PAYC - Earnings call 4 2023 | Paycom Software, Inc.

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Operator

Good afternoon. My name is Sierra, and I will be your conference operator today. At this time, I would like to welcome everyone to Paycom's Fourth Quarter and Full Year 2023 Financial Results Conference Call. [Operator Instructions]

I will now turn the call over to James Samford, Head of Investor Relations.

begin. may You

James Samford

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

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

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

and including report and risks with quarterly are recent filings Form Form our the our XX-Q. XX-K These on SEC, discussed annual uncertainties in most report on

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

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

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

Chad Co-CEO. will now to Richison, President Paycom's and turn Chad? I call the over

Chad Richison

XXXX organization. today. results, to our call with the to of across considerable our thank everyone the and We you James, efforts coordinated better-than-expected Thanks, team thanks joining ended

the about Co-CEO. today's Before Chris I'd quarterly to promotion in XXXX, the achievements to results announcements like into and of digging discuss Thomas

then will COO. and guidance previously Chris, that, review before served our as With I taking Craig that, who will briefly started. introduce questions. our Following our financials get let's

and can responsibilities been position to CEO preparing have me opportunity world-class in at of such Paycom announcement confidence have is great and in software even opportunity Paycom. closely into provided myself with Thomas. has leaders together a Paycom, the payroll Chris As I trust is Chris the and I He now. further for with to time leader share leadership. and One Founder company. some I've more HR my this extreme for illustrates someone leader who have work Today's a our I built work

it allows of I Personally, which this where role be the for A on other I'm very area Chris, even is impact largest ones can before. my for be our clients. product key about, that will ever aspects the the than strategy, in continued In business. and will exciting the further new this because focus have will are to me and focus invest operating of passionate Chris innovation to areas stronger Paycom continue

I'm Paycom, going strengthened excited and will for we forward. has do collaboration what Our

as continue Jason the Jason the of CEO Officer; we months, was Marketing as team strengthen of our of fit year brought several last Paycom. for an with to the Officer. leadership region's Chief Chief companies. comp about the In him knowing Clark ideal addition one Jason Steve officially Sturges with and years, largest XX was worked for insurance I the workers' this and into him various for Having in last capacities organization Administrative

investors. brand, continue to marketing elevate had successful see and agency, value owned operated I've sales demand him organization to I'm believe is privilege excited employees will our exciting, working and a bring generation very further force. of engage significant the and and clients about XX it This and I our of with our our for for drive Steve formerly years. our him evolution clients, to

highlights on to back discuss vision then of and want I XXXX look for our Now XXXX. some

automation better-than-expected areas: XXXX, ROI end solution key a achievement. client to Following XXXX, in and focused on we primarily service, world-class are X

being human every capital and leading Our is solutions provider serve. of continued we comprehensive the market focus payroll in management

We are of bringing and employees database to power the organizations more employers the and single by software. ROI using showing they experience Paycom more our

recently employee products been from one study a Beti in X Beti average, improved time and engagement. on tremendous time front, to product up. payroll strategy, A the clients. delivering commissioned went off took automation of spent On leading reduction engagement the Beti areas. our highlighted employee our benefit noted at has of processing the reduction On greater AI XX% that employee the A ROI edge in third-party checkers and within industry as payroll went days that a leader and restaurant down, errors, XX% automation the processing than

experienced to using engaging Additionally, Beti users XXX% of with up certain system. organizations their our easy-to-use end regularly

approvals expanding are new uses time-off of XX time-off enhances and the areas our GONE more our per This for has to product employee go staffing The product time-sensitive of and automation namely per suite, employee concerning Solutions of rollout requests XX the towards and requests, to and decisioning conflicts end logic both resolving going the decisions further decisions. vacation application. decisions. like Today, or may all manager GONE well. very denials into other tool AI XXXX eliminating clients which that make year Paycom's decisions been automate the by experience and PTO, between or

automated in and GONE, a time-off is request a by and experience if request of denied all providing for an it time-off employees. and whole. another on GONE It's employees, unnecessary administrators approved employee points our example a know for automated eliminates midnight since decisions. fully can immediately at that's business win managers, and a GONE industry HR interaction a their those With or a for Friday any consistent product win the has clients as

across in our XX all global We product, XXX now HCM We delivered XXXX. dialects. of companies launched product on and a and use the lot in international countries this languages of innovation and front sizes

We Canada developed Mexico. payroll launched and native and in

United Now native payroll and developed in we've launching are solution our Kingdom. the

strategy we our companies and to presence. adds that with are product complements international Our an have international momentum the seeing U.S.-based strategy

While impact very of still have our about will on potential are initiative this early, we TAM. the expanded excited

developments international with of I'm XXXX, even where department. expansion our in headed While more product and product are the I'm proud excited about we

a know changed automation. innovation As the feel that through happening excitement has XXXX, company, operate Paycom our walls. we and way all Since businesses and within the is

revolutionary map Our new continue levels bring our value to to road of clients. will product

the starts of the product our about buzz client and elevating is experience exciting organization The and future innovation are people I'm the encouraging. product. product everything in glad and the is our both to across that growth we with and in back see us, into all bringing The to organization.

excited enhancements and more are ever to We innovations before. than release product

achievement To the world-class sum client emphasis user our on service, and and up, ROI hyper size the in focused opportunity automation confident bolster for XXXX, we continue will that This record we our to trajectory. solution ROI our will our the will growth experience. continue means I'm of strategies. be and execution client on track

important and our thank I'd like commitment for to their to contributions XXXX Paycom. in employees

notably most them, of in many In top Exceptional XXXX, Paycom fact, Gallup's Award. Workplace earned accolades workplace because

mean most we for our and top leadership reflection Additionally, a a one because trustworthy the the of culture is have Newsweek of parents a workplace for recognized lot us and diversity These and organizations built. as it's accolades families.

turning Chris role. discuss to introduce Before his briefly over to himself vision Craig, the the call I'd like for and Chris?

Chris Thomas

departments XX feel and more future. Thanks, learning, a help such tenure, over tools opportunity approximately you my and Having tax, you've to insights honored an want through Paycom into for lead product, service, thank to even me the to HCM, guidance, implementation Chad. to lead personally the years. to the few, like help I'm name lead I incredible organization. the I prepared provided had

strategy. and encouraging. I'm proud group the been having quality has We feedback throughout strategized who client of the very clients, spent especially lot time our leadership year, quarter, built of has meaningful engagements and the achievement a our with last value

and our across will experience pursuing delivering client innovations strengthening We measurable our user relationships deliver to for Paycom. resonating are long-term that are relentlessly immediate high The clients, our our to and in value clients. ROI value automation deliver and solutions base,

relations to closely ever our clients ROI which service are than to We're before, maximize is further system. help our result, client them continue for to more we groups when going value engage even momentum generate our a As working clients. together driving as their and more using

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

Craig Boelte

Thanks, Chris.

outlook year up be for over like basis. billion, our results and comparable ended our full and revenue and results on revenues the everyone XXXX million, with I related expected Before We measures XXXX. of to non-GAAP better would year I were year XX% certain quarter first comments to total for XXXX the year that financial $X.XXX my XXXX, solid to quarter results full remind fourth will Fourth a full than review growth representing of compared year of XX% period. with $XXX with quarter prior the

Our business lower wins, to by partially cross-selling existing by revenue offset growth driven was new clients.

up year was $XXX $XXX Non-GAAP from Within and GAAP $X.XX million share comparable million the for XXXX $X.XX based EBITDA for growing on was diluted per XXXX. for net period. prior fourth revenues, basis. share, approximately or XX% diluted a of net representing XXXX, XX% million on XX% from net and prior year of per income delivered the adjusted revenues shares. income total $XXX million was recurring revenue XX the in quarter the per quarter or year income We strong share Full total

income million based represented XX GAAP quarter, million net $X.XX approximately net the share, In of fourth $XXX diluted $XX and shares. $X.XX of on million non-GAAP and income respectively, per

basis year million, quarter up margin Fourth quarter. points XX.X% a was of $XXX EBITDA quarterly representing margin representing over XX was year million, $XXX of Full XX.X%, year-over-year. full for adjusted EBITDA the adjusted

over a the of approximately million During of our and million, dividends. paid repurchased outstanding shares cash $XXX in stock common quarter, of shares X.X for X% approximately $XX we million we total fourth or

X.X have As $XXX share XXXX, XXXX, per have with the of buyback in million We of remaining we mid-March. and over XX, has And authorization $X.XXX December under as of combined payable million have our quarterly billion we dividend dividends, approximately shares. returned to $X stockholders. our when December XX, next still repurchased approved nearly Board

parent year count employees company client We XX,XXX ended XXXX. records details ended XXXX XX% basis, stored figures X% was for representing of with than based in year-over-year. clients, XXXX Digging roughly $X.X using XX% grouping to client we On of count greater X% mix up the client XXX groupings, compared number companies employee X,XXX Total nearly company than client parent million. with up in year-over-year, on system employees was and companies greater for our XXXX. was up a a XX,XXX in with compared with and clients, rate to growth the approximately

was about attrition Paycom's XXXX revenue XX% included concentrated in release at the retention issued Note market. primarily our press retention this revenue calculation. rate low annual a XXXX afternoon rate additional our in information with compared XX% earlier earnings our that in annual of modification recent to end

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

We continue of in the innovation. opportunity, areas future to and including AI growth automation, invest in long-term

Our GAAP basis. XX% XXXX a ended tax year rate for on the was

compensation XXXX, For the rate the approximately the award. year This potential to anticipate approximately non-GAAP a a not we XX% approximately as income any on expect does CEO onetime XX% we be related of XXXX our X.X%. of on In forfeiture and GAAP tax basis. adjustment reflect basis be stock-based effective to a fiscal performance percent revenue full year expense XXXX, to

this when details first provide any, on adjustment, we if quarter will earnings. We onetime report

in clients average debt. XXXX. XX%. an quarter paid cash approximately Cash $XXX Even and the million billion daily ended of on including and representing Turning balance we after equivalents behalf of of $XXX was sheet, operations a $X.X to increase dividends year quarter, and with strong substantial the million of very the was in held of fourth zero balance buybacks in balance from XXXX, the sheet. the The cash funds

in our City On complete. Oklahoma fifth XXXX. as in estimate total revenues expenditure building a substantially percent XX% front, We CapEx the capital approximately of to is be

let guidance. me to turn Now

and what Our guidance potential that consistent constraints. in with to historical and and factor can our guide remains trends, approach relevant see approach opportunities we we to

and the we XXXX, a of as several wider near-term in also range For sensitivities fluctuations such rates of of initiatives. are interest factoring outcomes strategic

we consistent we which For revenues growth earnings provided is or $X.XXX the expect fiscal on $X.XXX with call. approximately range billion range, the the in XXXX, year-over-year XX% midpoint our of growth target billion of range the at to QX

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

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

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

solid delivered strength of XXXX our year place and confidence client results that we of a the Paycom. product XXXX will be for in The have execution. solid give initiatives me

customer our to to and and expanding TAM. strengthen demand continue position will talent, meet expansion We invest our service geographic marketing, of innovation, in the competitive

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

Operator

question from Lenschow first Raimo comes today [Operator Barclays. with Instructions] Our

Raimo Lenschow

the best the new All to structure from me. management

with you're EBITDA maybe margin. XXXX? retention XXXX of if And bit projects it guys. year, this for at there like was that little we're kind doing a saw on EBITDA Can some in speak kind you little that and seems do of right, I of you talk bit that number? little growth, math bit a it? I on for unusual you. that about the kind down can work of If which you growth there Chad, One, the linked guiding Can retention a guide, like Because a you a and look bit talk drives we in questions. or then the Craig, to factors customer Two of little about some in X% XX% probably

Craig Boelte

take I actually. -- of take those may both I'll Raimo. Sure,

it relates the was XX% we in of Kind don't really retention, last of part As looking down versus from that year. at client size, based it typically year this reported the we XX% main attrition market retention, to discuss on side. but

that used we individuals If and we that lot we clients added to group, a -- COVID of smaller have X. X actually of to X where you in remember, teams increased during salespeople XX

the clients during And they're are a interest that by ones really retention added put was to we higher smaller on downmarket related what that higher pressure lot the as the rates, inflation. the And So impacted we macro, saw most the of that group. the that time. that it and

to we I and As it X that we've wanted the relates that's really is to say what the margins at really for last -- invest in to gives XX% years, and would this XX% to started or X -- innovation to to to the it areas us year. room And start really continue sales where of the drive where need growth. we invest revenue

Operator

Our next question Samad with Jefferies. comes from Samana

Samad Samana

us Maybe -- new the through is think the Is noncontrollable XX%. COVID the Is is up being in the attrition into guess added question end. And of that to maybe causing I'd is, during it you Welcome causing deeper to that help points. management. bit it gone low change. failure Maybe beyond my churn? at that due up? about from the down is retention to ticking that period? surge I what That's It's question like X clients business the dig what little follows to XX% the a members all Raimo's. on

Craig Boelte

business, I out Yes. more the group at impacted macro. clients that low typically mean the going but are it's end, more of by of

that retry way them We a also get the marking we the to little way and loss some our they're bit, pulling in we're we past. have back so. where we're of those implementation, changed we Samad, in out than marked And forward quicker that where still can as really clients' sell

Samad Samana

was what Great. fourth just as through guidance the well maybe quarter, And the of think ahead -- it then I was.

think down, employment services expected that that. staying any after market have -- they're unpack seen rates strength strong? Maybe you change in preemployment seen better you guidance runs? change fourth in any than either help saw like quarter the either the ticking to you bonus doing us through maybe in you Have the third quarter. the trying in Just the With looking that gave versus

Craig Boelte

went be downside more probably -- would we than where say And better what looking really our than after would in a things the what the I fourth the past quarter QX in could or had say kind expected. in I fourth the could quarter. the at happen we we results. mean what I We're Yes. conservative in little came of

Operator

with Our Marcon comes Mark next from Baird. question

Mark Marcon

you hear can me? Hello,

Chad Richison

can can Mark, we hear we you. Mark, hear you.

Mark Marcon

bit with revenue first the Great. growth Can new mention traction you you at did the what Because talk just float a the lower. And sales seeing quarter. you're of ex terms about the little force and implied looking client retention is growth? the for in I'm

So of there? wondering, a about But seeing talk little what part I'm and effectiveness just understand you're sales I can you bit that.

Chad Richison

Yes. success that in we're and call differentiated value. had effectiveness. XXX selling we've We of lot above. differentiated that the Obviously, a on brings sales more I solution mention mean had success the a with did we've

think group growth more. or in group, called I that XX% XX% we X,XXX the out that growth from has

lower we we at so what been clients value. and we of our to client impact there's as we're our look aspect onboard And how market. there, going And to have resource best also, a more resources pressured end the through use

So little size. lot success in of units. off employee units mid-market. we're larger about a And I'm there on basis, type oftentimes talking Oftentimes, having unit are a the you a bit for small trading

Mark Marcon

but making, What there's should where more imagine conservative areas specific part a you then specific a you're that we the little bit invest talk up the other you out about can starting you which investment ended I that And little the product, more? I'm to? a that areas if EBITDA with referencing, any look areas of can is bit wondering you would are year Great. of target. be slightly

Chad Richison

first for been us. price always has Growth

an the focused -- from X an with world-class adjusted automation, achievement. solution focused talked we we're So service then really what about I I EBITDA areas mean, talking we're impact mean ROI on and the that perspective, we're about When on on. the client that's

things. we've continue -- working we're From to an through the to and related. necessarily initiatives growth don't got impact are Those to additional do those going perspective, things client that's be positively. expense staff Those the

Operator

now comes next Our question Oppenheimer. Brian with Schwartz from

Brian Schwartz

funnel ask aspect wanted of of sales? I as along the you terms of seeing to in you effectiveness, seeing well line changes Are Chad, in that sales cycles the the and top as the of you're any what momentum.

Chad Richison

call, question. that I've that's mean, on the go better as a there at gotten and we little through market. motion a mentioned work it. good I we've continued further process and as is it bit We've to different at

And further it might have going so as it longer bit than would you you go you're the -- what little market, mid-market. up a to you're than in if take

the regards For of us, process strong onboard to can client in being work individual. value sales how it's quickly and that's does I a about individual still the really mean worked system. determine is it how and see sales the a onto then that the

specific more that cover it's want spaces company, say more that, more to would stakeholders you as within you all an and people upmarket, those then make salesperson. you as to you any individual that I to, talk I So would you sure to go add forward. have And you move

Brian Schwartz

And the project on follow-up I question the had investments.

of or in thinking thinking XXXX. you distribution sales side did and the what offices the share that new hiring us how pace either versus new last year you're there Just can is anything maybe about you on with year reps sales this the about --

Chad Richison

sales. well staffed in We're XXXX, really into heading

office mean, to will So we sales have our on internally that. to are out, the knows, everyone to think openings based able it do I capacity as play that I itself have be that but

into while managers would we better up. I way in we're been And a than what is going the all staffed have XXXX for say all that

the to those do so at looking they that we'll opportunities it, sense throughout year. make as be us And for

Operator

question with from next Our O'Reilly Josh Needham. comes

Joshua Reilly

you more seeing with with versus the attrition Beti? customers of some in those to adopt just color you're seeing yet Beti. to Maybe those on have Are attrition customer the yet that cohort higher who the remaining are Beti adopted adopt

Chad Richison

client the Beti want our continues mean to And use that most use obviously, in about attrition businesses ours. of ours. versus -- We of talking be out begin to that client look, lower past, much them don't. companies those someone's out or our true. we number I've on Obviously, lower Those one called this a they're retention the to with it a fully I hold get as a that of it. want value not we system have whether Beti

Joshua Reilly

customer? seeing helpful. Got you If you what it. average And -- per assumptions terms if versus That's flat you headcount what then making guidance Is in are on a just average headwind growth then you of normal are And going customer? per in guys? you a of 'XX. somewhat for in be and following to that year to year-over-year expect it's in up headcount that,

Craig Boelte

has mean seen head per the I stable. count we've customer -- been very

And stable so it the as we're as to customer. headcount we're guidance, relates very XXXX per looking at expecting same,

Operator

Steve Our next Citi. Enders from comes of question today

Steven Enders

product Okay. guess, And more want today? a is the of the be Great. you get business for Chad, just bit of now and time why focusing shift co-CEO when to side is to I sense I a the Maybe on to the for, strategic to time structure. right for

Chad Richison

Yes. years, prepared person and on in a we've been our Chris and is it's the been of with. mean right do through, Well, through the has XX I taken wasn't company -- has significant company. it remarks. to mentioned going already that as the departments have mean his XX something tour Chris operated This I this I

apply so something gifts And my at But excited mean, the I where and I innovation's it. mean, greatest I I'm oftentimes the about. that where and it's been long is, I've that's short best

mentioned at technologies of again with really me began this to reporting are working Barclays I've so -- new an running now. Conference, fun which September projects, them. our build the with product I've in year, but lot special department, of there It's And and last a to had I exciting enjoyed time. toys

like. the on alone. long -- I to I'm Chris be is don't can retiring. the accomplish been look, together and I and sales I as of the I would look strategy. could more I as short that mean part our And team focused than like I've well even compete, know and not that what

Steven Enders

the helpful. maybe update pushing where for is Okay. That's could going, can the that what are and that things for how and adoption we into year have go? how then, like get And the potentially maybe on expectations how base an this Beti -- back

Chad Richison

back I the Yes. Beti to not pushing base. I'm into mean going say we're

to client think sees not. within a use achieve that. extent ready value now usage where live the provide and clients I they they're their the there and that helping value to to and Beti meeting whether we're We're regardless them they organization, right or use Beti

I drives impact and will though, lot them continue employees. I businesses. for say, a as a both makes efficiencies say, of to Beti It for giant their

where Our live. a even go-to-market current is robust in And system XXX% of getting quite for strategy helping business. has very been value them regards And we're them without since significant keeps Beti. lot July it missed, achieve we're mean to clients, a product. but it GONE is meeting a because automated And Beti I XXXX. they our very

that as our clients using so of a value product lot achieving lot right are now. a well And of through

Operator

Our next ] McVeigh question Kevin today comes UBS. with from [

Unknown Analyst

on better-than-expected the Congratulations results.

about is X maybe wanted minute. seems As buyback there. like average [indiscernible] mean again, repurchase for Any to just the first buyback around scale, time a thoughts the [ looks about that? it on that? we it 'XX, any talk price ]. been Just short I like into XX thoughts to it's the share the think

Craig Boelte

Yes.

X% million bought think little And X.X year, a for over the the So shares. company. back we we bought quarter, of back full for I the

stock significant program. active been left on back the We buyback amount buying a of So still company. we've our have

to look opportunistic looking -- we've been buy we're as always very we'll So back. to be and shares

Unknown Analyst

run -- the the of and Or across about clients Then course adoption Beti flexes think XXXX? as there this think point? at about to you of that the is any of that has course way kind existing implementation kind its how over

Chad Richison

believe clients and I there'll to the utilize that be to Well, value of want see continue Beti.

to there will have to on clients. more we're yes, that be choose see to and Beti value, And to achieve actually the help And going them. to so as we they value come

good us. I they live clients. That's that's good will say our we're for meeting where right now. for a place product with And a clients place

we're the to where and It's achieve very value use there's a It's not. kinds software, in whether meeting helping use live, the we're So system. single they to all them they them and easy Beti available of areas that's database conversations everybody and I didn't receiving GONE, especially want now, to time-off time-off value, giving requests, to where who more because mean, our right automate there's as wants we've clients are requests. us nobody even automate introduced more or

So having right with now. as we're of lot that a success well

Operator

Our next question comes Mizuho. with from Siti Panigrahi

Sitikantha Panigrahi

to cross-selling going to ask about but CRR I talked last are few focus CRR quarters, I wanted I you strategy. how know focused. it's Beti, on ] about what nowhere understand [

how So impact what's XXXX? going opportunity cross-selling they now? think cannibalization any we to Are Beti, for how change you And right strategy and the should that CRR that talked that pushing by is earlier module? about other about CRR spending time more

Chad Richison

Sure.

on told is, making I with get And able I that. them even -- prevented that being take time doing the that to they into we from from been CRRs this that we're selling. CRR even that, were converting And as mean it time last to certain some sure mentioned I've and saying Beti say out spent usage, other do a going to Betis us not now, appropriate probably as that quarter, and say pushing out I this preventing the to right task. this would much wasn't much do we go. year, would they does as what that wanting were CRRs as already they're looked So out had

usage achieved. sure make as value after that There's sold just for, to a both client before we certain the you a product of as look client that criteria a well you a sell a is product being

to get achieve into So easier to through little them will it way you've process value. different bit now they a would pieces, of a both it's heard that year, to XXXX. continue both actually and been the and last correct we've say to use to in product just me there's And before, in I focused regards those on sell say very a selling, as client that that go

Sitikantha Panigrahi

some been And quarter, talked like mainly impact of that macro, those of has about checks, last then? services. from the preemployment then kind since How you trending

Craig Boelte

was talked I would but been we tight. that I it we little mean quarter still at similar. Yes, past. it say positive, I the last experiencing still the say, bit had in a the market would it's is rate about not that growing

seeing may preemployment change it's much jobs up. as the the not a you in little But services. that in it's It's people what You're area still past. soft just on still as -- have

Operator

Cowen. Our next question TD Jared with Levine today comes from

Jared Levine

you environment, In noticed is competitive XQ? And have or broad-based terms XQ competitors? any or limited certain change the in of so, it to if in

Chad Richison

it's always still the them, company, our XX think without talked years and been year. -- about highly very naming new mean, I last primarily competitive we're I've I we a celebrated environment. No. I've competitors.

So time. all highly I all the competitive we've other always each all long and -- a think that's to case. been say, for known that's We've been

Jared Levine

Got it. then And at the... looking

Chad Richison

positive a And that's thing.

Jared Levine

looking of XQ the revenue then revenue of growth just to the year-on-year how XQ how XQ form does embedded filings compared form 'XX filings at within to much And in Yes. that headwind here, that represents? absolute terms guidance the guide dollar a

Craig Boelte

really out. that in There's new after filing somewhat came forms seen forms the the for Yes. forms I of not years. mean a any QX. is ACA headwind We've several

that have that kind system, So growth for I growth been of and mean, talked filing rate We it's forms -- typically typically follows quarter. that the forms the that about the number of typically we our of type the kind file. of on same people we

Operator

Jason Our with comes next from Celino question KeyBanc.

Jason Celino

into low other said a about scenarios in end about what's range end? initiatives. just Maybe, to on and interest high baking you strategic year based baked the talk wider guidance Craig, you for, you're at Can think, different versus what the I you this talked rates

Craig Boelte

I on mean This larger year in is the different much be that. is that in I what rate the main factoring we're driver going there's full the they what to Fed than with and mean do things past. the funds guide. done we've

to X in from decreases You've X heard anywhere rates.

those sure range happen. that make So could we we a gave wanted of if in fit any to we scenarios that

Jason Celino

like initiatives what reaccelerate for maybe internally, you implement marketing, try growth Okay. Perfect. -- of to the And plan do then do on that? targeting to or going customer to and for XXXX, forward types

Chad Richison

Yes.

go-to-market revenue we're with it's to a playing So you're unit does I because But focus us. strategy. game. on We revenue. just each both obviously, wouldn't of focused the our unit the sides available on opportunities very help that, say

And a our so changing lot to when we're whole strategy. comes it not

getting continue think then another a report in out Beti's of interest I our a said We and cleaner. message database about just do system. regards I is using lot call, to in have value. businesses we Beti, I single to And put mean, like just again, the

Operator

from comes Piper with question next Ramnani Sandler. Arvind Our

Arvind Ramnani

prospective to any -- has a sort it's clients on mean, kind who of had Beti. in guess any of they -- clients of you I attrition questions I it largely like have or are there like go kind client existing Beti. some different been pushback choosing I clients been or from direction of Or positive? couple because seen on Beti negative don't quite from some like attrition customers? whether has

Chad Richison

Beti. with success of lot a having We're

they that to understands continue I actually think that, client. to and And down not do and value then available you're way might That stakeholders for with ROI salesperson comes where and choose them. that about and use traditionally. talking the been the time having also see it's through can someone the it the the somebody spending working done all Beti the really to the head-to-head

Arvind Ramnani

ability guess, wants you that you give except the of like turn like, this say use kind of kind latest that's someone Beti option, who I off turn And but do in self terms say as they certifying of use that to to something Great. of Paycom, payroll, to like, of they have one if version turn Beti, the hey, to use able is off want feature. [indiscernible] off and option? can that you are -- on, turn where on the all employees, the

Chad Richison

are modules, client, those have and by We they those. use how XX the chosen

tied together. many our of Now modules are

And through get the one that you so module other. value of it's the

sorry, that client I that would XX some to able there's actually But case would say to XX. wouldn't modules. -- are all for critical XX, a be I be some to a be that say to payroll going core have for driven area. client process want modules the provide with else. they solution modules of tax or more that they organization to whether choice that there's whether some another their then at And depositing other covered or not or and that's the in there's everything

Arvind Ramnani

Okay.

or someone here to is like paycheck the if -- weeks, all, X ability run is their employees question have payroll to they possibility not last basically you over has are but certify payroll, of are they no? like that kind every Just seeing but required a not to

Chad Richison

that. That's Yes, they on require what to client exactly up dependent in them. that's

Operator

Bhavin question Deutsche Our comes next Bank. with from Shah

Bhavin Shah

initiatives which just of you are spoke line. into Chad, some bit impacting you the greatest further I more about XXXX maybe little strategic think insight kind Can a of provide having think top impact do on Or your headwinds from how last? a you the kind out? thing? it initiatives do X-year you multiple take to strategic of years play revenue? it'll Is think ones long these And

Craig Boelte

some lot our obviously, mean, have that well tail and And the as 'XX I have 'XX, that. a impact small in as that well. initiatives strategic on mean, could say those I on Yes. of impact maybe for to of terms an top as of I a would are line going the expenses

Bhavin Shah

be you 'XX? headwinds of And through it. messaging terms it maybe base at that this Beti me guess least quarter from in appears please one that if that's the pushing your maybe in understand revenue little why about Got I kind last into Beti wrong, true, correct of decrease that customer of perhaps versus the today less might commentary. wouldn't creating clarification prior -- like what some you're If I'm talked then fiscal bit a aggressive I and

Craig Boelte

as may to has we creating. And that of revenue. headwinds of at to value last headwind to really, we about what Beti mean, looked Beti us. I about estimated X% from we that accrue But services that be that eliminates benefit be we've I eliminating those And mean, that customer. And and mean, quarter. to great away. errors approximately some as I might charge those We go of for. that talked customer. the we've a that's that it and be the And of some the that talked wouldn't expect all to

we've as looked really that's our of could be business that's that those what of gone areas impacted, looked -- kind and at. of through we at So kind

Operator

BMO. question Our from next today comes Jester Daniel with

Daniel Jester

gross margin focus of the less X compression know a than years I on EBITDA, of exiting trajectory. but straight it's Just XXXX.

As we again? think for about investments XXXX think making, compresses guess, should we and that the gross Or be the thinking some I should about you're year that we ahead? how margin of

Craig Boelte

guide that are mean, I don't margin. go gross there we into to things Yes. that. several mean I

One headcount largest of to really side. our impacts the service gross is margin on

XXXX. -- so and And we're well to those carry on XXXX, we're into as going staffed exiting costs continue

Daniel Jester

give global HCM, Okay. paying today? Great. of that's great in Canada native case, payroll the Mexico countries those -- then actually you And And the and out Are about and people in hear to when just if on Or who both there. displacing? maybe trajectory. providers? us flavor is local the kind you for U.S.-based peers? a on can color of you're your maybe international of a it some little Is of it kind Just more

Chad Richison

going payroll both up of And you're would HCM that to the Canada it's now. which now. that. in-country we're and talking and say our we're of typical are again, Global you Mexico, for replacing I displace on an but more side, a today Mexico, as or oftentimes countries. for to can right running partner as in-country We Mexico. vendor Canada Canada the and we're it's far But HCM countries for added did payroll side, and the about global may announce side, for But bag, our we mixed HCM Well, use an global in vendors then where that side see. The many Sure. all -- U.K. the running on in the those we've we

Operator

comes with final of Bergere Adam America. from Bank today Our question

Adam Bergere

embedded and saw guide Can retention and sales in XXXX? to the XXXX what the productivity rate assumptions into compares you talk that you how about

Chad Richison

us Yes. I We've take We're our organization. a get a and sales have. great things had last job working on the of with mean great up involved a we've We've people year I'll sales continuing great sales selling. through throughout did lot year set strategy. organization. to training year. job of done a had this to we're a go always We with We that. lot them, productivity. a great got We sales the

As kind throughout about displacement move of the cannibalization the Beti talked certain we year, or the of fees. we

that of that about still We've being already seen talked there. total a Craig portions X% out X% down XX%.

be in the to our and we're certain takes industry, successful client. within go client a do of win able work that with that's lot a for think I again, it and to So set there. success having a skill the

this saw that we're last sell what year. year expect more So we last do And sales to than we year. going good year was

Craig Boelte

the under end very retention, as was most Yes. part the the X% we less exposed the that And small. of employees. market. to the in than really that And we're I terms XX end has at retention we're impacted market, this low the year of mentioned, the low of mean,

closer it's think, actually, I So -- to X.X%. and

we're year, that we've as current the into already are positive. looks initial moving So the mentioned

would we of look at kind the way that's that. So

Adam Bergere

All incrementally lower the less little you end would say? right. And than then just in Are market a a follow-up that investing to that of last you point.

Craig Boelte

less. I investing little a Yes, would are we say

Operator

today's Thank concludes will to the you closing over for the now This remarks. call for Richison turn Chad questions. I of back your call. Q&A Mr. portion

Chad Richison

Chris throughout like contribution our March seeing many history. I'd We the Well, Air be and I Oklahoma. congratulate for coming Jim in the Jim U.S. the thanks, Morgan college from today. Force of award greatest months. happened Award KeyBanc who Thorpe in the This also in is in conferences and employees Jim the Trey to and want defensive everyone, Academy. joining to Paycom outstanding football XXXX on call most in Paycom's in recognizes for Thorpe all Thorpe, Stanley all back to around of winner, and one you Taylor the athletes thank congratulate participating memorializes to their person plan the success.

you call. may the Operator, end

Operator

concludes This today's conference call.

You disconnect. may now

Paycom Software (PAYC) 7 Feb 242023 Q4 Earnings call transcript