Paycom Software, Inc. Q3 FY2024 earnings call

• Paycom's automation continues to transform the industry, with initiatives like GONE (first fully automated time off solution) and Beti driving ROI for clients.
• Launched multiple products and enhancements, including position management and recruiting module improvements.
• Developed an AI agent for the service team, improving response rates by 25% without additional human interaction.
• Recognized with awards like being named a top HR product by HR Executive Magazine.

Third quarter revenue was $452 million, up 11% year-over-year. Recurring revenue was $445 million for the third quarter of 2024, representing 98% of total revenues for the quarter and growing nearly 12% from the comparable prior year period. Third quarter adjusted EBITDA was $171 million with a 38% margin.

• Fiscal 2024 revenue guidance range increased to $1.866 billion to $1.873 billion, representing ~10% year-over-year growth at midpoint.
• Adjusted EBITDA guidance range raised to $745 million to $752 million, with a midpoint margin of 40%.
• Q4 2024 revenue expected in range of $477 million to $484 million (~11% midpoint growth), adjusted EBITDA in range of $184.5 million to $191.5 million (~39% midpoint margin).

• Interest rate cuts could impact float revenue; a 50 basis point cut could affect ~$6 million annually, and more cuts expected in future.

Q: Raimo Lenschow asked about end demand, pipeline evolution, and float.

A: Chad Richison said demand is strong, September was largest sales month; Craig Boelte mentioned float revenue impact from interest rate cuts.

Q: Samad Samana asked about AI agent in customer service.

A: Chad Richison said AI agent is internal, built by Paycom, sped up process by 25%.

Q: Joshua Riley asked about full solution automation and client module utilization.

A: Chad Richison said automation drives efficiencies, utilization is increasing as clients trust the system.

Q: Steve Enders asked about 4Q guide and outlook.

A: Craig Boelte said Q4 is hard to predict due to bonus runs and interest rate cuts.

Q: Kevin McVeigh asked about EBITDA beat and automation progress.

A: Chad Richison said EBITDA beat due to revenue upside, much automation still to go.

Q: Arvind Ramnani asked about Beti adoption and international markets.

A: Chad Richison said Beti adoption increasing, international markets growing with global HCM product.

Q: Bhavin Shah asked about CR team and gross margin.

A: Chad Richison and Craig Boelte discussed CR team helping clients and gross margin impact from new building and headcount.