Paycom Software, Inc.

Good afternoon, and thank you for attending today's Paycom Software 4th Quarter and Full Year 2022 Results Conference Call. My name is Donyell, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end. If you would like to ask a question, please press star followed by 1 on your telephone keypad. It is now my pleasure to hand the conference over to our host. James Sanford, Head of Investor Relations. James, the floor is yours.

Thank you and welcome to PACOM's earnings conference call for the fourth quarter and full year 2022. 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. 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. You should 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 gross margin, and certain adjusted expenses. We use 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.paycom.com. We'll now turn the call over to Chad Richardson, Big Home's President and Chief Executive Officer. Chad?

Thanks, James, and thank you to everyone joining our call today. We ended 2022 with very strong results, and I'd like to thank all of our employees for the consistent hard work and execution that drove four consecutive quarters of revenue growth of 30% or more over the respective prior year periods. I'll spend a few minutes on the highlights of our fourth quarter and our full year 2022 results. and high level expectations for 2023. Following that, Craig will review our financials and our guidance, and then we will take questions. Our 2022 fourth quarter revenue of approximately $371 million came in very strong, up 30% year over year, bringing our full year 2022 revenue to $1,375,000,000, also up 30% year over year. Fourth quarter adjusted EBITDA also came in very strong at 164 million, representing an adjusted EBITDA margin of 44%, bringing our full year 2022 adjusted EBITDA to 580 million, representing an adjusted EBITDA margin of 42%. The sum of our 2022 revenue growth rate and adjusted EBITDA margin resulted in us hitting the rule of 72. With our full year 2023 guidance, we are once again starting the year strong with outlook for a solid rule of 65. As a reminder, we guide to what we can see based on our existing recurring revenue, new business sales, and anticipated new starts in the near term. I'm pleased with the momentum we are carrying into the new year. On the product front, 2022 was a very strong year for Paycom benefiting from our first full year of rolling out Betty. our differentiated employee self-service payroll solution. We are seeing strong demand trends that position us to deliver another year of rapid, profitable growth in 2023. We are leading an industry transformation by making payroll and HCM processes more efficient for both employees and businesses by eliminating manual tasks, improving accuracy, and reducing liability exposure caused when payroll and HCM is done inaccurately. With Betty, employees are doing their own payroll by interfacing directly with their data in a self-service, easy-to-use software. A recent study conducted by Ernst & Young found that the average organization has a 20% inaccuracy rate when it comes to payrolls, which results in lost revenue, hours wasted correcting errors, and increased exposure to potential lawsuits and fines. Each of these mistakes cost an average of $291 and can cost upwards of $705 for unentered non-productive time errors. So you can see how costly these errors become over time. In fact, over the course of a year, a 1,000 employee company could potentially incur almost $1 million in unnecessary costs correcting common payroll mistakes. Betty automates the payroll processes, to deliver perfect payroll and employees are empowered to identify and correct errors ahead of time so that everybody wins. Our marketing plan in 2022 continued to perform well, delivering strong demo leads throughout the year as we spent aggressively on advertising. At the same time, our deliberate investments in marketing are delivering high margin revenues and we saw improving operating leverage in the sales and marketing throughout 2022. We continue to be pulled up market in 2022 with the fastest growing revenue segment of our business coming from clients with greater than 2000 employees. We are seeing increasing demand from larger organizations that are recognizing the opportunity to simplify their HCM needs and Paycom is well positioned to benefit from this trend. With only approximately 5% of the TAM today, there's still plenty of runway ahead for us to expand our market share. Paycom received national recognition from several organizations in 2022. As a workplace, we were named one of America's most trusted companies, as well as best company for women. And we received a top workplace in Oklahoma award for a 10th consecutive year. These awards are a testament to our hard work, our thriving corporate culture, and our client focus. As of December 31st, 2022, our headcount stood at over 6,300 employees, up 18% year over year, as we continue to have great success attracting and retaining high-quality talent to further bolster our future growth. Additionally, I want to congratulate the 2022 PACOM Jim Thorpe Award winner, Travius Hodges Tomlinson, from Texas Christian University. This award recognizes the most outstanding defensive back in college football and memorializes Jim Thorpe, who is one of the greatest all around athletes in history. Jim Thorpe also happened to be in Oklahoma. To sum up, our focus on the employee experience and client ROI continue to fuel our strong results and we are executing well. I'm very excited about the long list of new innovative opportunities we will be pursuing in 2023 and beyond. I'd like to thank our employees for helping to make 2022 such a strong year, and we are set up for another great year in 2023. With that, I'll turn the call over to Craig for review of our financials and guidance. Craig.