Craig Boelte : Yes. I would say it’s both R&D and sales and marketing. And as we’re looking for our plans for 2023. We didn’t really talk about the adjusted EBITDA, but we’ve been doing a pretty narrow range for the last several years. Yes, gross margin for the last several years.
Operator: The next question comes from Jason Celino of KeyBanc.
Jason Celino: Maybe, Chad, you’ve been pretty vocal about opportunities in automated payroll and broader HR — when we think about generative AI, I feel like this is up your alley. I mean, what excites you most about the technology if you’ve looked into it? And what could it mean for Paycom and HR as a whole?
Chad Richison: Well, I mean, we are solving problems for the client and processes that I believe can be automated and hadn’t been until really Beti came into play, which somewhat forces appropriate usage within our software for employees so that they can get paid correctly. I do believe that there’s more automation that we can be doing. But you’ve got to start with, you’ve got to have the client and the employees using the product correctly, which I will say that about 50% of our client base, that is the case. And last year was our first full year of selling Beti and bringing it to the market. And so we’re having a lot of success for that. I believe AI for the sake of AI isn’t really valuable to the client. But I believe that if you can do something consistently and you can use something like AI to do that, I think that’s a good thing.
So I don’t expect we would see it as a wide platform within our industry this year type thing with that, but I think you’ll have more and more businesses looking for that machine learning and other types of automation that could be used to automate problems experienced by our clients right now.
Jason Celino: Okay. No, that’s fair. And then just, Craig, maybe a quick one. I think the beat in the quarter, $18 million, 6% beat toward the higher end of what we’ve typically seen over the last 4 years. Anything to note on the strength, expense management, anything on timing of some investments?
Craig Boelte : I mean there are really 3 or 4 buckets that really helped drive that EBITDA beat. One, your marketing spend was a little higher fourth quarter, and some of that is just when we are doing those marketing things that we had planned. A little higher capitalization rate on the development, and that’s focused on new initiatives. Beti clients generate higher-quality revenue. So we saw a little bit of that. And then in the quarter, we had a net insurance proceeds of about $4.8 million for expenses that were incurred both current and prior year quarters. So that’s really what drove the adjusted EBITDA beat.
Operator: The next question comes from Arvind Ramnani of Piper Sandler.
Arvind Ramnani: I just wanted to ask a question. How should we think about growth from existing clients who are expanding their own client base?
Chad Richison: Not any different than what we’ve experienced in the past. I mean, again, I’m removing the COVID year out of that, but not any different than what we’ve experienced in the past. In any given year, you have some clients grow, you have some clients not. You have some clients buy business. You have some clients sell business. And so I believe that’s always somewhat worked itself out. Maybe we win some. Maybe we lose some. But really, the growth for us is driven by new logo adds. I mean, Holly has booked sales numbers that drive our revenue growth, and that’s how we’re going to hit our targets. I think that we expect stability within our current client base as we look to guide, we do have an assumption of stability.
