Paycom Software, Inc. (NYSE:PAYC) Q2 2023 Earnings Call Transcript

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It’s the first time that we’ve developed another country, and it’s not like a country. It’s multiple provinces, territories. And as we look at the next countries we’re developing, it’s the same type of thing. These countries are large entries. But we’re well on our way. And like I said before on the last call, there was really only one thing holding us back from going up market. And that’s the fact that we didn’t have international capabilities. And with our global HCM product and now with our first expansion into Canada, we’re well on our way with that.

Mark Marcon: Great. And then in terms of the CRR and moving, Beti, to the remaining clients, what is your — what’s your forecast, Chad, just in terms of how long it will take to get that 40%? And to what extent could some of the Forrester data that you’ve put together, helped to speed that up?

Chad Richison: Yeah. I mean, the Forrester data is — it’s helpful. I mean, especially if you played it correctly to any client. It’s hard for me to, I mean, I said I thought we would have all converted within 18 months and we’re going to be past, we may be past that point, but we’re coming up on being past that point, if not. And so I guess, there’s an incredible amount of value that automatically associated with clients rushing to capture that value. There’s also some change management on the client side. I’ve also talked about I’m not going to force a client to go on it. So, we do have to sell it. And then because it’s a smaller revenue item, we’ve got to incentivize our sales reps another way to sell it to be able to keep them whole on commissions and what have you so that we get what we want.

So, it’s hard to answer that question. But we’re focused on it. I will say this, we’ve got some groups of CRRs and sales managers that are closer to having their clients converted than others. And so, you have that and we continue to bring out new products. So, I mean, I think that, for all of them, they’re going to be in this just for a little bit to get the rest of them going.

Operator: Thank you. The next question will be from the line of Joshua Reilly with Needham. Your line is now open.

Joshua Reilly: Yeah. Thanks for taking my questions. I guess maybe starting off, if you look at the revenue beat in the quarter, it was a little less than 1% versus the midpoint of guidance. Historically, these have been cultured to 1.5% to 2% on revenue How should we think about the way you’re positioning guidance going forward? Has there been any change there? Is there a little bit less conservatism built into assumptions? Any color there would be helpful.

Craig E. Boelte: No, I mean, we guide to what we can see and obviously when a deal starts in a quarter can impact the guidance for that quarter. So, there are certain things within a quarter that can make the beat larger or smaller. And so, we typically guide to what we can see and really no change to our, a stance on guidance. But as Chad mentioned, we saw the CRR impact start to come through. And that’s what we’ve seen over the last quarter.

Chad Richison: And quarter four really has much more variability. We have probably 20% of our clients that are brand new to us. So when you think of that, we don’t necessarily know how they’re going to pay bonuses and if they’re going to pay bonuses. So, a little more, uncertainty in that Q4 as we move throughout the year.

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