Q4 2022 Insperity Inc Earnings Call
Good morning, my name is Matthew and I'll be your conference operator today.
significantly above both our expectations and Q4 of 2021, the quarter which was negatively impacted by higher COVID costs.
paid works out employee growth of 14.3% in Q4, which is slightly below the low length of our forecasted range, as we experience the greater than expected slowdown in hiring by our client base.
As for the other two growth drivers, worksite employees paid from new client sales and client retention came in near our Q4 forecasted levels. In a few minutes, Paul and I will comment further on the outcome of our recent fall sales campaign and heavy client renewal period.
leading to our 2023 outlook. Fourth quarter gross profit increased 41% on the 14% growth in paid worksite employees and a 24% improvement in gross profit per worksite employee.
This improvement was largely driven by lower benefit costs as COVID-related costs continued to decline without a notable increase in healthcare utilization from previously deferred care.
Other areas of gross profit, including pricing and contributions from our payroll tax and workers compensation areas, also improved over Q4 of 2021.
Operating expenses increased 22 percent over Q4 the prior year, which was slightly above our forecast.
and included continued investment in our service personnel given our high worksite employee growth.
a planned increase in business performance advisors,
Our sales commissions tied to programs surrounding our Q4 sales volume and pricing.
increased costs related to recruiting, travel, and training, and costs related to our ongoing implementation of Salesforce.
That interesting come improved over the prior year on higher interest rates.
and our Q4 effective income tax rate remained at 25%.
Now, let me recap our full year 2022 results.
We achieved a 38% increase in adjusted EBITDA to $352 million and a 42% increase in adjusted EPS to $5.59.
significantly above both our initial budgets and our recent guidance.
These higher than expected earnings were driven by the significant growth in the paid works that employees.
execution of our long-term pricing strategy, and effective management of our direct cost programs, while making the key investments tied to our long-term growth plans.
Our full year worksite employee growth of 18% over 2021 included an increase in worksite employees paid from new sales.
driven by an improvement in the sales efficiency of our business performance advisors.
Client retention also improved from 82 percent in the prior year to 85 percent in 2022.
And the third driver to our growth included robust hiring by our clients during the first half of the year.
prior to the recent slowdown that I mentioned earlier.
Gross profit per worksite employee per month are key pricing and direct cost metrics improved from $273 in 2021 to $286 in 2022.
These results were above our expectations entering the year as we executed our pricing strategy while managing the favorable results in each of our direct cost areas.
As mentioned earlier, a lower benefit cost trend resulted from a decline in COVID-related costs without being offset by increased utilization from previously deferred care.
Effective safety and claims management combined with the recent hybrid work environment resulted in lower workers compensation costs.
Operating expenses increased 18% over 2021, consistent with our workside employee growth as we made key investments in our long-term growth plan.
In addition to an increase in our service capacity given the recent high levels of worksite employee growth, we made targeted adjustments to compensation levels of our corporate staff.
given the current labor market dynamics and the inflationary environment.
Our 2022 compensation costs also included higher sales commission and a set of compensation tied to our outperformance.
We continue to invest in our technology, including the ongoing implementation of Salesforce.
And lastly, we experience an increase in travel and event costs on higher prices and higher volume when compared to the unusually low levels during the pandemic in 2021.
Now we continue to produce strong cash flow and ended the year with a solid balance sheet while investing in the business and providing strong return to our shareholders.
We invested $30 million in capital expenditures in 2022 and returned $150 million to stockholders through our dividend and share repurchase programs.
We repurchased the total of 770,000 shares at a cost of $73 million.
We also paid out $77 million in cash dividends, which includes a 16% increase in our regular dividend rate in May of 22.
We ended the year with $224 million of adjusted cash up from $163 million at the end of 2021.
and continue to have $280 million available under our credit facility. Now at this time, I'd like to turn the call over to Paul. Thank you, Doug, and thank you all for joining our call.
Today I'd like to start with comments on our excellent board of results and the dynamic we've seen in the marketplace as we entered the new year.
Second, I'll discuss our record-setting full-year 2022 results in the context of our internal five-year plan and the key initiatives that are continuing our momentum.
I'll follow this discussion with the key drivers of our outlook for continued success in 2023 and how this keeps us on track with our long-term goals.
Our fourth quarter results capped off an excellent year in both growth and profitability. In addition, we executed a strong selling and retention campaign to continue growth into 2023, despite a slowdown in client hiring.
New booked workforce optimization sales came in at 96% of our aggressive fall campaign forecast. The highlight was continued success in our mid-market book sales up substantially over the prior year and exceeding the budget.
Another highlight was continued sales success in our traditional employment workforce acceleration book sales, which came in well over budget and well ahead of the same period last year.
Q4 is also our heavy renewal period with over 40% of our client base renewing around the year end. These renewals flow into the starting point for paid worksite employees in January . And this starting point is foundational for our unit growth expectations for the coming year!
in our recurring revenue business model.
Our Q4 renewal results were strong and our expected attrition, blowing into January and February , is expected to be slightly better than the average of the last several years. Now, this level was not as good as last year, but still solid results from a historical perspective.
Another highlight of this heavy renewal period was continuing our strong pricing of our direct cost allocations and markup on our services. We were successful achieving the targets which we had set to account for the higher inflation rates we are all seeing in the marketplace.
So these key revenue drivers that we control, new sales, retention, and pricing, were very solid in the fourth quarter and rolling into the new year. Now one driver we have less control over is the net change in employment within our client base. And this factor slowed more significantly than expected in Q4.
To put this in perspective, this client growth factor was stronger than typical years in 2021 and the first half of 2022 as the post pandemic economic rebound occurred.
The third quarter of last year slow to a more normal rate and we forecasted for this slowdown in Q4 accordingly.
Now keep in mind, we enroll every new hire and process every termination. So our net client growth numbers are actual real-time net hiring results, not an estimate.
In the fourth quarter, net hiring in the base was only a slight increase, which was considerably below the third quarter. This contrasted with the relatively positive hiring outlook reported in the client's survey, we conducted late in the third quarter.
Now this dynamic has continued through January . We've conducted an additional client survey to assess the sentiment of our client base to help plan this year. Historically, we compare actual data from client hiring and compensation and we check for alignment with the outlook of business leaders. Most of the time these are in sync but not always as in Q4.
Now, the good news is our client sentiment was even more positive in the survey we conducted over the last couple weeks as clients look ahead.
More than half of the clients responding to the survey expect to increase staffing levels, and more than 70 percent of those surveyed expect 2023 to be somewhat or significantly better than 2022. The top three HR concerns among survey respondents were
building a strong culture, attracting talent, and managing health care costs. These issues align with the key strengths of our service offering and reflect positively on the strong demand for our services.
Now in a few minutes I'll explain how we've integrated the recent slowdown in hiring and the positive survey results into our outlook. But first, the full-year record-setting results reported today were an outstanding first year of our internal five-year plan.
Our full year results were record setting in both growth in the number of worksite employees and profitability in adjusted EBITDA. This demonstrated our balanced approach and highlights the strength of our business model.
In addition to the significant financial outperformance of our plan, several key accomplishments in 2022 are driving our confidence going forward. Our five-year plan is driven by 10 key success factors and significant progress is happening across the board.
One of these success factors is improvement in sales efficiency, which we believe could add significant operating leverage to our financial model in the future.
This year, we increased sales efficiency by 9% and incorporated changes designed to further this improvement. We aligned commission incentives at all levels in the organization in order to focus on achieving quarterly goals and moving BPAs up through performance tiers.
This was successful in 2022 and we've made further revisions to optimize these incentives moving into 2023.
These incentives also incorporated changes to drive another key success factor in our five-room plan, ramping up our workforce acceleration sales.
Our 40% increase in these sales in 2022 validate we are on track with this initiative. Workforce acceleration has the potential to further improve our sales efficiency, lower BPA turnover, and enhance our customer for life strategy for long term client retention.
We're still early in the ramp up of this service and the contribution is relatively small. However, this business also adds to gross profit without related risk included in the co-employment workforce optimization model.
Our successful sales effort in 2022 was also supported by a 13% increase in marketing assisted sales, which was a new high watermark for marketing influenced sales for a year.
These results were related to another of our key success factors which is extending our brand awareness and affinity and capitalizing on the increased demand for our services we've seen coming out of the pandemic.
Another highlight of the year was our internal hiring success in the face of a continuing tight labor market. This effort directly supports our highest priority success factor, which is continuing to attract and retain people with the heart and dedication of our current staff. This effort helped us catch up on hiring across the company to meet our growth results. This effort helped us catch up on hiring across the company to meet our growth results.
The last key success factor to mention today is pricing and direct cost management, considering we've been in a higher inflation environment. Our discipline and consistency in this area has paid off considerably, and we believe we're well positioned going forward. So before I pass the call back to Doug, I'd like to provide some color.
around the approach we're taking in our plan for 2023 and how this fits in as year two of our five-year plan.
We're coming off a strong year with momentum in the primary growth drivers we control, sales and client retention. However, the recent slowdown in client hiring has modestly lowered the starting point of paid worksite employees and that needs to be factored into this year's plan.
Our recent survey of our client base and by solid hiring ahead in 2023, yet there's a level of economic uncertainty in the air that we believe justifies a level of prudence and forecasting this factor.
Now this has produced a wider range for our unit growth rate projections than we typically begin with each year.
Interestingly, this wider range for growth is somewhat offset by a narrower range for gross profit than we've had over the last few years due to our strong pricing performance and expected normalization of direct costs.
We're also continuing investments to achieve the objectives of our five-year plan with the goal of exceeding the strong five-year runway experience from 2015 to 2019.
Our compound annual growth rate in paid worksite employees over that period was 12.5% and adjusted EBITDA was over 24%.
Also, one of the charts in the earnings presentation we released today shows the compound annual growth rate over the most recent five years in paid workside employees at the Justin Eba-Dop of 10 and 15 percent respectively. This is a significant, since it includes a negative growth year in 2020 due to the pandemic related shutdown.
is very important for our shareholders to understand because if we perform according to this plan, the return to shareholders could be similar or possibly even better than our previous five-year run. Our total return to shareholders over that period was a remarkable 434 percent. Quarterly dividends increase an average of 27 percent each year.
and the share price increased more than fivefold.
Now we are focused company-wide on the 10-T success factors we believe will capitalize on the strong demand for our services in the marketplace, achieve the goals of our internal five-year plan, and produce compound annual growth rates that drive exceptional return to shareholders.
At this point, I'd like to pass the call back to Doug to provide our specific guidance.
I'd like to pass the call back to Doug to provide our specific guidance. Thanks, Paul.
As I'm sure you're aware by now, our worksite employee growth in 2022 was very strong and was significantly above our typical long-term targets.
We're now entering a year with some economic uncertainty and a recent slowdown in the level of hiring bar clients.
Therefore, we are beginning the year forecast in 2023's workside employee growth in a wider range than normal, with the midpoint in the highest single digits rather than our typical target of double digit growth.
Our outperformance in 2022 was even stronger at the earnings line. While this will create challenges with the comparisons, our 2023 earnings outlook remains strong, particularly given the current macro environment.
Now let me provide some details behind our 2023 guidance.
Beginning with the results of our recent sales campaign and heavy client renewal period and the possibility of less hiring by our clients, we are forecasting 10% to 11% works of employee growth for Q1 of 2023.
Subsequent to Q1, our growth is projected to be driven by an anticipated increase in the number of business performance advisors and their sales efficiency.
We expect client retention to remain strong, although at a slightly lower level than last year.
And when combined with the possibility of less hiring by our clients over the balance of the year, we have forecasted a range of 7.5% to 10.5% growth for the full year.
As for gross profit, we expect a strong performance last year to continue in 2023, although we are taking what we believe is conservative approach to budgeting compared to our 2022 performance.
We currently expect our direct cost programs to return to a more normalized environment in 2023 with less uncertainty in the benefits and payroll tax areas.
In addition, we expect a benefit from growth-based administrative cost reductions in our United Healthcare Contracts in 2023.
So we are more comfortable with a tighter range of expectations in this area than the past couple of years.
Now, as far as our operating costs, we remain focused on the long-term initiatives in our internal five-year plan.
2023 operating costs include the impact of successfully hiring sales, service, and support personnel in the second half of last year.
We plan to continue to grow the number of BPAs and we believe our restructured sales commission program will drive further improvements in sales efficiency over the long term.
We also intend to continue investment in our marketing and technology to meet our plan objectives.
As for our interest income and expense, our 2023 budget assumes the current interest rates and a run rate consistent with Q4 of 2022.
Recent rate increases have had a positive impact on our adjusted EBITDA. Given the interesting come we are on our cash investments including the funds in our workers' compensation program.
This is a component of our business model that has been depressed over a considerable period during the extended low rate interest rate environment.
We are estimating a tax rate of 25% to Q1 and 26 and a half percent for the full year of 2023.
So let's now talk about the full year earnings expectations, which have a couple of comparison issues.
We are forecasting $2,023 adjusted EBITDA in a range of $353 million to $409 million. Ranging relative from relatively flat to a 16% increase over 2022.
We are forecasting full year adjusted EPS in a range of $5.24 to $6.30.
Ranking from a decrease of 6% to an increase of 13% compared to 2022.
Now the disparity between the forecast and the just a debita and a just a DPS year-over-year growth rates.
This primarily driven by increased interest depreciation and amortization expense, which are excluded from adjusted EBITDA.
That's for Q1. We are forecasting the adjusted EBITDA on a range of $143 million to $153 million and increase of 21% to 29% over the prior year's quarter.
We are forecasting a just be adjusted BBS in a range of $2.40 to $2.60.
The Q1 forecasted year-over-year earnings growth rates are higher than the full year 2023 rates due to quarterly comparisons to the prior year.
Ernie, I think she won of the prior year were negatively impacted by higher benefit costs associated with COVID. These COVID-related costs declined over the balance of 2022, particularly in the latter half of the year.
Secondly, interest income started out low in Q1 of 2022 and increased over the course of last year.
As a result, comparisons are more favorable in the first half of the year and more challenging in the second half.
Now, at this time, I'd like to open up the call for questions.
Certainly. At this time we'll be conducting a question and answer session. If you have any questions or comments, please press star 1 on your phone at this time.
We do ask that while posing a question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality.
We do ask that all participants please limit to three questions per person.
Once again, if you have any questions or comments, please press star 1 on your phone.
Your first question is coming from Andrew Nicholas from William Blair. Your line is live.
Hi, guys. Good morning. This is Daniel Maxwell on for Andrew. Just to get started, I'm wondering what is assumed in guidance in terms of gross profit per worksite employee per month and then any –
Any puts and takes relative to the 286 number you did in the fall year 2022.
Yeah, I think it's your where we don't get as a key metric in our guidance.
We reported it to 286 last year. I was at the high mark for us. And it really contemplated the pricing strategy. Long-term pricing strategy that we put in place from the outset of the pandemic, through where we are today. And we've.
Yeah, slightly sees those targets through that particular time period.
And as you expect, there were fluctuations in benefit costs during the pandemic, post-pandemic, but we're exiting 2022 in very good shape relative to our pricing.
and our benefit-cost trend.
You know, we also obviously experienced some benefits from the remote work environment on our workers cop and we managed to pay our rental tax as aStar in Langdon, yeah.
All that said, 286, if you look at our history, is a high watermark for gross profit per employee.
We're not going to go into a year. We go through our regular.
typical process of budgeting gross profit going into a year with the...
with the intent of managing to the upside in each of the direct cost program areas. So you wouldn't expect us to go into 2023 budgeting at that same level. Now on the what we did mention in my prepared remarks was
We do expect to realize administrative cost savings in our United Health Care plan relative to the significant growth that we've experienced and that we're continuing to forecast so you know that would be some upside in that particular area versus.
you know, in previous years. So, gives you a little bit of a flavor there.
previous years. So, give you a little bit of a flavor there. Hopefully, I'll help you to offer a good success, and make this amazing version of a success, I think being one of these
Yeah, that's helpful. And then as a follow up, is there anything unique to call out from a health care activity or claims perspective? And in 2023, are you assuming any pent up demand flushing through or is 2023 kind of looking like a more quote on quote normal year?
No, I think we're looking at...
23 is more of a normal year as it relates to benefit and benefit utilization. Obviously we went through 2022 with declining COVID costs, but we didn't see a notable increase in utilization from care that was previously deferred when the pandemic was at its height. All that is.
Seems to have settled down through the latter half of the
2022 so we do think far and any significant new variants that we're entering 2023 in a more normalized environment both from a benefit perspective but also you know from the unemployment tax.
area where that was also had a little bit of volatility in it relative to the pandemic and its impact on unemployment and on state unemployment tax rates.
Great, thanks. And then maybe if I can just squeeze one more on pricing, are you seeing any noticeable change in the aggressiveness of competitors when it comes to price? And if so, is that something that's had any impact on new business?
science specific information throughout their organization. And then how we're trending things from going forward and building an increase is based on all the underlying trends that we're seeing. Plus.
Like I mentioned, one of our key success factors in our five-year plan was to also build in a reasonable level to deal with inflation that's going on in the marketplace. Obviously wage inflation has significant and 60% of our operating costs are in.
in personnel cost as a service company. So we've been really.
Our team has done a really great job at meeting those targets and so we're in good shape on that front and it really hasn't affected us on the competitive landscape.
Great. Thanks a lot, guys.
Thank you. Your next question is coming from Toby Sommer from Truist Securities.
Thanks. I was wondering if you could give us some color on trends in the workforce acceleration area.
sort of any kind of color about growth, etc.
Where do you want to go in terms of the transition and the ability to shift customers from optimization to acceleration and back and forth? And how long might it take to get to sort of an end state where that's a relatively smooth and sort of automated process?
That's a very good question. Toby and we're really all over that front. I mentioned that last year we had a 40% increase in our workforce acceleration growth.
We also, over this year, made some of these incentive changes, commission changes in our
organization that really have aligned everybody in the organization.
with this other key success factor that we believe, which is really growing this workforce acceleration business because of the benefits that I've listed in my prepared remarks.
So, you know, we see that where this is going for us now that we've synced things up. I wanted to be really careful about that because we wanted to make sure that we weren't pulling away any from our workforce optimization sales through how we went about this.
And we have done a beautiful job of that, but now we're ready to really see that all synced up, see that continue to grow faster. And you know, we believe that there's be a significant effort now. We've already had customers go both directions. From WX to WO, from WO to WX.
We had more of this past year than we did the year before that, but what our effort will be going forward is to now make sure our customer base knows about these options earlier.
So we don't have to have this discussion. After a customer's thought about making a move, or maybe like toward our year end transition, the numbers that we have in a tradition every year, we wanna see if we can address that. So we're gonna go after that more aggressively this year on how we do that.
And your question about how long you think it will take, you know, I think it will get a lot better this year. But it will take a couple of years before we really see that really happen. So hopefully that helps you.
It does, thank you. You talked about BPAs and some pretty good high single digit growth. Could you refresh us and put that into context relative to the last couple of years where you'll be able to hit pretty good rates of WSE growth?
with more flatish BPAs by optimizing marketing and some other things. But maybe just give us some color on the go-forward strategy and the interplay between BPA growth and WSE target growth.
Absolutely. You know, in our big picture plan, in our five-year plan, what is a key differentiator from previous years is that we believe that this sales efficiency improvement allows us to grow our units, our workside employee growth.
at a rate faster than our growth in BPAs. Historically, over the 37 years I've been at this, most of the time it was, when we grew the BPAs at 12%, within 18 months you'd be growing works out of poison, at 12%, that's kind of the way things work. Well we believe we're really at a different, the biggest difference in this five year plan is,
to do discovery calls on Zoom calls instead of, you know, so the whole, how people use their time. There's so many things that can contribute towards sales efficiency. So in our five-year plan, we talked about, hey, you know, we believe now we can actually look at a program where we're...
growing the BPAs in the, you know, high single digits and growing the worksite employees in, you know, double digits.
between that 10 to 15% range. So that's the objective and that's what we're targeting and the beauty of that is how that adds to our operating leverage. You know, we've had excellent operating leverage in our business.
On the service side, because we haven't had to grow the service organization as fast as the unit growth. Our service is broad, and our work is viable because it allows us to continue keeping the
We also have obviously our other areas in the business, G&A, other areas that don't have to grow as fast as the number of clients, etc.
But we've always had to grow the business performance advisors and invest ahead of the growth.
And this is going to change the calculation and allow more to drop to the bottom line, provided we're successful at this.
Perfect. My last question is could you remind us what normative historical fee and healthcare benefit expense growth is and juxtapose that with what you're seeing and were able to achieve?
for this year.
Well, I think if you look, you know, one of the slides we put out there on the benefit cost trend, you look at it over a five year period and looks at a, you know, a cag are less than three and a half percent on our benefit cost per employee.
So that's sort of the cost side of the picture, you know, over the past three years, which included the pandemic. If you remember going into the pandemic, we made the decision to price, to stick with our long term pricing strategy.
and not swing it back and forth from year to year, but with the intent of matching price and cost.
If we fell behind a little in one year, I think maybe in 2021, we added a percentage or two on the pricing side to accommodate that. But at the end, we're exiting, we feel very comfortable with the exit debt.
We are properly matching price and cost going forward. Thank you. Your next question is coming from Marc Marcone from Robert Baird & Company. Your line is live.
Good morning, Paul and Doug. Break results here for the full year. I'm wondering, can you talk a little bit about the, you know, the benefit cost increase that you ended up seeing this quarter? And in terms of enrollments, you know,
when we when we listen to ADP or paychecks, they basically ended up saying that you know fewer of their clients were were signing up for the full benefit package on a go-forward basis. Are you seeing anything similar to that? Just in terms of the number of eligible WFC is taking on.
health benefits on a go-forward basis? No, Mark, we really haven't seen any of that. And I'll tell you the reason I would suggest that that wouldn't be happening in our case is our target customer base, of course, we call the best small and medium-sized businesses in the country and they're... Now, we all agree that small and medium-sized businesses members must be the most vulnerable
a lot of times fast growing and a lot of times, you know, just they're really after, you know, an environment that really...
other people's centric and how they think about their business. And so benefits is really important there and they want to make sure what is able to do. So we've always had kind of in the industry the highest percentage participation.
and highest percentage rates of what customers are contributing toward the cost. So we don't really see that. Now we do have sometimes mix.
changes that affect the overall numbers that you see because sometimes mid-market customers or customers that have more part-timers of course those people aren't eligible for the coverage. So we have some moving around on that number to some degree.
but it's not reflecting any change in what people are signing up for.
Great. And the benefit cost expectation for this year and what it was actually in the fourth quarter in terms of year over your increase.
So for this year, you know, every year when we look ahead, you know, we trend every component of the cost and we compare obviously to our pricing. It needs to be, we feel super strong about how effective we were on the pricing front.
When we look at trends going forward you have years that offset certain parts of the trend in the marketplace you're seeing 7 to 8% of Trend and cost and then we have things that offset and that's what you look at our history as Doug just mentioned 3 and a half percent
You know, this year we would expect more like 4 to 5 percent because you got demographic changes, things of that nature that play in. This particular we don't have, but we did introduce a couple of new benefit plans that will lower costs when people choose those new options.
It does, thank you. And then you mentioned I didn't catch the retention for the full year. And so I'm wondering what that is. And then also, you know, in terms of the slower hiring among the client base, you know, to what extent did you see variances? Were there any, you know, clients that were actually reducing headcount? Or are there any regional differences or industry vertical differences that are discernible? Yes.
Thank you for the question. So, you know, our retention last year was exceptional. It actually went up from 82% in the prior year in 2021 to 85% last year. And of course, that's, you know, benefited by a really strong year and transition last year where we had...
kind of record low attrition. This year was a little bit higher than that, but even better than our average of the last few years. So we expect a good year on the retention front for this year. But the issue about net hiring in the client base, it's interesting. We obviously have dug in very deeply on this and then did our survey.
try to understand what's happening out there with our customer base specifically. I will say that in the fourth quarter, the slight increase in net hiring really was an issue across the board. It wasn't like we could pick pinpoint one area, one group. Previous in the year, we did have.
You know, customers by industry category, the mortgage business, some other companies that were hitting more obstacles and lowering staff. But in the fourth quarter, it was more kind of across the board. Now some of that, you know, is a seasonality effect. You don't have as much hiring typically in the holiday season. But you know, as we look forward, you know, we see the optimism there. And as far as, you know, customers expecting staff reductions, it's interesting because, you know, 54% are expecting to add employees.
And then only 4 percent expected staff reduction. So you know, that's the sentiment and their plan. You know, we're in a situation, we thought it was prudent for us to weigh what happened last quarter with...
you know with that optimism and with the potential for a tough economic environment. And so we're just being prudent to start the year and we think that's the right thing to do.
That's really helpful. Thanks a lot and congrats again on a great year.
Thanks a lot and congrats again on a great year. Thank you.
Thank you. Your next question is coming from Jeff Martin from Roth Capital Partners. Your line is live.
Thanks, good morning, fellas. Paul, I wanted to get a sense of the renewals.
January is a big month for renewals but also there's some in February . Can you characterize renewals on a traditional workforce optimization versus workforce acceleration and then also on the mid-market and wanted to dig in a little deeper in terms of where you're seeing
The biggest growth potential in the business is that mid market is it workforce acceleration or the traditional offering.
Yeah, that's great question. We always talk internally about a three-prong growth effort. So it is our core workforce optimization, sales and retention, our mid-market efforts, and then also our workforce acceleration. And we...
And we had all three gin and beautifully last year. We have optimized it, like I mentioned about the commission, to make all that work together. We've really tweaked it to where we believe we really have a great focus on the quarterly production, with quarterly bonuses people earn for
you know, for hitting their objectives on both sides, whether it's on all three of those actually, whether it's mid-market, core, or workforce acceleration. So we're really excited about where that's going and, you know, we think we're in great shape on that front. Alright, well, that's it for this special episode.
and conversion of those leads, it gives some color on the sale of marketing initiatives. Yeah, what we've done, the marketing efforts really benefit us because we've continued to localize what we're doing. So different markets are, you're able to reach our target customer base with different approaches. And that takes a lot of work to go market by market and figure it out and work with our local folks, but when you have a good overarching marketing program, you know, including the digital and you know, everything from, you know, radio or TV to.
billboards or different markets have different ways that it works best to hit our target market. So having localized campaigns has really helped a lot, having them multiple times within a year, you know, timing it right to boost activity. And then coupling that with our
Two other things that have really made a huge difference and that is our partnering programs that we have with different folks who refer people to us. And you know that's been very effective and what we call our loyalty events. Even through the COVID period we did them you know online and all kinds of people got very creative.
organization and we intend to continue to do that.
Once again, we want to thank everybody for participating with us today. We're excited about having, you know, a record year last year and very excited about this year too in our five-year plan and the return to shareholders we intend to produce. So thank you for participating and we look forward to discussing these things with you more. Thank you. This concludes today's event. You may disconnect at this time and have a wonderful day.