Good afternoon. Thank you for attending today's Paycom Software second quarter 2022 quarterly results conference call. My name is Bethany, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star one on your telephone keypad. I would now like to pass the conference over to our host, James Samford, Head of Investor Relations. Please go ahead. Thank you, and welcome to Paycom's second quarter 2022 earnings conference call. 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 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, adjusted gross profit, adjusted gross margin, 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 Richison, Paycom's President and Chief Executive Officer. Chad? Thanks, James, and thank you to everyone joining our call today. We had another very strong quarter. I'll spend a few minutes on the highlights and then turn it over to Craig to review our financials and our guidance, and then we'll take questions. Our second quarter 2022 revenue of approximately $317 million came in very strong, up 31% year-over-year, with continued strength in recurring revenue from new business sales. We continue to see strong demand for self-service payroll and automation of human capital management as more companies and their employees embrace innovative solutions like Beti. We have been leading the employee usage initiative for years, and our efforts are paying off. When data interactions on our platform are performed by employees, our clients realize the ROI that self-service promises. At the core of our employee usage strategy is Beti, which we believe is how businesses and their employees win in payroll. If any business is doing the employee's payroll for them, that business is doing both itself and its employees a disservice. The only way a company wins at payroll is by having the employees do it themselves. It makes no sense in the year 2022 for any company to continue to transfer data inefficiently through multiple systems or manual archaic processes. Beti's the future of payroll, and already over 13,000 clients or nearly 40% of our client base have embraced Beti. That's great progress, but as I've said, I expect all clients will eventually deploy Beti in order to finally experience the correct way to do payroll. We are reinforcing this message through our marketing efforts. Our recently launched new ad campaign calls on businesses and their employees to eliminate unnecessary activities, and the early feedback has been very positive. Overall, our marketing plan continues to deliver strong demo leads and brand recognition across our target market range. In particular, we continue to see strong leads from larger clients, which is driving average revenue per client higher and an important contributor to our strong growth. On the sales front, our 54 outside sales team continue to perform well, driving deeper penetration and market share gains into our target geographies. While we estimate we have roughly half of the country covered geographically, we only have approximately 5% of a very large and growing TAM. We have a long runway for rapid growth for many years to come. To sum up, we finished the first half of 2022 with very strong financial results. With our expectation for the second half of the year, 2022 has become a year of growth acceleration and margin expansion. Our differentiated product strategy focused on employee usage and self-service payroll is resonating with prospects, and we are onboarding new clients at a very strong pace. I wanna thank our employees for making this quarter another milestone growth quarter. With that, I'll turn the call over to Craig for a review of our financials and guidance. Craig? Thanks, Chad. Before I review our second quarter and our outlook for the third quarter and full year 2022, I would like to remind everyone that my comments related to certain financial measures will be on a non-GAAP basis. Second quarter 2022 results were excellent, with total revenues of $316.9 million, representing growth of 31% over the comparable prior year period. In Q2, we had very strong recurring revenue growth, predominantly from new client additions over the past year. Our revenue growth continues to be driven by strong demand for easy-to-use, employee-focused solutions and our success in attracting new business wins. Within total revenues, recurring revenue was $311.5 million for the second quarter, representing 98% of total revenues for the quarter and growing 31% from the comparable prior year period. Total adjusted gross profit for the second quarter was $268.2 million, representing an adjusted gross margin of 84.6%, and we are on target to achieve strong full year adjusted gross margin of approximately 85%. Adjusted sales and marketing expense for the second quarter of 2022 was $82.7 million, or 26.1% of revenues, compared to 26.6% of revenues in the prior year period. We continue to see strong return on investment from our advertising spend and plan to continue to invest aggressively in marketing and advertising through the remainder of 2022. Adjusted R&D expense was $33.9 million in the second quarter of 2022, or 10.7% of total revenues. Adjusted total R&D costs, including the capitalized portion, were $48.1 million in the second quarter compared to $38 million in the prior year period. We will continue to invest in innovation in our world-class products. Adjusted EBITDA was $119.6 million in the second quarter of 2022, or 37.7% of total revenues compared to $87 million in the prior year or 35.9% of total revenues. Our GAAP net income for the second quarter was $57.4 million or $0.99 per diluted share versus $52.3 million or $0.90 per diluted share in the prior year period based on approximately 58 million shares. Non-GAAP net income for the second quarter of 2022 was $73 million or $1.26 per diluted share versus $56.5 million or $0.97 per diluted share in the prior year period. For 2022, we anticipate our full year effective income tax rate to be approximately 27% on a GAAP basis. Turning to the balance sheet. We ended the quarter with cash and cash equivalents of approximately $279 million and total debt of $29 million. The average daily balance of funds held on behalf of clients was approximately $2 billion in the second quarter of 2022. We recently increased our liquidity through an expanded revolving line of credit of $650 million and a delayed draw term loan that allows us to borrow up to an additional $750 million as needed. Potential uses of proceeds include, but are not limited to, general corporate purposes, capital expenditures, and stock buybacks. During the second quarter of 2022, we took advantage of a dislocation in the stock market and repurchased approximately 360,000 shares for a total of roughly $100 million. Through June 30, 2022, Paycom has repurchased nearly 4.65 million shares since 2016 for a total of nearly $588 million, and we currently have $550 million remaining in our buyback program. Now let me turn to guidance. We are raising our full year 2022 guidance as a result of very strong second quarter financial performance and the continued strength of demand trends. We now expect revenue in the range of $1.354 billion-$1.356 billion or 28% year-over-year growth at the midpoint of the range. We expect adjusted EBITDA in the range of $546 million-$548 million, representing an adjusted EBITDA margin of 40% at the midpoint of the range. For the third quarter of 2022, we expect total revenues in the range of $327 million-$329 million, representing a growth rate over the comparable prior year period of approximately 28% at the midpoint of the range. We expect adjusted EBITDA for the third quarter in the range of $117 million-$119 million, representing adjusted EBITDA margin of 36% at the midpoint of the range. With only 5% share of a growing TAM, we have a long runway for continued high margin revenue growth for years to come. Our differentiated solutions and go-to-market strategy, particularly with Beti, are working well and driving new client growth and higher revenue per client. Combining our raised 2022 guidance for revenue growth with adjusted EBITDA margin guidance implies we are well on our way to deliver a material improvement over the Rule of 65 we achieved in 2021. With that, we will open the line for questions. Operator? Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, please press star one. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking your question. Please limit your questions to one per analyst and one follow-up. We will pause here briefly as questions are registered. Our first question comes from the line of Raimo Lenschow with Barclays. Please go ahead. Thank you. Congratulations from my end. Two quick questions. Chad, can you talk a little bit about what you're seeing there? Obviously, you know, macro is a big question for everyone on everyone's mind. Employment data are still very strong, but, like, anything that you're seeing out there in terms of, you know, end demand changes or different behavior from customers? That's my first question. My second question is, Craig, for you. Obviously we had quite a bit of rate changes over the last quarter. Can you just remind us how that feeds into your numbers going forward? Thank you, and congrats again. You bet. Thank you, Raimo. I'll take the first. No, we really aren't seeing much of a change from what we've seen in the past. I mean, I will say that, you know, I believe that it's not as difficult maybe to hire people as it was, you know, six months ago. It's still very much an employee's market. I would say we're nowhere back in no way back to where we were in 2019, where it was more of an equally yoked employer-employee market. You know, there's still a lot of jobs out there unfilled, and we're still all in somewhat of a fight for talent. Yeah, Raimo, on the interest rate question, you know, for every 25 basis points that interest, you know, the Federal funds rate goes up, you know, we get about $5 million of annualized interest income. It's typically layered in. You know, we saw one in May, and then June and July, we saw some. Those will layer in, you know, some in third quarter and then some in fourth quarter as well. Okay. Perfect. Thank you. Congrats again. Thank you. Thank you. Our next question comes from the line of Samad Samana with Jefferies. Please go ahead. Hey, good afternoon, and it's great to see the strong results. Maybe first one, Chad, just in terms of deal cycles, are you seeing similar close rates or similar lengths in terms of the typical deal cycle? Or are you seeing any changes in terms of the level of approval it needs to go to? What are you seeing as far as actually closing deals goes? Yeah. No, no changes there from what we've been seeing. As far as the timeline and our close percentages, I would say if anything, they're going up. We're definitely getting more interest in the first calls that we have and being able to move those into second calls. We're having more success with that. All in all, you know, our close ratios remain very strong and very similar to what they've been in the past. Great. Maybe just on the newer sales offices. I know we're still early in terms of the ramp, but where are we on the staffing of those and maybe the productivity compared to maybe prior new office openings, for comparison? I would say the staffing is gonna be similar. They're more productive today. Today's new reps are more productive than yesteryear's, you know, reps would have been. As far as the number of reps, that's very similar. You know, the progression to maturity of any one of our new offices is gonna start off with three or so reps, and then we'll continue to add reps over the course of a two-year period. Of course, at some point, they're fully staffed with eight, and they all have both pipelines and backlogs. After two years, you know, those cities carry the same quota as what we would have had in an existing city. Okay, great. Thanks again for taking my questions and great to see the good numbers. Thank you. Thank you. Our next question comes from the line of Brad Reback with Stifel. Please go ahead. That's great. Thanks very much. Chad, can you remind us historically what type of impact employment levels that your customers has on your, overall growth rate? Yeah. I mean, the next year will be our 25th year, and with the exception of the, you know, the two beginning months of the pandemic, normal gyrations in unemployment haven't really impacted us. You know, we've gone through multiple cycles. Now the pandemic is a little different because you had an overnight retreat of an employee base, which was a little bit different. You know, I would say we're very solid in regards to unemployment. That said, I mean, if unemployment doubles overnight, it would be hard for me to believe it wouldn't have some impact, you know, on our current client base. As we sit here today, unemployment numbers still remain reasonable with where they're at right now. I mean, you might even say they're still fairly low. You still have, you know, quite a bit of open jobs out there with over 10 million. I mean, at some point you have to start thinking, you know, does everybody that want a job already have one? That's great. Thanks very much. Thank you. Thank you, Mr. Reback. Our next question comes from the line of Mark Marcon with Baird. Please go ahead. Hey, Chad and Craig. Let me add my congratulations. Terrific results. Wondering, can you talk a little bit about, you know, the strong leads that you're getting, particularly from larger clients? Can you talk a little bit about what sort of size difference you're seeing? How big are some of the, you know, the companies that are now coming into the pipeline? And, you know, how big is the average client now relative to, say, a year ago? Well, it continues to go up because, you know, as you remember, it was about a year ago, maybe a little longer, that we increased our range up to 10,000. You know, obviously it's gonna continue to go up a little bit. I wouldn't say that there's been a massive shift for us to go a whole lot higher than that right now. What I would say is there's been more within that range, not necessarily, you know, quadruple that range. We continue to engage, you know, well above our target range, and we're having a lot of success. A lot of the leads we're getting right now are still coming from employees of companies that have used us elsewhere, have that, single easy-to-use experience and, you know, are really wanting to have that same experience at the next company they went to. We're still having a lot of success and continuing to bring in strong demo leads through both that, which I'll say is indirect, as well as through our advertising and marketing efforts, which are still yielding great results for us. That's great. With regards to, you know, the float balances, what was the effective yield that you were able to generate off of the last three months? Yeah. Mark, we haven't disclosed what yield it is, but I mean, we're investing still fairly short-term. You know, we have commercial papers, some overnight money markets, as well. You know, kind of a mix of that. We're not chasing yield, but you know, we're paying attention to it. Okay. Yeah. Obviously getting more and more promising. Thank you. Thank you. Thank you, Mr. Marcon. Our next question comes from the line of Brian Schwartz with Oppenheimer. Please go ahead. Hi. Thanks for taking my questions. I'd like to, congratulations again on these terrific results. One for you, Chad, one for Craig. Chad, the commentary that on the deal closures, you're seeing higher ASPs. Are you seeing similar trends in your lead flow also? Then the question I wanted to ask Craig, with the guidance, you're retaining the same EBITDA margin, but clearly we know that inflationary factors have gotten worse here throughout the quarter. I'm just wondering, are you able to maintain that margin because of the efficiencies of the business that you're able to overcome? Or are you holding back any sort of spend that maybe you had planned in the second half of the year? Thanks. Sure. On the first, I mean, definitely, you know, the leads are also coming in, you know, with larger clients. Also we still continue to target to do targeted prospecting. You know, that's always been our bread and butter. We remain very focused on that. That's more of our general pressure, relentlessly applied, strategy that we deploy through target marketing efforts. There's no doubt that the leads continue to generate, you know, larger opportunities for us. Yeah. In terms of the inflationary question, you know, we've seen some pockets where, you know, we're seeing some higher inflationary areas. Overall, you know, we're continuing to look for leverage throughout the model and, you know, and really not holding back on any hires, just finding leverage throughout the model. Thank you. Thank you. Thank you, Mr. Schwartz. Our next question comes from the line of Ryan MacDonald with Needham. Please go ahead. Hi, Chad and Craig. Thanks for taking my questions. Congrats on a great quarter. Chad, in your prepared remarks, you talked about this dynamic where you've got nearly half the country covered geographically, but only 5% market penetration currently. As you think about continuing to expand Paycom's portion of the pie, you know, where do you see the most value in terms of incremental investment, whether it be, you know, continuing that geographic expansion in the back half of this year with new offices, you know, incremental advertising spend to build the brand awareness, or perhaps, you know, continued investment and expansion inside sales teams? Thanks. Well, number one is us continuing to get better at the outside sales process. You know, we have more opportunity out there for us within the markets that we're in. We only have, you know, 5% of the market out there. You know, I would say number one for us is continuing to get better at selling our value proposition out there to prospects. We have continued to be pulled up market because of the strong value proposition, you know, that we are delivering all the way down to the employee level. You know, we are continuing to get more leads that tend to be a little bit larger than what we've had in the past. I would say in aggregate, there's more of them as well. Really that's been our focus, is getting better at executing and being able to sell that. Now, that alone, you know, isn't our only strategy. We're getting better at sourcing leads. We're getting better at retargeting them. Of course, you know, we continue to look at expanding geographically, when it makes sense to do so and when we have the staffing and leadership bench to be able to do that. Thank you. Maybe just as a follow-up, when you look at sort of the yield that you're looking to get off of the digital marketing investments and the advertising, can you talk about what the timeframe that you're looking for in terms of that return on investment and, you know, whether if we do see a slowdown in the back half year, if that could materially impact those returns in the near term? Thanks. Yeah. Well, we measure it weekly, so I mean, we know our return weekly. I mean, you know, these aren't—I mean, these are very strong demo leads. These are clients who are asking for a product demonstration and, you know, we have very good close ratios once we engage with those clients. You know, it would be more of that for us. As far as a slowdown in the back half of the year in this, I really can't see that. I mean, we have a very strong value proposition, which is resonating, you know, very well out there, both with employees as well as with their employer. You know, to some extent, the world's conspiring to help us here, in just the way different individuals now deploy and utilize technology. We're at the forefront of that. I've said many times, I mean, we might be early, but we're not wrong. You know, so we're gonna continue to drive our employee usage strategy throughout the, you know, both the last half of this year as well as next year. Thanks for the color, Chad. Congrats again. Thank you. Thank you, Mr. MacDonald. Our next question comes from the line of Siti Panigrahi with Mizuho. Please go ahead. Hi, this is Alex on behalf of Siti Panigrahi. I had a question about Beti. You talked about 10,000 clients uptaking Beti in Q1. In this quarter, you have about 13,000 clients. What drove the 3,000 net adds, and what sort of per employee per module uptake do you see as part of Beti, and what kind of growth upside do you see from Beti adoption? Like, can you enter that in that follow-up? Yeah. Yeah. Well, I mean, it continues to grow every quarter for two reasons. One, we continue to upsell Beti into our current client base, as it's a better way for them to do payroll. It really is the only way someone should be doing payroll, you know, today. As a reminder, since July of last year, every new client that's come on our system has deployed Beti. That's a part of our product offering since July of last year to every new client. You've got a mixture of both of those. Then as far as the opportunity that upselling into our client base has with Beti, you know, it is incremental increase in revenue opportunity for us, so it's accretive to that profile. In every year, you know, we have different focuses on modules. This year, and I'm sure in the next year, you know, we're gonna continue to be focusing on upselling Beti to 100% of our client base. Again, it'll be positive. Really what it does is it drives greater usage. Greater usage reduces the amount of service we have to provide to any one client. 'Cause of course, if their payrolls are correct, you know, we're not having to go through the process of doing corrections. Corrections can produce, you know, service calls. We believe that with greater usage of Beti done the right way, it changes the employee experience, it changes their expectation of what they would expect at any employer. That leads to more leads for us. That leads to greater satisfaction for clients, which ultimately also leads to less service on our end as clients experience the self-service opportunities. Got it. Thank you. My follow-up was, ADP continues to see better retention rates. How does your new bookings have trended so far, and are expecting any slowdown in new business bookings from a potential macro slowdown in the second half? Is ADP still a major source of new business for you? Yeah. ADP has been experiencing better retention rates since I started the company in 1998. I'm surprised their retention's not already at 200%. It doesn't impact our ability to sell and take business, as again, our product is more comprehensive, it's easier to use, and it's just the way that employees should be interacting with their own data. All right. Thank you. Thank you. Thank you. Our next question comes from the line of Bryan Bergin with Cowen. Please go ahead. Hi, guys. Good afternoon. Thank you. Wanted to start here kind of with the what if recession question. Just how are you thinking about the sustainability of growth trajectory in the event the U.S. does fall into a bit of a more challenged macro environment? Just as you think about the growth composition, what are the key swing factors that may change versus what you think remains unchanged? Well, first of all, just talking about the macro, I mean, the only thing that I could really see that would have a significant impact on us would be a very quick and massive shift in unemployment, you know, that doesn't happen incrementally over time, but happens, you know, somewhat right away. I would think that would have some level of impact on us. You know, we're a growth company. We're focused on growing. We're focused on automating the back office, and we're focused on making it easier for employees to actually do their job. That's always gonna be popular, you know, regardless of what's going on out there. Oftentimes, you know, when people have to do something with less, you know, that means they get the opportunity to automate more. You know, I feel really good about our ability to weather, you know, what we would expect to happen. Again, you know, it would take something, some massive change in the unemployment rate, to really impact us. I'm not saying we couldn't sell through that, but you know, you kind of saw what happened during the pandemic, and what happened there, and I would say that's probably much larger type of unemployment hit than what we would expect necessarily in a recession. Definitely something that would have happened a lot quicker and all at once. You know, we'll just have to see. Save that, I'm not really. I can't really see a whole lot that would prevent us from continuing to grow at a strong rate. Again, I mean, this next year is our 25 years in business. You know, we've been through different recessions and been on different cusps of recessions, you know, in the past. Okay. Thanks. Appreciate that. Then just a follow-up on free cash flow. Can you comment on just free cash flow margins thus far this year? How do you expect those to land for 2022? Just any thoughts on longer term forward free cash flow conversion trends? Yeah. One thing this quarter that impacted our free cash flow some was just the tax rate we saw. Last year, you know, second quarter, we had some benefit from, you know, a discrete item to the quarter as it related to some stock vestings. This year we didn't have quite the same level. You know, I would think that what we're seeing this year would be more indicative, you know, as we kind of roll out throughout the rest of 2022 and then into 2023. Thanks. Thank you. Next question comes from the line of Jason Celino with KeyBanc Capital Markets. Please go ahead. Great. Thanks for taking my question. You know, really strong results here, you know, especially given the macro backdrop. You know, Chad, how would you describe or attribute the upside that we've seen just from industry resilience versus, you know, company specific drivers and execution? Yeah. Much of our upside in any one quarter is dependent upon when a deal starts, you know. We always believe going into quarter, we have really good visibility into when a deal is gonna start. But when it starts matters when you're talking about over performance within a quarter. Because of course, if a deal starts at the beginning of a quarter, we get 100% revenue billing for that deal that quarter. If it starts at the end of the quarter, we could only get, you know, a third of the billing or maybe 15% of it. Of course, in subsequent quarters, we get 100%. We have pretty good visibility. I'd say we have great visibility, going, guiding quarter to quarter. As far as the outperformance, it's always being delivered by new client wins. Then on top of that, you really have to look at when those deals are starting for us. Okay. Perfect. Craig, you know, again, 31% growth in the quarter, you know, very impressive. I think the guidance assumes for the second half some modest deceleration. You know, curious on what kind of macro assumptions, you know, you've built into this. Yeah. I mean, you know, as we were coming into guidance, I mean, at this point, we haven't seen anything. You know, you're starting to hear about it, but we haven't baked any sort of a macro impact to our guidance for the back half of the year. Really, we're guiding very similar to how we've done in the past. We guide to what we see. As we get closer to fourth quarter, we can see a little more on the fourth quarter. You know, that's the quarter that has the bonuses, the off cycle runs. You know, as we're sitting here in the beginning of Q3, we're guiding very similar to how we have in the past. Okay. Thanks for the clarification, Craig. Thank you. Thank you, Mr. Celino. Our next question comes from the line of Arvind Ramnani with Piper Sandler. Please go ahead. Hi, thanks for taking my question. You know, clearly good results, but I'm trying to dimension, you know, are you able to kind of separate, you know, how much of your growth was driven by expansion at existing clients versus new client logos? Sure. Is that the question? I'm just making sure. Okay. If that's the question, the overwhelming majority of our revenue and our revenue that we onboard, our new business revenue comes from new client wins. You know, we do continue to sell into our client base. You know, I've never said land and expand. We land large, but there are opportunities for us to expand into that client base, and we do that as we believe that, you know, clients should be able to use all the products that we have the correct way to drive the employee experience. Go ahead, Craig. You know, one thing I would say, you know, Arvind, is our outside sales teams, those 54 sales teams, are only bringing on new logos. You know, that entire group is bringing on new logos. You know, the mix has been very similar to what it has been in the past, with the exception of that year that, you know, ACA came about where, you know, that was such an immediate upsell. You know, the last few years have been very similar, the mix of new logos to upsell, and it's still the overwhelming majority is going to be new logos. Perfect. Just quick follow-up here. Have you seen any sort of layoffs or turnover with the existing clients that has been a headwind on revenue, or has it been sort of r oughly equal. The second thing is, if you can comment on pricing, if you've been able to push sort of pricing increases through. No on the headwind. Then as far as our pricing, you know, we've talked about that in the past, where we did our first pricing adjustment, I believe it was in 2019. We did a small pricing adjustment to a small subset of our client base. We did talk about as we move forward, that, you know, talking about our pricing model isn't something that we're gonna do just for competitive reasons. I've also always said that as we make our product more valuable, it only makes sense that we get to share in the value we create through pricing adjustments over time. Perfect. Thank you. Thank you. Thank you. Our next question comes from the line of Alex Zukin with Wolfe Research. Please go ahead. Hey, guys. Thanks for squeezing me in, and congrats on an all out great quarter. I guess, you know, a lot of these questions have been asked, but I'll try to maybe ask it a different way. It sounds like you're having incremental success selling more modules at the same time because of Beti. You're still seeing a tremendous amount of new business. And you don't really see, you know, a recessionary headwind impacting employment rates. I guess the main question I would have is, if you look at your the constitution of your new bookings, and you look at that from, you know, kind of increased value versus increased units, how does that compare to prior periods. Meaning, are you getting more of your growth from the fact that your deals are larger, incrementally. I would say it compares very similar to every past year with the exception of when we added onto our inside sales business, which are for more of your emerging businesses, those companies that have less than 50 employees. That group represents, you know, approximately 5% of our overall revenue. That's one way to think about it, is companies that have less than 50 employees represent 5% of our overall revenue. What has been growing is the average size of our other clients. That hasn't been different in any year from year to year. It continues to go up. Again, part of that diluting factor, if you just take the unit count, divide it by total number of employees in our system, part of that diluting factor is going to be all of those emerging below 50 employee companies that we added when we added this inside sales group and expanded it in the year 2020. Understood. I guess increasingly, as you think about incremental modules and you think about that incremental potential over the next coming couple of years, do you see, again, every year, if everybody is buying all of the modules up front, do you see that kind of momentum continuing in the future? Yeah. We've always said that people buy half, at least half or greater of the modules that we have at the time that we sell them. Of course, we've been in business some time, so some of the modules you have to go back and sell into the current client base because, you know, we didn't have them at the time we actually sold them in the beginning. I would say it's a little bit more than half now as we go into new sales, just because of what's required for a client to have in order for an employee to do their own payroll. You know, there's several modules that they have to have. I'm not gonna say it's 100% because that wouldn't be accurate, but I would say it's more than what they needed in the past. Perfect. Just a clarifying question. With respect to the guidance you did, it looks like a bigger passthrough than usual, bigger raise than usual. I think it would be helpful just to understand out of the incremental raise, how much of that is coming from the rate hikes coming through the model? As we've said, I mean, you know, for us, it's really the new business sales are really gonna be what's driving quarter to quarter, and then it does matter when those start. That's not to say that we're not gonna have some positive impact from the rate increases. You know, you had the 50 basis points in May, which is somewhat in the middle of the quarter, not necessarily, maybe a little short of that, and you had another 75 basis points toward the end of July. We've talked about how those layered in, or sorry, at the end of June. We've talked about how those layer in and then you also had some in July. We've talked about how those layer in. We would absolutely expect that to have a positive impact on both next quarter and subsequent quarters. Still, you know, first priority for us, which has been that growth in new logos. Perfect. Thank you, guys. Congrats on a great quarter. Thank you. Thank you. Our next question comes from the line of Bhavin Shah with Deutsche Bank. Please go ahead. Great. Thanks for taking my question, and echo my congrats on the strong results. Chad, earlier you mentioned a lot of the benefits of Beti, but just as it relates to retention, can you talk about what you've seen maybe from those customers that utilize Beti to the ones that maybe don't yet? Are you seeing any improvement there, or is it still too early? Well, I mean, definitely clients that use Beti and deploy Beti are gonna have much stronger usage patterns than someone that doesn't. You know, once they've deployed Beti, it kinda changes the game and the expectation of what an employee expects to be able to use in the business. Absolutely, that impacts our retention. As I've been saying, you know, usage is really what drives retention. I believe that's so for any software out there, but definitely ours. Helpful there. Craig, just a quick follow-up, like clarification on float. I just wanna make sure that I understand it. Is it safe to assume that your guidance takes into account the layered impact of all the rate increases up until July, and assumes no further rate increases? Is that accurate? Yeah, that would be accurate. It would not include any future rate increases and then layering in what we've you know up through July. Perfect. Thanks again for taking my question. Thank you. Thank you. Next question comes from the line of Daniel Jester with BMO Capital Markets. Please go ahead. Great. Thanks for taking my question. Just one on margin. Another great quarter of year-over-year margin expansion on the EBITDA line, but you did have some compression on gross margin. I know that, Craig talked about the full year expectation for about 85% gross margin. You know, I would think with float income going higher, you'd have a benefit there just like on the EBITDA line. Can you remind us, you know, about the investments potentially you're making that could impact that gross margin trend? Thank you. Sure. You know, the one thing on the gross margin line, you know, as we continue to hire and hire in front of, you know, the revenue growth, you know, that's going to have an impact on that gross margin. You know, you'll eventually grow into that. You know, you have to hire and train ahead of capturing that revenue. You know, we're continuing to hire aggressively. You know, we brought on the new Grapevine facility and data center that Tier IV data center. You're starting to see some of the depreciation, you know, hitting the different areas of our income statement. That had a small impact as well on the gross margin. We're still expecting to be, you know, at least at that 85% level for the full year. Great. Thank you very much. Thank you. Thank you. Our next question comes from the line of Kevin McVeigh with Credit Suisse. Please go ahead. Great. Thanks so much. Hey, is there any way to frame what the revenue impact is if Beti was adopted 100% across your existing client base? So, you know, said another way, what's the revenue impact as Beti becomes, you know, 100% utilized across the client base? Well, Beti's one of 29 modules that we have. I mean, it would definitely have an impact. Again, you know, where we're making the impacts, new business logo adds, and Beti gives us the opportunity to do that. I think Beti will have some impact for sure, because we're charging for it. I think where you'll see a bit better impact of Beti once we have every single client on. I mean, I think it's gonna impact retention. As we've seen, usage has been impacting retention of our product. We were at 91%, I think it was three or four years ago, and it's continued to go up. That's really been driven by usage. You know, Beti generates stronger usage of our product. You know, if history's an indicator, we would expect that, you know, once all of our clients have deployed it and are actually generating that ROI, it's going to have an impact on our retention. All those clients' employees will be used to Beti, and as they go to other companies in the market as a normal flow of an employee life cycle goes from one company to the next, you know, we believe that generates even greater leads for us as we've been seeing now. Very helpful. Can you just remind us the philosophy on float in terms of, you know, to the market as opposed to maybe reinvestment in the business? I mean, you know, we'll have to see on that. You know, I think a lot of it depends on the timing of when we might make some of those investments. You know, you look at, and if it's something that we can invest in, let's say advertising or R&D that's going to generate additional revenues, then that's something we're definitely gonna look at. You know, we're also a company that doesn't like waste. You know, we're not going to spend it just to spend it. We'll, to the extent that we don't see an opportunity, we'll let that fall to the bottom line. Thanks so much. Thank you. Our next question comes from the line of Robert Simmons with D.A. Davidson. Please go ahead. Hey, guys. Thanks for taking the question. I was wondering, are there parts of the market that are responding particularly well to Beti, certain industries that are the most apt to want it and to embrace it? No, I would say it's been industry agnostic. I mean, you know, you're talking about the benefit of Beti is to the employee. So it doesn't really matter what industry that is. Anywhere an employee really needs for their check to be accurate going into the weekend, you know, Beti's there for them. And within every industry you will have those types of employees. And you know, then again, every business that would like to automate and reduce, actually reduce their exposure and a lot of their liability around the payroll process, you know, deploying Beti's the right way to do that. No, I can't say that there's any industry that Beti would work stronger in than the other. Got it. Great. Can you talk about the UKG situation? I mean, how much benefit have you been able to see from that so far this year in terms of both bookings, to date and also to pipeline for the second half of the year? Yeah. I mean, I think that produces an opportunity for everyone. I also think, you know, it makes everyone take pause and everybody's got to make sure they have the right plan for their clients, you know, as we're all in this same world together and, you know. I think as you see those kind of things, I know that we looked at everything ourselves. I'm sure many competitors looked at, you know, what everyone can do differently to make sure that employees always get paid. Yeah, I mean, absolutely it produces opportunity, but I wouldn't say it's the hack that produces the opportunity. I mean, it's the fact that someone has an opportunity to have a very good experience in a single system for their employees, or they have an opportunity to have multiple systems where their employees are trying to find their passwords. I would say that's what drives our wins more so than what's happened to them in the past. Got it. Great. Thank you very much. Thank you. Thank you. There are no additional questions waiting at this time. I would like to pass the conference back to Chad Richison for any closing remarks. Okay. Thank you to everyone for joining our call today, and thank you to all of our employees for contributing to our continued success. We have a busy schedule ahead starting next week with meetings at the KeyBanc Technology Forum in Vail and virtual meetings with Oppenheimer and BMO. In September, we'll be hosting in-person meetings in Las Vegas at the Deutsche Bank Technology Conference, in New York at the Citi Global Technology Conference, and in San Francisco at the Wolfe TMT Conference. We hope to speak with many of you soon and appreciate your interest in Paycom. Operator, you may disconnect. Thank you. That concludes the Paycom Software second quarter 2022 quarterly results conference call. I hope you all enjoy the rest of your day. You may now disconnect your lines. All right ahead.