Q1 2022 Paycom Software Inc Earnings Call
As organizations recently received best marketing Department and Best Sales Department Awards. These awards are in addition to the awards we received for best companies for women in Forbes list of best midsize employers in top workplaces I'm more confident than ever that we have the right team and culture in place to achieve our growth X.
<unk> as a reminder, we only have approximately 5% of our very large and growing Tam and a long runway for rapid growth for many years to come.
Also I want to say, thank you to John Evans, who is with pay com for eight years and was our COO for four of those years as he took over for Stacy peso.
John did a great job for this company like anyone who does a great job for pay com their DNA exist in the company long after they're gone.
He's excited to turnover the department to the next generation of leadership, such as just in long and we know he will take this group to the next level as has been proven every time, we make strategic moves like this.
To sum up we kicked off the year with a great first quarter and are entering the second quarter with very strong momentum our differentiated strategy our people and the value. We are delivering to our clients are fueling our long term growth I want to thank our employees for their hard work and exceptional performance this quarter with that I'll turn the call over to.
Craig for a review of our financials and guidance Craig.
Thanks, Chad before I review, our first quarter and our outlook for the second quarter and full year 2022, I would like to remind everyone that my comments related to certain financial measures will be on a non-GAAP basis.
First quarter 2022 results were excellent with total revenues of $353 5 million representing growth of 30% over the comparable prior year period.
In Q1, we had very strong recurring revenue growth from strong starts and modestly better than expected annual forms filings and adjustments revenues.
Our revenue growth continues to be driven by strong demand for easy to use employee focus solutions and our success in attracting new business wins.
Within total revenues recurring revenue was $348 2 million for the first quarter, representing 98% of total revenues for the quarter and growing 30% from the comparable prior year period.
Total adjusted gross profit for the first quarter was $306 million, representing an adjusted gross margin of 86, 6% and we remain on target to achieve strong full year adjusted gross margin in the range of $85 to 86%.
Adjusted sales and marketing expense for the first quarter of 2022 was $72 1 million or 24% of revenues compared to 21, 8% of revenues in the prior year period, we continue to see strong return on investment from our advertising spend and plan to continue to invest aggressively.
In marketing and advertising throughout 2022.
Just to the R&D expense was $29 4 million in the first quarter of 2022 or eight 3% of total revenues adjusted total R&D costs, including the capitalized portion with $42 9 million in the first quarter compared to $34 million in the prior year period innovation continues to be a key area of.
Investment for Us and we have a deep pipeline of projects that we're pursuing.
Adjusted EBITDA was $170 1 million in the first quarter of 2022, or <unk> 48, 1% of total revenues compared to $133 million in the prior year or 48, 9% of total revenues.
Our GAAP net income for the first quarter was $91 9 million or $1 58 per diluted share versus $64 6 million for a $1 11 per diluted share in the prior year period based on approximately 58 million shares.
non-GAAP net income for the first quarter of 2022 was $110 6 million or $1 90 per diluted share versus <unk>, $85 9 million or $1 47 per diluted share in the prior year period.
For 2022, we anticipate our full year effective income tax rate to be approximately 28% on a GAAP and non-GAAP basis.
Turning to the balance sheet, we ended the quarter with cash and cash equivalents of approximately $361 million and total debt of $29 million. The average daily balance of funds held on behalf of clients was approximately $2 2 billion in the first quarter of 2022.
Now, let me turn to guidance.
Based on the very strong first quarter results and the strong demand trends. We're seeing we are raising our full year 2022 guidance. We now expect revenue in the range of $1 billion $333 million to $1 $335 million or 26% year over year growth at the midpoint of the range, we expect to adjust.
That EBITDA in the range of 533 million to $535 million, representing adjusted EBITDA margin of 40% at the midpoint of the range combined revenue growth and adjusted EBITDA margin. We now expect to exceed the rule of 65 that we reported last year.
For the second quarter of 2022, we expect total revenues in the range of 308 million to $310 million, representing a growth rate over the comparable prior year period of approximately 28% at the midpoint of the range we.
We expect adjusted EBITDA for the second quarter in the range of $111 million to $113 million, representing an adjusted EBITDA margin of 36% at the midpoint of the range.
The strength of our results and our raised guidance clearly reflect our confidence in the market demand for our solutions and the success, we're having in expanding our market share from the roughly 5% share of the Tam that we have today, we have a high margin recurring revenue model, a strong balance sheet and with the investments we're making in.
The success of our sales model, we are very well positioned to deliver another year of rapid revenue growth and robust adjusted EBITDA margin with that we will open the line for questions operator.
Thank you.
I would like to ask a question. Please press star one on your telephone keypad.
Any reason you would like to turn that question. Please press star followed by team again to ask a question Press Star one as a reminder, if you are using a speakerphone please pick.
<unk> up your handset before asking your question, we will pause here briefly if questions are registering.
The first question is from the line of Raimo <unk> with Barclays.
Your line is open.
Thank you.
That's fair.
It's quite an interesting guidance is very strong guidance.
I wanted to kind of talk a little bit about the.
What you're seeing in the market, obviously, you guys like a nervousness about like how you're at the European situation might spill over to the yes. It doesn't look like it but like maybe any comments on that one Chad, but then also I wanted to hear more from you around.
Momentum in the different customer segments around launch customers.
Small customers, what's driving that.
Momentum, especially if I look at Q2 guidance that looks stronger than what you've done historically thank you.
Yes, so first I mean as Youre aware, our focus is here domestic here in the U S. We are focused on on those businesses our system does allow people to.
Store employees that work internationally, so I mean as far as the impact on what's going on in Europe , I think from a macro level I think.
On what impacts.
Every business, but for US we only have 5% of the Tam out there and we're continuing to drive new business revenue and Thats not keeping us.
From being able to do that.
Although our hearts go out to what's going on over there.
And your next.
Question, what's driving our momentum we are having a lot of success.
Above the 1000 employee Mark.
As more and more businesses to deploy self service technology in the hands of their employees and then as long as Youre deploying self service technology and those employees hands, you may as well deploy something that does the most for them or something that they can do the most on and so that's definitely helped drive our momentum as we continue to.
Move forward.
Okay, and then one quick follow up if I think about the the floor Allianz.
Potentially higher interest rates impacting you and how immediate is that effect.
Yes, so we had a 25 basis.
Towards the end of first quarter, so that takes a while to layer into our numbers.
We're still investing.
Fairly short term, but obviously looking at the best way to deploy.
Those balances so as they go up and we would start to see impact over time on those.
Increased rates.
Thank you.
Thank you.
Thank you Ms Chairman Chang.
The next question is from Sumit <unk> with Jefferies.
Your line is open.
Hi, good evening, thanks for taking my questions.
So maybe Chad first for you just I know the company opened several new offices I am curious does had been fully staffed already and maybe how the staffing of that.
Informs the kind of stronger than normal guidance that you gave for the rest of the year, even on top of a very strong one.
Yes, I can tell you all of the new offices have been open and they are producing already so.
Each of them do produce it takes two years for an office to reach full maturity, but obviously, we're going to continue to generate revenue from them as they are in the maturing state.
So definitely.
Some of the revenue that we would expect the revenue growth that we would expect to achieve this year there will be some contributions from those offices all those small.
I would think you would see a larger contribution from those offices next year and definitely as you look into 2024.
Great and then Craig maybe just a follow up.
<unk> question I know, we've only seen a 25 bip raise.
The fed funds rate, but can you just help us understand are you baking any further increases in to the guidance or is the revised guidance, Jeff as of whats already been happened not the scuttlebutt around in future potential raises.
Yes.
The guidance, we gave is really kind of where we are today on what we're earning today. So that included that first 25.
<unk> basis point increase so.
They are talking about additional raises even this week, so kind of have to see how those layer into R. R.
And our earnings.
Okay, great. Thanks, Thanks for taking my questions and congrats on strong quarter.
Thank you.
Thank you Mr Savannah.
Next question is from Brad Reback with Stifel.
Your line is open.
Great. Thanks, very much Chad as Youre sellers get back to face to face interactions have you seen any change there.
Productivity as a result, I know you were really productivity you are really productive.
Over the last few years, but any changes.
No I mean, I wouldn't say, we're back to face to face we're doing some of them.
To face so we're definitely doing more this quarter than we did the last quarter.
But I wouldn't say that we are back face to face the way we were pre pandemic I do believe going face to face has opportunities to impact in a positive way our close ratios.
As we as we do that.
But as we sit here today it would be hard for me to say that we've fully made that shift again were still meeting clients where they live.
And we're still walking through that process and a substantial number of our clients and definitely the overwhelming majority of our meetings.
Still being held virtually and I believe that we're doing that.
For the benefit of efficiency for both the client as well as us.
Great and then switching gears I think it was last week ADP talked about more aggressive price increases to reflect the current inflationary environment from your experience over the last 20 years, what type of impact does that have on the market and overall customer demand.
Well as you know Brad we did our very first step pricing adjustment in 2019, it impacted a very small subset of our.
<unk> base, and we generated around 1%.
At that time at that time, I mentioned that as we look at pricing adjustments and we increase the ROI for our clients. It would only make sense that we were able to share in the ROI that we increased and Thats really how we look at it regardless of inflation or anything else. If we are increasing the ROI for us.
Client there is an opportunity for us to share in that value that we create through pricing adjustments and if we don't do that then it really doesn't matter, if there's inflation or anything else, we really don't have that opportunity. So.
As far as what another company might do how that could impact us.
Not so sure on that.
But that for us.
Pricing adjustments to the extent, we do one would be it would be based on an increased return on investment that our clients are achieving.
That's great thanks very much.
Thank you.
Thank you Mr Reback.
The next question is from the line of Mark Marcon with Baird.
Your line is open.
Hey, good afternoon, and congratulations on the excellent results.
Can you talk a little bit about the study conversions that you've had so far and what sort of revenue uplift you've seen and then.
What is what's been the change in terms of the level of client engagement and satisfaction.
Early reads in terms of retention trends among those clients.
Yes, well from a rolling out Betty we started doing that in July .
For all new clients all quotes for all quotes given in July .
Those quotes all had Betty and so it was a part of our ongoing strategy and so the reason I'm, saying that is the way of new client would approach bed is a little bit different in the way of current client would approach bedding and what I mean by that our current client does have to go through a bit of conversion and theyre not necessarily <unk>.
Ana conversion mode. The way of new client they are already in a conversion mode and so theres a little bit different there and how we work with one or the other but we're also getting a.
A lot better at deploying making those conversions and helping the client.
Set up their datasets that they have to feed into <unk> and <unk>.
Order to make it work for them payroll after payroll and so.
Answer to your question from a retention absolutely the more of our product businesses use on arquette in our case.
The more products that they use the longer they stay in the happier that they are so we're having a lot of success getting getting better out there.
Chad do you get a revenue lift on the clients that you are converting to Betty and if so we do Ngls Betty Yes, Betty is.
Provides an incremental revenue opportunity for us it's a as I said the past its a nominal fee. It's one of 29 modules, but we do.
Get a revenue uplift each time, we sell better to a current client.
Or if we sell <unk> to a new client.
Their pricing includes Betty and so.
That would be.
Larger feed and what it would have been prior to <unk> being included.
And so in terms of expectations.
What's built into your expectations in terms of conversions among the client base.
Currently doesn't have Betty through the balance of the year and then as it relates to the rate question and the float income.
To what extent would you let that incremental benefit.
Flow through to the operating line as opposed to.
Yes.
Yeah.
We will take the latter first we're always trying to.
Invest I mean, our first opportunity.
Is to invest in growth and so we're always looking to do that but.
We're also very disciplined in what we do.
The first question was.
As far as Betty built into our forecast as far as what we're looking to do.
It's been built into our forecast the whole time I've been very aggressive about the expectations about our hopes for bringing better yen.
Although I'm happy with 10000 clients on it are well over a quarter of our clients.
There are a lot of clients out there that arent, yet as well as their employees that arent yet.
Variances the benefits and the RLI that Betty can deliver and so that's what we're focused on doing I don't know that we're going to hit.
My expectations for speed on that we rarely do in.
Situations like that but what I will say is we're talking about 10000 clients that have either either signed up for it or already converted and this is a product that we started really putting out their own clubs beginning in July .
So it's hard for me to find another product that's moving as fast as what <unk> moved with the exception of our.
Product and like 2016.
Terrific. Thank you Chen.
Thank you.
Thank you Mr. Martin.
Just as a reminder, please ask one question and one follow up.
The next question is from Brian Macdonald with Needham Your line is open.
Alright, Thanks for taking my question and congrats on a great quarter, Chad last quarter on the call. There was discussion of a competitor or pay comes of dealing with a hack issue in December and obviously that that competitor being at the higher end of the market you mentioned those sales cycles take a bit longer to process through just curious obviously now.
Sort of five months post that how you are feeling competitively and if you've been able to successfully have some competitive wins there. Thanks.
Well, yes, definitely we've had competitive wins, but we always have it's not a we don't have a pull the format of your poll strategy.
Ours is a full strategy that we go through and definitely is as clients were going through having the system down and having to implement all of these.
Different technologies <unk> do it manually so that their employees can get paid some of them didn't that becomes a thorn out of the PA moment, where we can pull that borne out and now youre not hurting exactly right now, but thats not necessarily driving an overall strategy for our business and how that changes in most businesses of that size.
So I would say our all businesses of that size are pretty strategic and smart about how they move forward and so all that's to say is that it would've been awed with at the time that that happen that we would have converted all of these businesses overnight.
We're not we're not going to do unnatural things to bring in clients without them understanding what they are buying and how the values created because it's important for us to retain them in order for us to really generate revenue and especially margin and adjusted EBITDA from them.
Excellent. Thanks, and then perhaps as a follow up just curious what you are seeing sort of down market in terms of inbound lead flow for your inside sales teams and how you are feeling about the capacity of those teams currently any thoughts.
Sort of incremental investment to expand the <unk> through the remainder of the year.
We would expand the number of teams to meet up with the demand, what's what's driving the demand as our advertising spend we continue to spend heavily in advertising because it's working.
So as our marketing and advertising efforts continue to drive more leads than obviously, we would want to make sure. We have that group staffed to be able to handle those leads.
The small market group, which handles under 50 employees.
<unk> represents about 5% of our revenue.
So.
When youre talking about how many resources that we would add to grow that into the future.
Definitely enough to service.
Be able to sell what the demand is that we're generating from our lead and marketing and advertising volume, but not so much that it shifts our focus and strategy.
Way from.
What we're trying to capture here.
Thanks for the color Congrats again.
Thank you.
Yes.
Thank you Mr Mcdonald.
The next question is from Citibank Bragi with Mizuho. Your line is open.
Thanks for taking my question just one.
Clarification, and then follow up you said this.
Revenue from filing taxes modeled modestly better so is it now to the pre pandemic level.
No.
Okay.
And then when you're thinking.
In terms of product innovation, we heard about the Dx now BT, so how you're thinking about in terms of product innovation, adding modern features.
Dividends, yet further as youre moving up market.
Yes, we have a deep pipeline of products that we continue to work on and Youll continue to see products released throughout the year.
It's very important that we continue to drive and have success with the current strategies, we have because they are building blocks of what we do next.
As everything has been.
As we've rolled it out so everything's a building block for whats next so it's always important for us to roll products out and then get usage I mean.
I've been on these calls and listen to different competitors calls all.
You will hear them announce a product and two years later, they have 300 clients on it.
We put this out in July to all.
Clients and put it in our quotes and we're already at 10000 and over a quarter of our clients and so that's very good and as you get to version one Don you shift quickly into version two version three version four Youre never done developing products and so we're continuing to enhance the products we have to have <unk>.
Later usage on them and that leads to other product opportunities, which will continue to roll out through this year.
Great. Thank you.
Thank you.
Thank you.
The next question is from the line of Bryan Bergin with Cowen Your line is open.
Hi, guys. Good afternoon. Thank you first one here on just the client employment base. So can you kind of comment on how client pays per control progressed during the quarter and what do you estimate your client's employment base now stands relative to those pre pandemic levels.
I wouldn't say that client employment had a big impact on us outside of the fact that it's stable I mean thats. The main thing that we need with the exception of massive unemployment, which we did see in the pandemic that happened very quickly.
Quarter to quarter, I can't say that employment trends have big.
Big impacts on us due to the growth nature of our business other.
Then to say if theyre not.
They are not stable.
And I believe that they've been stable for quite some time now.
Okay and then just on the sales force can you talk about the sales force growth and your sales force retention.
Has trended here over the last several quarters.
Substantially unchanged.
Maybe a little better I would say actually in the last year, we do know that our sales retention.
It is a little better.
Holli for road took over and we've had a little better sales retention, but thats also because we've got more reps moving into that executive rep position and we just have higher retention with those groups and as they sell more quicker they move in to that executive rep position.
<unk> quicker and so I do know that sales retention.
It's higher than what it's been but.
<unk> retention always remains a challenge because we have aggressive goals and.
There is there is a lot to sell as you go through as you go through these products, but I would say for sure it's improved some but.
Lot of that just has to do with the people hitting executive rep, even faster than what they've done in the past.
Okay makes sense. Thanks.
Thank you Mr. Burton.
The next question is from the line of Alex <unk> with Wolfe Research. Your line is open.
Hey, guys. Thanks for taking my question so.
Maybe just first one Chad.
Given this is probably one of the largest fleets I think you've had in the Q1 and I think one of the largest raises you've had a lot of the questions we get.
To kind of Rimose first question is around how to think about your business.
In terms of recession resiliency of recession exposure, you've been you've run this company for a long time through many economic cycles and this one seems a little different given the difficult hiring environment that most of your customers are experiencing so just maybe comment on your like what's driving your incremental level of <unk>.
Confidence in the face of some of these macro issues and a quick follow up.
Well I mean, I think tight labor markets. They do a couple of things one thing. It does is you have to do more with less.
And one way to do more with less as have the right technology that you are deploying for everyone.
And if you're in a bit.
Business.
That moves pipe around not everybody drives the fork lift, but everybody does use the app. So.
Our system, you are able to really impact the entire company and to some extent.
It gets more difficult to hire back office people as well and so we're able to make that.
Make that impact so I think from that perspective, it's helpful. It's always a good time to automate and become more efficient for any business and I think that when you run through markets like this it forces people in good times, you don't necessarily.
C what's going wrong.
And in times that get a little bit tougher. It forces you to make those changes within your business that creates.
This should see through automation, and that's where we come in so.
It provided again that we're not having massive unemployment shifts.
I believe we're in really good shape as we move throughout this year.
Perfect and then maybe just a bigger.
Bigger picture question. If you look at as you move up market and as we move into an environment. That's.
Normalizing the concept of hybrid work.
Some of your competitors have native.
Or acquired native capabilities for doing kind of global payroll how important is that as particularly as you move up market as companies start hiring in various geographies.
On a global basis, how do you think about I think he partnered that for that technology today, but.
What's the longer term plan to offer that type of functionality natively.
Well everything has its time and place and.
There are certain things that.
That you are able to provide for a customer ahead of some others, even so but everything has its time and place and I would say everything is important not everything's urgent.
So we continue to review those things that make sense for US again, we don't preclude our clients that have international employees from using third.
Third parties I would even go to say that using one system for all your U S and even putting your ex pats in other international employees into that system and using a third party for payroll because youre in Germany.
I can I can honestly say that even in that environment, we are a better fit than the eight legged octopus with no head they would use otherwise.
All of that said everything does have its time and place for what we develop and win and we continue to be ambitious with.
Being the largest in our industry and that takes some time and I believe that we've got a lot of strong momentum and we're heading the right way on that.
Perfect.
Keep doing good work again.
Thank you.
Thank you Ms James asking.
Next question is from the line of Robert Simmons with D. A Davidson your line is open.
Thanks for taking the question some of your competitors that are your biggest sources of wins just talked about retention rates holding up better than expected. So I'm wondering what are you seeing in terms of the source of your new clients and also just the general switching environment.
Yes, I mean, we're not seeing any.
Changes to our.
How it's impacting us.
Our competitors have been talking about increasing retention on and off.
For the last 24 years that I've been doing this so.
We're focused on taking market share again, we only have 5% of the Tam right now so.
We remain focused on that.
And so yes, I don't I don't.
See what what Theyre doing too.
0.2 changes that are being made that would improve retention rates.
For someone else in our industry, but I do know the things that we're doing.
We are having a lot of success, bringing businesses over still today as evidenced by.
What we just reported in the first quarter and what we expect.
Into next quarter and for the year.
Got it.
On capital allocation now that the company's business model has been tested.
Tested you're starting off consistently good cash flow have you given much thought to paying out a dividend.
Yes.
And it's 1% to seven every board meeting our 1% to six every board.
Thank you.
Uh huh.
Thank you Mr. Sidney.
The next question is from Bob <unk> with Deutsche Bank. Your line is open.
Great. Thanks for taking my question and Echo My Congrats on a strong start to the year just first on the success of staying above the one K employee level, what's driving that and how much of that is maybe attributed to profit improvements versus sales execution and then are there any specific verticals or geos youre seeing stronger success here.
I think we are really what's driving that is it becomes a necessity at some level I mean again, even with tight labor markets or even without you having to do more and more whether it's a tight labor market or not there is all these new laws and regulation and everything that continues to come out whether youre in a steady state or what have you.
And so.
Businesses can only do so much so I think anytime youre able to put something in the employees' hands, that's much easier for them to use and saves the backend of lot of time and eliminates or at least eliminates a lot of exposure and can decrease a lot of the liability that remains.
And that becomes an important thing to do and so I also think more and more employees are becoming they expect good technology.
Lightest campaign talks about the wrong tool.
These are going to work they expect the right tools to do their job and more and more technology that allows them to manage their data is considered to be the right tool for that and so larger and larger businesses are almost in half two.
Scenario.
At a certain level and I think that we're seeing a lot of that.
Got it that's helpful and just a quick follow up just split the change in CEO to Justin from Josh anything changing in terms of structure a strategy that just might look to deploy it.
Okay.
No actually adjust and ran our implementation has been running our implementation side ahead of that for four years.
He has been doing has been very focused on usage. He works very closely.
With Holly.
John has done a great job I talked to John yesterday, I mean, we continue on.
I'd want to say this one point because I know we've had different questions about this or what have you and only.
One time that normally we give a retention number at the end of the year and I'll look forward to giving that at the end of this year. So it's not a comment then I'm going to make on an ongoing basis every quarter, but with that said. This one time I will share with you that our current retention number when compared with the same period last year.
Either equal to or improved.
So again, all I can say is John did a great job with while he was here and Justin is well prepared and has been working very closely with Holly and the rest of this this entire time. So we're very excited about what he brings to the table.
Thanks for taking my questions.
Thank you Ms Shang.
The next question is from the line of Daniel Jester with BMO capital. Your line is open.
Yes. Good afternoon. Thanks for taking my questions, maybe just to circle back on Betty I guess have you said on average how long it takes the conversion to go from signing to go live and I ask because given your comments that this is the fastest selling modules.
Do you have better visibility when you're giving your second quarter guidance today because of the big backlog relative to a typical second quarter.
No, but we have great I wouldn't say, we had better visibility, but we've always had great visibility we've been we've been guiding in a $2 million range since we IPO in 2014 with.
$107 million. So we've always had great visibility in regards to Betty again, it's a nominal.
Fee for us in answer to your question from a conversion it doesn't impact the conversion on a new client where you would see a conversion impact would be on current clients that are converting over and it's kind of a mixed bag on how long that conversion might take them because what because of the datasets that have to be.
Loaded.
Betty that might exist outside of our system, such as Theyre doing commissions and the way. They calculate commissions is in a completely different system than pay come in they are fed in when those commissions are fed in and at what time period. They are fed in and how they are fed in matters and thats, how we work through a process with.
But that would be part of their conversion that currently they are already data feeding it in towards the end and we move that towards the beginning based on what employees. Their pay that's one point there are many others, but it just depends on what's going on with that client as to what the conversion would be interbedded. It doesn't take a long time necessarily to have them.
Motivated client we're ready to go.
But there is some.
Some things that have to be done on the clients and to prepare them to make that conversion of course once they do now.
Set it and forget it and.
The employees work the system from there.
Sure.
Great. Thank you very much.
Thank you.
Thank you.
The next question is from Kevin Mcveigh with Credit Suisse. Your line is open.
Great. Thanks, so much and I Wonder if you could just following up on that improvement in retention.
Just help us understand what's driving that is that kind of increased module adoption just any thoughts around that would be helpful.
Sure. So what I said, it was either equal to or greater than and then what's been driving our retention for the last three four years has been usage of the product and clients actually getting the return on investment out of the product as more and more employees continue to have a direct interface.
With the database and skip the middle middle person on it.
And Thats really whats driving it that usage.
Got it and then on the client success up market is that kind of primarily organic or is that existing clients moving up like is there any way to quantify how much is existing clients versus new clients that you're winning out in the marketplace, but that 1000 Mark.
Well, what I'm talking about new clients I'm sure. We've had some current clients that have gone from 878 employees 1012, but that's not the group that I'm talking about when I'm talking about we've had success onboarding.
Clients above 1000 and much larger.
Then 1000.
Employees as well as we continue to go up market of course, we've always had success in that market. We're just continuing to have more and more of it because we've gone even further up market and you know we've got more people in the field now.
Thank you.
Thank you.
Thank you Mr Mcveigh.
The next question is from Marvin Romanow Rahmani with Piper Sandler Your line is open.
Alright, thank you.
My question I, just wanted to ask about the competitive environment.
Certainly Ben.
Innovation engine you had.
Do you think change a couple of years back.
Are you seeing any.
Okay competitors, whether it is the kind of a larger ones the more of the cloud players or even some of the private companies.
Hey, guys, thanks could be fast followers or sort of come up with.
Innovation that that's.
Sort of keeping you up at night.
Well not keeping me up at night, but I will say that I mean, I don't know anybody that beat us onto the Internet now everybody is I mean, I don't know that being first is something is enough as ever enough. I mean, you have to continue to innovate something.
We've always been in a very competitive industry I think.
Competition is really what drives innovation I mean, if we didn't have strong competitors there'd be no reason for us to come up with new innovative ways to drive stronger return on investment, but we are we do have a strong competition out there throughout the market I believe we have the better model and I believe if somebody wants to do.
Do less work.
They should implement our model and I think that our competitors have a long way to catch up to that.
And I do think as you look into the future I think that.
Employees doing their own payroll and employees, making all changes into the database through the direct data exchange the way the direct data exchange measures.
I think that's going to be just an established expectation for any employee going to work and so I think that's really a change youre starting to see happen is what do employees expect to use when they go to work and I think thats shifting I think up to now employees expected to go to work.
Usually eight legged octopus with no head, which is what I would like to call multiple systems cobbled together with.
Multiple passwords, whatever E mails and everything else I think there is an expectation starting to change on the employee side of how much work. They actually want to have to do to manage those types of systems and so I believe we're at the forefront of making those changes I think we're putting out a lot of proof sources of success.
As we've gone through that and I would expect only more of the same cannot competitor do what were doing yeah. I think anybody can do anything I mean, you know.
<unk> had people build the space shuttles over two year period of time. So can someone do this year, but I do think you have to be intangible for how you do it.
You've got to have that expectation and I believe we're the ones, leading I know, we're the ones leading that and.
Like I said with all of my calls earlier in this year I mean, we're really set up this year.
To do a lot of good things and we're already seeing those things happen. So a lot of success right now.
Perfect. Thanks for that.
Thank you. Thank you Mr in Miami.
There are no additional questions waiting at this time, so I'll pass the conference over to Chad Richison for any closing remarks.
Alright, I would like to thank everyone for joining us today on the call I want to reiterate my thanks to our employees for making this another outstanding quarter. This month, we will be hosting meetings at the Needham and J P. Morgan conferences in June we will be hosting meetings at the Cowen Jefferies Baird and Stifel conferences. Thank you for your continued.
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