PAYC - Earnings call transcript Q4 2024

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Operator

Good afternoon. My name is Cameron 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 2024 Financial Results Conference Call.

[Operator Instructions]

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

begin. may You

James Samford

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

risks forward-looking annual While expectations uncertainties we current statements report our in believe recent call made the are any because based may are statements and results subject reasonable, including discussed differ the and materially our with are most These filings on actual to our this SEC, XX-K. risks on Form on uncertainties. and

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

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

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

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

Chad Richison

operational We with sales and ended Thanks, joining thank momentum, call focused to organic to everyone strong growth gains. XXXX execution, efficiency thanks you today. our James, and

after joined Prior X Before of years firm's industry Paycom experience, and Chairman the our a served diving will for industry he as effective pedigree the our Bob CEO that, brings Foster. managing partner senior and CFO, to next ago a financial over years. working welcome in, process role to largest my the accounts. He within team. to X of Bob company February as lead Ernst at Young, financial retires. I the strong of longtime assume payroll Boelte, & Craig several when a XX, officially and brand CFO expertise colleague, want He

Bob our Craig After review our and full quarter provide comments my results guidance. fourth remarks, on year full opening will will year and

We take will questions. then your

With that, let's get started.

Our performance strengthened throughout as we XXXX diligently the our year executed plan.

bought our they We software vision already even software solution people the and Simply that buyers And momentum today, in they on for systems put, automate. product fuel user rapidly more maintaining by tasks can we is achievement automation, our to industry, them. do world-class sold the more full that delivering the automated this when wanted our ROI expect want client focus our software, service. in our solution to do XX more solution XXXX ROI towards ago years to moving for do full because are automation, with and most We the software. we clients. driving shouldn't safely have

for this activities. up deadline. payroll delivers through solution this we submission shift sports validated Beti and days to are eliminate payroll payroll their client XXX-employee worked the Prior to for a leading of seeing payroll, to automated ROI. the as to daily. employees do that a allow client to issues Take, resources On example, effective industry. professional ours Beti, in way do the to organization their Beti clients differentiated side, own which most tasks, strong highly non-revenue-generating continues Having is profitable more

a trust chased We They their time seamless has attendance their client transition time multiple check increased reports employees correct, is of processing their issues. raved states. employees employee the that automated time in their retail ran the previously client X,XXX-employee which fix ensure significantly and they reduced effort This they down With separate supervisors and Beti, and client onboarded on operates has and to by payroll nearly process, wasted confirm also payroll. about and have XX%. XX%

payroll annually to payroll see ROI continue to additional an unproductive HR outside automated month In of their management the to and time of our team strong saved from the addition process. automations time labor solutions. savings, Clients

in With clients a represents whole. XX% automated points awarded a generate of ROI managers, labor to pleased automation interaction nearly companies of saved year. roughly study time managers for the A on by unproductive hours unnecessary that eliminate experience Through consistent For save every GONE is the the of Group's to the providing and week accounting world. as and HR, a fully of Award, Forrester employees, We Business can recent GONE, the how an decisions, organization's areas GONE of changing HR the many weeks time Innovation time-off finance experience unproductive found annually. received nearly can X were business up which XXX%. that of unproductive And administrators average, costs. clients, Intelligence and employees

service increased agent, own to knowledge-based our our utilizes efficiencies than are team quickly responses consistently which search months before. ever experiencing to automation. our through AI help ago, product was more and Paycom's faster and provide clients rolled X semantic out Internally, we model

time, over and more improve client we valuable, become continuously connect interactions the to responses them faster As solution. our right

service to rates year compared and improved XX% ago. seeing a result, tickets a As are have eliminated response we over by immediate

human a AI client service provide a of to means efficiencies, single with high-touch Scores. interaction, margins. point internal to our positive our for necessarily model, automations Net initiatives a clients and we efforts, automate committed automation to we'll a contact and having personal even on identifying But remain service currently is agent, internal Through always seeing realizing that processes which having this higher service. driving are and our satisfaction We require them increasing are we more have Promoter impact like opportunities

deep sales be sales our leaders, is to solution greater have experienced of having last roughly more attract areas is we industry And year talent most amongst for service, same provided by of these Demand record organization, as individuals year. the our with than Paycom opened with more the ever, X businesses success we sales January. efforts, automated of offices benefits key as to success R&D. headcount Thanks automation. ready we With in the in solution sales the in stronger a and new continuing bench leaders. the ended while and to sales

North Providence, and sales which Island, in our These Raleigh, Los Carolina, brings teams are XX. California Angeles, located to Rhode outside total

top culture QX company compensation Our company was culture. Paycom was for as in by the and best highlighted comparably

Newsweek one Additionally, as greatest us America's workplaces of for recognized diversity.

year growth, With over and off in we to up are record turn With the to most beyond. XXXX sales Craig. and retention set perform that, automated the with kicking it product, consistent well me let

Craig Boelte

Thanks, Chad.

today, our $XXX other non-GAAP or ended income total held income full with solid XXXX up recurring statement. This we growth change billion, on and Full revenue quarterly year statement, representing the Before line for $X.XX release revenue my we to billion, revenue into recurring to with interest revenue funds to comments other also was year in earnings for million would quarter provided XX% broken on interest a revenue any press to I and item And full out measures clients. has in $X.XX year results impact XXXX this clients amounts funds approximately conform have no results on other In certain compared our of total presentation. year-over-year. XX% year be and Also, like I for was our up revenue organic to XXXX, XXXX. remind on XXXX. related compared our financial of will basis. and We review fourth held XX% to everyone that

expected for were compared total comparable year-over-year results up on million million, of fourth was revenue the revenue on approximately clients, of Recurring of and growth quarter generated to $X.X million, balance than $XXX average X% We approximately quarter other an $XXX representing up of interest funds approximately in the daily over with XXXX. $XX billion. Fourth held period. year XX% prior better XX.X%

line $XXX per translated into year $X.XX approximately efficiency even million XX GAAP top or was Non-GAAP gains was based for and diluted stronger results. shares. line million Full net operating income income or net strong bottom Our $X.XX XXXX recent on million per results diluted share $XXX share.

of margin $XXX In XX.X%. income shares. up EBITDA quarter, fourth million represented and net $XXX $XXX net on Fourth adjusted XXX respectively, diluted $X.XX a million, representing XX margin was million representing adjusted of based full basis income points and year-over-year. share, $XXX million $X.XX was year EBITDA Full per million the year quarterly approximately non-GAAP of quarter of GAAP XX.X%,

XXXX Adjusted in revenues. continue automation expense prior portion, $XX XX% million the the million R&D was period. quarter costs, in software. We $XX invest XXXX of R&D in the million of in were Adjusted fourth or capitalized total including the to of quarter $XX compared total to our across fourth year

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

total XXXX. XX%. XX XX% flow, or on GAAP was defined $XX full in CapEx a approximately million representing of repurchased XX% to as be and anticipate in approximately in represented total In $XXX XX% XXXX, We X% For Cash over expanded points $XXX stock paid approximately X%. percent XXXX, in XX% a cash million, effective over expect of approximately XXXX. and million percent Free basis from we XXXX in non-GAAP flow total a cash In shares year stock-based XX% XXXX, year-over-year. we year-over-year total CapEx we common estimate revenues of compared revenues for CapEx expense we to dividends. rate cash less XX% on shares approximately to revenues compensation outstanding approximately flow revenue basis. below of to operations up approximately to a $XXX as year Free margin XXXX million, the basis fiscal of Total $XXX of be our be XX% was margin. of a as operating of in our and cash tax flow XXXX, million income XXX,XXX

Since XX, approved the repurchased authorization in payable remaining still million or mid-March. of million. under over approximately our billion December our have shares $X.XX buyback the has shares approximately dividend beginning quarterly $XXX Board of approximately share $X.XXX We per of XXXX, X.X we and XXXX, next as of outstanding for X%

with consistent ended clients representing capital XX,XXX compared XXXX in was up shareholders a to paid through XXXX than progressed. to those, debt. and growth XXXX. XX%, approximately the of revenue after with retention we cash Total balance ended our employee of in million sheet, Paycom's a X,XXX system employees in XXXX, year-over-year. dividends greater year cash we equivalents buybacks very X% basis, records $XXX the ended were On Even year-over-year. of and with X% Turning was year We up grouping which in strengthening company clients, XX,XXX was a to of million, including the sheet. the balance year with returning rate and rate X strong stored XXXX with approximately as a XXXX. was solid with fundamentals clients. And XX% annual year XXXX execution X parent

employees all our With that thank I'll for guidance. is to hard to for that, want over paying call off. Bob? turn work Bob the the I

Unknown Executive

Thanks, Chad, financial innovative an the Craig, such to profitable you, and opportunity take of company. the thank and for reins

in of near R&D, to well areas us we momentum in the have to continue internally. sales building in XXXX term, clients investing been the plan the to is benefit our and as as the fuel automation For

consistent to factor and can trends, potential we constraints. guidance approach in relevant as Our we what opportunities to and guide remains today, see

focus an consistent goal With EBITDA aligning and long-term run transitioning our adjusted are framework. to the we revenue how business, our with and of with we our guidance guidance annual

billion we be X% the revenue range. between approximately of midpoint $X.XX $X.XX the fiscal [ expect billion For year-over-year total at XXXX, or to to ]

year year-over-year. We up expect recurring and X% revenue full approximately to be other

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

Inchon $XXX in XX% Included total approximately million, of of Funds represents outlook initial clients down is our one revenue highest guide. held This year-over-year. for margin

Looking first quarter the of we be at growth the the low to shape point the year. year, expect of

accelerate to as growth digits revenue and retention quarter trends. every sales benefit consistent record from thereafter, other and recurring double expect consistent to we We

momentum well positive positioned in and We XXXX. have are

revenue have We high-quality produces and that organic profit. growth an model

We and the build our product success. to vision also talent the have on

open want to questions. I Craig, our our all the has taking your he let's questions, to last for Before line XX what you. over Craig Paycom, employees and for thank clients years. that, thank the of Operator? meant With From us,

Operator

Instructions] [Operator

the from comes question line of first Raimo Your Barclays. Lenschow with

Raimo Lenschow

feel quick Perfect. and a as a Two business, what do all kind Paycom I surprising Bob, guidance Maybe Paycom questions. quarterly first to bit like not so with talk thinking? a Congrats of decision great guidance there. in the and bit on it a that's little CFO. does a is anymore. mean journey little very philosophy, about drove on best predictable QX Bob, the your your

we've is levels like to are we've Congrats in seen Or level? before? level rates, the bring good last to so But years new this then, past, large to And Chad, I'm seen headwinds the a on created year. talk little of your you seen uncertainty you the the renewal like back stable ambitions on [indiscernible] prior in whole Beti the again. what the kind and bit thinking QX it like can we've and numbers about mentioned the obviously

Unknown Executive

the for Raimo, Yes, thanks question.

And look you know, business. things invest our aligned we that a you along our long-term business. with our at help strong margins, there's we when our year we guide and with Paycom EBITDA how business feel and run through how aligns clients high accelerating in with the this a we better As run very and the guidance, run our will and way, with we focus,

Chad Richison

we from we And mean, year I -- I year, would I'll take will the it being consistent last that But as the the had year. exact move every I it the same that last that renewals. that We strengthening to I the into retention was say, did stronger throughout the year. was number before. this year, stability the see say mean, number continue as expect I we I we throughout previously. for hope yes, year move year we and in throughout would year was with will as year move it

Operator

of Samana The next with question line is the Samad from Jefferies.

Mason Marion

building guidance a I macro commentary within helpful. per for dig like recurring embedding be retention. on on and want some X% What realization that would This Marion you is blocks to Anything provide from a commentary there are Mason bit. around the And price Samad. you little control, into expecting here any standpoint? Can guide. pay then other you're

Unknown Executive

would X% recurring be interest, are ex what other, we've so the mean interest I Yes. broken that revenue now right? and out and so our And is.

and as we've new to revenue as would business clients throughout higher at year. And that us be move do, so onboarding that higher us we continued rates rates, will impact the

assumptions go us. or that into for components new no So calculation

Craig Boelte

mean, Yes. positive us we've either with And would say count we I macro year. kind of during consistent don't the how negatively impacting always done or the guidance. I on

Mason Marion

your is it the team throughout half for this move into expectations like in improved of That context seems Okay. performance the are helpful. we 'XX. 'XX as your CRR the And then What of guidance? back team

Chad Richison

be the satisfaction. We're We're delivered can the sure on client all ROI focused focused to clients service that are making on getting our them. in

So what is entire doing. that's our organization

upselling clients' definitely, definitely. So are they or products need. enable, And that that we with ourselves they

happy as start continuing strength -- of what did group the to back saw continued the effort off now. again, group we we a very our And as board. half across I'm hear with the year. the so That's it's year into

for And just focusing it's for the right doing so things the right on reasons. us,

Operator

The with Baird. next Mark question Marcon the comes line from of

Mark Marcon

the looks some you're gaps having regards With was like with can that with Craig, bigger great lower factor the going fill client you does client forward compare the in it's if to look modules. throughout probably on a growth? more total module ended pricing? into because contrast on been relative Obviously, pleasure with what's a you you. could to wondering mean career, of but you. I'm Bob, and to performance wondering revenue Because also the working towards and side. working the year. you've Congratulations build growth I little on it selling clients, bit that you moving been a year, I'm the how next the up

question. first the that's So

And improvement nice gross and part was terms you It balance particularly to the really G&A the how question guide? do sales then to has your margin versus in of see, of the R&D margins, and about between thinking marketing, improvement. as gross with margin second are

Chad Richison

has for We did January, I month. ever. mean, that our COVID. Throughout mean, but as the we I increasing had. Yes. marketing the group which maybe None we some sales deals new during I of year, business -- done largest did. group out previous those of just we Actually, about small And new up I smaller this did largest unit and as started. sales sales growth It's all now. our call been say would we year. We also, month businesses, any ramped finished well talk blew out selling month month. haven't sales was many have a sales,

with of might So $X.XX be but pocket, we our $X replaced we out losing bills. it

little So know in did grew, Craig bit there's on call mention that it. That market client a was what X,XXX employees on the of grew. above going clients that mix. I

Craig Boelte

XX%.

Chad Richison

XX%.

where little that lot that the solution. do our with the So bit there's most of is. automated We focus in a field. out of having of success a We're have

sales new reps having opened Our X That's we've offices. lot up are a why success. of

margins. strong going we've Craig And a so and year, year. into and let that talk next you're to Bob I continue see as And would I'll very say move we had that about growth the

Craig Boelte

we was I throughout, online. efficiencies depreciation items, we to those the Eventually, that impacted to that kind in we're continue grow of margin those building. look then say to improve mentioned And We for throughout. other on that of that. building of start I additional kind had came new would will And R&D. half as gross new And Yes. the the a opening cost back invest then side, year line into of on of mean, well as margins. the that we'll continuing that margin things some the this on

Operator

The next of question UBS. Kevin with McVeigh comes from line the

Kevin McVeigh

Great.

has working me been Let add you. with it congratulations. my Craig, great

the is 'XX deliberate office how how those there should what and approach should Chad, 'XX? in of openings, scale the they maybe over they a way help the you I know, factor scale, as anything guidance? of terms us new of pretty to and any into of In kind dimensionalize scale just course into think about to staffing then have terms

Chad Richison

months takes for XX with the It fully pipeline. offices Yes. be to staffed those backlog

first a smaller full beginning carry those they're XXXX meaningful those to quarter selling, This contribute will beyond, obviously, in now So impact that. because we and on just and But capacity have year, throughout start. will team move revenue a quote to deals at offices a they so more XXXX. they'll have as

Kevin McVeigh

it the embedded just over guidance? the anything mix way effect what runoff of the year. related just the And that think retention sounds like Betty then improved like, in about larger clients? kind the And Great. retention levels or of of the Chad, course Was to of any 'XX

Chad Richison

Yes. I mean, Beti improves retention.

our full allows it. we've a And more so -- differentiated back on that clients that That out where say us Beti, that strategy would lot helps of lead mean a ROI not the payroll that also it's they're to And get clients to I getting usage our clients us. just I us. system the write with out back of faster. win got

say obviously part really helping as being helps automation. Beti that that that, of But us I all so we're of bringing And a into big the now win it's through technology deals. that's right market well. the would

Operator

Citi. Enders of line Steve next comes from question The with the

Steven Enders

I drove strength? I drove QX? we maybe guess, the think puts maybe to What better start, might impact Okay. what QX? sense guess between maybe just what upside I here here takes in strength get should And Great. just the the revenue how about the and a versus for

Craig Boelte

to came into predict QX, go strong. unscheduled the that. QX, and say hardest would it's runs in I as those in we of terms would things like I And Yes. really usually say

as on so QX there relates clients board. good And was quarter well to as strength in coming overall, in as the it new starts

Steven Enders

guess, then strength seeing changes upon? do what And or a been plus. of a Okay. can is you working that some over like past where maybe I do where you've areas can there's on the know improve some feel lot you there you the year like now? I right guess the What's booking that go-to-market resonating? And lately, improvements incremental feel are see then in been I you year, things

Chad Richison

Yes.

wanted And do wanted would the product fact in and the do to them XX said with these so before, more it's want product sell industry they I the years we I days. because Today, to it. product automated and the things is ago, sold Like do people what's to working that for say people automated. you less our have I most because

things that's those clients. the we're there delivering out to available our And where obviously having our strengths so and about most ROI that's going talking

And client our on so -- company and important. That's entire we have focused satisfaction. pretty

why the are we're here. reasons clients Our

me as our And successful so It's in I to look for initiatives. focused where well. we're any at all weren't XXXX area on that hard see as we

So we continue as we go into XXXX and beyond.

Operator

next Capital the The Markets. from Jason with line Celino KeyBanc comes question of

Jason Celino

years first Craig, I offices, the typical macro, but absolute your is well. sales decision sign. you Can to remind last few offices. the question open time think been us Maybe when you internal an good the pleasure. the My planning? them views opened all. to just a it's bench the you just hope Or be farming find it's sales been the grandkids on I the goes when and with think influence retirement it certainly expand ready, I only a typically you leadership at and wheat

Chad Richison

I would since I we say, probably it's say last years, it been our is mean want it couple may first to but of to I James have been up, opened -- say of I or office. a looking XXXX? into XXXX No. want

James Samford

Yes.

Chad Richison

market right the company. as I for X% only But now that's us, we have internal, mean a of

is So the there. demand

there. be backfill have. -- that manager manager. time sure every in ready rep which dependent manager office, upon that's that the XXX% put make that to that's you you you got just want a And success obviously to have an you the with really You we then And open we've

the the us, to it. we things do trained already at when we've past, we to strength them the in to go up were office it been and what offices we better opening have makes opened those say I identified. do would year sense reps and and already had ready up this and bench in than we So meaning

earlier say these than So wouldn't that in market. would had to changes way that A I I what to it. offices, we maybe go-to success past. go lot to the expect more our we've are just made at I would the say I is have training way would we necessarily to we've our changed due of the and say we changed prepared

And so been -- and that's successful. very

very strong That's of have lot and strongest having You good with and the product in coupled sales out program. a marketing a we're success messaging successful with the there. industry there

Jason Celino

Okay. in just question, quick don't terms did but Steve's of QX. what I follow-up. last guess, was my workforce levels if I this know part of in see you And then

Just baking in one quarter. guide? are what but strong expectations of And your competitors workforce XXXX you of I for mentioned obviously in, then, some terms had weakness, guess, a the you

Chad Richison

unique say I far mean, we not anything unique I we're and into forecasted saw employment stability. anything XXXX we don't Just changes. anything for can't macro -- as in as going have QX,

Operator

The TD Cowen. of next the Levine with question from Jared line is

Jared Levine

additional offices guide over contemplated sales of discuss in the currently? you Is your rest Can the that thoughts on year? the

Chad Richison

we this move through open but haven't open we we our would our in additional -- year would I guidance, offices. already any plan to be plans the offices don't be mean as disclosed up would to we year what

Jared Levine

what XQ for Got of revenue benefit day here, can was pull my forward disclose from extra the you then follow-up that it. payroll processing XQ? that from And

Chad Richison

to within that we even look strength normalized or basis, a a on of in half basis had we a accelerates are And continues throughout year and or the calendar actually There XXXX at year. if it move always XXXX able longer issues to the as going weekly back you're quarter. into see the you're

Operator

is line with the of Shah Bhavin Deutsche question next The from Bank.

Bhavin Shah

point then of [indiscernible] recurring full a a guidance the like there appreciate you revenue else? and there's guess impacting comments of X% kind around your is for at factors if lot double there? what it with revenue kind in of anything digit Bob, low Or thereafter. year for the the recurring I ballpark today, kind but taking just Am right the are XQ. is growth XQ, issue? timing so, I I And calendar

Unknown Executive

filings the question. the not we'll Yes, fast and there's XX% will The guidance. be Yes. year up don't interest in XX on a the There because interest and so Thanks quarter. changed about for business grow our core first lot we're as that things year-end in since shape quarter forms as we quarter. talk are a were couple last comment or headwind -- the we've our percent we don't of down

Bhavin Shah

else very That's And 'XX, helpful lot for it's sales Where able kind within it float AI force? efficiencies, there. is you're just are of a provide the more guide of seeing your healthy. the you're areas across on to anything really the leverage board? on then to certain EBITDA just side, where or up following what Are there kind you given being seeing the productivity

Chad Richison

XX are adjusted and important. you actually an being EBITDA. appreciate When high-quality produces start I that with appreciating first, kind efficient matters revenue income. pretty Those SBA profit loan, credit Well, you cards company and and of having a

of So lot getting we focused And benefit on through that. a automation. we're

seeing our department to I into been and deals. comps say. that that's also And -- I our growth in the at We're take And Obviously, we're and to to valuation. as us fair -- what we're our something the out will catch now be it difficult. catch it's a adjusted I sales XX comparables, us, good when it adjusted almost years our theirs, automation started getting benefit somebody selling would X years revenue, only end. I I'm fix calculation us decades over on through companies then thing deals having back And EBITDA. in that's before on the do them decade and year look into that next closest exact X success through EBITDA going and -- trying at mean, I really is I to right mean, company, look my is

being organically, our automation I'm force high-quality continue also I got of We've industry, again, glad guide. full future, a us second system. going to we area with So do to the now there. we're put believe grown the highest do And our business expect we people growth focus that the in our we've margin our on will the company have in sales revenue. And as best of I appreciate strong be our do that's because I and into current move that out think

have we and product, got retention base. best the have We consistent client their with

for about question. excited So the it. I'm Thanks

Operator

question comes the Jester from Markets. The BMO Daniel line Capital with next of

Daniel Jester

I much been for but know Beti philosophically, talking few the too roadmap, you don't years. comment product on a about we've

I think in -- late GONE announced XXXX. you been has that

So that about does direction on the assume thinking going just about or the the of XXXX, maybe any think guidance playbook of as I to and products? terms Or in product be your sort side you're launching guidance be would helpful. new road the does map

Chad Richison

there's and I'm our we you sleep we tell make on awake product a how I how about can Well, not I'm and will that moment probably can the it that it. that thinking half better the not times and enhance

of that able do flight our in safely, automation human think there. want you that. I We're year. can around with all product right I time doing worked I've interaction of took of so got very closely very to any over Again, in We've that to be a the last back well initiatives now product. automate lot over November that group. again And you

think do there's I all Yes. that do opportunities. those can't that everywhere. You But

in momentum charge you'll year. I been focused product a believe will And And this more we've there continue continue And on think announcements be than so that we've anybody see that led to XXXX. that absolutely, I else. into that.

Daniel Jester

that. appreciate I Great.

I if interest expectations you sorry balance the to missed income this year. number? your or were to that with share but rates And million Did of $XXX what this, on average regards interest get daily

Craig Boelte

funds No, say the rates, the we would interest I the Fed look -- on mean, I I on rate. mean, at can

the rate in in looking the baked and And of a and so one that cuts to something the towards couple year we're range, potential XXXX. at we in then of the year end middle of

Operator

with line the Funk The Bank of America. next Michael question from of comes

Michael Funk

Yes.

thoughts and on to means your the your change overall acquisition broadly get the of kind the environment. to competitive love industry of for I'd in and Paychex environment. competitive Paycor one, Any more what First that view?

Chad Richison

It's say in view changes environment. a competitive always to would I our been industry. field our competitive no in No.

competition, lot of client wins. you I have think when a the

trying to on I our I had I'll think strong different mean is differentiate. combine for all themselves And consolidate companies But very And that. in talk them that plan together. believe and that. I we're no, let you've times,

Michael Funk

you the think over evolution Okay. awake, earlier, of part being evolving mentioned AI I half about of as every become being pricing product, think do about that the time pricing the you think more do industry in [indiscernible] of you the becomes see product you how How automation asleep. longer-term minute And more time? product then

Chad Richison

Well, pricing from a has client. evolved from value received

price. set really You don't just a

much time for how is you truly someone -- as that forward. able value You creating be something in and to goes to hope then share

goes as time on. So

we for to help and can client? So a I can would many How order that, cases that create in so can in business same say their it in get for automate we efforts, at result. we What that fully them? removes cost labor us, their exposure look value we how

drive value really And include things product does product so clients correctly value. on. absolutely, map road we today say additional lot utilize focus full that a ways. large I of our this, who realize will that's in that our very what And

be just of would on that. it top extension So an

Operator

The next Reilly comes Joshua question the line of with from Needham.

Joshua Reilly

here relative considering well, and the commentary retention around get exiting some I the trended XX% to thoughts any maybe We expectations And and on in revenue year. just retention February some commentary, updated initial client guess, takes January how and XXXX, off your of lower-value the be and seems customers some puts those more smaller, for in investors you've from like of the bled here kind it metric how figure given that calculated? that should that's

Chad Richison

towards Yes. did a year, forward. I it head We that to believe full benefit once to this consistent retention expect a as we would XX%, mean, automation as automation, the prior remind do I was I'll businesses receive more and retention, and with in that report more of the we report retention on year. again better year. that also able go be we it and

very trends this continuing year, see We we number, haven't we're we with so the year. and retention a but strong finished to how far pleased guided

book our I month sales largest January, the have As of mentioned, and businesses far side started from sales those yet. was by even any not

the rest excited about what really year us. for of the like we're So looks

Joshua Reilly

That's of look a XXXX? we And R&D of XX.X% of much XX% how Is if being there kind think R&D about margin, guidance on an we for do you expensed revenue non-GAAP And impact then it. as XXXX. Got about EBITDA consistent super the think percent of the again helpful. the at -- in how in there capitalized should how versus much the margin?

Craig Boelte

we bake of in we this didn't anything really on what saw mean than R&D. the different I Yes. capitalization year rate terms

expensed, it's it's really on reminder, really as change XXXX whether the they're or from As working relates to but the a projects it rate. as capitalized no to

Operator

Blair. the of Next question with William comes from line Roberge Jake

Jacob Roberge

bit kind few that really of all a up few just You've open being of drove also budgets election? referenced after you Curious noisy strong Is times. kind starting are years? And execution? more that kind what HR of January internal sales little a that. post Or to teams see focused here

Chad Richison

anytime X now record-breaking months in year. January. stronger had And our would I talking sales. sales where about to than And We're quarter. opened talking been February as we strength a mean too. we've I've far up offices. more of happened what even were Paycom at year, point in stronger say I've the in last I last group. been increased that's first as We're we about internal we're

now. then this right success, preparation what's of having breeds So more year really, we did what of to prepared say that's as year happening move and and and we just success, success kind I would for get that's through really us the last

go And ahead. then -- sorry,

Jacob Roberge

going. Sorry, can no, you keep

Chad Richison

saying to a was great I know doing was product. No, just possible They're that clients our the made due that, and product their value. solving job

Jacob Roberge

then sold than will kind that of the the 'XX trended forward? new just for of priorities sitting how in team of you was priorities on CRR shelf. the getting that a the there any Curious I know then be rather live just And already lot moving product Helpful. in QX? And

Chad Richison

sense Yes, we're case, here CRRs [indiscernible] CRRs satisfaction. company do CRR that's Everyone that have of that the for, that's as the priorities but that to them of software, client make for and we're all our helped regardless priorities and job, doing, so and they are focused definitely what with continuing what the continue same that. on enable at the expand their that's ROI sell value your clients company's to full they're of now. We products can get

Operator

of line Mizuho. Panigrahi with is question the next The from Siti

Phillip Leytes

countries, is there any I for there your on just to years? the X know add to front? This over countries I to plans Phil international wanted live Siti. of you next strategy ask, more in are but are updates are the on couple guys

Chad Richison

our international build to continue We out strategy.

our We out use. also clients internationally then other for have all that countries. global HCM And product have built we

fulfill work needs. to as other and to other certain with as well developed connect us continue we move certain help into within partners allows We that into countries ones we've to to clients which are our identify to the as move things product

Operator

Gunn of is question with FT the from Zachary next The line Partners.

Zachary Gunn

the just EBITDA to wanted margin. on I ask

XX% to XX%, that of versus So rate quarter the is where between exiting year. it for similar I expecting the to understand I'm think trying fourth this just quarter guide this year are for what what delta mechanics it the year? XX%. full year exit you're was full your And was here, next

Chad Richison

a the usually year we the as Thanks. rest through EBITDA the and to the of we start lower see, of can guide what Yes. beginning with we to accelerate margin We year. in out

Craig Boelte

forms first one we the as the the EBITDA as as the And mentioned, in quarter. quarter the the quarter history and the year largest had EBITDA are company. of first highest filings the of starting then in margins we've of fourth of unscheduled the going the is quarter well to the Typically, guide be because fourth in this

Operator

This today's remarks. now over back turn concludes will call closing for Chad call. to of Richison question-and-answer Mr. the the portion I

Chad Richison

Well, success the this Oklahoma also James contribution of joining and will meetings be of with and Award I want to our call I'd was of most Jude to XX all Texas. Boelte. a defensive stewardship I our Paycom Jim meeting quarter, for one Thorpe. our winner, in outstanding and like the March. the on their last San and in athletes today. from greatest recognizes want around memorializes fellow Jim leadership to financial XXXX Bob thank the KeyBanc Stanley the back and and including to employees the in Paycom's thank Francisco success. all hosting to in award Morgan the history everyone college Baron over Thorpe This conferences investors football for of of at University years the road due Much Craig congratulate

to career can to on for forerstand that contributions, I'm tried close for thankful helped enjoy be to others call business his the Craig excited work for and to to profitable hard that, I'm time. Craig's over With example this the He what out an hand have going him grandkids. and build playing farm get a and many as achievements emulate. last high-growth and to will with his as to working I'm achieved grit. his to with

Craig Boelte

Chad. Thanks,

you so company I'm I'm company do my operator, call. With lifelong career. we amazing said, Together, you as the working its I'd has time at most with Paycom my friends tremendous shareholders, during and for may that Paycom will join fan of years this over ago. to collaborating know end and I've I am amount in very made great. in the walking me halls you like capable a experience here. make who the company accomplished the fulfilling the rewarding to in and thank say First, miss asking will and biggest XX one to things. I talented been I Paycom's largest hands, and continue leaving people great confident this

Operator

This Thank conference call. today's concludes you.

may disconnect. You now

Paycom Software (PAYC) 12 Feb 252024 Q4 Earnings call transcript