Paycom Software (PAYC) 4 Nov 202020 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by and welcome to the Paycom Software Third Quarter 2020 Quarterly Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] And please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. Investor Paycom. of Head Samford, Relations for James Thank you. go sir. ahead, Please

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

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

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

and call want you James, employees to excellent thank Thanks, everyone I joining for today. delivering thank quarter. also to another our our

I'll and third long-term few on drivers our today's of the minutes call, results XXXX our quarter a spend business. For

Following solutions Craig our some human the will perspective with our guidance I'm capital strong provide pleased take review then in on your and that, large we'll third and financials a expanding continued for management quarter very our in demand performance with and questions. market.

of hit of for full strong operational thanks and on adjusted we've to in headwinds XX XXXX confidence we margin, revenue Rule came which our have ahead XX but our gives economic from We long in in And difficult being client share, benefits the from of runway. ever lot base the and XXXX. most value the through product million, in times lot Rule at me EBITDA and relatively The EBITDA pre-pandemic than implied headwinds growth and X% and client having quarter adds both our less the $XX.X of a we the second QX combining success market remains unemployment proposition in of is guidance Based believe despite new year of with we on adjusted our improve expect sales. efficiencies. business across million outlook unchanged revenue our $XXX.X respectively plowing I new strong will a seen. are one to

by The sales all strong plan new pandemic sizes demo stronger leads, marketing which of plan Paycom's future client is single range. leading than the and the companies well to third vendors on companies aggressively our delivered proposition are to value together are to shortcomings cobbled challenges database including the HCM in of the above quarter multiple solution exposing disparate fuel spend to of systems, ever target from growth. we for and continue strong advertising created Our revenue

well We have time, for small continue At our targeted own pulled continued companies the look to leverage their adds to our be stated employees. to business larger above same range automated processes as we increase was Manager in named to this build year's XXXX HR HR out sales Technology top Conference. a as continue gain to inside popularity continues our at on-the-Go and force. recently product

usage. speed our Manager doubled. of the leads sales pave workflows continues Since In product have the mark, deployed for usage and future us on-the-Go of throughout the more DDX the innovation from way as ROI all QX usage to the XX% sets that moves our Manager procedures the for fundamentally towards the data employee automation. changes XXX% upwards to Paycom accelerates XXs. usage and trend commit changed on-the-Go. strategy. XXX% and July future has manager receiving system, an up the referrals Manager usage new and are XXXX, ensure up increases end toward nearly clients industry low that of that shifts clients we further solution patterns We of on-the-Go to which

usage the at and last We industry's executives the database. to continue from HR highest software an of launching CEOs our DDX rate year. the see employee's are with since relationship kind only direct now savings its

company a DDX. the an time real the and when are employee change As in $X.XX savings a makes saves data calculated the using reminder, themselves,

thus any with worse. to impact expect counts. nor earnings road reported improve. and employee their without has when stable or we invest it ambitious clients to we unclear it's And to and When pre-pandemic extremely employee improved will August, revenue map we our that continuing are has on in our remains those gotten same are The if We materially said we R&D. client not a far add in it counts product pandemic's catalyst wouldn't

three developing to will and to these rapidly world-class controllable platform. As clients, we through the on new work technologies activities: unique of times, added providing clients to we our service number remain our new focused increasing continue

base deliver differentiated than X% year and we been three campaigns, on our expand share pre-pandemic transformation market even any employee users, base. year-over-year. our and client market investments has fronts revenue established can these improvement and to continue value along without revenue accelerating and of less exceptional. clients' our of stronger advertising strength our employee the marketing effectiveness in are investment the driven businesses execution full advertising digital and is on all working. for next year proposition Based I'm growth The top by newly share estimated even of our our be our Our up trends is confident to Leads referrals in new

review the believe value stop way between financials a are to a choice We hand distance guidance. proposition competition we of those that the efficient seeking clear manage for there and HCM greater are product, Craig Craig? needs. and our to our more and over and putting we it to I'll

Thanks, Chad.

changed a Before measures third to our on will guidance. related comments be discussed rate I'll in results, seen in briefly any certain catalysts loss impact of clients of QX some comments we our basis. represented Last XXX this point cuts I client in recurring revenue head quarter on materially then cover $XXX,XXX additional weekly interest I current that count revenue. XXXX would that effect million quarter, of have how an provide review my $X approximately loss at represented headwind. trends QX recurring The our results occurred financial March weekly we roughly about to I'll that of haven't weekly like everyone non-GAAP high-level our pre-pandemic revenue. remind and the a basis lower To-date,

$XXX.X by revenues expenses third XXXX, third period as Our in total for of of Total business $XX.X XX% we million million In driven total therefore were wins. $XX.X for profit was business. representing Adjusted the for million million the recurring representing the third expense gross coming was over new year of of sales in XX.X% of of representing Adjusted million margin third strong for quarter XX.X% the from the compared adjusted revenue largely growth revenues generated Within the XXXX up quarter, third marketing quarter prior comparable is the or revenues from million, quarter year adjusted quarter. of the XX.X%. revenue period. total $XXX.X $XX.X million XXXX. client quarter to total for gross and quarter growth $XXX.X was of third administrative new $XXX.X the prior

translating we drive intend and Our deliberate efforts the several are aggressive over quarters rates leads last be marketing further demo more and close this advertising to and QX increase to share area in to gains. increased and in in meetings virtual again market

will $XX.X to prior of growth GAAP XXXX continue and Adjusted key portion to XXXX in in expect the year in similar total quarter and adjusted $XX.X driver innovation R&D marketing on We third of QX the were of million was R&D period. XXXX EBITDA the total Product compared solutions. of quarter of the the of million of R&D million we our revenues a to XX% in cost both third XX.X% million total our a expand Adjusted quarter $XX.X Adjusted to to quarter in third basis. investments our revenues. the or including total was or remains revenues. XXXX of or further expense differentiate sales to XX% compared $XX.X third and QX capitalized $XX.X be expense million

the XXXX. up We us future believe for are in deliberately pandemic investing accelerating through and growth growth in sets well this

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

to rate third XX stock-based be our XXXX in full diluted versus million on period. non-cash Non-cash be for we million based shares or tax shares We same net XXXX quarter quarter the share million rate and the year compensation expect on XX XX% quarter we million anticipate to effective per third and outstanding $XX.X approximately $X.XX stock-based shares was be the in the effective fourth fourth expense will QX was Non-GAAP or year tax of approximately as income expect to $XX.X approximately quarter prior the million QX, approximately share of for XX% diluted $XX.X diluted income shares income approximately per in million XX our XXXX. XX%. to approximately the $X.XX compensation For fully of XXXX. based be

XX, XXXX million in remaining program. our X million $XXX repurchased and since September shares we buyback have of As XXXX, have over

and daily from balance over total of million. or clients in comparable funds Turning of The million equivalents average cash to a was billion year debt quarter XXXX. approximately $XX ended sheet. the the of held the for Cash period. third cash the third was with $XX.X of XX.X% operations $X.X $XXX the prior balance quarter million quarter third and increase We for

to guidance. me let Now turn our

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

fourth lower our over in the of last and while sales roughly We to pandemic We the of lowered expect and the $XX of representing clients. range. range our to XX% to base funds Based sales total at impact XX, adjusted million, midpoint the this comfortably a addition revenue EBITDA we to adjusted interest work-from-home recurring $XX Rule EBITDA the three held we a quarters pandemic's $XX for of earlier despite of approximately of in the million million margin in estimate quarter outlook, a on on now million can hit growth loss XXXX, transitioned of by we feel the the EBITDA to organization of for the adjusted year deliver revenue model. a combination margin $XX

Our providing the focus our world-class clients new business the added on service rapidly to on platform. of our continues impact developing of our pandemic by technologies increasing clients to number new be the to and mitigating

a questions. highly will and We value model have profitable line a recurring Operator? sheet, a proposition. the that strong rapidly for With balance business we expanding open

And [Operator Raimo question Lenschow the Barclays. line from Instructions] comes first of from your

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business you help that you new momentum Chad, have well. should kind doing us that Do or talked Two there? kind the around commentary any more any points have quick of ones. understand of help about data us kind of you that the –

new our I our sit mean our I leads, remained from changing. and where don't business I right and all Well, starts And new at have business now record see highs. that our bookings sales

our that you Now we've believe returned numbers well as do these in to we're guidance. that focused reflected that we've quarter that as added guidance, on our see current in piece. I

that all And in reminder, a or would receive As start subsequent XXX% middle should revenue for a of revenue receive of of business. deal beginning proportionate that we the might at at revenue for receive a start the that quarter, new the quarter, quarters. end would we deal of we the that for but the business would that

with So so been so up, happy how been for what deals start us right leads starts, and now. we're very accomplishing matter have have but up sales

headwind in your people you one And paycheck that you then paid that commentary, you. COVID, per have mentioned lower about follow-up. when And you Perfect. since employee Like on prepared a the count. is hurts basis get obviously, talked that a

And if then a with understand about way and gap. a you're you to kind they it's fill think win, about starts that Is good you So new was the back clients you think again hiring furloughed think then it that up in right the gap so about of way the beginning year as it. way like were that At people that come running next that of created. you'll the as kind it? and crisis of didn't to

clients fill up material changes haven't – our what client the to Well, in pre-COVID base. on look impact mentioned added. new our now. we're any actually to That's that I with the we entire done gap we've seen going pre-COVID to

how of or we August from throughout anywhere – August loss quarter. the We we that the did million say at that was per And that stabilization sorry seen seeing end second so at that we mentioned $X and million did mention in of to beginning the number week. of were $X.XX had it million we $X

can't number had I less on that that a may has or of positive. As here $XXX,XXX changed week another impact have we one we materially. than out the call mean small that today, impact to sit number you

count clients, a in there's And might above while what it's mean, million, hotel little that $X.X be it we or extent catalyst, said all that makes measure. really who our week what wouldn't staff. impact business was to It client health a it a on still the it since the entertainment nothing And you depending materialized pre-COVID. clubs. employee we was on has hiring start that's $X August unemployment without back that to date, million, the sense. their people of August, to for happened expect a a it But improved double reduced improve. hasn't cause So pre-COVID I would or restaurants, sudden, or since

of thriving more businesses think at And stimulus a fact is, to see point. the before necessarily either surviving. pandemic, are change type to So wouldn't this those some we're I I some an we'd on end them waiting the call or meaningful that.

business Hopefully, into the we've and out stabilized, So of established it a get can of as jumping through will that, clients, we record new the I'd we right we base. I some on it. a which where to tailwind doing new we've look we're crosswind believe more new get now, – and we future, pandemic. been through But as need call to on we say, it, at pace adding adding get by

don't only stops proposition I as So in a that has see our value which gotten situation for us stronger.

you. Congrats. Perfect. Thank done. Well

Thank you.

Jefferies. Your from Samad the comes of line next from Samana question

open. is line Your

for to and taking back of quarter. well. on questions. a into nail down trying company new X,XXX exiting I'm added per more the just follow-up booking it kind bookings. suggests. I than is further per assume new starting clients. just average frame to To want Chad, Maybe new basis to quarter question XQ? point, that or that bookings, July curious. Thanks that evening. If doing my maybe annualized XXX quarterly an just that around XXX everybody adding you're I XXXX, Good on numerically about We're fair is what That's rewind Hi. Raimo's about I hope has to

larger we versus units. – revenue out Yeah. more I haven't talking how well, exactly you deals. on of smaller what be selling I got many Units would I'm larger strong the continued mean, about based generated. deals Whether called at both I a remain tell as been levels aggregate and as can as the has smaller it's converting, well deal, we've amount that or revenue to on. and we are continues record

what of or trying kind back May at right? quarter, a In August pre-pandemic pre-pandemic, for first mentioned bit July, to got I then talked which I'd better, talking gotten waiting Now, to and kind see had believe, levels, of were gave was of Last We mentioned what it's that, little that's pre-pandemic beginning, sales how off very I've after I we reported I curled Xst either to into quarter. even that month, talked and and end of happened. I our in we about. back our I had back gotten ball April levels. up had we've a to that we about the about in the announcement to backed as best accelerated. get

the is as well to continue get we in the started the in quarter book that that both stronger just This and sales. continuation stronger as of sales

in – Great. And you believe a of to mentioned. XXXX? Or acceleration Are – when looking when that. is revenue growing type we're and maybe frame kind was about to context and of Craig I'm you just we that it historically XXXX should you of reacceleration grower high say terms the of from XXXX just think sounds mentioned I in a back XXs, if a to that bit. thinking ahead or thinking could XX% follow-up it what The of commentary as levels? maybe we curious, XXXX both in was little and accelerating about out Paycom that,

– on holding you Yeah. We're we're Well, revenue we've many how nobody our to calculated has fingers up. fingers holding right many telling now. guess, up. the It's impact we're how

us. calculated that the on amount that So we've already impact has of the

that and And know, believe stable. been – also well, – we it's we so

it. time, comfortable to EBITDA doesn't quarters that throughout very clients feel have and numbers base established with into first numbers strong as our a so well. this adjusted as lapping much new to very next about year, during into COVID added strong year, comp turn the have we And growth subsequent move we're I on get back impact we and we COVID with ability But as obviously, a those quarter

Great. quarter. Thanks, the this glad hear guys. bookings And strong again to performance about

Thank you.

Suisse. comes of the question Chew Credit from line next from Your Yao

open. Your is line

bit here. Good comments evening. ties everyone and made Thanks well quarter to little execution their a everyone. on question, question and that. Hi, of my the all I for one had remarkable on the and keeping involved ADP safe. from Congrats taking that it you around hope quarter a recent I

Chad around stimulus Number in You're remains strain stimulus partial and uncertainty have stimulus They this mentioning your of would and to to one, from bankruptcy there fallen continued clients take said, on impact that business how your two catalyst. two, to helped terms stimulus? the of lack wanted a react shutdowns. as possibility on do or do ways. for I the have recovery further think you you the go-to-market would meaningful differently thereof position motion path stimulus a And business? to of further how or

Yeah. our to mean, succeed end or I we're pandemic regardless. fast stimulus to Well, there's operating a business the whether a

out stimulus those stimulus, business. could that. of take drive those stimulus have works And there control. their we to But that or so being businesses that to out wait-and-see we're in focused a a we'll on do of going on that It of survival. difference a gap growth be being the I kind a going be And things bridge the think can there between business business or them actually can may approach

per count. of a of number, we every out smaller amount revenue headwinds the less stable, employee amount probably percentage processing would that smaller business I business. in there amount back, expect that a has we've just lost come that again hit business, would which much the because of it's these mean, is probably business to still of in to we've lower that represents not on of that's related of are amount. a say an -- we've identify it week, It's is As than been there that gone XX%. It's that able has a with digits XX% say, closures. I the that And would there or we I taking but to is at more of lost we single that week. look been

Super on the to you've and need Got in follow-up. us you you resources remind dedicated the which any this Thank One to And with sales, effort, this you. helpful. wanted learnings I what out. or you. size clients particular have quick environment? double-click inside been? that's module called resonating Can

Yes.

XX So are businesses fully teams. right sales to they now they're and lot do continued made They using to would sell XX Thankfully focus using, outside below the staffed the Obviously, connect. interest have generate we each exact that technology the employees. inside of We've use on sales four say inside because employees. I they to before had we have our at shift, downmarket. sales They managers. which that same not same is sales, the a model we have but inside to methods

of so, continued had success we've grow have Obviously, much would you add when to you you sales. larger number And expect inside to salespeople downmarket. inside the our year, previous a than what

group. And success inside do downmarket so, to well sales we our with continue have as

That’s great. again. Thank you. Congrats

Thank you

Your from question Borg of from the comes Adam next Stifel. line

is line open. Your

Great. the And taking for thanks question.

maybe for Chad. Just

that past changes we're typically prioritized it relative any season, are strong sense monetizations and to how caused, years? selling that the the in on the given pandemic HCM just the Now being

advertising the helping morning excited as excited dentist. say -- about people capital is people that about wake mean, many wouldn't I going over their changing our that human to about shifting probably I products. wake that. It's I with in think up management the over Well, up that

they pain, more points you we've dentist as to the pain multiple where going changes. have COVID, However, employees need moved if to have making are become to excited apparent systems using think those I about that use. or outdated enough in you systems the have And that

very paying their oftentimes see benefit going the for going a investment with backwards usage, forward. figure return without. businesses on society. a more just own actually own can and that's to they that moving thing employees' shift strong I not their Paycom. and to employee the out that you're receive And mean, they're as leverage The more go they desires So We're

receive So problems only outdated dispirit those drive and continue the the And that to using we're again benefits. going pandemic exposed with to has systems.

a And we're round. that bit so, success. through Paycom season, selling is quite which and year continue of we're going that's having for And focused all to on

guys. you, Thank Excellent.

Your Mark Marcon the next from comes question from Baird. of line

Your line is open.

some Good change seeing, afternoon in from bookings you're at bookings? terms coming source regionals also any are that in the the that of of there? that to bit beyond relative say Hey. that competitors mentioned even out all of and -- composition you regards with bigger a are that your range. the Wondering to that in And on the you're you terms of Are of Can Chad, seeing more you are expand congratulations. the I think seeing? upmarket, pulled what little terms you're being

Sure.

as I And as It's been we just since did bookings, say. be or the I range, pulled should they're our out more suspects. up -- that happening went the happening. we of So do usual similar. that's stated all our continue them. that's public. mean, to I targeted far call There's range been above

We be our above continue pulled up to range. talking about being

And continued this happen to so, that's environment well. as during

earlier, well same what time both And had out group year. as we much I that we have mentioned so, inside our larger than last have built as, sales this as we

And -- that we we now ignored, group was below making be as a having well that it market. several also for but you XX, us. teams necessarily down some say traditionally are want somewhat So have to would was expect focus and don't not a a would that that as focus I success

attribute in It And rates like pulled talk sounds that the little How down, close terms being little improving. great. you about is you which Great. what up you're a mentioned of a and you bit are to? bit Can much? being barbelled do that --

call going had exactly the you close not measure always better them rates that We're out to on time. over We've specifics improvement. Yes. as

that different one rate close the might close believe going fact quite close would hitting little say a bit would from I and a a a catching well doing rate. selling if you helping had on one longer, that a our with bit then to But us as you significant give We're to hard three-month one-month knowledgeable I be as go deal I interested have word-of-mouth to that been is Again, from advertising. our is close the deal that's bring are a with rate. company thing higher rate than really your we airwaves that us point on in. the prospect. We've we've another employees and more digital, Your

right is been close now. rate when level stating has calling one And I demos. gone percentage those into proposition our And now Oftentimes the parties of a are a what I'm the we've requesting going again -- we that's still large of someone's that more call-ins not -- that on so But business, business. for us are on as part it, we've our higher number value interested us brought or just And of most isn't which is they're that different. that of educated called. has and up to thing a think leading

Great. last And one one. then

a to you Just logos, but talk more it the getting upsells sounds little seeing extent can you're like them? about you're bit

Yes.

we're that of more past. clients current changes there. upselling added to now a onboarding as in to done what we've We've that so ignored. or to current we're selling our always the new remains and to more We our no that from anything never -- today not to case in upsell done revenue no We're aggressively, that versus change It's business continue new percentage been clients clients. the upsells new than percentage current we've not revenue platform client in percentage

Great. very much. Thank you

question comes Daniel of the Your Jester next Citi. from from line

open. is line Your

Great. Thanks for taking my question everybody.

four I points margins think in compared about to First, maybe a XXXX. EBITDA same question are the margin. on down Year-to-date period

much float other the year's factors structure how kind of off of puts you impacting next business? as think we like should to year what you and going level? of reflect are of the into about just So this about the revenue can potential going versus be is terms the improve the margin away the takes And this business thinking of just in

Sure.

from primarily piece well the current our you the receiving, impacts four that a margin EBITDA our also like is are is business I revenue employees. of piece the So less that's points. as paying float a we said high-margin fact margin. that about that's as mean, which mean, that were down I clients that

So well through and consistent things servicing efficiencies the organization organization. gross margin our fairly just throughout of the we're And been just in organization sales both seeing our is as onboarding our the this. we've stayed even proud as extremely

move thing continue obviously, hoping area focused growth. to talked we're to one XXXX, improve. super on is, to And as is margin into we going So we the focus we're other But about the revenue on.

to we're sales -- revenue as to marketing spend So for that terms of going in well. growth and

that And a basis implementation subscription is on part at revenue. know then of half base, small as pace it year-over-year the a but is revenue growing the very I

Given implementation the bookings, about rate improvement quarters? of sort the we in think see the Thanks. of that how Or we upcoming in should growth in revenue should new strength commentary about that? line the

Yes.

new XX-year booking the capitalize and As revenue a that -- setup charge over recognize reminder we a that the that period. clients, we

into for that So charging that setup we're the bucket. deferred the goes amounts

that not line. you're to the revenue on significant in going see So changes

as As a reminder, there's other well. items in that line

and well. attendance sales other We as time items as some it and relates have hardware certain to

color. Great. guys. the Thanks Appreciate

from from Schwartz Oppenheimer comes Brian question next Company. the Your of & line

line is Your open.

afternoon. world? Chad the implementations higher doing it's you're the change in And Have in thank you here smaller implementation. deals? questions all changed pace my any the for Are virtual they this follow-up deals question here the whether you. seeing Thank or the taking the of that at you on a

what a like. period mean February right deals all No, someone did what really. looked expecting we then of certain changed like. to your I I March that would and we office. that you're a out of mean come sold we not had transition that conversion look to January, And had have expectation

started training different there the rate here on into last expecting filtered mean You're not as we a itself come year. sit sit of But see had today, we lot was site. through as things pushes I our is back. all we unlike second we Any today, that's And had for it was business start to quarter no that all change. out. that that we sold here to

similar. very they're -- it's So

we I'm go the throughout just have we did moved we had really you really onboarded. and those a to back to delayed had process mindset to did done pushes, have you And we as of and to think because them resell going but a deal, quarters, because deals few starts never some I we've have not say the So, -- been different lost that acclimate implementation.

So, and sit of today to here or any live. as to go go accelerated to elongated we time we on there's type call live nothing out look as forward, time either

ask And follow-up you if Chad. could I the question

You about you to staffed fully said Just sales, moving enough clearly ahead do the here? feel and thinking you with about the velocity have but able you're the you're with bookings capacity organization sales what levels that achieve talking new inside it do. the continue that been of deals to and customers to to the correspondingly company and satisfaction high the your and has services able the be these advertising then deploy new always

mean I you salespeople. continuing salespeople. Yes, always more to add want We're

we the that since pull we put started again beginning that summer the do getting new where able We've to we time. been think at back model. done the back thing one job in shift We to good hiring I into We've that. early over gas of on and this to doing hiring back to that. did started a had we've

having now. more sales Our are a success lot reps right

we've significant amongst Our organization had. -- our we're sales having that gains productivity same

strategy plan is office Also do right intact. offices still open up sense. is We still it now every makes to as city open. Our opening

really anywhere So, from now. we're right able to sell

our had model the same is back to though don't continue may online, if past back yet. desks to be So, may they the that at way to we selling buy time. efficiencies to selling. selling of home Then know Look I the we're client those through maybe don't. I sell continue to even some We they in going going desks. still see appropriate do, offices us in our instead from maybe the receive returning from we

has we've right every see exception happy positive had future looks So and But as really like as of of pre-pandemic with that, gone about this client really exception now. what had that-- through what that so we'll the the has And we're impact impact we've well been our very rates, on pandemic the interest our kind as current of that with happens. revenue far negative the

Last question--

driving That really by I is the everything. what's proposition. that's driven mean value

right for right receive work they them the pays they can proposition have have to them value money. product now. product and that We back start shift business can And a works a very them they for make easily costing that and that's versus and

And so that's really what's driving it.

Last question from me for Craig.

of here bit today trajectory here that a because us any Thank we it say just the directly remote thinking of far. items thinking organization such about margin you leases? can given are here very be having how or share a you've any any that question think for savings are workforce, little you other helpful. the about let's I'll lot ask Are with so would to returning as color got think Maybe any you're XXXX. the And differently just Paycom of from happening the sustainable color those about of much. -- T&E this XXXX more you work. on kind about as I before

obviously say on numbers had in bring get sales going is and past entertainment once -- next mean would mean the I it travel year. been a would up depend lower organization I what see I lot the we'll we train. that's to Yes, and if at some. than on to back in to level where to entire -- like we looks those normal start go it much a

leases of evaluating we're kind what looks would this I still it normal we're the point on continuing see we what at mean that's I as think say. But I in like that. XXXX. So, until

just of off of And to that. dovetail kind

that adjusted business pulling by over the margin levers. We've business EBITDA. receiving EBITDA more that the increase profitable adjusted our follows sell of are selling so we of it profile we time, expanding the been by been haven't benefit doing same and all percentages We

And not It's so when that. and and -- But going we sales, it. money to objective. our I we're poorly on look those types mean not spend year, really travel of saving that's on into next saving entertainment

our accelerate what's continue of that's the into as to drive And to as revenue, future. objective our and that X% going market clients onboard have we to to continue well is revenue Our capture margins the today. growth more than the

much. very you Thank

comes of RBC. Alex the question Zukin line from Your from next

line is Your open.

the of question remind travel well. just of uptick the reasons vertical can Maybe you kind you because you as didn't the there? what's the mentioned from Hey, the my for one same exposure Chad, hospitality us restaurants. that what's see rate congrats the maybe employment You was bouncing of business? guys. back me. taking one first and for remind exposure from the Thanks us Can

industry-agnostic. Yes. We're

I little clients But guess our guys And been different attrition exposure you could calculate say, so same or somewhat I we've rate and it's furloughs that weekly the we've the -- that. employee a you having you have. said revenue exactly those to has what told everywhere. that layoff would what impact bit from

restaurants Some than others. better states doing have

the least the are different for Some the hold is at on their responsible clients. states doing we've And were potentially, up, not a our preparing see weather business. up at could pandemic for to we what better early being But situation. is conducive weather if restaurants because does people now seen with

we were took mentioned in I they second hits on think those early do clients early started see reporting moves. to of quarter when many think some to our first -- of as I their mid-March that we mean I that because started we or quarter -- make

that not people we're our to growth that hopeful will not for happen waiting on start back dependent some waiting initiatives. not point. add to that I for or being just -- and future think I'm just they upon at that on So that We're

you makes of -- if us expect flow -- customer kind to that of way guess not because from you in expect do is Or timing stimulus sense. trends? we a share at I with it? can if And us the get your actually total walk point right round through early do very the you've That you seen And a perspective, into hiring think some get base stimulus about year, that to when would enacted.

you know. small midsize don't the and you my of When a business kind will. stimulus saw at last took at of would business least what had from impact larger stimulus, package we I look large even in if Yes. standpoint it much than what what did who I on say

a of that a stimulus just that jobs depends or you tailwind directly that to tied company think just all out that's a your putting at jobs I and be could stimulus on type checks stimulus quality what If quality of labor so the us. stimulus market. going off quality amounts of for based are If even certain tighter that they're they stimulus the on individuals has jobs, probably give people based producing pay of to And and house, do of there. some adding reimbursements nice their to pretty it's a have sending we comes

The going that. for seen again have in employment mean So we've to or that separate us going have now months. the to to five we're of see just impacted But from those I I'm impacts stabilize employment. from changes Paycom four

our next we growth as we're expecting be able be to definitely and to so year objectives through that quarter throughout then this stable and head hit to expecting as head And we're we adding be good going now. think new And COVID good lapped shape. with a clients we has COVID job to doing as we've to been in right our platform we're I really -- which into

are is growth see kind informed cadence buyers, and XQ and the more record then XQ thing trajectory, new efficient to of you talk I When bookings about cycles bookings hear sense. accelerating on a you faster just And bookings stay maybe That -- to months you would record Last I talked seeing final ask fair and go-to-market, then you When same your should quarter, XQ? XQ sequential quarter. effective to makes if more say about it about talked say sales you you you you as one. this well.

our each expectations quarters bookings. and about said entering have wouldn't quarter that than least get are that want to people don't and going that "Well as thought to bookings to even from out we've this on I I want guiding, any we're for have But quarter, we've talking tell Now bookings for Yes. we've to have guidance, because not different I been different at these anything of any having bookings been keep else bookings been wouldn't bookings I of well." each I in calling time. we're that giving want Last I that. calling this COVID. we away gone call be in out record much listen that this through returned you weren't though

Perfect. Thank guys. you

Your line from from the Needham. next question comes Ryan of MacDonald

Your line is open.

for for of questions. gentlemen, bit the the you terms clients potential that what had these again. starting sure new sense evening of we're in first it's are different have total you've of clients do what start that look hiring uplift I'm a employees? client initial these to see taking new could one When thanks Chad you you. for my wins client the each starting get strong on land once with bookings capacity Good at sense the to be trying in a but these

be as Yeah. COVID-related? factors I $XXX at X,XXX? that may us don't employees. look I million next mean, grow employees have they XXX they even onboards other a I that. good for XXX with based client be that Will to with Maybe. a feel on Maybe. year not Could

and we not clients as we us. that by we bring that's add because the so go what try don't And to controllable myopic and could future get

platform. of we by onto We us. What's our completely the only X% us value of market. new have clients what by controllable add is controllable That's is is so our controllable And to continuing number the choosing provide to then And of investments is proposition, and service clients. keep an currently world-class that controllable therefore, that all in also our clients servicing we're us for the the return we for Paycom. what's on expand effort

we're what some right that's more. are are getting so Hopefully that's to in And growing, market but we're clients going not how focused we're that now. on that selling industries

cash margin this conversion free follow-up cash as What Got Thanks. we the not margin but is from free the And fourth quarter last rate call was and compared like performance looks It a strong only a also drove ahead a it. to strong better look quarters few perspective even quite year? perspective, just sustainable here. from in that anything flow quarter out? you. how next you'd from if to for Craig And flow there

Yeah.

timing some did a had cash the of quarter that's a flow have strong some as for little we as well very flow. of We free cash on But So to we on operating benefit cash Obviously operating free the from accruals. good felt flow. a cash was and items that were it rate in quarter. tax quarter of terms for those specific some like a overall,

where to last it similar fairly was quarter. was CapEx Our

about both excited those. I'm of So

Great. Thanks.

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is Your line open.

product for dig and my that question. rapidly investing just I new taking Thanks your want on to technology. the commentary on to the in

So Chad you on-demand or your Manager of increase talked pay about two of ROI that then across like and product kind Go, DDX base of like any your could potentially opportunity you have product? drive stickiness for come maybe But that need new kind your customer. and basically or during any which requirement customer this cross-selling revenue pandemic, into

It's automated. this so needs being upgraded out surprise released It's has flow it It's seen that we've trying we've DDX be partnerships and around learning Well last are on-the-Go Manager high Manager the significant we usage allowed and which has and to allowed data the really seen We risk well that on because the year on-the-Go recently go timeliness anyone that again there. us enhanced be management. would some to managers I -- background end back for eliminate automate to reward. year say impact and the had it. improve industry we no patterns our actually checks Sure. But then been market, deployed of into low to product this complex. significant

who right get you cares. it If

You're get benefits. their supposed people to

onboard You're them. to supposed

to them correctly. their get checks supposed You're

it And are wrong get really nobody if it cares there significant So get you you if right. penalties.

can these the bigger products, so And the you win for the more automate business.

for plans what that's work so we as And one of each we products. focused enhance on product each usage And and each patterns those a plan, has been those throughout we've to this. the of out continue

it's doing onboarding, whether so our learning been whether all And the background the across whether products it's that checks. of pandemic performance, management, through on it's board we've

that a mentioned added. couple of You've we've products

here do into the that. continue initiatives to out the into And product forward that many so we'll look rolling we'll And we be future. also

from of from Your question the Bergin Bryan comes Cowen. next line

is open. line Your

afternoon. Hi, you. follow-up to on I demand. guys Thank good want

market. you've enterprise across had each client the questions good We larger like sounds around your dig serve get it you to of sub-segment ability Can ceiling. So clients? the success around some in

So you scale can clients end? on details to or the to any top serve any ability metrics better of the share that your largest gauge

Well our triple I mean range. clients we're stated serving that

believe focus reason the a for do prospect. sell. we way direct top end on with that decision If that is the that a the that from that have clients they fits And we way primary you're about talking the make we we

every those week salespeople we Our sell so choose at definitely and prospects. Paycom

as We It to made be continue as to have be difficult, they've realized. pulled many is up-market as doesn't it in cases. business

further million a spent typically the more go, a deployed. you're company. really And but you do on strategy. also they've up dealing so technology. there's Oftentimes, with has decision-makers, you XX,XXX- not things. it less functionality market can it usually product, but that XX,XXX-employee that run into and three more somebody They It's deploy They've $X

years XX I over a do see just I market, much right do ago. was So on necessary just businesses necessity not we're was want I fit that It years think necessity don't that work pulled continuing might a better seven because it us even just now. up software. for time ago. to say, a It's to be

well. success us as see So have market I continuing up to

efficiency lower share environment? and function on in had And Is sales marketing better than the on projected Any there this then versus about color the I marketing, targeting just And spend, of and sales the efficiency you you Okay. on outlook. slightly you making? learning a was variance it think greater there. and were can that

I But we Slightly it's more that that quarter marketing, out going in sure that our was we we to we're we're would what quarter quarter, expect that timing. the spend that and well. – fourth efficient fourth then and is. say return as make some that the of marketing spend sales called lower third on what and getting with

Yeah. marketing. We dollar account every for in

back. spending we I dollar that an need So, mean, to if advertising we're get

– So happening. far been that's what's thus and

you. Thank right. All

of Sandler. Ramnani Piper Arvind line comes next the Your from from question

open. is line Your

for Hey. question. taking my Thanks

you you players. are still you're seeing these Or One winning Are continued to from traditional you competitive? players enhance any seeing the the was able more of from to mentioned progress, traditional distance keep of the technology the things become them?

Yeah.

at It's been been our for that have long I a mean, a competitors thought industry I've the very never wheel. time. competitive So, asleep

you've It that I value proposition a had what use competitors built in an Internet, – sure we delivered know the that the was us and don't in don't the think seen doing, I to ADP – different us multiple Employees and have online, systems. we've out. that be beat have shifted database That and have strategy, a for to Then I want we beginning. that And solution anybody different to database. single look to you really employee buy is well, at anybody know second. sell were best-in-breed you beat you primarily best-in-breed, to single have integrate. our a which which was now to than don't

our differentiate that's to we product ROI And to the client. by continue so delivered the

If being us. they're you're We're to the us mean, to on our beat have software not you and use I at similar to receive want Paycom. competitors to to Paycom, going going investment going being them ROI beat a to at not

on. moat we And even as so continue the and going to more to and we're to going move continue around widen revolves more we're as to competitive it automate usage

the stat by in from savings similar a past shared aggregate have And a on your of using DDX. clients of you cost are terms share you DDX? In savings kind using aggregate metric to like able your Great.

time for that what read savings their The change make that did makes is HR a system payroll, is, They DDX benefit employee each the and/or the that an that change is them. HR department, versus for hiring change DDX, applicant's so department they HR Well, employee makes thought does if any employee's it in that read the did applicant – not measures change department actually system mind. any in makes They not duplicative. an mind.

made technology, DDX if easy-to-use could employee at so so in all that's DDX, client changes else daily for by making changes. uncommon And does changes everywhere the themselves, not rating, make had they clients of business? that month. the that have their employee applicant themselves made lives. change of wouldn't in made has XXX,XXX and/or but changes be midsize a XX And department X,XXX adds if what that for HR many Why X,XXX if that it had is made leverage instead in the database. are a And because the X,XXX our is DDX those up. work And employees the to a company changes it of HR a XX% – that they that

mean, savings I to it's $XX,XXX cost the they going work cost the they did hard/soft because So on table them in left that themselves.

a into sure I so when earlier Ernst together And I'm again. by point Young. some it calculation as year And that's it we was put $X.XX. it this year, It believe, that will be move was for $X.XX. was updated updated first at next came out &

from comes the question final from of line KeyBanc. Your Beck Josh

open. line is Your

and the and bit new I the little quite share hear for seems spend. ask question. Thanks about favorable about gains. commentary It so to return taking wanted on market a much your I bookings when sales just marketing

lean year into into you that and framework how next hear investment remain and we in you if that that go like environment, would work-from-home to year? just really we you So this is your continue into? to next I want look evaluate to as area would as an

Yes X% can we mean into quarter sometimes spend for get sure. that different goes can not up more to to and we're success. you – I been on advertising. throughout spend lean realized mean, more. times that continue have double we necessarily we're going only it. in I having We'll the but it There

Obviously, through that XXX% just going would for we growth. go And done have measuring have had thought we're that adjusted dollar us not of a train you for percent leads if out percent smart of of interested we've EBITDA that. really – training, had we've I emptying the EBITDA adjusted of percent on in I'm a we're not become quarter. more just keg this we to more we done of this. is by in would then every a powder nothing. brought spending. this X% that As And how

new focused client remain So sales at on record we've and Leads sales it. levels at record remaining remain still right now. been levels levels, are record at

and and having to lot So year a looking next fourth of forward success quarter.

Very Thank you. hear. to helpful. Good

us to to question-and-answer for you end brings closing our the call This over turn of Mr. session. Richison remarks. some Chad back I the

the employees today Paycom everyone the and us thank their on joining call continued I right. to commitment want all to for and for All execution.

months, speaking interest soon Over We as at look you your Suisse, Thanks, of and RBC, the next Credit couple Paycom. again appreciate of forward be conferences operator. virtual as several in with Stifel, Barclays. well Needham, we'll to quarter this continued many including

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Ladies and today's participating. gentlemen, call. you for this conference concludes Thank

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