The paragraph is an introduction to Paycom's Fourth Quarter and Full Year 2024 Financial Results Conference Call. It includes statements by the conference operator and James Samford, the Head of Investor Relations. During the call, forward-looking statements will be discussed, which are subject to risks and uncertainties as noted in their SEC filings. The company will also discuss non-GAAP financial measures such as adjusted EBITDA and free cash flow to evaluate their performance. The disclaimer highlights that forward-looking statements are current as of the call date, and there is no obligation to update them unless required by law.

The paragraph discusses Paycom's strong performance in 2024 and introduces Bob Foster as the incoming CFO, succeeding Craig Boelte. CEO Chad Richison highlights the company's focus on execution, sales growth, and operational efficiency, while emphasizing plans for 2025 that include enhancing full solution automation and client ROI. The company aims to provide world-class service and move toward automation, ensuring that tasks handled by software would no longer require manual intervention.

The paragraph discusses the benefits of Beti, an automated payroll solution, and GONE, another automation tool. Beti helps clients, like those in the professional sports and retail industries, by reducing the time and effort spent on payroll by 85%, enhancing employee trust, and improving resource allocation. GONE automates time and labor management, significantly lowering unproductive labor costs and saving nearly five weeks of time annually in HR, finance, and accounting. A Forrester study highlights an ROI of up to 800% from GONE, emphasizing its efficiency in streamlining time-off decisions and reducing unproductive hours for managers.

The paragraph discusses the positive impact of automation initiatives at Paycom, highlighted by their AI agent that has improved client interactions and increased efficiencies. Despite maintaining the same headcount as the previous year, Paycom has achieved higher client satisfaction, reduced service tickets by over 25%, and opened new sales offices due to increased demand and sales success. The company's commitment to a high-touch service model remains, while automation is leading to improved service margins and creating leadership opportunities within the sales team.

The paragraph discusses Paycom's achievements and financial performance. It highlights new sales teams in Raleigh, Los Angeles, and Providence, bringing the total to 57. Paycom was recognized for its strong company culture and diversity. The company reported record sales growth and anticipates strong performance into 2025. Craig Boelte notes that Paycom's 2024 financial results show total revenue of $1.88 billion, an 11% organic growth from 2023, with recurring revenue at $1.76 billion and a 16% increase in interest on client funds. Q4 revenue was $494 million, a 14% increase from the previous year. These positive results underscore Paycom's operational efficiency.

The company reported a full-year GAAP net income of $502 million ($8.92 per share) and a non-GAAP net income of $462 million ($8.21 per share) in 2024, with approximately 56 million shares. Fourth-quarter GAAP and non-GAAP net incomes were $114 million and $130 million, respectively. The adjusted EBITDA for the year was $775 million, with a margin of 41.2%, and for the fourth quarter, it was $215 million, with a 43.5% margin. The company is investing in automation and incurred adjusted R&D expenses of $61 million in Q4 2024. The effective tax rate was 23% in 2024, and it is projected to be 29% (GAAP) and 27% (non-GAAP) in 2025. Stock-based compensation is expected to be 8% of revenue in 2025. In 2024, operating cash flow was $534 million (28% margin), and CapEx was $197 million (10% of revenue). Free cash flow rose to $337 million, with an 18% margin. The company repurchased about 900,000 shares for $145 million and paid $84 million in dividends.

Since the start of 2023, the company repurchased 2.4 million shares for $445 million, with $1.48 billion still available for buybacks by the end of 2024. The board approved a $0.375 per share dividend for March. Despite capital returns, the company maintained a strong balance sheet, finishing 2024 with $402 million in cash and no debt. Client growth was 2%, with larger clients increasing by 12%. Total employee records grew by 3% to 7 million, and revenue retention remained at 90%. Bob Foster announced plans to maintain momentum in R&D, sales, and automation, transitioning to annual revenue and EBITDA guidance for long-term alignment.

The paragraph provides a financial outlook for fiscal 2025, projecting total revenue to be between $2.015 billion and $2.035 billion, with an approximate 8% year-over-year growth at the midpoint. Recurring and other revenue is expected to grow about 9%, and adjusted EBITDA is projected between $820 million and $840 million, with a margin of 41%. The interest on funds held for clients is anticipated to be $110 million, down 12% year-over-year. The first quarter growth is expected to be the lowest, with recurring revenue growth accelerating to double digits in subsequent quarters due to strong sales and retention. The company emphasizes its organic growth model, high-quality revenue, talent, and product vision as key strengths. It concludes with gratitude to Craig for his contributions and opens the floor for questions, with the first from Raimo Lenschow of Barclays. Raimo congratulates the company on a successful Q4 and inquires about the decision to stop quarterly guidance and renewal rates.

The paragraph features a discussion during an earnings call, where Bob Foster and Chad Richison from Paycom are responding to questions from analysts Raimo Lenschow and Mason Marion. Raimo asks about stability and future ambitions regarding company performance, to which Foster responds that Paycom runs with a long-term focus, showing optimism through a strong year's guide with high EBITDA margins. Richison adds that retention was stable last year and anticipates stronger retention moving forward. Mason Marion, standing in for Samad Samana, inquires about Paycom's guidance, particularly the 9% recurring revenue excluding interest. Richison affirms this figure and explains it excludes interest revenue.

The paragraph is a part of a conversation that discusses the company's revenue performance and client growth. The speakers mention that the company has been onboarding new business clients at higher rates, which contributes to increased revenue throughout the year. They do not take macroeconomic impacts into account when providing guidance. The CRR team's improved performance in the latter half of 2024 is noted, and expectations for continued focus on client satisfaction and ROI are expressed. Mark Marcon, asking questions, highlights that while client growth was slower, the company has shifted towards acquiring larger clients and selling more modules. This suggests a strategic focus on enhancing client value rather than just increasing client numbers.

The paragraph discusses pricing strategies and business performance, notably highlighting a significant sales achievement in January. Chad Richison emphasizes strong growth in new business sales, particularly among larger clients, while noting a reduction in sales to smaller businesses. The company has seen success due to its automated solutions, prompting the opening of three new offices. Craig Boelte addresses gross margin improvements, mentioning impacts from a new building opening, which initially added costs but is expected to benefit margins as the company grows into the space. Overall, there is an optimistic outlook for continued growth and margin improvement.

The paragraph discusses a conversation between Kevin McVeigh from UBS and Chad Richison regarding new office openings and retention rates. It highlights that new offices will take 24 months to be fully staffed, with a full team in place by the first quarter of 2027, and will contribute to revenue modestly at first. Retention rates improved over the year partly due to the Beti system enhancing client engagement and return on investment (ROI). The strategy helps retain clients and quickly win back those who leave, positively impacting retention levels anticipated in the 2025 guidance.

The paragraph discusses the factors contributing to recent success in the market, particularly in Q4. The company's use of automation technologies, specifically mentioning Beti, is credited with helping secure deals and attracting new clients. Chad Richison highlights the strength seen in unscheduled runs and new client acquisitions during Q4, alongside an evolution in customer needs, with a shift towards desiring more automated solutions. The company is focusing on client satisfaction, emphasizing that their highly automated product is resonating with clients who prefer the product to perform tasks on their behalf, demonstrating strong ROI and contributing to the company's growth.

In the paragraph, Craig Boelte responds to a question from Jason Celino about the company's sales office openings. Craig mentions that it's been a couple of years since they last opened an office, possibly around the end of 2022 or the start of 2023. They currently hold only 5% of the market, indicating demand for expansion. Success in opening new offices depends on having the right leadership, and they have become more effective in training and preparing sales representatives beforehand. This has led to better readiness and expected earlier success for new offices than in the past.

The paragraph discusses a company's approach to its sales and marketing strategy, emphasizing that they have not changed their go-to-market method but have adjusted their preparation, which has led to success. Jason Celino inquires about workforce levels in Q4 and future expectations, with Craig Boelte responding that they anticipate stability without any significant macro employment changes. Jared Levine asks about plans for additional sales offices and the revenue benefit from an extra payroll processing day. Chad Richison indicates that any planned office openings are included in current guidance but does not disclose specific plans, and he mentions that revenue strength is expected to continue and accelerate into 2025.

Bhavin Shah from Deutsche Bank asks about the company's recurring revenue growth for the first quarter, noting a 6% increase and inquiring about factors impacting the quarter. Bob Foster explains they don't comment on quarterly results due to a change in guidance but mentions slower growth in year-end forms filings and an interest rate headwind as factors. He avoids detailed quarterly comments but provides some context. Shah then asks about efficiencies contributing to the company's healthy EBITDA outlook for 2025. Chad Richison highlights the importance of profit and efficiency, noting benefits from automation and effective sales strategies, which help drive productivity and quality revenue.

In the paragraph, a company representative discusses their company's current focus on improving its valuation and highlights its superior growth compared to comparable companies, expecting them to take decades to match in revenue and adjusted EBITDA. The company prides itself on quality revenue, organic growth, and system automation, which they believe will eventually make them the highest-margin entity in their industry. They attribute their strong growth to having a top-notch sales force, excellent products, and high client retention. The conversation shifts to Daniel Jester from BMO Capital Markets, who inquires about the company's product roadmap and potential new product launches by 2025. The representative, Chad Richison, responds by emphasizing his constant focus on improving their products.

The paragraph discusses the speaker's role in overseeing product development with a focus on automation and anticipates continued momentum and product announcements in 2025. In a financial discussion, Craig Boelte mentions expectations regarding interest rates and potential rate cuts by the Fed in 2025 but does not provide specific details about $110 million interest income projections. In response to a question by Michael Funk, Chad Richison comments on the competitive landscape, specifically regarding Paychex's acquisition of Paycor. He states there is no change in their view, noting that competition benefits clients and that consolidation is common in the industry.

The paragraph is part of a financial discussion involving Michael Funk and Chad Richison. They talk about the evolution of product pricing due to automation and AI, emphasizing value creation for clients that leads to pricing adjustments as the product improves. Richison explains that their focus lies in automating clients' business processes to reduce effort and costs. He also highlights that clients who use their product effectively already realize significant value, and future improvements would enhance this further. Then, addressing a question from Joshua Reilly, Richison notes that client retention is reported annually and was 90% this year, consistent with the previous year, despite shedding smaller, lower-value customers.

The paragraph discusses the positive outlook for a company benefiting from increased automation, contributing to improved retention rates. Although no specific retention targets are provided, the company is satisfied with last year's performance and anticipates positive trends continuing this year. January marked a record month for book sales, even though those businesses have not yet started. Regarding financial guidance, the company's EBITDA margin is 41%, with R&D expenses consistent with 2024. Strong January sales are attributed to internal execution and a focused sales team, showing improvement over the previous year. The operator then introduces a new question from Jake Roberge of William Blair, inquiring about the factors driving the successful January performance.

The paragraph features a conversation primarily involving Chad Richison and Jake Roberge, discussing the company's expansion and priorities. Chad highlights their success in opening three more offices, attributing it to their product quality and client value. For 2024, the focus will be on ensuring that products sold are actively used by clients to enhance their ROI. The company's priorities, including for the CRR team, emphasize client satisfaction. Chad also addresses their international strategy, stating they are operational in four countries and continue to develop their global human capital management product for international clients.

In the article's paragraph 22, there is a discussion about the anticipated EBITDA margins for the company. An unidentified analyst asks about the discrepancy between the previous quarter's EBITDA margin of 43-44% and the upcoming year's guidance of 41%. Chad Richison and Craig Boelte explain that the company usually shows a lower EBITDA margin at the beginning of the year, which builds up as the year progresses, with the highest margins typically seen in the first and fourth quarters. This is due to firm filings and unscheduled activities during these periods. Richison also notes this guide is historically high for the company. After this discussion, Chad Richison concludes the call by thanking participants and congratulating Jahdae Barron from the University of Texas for winning the 2024 Paycom Jim Thorpe Award.

In the paragraph, Bob and James are set to meet with investors this quarter, attending conferences in San Francisco. The speaker expresses gratitude to Paycom employees for their contributions and highlights Craig Boelte's significant financial stewardship and leadership over two decades, contributing to the company's growth and success. Craig is retiring and looking forward to personal time. He expresses gratitude for his career at Paycom, its rewarding nature, and the friendships formed, while expressing confidence in the company's future. As a significant shareholder, Craig remains a firm supporter of Paycom. The operator then concludes the conference call.

This summary was generated with AI and may contain some inaccuracies.