market. quarter on year XX% diluted repurchasing shares share tax anticipate to million XX XXX stock initiated Since rate to shares purposes, of be nearly in period. shares ago, to per quarter outstanding compensation open XX.X modeling be in We quarter of program rate lowering the the over diluted nearly our shares XXXX. repurchase our We effective repurchased full anticipate million than the our basis, net first XXXX open be first Non-GAAP or in quarter of tax XXXX. shares million This had we In X.X approximately per returned will at basis have anticipate XX% million full XX%. of shares including income million to $X.XX non-GAAP months we for shares to $X.XX XX% be vesting remainder for on the to $X versus million over market. XX stakeholders based million year X.X anticipate we second approximately quarter On or $X the to purchased tax points. including fully XX approximately on first

million. Turning of total ended balance quarter we cash and $XX.X and to equivalents of million the with sheet; $XX.X debt the cash

in clients million the As our represents a Construction our XXXX. fourth first a of first average is billion was $X quarter at headquarters. revenue corporate and reminder, $XX.X of The from strong daily our our completion. of building of approximately performance financing construction business nearing quarter of debt behalf model. Cash was the balance this the operations [indiscernible] for profitability reflecting of

for Now XXXX. and guidance year let fiscal me for to turn second quarter the full

expect we of midpoint of XX% the the of quarter to period second For prior million $XXX at comparable $XXX total a approximately million the the growth over representing in range year rate revenues the range. in XXXX

second adjusted margin EBITDA of an expect the for $XX quarter of range. $XX XX% to EBITDA million We at adjusted midpoint of in the the range representing million the approximately

to For growth the fiscal to at range. XXXX, guidance XX% approximately million our of or the $XXX $XXX are increasing year-over-year we midpoint a revenue range of million

We open are million, we margin increasing representing XXXX line a at of full million the $XXX questions. to will range to year of With XX% that, EBITDA guidance approximately the adjusted $XXX Operator? EBITDA midpoint an for range. our adjusted the of

Operator

Raimo comes first Today's question Please Instructions] from ahead. Lenschow go Barclays. of [Operator

Raimo Lenschow

management doing about of take-home where [ph]? kind of look Can now bit critical for the IPO like functionalities. HR cross-selling where you're started in space how you. you you of First area. you question probably and Thank industry, just you're like a you where the workforce normally, other -- already saw if evolution became we an for you at so see an To point terms the evolving this little space of beyond the in you guys holistic talk Chad, ask, that

Chad Richison

that adding eliminate add additional to additional as and management that in on continued And now as as can time from started attendance workforce we've and and to really a data so system the of on we've with started focused onto to actually And retrieval. payroll since out roll We XXXX with the assume on an modules stated for so be then perspective. information products that strategy both, usage integration that need we've the to employee single build to our for out clients. that able well the responsibility for accuracy employees help

Raimo Lenschow

do that product And couple quarters? little you progress of talk bit was can then the on a you that Perfect. about last learning titer the on focused

Chad Richison

on believe of of continuing content clients. pieces amongst to Yes, pieces we we've internally last focused Paycom usage we announced content, that quarter been base LMS our that again have for that into our I unique system XX drive included I greater to each did develop employee developed develop content, with of

We will have courses, to added to overtime another be charging courses think content for those as since I XX additional we've and to the added we that courses. that, XX well,

Raimo Lenschow

the takes areas Craig; a for if then And so for of in for you where quick evolution, and would puts beat mean, question year? the focus QX investment need and be about remainder about in I areas? for what's kind of the think I some the EBITDA of focused the obviously nicely investment of remainder think that terms year the to stuff the

Craig Boelte

quarter the the and R&D; the a as hope for probably capitalized, of In terms in see revenue little our beat and and the we out part line. the we marketing -- first of quarter, first capitalized EBITDA, rather around as G&A adjusted and percent and really than quarter year. at to were but the The look quarter-to-quarter, of at first basis beat bit and the -- we on sales to line, R&D we're we remove year then we getting through where actually was the those XXX that were we points marketing, to a some but we XX% revenue bit percent up we the you called and to higher had in efficiencies the R&D throughout so initiatives line and well that of as little some kind some did some -- of higher kind quarter moved would then XX% on total continue the of closed first on a so And we we bottom we add had and at quarter G&A some move the going that. some take the sales year in of was our R&D spend the maybe saw as last efficiencies rest beginning of

Operator

Michael question go Suisse. today from Nemeroff next of Our Please comes Credit ahead.

Unidentified Analyst

it's more any even perhaps since data than while you a growth Chad can This year-to-date QX. taking staggered new year year? that you've the you sort And give I or to you've sense now office for a Craig, update thank share on provided A&R [ph] been timeline prior gains for this new and Michael, us the capacity compared for questions. believe metric, metric seen you is an update on period an on increase that curious for the our we've sales been of that productivity performance or like to you if would points Alex on opening a business the had

Chad Richison

Sure.

And business annualized that that an for number capacity business of so new sales number we the number stands today. $XXX million new on, add

As to year far would have of to continued on. that as as question a again I gains have updating now and and number, achievement right just those the we we number increase but is drives productivity that it's make we it's those productivity gains, increased forward $XXX throughout move your decision million; something what how not look that we

update what's but -- throughout but we what quarter to what in forecast. can we numbers to to believe we later. so guide to reflected as And I'll productivity the continue be we the both are And those I looking gains achieve that year to this continuing see and number give again, an

Unidentified Analyst

you could a should then total don't you the And you up guide of in be but -- sense quick three give from office just XXXX? XXXX rough know to number us one expected know maybe office openings to just expect follow-up; -- openings I we

Chad Richison

focus for and results us so as up for work this our definitely opportunities very as staggered of that continuing as move has upto opened us, we've well offices on far those year so the development we've opened focused we'll the year, the making look offices the produced strategies for two our backfill very and as to mature be And focused managers. on of as approach We're we those that on new we're identify relocation well best throughout opportunities decisions. both now,

Operator

DiFucci Please Our next go Jefferies. of question John today from comes ahead.

John DiFucci

Chad, does market and make and to customers and go your given and continue that you after levers different continues primarily it capture makes for to been sense has sense to the growth that. focus new

more is usually However, especially end perhaps of fruit, you sell hanging and more like inside of team whatever they that add-ons and about into but they give and try more to that trying curious; to low do an just a maybe is up know But as aggressive sort curious there typically a that that you do overtime. customer, your more update that I'm there can know a we using little -- any not just some I I on buildout it first. is heard buy customer, tries seems I'm have you you can about just modules working, aggressively it's it. there plan be a to to And us or if portfolio

Chad Richison

say works item really we to that the would use we've whether What haven't the to usage the it proper focused and I we've are for at more get you -- on usage you the something buy focused a developed that to they focus times for and out of uses is it's is a continued have we're can a we the apt are so something can product, we I it client a to that our client easier us. client more on beginning they we've would tell we the modules needed. recognized say been it's that than receive focus what Often very will whether to each that are additional mean, ROI I buy that's or to after continuing that we to and on. produce trying I but client like additional on tell developed. fact each functionalities that's products so but been to do I this, strategy correct so that always deliver all the we've pricing of strategy the focusing aggressively a client been to try that software ROI to with important and that's

John DiFucci

It's a just is sort of prices? know I any I you'll customer the and and like room another believe sell you is I'm -- is that most for point consistent. success is customer And pays raises overtime same overtime curious if something call but guess to I just you question; at there to on price pretty I minimally raise here to there understand important this for customer the that? a for type line room

Chad Richison

-- fact unaware of is after not for the a standard our Again, have company the want them, go work want we we when we believe generates the increases in that spare in is also us, standard with produce go that we with doing It does industry. it of to routine work with we're I out pricing I'm that. ROI, industry, and client, exception to collaboratively price

I there point, are to an update that there on every your believe price that goes continue an to so is far based do I say opportunity our I is earned usage incredible of I that I an our we're additional Now amount time delivering but going business we're as opportunity an off to that, ROI that's you've and that ROI, and on, so and will A opportunity increase it's we functionality we focus for as it's that believe and month of don't as think without developing think overtime. clients an client. the good drive to

us, And current so strategy. for focused our on we're

John DiFucci

the bit rest And year? higher just should bit curious, for thinking little anticipated. about you us a than was Craig; just of give we CapEx one a that quick I'm be the of can on just a how guidance we for little

Craig Boelte

Sure.

-- our all mentioned is that reminder, of a the of the we three building that completion and kind coming combined. fourth the of of size we're building I others to as As

large endeavor. was it a pretty So

get quarter. moderate after elevated that see As would and that building, would you -- maybe see us completed, it the some the see to second coming levels CapEx you'll we we of after of the completion

Operator

next our from of comes today Mark JPMorgan. question Murphy And

Albert Chi

for Mark, on Chi is This on congrats the quarter. Albert

and you've Asking far for needle about stellar great think company the the on the the employee Paycom some redesigned retention; retention XX% customer you with pretty but employee the the that self-service ever product; rate? especially beyond that gotten and that's side so do moves service

Chad Richison

retention, the We've drives it last our times correctly, Definitely -- lose as we had as and important I times the rate years retention. far a well on, in as usage drive some they it that's similar very different usage. there for it's would strategy clients client we've client, our I what's something it's employee are is so not goes. XX%; often continuously And six that usage controllable we out but of use around as can say retention because revolves and typically been work help the believe, products similar than somewhat

the as desktop responsive a on coding far As and device. a before we had version to employee we used redesign, that mobile reflect

mobile, it's but level because usage. the view it we want desktop have it's employees having as them we of the so same mobile when that the easy then you're do type on for mobile it amount they're for and it at as when to easy move a first to that to we generate make so possible to greatest and receive employee work makes easier so for navigation the you approach it's something taken where and and for it's you Now view

Albert Chi

I appointment there going can well forward? COO the role. of really strategy? you that the With if sales new to maybe give field preview change a it's worked know promotions, far you And particularly in how so the any but expect in want is terms on us one look the might more

Chad Richison

year COO, since as been far role President of Executive as that I sales. His February approach to Operations. into change our running believe our of of about last not operations our Vice would has promotion So John as COO

a both that. onboard product has focus and be We that going to to to of have made generate we're going and component we to been continue believe and and early on on I -- clients usage how John's key improvements our

Operator

And next Please today of David our from Canaccord. comes go question Hynes ahead.

David Hynes

quickly one Raimo GIG the it earlier about the to they was and Ceridian growth thought all address ability economy, day and think hadn't paid that of an you freelance would alluded and and really impacting interesting, thought getting market? perspective do I before right, pursue? that [ph] IPO I'm that How about and opportunity drivers the could a about onboarding it same something I the opportunity? something you think talking that those of up Is curious, were folks to do workers, it's real Paycom that's it's was so

Chad Richison

I used by and I'll let that's used has something we [ph] case, development something will would we be our the develop. to Ceridian strategy, say it's that this is a as significant to create going clients -- extent what see that we

until a part what first. company it's The that talked would I wait we're is, to not that other say always has about we're going be developed we doing,

that. with guess I just would leave I it So,

Operator

And comes ahead. Brent from KeyBanc. question of Please Bracelin our today next go

Brent Bracelin

by pace, and is new expansions; matches new type couple openings growth pace staggered. staggering have about year, start a the the seen are open this now office you let's How of that think Chad, what should opening office with we kind the we've -- feel learned the of of aspirations? that kind this they your you

Chad Richison

to managers, sales ready in we person new do staggered backfill -- managers develop to who office mean sales with those we I of be to is them opening look, take now management. to goal we have mature sales with a -- Yes, and it bench reminder, a a just for office the then relocate mature managers and our of be as sales openings for us able

clients as we the opened approach up allowed managers, those So new staggered allowed as us to us absorb -- well to development on as cities, those those of strategies. focus it and

and do plan I'm we excited we've productivity excited gains, on we to this already going future. and those bench the year, and to both gains going so to focus that, well are opened according look that I'm up productivity we're continue two as continue our to back of work to And also the development on as as

Brent Bracelin

And of kind we as gears, EBITDA year Craig, how the perhaps why of it margin lookout to kind the EBITDA even benefited were obviously the XX% kind midterm the you strong and here EBITDA, very of put So Thank some timing what you the sounded QX side, the much you. the together margin margins raising there your you margin midpoint. the improve how of profile want the kind some margins EBITDA QX like Entering of some reason versus EBITDA drove to upside we is, should timing just issues on further, I about side? I year that the in full margin ask shifting on issues perspective that have so aspirations you at quarter do the are in of had guided of room from think here? this

Craig Boelte

would it to through our say XX% we'll there more the some wasn't the really continue for spending it at types marketing marketing in efficiencies that different know, -- going midpoint the to I and year see efficiencies the line we've the our but we throughout G&A focus the to line. R&D, of increased and initiatives had -- to on look we're you the guidance the related as and necessarily we've year. mean, I there timing continue to to sales

Brent Bracelin

margins or you of in right as type investments, to rate? kind on growth of update is for this you sustaining of that to the Is EBITDA XX% higher XX% to while balance growth sort any about is the XX%, rate aspirations, there be do that sustaining sustain think sustain growth a XX% And plus think than room market? EBITDA what balance

Craig Boelte

were prepared Under this we update at look asked continuing the point at margin our we're new I to to that. really EBITDA we guidance. not are We're long-term going quite but XXX think to

future. in that updating be probably the we'll So

Operator

question next go our Reback today ahead. from And Stifel. Please of comes Brad

Brad Reback

economic sense you quick if Chad, just question. us all side? any backdrop It give strong the really helping how on the market continued Can -- at growth you gains? share is purely

Chad Richison

to or coming to Definitely, years our that's our of of growth are clients it's the we close well. us remained overwhelming current -- that so type impacts ads this, quarter can't impacts XX in I new At from and revenue been adds our been our our this always to or primarily rarely I of grow this additions that now. negative, positive client that see way majority we environment, the think as employee we've Whether base anything growth necessarily been and the of the much and logo scale that. say it's would and as doing employee positively positively so new all

Operator

question our ahead. next And today Baird. go from Mark of Please R.W. comes Marcon

Mark Marcon

in if talk could also that during could by a you quarter about you if -- quarter? regions you're this talk that about the does those all shifted the were differences across into help you're success? And and addition terms seeing the clients just little impacted of bit the of where various seeing that and wondering get sizes at of some client hurricane was of in that little bit some most a this day the delayed I this

Chad Richison

of January clients so we in January I'll that guess first wouldn't towards the our in negative all definitely hurricane by were -- that. the or all either fourth lingering fourth from the a were the we from of at end we have first all I X; clients have mean, I attack quarter, your had set quarter up side; set hurricane had effect of had didn't much beginning any question and on up quarter, impact

mean the that manager, As sales person. point the best sales as best our different best far that best this -- the our best regional city has manager, the region that has does city ourselves regions, does best person I city our has the at the does

so those is collaborative and there driving and consulted opportunity prospecting us there both, in often and for of of sales. results sales times And a we're through lot

one running And to impact have the so on based there there be going is going since business much the region out is on person it. any we're so to

past As far anything continue to we've other in as But well client your as to above what client size which sell size out is is range regards in one of I done of couldn't range. size have our to as point range. than we in the that client different similar, been very our questions;

Mark Marcon

uniform of decent to And rate? country is the seeing a disparity continuing then are and across back bit levels go more grow still of on growth the at entire some offices just are older the to like a you or little markets; there

Chad Richison

do pull had offices couldn't relocate office would a disrupted. part, not the even put not and them. an and if has that backfill. continue that disrupted take and offer I you have growth have you for their in within -- something that a to undisruptive manager the especially sure, offices. might mature did for have mean and we Yes, then manager rep similar to a If same maybe growth done out in but it's that manager remove say On it's offices Yes, as their new from we those not average, remain of same see mature in most have wasn't manager them to a them continue past that mature to that

Mark Marcon

And the what happening are to be think on up do of way terms float balance; yield just the relative interest sort systems going able get set you the rate? with of then in to what's shorter you're term to

Chad Richison

interest that continued the say things. negotiate. to how very with investment that conservative those rates we the these remains our we're the have funds, strategy same, and I changed, though rates are in will we are mean, things safe very do I try I up. have we're to say would client tick even

as However, I and up do [ph]. sweep so rates have mean, tick overnight rates account interest

receive that part out tick So rates specific for we to we accretive is the our yield revenue. don't should interest than up we haven't other there, that's that say and/or that that disclosed that as it a the something revenue be is of but disclose

Operator

And question our go comes Please [ph], Analysis. next ahead. Greenbill from First Corey

Unidentified Analyst

that running I interest getting running it the other clarification, revenue? through thought was quick income. is a through Just you're

Chad Richison

No, through it runs revenue.

Unidentified Analyst

two I just then on And questions sales. had quick

environment, on sort think comment or of find you turnover kind salesforce? increases could all, the it's people, the particular, of in tougher you about in like are and/or of overall First to pressure everything getting hiring wage commission pressure

Chad Richison

speaking salesforce. the to So directly

looking a comp package, have a First across recruiting, that's good Paycom very all you're of to have best to at the important. at you be good and board have good culture to the find have all, you anytime you have to

have to sell. people, to you that Specifically staff, always a important great good it's also it's have for product really but culture important a you the sales sales

You're if that experience referencable are clients out people able product to they they sales can and value are that out not go that. where and it aren't to going keep where referable, do referrals and convert sell you you to good so so able provide of happy continue a to they can

And that -- people. get we if maintain sales continue so to us I our competitive think our recruit advantage want it's important to for to do

and say best and Now to is them are this upon people are there the a not and we their as Paycom take the recruits help industry, teach model, we development persuasive we sales intelligent also will to within are people sales out want are consultative have skills dependent we a we're from that turnover someone honest organization, so organization who I not so industry selling us, here. development and career to and that a who them and build do learn our

Unidentified Analyst

some just about that other of others partners? a is strategy much of channel doing us much may give are are could channel like off things looking not do of more kind through aware you -- us doing quick least you some you're at -- at sense my that question summary as as My talk don't a but you

Chad Richison

to not relative high you're are industry so -- and the I in We have make -- to it how touch for analysis; to in-depth mid-market, know you going is selling do mean and using you -- sale and the you meetings, it that. I and it's don't term specifically mean, are go but work to high to to where client be our sale, know have referral in on always touch I to not a the means out a what very very I more we this try channel us. the specifically, collaborative mid-market, I'm with lead going the do have us going

that's and have refer or insurance or based software from base into won't Now us receive XXX(k), private on other business I said, on [ph]. health you we that not I on, have that references client many mean not their that's partners can own equity, whether whether go who they companies brokers,

as well manager's it's of beneficial that regional are to to manager's responsibility So they organization think Paycom the as mutually the those referring and as as going us, well client. markets the within both, the develop certain responsibility be for relationships

So as referral we do well. focus to sources continue on

Operator

question next Brian ahead. comes go from And today Schwartz our Please of Oppenheimer.

Brian Schwartz

are just could assess you competition? you even are on qualitative, if when wondering any able just rates provide it's question, commentary win trending if First just how the to

Chad Richison

have based lose. going sales reps be some rarely is rate they person to there. win that I that's we again, out mean on mean, sales I the --

to well, have has strong, or our so to continued we think We that other mean any I be win I market are I improving overall, one some and noticed but that are as way rate the in difference -- share. haven't continuing it gain but

the -- that the we've to about good strong the we'll guide we quarter, and move that both our had a and I next I quarter think as feel year. update throughout continue I that year think in

Brian Schwartz

I very follow-up had DiFucci's it's with plus but earlier. that question much really question follow-up the Chad, is a on strategic John [ph] just topical the

the the out in the that more seen world a for we've -- and base, raise research prices; within more data be the installed business, we've monetizing that's around you data that don't is activities known going the for services new correctly pointed as in here, so services Just certainly all world place you opportunity don't API driver cloud John going charge future. take and there the only to to our

base greater tap the the accelerator So to I customer make maybe of when the is, guess would installed question our versus it trigger that to maybe indicator sense what for on acquisition? look the new that look on monetize and kind is Thanks. or you'd

Chad Richison

case now so would time -- at the it's what on would we're that for price through they the the same a increase solving very to than we would Right strong we're are -- their the connected. solve on. are model. delivering current of greater a they somewhat point we're different once I made employees their to and mean price the thing to clients the that's technology the change to value mean focused flows make customers driving that they now we're clients and that to you're single over is way charging, very was in that a -- mean, this in new that I value I say client, We're I focused extent us roll for problem. of we what delivering on and that question for product a using have very, sense problem type think are I the you're right focused out are able client. your usage and value for are type pricing

ROI in going at more and both, client value the be in client to the looking deliver that ways can share that well. Paycom that We as way to always a to are

with that. so just And leave I'll that

Operator

next America/Merrill our Bank comes And question go of from of Please Shankar Subramanian ahead. Lynch.

Shankar Subramanian

terms -- like versus their first of quarter Just said in they teams; the an teams to in mature thinking -- six second onboard half, the the will growth more about team this about have mature get more think sales teams a experience of it is year, revenue you And or think in over as last second to half is this question are the terms -- they mature team year, the on understanding the going structure the trying the the year? I changes coming -- come greater how I'm would of you across about on how how staggered year? half

Chad Richison

opened mature. but offices approach been offices, been has is that six in offices staggered hit to opened XXXX would one XXXX maturing be those were office office and continue just and an year opened years, that I initial to -- It maturity they amount going first of note so XX office has to that mature. sell that mean for months those is very five opened office important an talking been we're we those would started have So that that and the in as we before up counting about up was our

going an so opened couple years only they opened sell. often or years, Xx that And a or to been to because Xx it's are going might office it's have of six office have been to that times more sell; five

staffed reps of going of start takes continue they they talking that staffed, reps beginning built stage first So they usually they the fully point clients them to on we've mature that couple fully reps six a more. a are It or a pipeline couple and it's adding of then been of are turn a reps three out where become then in and months us. you off they will then for of as year, to XX the months brought those maturity more we've with lot they've are and continue with before and that that from to executive two

would open were those open And offices most think first believe initial them count of other. were XXXX. each within I most this we maturity so for quarter I six as Actually in first about days them of quarter, XX of

Shankar Subramanian

relative question asked. new seen this to it is you the competition, add already with year? is Could -- same you terms to color of need some are anybody my as second that year or pretty you've the to compete follow-up that seeing versus the much year So you last last in is

Chad Richison

mean want get, I I environment the been better used I pricing state would better the for which a mean, say have it's same good going clients, products is marketplace, you get. always also but I the cases you're the more much competitive you're that competitive it's the products to pretty in to to better and going

far typically we've share that's that times coming clients, follows are I from often been mean as companies gaining same each a company of about going which see. as talking where of I some of can are is all of them happened, year some new name our last mean always very that's we've types gone them XX markets, in had So the companies entrants our it's but the has, business to in the into hang the I always years, we're quickly, XXth proportion what market this around, we

can't competitive it's say perspective the other past. from I than it So as to been that a in say remains as competitive anything's changed

Shankar Subramanian

did in half, down look about a basis And cash maybe year. cash you you've trimming EBITDA last but margin a flow XX% free I on if this free CapEx talked for flow think question I mid-XX% going Craig; margins the run you of there the that? flow at do us see cash or from kind like long kind free of range to XX%, maybe can the give on guideline margin that XX% you or any is the second

Craig Boelte

you're depends We on margins cash would the past, to so not really it say the that, really CapEx. really haven't the flow in on guided I free

Operator

our And from comes Amit question [ph] Please Lamba Securities. go next ahead. of Mizuho

Parthiv Varadarajan

items but cash street quick just know a -- a you thinking flows. whether sense follow-up flows we was else of cash guide anything it be it to where came realize in EBITDA, shy the should or give previous don't question the of you about? be quarter's us I any special flows you Just cash there the around were the don't despite the could

Craig Boelte

really. Not

you I was the we're probably elevated up saw building. CapEx because that think as slightly wrapping

of obviously couple highest quarters CapEx during the is at last building, the that see that time. the you levels on As

Operator

And session. to the I ladies over question-and-answer turn and this remarks. would team the concludes like gentlemen, for back conference to management the any final

Chad Richison

on for call Alright, I the want to today. thank everyone joining us

Over May at Jefferies Conference May to meeting be Boston. in X Global Technology you and the the on conferences; in on your Sector on forward looking we Conferences the June the operator. be & We Technology Boston; finally, York; with next Baird in months at Services following JPMorgan Conference meeting at we'll soon. the will in Thank Technology appreciate and XX Cross on of Media few interest many & Communications Conference road be Inside on June we Consumer investors X New at with Paycom continued Hills; will Beverly Stifel the you, XX be we'll the in

Operator

today's we now you Today's And presentation. Thank you, concluded. conference all sir. thank has for attending

and wonderful You lines now a your disconnect have may day.

Paycom Software (PAYC) 1 May 182018 Q1 Earnings call transcript