Q4 2023 Paycom Software Inc Earnings Call
Operator: Good afternoon. My name is Sierra, and I will be your conference operator. At this time, I would like to welcome everyone to Paycom's fourth quarter and full year 2023 financial results. All lines have been placed on mute to prevent any back-up. After the speaker's remarks, there will be a Q&A if you would like to ask a question. Simply press star followed by 1 on your telephone.
Good afternoon.
My name is Sierra and I will be your conference operator today.
Sierra: At this time I would like to welcome everyone to pay com's fourth quarter and full year 2023 financial results Conference call.
Sierra: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a Q&A session.
Sierra: If you would like to ask a question simply press star followed by one on your telephone keypad.
Unnamed Speaker: If you would like to withdraw your... Press the star key followed by. I will now turn the call over to James Samford, Head of Investor Relations. You may begin. Thank you, and welcome to Paycom's earnings conference call for the fourth quarter and full year 2023. Certain statements made on this call that are not historical facts, including those related to our future plans, objectives, and expected performance, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
Sierra: If you'd like to withdraw your question press the Star key followed by two.
Sierra: I will now turn the call over to James Samford head of Investor Relations you may begin.
James Samford: Thank you and welcome to pay comps earnings conference call for the fourth quarter and full year 2023 certain statements made on this call that are not historical facts, including those related to our future plans objectives and expected performance are forward looking statements within the meaning of the private securities.
James Samford: Litigation Reform Act of 1995.
Unnamed Speaker: These forward-looking statements represent our outlook only as of the date of this conference call. While we believe any forward-looking statements made on this call are reasonable, actual results may differ materially because the statements are based on our current expectations and subject to risks and uncertainties. These risks and uncertainties are discussed in our filings with the SEC, including our most recent annual report on Form 10-K and quarterly report on Form 10-Q. Please refer to and consider these factors when relying on such forward-looking information. Any forward-looking statement made speaks only as of the date on which it is made, and we do not undertake and expressly disclaim any obligation to update or alter our forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law. Also, during today's call, we will refer to certain non-GAAP financial measures, including adjusted EBITDA, non-GAAP net income, adjusted gross profit, adjusted We use these non-GAAP financial measures to review and assess our performance and for planning purposes.
James Samford: These forward looking statements represent our outlook only as of the date of this conference call.
James Samford: While we believe any forward looking statements made on this call are reasonable actual results may differ materially because the statements are based on our current expectations and subject to risks and uncertainties. These risks and uncertainties are discussed in our filings with the SEC, including our most recent annual report on Form 10-K, and quarterly report on Form 10-Q.
James Samford: We refer to and consider these factors when relying on such forward looking information.
James Samford: Any forward looking statement made speaks only as of the date on which it is made and we do not undertake and expressly disclaim any obligation to update or alter our forward looking statements, whether as a result of new information future events or otherwise, except as required by applicable law.
James Samford: Also during today's call, we will refer to certain non-GAAP financial measures, including adjusted EBITDA non-GAAP net income adjusted gross profit adjusted gross margin and certain adjusted expenses.
James Samford: These non-GAAP financial measures to review and assess our performance and for planning purposes, a reconciliation schedule showing GAAP versus non-GAAP results is included in the press release that we issued after the close of the market today and is available on our website at investors that Paypal Dot com.
James Samford: A reconciliation schedule showing gap versus non-gap results is included in the press release that we issued after the close of the market today and is available on our website at investors.paycom.com. I will now turn the call over to Chad Richison, Paycom's president and co-CEO.
James Samford: I will now turn the call over to Chad Richison, <unk>, President and co CEO Chad.
Chad Richison: Thanks, James and thank you to everyone joining our call today, we ended 2023 with better than expected results. Thanks to the considerable coordinated efforts of our team across the organization.
Chad Richison: Thanks, James. And thank you to everyone joining us on our call today. We ended 2023 with better than expected results, thanks to the considerable coordinated efforts of our team across the organization. Before digging into the quarterly results and achievements in 2023, I'd like to discuss today's announcements about the promotion of Chris Thomas to co-CEO. Following that, I will briefly introduce Chris, who previously served as our COO. Craig will then review our financials and our guidance before taking questions. With that, let's get started. As the founder and CEO of Paycom, my position has provided me with the opportunity to work with great leaders who have built Paycom into a world-class HR and payroll software company. One such leader is Chris Thomas. He is someone I have extreme confidence in and a leader I can share responsibilities with.
Chad Richison: Before digging into the quarterly results and achievements in 2023 I'd like to discuss today's announcements about the promotion of Chris Thomas to co CEO following that I will briefly introduce Chris who previously served as our CFO.
Greg will then review our financials and our guidance before taking questions.
Speaker Change: With that let's get started.
Speaker Change: As founder and CEO of pay Com. My position has provided me the opportunity to work with great leaders, who have built pay com into a world class HR and payroll software company. One such later as Chris Thomas He is someone I have extreme confidence in and a leader I can share responsibilities with at Paypal.
Chad Richison: I've been preparing this opportunity for Chris and myself to work even more closely together for some time now, and today's announcement further illustrates the trust I have in our leadership. Personally, this is very exciting because it allows me to invest further in the areas that I'm passionate about, which are the ones where I can have the largest impact. In this new role for Chris, Paycom will be even stronger than ever before. A key area of my continued focus will be product innovation and strategy, and Chris will continue to focus on operating other aspects. Our collaboration has strengthened Paycom, and I'm excited for what we will do going forward. In the last several months, we continued to strengthen our leadership team with the addition of Jason Clark as Chief Administrative Officer and Steve Sturgis as Chief Marketing Officer. Jason was the CEO of one of the region's largest workers comp insurance companies. Having worked with Jason in various capacities for about 12 years, I officially brought him into the organization last year, knowing this was an ideal fit for him and for Paycom. H.D.
Speaker Change: I've been preparing this opportunity for Chris and myself to work even more closely together for some time now today's announcement further illustrates the trust I have in our leadership.
Personally this is very exciting because it allows me to invest further in the areas that I'm passionate about which are the ones, where I can have the largest impact for our clients.
Speaker Change: In this new role for Chris pay com will be even stronger than ever before.
Speaker Change: A key area of my continued focus will be product innovation and strategy and Chris will continue to focus on operating other aspects of the business.
Speaker Change: Our collaboration has strengthened pay com and I'm excited for what we will do going forward.
Speaker Change: And the last several months, we continued to strengthen our leadership team with the addition of Jason Clark as Chief administrative officer, and Steve Sturgis as Chief Marketing Officer.
Speaker Change: Jason was the CEO of one of the region's largest workers' comp insurance companies, having worked with Jason in various capacities for about 12 years I officially brought him into the organization last year. Knowing this was an ideal fit for him and for pay call Steve.
Chad Richison: He formerly owned and operated a very successful marketing agency, and I've had the privilege of working with him for about 15 years. I'm excited to see him continue to elevate our brand, engage our clients, and drive further demand generation for our sales team. This evolution of our organization is exciting, and I believe it will bring significant value to our clients, employees, and employers. Now, I want to discuss our vision for 2024 and then look back on some highlights of 2020, following a better than expected end to 2023. In 2024, we are primarily focused on three key areas, World Class Service, Solution Automation, and Client ROI Achievement. Our continued focus is being the leading provider of comprehensive payroll and human capital management solutions in every market we serve.
Speaker Change: Steve formerly owned and operated a very successful marketing agency and I've had the privilege of working with him for about 15 years I'm excited to see him continue to elevate our brand engage our clients and drive further demand generation for our sales force. This evolution of our organization is exciting and I believe.
It will bring significant value to our clients employees and investors.
Speaker Change: Now I want to discuss our vision for 2024, and then look back on some highlights of 2023.
Speaker Change: Following a better than expected in 2023.
Speaker Change: In 2024, we are primarily focused on three key areas.
Speaker Change: World Class service solution automation and client ROI achievement.
Speaker Change: Our continued focus as being the leading provider of comprehensive payroll and human capital management solutions in every market we serve.
Chad Richison: We are bringing the power of Paycom to more employers and employees and showing more organizations the ROI they experience by using our single database software. On the product front, Betty has been one of the products at the leading edge of our AI and automation strategy, delivering tremendous ROI to our customers. A recently commissioned third-party study on Betty highlighted three benefit areas. On average, a greater than 80% reduction in errors, a 90% reduction in time spent processing payroll, and improved employee engagement. A leader within the restaurant industry noted that the automation from Betty took days off payroll processing time, and that as employee checkers went down, employee engagement. Additionally, certain organizations using VETI experience up to 100% of their end users regularly engaging with their E-ZDF. Solutions like Paycom's Gauntool are expanding automation to other areas of our product, namely our time off application.
Speaker Change: We are bringing the power of pay come to more employers and employees and showing more organizations. The ROI they experienced by using our single database software.
Speaker Change: On the product front Betty has been one of the products at the leading edge of our AI and automation strategy delivering tremendous ROI to our clients. Our recently commissioned a third party study on Betty highlighted three benefit areas.
Speaker Change: On average a greater than 80% reduction in errors and 90% reduction in time spent processing payroll and improved employee engagement.
Speaker Change: Later within the restaurant industry noted that the automation from Betty days off payroll processing time and that is employee checkers went down employee engagement went up Additionally, certain organizations using Betty experienced up to 100% of their end users regularly engaging with our easy to use system.
Speaker Change: Solutions like pay Comms gone tool are expanding automation to other areas of our product suite, namely our time off application.
Speaker Change: The rollout of gone towards the end of 2023 has been going very well.
Chad Richison: The rollout of G.O.N. towards the end of 2023 has been going very well. This new product uses AI and decisioning logic to automate all decisions for time off requests, which further enhances both the employee and the manager experience by eliminating conflicts and resolving time-sensitive issues. Today, clients may make between 20 and 30 decisions or more per year, per employee, concerning PTO, vacation requests, and the denials or approvals that go into staffing decisions. GAN eliminates those unnecessary interaction points by providing a consistent and fully automated experience With GAN, an employee in any industry can request time off at midnight on a Friday and know immediately if it is approved or denied because GAN has automated all time off request decisions.
Speaker Change: This new product uses AI and Decisioning logic to automate all decisions for time off request, which further enhances both the employee and the manager experience by eliminating conflicts in resolving time sensitive decisions.
Speaker Change: Today clients may make between 20, and 30 decisions or more per year per employee concerning PTO vacation request and the denials or approvals that go into staffing decisions.
Speaker Change: Gone eliminates those unnecessary interaction points by providing a consistent and fully automated experience for employees managers HR administrators in the business as a whole with gone an employee in any industry can request time off at midnight on a Friday and know immediately if it is approved or denied because gone has automd.
Made it all the time off request decisions. It's another example of a product that's a win for our clients and a win for their employees.
Chad Richison: It's another example of a product that's a win for our clients and a win for their employees. We delivered a lot of innovation on the international front in 2020. We launched our global HCM product, and now companies of all sizes use this product across 180 countries and in 15 languages and dialects. We developed and launched Native Payroll in Canada and Mexico. Now we've developed and are launching our native peril solution in the United Kingdom.
Speaker Change: We delivered a lot of innovation on the international front in 2023, we launched our global HCM product and now companies of all sizes used this product across 180 countries and in 15 languages and dialects, we developed and launched native payroll in Canada and Mexico.
Speaker Change: Now we have developed and are launching our native payroll solution in the United Kingdom.
Chad Richison: Our international strategy complements our product strategy and adds to the momentum we are seeing with U.S.-based companies that have an international presence. While still early, we are very excited about the potential impact this initiative will have on our expanded, While I'm proud of our product developments and international expansion in 2023, I'm even more excited about where we are headed with the product. As a company, we all know and feel the excitement that is happening within our walls. Since 1998, Paycom has changed the way businesses operate through innovation and automation. Our revolutionary product roadmap will continue to bring new levels of value to our customers. I'm glad to see both growth in our product and in the people we are elevating and bringing back into the organization. The buzz about the future of product innovation across organizations is exciting and encouraging.
Speaker Change: Our international strategy complements our product strategy and adds to the momentum we are seeing with U S. Based companies that have an international presence.
Speaker Change: While still early we are very excited about the potential impact. This initiative will have on our expanded Tam.
Speaker Change: While I am proud of our product development and international expansion in 2023, I'm, even more excited about where we're headed with the product department as a company. We all know and feel the excitement that is happening within our walls. Since 1998, <unk> has changed the way businesses operate through innovation and automation.
Speaker Change: Our revolutionary product roadmap will continue to bring new levels of value to our clients.
Speaker Change: Im glad to see both growth in our product and in the people, we are elevating and bringing back into the organization.
Speaker Change: It's about the future of product innovation across the organization is exciting and encouraging the client experience is everything to us and that all starts with our product.
Chad Richison: The client experience is everything to us, and that all starts with our product. We are excited to release more product enhancements and innovations than ever before. To sum up, in 2024, we will continue to be hyper-focused on world-class service, solution automation, and the client ROI achievement strategy. This means we will continue our emphasis on client ROI and the user. I'm confident that the size of our opportunity and our track record for execution will bolster our growth trajectory. I'd like to thank our employees for their important contributions in 2023 and commitment to Paycom. In fact, because of them, Paycom earned many top workplace accolades in 2023, most notably Gallup's Exceptional Workplace Award. Additionally, Newsweek recognized us as one of the most trustworthy organizations and as a top workplace for diversity for parents and families. These accolades mean a lot because it's a reflection of our leadership and the culture we have. Before turning the call over to Craig, I'd like Chris to briefly introduce himself and discuss his vision for the role.
Speaker Change: We are excited to release more product enhancements and innovations than ever before.
Speaker Change: To sum up in 2024, we will continue to be hyper focused on world class service solution automation and the client ROI achievement strategies. This means we will continue our emphasis on client ROI on the user experience.
Speaker Change: Confident that the size of our opportunity and our track record for execution will bolster our growth trajectory.
Speaker Change: I'd like to thank our employees for their important contributions in 2023 and commitment to pay com in fact because of them pay com earned many top workplace accolades in 2023, most notably Galebs exceptional workplace award. Additionally, Newsweek recognized us as one of the most trustworthy organization.
Speaker Change: <unk> and as a top workplace for diversity for parents and families. These.
Speaker Change: These accolades mean, a lot because it's a reflection of our leadership and the culture, we have built.
Speaker Change: Before turning the call over to Craig I would like Chris to briefly introduce himself and discuss his vision for the role.
Speaker Change: Chris.
Speaker Change: Okay.
Chris Thomas: Thanks, Chad. I'm honored to help lead such an incredible organization. I want to personally thank you for the guidance, tools, and insights you've provided me with. Having had the opportunity to lead approximately 10 departments over my career, like Product, Service, Learning, HCM, Implementation, and Tax, to name a few, I feel even more prepared to help lead Paycom into the future. I'm proud of our leadership group who have strategized and built client value, spending a lot of quality time throughout. Especially last quarter, we had meaningful engagements with our clients, and the feedback has been very encouraging. We are strengthening our relationship and relentlessly pursuing solutions that deliver high ROI for our clients. Innovations in Automation and User experience are responding across our client.
Chris Thomas: Thanks, Chad a moderate to help lead such an incredible organization I want to personally. Thank you for the guidance tools and insights you provided me through the years, having had the opportunity to lead approximately 10 department over my tenure like product service learning HCM implementation and tax.
Chris Thomas: A few I feel even more prepared to help lead <unk> into the future.
Chris Thomas: Our out of our leadership group, who are strategize and built the client value achievement strategy. We spent a lot of quality time throughout the year, especially last quarter, having meaningful engagements with our clients and the feedback has been very encouraging we are strengthening our relationships and relentlessly pursuing solutions that deliver high ROI.
Chris Thomas: For our clients.
Chris Thomas: Innovations in automation and user experience are resonating across our client base delivering immediate measurable value to our clients will deliver long term value to Paypal as a result, our service and client relations groups are working together more closely than ever before which is driving further ROI for our clients.
Chris Thomas: Delivering immediate and measurable value to our clients, we'll deliver long-term value to Paycom. As a result, our service and client relations groups are working together more closely than ever before, which is driving further ROI for our customers. We're going to continue to generate even more momentum as we engage clients to help them maximize their value when using our system. With that, I'll turn the call over to Craig for a review of our financials and guidance. Craig
Chris Thomas: We're going to continue to generate even more momentum as we engage clients to help them maximize their value when using our system with that I'll turn the call over to Craig for a review of our financials and guidance correct.
Chris Thomas: Okay.
Craig E. Boelte: Thanks, Chris. Before I review our fourth quarter and full year results for 2023 and our outlook for the first quarter and full year 2024, I would like to remind everyone that my comments related to certain financial measures will be on a non-GAAP basis. We ended the year with solid results, with full-year 2023 revenue of $1,694,000,000, up 23% compared to 2022. Fourth quarter results were better than expected, with total revenues of $435,000,000, representing growth of 17% over the comparable prior year period.
Craig: Thanks, Chris before I review, our fourth quarter and full year results for 2023, and our outlook for the first quarter and full year 2024, I would like to remind everyone that my comments related to certain financial measures will be on a non-GAAP basis.
Craig: We ended the year with solid results with full year 2023 revenue of $1 $694 million up 23% compared to 2020 to fourth quarter results were better than expected with total revenues of $435 million representing growth of 17% over the comparable prior year period.
Craig: Our revenue growth was driven by new business wins, partially offset by lower cross selling to existing clients.
Craig E. Boelte: Our revenue growth was driven by new business wins, partially offset by lower cross-selling to existing clients. Within total revenues, recurring revenue was $427 million for the fourth quarter of 2023, representing 98% of total revenues for the quarter and growing 17% from the comparable prior year period. We delivered strong net income and adjusted EBITDA in 2023. Full year gap net income was $341 million, or $5.88 per diluted share based on approximately 58 million shares. Non-GAAP net income for 2023 was $449 million, or $7.75 per diluted share, up 26% from the prior year on a per share basis. In the fourth quarter, gap net income of $82 million and non-gap net income of $110 million represented $1.43 and $1.93 per diluted share, respectively, based on approximately $57 million.
Within total revenues recurring revenue was $427 million for the fourth quarter of 2023, representing 98% of total revenues for the quarter and growing 17% from the comparable prior year period.
Craig: We delivered strong net income and adjusted EBITDA in 2023 full year GAAP net income was $341 million or $5 88 per diluted share based on approximately 58 million shares.
Craig: non-GAAP net income for 2023 was $449 million were $7 75 per diluted share up 26% from the prior year on a per share basis.
Craig: In the fourth quarter GAAP net income of 82 million and non-GAAP net income of $110 million represented a $1 43, and $1 93 per diluted share respectively based on approximately 57 million shares.
Craig E. Boelte: Full year adjusted EBITDA was $719 million, representing a full year margin of 42.5%, up over 30 basis points year over year. Fourth quarter adjusted EBITDA was $177 million, representing a quarterly margin of 40.6%. During the fourth quarter, we repurchased approximately 1.2 million shares of common stock, or approximately 2% of our shares outstanding, for a total of $213 million, and we paid over $21 million in cash dividend As of December 31, 2023, we have repurchased over 6.1 million shares, and when combined with dividends, we have returned nearly $1 billion to shareholders. We still have approximately $800 million remaining under our buyback authorization as of December 31, 2023, and the board has approved our next quarterly dividend of $0.375 per share, payable in mid-March.
Craig: Full year, adjusted EBITDA was $719 million, representing full year margin of 42, 5% up over 30 basis points year over year.
Craig: Fourth quarter, adjusted EBITDA was $177 million, representing a quarterly margin of 46% for the quarter.
Craig: During the fourth quarter, we repurchased approximately one 2 million shares of common stock or approximately 2% of our shares outstanding for a total of $213 million and we paid over $21 million in cash dividends.
Craig: As of December 31, 2023, we have repurchased over $6 1 million shares and when combined with dividends. We have returned nearly $1 billion to stockholders.
Craig: We still have approximately $800 million remaining under our buyback authorization as of December 31, two.
Craig: 23, and our board has approved our next quarterly dividend of <unk> 37, five per share payable in mid March.
Craig: We ended 2023 with approximately 36800 clients, representing a growth rate of 1% compared to 2022 on a parent company grouping basis. We ended the year with roughly 19500 clients up 2% compared to 2022 digging.
Craig: Digging in the client mix details and using client figures based on parent company groupings client count for companies with greater than 500 employees was up 11% year over year and client count for companies with greater than 2000 employees was up nearly 18% year over year.
Craig E. Boelte: We ended 2023 with approximately 36,800 clients, representing a growth rate of 1% compared to 2022. On a parent company grouping basis, we ended the year with roughly 19,500 clients, up 2% compared to 2022. Digging into client mix details and using client figures based on parent company groupings, client count for companies with greater than 500 employees was up 11% year over year, and client count for companies with greater than 2,000 employees was up nearly 18% year over year. The total number of employee records stored in our system in 2023 was 6.8 million. Paycom's annual revenue retention rate in 2023 was 90% compared to 91% in 2022, with attrition Note that our earnings press release issued earlier this afternoon included additional information about a recent modification to our annual revenue retention rate calculation.
Total number of employee records stored in our system in 2023 was $6 8 million.
Craig: <unk> annual revenue retention rate in 2023 was 90% compared to 91% in 2022 with attrition concentrated primarily at the low end of our market.
Craig: Note that our earnings press release issued earlier. This afternoon included additional information about our recent modification and our annual revenue retention rate calculation.
Craig: Adjusted R&D expense was $51 million in the fourth quarter of 2023 were 11, 6% of total revenues adjusted total R&D costs, including the capitalized portion were $73 million in the fourth quarter of 2023 compared to $52 million in the prior year period.
Craig: We continue to invest in the long term future growth opportunity, including in areas of automation AI and innovation.
Craig: Our tax rate for the year ended 2023 was 28% on a GAAP basis for the full year 2024, we anticipate our effective income tax rate to be approximately 29% on a GAAP basis and approximately 25% on a non-GAAP basis.
Craig E. Boelte: Adjusted R&D expense was $51 million in the fourth quarter of 2023, for 11.6% of total revenue. The adjusted total R&D costs, including the capitalized portion, were $73 million in the fourth quarter of 2023, compared to $52 million in the prior year period. We continue to invest in long-term growth opportunities, including in areas of automation, AI, and innovation. Our tax rate for the year ended 2023 was 28% on a gap basis.
Craig: In fiscal year 2004, we expect stock based compensation expense as a percent of revenue to be approximately eight 5%.
Craig: This does not reflect any potential one time adjustment related to the forfeiture of the 2020 CEO performance Award we will provide details on this one time adjustment if any when we report first quarter earnings turning.
Craig E. Boelte: For the full year 2024, we anticipate our effective income tax rate to be approximately 29% on a GAAP basis and approximately 25% on a non-GAAP basis. In fiscal year 2024, we expect stock-based compensation expense as a percent of revenue to be approximately 8.5%. This does not reflect any potential one-time adjustment related to the forfeiture of the 2020 CEO performance. We will provide details on this one-time adjustment, if any, when we report first quarter earnings. Turning to the balance. Even after the substantial buybacks and dividends paid in the quarter, we ended the year with a very strong balance, including cash and cash equivalents of $294 million with zero debt. Cash from operations was $485 million in 2023, representing an increase of 33%. The average daily balance of funds held on behalf of clients was approximately $2.2 billion in the fourth quarter of 2023. On the capital expenditure front, our fifth building in Oklahoma City is substantially complete.
Craig: Turning to the balance sheet, even after the substantial buybacks and dividends paid in the quarter. We ended the year with a very strong balance sheet, including cash and cash equivalents of $294 million and zero debt.
Craig: Cash from operations was $485 million in 2023, representing an increase of 33%.
Craig: The average daily balance of funds held on behalf of clients was approximately $2 2 billion in the fourth quarter of 2023.
Craig: On the capital expenditure front, our fifth building in Oklahoma City is substantially complete we estimate total capex as a percent of revenues to be approximately 12% in 2024.
Craig: Now, let me turn to guidance our approach to guidance remains consistent with our historical approach and that we guide to what we can see and factory and relevant trends opportunities and potential constraints.
Craig: For 2024, we're also factoring in a wider range of sensitivities such as fluctuations of interest rates and the outcomes of several near term strategic initiatives.
Craig: For fiscal 2024, we expect revenues in the range of $1.860 billion to $1.885 billion or approximately 11% year over year growth at the midpoint of the range, which is consistent with the target growth range. We provided on our Q3 earnings call we expected.
Craig E. Boelte: We estimate total capex as a percent of revenues to be approximately 12% in 2020. Now, let me turn to guidance. Our approach to guidance remains consistent with our historical approach in that we guide to what we can see and factor in relevant trends, opportunities, and potential constraints. For 2024, we are also factoring in a wider range of sensitivities, such as fluctuations in interest rates and the outcomes of several near-term strategic initiatives. For fiscal 2024, we expect revenues in the range of $1,860,000,000 to $1,885,000,000, or approximately 11% year-over-year growth at the midpoint of the range, which is consistent with the target growth range we provided on our Q3 earnings call. We expect adjusted EBITDA in the range of $720 million to $730 million, representing an adjusted EBITDA margin of approximately 39% at the midpoint of the range.
Craig: Adjusted EBITDA in the range of $720 million to $730 million, representing an adjusted EBITDA margin of approximately 39% at the midpoint of the range.
Craig: For the first quarter of 2024, we expect total revenues in the range of 494 million to $497 million, representing a growth rate over the comparable prior year period of approximately 10% at the midpoint of the range. We expect adjusted EBITDA for the first quarter in the range of $218 million.
Craig: To $222 million, representing an adjusted EBITDA margin of approximately 44% at the midpoint of the range.
Craig: 2023 delivered solid results for pay com, the strength of our product and the client initiatives. We have in place gives me confidence that 2024 will be a solid year of execution.
Craig: We will continue to invest in talent marketing innovation customer service and geographic expansion to strengthen our competitive position and meet the demand of our expanding Tam.
Craig E. Boelte: For the first quarter of 2024, we expect total revenues in the range of $494 million to $497 million, representing a growth rate over the comparable prior year period of approximately 10% at the midpoint of the range. We expect adjusted EBITDA for the first quarter in the range of $218 million to $222 million, representing an adjusted EBITDA margin of approximately 44% at the midpoint of the range.
Speaker Change: With that we will open the line for questions operator.
At this time I would like to remind everyone in order to ask a question press star.
Speaker Change: <unk> followed by the number one.
Speaker Change: And the interest of time, please limit yourself to one question and one follow up.
Speaker Change: We will pause for just a moment to compile the Q&A roster.
Speaker Change: Okay.
Speaker Change: Our first question today comes from Raimo <unk> with Barclays. Please proceed.
Raimo: Okay. Thank you and all the back to the new management structure for me.
Craig E. Boelte: 2023 delivered solid results for Paycom. The strength of our product and the client initiatives we have in place give me confidence that 2024 will be a solid year for us. We will continue to invest in talent, marketing, innovation, customer service, and geographic expansion to strengthen our competitive position and meet the demand of our expanding TANF. With that, we will open the line for questions. Operator.
Raimo: Two questions one Chad can you just speak a little bit too.
Raimo: Tension.
Raimo: Cheney free and customer growth continues to improve.
Raimo: Because if I do the math Friday was like a 1% growth, which seems unusual for you guys can you talk a little bit about factors, we saw there and that's probably kind of links in with that 90% retention number.
Operator: At this time, I would like to remind everyone that in order to ask a question, press the star followed by the number one. In the interest of time, please limit yourself to one question and one follow-up. We will pause for just a moment to compile our Q&A roster. Our first question today comes from Raimo Lenschow with Barclays. Please proceed. Hey, thank you.
Raimo: And then on EBITDA Guide Craig for you if I look at this year.
Raimo: Guiding down a little bit on EBITDA margin can you talk a little bit maybe about some of the projects or some of the work you're doing there to kind of drive that thank you.
Craig: Sure Rob I'll take I'll take both of those actually.
Craig E. Boelte: All the best for the new management structure for me. Two questions. One, Chad, can you speak a little bit about retention in 2023 and customer growth in 2023? Because if I do the math right, it was like 1% growth, which seems unusual for you guys. Can you talk a little bit about the factors we saw there and that probably kind of links in with that 90% retention number? And then on EBITDA guide, Craig, for you, if I look at this year, you know, we're kind of guiding down a little bit on EBITDA margin. Can you talk a little bit, maybe about some of the projects or some of the work that you're doing there that kind of drives that? Thank you. Sure, Raimo, I'll take them. I may take both of those, actually.
Craig: As it relates to retention.
Craig: This year, we reported 90% versus 91% from last year.
Speaker Change: Kind of looking at retention, we typically don't discuss it based on client size, but the main part of the attrition was really in that down market.
Speaker Change: <unk>.
Speaker Change: If you remember we added a lot of smaller clients during COVID-19.
Speaker Change: We used to have five individuals five salespeople in that group and we increased that to actually turn teams.
Speaker Change: So we had a lot of our smaller clients during that time and that was really what we saw as it related to the retention in that group of pressure on that down market group.
Speaker Change: They are the ones that are most impacted by.
Speaker Change: By the macro.
Speaker Change: The higher interest rates the higher inflation.
Speaker Change: As it relates to.
Speaker Change: The margins.
Craig E. Boelte: You know, as it relates to retention, this year, we reported 90% versus 91% from last year. You know, kind of looking at retention, we typically don't discuss it based on client size, but the main part of the attrition was really in that down market side.
Speaker Change: What I would say is we've really started at that 39% to 41%.
Speaker Change: For the last four or five years, and Thats really where we wanted to start this year and it really gives us the room to invest where we need to invest in the areas of innovation and sales to continue to drive revenue growth.
Speaker Change: Okay perfect that makes sense. Thank you.
Craig E. Boelte: If you, you know, if you remember, we added a lot of smaller clients during COVID where, you know, we used to have five individuals, five sales people in that group, and we increased that to actually 10 teams of Abhey. So we had a lot of smaller clients during that time. And that was really what we saw as it related to retention and that group, the pressure on that down market group. And, you know, they're the ones that are most impacted by the macro, you know, the higher interest rates, the higher inflation.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Samad Samana with Jefferies. Please.
Samad Samana: Please proceed.
Samad Samana: Hi, Good evening, Thanks, taking my question and welcome to your new members and management.
Samad Samana: Maybe my my question follows up a little bit on Rainbow I'd like to dig deeper in Q.
Samad Samana: The retention change, it's gone from 94% down to 90% that's about four points is that all due to the surge in clients that you added in during the Covid period and I guess the question is maybe what is causing the attrition and beyond that is a business failure ticking up and yet not.
Craig E. Boelte: As it relates to, you know, the margins, what I would say is, you know, we've really started at that 39 to 41% for the last four or five years. And that's what we wanted, where we wanted to start this year. And it really gives us the room to invest where we need to invest in the areas of innovation and sales to continue to drive revenue growth. Perfect. It makes sense.
Samad Samana: Controllable churn maybe help us think through what is causing that at the low end.
Samad Samana: Yes, I mean at the low end it's typically.
Samad Samana: More going out of business, but that.
Samad Samana: That group of clients are more impacted by the macro.
Operator: Thank you. Thank you. Our next question comes from Samad Samana with Jeffreys. Please proceed. Hi, good evening.
We also changed the way we marked our clients' loss, where we are.
Samad Samana: Pulling that forward a little bit of <unk>, where we're marketing them quicker than than we have in the past and that way, we can get back out in.
Craig E. Boelte: Thanks for your questions. And welcome to the new members of management. Maybe my question follows up a little bit on Raimo.
Samad Samana: Really we tried to sell some of those as are still and implement patients.
Craig E. Boelte: I'd like to dig deeper into the retention change. It's gone from 94% down to 90%. That's about four points.
Speaker Change: Great and then maybe just as I think through the fourth quarter.
Speaker Change: It was well ahead of what the guidance was just trying to unpack that with rates, maybe looking like they are clicking down have you seen any change in either.
Craig E. Boelte: You know, is that all due to the surge in clients that you added during the COVID period? And I guess the question is, maybe what is causing the attrition? Beyond that, is it business failure taking up? Is it non-controllable churn?
Speaker Change: The employment market. Thanks, John have you seen any change either pre employment service is doing better than expected bonus Ryan maybe help us think through the strength that you saw in the fourth quarter versus the.
Craig E. Boelte: Maybe help us think through what is causing that at the lowest level. Yeah, I mean, at the low end, it's typically, you know, more going out of business, but that, you know, that group of clients are more impacted by the macro. You know, we also changed the way we mark our clients' lost items where we're pulling that forward a little bit, an SMOD where, you know, we're marking them quicker than we have in the past. And that way, we can get back out and, you know, really try to sell some of those as they're still in. Thanks. Great, and then maybe just, you know, as I think through the fourth quarter, it was well ahead of what the guidance was, just trying to unpack that with rates maybe looking like they're kicking down. Have you seen any change in either the employment market being strong, or have you seen a change in either pre-employment services doing better than expected, or bonus runs?
Speaker Change: Guidance you gave after the third quarter.
Ryan: Yes, I mean, I would say, we probably went into the fourth quarter, a little more conservative than what we have in the past after a kind of our Q3 results.
Ryan: We were really <unk>.
Ryan: Looking at where the downside could be or what can happen in fourth quarter.
I would say things came in better than what we expected.
Speaker Change: Great I appreciate taking my questions.
Speaker Change: Our next question comes from Mark <unk> with Jefferies.
Mark: Please proceed.
Mark: I will say and I apologize.
Mark: Can you hear me.
Mark: Yes.
Mark: Okay.
Mark: Hello can you hear me.
Mark: Mark we can hear you.
Mark: Hey, Mark we can hear you okay.
Speaker Change: Great. Thanks.
Speaker Change: Can you talk a little bit about.
Craig E. Boelte: Maybe you could help us think through the strength that you saw in the fourth quarter versus the guidance that you gave after the third quarter. Yeah, I mean, I would say we probably went into the fourth quarter a little more conservative than we have in the past, you know, after kind of our Q3 results, you know, we were really looking at where the downside could be or the, you know, what could happen in the fourth quarter. And, you know, I would say things came in better than we expected.
Speaker Change: The traction with the sales force and what Youre seeing just in terms of new client growth because I'm looking at the.
Speaker Change: Implied.
Speaker Change: Ex float revenue growth.
Speaker Change: For the first quarter and you did mentioned the retention is lower so understand part of that but I'm wondering can you just talk a little bit about sales effectiveness and what youre seeing there.
Speaker Change: Yes, I mean, we've had a lot of success with sales effectiveness, obviously, we're selling a differentiate a differentiated solution.
Craig E. Boelte: Great, you appreciate my question. Our next question comes from Mark Marcon with Jeff. Please proceed. I was there, and I apologize. Can you hear me?
Speaker Change: That brings differentiated value we did mentioned on the call that we've had more success.
Speaker Change: And the 500 and above I think we called out 11% growth in that group, 18% growth in the group that has 2000 or more and so we have.
Operator: Yeah. Hello, can you hear me? Hey, Mark, we can hear you. Okay. Right, thanks. Hey, can you talk a little bit about, you know, the traction with the sales force and what you're seeing just in terms of new client growth? Because I'm looking at the, you know, implied, you know, ex float revenue growth for the first quarter. And you did mention retention is lower.
Speaker Change: <unk> been pressured more at the lower end of our market and also there is a.
Speaker Change: Our resource aspect as we look to onboard clients and what we're going through there of how we use our resources to best impact client value and so.
Craig E. Boelte: So I understand part of that. But I'm wondering, can you just talk a little bit about sales effectiveness and what you're seeing there? Yeah, I mean, we've had a lot of success with sales effectiveness. Obviously, we're selling a differentiated solution that brings differentiated value. You know, we did mention on the call that we've had more success with the 500 and above. I think we called out 11% growth in that group, and 18% growth in the group that has 2,000 or more. And so, you know, we have been pressured more at the lower end of our market.
Speaker Change: We're having a lot of success there in the mid market often times you are trading off.
Speaker Change: You are trading off on a unit basis oftentimes small units for a little bit larger type units and im talking about employee size.
Speaker Change: Great and then can you talk a little bit about the.
Speaker Change: Specific areas of investment that.
Speaker Change: But you would be making.
Speaker Change: Starting the year out.
Speaker Change: Slightly more conservative EBITDA target.
Speaker Change: Target what are the specific areas, where youre going to invest a little bit more I imagine part of that is product, which you ended up referencing but im wondering if theres any other areas.
Craig E. Boelte: And also, you know, there's a resource aspect as we look to onboard clients and what we're going through there, how we use our resources to best impact client value. And so, you know, we're having a lot of success there in the mid-market. Oftentimes, you are trading off on a unit basis, oftentimes small units for a little bit larger.
Speaker Change: We should look to.
Speaker Change: And growth has always been first prize for us. So I mean, that's really what we're focused on when we're talking about an impact on the.
Speaker Change: From an adjusted EBITDA perspective, I mean, we're focused on the three areas that we talked about with the solution automation World class service and client ROI achievement, but those don't necessarily.
Craig E. Boelte: I'm talking about employee size. And then, can you talk a little bit about the specific areas of investment that you would be making? You're starting the year out with a slightly more conservative EBITDA target. What are the specific areas where you're going to invest a little bit more? I imagine part of that is product, which you ended up referencing, but I'm wondering if there's any other areas that we should look to. And growth has always been the primary focus for us.
Speaker Change: We've got the staff to do those things those are things, we're working through and continuing to impact client positively from an additional expense perspective, that's going to be growth initiatives.
Speaker Change: Related.
Speaker Change: Great. Thank you.
Speaker Change: Thank you.
Speaker Change: Our next question today comes from Brian Schwartz with Oppenheimer.
Brian Schwartz: Please proceed.
Brian Schwartz: Yes, hi, Thanks for taking my question. This afternoon, Chad wanted to ask you along lines of the sales effectiveness, what youre seeing in terms of cycles and as well as the top of the final momentum are you seeing any changes.
Craig E. Boelte: So I mean, that's really what we're focused on when we're talking about an impact on the, You know, from an adjusted EBITDA perspective, I mean, we're focused on the three areas that we talked about with solution automation, world-class service, and then client ROI achievement. But those don't necessarily, you know, we've got the staff to do those things. Those are things we're working through and continuing to impact the client positively. From an additional expense perspective, that's going to be growth and, Great, thank you. Thank you. Our next question today comes from Bryan Schwartz with Oppenheimer. Please proceed.
Brian Schwartz: In that aspect.
Brian Schwartz: Of the sale.
Speaker Change: I mean thats a good question. We've continued to go further up market I've mentioned it on the call and there is a little bit different motion as we work through that process and as we've gotten better at it and so as you go further up market youre going to have.
Speaker Change: It might take a little bit longer than what it would.
Speaker Change: And if you are in the mid market for us it's still about the <unk>.
Speaker Change: <unk> of the sales individuals I mean, it really does determine how strong a sales individual is.
Operator: Yeah, hi, thanks for taking my question this afternoon. Chad wanted to ask you along the lines of sales effectiveness, what you're seeing in terms of cycles and as well as top of the funnel momentum. Are you seeing any changes in that aspect of sales? You know, I mean, that's a good question.
Speaker Change: In regards to the process, that's being worked in and how quickly a client can see.
Speaker Change: See that value and then onboard.
Speaker Change: Onboard onto the system. So I would say, it's more specific to an individual sales person and then I would add to that that as you go up market you have more.
Chad Richison: You know, we've continued to go further in the market. I mentioned it on the call. And, you know, there is a little bit different as we work through that process and as we've gotten better at it. And so, you know, as you go further up market, you're going to have, you know, it might take you a little bit longer than if you're in the mid-market.
Speaker Change: People that you talked to more stakeholders within any company and you want to make sure you cover all of those basis as you report.
Speaker Change: Thank you and the follow up question I had on the project investments just thinking about that on.
Speaker Change: The sales in the distribution side.
Speaker Change: Is there anything you can share with us how you're thinking about the pace of either new offices or new sales rep hiring this year maybe.
Chad Richison: For us, it's still about the work of the sales individual. I mean, it really does determine how strong a sales individual is in regards to the process that's being worked and how quickly a client can see that value and then onboard onto the system. So I would say it's more specific to an individual salesperson, and then I would add to that that as you go up market, you know, you have more people that you talk to, more stakeholders within any company, and you want to make sure you cover all those bases. Thank you.
Versus what you did last year in 2023.
Speaker Change: We're heading into 2024 really well staffed in sales.
Speaker Change: So I think that even though I have to play itself out, but as everyone knows I mean, our our sales office openings are based on the capacity that we have internally to be able to do that and all I would say is that we're we're better staffed going into 2024 than what we have been in a while for managers all the way up and so.
Chad Richison: And the follow-up question I had on the project investments, just thinking about that on the sales and distribution side. Is there anything you can share with us about the pace of either new offices or new sales rep hiring this year, maybe versus what you did last year in 2023? Thanks.
Speaker Change: Those opportunities as they make sense for us as it makes sense for us to do it.
Speaker Change: We'll be looking at that throughout the year.
Our next question comes from Joshua Reilly with Needham. Please proceed.
Operator: We're heading into 2024 really well staffed in sales, so, you know, I think that even though I have to play it out, but as everyone knows, I mean, our, our sales office openings are based on the capacity that we have internally. And all I would say is that we're better staffed going into 2024 than we have now. www.kenwang.com Our next question comes from Joshua O'Reilly with, Please proceed. Yeah, thanks for taking my questions. Maybe just some more color on the customers you're seeing attrition with in the cohort of those who have adopted Betty versus the remaining customers yet to adopt Betty. Are you seeing higher attrition with those that are yet to adopt Betty?
Joshua Reilly: Yes, thanks for taking my questions, maybe just some more color on the customer and Youre seeing attrition width in the cohort of those who have adopted body versus the.
The remaining customers yet to adopt <unk> are you seeing higher attrition with those that are yet to adopt Betty.
Speaker Change: I mean, we wanted to begin talking about our retention as one number whether someone's on Betty or not they are a client of ours, we want them to be a client of ours.
Speaker Change: Obviously of so called this out in the past continues to hold true those companies that use our system fully get the most value out of it and obviously we have a lower.
Chad Richison: I mean, look, we want to begin talking about our retention as one number; whether someone's on Betty or not, they're a client of ours; we want them to be a client of ours. Obviously, I've called this out in the past, and it continues to hold true for those companies that use our system fully to get the most value out of it. And obviously, we have a lower, much, much lower attrition rate with businesses that use Betty versus those that don't. Got it, that's helpful.
Speaker Change: Much much lower attrition with businesses that use Betty versus those that don't.
Speaker Change: Got it that's helpful. And then what are you seeing in average head count per customer and what assumptions are you making in guidance in terms of average head count per customer. If you and then just following up on that if you expect it can be flat year over year, and 24 is that somewhat of a headwind to growth versus a normal year.
Chad Richison: And then what is your average headcount for customers? And what assumptions are you making and guidance in terms of average headcount for customers if you and then just, you know, following up on that, if you expect it's going to be flat year over year in 24? Is that somewhat of a headwind to growth versus a normal year for you guys? Thanks.
For you guys. Thanks.
Speaker Change: I mean, we've seen the head count per customer has been very stable.
Speaker Change: And so as we're looking at 2024 guidance.
Speaker Change: <unk>.
Speaker Change: And we're expecting the same.
Speaker Change: As stable.
Speaker Change: As it relates to head count per customer.
Speaker Change: Our next question today comes from Steve Enders with Citi.
Chad Richison: I mean, we've seen, you know, the headcount for customers has been very stable. You know, and so as we're looking at 2024 guidance, you know, we're expecting the same, you know, very stable, as it relates to headcount. Our next question today comes from Steve Enders of Citi. Please proceed. Okay, great.
Steve Enders: Please proceed.
Steve Enders: Okay, great. Thank you Sara and thanks for taking the question.
Maybe for Chad just yes.
Steve Enders: Let me get a better sense for I guess why now is the right time to tissue.
Steve Enders: Structure.
Steve Enders: Why is the time for <unk> focusing more on the.
Chad Richison: Thanks for taking the question. Maybe Chad, just, you know, want to get a better sense for why now is the right time to shift to a co-CEO structure? And, you know, why is the time for you to be focusing more on the product and strategic side of the business today? Yeah, well, it's been 25 years, and, you know, I have the right person to do it with.
Steve Enders: The product and the <unk> side of the business today.
Chad Richison: Yes, well I mean, it's been 25 years and have the right person to do it with this wasn't this is something that we've been going through as Chris mentioned on his prepared remarks, I mean, Chris has taken a tour through the company and has operated 10.
Chad Richison: Our significant departments already in the company and so.
Chad Richison: This wasn't, I mean, this is something that we've been going through, as Chris mentioned in his prepared remarks. I mean, Chris has taken a tour through the company and has operated 10, you know, of our significant departments already in the company. And so, you know, it's something that I've been excited about. But I mean, the long and the short is, I mean, innovations, you know, where I oftentimes apply my greatest gifts, and that's where I'm best at it.
Chad Richison: Something that I've been excited about that I mean, the long and the short is I mean innovations, where I often times supply my greatest gifts and Thats, where I am best at it and there are new technologies and toys to build with now it's an exciting time I've had a lot of fun run and special projects.
Chad Richison: In September.
Chad Richison: Timber of last year.
Chad Richison: Product Department, which I mentioned this at the Barclays Conference.
Chad Richison: Began reporting to me again.
Chad Richison: So I've really enjoyed working with them have been focused on that as well as our sales strategy and.
Chad Richison: And there are new technologies and toys to build with now. It's an exciting time. You know, I've had a lot of fun running special projects, but, you know, in September of last year, our product department, which I mentioned at the Barclays Conference, began reporting to me again. So I've really enjoyed working with them. I've been focused on that as well as our sales strategy. And look, I'm not retiring. I mean, I don't even know what that would look like.
Speaker Change: Look I'm not retiring I mean, I don't even know what that would look like.
Speaker Change: I like to compete be part of a team and the long and the short Chris and I can accomplish more together than I could alone.
Okay.
Speaker Change: That's helpful.
Speaker Change: And then maybe we could get an update on on how the adoption is going.
Speaker Change: Pushing that back into the base and maybe how things are.
Speaker Change: Sure.
Chad Richison: I like to compete, be part of a team, and the long and the short is that Chris and I can accomplish more together than I could alone. Okay, that's helpful. Um, and then maybe we can get an update on how the FETI adoption is going, pushing that back into the base, and maybe how things have been, and how, like, what the expectations are for this year for where that could potentially go. Yeah, I mean, I'm not going to say we're pushing Betty back into the base.
And how like what the expectations are.
Speaker Change: For this year for where that could potentially essentially now.
Speaker Change: Yes, I mean, I'm not going to say, we're pushing <unk> back into the base I think that.
Speaker Change: To the extent a client sees the value and they are ready to.
Speaker Change: Use Betty within their organization, we're there to provide that we're meeting clients, where they live and usage right now and helping them achieve value regardless, whether they use a birdie or not I will say, though is I continue to say.
Chad Richison: I think that, you know, to the extent a client sees the value and they're ready to use Betty within their organization, we're there to provide that. We're meeting clients where they live in usage right now and helping them achieve value regardless whether they use Betty or not. I will say, though, as I continue to say, Betty drives a lot of efficiency for businesses. It makes a giant impact on both them and their employees. Our go-to-market strategy has been 100% Betty since July of 2021. And in regards to current clients, you know, we're meeting them where they live, and we're helping them achieve value because our system's very robust, even without Betty. And, you know, it keeps getting missed, but gone is a very significant product. I mean, it automated quite a lot for a business.
Speaker Change: Betty drives a lot of efficiencies for businesses. It makes a giant impact for both them and their employees.
Speaker Change: Our go to market strategy has been 100%.
Speaker Change: Betty.
Speaker Change: Since July of 2021.
Speaker Change: And in regards to current clients, we're meeting them, where they live and we're helping them achieve value because our system is very robust bust, even without Betty and it keeps getting mass that gone is a very significant product I mean it automated.
Speaker Change: Quite a lot for our business and so a lot of our clients are achieving a lot of value through using that product as well right now.
Speaker Change: Thanks for taking the questions.
Speaker Change: Our next question today comes from Kevin <unk> with UBS. Please proceed.
Chad Richison: And so a lot of our clients are achieving a lot of value through using that product as well. Our next question today comes from Kevin V with UBS. Please proceed...
Kevin: Great. Thanks, so much.
Kevin: Congratulations on the better than expected results.
Kevin:
Kevin: I just wanted to talk to the buyback for a minute.
Kevin: It seems like.
Maybe the first time, it's been.
Kevin: Scale.
Kevin: Any thoughts around that.
Operator: Yeah, so for the quarter, we bought back, you know, a little over 2% of the company. And for the full year, I think we bought back 1.5 million shares. So, you know, we've been active buying back stock of the company. We still have a significant amount left in our buyback program. So, you know, we'll look to be, and we've always been very opportunistic as we look to buy shares back. Oh, I believe they'll continue to be clients that see and want to utilize the value of Betty. And so, you know, yes, we will have more clients. And as they see the value and choose to come on board with Betty to actually achieve that value, you know, we're going to be there to help them. I will say we're meeting clients where they live with our product right now, and that's a good place for us.
Kevin: As we think about the buyback into 24 again, it looks like the average share repurchase price of about 178 is there any thoughts on that.
Speaker Change: Yes, so for the quarter, we bought back.
Speaker Change: A little over 2% of the company.
Speaker Change: And for the full year I think we bought back one 5 million shares.
Speaker Change: We've been active buying back stock of the company.
Speaker Change: We still have a significant amount left on our buyback program. So.
Speaker Change: Look to be and we've always been very opportunistic as we're looking to buy shares back.
Speaker Change: And then.
Speaker Change: As you think about kind of that EBITDA.
Speaker Change: Adoption across existing clients.
Speaker Change: And the implementation is that kind of run its course at this point or is there any way to think about how that flexes over the course of 2024.
Speaker Change: Well I believe they will continue to be clients that see and want to utilize the value of Betty and so.
Speaker Change: Yes, we will have more clients and as they see the value and choose.
Speaker Change: To come on to Betty to actually achieve that value, we're going to be there to help them I will say, we're meeting clients, where they live with our product right now.
Speaker Change: And that's a good place for us that's a good place for clients. So we're meeting them, where they live and we're helping them achieve the value available to them in the software whether they use better youre not its a single database system, it's very easy to use and there's all kinds of areas, where our clients are receiving value, especially right now as we.
Chad Richison: That's a good place for clients. We meet them where they live, and we're helping them achieve the value available to them in the software, whether they use Betty or not. It's a single database system.
Chad Richison: It's very easy to use, and there are all kinds of areas where our clients are receiving value. Especially right now, as we've even introduced Gone, you know, that's giving us more and more conversations because everybody wants to automate time-off requests. I mean, there's nobody that doesn't want to automate time-off requests.
Speaker Change: Even introduce gone, that's giving us more and more conversations because everybody wants to automate time off request I mean, there's nobody who doesn't want to automate time off request. So we're having a lot of success with that as well right now.
Chad Richison: So, you know, we're having a lot of success with that as well. Thank you. Our next question comes from Siti Panigrahi with Mizuho.
Speaker Change: Great. Thank you.
Speaker Change: Thank you. Our next question comes from city pennant Guynn with Mizuho.
Operator: Please proceed. Thanks for taking my question. I wanted to ask about CRR's strategy. I know the last few quarters, you talked about how CRR was going to focus on, you know, cross selling Betty. But from what I understand, that's no longer a focus. So what's CRR's strategy right now? Are they cross selling any other modules?
Speaker Change: Please proceed.
Speaker Change: Thanks for taking my question I wanted to ask about CRM strategy.
Speaker Change: <unk> lost.
Guynn: The last few quarters, you've talked about how is <unk> going to focus on cross selling Betty, but what I understand it's normally a focus so what's the CLO strategy right now are the cross selling any other module and how should we think about that Ken ablation opportunity that Larry talked about cri.
Chad Richison: And how should we think about that cannibalization opportunity you talked about earlier when talking about CRR by spending more time pushing Betty? How is that going to change? And the impact for 2024? Sure.
Guynn: By spending more time, pushing Betty how is that going to change and the impact for 2024.
Chad Richison: So what I would say is, even as we looked into this year, it wasn't as much that the CRRs were out pushing Betty as much as they were out converting the Bettys that had already, you know, told us they were wanting to go. And that does take some time for the CRRs to do that. And that time they spent doing that, making sure we get appropriate usage, you know, prevented them from being able to do certain other tasks.
Speaker Change: Sure. So what I would say is even as we looked into this year. It wasn't as much that the <unk>, we're out pushing Betty as much as they were out converting the bodies that had already.
Speaker Change: Told us they are wanting to go and that does take some time with the <unk> to do that and that time, they spent doing that making sure we get appropriate usage.
Speaker Change: Prevented them from being able to do certain other tasks.
Chad Richison: I mean, I would say that right now, and I've been saying this, even probably mentioned this last quarter, we're not preventing a CRR from going out and selling. There's just a certain criteria of usage that we look for, both before you sell a client a product as well as after you sell a client a product to make sure that the value is being achieved. So I would just say that there's a little bit different process that they go through now in regards to selling. As you've heard me say before, it's easier to sell a client a product than to get them to actually use it the correct way to achieve value. And we've been very focused on both of those pieces, both in the last year, and that'll continue into 2020. Thanks, Chad. And then last quarter you talked about some of the impact from macro, mainly like pre-employment checks, those kind of services. How has that been trending since then?
Speaker Change: I would say that right now.
And I've been saying this even probably mentioned this on last quarter were not preventing a CR from going out and selling there's just a certain criteria of usage that we look for both before you sell a client a product as well as after you sold decline of product to make sure that the value is being achieved so I would just say that they are safe.
Speaker Change: Little bit different process that they go through now in regards to selling as you've heard me say before it's easier to sell a client a product then to get them to actually use it the correct way to achieve value and we've been very focused.
Speaker Change: On both of those pieces.
Speaker Change: Both in last year and that will continue into 2024.
Speaker Change: Thanks, and then last quarter, you talked about some of the impact from macro men, mainly like preemployment checks those kind of services how has that been trending since then.
Chad Richison: Yeah, I would say, you know, we talked a little bit about it last quarter that it, you know, was still positive, but not growing at the rate that we had been experiencing in the past. I would say it's still similar. I mean, you know, the market is tight. You're not seeing people change jobs as much as you might have in the past. But, you know, it's still up.
Speaker Change: Yes, I would say.
Speaker Change: We talked a little bit about it last quarter that it.
Speaker Change: It was still positive, but not growing at the rate that we had had been experiencing in the past I would say, it's still similar I mean.
Speaker Change: The market is tight you are not seeing people change jobs as much as what you may have in the past but.
Speaker Change: It's still up it's just.
Operator: It's just, you know, it's still a little soft in that area for pre-employment. Thank you. Our next question today comes from Jarrett Levine with TD Calendars. Please proceed. Thank you. In terms of the competitive environment, have you noticed any change in 1Q or in 4Q? And if so, is it broad-based or limited to certain competitors?
Speaker Change: It's still a little soft in that area on a pre employment services.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Our next question today comes from Jared Levine with TD Cowen.
Jared Levine: Please proceed.
Jared Levine: Thanks.
Jared Levine: In terms of the competitive environment have you noticed any change in <unk> urban <unk> and if so is it broad based or limited to certain competitors.
Chad Richison: No, I mean, it's always been a very highly competitive environment. I've, you know, without naming them, I've talked to about our competitors. I still think we're primarily a new company, and we celebrated 25 years last year. So, all that's to say, I think we've all known each other for a long time. We've all been highly competitive, and, you know, that's always been the case. And that's a positive thing; I believe it. And then looking at the 1Q guidance here, how does the absolute dollar form filings revenue embedded within that 1Q guide compared to the 1Q23 form filings revenue, just in terms of how much of a headwind year-on-year to growth that represents? Yeah, I mean, the forms filing is somewhat of a headwind queue on, you know, we've seen that, for several years, there were really not any new forms after the ACA forms came out.
Jared Levine: No I mean, it's always been a very highly competitive environment.
Jared Levine: Without naming them I've talked to have talked about our competitors I still think we're.
Jared Levine: We're primarily the new company and we celebrated 25 years last year.
Jared Levine: So all that's to say I think we've all known each other for a long time, we've all been.
Jared Levine: <unk> been highly competitive.
Jared Levine: That's always been the case.
Speaker Change: Got it and then looking at the net is a positive.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Then looking at the <unk> guidance here, how does the absolute dollar form filings revenue embedded within that <unk> got compared to the <unk> 23 form filings revenue just in terms of how much of a headwind year on year to growth that represents.
Speaker Change: Yes, I mean, the forms filing is somewhat of a headwind in Q1.
Speaker Change: We've seen that for several years are really not any new forms after the HCA.
Chad Richison: So I mean, it's kind of been the same type of forms that we typically file. You know, we talked about the number of people that we have on our system. And that typically, that growth rate typically follows the kind of forms filing growth for the quarter. Great, thank you. Our next question comes from Jason Salina with KeyBank. Please proceed.
Speaker Change: <unk> came out so I mean, it's kind of been the same top performance.
Speaker Change: We typically file.
Speaker Change: We talked about the number of.
Speaker Change: People that we have on our system and Thats typically that growth rate typically follows kind of the forms filing.
Speaker Change: Growth for the quarter.
Speaker Change: Great. Thank you.
Speaker Change: Yeah.
Our next question comes from Jason <unk> with Keybanc. Please proceed.
Operator: Great, thanks for taking my questions. Craig, you talked about a wider range of guidance this year, based on different scenarios for interest rates and other strategic initiatives. Maybe can you just talk about what's baked into the low end versus what you're baking in at the high end?
Jason Clark: Great. Thanks for taking my question.
Maybe Craig you talked about a wider range of guidance. This year based on different scenarios for I think you said interest rates and other strategic initiatives. Maybe can you just talk about what's baked into the low end versus what youre baking in at the high end.
Jason Clark: Okay.
Craig E. Boelte: I mean, you know, there are different things that we're factoring in on the full-year guide. This is much wider than what we've done in the past. I mean, you know, the main driver is going to be the fed funds rate and what they do with that. You've heard anywhere from three to seven decreases in rates.
Craig: So I mean, there's different things that we're factoring in on.
Craig: The full year guide this is much wider than what we've done in the past.
Craig: The main driver is going to be.
Craig: The fed funds rate and what they do with that you've heard anywhere from three to seven.
Craig: Decrease was in rates.
Craig E. Boelte: So, you know, we wanted to make sure we gave a range that we could, you know, fit that in if any of those scenarios happened. Okay, perfect. And then on customer growth, you know, for going forward, maybe for 2024, internally, what types of initiatives, like marketing, and targeting, do you plan to implement or do to try to re-accelerate? Yeah, so we're very focused on our go-to-market strategy. You know, we focus on the revenue opportunities available to us. I wouldn't say it's just a unit game.
Speaker Change: We wanted to make sure we gave a range.
Speaker Change: We can fit that in.
Speaker Change: Any of those scenarios happen.
Speaker Change: Okay.
Speaker Change: Perfect and then on the customer growth.
And going forward, maybe for 2020 for internally what types of initiatives like marketing targeting <unk>.
Speaker Change: Do you plan to implement are due to trying to reaccelerate that thanks.
Speaker Change: Yeah.
Speaker Change: Yes, so we're very focused on our go to market strategy.
Speaker Change: We focus on the revenue opportunities available to us I wouldn't say, it's just a unit gain but youre playing both sides of that obviously because its unit does.
Chad Richison: But, you know, you're playing both sides of that, obviously, because this unit does help with revenue. And so, you know, we're not changing a whole lot when it comes to our strategy. I think our message is getting cleaner. And, you know, like I said in the fall, we just put out another report in regards to Betty's value. We do continue to have a lot of interest in businesses using Betty. And then, again, just a single database system.
Speaker Change: Help with the revenue and so we're not changing a whole lot when it comes to our strategy I think our message is getting cleaner.
Speaker Change: And like we like I said, I mean, Paul I mean, we just put out another.
Speaker Change: Report in regards to Betty's value, we do continue to have a lot of interest about.
Speaker Change: Business is using <unk> and then again just a single database.
Chad Richison: Great, thank you. Our next question comes from Arvind Ramnani with Piper Sandler. Please proceed. Hi, thanks for taking my question. You know, I had a couple of questions about Betty.
Speaker Change: Yes.
Speaker Change: Okay, great. Thank you.
Speaker Change: Okay.
Speaker Change: Our next question comes from Arvin Ramani with Piper Sandler.
Arvind Anil Ramnani: Please proceed.
Arvind Anil Ramnani: Yes.
Arvind Anil Ramnani: Hi, Thanks for taking my question.
Arvind Anil Ramnani: A couple of questions on on Betty.
Chad Richison: So I guess, you know, have you seen any sort of client attrition? You know, but that's like attrition from existing clients or, or some clients saying, you know, prospective clients who are choosing to kind of, go in a different direction because they don't like Betty. I mean, has there been any kind of negative or pushback on Betty from customers, or has it largely been quite positive?
Arvind Anil Ramnani: So I guess have you seen any sort of client attrition.
Arvind Anil Ramnani:
Arvind Anil Ramnani: But that's like attrition from existing clients, our cornerstone client thing.
Arvind Anil Ramnani: The prospect of clients, who are choosing to kind of.
Arvind Anil Ramnani: Go a different direction, because they don't like Betty I mean has there been any kind of negative pushback on Betty from customers or is that largely being.
Arvind Anil Ramnani: <unk> been quite quite positive.
Chad Richison: Yeah, we're having a lot of success with Betty. I think you're talking about head-to-head competition, where someone might choose not to use Betty and continue to do it, you know, the way it's been done traditionally. That really comes down to the salesperson and having somebody that understands the value and then also spending the time with the client and all the stakeholders and working through that so that, you know, they can actually see the ROI available for Right. And I guess like, you know, if someone kind of wants to kind of, you know, kind of use the latest version of Paycom, do they have the ability to use Betty but say like, hey, you know, in terms of like self-notifying the payroll if that's something they want to give the employees is that, Are you able to turn on and off that option where you say like, you know, you can use all of Bett I'm trying to think of how to turn off that one feature.
Arvind Anil Ramnani: Okay.
Arvind Anil Ramnani: Now, we're having a lot of success with Betty I think youre talking about head to head where someone might choose.
Arvind Anil Ramnani: Not to use better and continue to do it.
The way it's been done traditionally.
Arvind Anil Ramnani: That really comes down to the salesperson and having somebody that understands the value and then also spending the time with the client and all the stakeholders.
Arvind Anil Ramnani: And working through that so that.
Arvind Anil Ramnani: They can actually see the ROI available for them.
Arvind Anil Ramnani: Great.
Speaker Change: Thank you.
Speaker Change: Youre kind of wants to kind of use.
Speaker Change: Use the latest version.
Speaker Change: <unk>.
Do they have the ability to use <unk>, but say like hey in terms of like us.
Speaker Change: So to find the payroll.
Speaker Change: That's something they want to give the employees is that.
Speaker Change: Are you able to turn on and off that option, where you say look you can do is olive Betty except turn on turn off option.
Speaker Change: Yeah.
Okay.
Speaker Change: I just wanted to check.
Speaker Change: Great.
Chad Richison: And so we have 31 modules, and those are chosen by the client according to how they use them. Now, many of our modules are tied together, and so it's through one module that you get the value of the other. But that wouldn't be the case with all 31. I would say there are some 34, sorry, 34 modules.
Speaker Change: Okay.
Speaker Change: And so we have 31 modules and those are chosen by the client how they use those now many of our modules are tied together.
Speaker Change: And so it's through one module that you get the value of the other but that wouldn't be the case with all 31 I would say there is some.
Speaker Change: 34, sorry, 34 modules I would say there is some core modules that.
Chad Richison: I would say there are some core modules that, you know, are going to be critical for a client to be able to actually process a payroll for tax depositing and everything else. And then there are some other modules, you know, that are more driven at the client's choice of whether or not they want to provide that solution to their organization or whether or not they have that covered in another area. Okay, this last question over here is like, you know, if someone has payroll, but they are basically not, you know, they have the ability to kind of run payroll for you all, but they say, like, employees are not required to certify their paycheck every two weeks. Is that a possibility or not?
Speaker Change: Are going to be critical for a client to be able to actually.
Speaker Change: Process of payroll for tax depositing and everything else.
Speaker Change: And then there are some other modules you know that thats more driven at the client choice of whether or not they want to provide that solution to their organization or whether or not they have that covered in another area.
Speaker Change: Okay.
Speaker Change: Just last question here.
Speaker Change: One has payroll.
Speaker Change: But they are basically not.
Speaker Change: Sure.
David: David I believe.
David: Kind of run payrolls for you all but seemed like.
David: Employees are not required to certify their paycheck every two weeks is that a possibility or no.
Chad Richison: Yeah, that's client dependent on exactly what they require. That's up to them. Perfect, thank you.
Speaker Change: Yes, that's client dependent on exactly what they required on that.
Speaker Change: Okay.
Speaker Change: Perfect.
Speaker Change: Perfect. Thank you.
Operator: Yeah. Our next question comes from Bhavanshah about Doja Bank. Please proceed. Great, thanks for taking my questions. Chad, I think you spoke about some of your strategic initiatives kind of impacting the 2024 top line. Can you maybe just provide a little bit more further insight into which ones are having the greatest impact on revenue? And how long do you think these kind of headwinds from these strategic initiatives will last? Is it a one-year thing, or do you think it'll take multiple years to play out?
Speaker Change: Yes.
Speaker Change: No.
Speaker Change: Our next question comes from Bob <unk> with Deutsche Bank. Please proceed.
Bob: Great. Thanks for taking my questions.
Bob: Chad I think you spoke about some of your strategic initiatives kind of impacting 2024 top line can you maybe just provide a little bit more further insight.
Bob: Each ones are having the greatest impact on <unk>.
Bob: On revenue and how long do you think these kind of headwinds from these strategic initiatives. The last is it a one youre seeing or do you think it will take multiple years to play out.
Chad Richison: Yeah, I mean, in terms of our strategic initiatives for 24, I mean, obviously, that they could have an impact on the top line as well as some of the expenses as well. And, you know, I would say that a lot of those are going to impact 24. And, you know, maybe have a small tail on that.
Chad Richison: Yes, you mean in terms of our strategic initiatives for 'twenty four.
Chad Richison: Obviously, it could have an impact on the top line as well as some of the expenses as well.
Chad Richison: I would say that a lot of those are going to impact 2004.
Chad Richison: Maybe you have a small tail on that.
Chad Richison: Got it. And then I guess maybe one clarification from what I understand, at least I understand. Please correct me if I'm wrong. It appears that through your messaging today that you're perhaps a little bit less aggressive in terms of pushing Betty into the customer base versus maybe prior commentary. If that's true, why wouldn't this decrease some of the kind of revenue headwinds that you talked about last quarter that Betty might be creating in fiscal 24? Yeah, I mean, you know, we talked about some of the headwinds that Betty may be creating.
Chad Richison: Okay.
Speaker Change: Got it and then I guess, maybe one clarification.
Speaker Change: At least I understand and please correct me if I'm wrong. It appears like through your messaging today that youre, perhaps a little bit less aggressive in terms of pushing better into the customer base versus maybe your prior commentary. If that's true why wouldn't this decrease some of the kind of revenue headwinds that you talked about last quarter that you might be creating in fiscal 2012.
Speaker Change: Okay.
Speaker Change: Yes, I mean, we talked about some of the headwinds that might be creating we'd talked about that last quarter and I mean, there is a.
Chad Richison: You know, we talked about that last quarter. And, you know, I mean, Betty has a great benefit to the customer. I mean, it eliminates errors, and those accrue as value to the customer.
Speaker Change: It has great benefit to the customer I mean, the eliminates errors and those accrue as value to the customer and we've looked at that and what that is a headwind that might be to us and really thats from eliminating some of those.
Chad Richison: And, you know, we've looked at that and what that, as a headwind, that may be to us. And, really, that's from eliminating some of those services that we charge for. And, you know, we've estimated that to be, you know, approximately 5% of revenue. But, you know, we wouldn't expect all of that to go away.
Speaker Change: Services that we charge for and we've estimated that to be approximately 5% of revenue.
Speaker Change: We wouldn't expect all of that to go away. So.
Chad Richison: So, that's kind of, you know, as we've gone through and really looked at those areas of our business that could be impacted. That's kind of what we look at. Got it.
Speaker Change: Kind of as.
Speaker Change: As we've gone through and really looked at those areas of our business.
Speaker Change: It could be impacted that's kind of what we looked at.
Speaker Change: Okay.
Operator: Thanks for taking my call. Our next question today comes from Daniel Jester with FEMA. Please proceed.
Speaker Change: Got it thanks for taking my questions.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Our next question today comes from Daniel Jester with BMO. Please proceed.
Craig E. Boelte: Great. Thanks for taking my question. Just on the gross margin trajectory, I know it's less of a focus than EBITDA, but three straight years of compression exiting 2023. As we think about 2024 and some of the investments you're making, should we think that gross margin compresses again, or I guess how should we be thinking about that for the year ahead? I mean, you know, we don't we don't guide gross margin
Speaker Change: Yeah.
Daniel Jester: Great. Thanks for taking my question.
Daniel Jester: Just on the gross margin trajectory I know, it's less of a focus than EBITDA, but.
Daniel Jester: Three straight years of compression exiting 2023, as we think about 2024 and some of the investments you're making should we think that gross margin compresses again or I guess, how should we thinking about that for the year ahead.
Speaker Change: I mean, we don't we don't guide to gross margin.
Craig E. Boelte: You know, I mean, there's several things that go into that. One of the largest impacts to gross margin is really headcount on our service side. And so, you know, we're well staffed going, you know, as we're exiting twenty twenty three, and those costs continue to carry on into twenty twenty four. Okay, great. And then on global HCM, great to hear about native payroll in Canada and Mexico out there. Are you actually paying people in both of those countries today? And when, and if that's the case, could you just give us a flavor for kind of who or who you're displacing? Is it some of your maybe US based peers? Or is it maybe local providers?
Speaker Change: Several things that go into that one of the largest impacts to gross margin is really head count on our our service side and so.
Speaker Change: We're well staffed going as we're exiting 2023 and in those costs.
Continue to carry on.
Speaker Change: We ended 2024.
Speaker Change: Okay, Great and then on the global HCM great.
Speaker Change: Great to hear about native payroll in Canada, and Mexico out there are you actually paying people in both of those countries today and when.
Speaker Change: And if that's the case can you just give us a flavor for kind of who are you displacing is it.
Speaker Change: You may be U S based peers or is it maybe local providers is a little more color on kind of the international trajectory. Thank you.
Chad Richison: A little more color on kind of the international trajectory? Thank you. Sure, the global HCM side, again, we're talking about for Canada and Mexico. Well, global HCM, you can use for many of the, for all the countries, but our global HCM side, you're going to displace more of our typical vendors that we may see, and then I would say on the payroll side, it's a mixed bag, but it's oftentimes where we're replacing an in-country partner or an But as far as Canada and Mexico are concerned, we're running in those countries.
Speaker Change: Sure the global HCM side again, we're talking about for Canada, and Mexico will global HCM you can use for many of the count up for all the countries, but our global HCM side Youre going to displace.
Speaker Change: More of our typical vendors that we may see and then I would say on the payroll side, it's a mixed bag, but it's oftentimes, where we're replacing an income tree partner or an in country vendor on the payroll side for both.
Speaker Change: Canada, and Mexico, which we are up and running and now we did announce today that we've added the U K.
Speaker Change: To that.
Speaker Change: But as far as Canada, and Mexico were running in those countries right now.
Speaker Change: Okay.
Chad Richison: Great, thank you. Our final question today comes from Anne Alberta with Bank of America. Please proceed.
Speaker Change: Great. Thank you.
Speaker Change: Thank you.
Speaker Change: Our final question today comes from Ana <unk> with Bank of America. Please proceed.
Operator: Hey, thanks for taking my question. Can you talk about sales productivity and the retention rate assumptions embedded in the 2024 guide and how that compares to what you saw in 2023?
Ana: Hey, Thanks for taking my question can you talk about sales productivity and the retention rate assumptions embedded into the 2020 forward guide and how that compares to what you saw in 2023.
Chad Richison: Yeah, I'll take the sales productivity. I mean, you know, we've got a great sales organization. We always have.
Ana: Yes, I'll take the sales productivity I mean, we've got a great sales organization. We always have we've had a great sales strategy, we're continuing to get a lot of people involved with our sales organization.
Chad Richison: We've had a great sales strategy. We're continuing to get a lot of people involved with our sales organization. We've done a great job training them. And, you know, we're set up to go through this year.
Speaker Change: We've we've done a great job training them and we're set up to go through this year.
Chad Richison: We did a great job last year throughout the year selling, you know, we had a lot of things. Working with us on that as we move throughout the year, we kind of talked about Betty cannibalization or the displacement of certain fees. Craig talked about that being a 5% total out there, but we've seen portions of that 5% already down 20%. So again, that's a successful win for the client. I do think that it takes a certain skill set to be able to go in and work with the client within our industry, and we're having a lot of success there.
Speaker Change: We did a great job last year throughout the year selling you know we had a lot of things.
Speaker Change: Working with us on that as we move throughout the year, we kind of talked about the Betty cannibalization or the displacement of certain fees, Craig talked about that being a.
Speaker Change: 5% still total out there we've seen portions of that 5% already down 20%.
Speaker Change: So again, that's a successful win for the client I do think that it takes a.
Speaker Change: A certain.
Speaker Change: Skill set to be able to go in and work with the client within our industry and we're having a lot of success. There. So we do expect that we're going to sell more this year than what we saw last year and last year was a good sales here.
Chad Richison: So we do expect that we're going to sell more this year than we sold last year, and last year was a good sales year. Yeah, and in terms of retention, you know, as we mentioned, the part that impacted retention the most this year was really at the low end of the market. We're exposed to the low end of the market, very small. We're less than 5% of the companies that have 150 employees, and it's actually, I think, closer to 3.5%. As we're moving into the current year, we've already mentioned that the initial looks are positive, so that's kind of the way we would look at it. All right, thank you. And then just to follow up to that last point, are you investing a little less incrementally in that lower end of the market, then, would you say? Yes, I would say we are investing a little less.
Speaker Change: Yes, and in terms of the retention.
Speaker Change: No.
Speaker Change: As we mentioned.
Speaker Change: The impact.
Speaker Change: Impact of retention the most of this year was really at.
Speaker Change: At the low end of the market.
Speaker Change: And we're exposed to the low end of the market very small I mean, we're less than 5% that has under 50 employees, so and it's actually I think closer to three 5%. So.
Speaker Change: As we're moving into the current year, we have already mentioned that.
Speaker Change: This shall looks are are positive. So that's kind of the way we would look at that.
Speaker Change: Alright. Thank you and then just a follow up to that last point.
Speaker Change: Are you investing a little less incrementally in that lower end of the market then would you say.
Speaker Change: <unk>.
Okay.
Speaker Change: Yes, I would say we are investing a little less.
Chad Richison: Thank you for your questions. This concludes the Q&A portion of today's call. I will now turn the call back over to Mr. Chad Richison for closing remarks. Well, thanks, everyone, for joining the call today. I want to congratulate the 2023 Paycom Jim Thorpe Award winner, Trey Taylor, from the U.S. Air Force Academy. This award recognizes the most outstanding defensive back in college football and memorializes Jim Thorpe, who was one of the greatest all-around athletes in history. Jim Thorpe also happened to be in Oklahoma at the time.
Speaker Change: Okay.
Thank you for your questions.
Speaker Change: This concludes the Q&A portion of today's call I will now turn the call back over to Mr. Chad Richison for closing remarks.
Speaker Change: Right.
Chad Richison: Well, thanks, everyone for joining the call today I want to congratulate the 2023 <unk>, Jim Thorpe Award winner trade Taylor from the U S. Air Force Academy. This award recognizes the most outstanding deep into back in college football and Memorializes, Jim Thorpe, who was one of the greatest all around athletes in history, Jim Thorpe also.
Chad Richison: So happen to be in Oklahoma, We plan on participating in the key bank and Morgan Stanley conferences in March and seeing many of you in person throughout the coming months I'd like to congratulate Chris and thank all our employees for their contribution to <unk> success. Operator, you may end the call.
Chad Richison: We plan on participating in the Key Bank and Morgan Stanley Conferences in March and seeing many of you in person throughout the coming months. I'd like to congratulate Chris and thank all our employees for their contribution to Paycom. Operator, you may end the call. This concludes today's conference call. You may now disconnect.
Chad Richison: This concludes today's conference call you may now disconnect.