Happy to have Chad Richison here from Paycom. Chad, you and I go back many years, and it's great, always great to see you. To get everything on the same page, like, you reported Q3 results, you know, there was a lot of questions in the market about, like, how to think about the results and what you said here. Maybe from your perspective, like, how, you know, to get everyone back on the same page, like, so how did it play out for you? Yeah, and so, you know, Q3, we announced our results. In doing so, we did talk about the things that impacted our revenue in Q3. We called out the pre-employment business that we have and that we saw some softness in that area. We did talk about the impact that more efficient payroll from the beginning on our revenue model from you know, Beti revenue cannibalization aspect, if you will. And then, you know, we also talked about our client value achievement strategies that as we move into both Q4 and next year, and [audio distortion]. And then the other piece I would say is that, you know, we have been talking about the fact that our CRR groups, which have traditionally upsold products to current clients, are really focused on helping clients achieve the value from the products that we had sold previously. And that group's down, you know, this year compared to last. Well, they've always been up, and this year they're down. So those are kind of the four factors I would say that impacted Q3, and then as we look into the future, impacted alongside, as well as the initial outlook that we gave for 2024. I mean, if you think about it, the, a lot of that seems very, very temporary stuff, so I kind of I'm not concerned about you guys. But maybe let's double-click on some of that. Like, so Beti, like for those in the audience that are not, like, that familiar with it, like, so when you came up with the idea of Beti, like, what was the kind of core thinking here? Yeah, I mean, the core thinking with Beti was that as more and more employees engaged in our app, as more and more employees engaged through Manager on-the-Go, the data was flowing. As we released the Direct Data Exchange, which measured good usage, the number of changes or interactions an employee had with the database directly- Without it being duplicative effort through going through some other process through HR payroll, we really saw the benefits to that. And now that you have an employee base using the product, you can expand the ROI available to the client, as well as impact the employees' lives by ensuring that payrolls are accurate first time so that there's not a lot of after-the-fact fixes, which impacts both the employee as well as the company. And in doing that, it does shift who does payroll- Yeah If you will. It's not to say that the payroll person isn't important. It does allow them to be even more successful when employees are engaged with it from the beginning. And because it was easy, it was... meaning easy product to utilize, because it did create great value, you know, we came up with Beti. I apologize, probably a terrible question. Like, for you, you talk about that engagement of employees with the app, and like, you know, I'm probably not on the times, kind of, fun track, you know, so for me, looking at payroll doesn't happen, like, that often, if I'm honest. Like, what do you see? Like, is there a certain type of employees that do that in your client base? And what do you see? You said, like, you see good usage, like... Yeah, I do think there's a push versus pull. Yeah. There are certain employees that it's just improved. Yeah. The impact of a missed day's pay or a missed expense reimbursement, or not having the correct overtime hours or not being paid for the correct shifts or what have you, has a much larger impact maybe than you or I. But you know, one thing I've realized even about salaried employees, it's not that they don't care about what happens, it's that they have some trust in the current model. Yeah. Yeah, Yeah, yeah. And so, u ntil it impacts them. Yeah, yeah. And so, you know, from a company perspective, when you look at what Beti does, it really not only produces [audio distortion] things are accurate and/or fixing it after the fact, but there's a substantial amount of liability and risk associated with paying someone wrong. And then, you know, as you get more and more employees that each company has, especially as you further upmarket, it becomes almost impossible, you know, after-the-fact corrections are baked into the model. So, you know, we're having a lot of success with Beti. That's not, that's not going away for us, from us. I do think there has been opportunities in our rollout. Think back to a couple of years ago of, of our current client base, of things we could have done to help them achieve full value out of our system, whether they went on Beti or not. We still have about a third of our clients that aren't. Yeah. And making sure that they are able to the value of the current product they're using, very important to us. And then it's not like you're just doing it for the sake of keeping your R&D guys happy. You know, there's a reason why you think you are thinking so strongly about Beti. Like, can you speak to that a little bit? Like, you know, is that just a Paycom-specific thing, or is that something that actually should impact the whole industry, and everyone should be worried about that or thinking about that? Well, I mean, I think it's the right way to do. Yeah. And so, you know, there are certain employees like yourself or others that might be like, "Well, I mean, I look at my check once a month or every two months, and if it's not, it wasn't incredibly wrong, then I'm okay with it." But from a company's perspective, you have a makeup of a lot of different- Employees, and so there is a push and pull. We have some companies that they mandate Beti because of the impact that it has on their business. It doesn't matter if they're a salaried employee or not. If you're a salaried employee, then it just ought to be that much quicker, to use it, and you still, save the company just by verifying that you're in the right state, if you have the right. There's a lot of [audio distortion] that. And so, but I do think that it's, you know, it's a client-by-client choice, but I think as you look into the future, it's the right way to do something. And then when you, apply other ways to automate, that's important. You know, as we've just come out with GONE. Yeah. Another source of automation, which an employee can say at midnight, if an employee would request time off in the old model, they'd have to wait for a manager to approve it or someone to approve it. And then maybe on Monday, if it's not approved, they're tracking someone down to approve it, so they can book their flight. With GONE, you can book your flight right then or not. It'll tell you no- Yeah, yeah. -based on the amount of capacity that a company might have available for their workforce and what their settings are. So, you know, in a perfect world, an HCM system would just do everything you wanted it to do, and you never had to log into it. Yeah, yeah. That's full automation. I know, you know, we probably won't get to a system where that you don't have to log into, but, you know, there's a lot of changes in the way that, especially in the last year or two, opportunities to accelerate automation in certain areas. So if you start with the right problem to solve. Beti did. Beti started with the right problem to solve. Yeah. You do have people that aren't paid correctly, and they live through the weekend like that, and they have to borrow money to get through the week. We have that. You also have people that are salaried employees that didn't really care if it was right or wrong. It still got to be fixed, and they may have found out they weren't in the right state for two quarters. That has an impact on the business. [audio distortion] product, we focus on what is the value for the client? What is the return on investment for them? How do they win? Yeah. [audio distortion] You know, with us and our focus on that, you know, we'll continue to develop more and more out. And then if you think from that perspective, like if I'm a client, it seems like a no-brainer. Like, you know, my stuff gets fixed before I have to run another specific payroll cycle or a kind of correction cycle, et cetera. So from that perspective, it should be fine. You'd be almost sacrificing a little bit of extra revenue because there's less extra kind of cycles that need to be run. So you must be feeling really strongly about getting this right for you, but also for the industry then. I mean, ultimately, you know, what I'm going to say is cumulative revenue for all of us. Yeah. I think ultimately, at some point, that goes away. I mean, if you are, you know, whether there's tax issues, whether it's not revenue, I mean, you know, if the people are like, "Well, we don't charge companies for that. We just bake it in to our pricing. Yeah. Regardless of how you kind of judge that, those are tasks that you would look to eliminate from every model- whether someone's charging for it or not, because it's a punitive task that someone has to take anytime they have to make a correction. Yeah. Punitive to the employee. Whether someone's paying someone to do it or not, they've accrued some level of liability for the fact that it's wrong. Yeah. There's some level of risk there. So it's the right move, for us and our industry. I think that the areas where, you know, we could have executed a little bit differently was, in our base of realizing also that, you know, priorities of areas where we think everyone would want to move because of the value to achieve for them, that- Yeah. You know, every business has their own process that they go through, and you know, if I had an opportunity to rerun time, I would develop the exact same product I developed. I would have deployed it into the market the exact same way, for new logos. But I do think that there would have been messaging and value that could have been displayed with our current client base because we, we did allow for there to be a little more distortion around its value, and now that we have shifted into controlling the narrative- Yeah what we want for the client, whether they use Beti or not, I think there's some realization on that of- Mitigating areas. So if I listen to you like, so there's some guys at the moment that say, like: "Oh, like, well, we're a per employee per month," but they just kind of have a higher monthly price, and then that kind of includes whatever kind of reruns that need to be happened anyway. So that's kind of the argument. But in a way, if Beti, if you have Beti in your client base, your clients should ultimately pay less, which creates a big competitive advantage that you have over the other guys. Is that correct? It is. I mean, if you are just looking at these, I will say that the value of Beti is not really measured by how much you're saving on the bill you pay us. Yeah. It's all of the other impacts that it has within your business, for the employee, for the labor and effort it takes you to fix it, for the liability and risk that you incur for it being wrong in the first place. So I think, you know, that's an important piece to look at it as well. Right. But as far as from a competitive standpoint, you know, you've always had you know, different pricing models. I'm still not 100% convinced that we don't have our competitors also charging on a per payroll, per transaction basis. I don't have data that supports that, but I'm sure that there are also certain competitors that are doing more of PEPM. But from a core payroll-type provider There just are transactions that have always been inherent within our model. Yeah, yeah. But they should, in a way, much better control Beti, then, yeah. I mean, from that perspective, can you give us an example? Because, like, to me, at the moment, it seems like, odd, like, you kind of go to your client and say, "Look, this is all that I'm going to do to you, and it's better for you. A third of your client base still says, like, "Yeah, not now." Is there, like, a progress change, or is there any change that needs to happen to run Beti that kind of keeps them holding back? Because it seems like- Yeah, there is. Yeah. There's change management at the front end. Yeah. You know, Beti, you know, with the old model, you know, you really start the payroll process after the payroll ends, after the pay period ends. Mm. Pay period ends on a Sunday. Monday, I'm collecting all the data. On Tuesday, I'm gonna send it to the payroll company. Yeah. In the Beti-type environment, you start your payroll at the pay period beginning, and when the pay period ends, it's done. So there's not much after-the-fact Work in regards to that because the work's been done. So there's a little bit of a process change there and change management for [audio distortion]. It does depend on how close their pay period end was to their actual check date, pay, what have you. So those, those types of things do matter. But the current process is really. I mean, it's just, it's messed up a bit. Yeah W hen you're not using Beti, because, I mean, even this case, when we, when we did GONE, I mean, 52% of time off approval happened after the time's already been taken. 52%. So, and oftentimes right before payroll, so- Yeah. Then you have 20 states that require you to pay out, time off accrued but not yet paid. So, you know, those things are very important. And so as you continue to automate, you know, that's what happens. I would say that in our current client base, we are now meeting them where they live versus, trying to get them to, utilize a product. Right now, it's meeting them where they live because all of our clients have different objectives- Yeah. Yeah Of what they're trying to accomplish for their business, and accurate payrolls is always one of them. Yeah, yeah. But, I think that our approach right now of how we're working with our clients is, you know, gonna be important for us. Then you talked earlier about one of the factors was the customer success team, because you kind of, in a way, used it to kind of push more on Beti. If you kind of, you know, push slightly less now going forward and give them the customers more flexibility, does that mean, in theory, you can repurpose this year, or not repurpose, but I think get them back to their old kind of cross-selling? Yeah. You know, I've kind of said this in the past, if you kind of go back and look, I've said that, you know, if you, if you sell a client a product and, you know, you're, you're billing them $10, and you're using $6 of it, you're trying to go out there and sell them another product, you're creating more of the problem- for a client. You really want the clients to achieve a value from what they've already bought. Yeah. And so our CRRs are doing. It's not that we don't have CRRs selling product. We do. It's just they're selling a lot less of it than they've ever done in the past. That group's typically always been up. Yeah. This year they're going to be down $20 million in sales- Yeah Because they're out there on-site with clients, helping them utilize the products that they have. We are not out there pushing. Yeah, yeah. I'm not going to say that we weren't at some level, but I also think that we've gotten better- Yeah. Yeah at both how Beti is utilized, as well as how we work with each client and- Yeah helping them achieve the full value, whether they're on Beti or not. Mm. And I think we spent a lot of time on Beti now. Let's just move on a little bit. Sure! Let's talk a little bit about your move upmarket and your move international. Like, how is that going? Where are you on that journey? It's going very well. You know, we started with our Global HCM product, which was our HCM product in, you know, I think it's 15 different languages. Yeah. It works in 170-something countries. And then now we've started adding native payroll. That means we've gone to different countries. We spec out what each country has for full service, payroll, tax, banking, the whole thing. We're doing it all ourselves. Then we started rolling that out. We did Canada earlier this year. We announced Mexico in last quarter, and we're continuing to build those countries out. We believe there's- Yeah 18-20 countries that represent over 80% of the total opportunity. Yeah, yeah, yeah. Okay. Yeah, yeah. And so will you do all of those in the- Absolutely. Yeah, yeah. I mean, absolutely, we're building that out. And how do I have to think about it? So it's building out the payroll, and then start selling in it, or will that be more like the larger clients that you're signing at the moment? You can run also their Canadian business for them or their Mexican business. Well, what's the go-to-market there? Yeah, correct. We have a built-in demand already, clients that we have. Yeah. Yeah, Yeah, yeah. Of what they're utilizing external to us and an opportunity to bring it all into a single database, and that opportunity is, you know, I mean, long term, we'll sell deals in Canada. You know, but we do also have opportunities here in the U.S. for businesses that have a Canadian presence or have a [audio distortion] Yeah [audio distortion]. You know, traditionally, global is done through third-party and country partners, where someone feeds data, has it processed and sent back to the vendor, and so we have the functionality for all this within our system. Yeah, yeah, yeah. And then, a s part, I would almost view it as a similar, no, not a similar motion, but like, as part of that, you also have, like, the slight move upmarket, and so because like that need for international comes more, doesn't come naturally at the 500 employees, which offers the number 5,000, 10,000, 15,000. What are you seeing in terms of that move upmarket? Yeah. So we started, you know, we've been gradually being pulled upmarket. Yeah. I mean, we've got clients that have 20,000 employees and what have you. But, you know, we did announce that we now have an enterprise market that focuses on businesses that have 25,000 employees or more. Oh, wow. Okay. Definitely the global experience, both in HCM and the additional payroll modules are definitely helpful in that. I think it can be table stakes in many of the calls, and you're going to have to have something like that. Yeah. So that does help us. Are you changing, like, because as you go higher up, then usually it's like a very specific, like, HR buying center, et cetera? Do you need to change your sales approach, and how you sell and guys that come in for something like that? In answer to, we've pulled our own to do this. Yeah. So when I'm talking about it, we're talking about a different salesperson. No. There is a different sales process- Yeah, okay that you go through- Yeah To work with a company of that size, just because the number of stakeholders. Now, it's not always a different sales process, but it's rare that it wouldn't be, if you will, just because of the size and the number of stakeholders, and typically, they operate in oftentimes a more decentralized [audio distortion] as well. Yeah. You know, you have a little more work. How do you do—like, because I do seem to remember, like, your, your historic sales model was very much driven about sales velocity. You know, like, if it was more than six weeks, commission would go down. I don't know if you had people probably, like, you have these slightly bigger deals. Like, it's different. It's difficult then, you know, because, like, if the pool is often six weeks, it's kind of going to be a tough one. Like, how, how... You know, do you have, like, separate sales force or like a, a one guy per sales function that does it? Or how do you do kind of- Yeah, this group is broken out- Okay from our core sales group. Yeah, yeah. Just because of even the sales calls, [audio distortion], you know, resource that you need with them because there are certain things we're going to run into with large amounts of data- Yeah, yeah That, you know, require some discussion from the analytics. But it must be exciting for you. Like, I mean, you remember when you started the company, it was your all your credit cards, and now you're talking to operations that are, like, 20,000+ employees. Yeah. There was a lot of work in between. Yeah, yeah, yeah. But yeah, it is. I mean, you know, when we can create the value, that's important. I think that, as we complete our market, we will get more and more proof sources of success- Yeah, yeah In that market. I think that our, our product's very strong because of its full automation in many areas, for a business, and so, you know, I'm really excited about that. It does expand our TAM. But we still, you know, we're focused on the market. We're focused on two. I don't want to make it sound like, you know- Yeah, yeah We're just moving upmarket. We're automating for everyone, all the markets that we work in. Yeah. Yeah, yeah. We're very focused on each level of it. Yeah, and, one of the points you mentioned, it was on the earlier, like in terms of the impact that you saw, it was in the pre-employment services. Is that, was that something that was company specific, or is that kind of more the market? Well, I mean, I think, you know, we're probably the tenth largest pre-employment background checks business. Okay. We actually hire people to go to the courthouse and- Yeah [audio distortion] not something we outsource. Yeah, yeah, yeah. Okay. I like to say, you know, we're the outsourcing company that doesn't outsource a thing that you should. Yeah. You know, and so, when it comes to background checks, you know, we quite a bit of revenue in regards to that. And we called that out because we did see some impact in that with our categories. Is that like? Was there something in that August, September timeframe that was different, or is that just kind of more like slowing? I mean, I feel like in regards to the background check in August, September. Yeah, yeah, yeah. Okay. Okay, that's interesting. So then, guidance for next year, like, you know, like, the one question I got then is like, so how does Chad think about spending then? Like, you know, because like, it, how do you think about profitability in the business and manage that kind of growth versus kind of profit margin? I mean, my tolerance for waste hadn't changed. Yeah. So, you mentioned the 13 credit cards and the SBA loan, and, you know, once you get out of debt, which we don't have any debt. Yeah. You know, we have, like, $29 million that we paid off, so now we don't have any debt. But once you get out of that old habits die hard. So there's no initiatives that we're going into 2024, that I can think of that make a dramatic swing on what our spend is. Yeah. You know, we're gonna continue to capture the opportunity. For us, growth is important and first prize when we go to spend. But for me, I don't see this as an additional spend gets us different necessarily. I think this is some execution opportunity that we have- Yeah And kind of taking that open approach with current clients and want to go to market for new clients. It's continuing to, you know, display the value that's available with the differentiated product. Yeah. Yeah. And how, like, obviously, you know, there's a lot of new stuff coming out, like in GONE as well as, like, a new way to automate things. You have Beti coming out. How excited are you about, like, what's going on there, and how excited are you? Well, I've been very engaged. You know, I took, I hadn't, product didn't report directly to me for the last seven years. I took back over product in September. Now, I always had projects. Yeah. Manager on-the-Go. You know, Beti was my project that I ran GONE. I ran GONE, so- Yeah I always worked with product. Yeah, yeah. But it was for my own projects. Yeah, yeah. And so, I see opportunities for us to accelerate client value through, you know, different technologies that are available. Plus, you know, we've gotten a lot better at it. And then, last question for me is, like, you know, you're cash flow positive. You said you paid down your debt. How do you think about usage of cash then? Like, at the moment, like, you know, it's almost like an opportune time to think about kind of buying back shares aggressively, because, like, you believe in it, the market might not quite kind of be eye to eye with you. How do you think about usage of cash? Well, buyback, you know, we do have a buyback in place. Yeah, yeah. You know, we did announce, about three quarters ago, a dividend as well. Yeah. I mean, I think you have those. You know, again, growth is first prize, but we're already spending on advertising, and we are looking at, you know, how much more would we need to spend or what have you. You do get to a point of diminishing return- Yeah, yeah In advertising, and that kind of goes into that waste piece of it as well. But, you know, I think we have to have a measured approach in everything that we do. I mean, this isn't about this quarter, next quarter, or what have you. You know, I have a view of where we need to be and what we need. I'm not indifferent about the impact to shareholders. I mean, I've got friends, my friends, family members, I've got a little bit. I spent the night at their house as much as my house, and we have, you know, half of their savings in Paycom. So, I mean, you know, it's important to me, the value that we're able to achieve and- Yeah And we do that through the appropriate strategies of what we go through, and so, I'm very happy about that. And I do think that what we're dealing with now, while I know it's transitory, our client base, but as far as the, you know, we're doing everything that we can do- Yeah To create the maximum amount of value, and every time we've done that, we've won. I've often said we're, you know, we're oftentimes early. Yeah. We're not late or we're oftentimes early. We're not wrong. Yeah. You know, when you're the one creating the innovation and the products and some of the bigger problems, you oftentimes have to deal with some of this. I would say that the Beti transformation of who does the role and who interacts with that data, was a big one for us. Yeah. Yeah. I mean, in a way, like, fair play to you, like, it was a gutsy call. Like, as part of a public company with a professional CEO probably wouldn't have done that because painful in the short term, but, like, might move along term, so. Yeah, but there's, I mean, you know, you've got to make it count for everything. Yeah. For me, that's a, you know, gutsy is not really worth any point. Okay. Yeah, yeah. Yeah. Okay. Chad, thank you. All right. It's great to talk to you.