No bad stock

Paycom Software, Inc.
CEO : Mr. Chad R. Richison

Quarterly earnings growth(YoY,%)

Chad Richison says,

Revenue growth and adjusted EBITDA margin

• The company reported strong results in Q4 2022 with a revenue growth rate of 30% year-over-year, bringing the full-year revenue for 2022 to $1.375 billion, which is also up 30% year-over-year.
• The adjusted EBITDA for Q4 2022 was $164 million, representing an adjusted EBITDA margin of 44%, and $580 million for full-year 2022, representing an adjusted EBITDA margin of 42%.

2023 Guidance

• The company expects a Rule of 65 for 2023.
• The guidance is based on existing recurring revenue, new business sales, and anticipated new starts in the near term.

Beti, the employee self-service payroll solution

• The company had a strong year in 2022 with the first full year of rolling out Beti.
• Beti eliminates manual tasks, improves accuracy, and reduces liability exposure caused when payroll and HCM is done inaccurately.
• Beti automates the payroll processes to deliver perfect payroll, and employees are empowered to identify and correct errors ahead of time.

Marketing plan and increasing demand from larger organizations

• The company saw strong demo leads throughout the year as they spent aggressively on advertising, delivering high-margin revenues and improving operating leverage in sales and marketing throughout 2022.
• Paycom is being pulled upmarket as the fastest-growing revenue segment of their business is coming from clients with greater than 2,000 employees.
• Increasing demand from larger organizations recognizes the opportunity to simplify their HCM needs.

Paycom’s corporate culture and headcount

• Paycom received national recognition from several organizations in 2022 as a workplace, being named One of America’s Most Trusted Companies, Best Company for Women, and receiving a Top Workplace in Oklahoma award for a tenth consecutive year.
• As of December 31, 2022, their headcount was over 6,300 employees, up 18% year-over-year as they continue to attract and retain high-quality talent to further bolster their future growth.

Chad Richison says,

Revenue from Small Clients

• Smaller clients contribute smaller revenue amounts, but there is a trend where more small businesses are starting up.
• The company has been adding small business units since 2020 and expects to gain more revenue as they continue to do so.

Revenue Retention

• The company is experiencing efficiencies with Beti, preventing hiccups and lower-margin charges.
• Revenue retention is at 93%, which is an industry-leading number.
• Clients with Beti have a 99% retention rate, and the company expects to gain more retention as they convert their client base to Beti.
• Uncontrolled losses, such as bot sold merge type businesses, prevent the company from achieving 100% retention.

Q & A sessions,

Shift towards leveraging employee usage

• The industry has shifted towards leveraging employee usage to help clients.
• Self-service technology has been helping clients to have less exposure and liability around paying employees, providing them benefits, and everything else.
• Large companies want to prevent issues with employee data and avoid doing extra work.

Focusing on the employee

• Paycom has stayed focused on the employee regardless of which company they work for.
• Most needs of an employee, whether they work for a 30-employee or a 10,000-employee company, are substantially the same.
• Tactical moves are made to provide the back-end experience that clients are looking for.

Points for Prevention

• Clients get a lot of points for prevention these days.
• Preventing issues with employee data reduces the amount of work needed to fix it.