Paycom Software, Inc.

Good afternoon. My name is Cameron, and I will be your conference operator today. At this time, I would like to welcome everyone to PACOM's fourth quarter and full year 2024 financial results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the star key. Thank you. I will now turn the call over to James Sanford, Head of Investor Relations. You may begin.

Thank you, and welcome to PACOM's earnings conference call for the fourth quarter and full year 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 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, free cash flow, 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. We ended 2024 with strong momentum thanks to focused execution, organic sales growth, and operational efficiency gains. Before diving in, I want to welcome our next CFO, Bob Foster. Bob joined Paycom over two years ago after working within the industry as the CEO and chairman of a payroll company for eight years. Prior to that, he served as a senior partner at Ernst & Young, managing several of the firm's largest accounts. He brings industry experience, process expertise, and a strong financial pedigree to lead our financial team. He will assume the role of CFO effective February 21st, when my longtime friend and colleague, Craig Bolte, officially retires. After my opening remarks, Craig will review our fourth quarter and full year results, and Bob will provide comments on our full year guidance. We will then take your questions. With that, let's get started. Our performance strengthened throughout the year as we diligently executed our 2024 plan. We expect to fuel our momentum in 2025 by maintaining our focus on full solution automation, client ROI achievement, and delivering world-class service. 20 years ago, when we sold our software, user buyers bought the product because they wanted to do more with the software. And today, they want the software to do more for them. We already have the most automated solution in the industry and we are rapidly moving toward full solution automation, driving even more ROI for our clients. Simply put, our software vision is that people shouldn't do tasks that systems can safely automate. On the payroll side, Betty continues to eliminate non-revenue generating tasks, which allow clients to shift resources to more profitable activities. Betty is a highly differentiated automated solution that delivers strong client ROI. Having employees do their own payroll is the most effective way to do payroll, and we are seeing this validated daily. Take, for example, a client of ours in the professional sports industry. Prior to Betty, this 500 employee organization worked through payroll issues for days leading up to their submission deadline. They ran separate reports and supervisors chased down employees to fix time and attendance issues. With Betty, their employees ensure their check is correct which has significantly increased employee trust and the client has automated 85% of the time and effort previously wasted on payroll. We onboarded a 2000 employee retail client that operates in multiple states. This client raved about their seamless transition process and they confirmed they have also reduced their payroll processing time by nearly 85%. In addition to the payroll savings, their HR team saved an additional month annually of unproductive time, to automations outside of the payroll process. Clients continue to see strong ROI from our automated time and labor management solutions. For many clients, unproductive time represents roughly 10% of labor costs. With GON, clients can eliminate unnecessary interaction points by providing a consistent and fully automated experience for employees, managers, HR administrators, and the business as a whole. A recent Forrester study found that GON can generate an ROI of up to 800%. Through the automation of time off decisions, managers save nearly a week of unproductive hours annually. And on average, companies save nearly five weeks of unproductive time in the areas of HR, finance, and accounting every year. We were pleased that GON received the Business Intelligent Group's Innovation Award, which is awarded to the organizations changing how employees experience the world. Internally, we are experiencing increased efficiencies through product automation. Paycom's AI agent, which was rolled out to our service team six months ago, utilizes our own knowledge-based semantic search model to provide faster responses and help our clients more quickly and consistently than ever before. As responses continuously improve over time, our client interactions become more valuable and we connect them faster to the right solution. As a result, We are seeing improved immediate response rates and have eliminated service tickets by over 25% compared to a year ago. We remain committed to having a high touch service model, which means we'll always have a single point of contact for our clients to provide them personal service. But with automations like AI Agent, we are realizing internal efficiencies, driving increasing client satisfaction and seeing higher net promoter scores. Through our internal automation efforts, we are identifying opportunities to automate even more processes that currently require unnecessarily human interaction. And this is having a positive impact on our service initiatives and margins. Thanks to these efforts, we ended the year with roughly the same headcount as last year, while continuing to attract talent in the key areas of service, sales, and R&D. Demand for the most automated solution in our industry provided by Paycom is stronger than ever and sales is having record success as more businesses experience the benefits of solution automation. With greater success amongst our sales organization, we have more individuals ready to be leaders. And with a deep bench of sales leaders, we opened three new sales offices in January. These are located in Raleigh, North Carolina, Los Angeles, California, and Providence, Rhode Island, which brings our total outside sales teams to 57. Our culture was highlighted by Comparably in Q4 as Paycom was the top company for compensation and best company culture. Additionally, Newsweek recognized us as one of America's greatest workplaces for diversity. With the most automated product, consistent retention, and kicking off the year with record sales growth, we are set up to perform well in 2025 and beyond. With that, let me turn it over to Craig.