PAYC - Earnings call transcript Q3 2019

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Operator

Good day and welcome to the Paycom Third Quarter 2019 Quarterly Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.

At this time, I'd like to turn the conference over to James Samford, Head of Investor Relations. ahead. go Please

James Samford

plans, welcome Securities call. and are third XXXX meaning our quarter historical forward-looking performance, Thank within Reform statements statements to Act made conference the future to related Certain including the that and during earnings expected facts, are Private you of those Paycom's objectives Litigation conference not XXXX. call of

conference only call. represent statements the of forward-looking as our outlook of These this date

could risks presentation While materially we current statements forward-looking statements reasonable, based because differ believe results are made in the are expectations actual this and and any on our subject uncertainties. to

risks recent our filings Annual These Report our with most Form discussed on Quarterly our and XX-K including uncertainties and Report most are XX-Q. the Form in recent SEC, on

and such consider relying to when factors forward-looking refer on these should information. You

statements as result made undertake do we on as update or forward-looking as made, otherwise, law. or of alter any to required only information, not is it except by speak obligation a the applicable our which of whether Any new date future and events and disclaim expressly forward-looking statements,

of market in the assess press of release purposes. for GAAP issued website and A included the at planning results adjusted call, these financial Also, gross course net measures on our adjusted review adjusted our certain close is the and and adjusted EBITDA, versus today's that measures, performance use the we non-GAAP income, reconciliation to will is schedule non-GAAP investors.paycom.com. profit, margin and showing gross after non-GAAP expenses. during available We financial we certain refer including to non-GAAP today

Executive Chad Richison, Officer. over I will Chad? President Paycom's to now and turn call Chief the

Chad Richison

financials Direct strong and joining you and to Here. our Craig management, on reviewing taking our start outlook of today. employee Data some HCM our comments profitable finish it. provide growth Exchange Thanks, and usage, robust will by and position of Then within Ask scale capital of human your or questions. call James, and discussing quarter the the review I'll by you everyone the I'll industry thank another strength before

results were the business. approximately QX business robust year new growth XX% over and period. high-margin quarter was Third by $XXX our strong million, recurring of durable prior driven representing revenue revenue adds

in Adjusted of year-over-year point X a million XX%. $XX.X of QX, margin represented EBITDA percentage expansion to roughly

With strong in growth continued our revenue raising detail we guidance year year-over-year will and more in these remarks. to at Craig XX% approximately results of expectations midpoint strength for in full the range, his QX, which discuss the are

a focus this charge Paycom. have industry happening future in usage to the industry with marketplace. are starting theme the our We in believe echoed to that is see HCM lot We've at great of fundamental the been here of the we leading our things on and employee we

and increased employee Paycom, productivity from clients engagement, With benefit higher satisfaction. our job

We to businesses workplace to continue in to as they employees encourage just ways and their in the the have lives. embrace their daily new find digital transformation already

we and the Easy-to-use clients DDX, we solutions important demonstrated tech engagement. Direct of to as drivers our year, showcase employee disruptive awesome continue part Earlier this this tool Tech. the Data recently Exchange, be mobile introduced new at of of to including HR apps all or

they client achieving our just clients by measure or like and XXX% to that all near realize savings were today. many our us DDX are made data and already of The at cost data representatives the employees made entries changes operating score, quantify and track clients duplicative ability to by might all if Paycom allows

DDX. implementation results and receiving notice the taking stated with are great range, of including targeted leads from our DDX are the Prospective we clients well clients upon prospective it, are above who achieving

we estimate of were the in perspective, if clients one all a to nearly operating DDX DDX let look launch step save average like score Until aggregate attribute employee could HR of a approaching measurable further an clients alone the put they while cost incentivize of it. and score, achieving an annually. our usage. our To potential or XX%, $X.X savings usage at of it are what billion how estimate we appropriate knew professionals And further in industry ROI take now DDX, employee can no to XXX% measure

up their work are captured launched a the We cost usage Paycom's Last Ask to scale. gives seeing, answers, the representatives clients, is employees direct technology. very communication quarter, questions through by we they self-service lot levels the our yet and there a Here of at DDX company receive clients tool pleased that be still timely with are of adoption savings we related ask to a all but of as to our still migrate line DDX convenience

growth and While it the early, continuing very starting clients to been excited our still already tool. share experience initiative, this about feedback market the market. feature of a and our the addressable strengthen is the to expanding have half within usage new look companies and are HCM enabled and employee rapid forward experience and very innovations new develop has gains to clients' contributing sales I'm and These the positive. enhance iterate their are employee-employer and further employees to which initial large benefits

metric XX% very strategy, well tremendous as industry. product we growth. really long-term. positive well people up transformation value our us clients revenue, third culture and demand With our this with them the their employees, XXXX. and for lead and pleased our We're the through recurring digital particularly position I'm that confident strong HCM delivering the in and setting our the we're quarter to of direction, high-performance every strong pointing conclude, continued for sales new To with I'm

the Craig financials guidance. our over updates turn to review With and of for to Craig? call that, a I'll

Craig Boelte

our basis. the quarter our to review remind I third related that will I XXXX, Before would full certain for my and year to quarter a XXXX as everyone financial discuss well measures results fourth on as outlook for comments be like non-GAAP

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

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

Adjusted third expense quarter third to we for the the million gross quarter in million $XX.X of million XXXX as to year XXXX. that quarter the the margin compared of For our and for sales million, quarter, third was in XX%. $XX.X marketing be XXXX. of $XX.X and full XX% were as adjusted XXXX, expenses anticipate Total administrative between $XX.X adjusted the compared will

million compared in Adjusted $XX.X third or in the revenues million of XXXX, to Total quarter total costs, of R&D of was revenues. in of quarter third in portion $XX XXXX, adjusted period. $XX.X capitalized the the R&D expense prior compared Adjusted million was XXXX quarter quarter year the were of third total $XX.X XX% the XX.X% the third million in or EBITDA million, to including $XX.X of XXXX.

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

nine for quarter for tax XX.X% September Our the effective and was XX.X% the rate third ended XX, months income XXXX.

effective XX% to our quarter, tax For the be rate roughly income to XX%. fourth expect we

our roughly expect to to we year, full effective XX%. XX% income the tax be rate For

the expense to anticipate approximately For $X be we to $X million. non-cash fourth quarter, stock-based compensation million

We million versus Non-GAAP quarter approximately $XX.X fully million approximately based anticipate share net XX.X income third the $X.XX shares outstanding period. on XX million the for XXXX. or shares the million diluted fourth of was in per will shares $XX.X or in XXXX of share per quarter year diluted diluted prior be $X.XX

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

of headquarters. As a construction in daily debt of was this behalf funds XXXX. at third average clients billion corporate of our of approximately financing held $X.X represents on expansion-related the quarter The reminder, balance a

our During XXX.X $XX.X land the to Oklahoma for of headquarters City purchased in million. we corporate quarter, adjacent acres

to it our additional opportunity do plans build establish existing require While not it, it. around needs space headquarters future we any currently on an for have business was us to if

Now let guidance. me turn to

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

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

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

of EBITDA increasing adjusted are EBITDA million the full XX.X% representing We at year to $XXX the of approximately margin range guidance our XXXX midpoint an million, $XXX also adjusted to range. of a

will we Operator? for that, line open the questions. With

Operator

Thank you.

go session from Our question-and-answer Lenschow will the ahead. Raimo [Operator Barclays. begin of will We question today now Please first come Instructions]

Raimo Lenschow

Or Chad, thanks talk you and mentioned of DDX that? employee Is that last the is bit? above the that even you're of taking that another expand congrats can that -- And higher little questions that kind into XXXX a of year? of questions. Can to momentum slightly -- there? on up that your you you had pulling for force in like is earlier comments Hey, of my the you into sales market. category what's the you on kind XXXX kind to quarter. great kind kind seeing given Two

saw are enough as run to even I higher discovered from in that about talk this advertisement year. that a to have you. While that last you Thank you again question a were talking and year. you're year kind EBITDA a little of bit like what saw And that? talk kind the that you of compared successful about then well it little your margins about TV last for Can now the drivers bit Craig,

Chad Richison

leads Raimo, you what the are questions, first, beginning will said it. true. I Well DDX, and I've but in right. having squeezed to All think from The about get that's handle was DDX I four we

X had one particular client range fact, four already double they've we that made and stated million months. our was in changes the last In

of And DDX they XX%. score have a about

us to in want the it were I'll EBITDA. differentiating database both businesses that Craig and for let with is do as have direct that bit input talk data the employees the there a marketplace out for adjusted relationship those retrieval. about it so little And their

Craig Boelte

Yes.

year. this guidance – the where guiding we finished our we're Raimo, midpoint quarter In last we're this currently terms for and at basically, of this year quarter at

So to nice you notice of that.

we're to the the we're as give is the sales in that continuing see and and you G&A when year and if the spend then we're remember on year online. of the the on towards building marketing to – the takes bought of end and we R&D Some efficiencies line, starting last

guidance. current question And of seeing TV on ads seeing baked some are you efficiency – this that the I'm we but there. So, has then already yeah some into any TV quarter, your ad, fourth

Chad Richison

successful last they the we in why them into and are quarter fourth we And as had little which were continuing quarter in a this is bit year, third year.

Raimo Lenschow

Perfect. Well done.

you. Thank Okay. Congrats.

Chad Richison

bet. You

Operator

next Mark question from today Please JPMorgan. And ahead. Murphy of go our come will

Mark Murphy

you employee usage? Thank new I'll my recently what Chad, much. logos very XXX% are for signing mandated Yes. the I'm congrats. up signing you're that of add percentage curious

Chad Richison

to Yeah. XXX% the I seeing growing as have though all from number. mean, say on-boarding to pledge. scores clients through are a is we the I XXX% of is getting that, it's we're we What DDX growing our that are I I'd of increased that continue as have of that beginning. them. exactly will far look say can't

in from out-of-the-gate those those scores third in out-of-the-gate converted quarter previous companies that higher than the number converted are they're DDX of that for quarter. had DDX have the So

And to to number the push in which so our scores DDX growth continue month-over-month of does are aggregate initial continuing up. DDX, we see

Mark Murphy

Okay. overall Craig the reductions to is rate Great. you'd it incremental expect drag interest any interest then XXXX possible in the rate environment? in from quantify, And

Craig Boelte

our Yeah. we out balance billion. average call $X.X I fund was mean, that daily

in So will with point in, it XX $X.X $X million. to but a layer will the somewhere million – the the XX obviously full basis decline be

Chad Richison

Yeah. some we've did raises. benefit last we started year, reverse. And some year, interest they've This interest to rate rates had from as headwinds

yields headwinds. as as the as put high and X%. numbers last low those on in as of to face The X.X% we – sweep accounts I the received years, overnight mean, up continue XX last in We

feel We comfortable small very product with the of have to rates. we being in the have the most and able we weather TAM, the whatever a interest percent about and differentiated marketplace, happens

in new a sell to more point important week business we is drop than in quarter It in any interest rates. note,

percentages annualized greater And rate our given on week any on is any sales quarter so average than drop.

there create is we've in out headwind, it there. some it as So pushing obviously, been but – It you've through this does seen quarter.

Mark Murphy

much. very you Thank

Chad Richison

You bet.

Operator

Please Suisse. come of Credit Our next from question Brad today go Zelnick will ahead.

Brad Zelnick

hinted perspective? things where teasers that congrats developments my quarters, whether you'd the well year showcasing? from maybe a rolled are that you where or you in to out wonder, you've about I'll been places customers products from direction on how And I broadly of sense future or go product HCM it's space the that are have a competitive asking product time processes. for nice even HCM as able Any augmenting Thank being competitors so results. go thinking wouldn't you'd additional us intelligence that past much. echo give pay Great. few more as And well. things across definitely see an it's layers R&D of we places Chad, on-demand directionally or of be just the you're interesting viewpoint where various

Chad Richison

Yeah.

as what spend So, I buckets have R&D substantially been far mean as our is. same our the

on do labor accordance the we compliance keep – as well things as software laws our are filing. portion going the deposit to updated a to in certain to tax laws both You have have with

that At time to any another that given – going third proportionate. piece in be You're one category can than I'm just to continue to a you but They're – continue not category. the three going more is of have second a one in categories. of – expand. to other, there's saying, be that

So, the on I is compliance first mentioned what side. more category just

out is current within deeper to second develop better. making The product continuing set category them our

And that. we continue update so to

some within Ask three are third-party category industry us nothing concept. or innovation. things that third that's DDX, the like developing And The items other the our replacing of be would typically like Here

for set And drive do to those to -- within continue on that. from you the they're continuing past true disclose continue deep make we on in work as we have further to go products don't as But you product until client. that Staying more well the we're so innovation to working ourselves, our out. value as us, will to see

Brad Zelnick

heading I year planning a somewhat go-to-market midst you're the model from new we go-to-market appreciate appreciate think perspective. as unique in I just into -- your thick maybe that of you've commentary, know and your the that very I and about but still Again the pursued. follow-up a and a and definitive probably cycle,

sales about quarters I me, to moving really last once leader ago, it been you're which from said that of change of But to year, As you same great things couple successful you a upmarket, got a talked did what to doing wasn't if think it had be was we doing. year up. a you as the this mix

past you've Any early thoughts forward? on to over just the learnings from the what changes for or and years the the made the in tweaks we be might of a as or directionally we so look that year couple model and

Chad Richison

Yes.

So right. you are

ago three a the went we are continues have strategy today problem that product to market product continuously we us. have when mean would go-to-market as what what your today going to to years your for change too. a years change than the ago, -- You if we strategy had same different I we way as three be

We're a moat. year last be a I a up is percent probably our we very best year We're creating This large up then. to larger year our as until have TAM. stronger shaping only hard of an competitive follow small as year to mean, as organization. And organization. an best was getting

XX% of But rule here out another again. XX to we ready about with set growth the stamp

well head well up really doing into I feel very we're and And -- for as like we so, we're year. set next

Brad Zelnick

on guys. Well Thanks the all congrats success.

Chad Richison

Thank you.

Operator

Our ahead. will of Please from question Reback come next Stifel. Brad go

Brad Reback

initiative very the can give update how Chad inside much. on progressing? an that's you sales Thanks us

Chad Richison

Yes.

I outside had manager we sales have that I there they We’ve where that. have think change do deals we before group. just are where pick into continue two that strategy inside had some an I not low-touch teams do up might below bit opportunities teams. five do a catch We in as size. now in territory quarter. believe They XX, we catch there. out to reps, announced businesses those sales areas office, as in deals started we well calling moved be that build started So those can of where last it little in No

nothing's there So are really except staffed. they changed

Brad Reback

quick And revenue of we longer money then the sense just percent as increased should R&D you put has pace a very revenue? expect product. that back into to term as nice Great. spend one follow-up, a continue to percent at Any where stabilize a as obviously of

Chad Richison

mean revenue quarter at in from I up we where a you're quarter. percent been increase opposite spend. I fluctuated looking way Yes. it's continue R&D goes bit our when to over think sometimes quarters, of mean there's it prior I little year the quarter-to-quarter

R&D continue strategies. do in But to our we invest

And to would to We're the that focused a us as in still all very as -- product. be continuing and well. very company to growth to so, on growth it's relative continue invest to our strong require

Brad Reback

Thanks much. Great. very

Operator

today And go Marcon our Please Mark come next from will question of Baird. ahead.

Mark Marcon

Good afternoon.

Let me add my congrats.

usage because not leads? out nice some continues how we go -- it's talk DDX then points? proof force well Can about like DDX you the the is a that a well to is that would to as really it and up. what that's ability it's With little got perspective itself, that sales track go -- the that How DDX the you measuring the the sales from this the and impacting retention you've is resonating? anticipate would year convert through seem also bit And

Chad Richison

that prospects Sure. have Well initiative. some

to to actually have clients huge benefit see they the Other have were but yet so, have the employees in on. organization, ready to a initiative not a and organization. see as And take as might that a XXXX with beyond. database relationship They direct they they're as their an it the it to benefit

to in that used process haven't idea. to it clients, different been to a those It's past. the the type they with acclimate where them so have sales is we And something

we continue And do to so that.

just so it's And I some much easier for would say us. sales,

market to it's way. just And it's a sales to sales, have bringing But different are something process conversion they're than some we times since sell -- it any different seen from we used that's elongated to we times what different. and/or haven't

always with the to As more establish, clients you're clients that bring think that usage far conversion, the able to more as stay I value look longer you the to you. and

as a far do we year. once update retention, As that

October, And year, November as updating end the of that change December. as through you now. we the aren't start move and We go the number through to

be we'll updating the so And that year. of first the at

Mark Marcon

I you're planning wondering regards follow-up readiness And year broadening you're next organizational ask as obviously for with what's in in, just great to but Great. expansion just offices? coverage. a of a just for You're the quick doing the markets can job in Chad, up the new terms

Chad Richison

Yes.

are part billion the far offices we point New year. got more that inside So open. opening expanded We as up markets have half that than already this the we've we have, open strategy. team of sales that covered of up well our an as $XX of we did so it I TAM as of out Orleans will in

Our And productivity can you well sales as from see strategy careful mean, of results I and reps as the on the as expansion focus is execution. is working.

Mark Marcon

correct. Absolutely,

Operator

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

Brian Schwartz

rates or Any just modeled if spend Craig in competitive had Thanks of everything of It Chad Yeah, quite landscape? seeing quarter? maybe able the I just where you had a you're a aware for from? of spend where the higher came aware to taking the bit wanted changes the ask on that any the I just the to Thanks. maybe follow-up a question. that the And flow And maybe for in I'd just update replacements you're then hi. thought wondering you that. cash was are you of than question in coming quarter. terms win you're in terms in Are my that questions.

Chad Richison

Yes.

as going So us -- win aren't I'll rates I first usual down. you, tell win aren't would take it's -- any well our it been a the has getting question. for our suspects time. And the for long rates

say just can I So from that there.

Craig Boelte

payments as it's the I some to in mean yes, I cash I we're and But let's variation terms to it relates tax say levels. quarter-to-quarter it. of we Yes. things like kind like you're flow, where feel the mean have probably that. expect of at spending going right

Brian Schwartz

Thank you.

Operator

Our Guggenheim from go question Please ahead. come Amladi of today Partners. Nandan will next

Nandan Amladi

afternoon. question. Thanks for good Hi, taking my

the is how versus So by scale get driven business larger? on gross of you improvement this your as automation the margins, gross much just for push margin natural in

Craig Boelte

this we're the because to on just that strategy kind impact I mean having a to clients are to it seeing obviously usage volume able We're and system fullest. are larger our employees their able is our system that the the an gross using see were our employee margins. using specialists handle

is it impact having So an margins. our on gross

Nandan Amladi

in then Chad? you And would sales characterize any move Okay. as you move change cycles upmarket upmarket, on the

Chad Richison

No. further say, any I wouldn't. haven't And I we want to moved upmarket.

continued We've get success had range. Our with in clients have us strategy end the is We the range so with just upper range past. always at more what a our the of people still the to had past. than bit in the we contacting little

So we kind that of called out.

stayed the As sales as those conversion and far as cycles have as same. cycles well

Nandan Amladi

Okay. Thank you.

Operator

Our will from Please Jefferies. go next Samad come ahead. of Samana question

Samad Samana

afternoon. question. at of that brings that my base see a of there's greater curious, or good taking that on kind that's Thanks trend following Hi, adopting guess something upper customer up success. if upmarket success. them your seeing maybe the you modules or different in pickup you're over I end driving customers particular the are that the in if Chad, I'm for

Chad Richison

adoption upmarket. I of don't our I that greater know Yes. products. out strong always adoption We've could had call

Samad? Our greater that clients and still there products of upmarket the hasn't of at half the changed take Are time either. a have we than that conversion you

Samad Samana

a Yes, not I did that. have great. it. question. follow-up Thanks I No, for appreciate

Operator

ahead. go come next KeyBanc. Ramnani Our today question Arvind of will from Please

Arvind Ramnani

Good the results. taking for question. Thanks

cost of clients route? think go your charge more you're Just percentage -- of kind savings you to or a engagement continue you you more all just are that may that see model don't wanted just you this or kind offering? revenue tell kind think to see to usage-based DDE of and to may Do of of on or you offering the employee success success of

Chad Richison

at want least the We're it. Well, advertising you most use Paycom not historically, the the it tell We're of system companies look will to more if leading you I it. think with I software using. system much actually you're for use system. actually don't. measuring most they're I no, our you -- how I necessarily the is business too. mean full We better you that

And the so I charging for see don't us clients that more using system. we're

They've already the bought modules.

And usage same cost out is value the you've may measure system investment, and the that that full always well about whether being -- the full for so investment once And made you system, that you that get the as get the return of you I've to think that's value the clients order that on or said but and to our value receive not. difference. able in making they out I of so

Arvind Ramnani

is kind things Great. sort then essentially the you With and your of where further think opportunity where -- offering, about do greatest like your are have product set is focus we automation? of talked And automation. current on for

Chad Richison

productivity. Employee

Arvind Ramnani

you. Thank Great.

Operator

will question Please next MacDonald come go from our Ryan And & Company. today ahead. of Needham

Ryan MacDonald

Chad Craig, for questions. my taking and Hi thanks

interested First while. boost presence Tech time Paycom's in the HR I at to that see off, quite a was with for first a Chad

brand awareness what process? any increased And decision-making could either since curious if lead-generation a then on benefits of from went that the you really you've that talk or from perspective. Just seen to about

Chad Richison

right you're think had to year that. from prior third Yes, our been was But in we row -- we this have Tech. HR it to absent I a attend

and something I what have we Tech had through you and that shows -- about yes, trade going definitely doing ago. is started three years mean So, HR

that this did us year. opportunity gives developed. It We to it new continue we've an products highlight

in had floor. the of where Room we year think the implemented the last I we I middle think it somewhat Break HR

do HR for continue those to as we good to us to. so make well and in shows go trade is And a investments Tech one

Ryan MacDonald

follow-up. And a then it. Got just

platform, you're days Here enabled are Direct trends is usage the On think do had since it even you takes to announced there? Ask Exchange? And that though Thanks. similar mentioned customers of of launched -- Data half or to about early you you had it. What that you see with had this what starting sort it communication a I your think it's path something seeing

Chad Richison

I your a I a to would and you imagination mean scorecard of by say they're that something questions, of can on that business up questions. Yes, mean continue to Here strategy might set mean implement is want. should I you you're the DDX different. the the somewhat grow. Ask be is little categories actually kind limited it I whatever

who question You resources how company a get benefits those the experts administration a it's IT they're right or set whatever on question representative do key up whatever it's are all where I there. questions questions, whether

Here And so what for then Ask don't it ask. employees, need set to And up know you those don't to is who categories. allows the With company to they to do oftentimes, know who ask.

question is. knows who to person that You respond just ask and the your question Here to it appropriate of Ask

so you the once as that as builds conduit employee adoption, that if between again for the it will, greater employee stronger communication. and drives it just And well employer

versus a Ask DDX, both And differentiators. different but so Here little they're are strong

Ryan MacDonald

you. Thank

Operator

come will Please today from question of next ahead. go Daniel Citi. Our Jester

Daniel Jester

for taking question. Hi, thanks my

one, kind to to your introducing you're you're the how features, of Like you can for of when when ultimately Just away do think charge like you it? introducing from the for think DDX, Ask about philosophically you just new do kind that, functionalities you free? whether to give new want of clients benefit it most about how like to the talk to want off us last the platform build some Here, whether to you to

Chad Richison

I for. exactly of though. that strategy we which going on. so charge hard to on see a Yeah. products XXX% to how decide, I answer you giving -- kind as too for get we're which we're that that much develop, you There it's it's going mean, me I products important are to competitive a that this out question without and certain usage can tell

go over want year time through the sell the or it to You clients. of really to trying to don't next two

And one that's was but the on value. Ask it? both would have we create Maybe rather could just have I of types the using Here. definitely DDX products those it. margin, XXX% that so much of sold with They same people

And it so just leave that. would at I

be of client head I Here, us it continue DDX rate click quarter like Ask increasing that now. as get right we through that products throughout had XX% it's to using develop important do we've I see fourth least We we would adoption to close year. perspective. at really clients products. actually two, only the But that as the for on on XXX% And it getting fee these other as for from of I then And far We're next every mean have it. and the out a felt usage into

Daniel Jester

Great, with the thanks. to talk $XXX investors on going you'll ending Thanks. do about cash? And over on view how that be cash cetera? there And more million know can letting balance just time balance of in with become sheet, structured is you deploying sort a sheet whether using buyback for et you which the that then about you're

Craig Boelte

very capital throughout to that were is the XXXX under in as continued we I we the are the that position have our we available R&D plan. we're And $XXX or invest end over to buyback you're towards And mean, to I on in one our opportunistic balance We priority Yeah. first is million aware, of back return in approaching our current side. ways growth and -- the have year. existing sheet. mean cash And million build over $XXX now this still shareholders.

Operator

will go Fitzgerald. from today Drew come Please our next of Kootman ahead. question And Cantor

Drew Kootman

my Hi, thanks question. taking for

in areas. Just people Here Just point are picking adopting are DDX it quickly can to On they're clients how anything any seeing smaller on it people button, you Ask or me. and maybe larger up quicker, different for of one clients? you differences

Chad Richison

Yeah.

products right then sales you have you takes the is before while organization beginning. you sales and train that and start it get all So the the it necessarily, put out what to selling from it little way a off when organization

the And lot clients of in circling that products last had I today, a and a Ask we've as if didn't are the to clients the they're products. I've can DDX Here. those we've to tell job ROI. mentioned a we and this capturing we've both sell to. of good But drive those further of on all value sure mentioned using those and But they're you these beginning. with a with on call on of coming done business making on but in the are we've Ask should have Here, job as circle from DDX products We've in new the that had large I back that clients coming still done included got those past to back base client be we good quarter just products that

Drew Kootman

Thank you.

Operator

from Siti come go And question next Mizuho. of today Panigrahi ahead. our Please will

Siti Panigrahi

easily just I quarter into pipeline, a new Chad, adds. to of the QX is strong drill terms wanted which in customer,

your for So terms any in upper end seeing terms XXX Any like seeing are to in side in X,XXX are the on environment? more of you to pipeline comments more switch range? you of traction X,XXX Or demand XXXX?

Chad Richison

change about talking range mean, talk I used top above of there. our X,XXX. about was I real and mean, I to no I the end

of end X,XXX. about top the about talk I above our when range, I'm Now talking

I had change into that's guide little that's going some So mean got We've bit. a QX. strong a --

year QX it larger than guide percentage heading a is QX. heading In into as into fact was last our this year

we're strong feel we QX. for really pipe to what so, the in we the seeing have market would the be that answer question. And demand And across strong about

Siti Panigrahi

That’s great. Thank you.

Operator

Capital. next come ahead. question of Please go from will Simmons And RBC our today Robert

Robert Simmons

been What recent to or response increase guys. has the results the pushback Nice through? put you price

Chad Richison

Yes.

mean, So, I did we pricing a adjustment.

on It'll to that remember, be excuse to I adjustments at I guys impact competitive very for If quarter, have -- we second X% full that. no first mentioned nature. said in the we consider in fourth me. pricing time, that I It year. you little believe had did on quarter impact about

going to something I'm forward not moving that about our to talk choose in we how price it's So, product.

Robert Simmons

small Can talk -- are though which in they any is stride you Or basically reaction it? taking just clients seen it have to percent? having you negative a

Chad Richison

select Yes. group I've pricing It clients. first have a had before, I really on to of impact good our feel And a price small to a about were as able very said strategy. adjustment quarter. we

about it's organization I calls. this And be competitive on X% our I and we the do on moving total talk On these to for not want about forward considered that, to something subsequent quarters expect year. impact to pricing,

Robert Simmons

Thanks. right. All it. Got

Chad Richison

Thank you.

Operator

turn like now gentlemen, to closing to this will question-and-answer this over I'd session. our And time, back ladies remarks. for the and any Richison At conclude conference Chad

Chad Richison

today. everybody want for I All to on right. joining us call thank Well, the

XX. Over the be in many at meeting Tech the following soon you, Conference and X conferences. York I'll in as New the Arizona at well road. on look Craig with and Chicago Francisco Meetings November presenting and as road the RBC James the on December on San at on the meeting of be the next at couple Paycom on X November We Tech Investor in appreciate Thank continued in operator. Conference and you months, Media we'll investors with be of Suisse Credit hosting in forward Barclays will Stifel the XX. on interest Tech at Conference December your we to Growth Conference

disconnect. may You

Operator

has now concluded. now lines. Thank today's your you, thank sir. disconnect The presentation for attending may everyone We and conference you

Paycom Software (PAYC) 29 Oct 192019 Q3 Earnings call transcript