Paycom Software, Inc.

Good afternoon. Thank you for attending the Paycom Software second quarter 2024 quarterly results conference call. My name is Cameron and I will be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to pass the conference over to your host, James Sanford, head of investor relations. You may proceed.

Thank you and welcome to Paycom's earnings conference call for the second quarter of 2024. 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 the 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, 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. I will now turn the call over to Chad Richardson, Paycom's CEO and President. Chad?

Thanks, James, and thank you to everyone joining our call today. I'll focus my comments on the progress we are making on our 2024 initiatives, and then I'll turn it over to Craig, who will review our financials and guidance before taking questions. This year, we remain focused on providing world-class service to our clients, solidifying client ROI achievement and deepening our automation capabilities through product innovation. I'm very pleased with the progress we are making on these client focused initiatives as they are resonating across our client base. As a result of our initiatives, our client usage metrics and our net promoter score are up and trending positively. Beyond that, I'm very pleased with our achievements on the product front. We continue to lead the industry in automation. our clients consistently confirm this view. We continue to eclipse our functionality with even greater automation as we rapidly move towards full solution automation. The enhancements we made to our development processes at the end of 2023 enabled us to transform our solutions even faster. Year to date, we have more than doubled our development productivity rates and implemented functionality for our clients that eliminates redundant payroll and HR work through automation and employee usage. We are rapidly eclipsing the industry by delivering a fundamentally differentiated value proposition for our clients, which ultimately results in a better employee experience. We are focused on continuing to automate the most automated solution in the industry. Two examples of automation in our industry are Betty and Gon. Every month, millions of checks are processed directly by employees using Betty, delivering our clients measurable ROI through this truly unique solution. One example is an existing client who has been with us for six years. This is a 2,500 employee company that recently adopted Betty. Since allowing their employees to do their own payroll, they reduced their payroll team by half. going from a process that took roughly four days before Betty to merely hours with Betty. Betty continues to evolve and raise the bar as we add more functionality and connections to solve complex decisioning. And we are seeing increased inbound inquiries from prospective clients. Gone, the industry's first fully automated time off solution was recently recognized as a Globe Award winner for transforming the time off process. It connects highly complex, traditionally disparate solutions and leverages decisioning logic to automatically approve, deny, or warehouse employee time off requests. Time off decisions are a hassle for everyone within an organization unless you use GON. Thanks to GON, employees get immediate decisions and managers gain back time and increase scheduling visibility. HR and payroll no longer have to track down managers to verify and decision requests. and GON significantly reduces after the fact liabilities and related costs. The C-suite benefits from increased confidence in operations and resource management, driving improved productivity and reducing liability. We have a retail client with over 100 stores where each manager's controlled time off requests differently. The client enabled GON and built unique rules per store to ensure each manager was in control of their appropriate coverage. Now these managers no longer need to take direct action on request, and when the payroll team is prepping payroll, they've eliminated the need for all follow-ups. Their payroll manager stated, gone took Betty to the next level. Since implementing gone, this client has automated over 1,000 time-off decisions, bringing up hours of non-productive time. I'm very excited about gone and its ability to streamline time off requests for the businesses across the globe. Through solution automation, we are helping our clients eliminate decision fatigue across the entire organization from the C-suite to HR and for managers to employees. This in turn creates better employee retention and engagement for all organizations. We are meeting the expectation of today's employees and once they've experienced Paycom, They don't want to go backwards in technology. In fact, we are seeing more and more returning clients as both user buyers and employees are missing the automation that is lacking in disparate and antiquated competitor solutions they had deployed. At the end of the day, the best product will win and we are furthering our product advantage. We continue to leverage AI across a wide variety of areas within our organization. We believe our AI approach toward full solution automation will continue to deliver even stronger ROI, value, and functionality for our clients. On the international front, we continue to make meaningful progress in the geographies that we rolled out in the last 12 months. Betty is now available for employees in Canada, Mexico, Ireland, and the UK. We continue to win new clients with domestic and foreign employees thanks to our investments. in our global HCM product and our native international payroll. On the sales side, we are seeing strong momentum. Our new outside sales reps are winning more deals earlier than ever before, and we've sold significantly more units in 2024 than we did this same time last year. Just this month, we had our top sales week in company history. Sales is energized, and last week we added our largest sales class of new reps placing 67 sales reps in the field across the country. I'm excited about the enthusiasm across our sales division heading into the back half of the year. To sum up, I'm pleased with the progress we are making with our product strategy and with our strategic initiatives. The investments we are making in 2024 and our focus on client value achievement are designed to deliver long-term value to our clients and their employees. which will in turn deliver value to Paycom and its stockholders. With that, let me turn it over to Craig. Craig?