Good afternoon. Thank you for attending the Paycom Software first quarter 2023 quarterly results call. My name is Matt. I'll be the 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. James, please go ahead. Thank you. And welcome to Paycom's Earnings Conference Call for the first quarter, 2023. 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 the date of this conference call. While we believe any forward-looking statements made on this call are reasonable, actual results may differ materially because of 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. 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 delivered strong results in the first quarter, and I'm very pleased with the progress we've made on a variety of initiatives. I'll start with highlights from the first quarter, then I'll discuss some of our plans for the remainder of the year. Following that, Craig will review our financials and our guidance and discuss our new dividend policy. We will take questions. With that, let's get started. Our 2023 first quarter revenue of approximately $452 million came in very strong, up 28% year-over-year, with strong recurring revenue growth from new clients. First quarter Adjusted EBITDA also came in very strong at $221 million, representing an Adjusted EBITDA margin of roughly 49%, up 70 basis points year-over-year. With our updated full year 2023 guidance, we are well positioned to exceed our initial outlook for a solid Rule of 65. On the product front, Beti continues to be a key differentiator in the market, with employee self-service payroll continuing to drive strong client additions. The industry transformation to more efficient HCM and payroll processes is accelerating, and now with Beti, payroll processes can be automated to deliver perfect payroll. Using Beti, employees do their own payroll. Employee usage is a key differentiator, and new clients are coming to Paycom for exactly that. With 95% of database interactions being completed by the employees of our clients, as measured by the DDX, we are changing the way employees engage with HCM solutions. Our product and go-to-market strategy are working. I just returned from our annual President's Club meeting with our top salespeople, and I couldn't be more excited about the tone of the conversations and enthusiasm for our product, especially around employee usage and Beti. We are having increasing success at market with continued rapid growth at the upper end of our target market range. Larger organizations benefit tremendously from simplifying their HCM and payroll needs with our single database solution. We have 5% of the TAM today. However, our TAM has increased now that we've laid the groundwork for a global platform, beginning with Global HCM, which further strengthens our value proposition with our largest clients. To sum up, we are executing well with a highly differentiated product and go-to-market strategy. Our addressable market opportunities continue to expand. We are pleased to enhance our long-term commitment to stockholder return with the initiation of a quarterly dividend program. I'd like to thank our employees for helping lay the foundation for another record-breaking year. With that, I'll turn the call over to Craig for a review of our financials and guidance. Craig? Before I review our first quarter results for 2023 and our outlook for the second quarter and full year 2023, I would like to remind everyone that my comments related to certain financial measures will be on a non-GAAP basis. We delivered very strong results this quarter with revenue of $451.6 million, up 27.8% compared to the prior year period. Our GAAP net income for the first quarter was $119.3 million or $2.06 per diluted share, up 29.8% compared to the prior year period based on approximately 58 million shares. Adjusted EBITDA was $220.5 million in the first quarter of 2023, or 48.8% of total revenues, compared to $170.1 million in the first quarter of 2022, or 48.1% of total revenues. non-GAAP net income for the first quarter of 2023 was $142.7 million, or $2.46 For diluted share, up 28.9% from the prior year period. Our revenue growth was driven by strong demand, new business wins, and new product adoption. Within total revenues, recurring revenue was $444.4 million for the first quarter of 2023, representing 98.4% of total revenues for the quarter and growing 27.6% from the comparable prior year period. Adjusted sales and marketing expense for the first quarter of 2023 was $98.1 million or 21.7% of revenues. We have been aggressively investing in marketing to drive strong demo leads that complement our outside sales model. Adjusted R&D expense was $37.4 million in the first quarter of 2023 or 8.3% of total revenues. Adjusted total R&D costs, including the capitalized portion, were $55.2 million in the first quarter of 2023 compared to $42.9 million in the prior year period, reflecting continued investment in new products. For Q2 and full year 2023, we anticipate our effective income tax rate to be approximately 28% on a GAAP basis and approximately 26.5% on a non-GAAP basis. Turning to the balance sheet. We ended the quarter with a very strong balance sheet, including cash and cash equivalents of $506 million and total debt of $29 million. Cash from operations was $146.1 million in the first quarter, representing an increase of 24.6%. The average daily balance of funds held on behalf of clients was approximately $2.4 billion in Q1 2023, up approximately 10% year-over-year. Let me turn to guidance. For fiscal 2023, we are raising our outlook and now expect revenue in the range of $1.713 billion-$1.715 billion, or approximately 25% year-over-year growth at the midpoint of the range. We expect Adjusted EBITDA in the range of $717 million-$719 million, representing an Adjusted EBITDA margin of approximately 42% at the midpoint of the range. With these strong results in outlook, we are well positioned to exceed the Rule of 65. For the second quarter of 2023, we expect total revenues in the range of $397 million-$399 million, representing a growth rate over the comparable prior year period of approximately 26% at the midpoint of the range. We expect Adjusted EBITDA for the first quarter in the range of $152 million-$154 million, representing an Adjusted EBITDA margin of approximately 38% at the midpoint of the range. Finally, after 25 years of rapidly growing Paycom into a highly profitable company, we're expanding our capital allocation strategy. On May 1st, the board of directors approved a quarterly dividend program that we expect to initiate in mid-May. In 2023, we project Paycom will generate greater than $1.7 billion in revenues, over $700 million in Adjusted EBITDA, and strong operating cash flow, all of which continue to grow. We believe Paycom is in a unique position to return value to stockholders in the form of a dividend and still have the necessary resources to aggressively pursue growth opportunities. Since 2016, we returned a total of nearly $600 million to stockholders through stock buybacks, and we have a $1.1 billion buyback authorization still in place. Today's dividend policy announcement reflects our confidence in the resilience of our long-term growth opportunity, the strength of our balance sheet, and the profitability of our business model. We intend to pay a dividend at an annual rate of $1.50 per share with a first quarterly dividend of $0.375 per share payable in mid-June, subject to board approval. 2023 is off to a great start. We are in a strong financial and strong competitive position in a large and attractive addressable market, and we have a long runway to continue to deliver rapid organic revenue growth, high profit margins, and attractive cash flows. 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, press star one. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking your question. We ask that you please limit yourselves to one question and one follow-up. We will pause here briefly as questions are registered. The first question is from the line of Raimo Lenschow with Barclays. Your line is now open. Thank you. Congrats on another strong quarter and the dividend introduction. Two quick questions from me. First, on the global initiative chat, can you help us understand a little bit like how global or like what's the extent of what you're trying to do here? Is this helping existing customers that have subsidiaries? Is this a wholesale change in strategy that you become more international? Just help us understand a little bit there, then I have one follow-up. Sure. You know, right now, Raimo, we have several clients who, you know, currently use our domestic software, and they use it internationally. You know, they rig the system a little bit so that they can store employees in other countries. Oftentimes they'll work with a third party for payroll. You know, our current clients, you know, they're don't have to do this any longer, because the, you know, the Paycom system now does have Global HCM product that'll work in 180 countries in 15 languages. You know, Global HCM for us is everything, minus the payroll side. You know, we've looked at integration opportunities, we've looked at. You know, working with third parties and even, you know, potential acquisitions. You know, the fact is, you know, everyone else does it the old way and, you know, payroll and HR departments send data for processing and, you know, we're not gonna be putting any development into the old way. For us, you know, Beti's packing her bags and, you know, we'll be going around the globe as we develop it out. Yeah. Yeah. Okay, perfect. Okay. does it mean that you want to become now a global company with operations in other major countries, or is this just more for U.S. domestic clients to give them more optionality and kind of, work with them better? Yeah, absolutely, we'll be a global company. You know, this is the first step, and that's moving our product into the different languages and getting the HCM side done. Now we're heavily focused on, you know, bringing Beti to the other countries, which, you know, it will require us to have operations in certain countries in order to do that, in order to process in those countries. Thank you for your question. The next question is from the line of Samad Samana with Jefferies. Your line is now open. Hi, good afternoon, and congrats on the good quarter. Chad, I had a whole list of questions, but then you said the word open to acquisitions, which I hadn't really ever heard you say before. I'm gonna pivot in real time here and ask you know, between the dividend announcement, you mentioning potential for M&A, which is something Paycom hasn't historically done. Is M&A something that is just maybe gonna be something part of the broader capital allocation or strategy of how to use the company's cash going forward, or... Is that just limited to maybe the global side of it, or would it be something you'd explore in other areas too? Well, I mean, I don't wanna say, never, but, you know, it's been our process to develop internally and develop things that way and grow that way. My comment earlier was more as we looked at building out the payroll side internationally. You know, we did review multiple options for that. At the end of the day, you know, there's no shortcut to long-term success. At the end of the day, you know, we're gonna dance with what brung us, and we know how to develop software, and we're already well on our way in getting things set up to be able to have Beti in all the other countries as well. In answer to your question, I would say more no, Samad. I mean, if I was gonna have to be direct with that. You know, we did do a dividend, and, you know, we still have a $1.1 billion buyback in place. Great. Then maybe just a quick follow-up for Craig. Just, yeah, the numbers on the margin side were impressive as always. Just the sales and marketing dollars jumped a pretty good bit from four Q to one Q. More than you normally see. I was just curious, I know you mentioned marketing campaigns. Was there any acceleration or pull forward maybe in sales headcount addition or anything else that we need to maybe be aware there beyond just digital marketing? How should we think about that maybe going forward? No, no. I would just say it's pretty normal. You know, I think, I think last Q1 was slightly down. Yeah, I mean, just kinda normal marketing spend and campaigns that we talked about, you know, kind of from Q4 of 2022 to Q1 of 2023. You know, some of those pushed into this quarter. Thank you for your question. The next question is from the line of Brad Reback with Stifel. Your line is now open. Great. Thanks very much. Chad, you have a pretty unique perspective on the economy across the country. Down market, up market, geos, verticals. Anything you're seeing specifically that gives you pause or optimism? I mean, no, I wouldn't say I wouldn't say either way. I mean, I do think it's a little bit easier to hire. You know, if you're looking at from a year ago, I would say the labor market was a little bit tighter for us on hiring, just as more people, you know, touted the work from home in which we came back to work. I think that especially on the tech side, we seem to be doing very well attracting top talent there as, you know, more and more companies have shed some of those jobs. You know, from our own client base, you know, we're definitely focused on adding clients. Don't really have anything to call out on, seeing any negative softening within our own, you know, within our own client base. I've tried to, you know, do as much as I can to kind of look into the future, you know, with 5% of the TAM and several accelerators for ourselves. You know, I'm focusing on being a salesperson right now than an economist. Definitely we're really not seeing much in our own numbers as we look into the future. From hiring people, which, I mean, I think is somewhat of a proxy to what happens as well for our clients, you know, we are definitely seeing it's a little bit easier to hire, especially on the technical talent side. Brad, I would say on our client base, I mean, we have a very diversified client base, and that's both geographically and based on industry. You know, some of the things you're hearing out there that, you know, we're not overly exposed to those. That's great. Thanks very much. Thank you. Thank you for your question. The next question is from the line of Mark Marcon with Baird. Your line is now open. Hey, good afternoon, Chad, Craig, and James, and congratulations on the really strong results and also the initiation of the dividend, which I think is quite a huge positive. With regards to what you ended up seeing, you know, during the selling season and then extending into the first quarter, could you give us a little bit of a sense for on the recurring revenue, if we strip out the float income, you know, what you ended up seeing in terms of like sales from new logos relative to upsells, relative to increases in employment within the existing base and how you're thinking about the pipeline on a go-forward basis? Yeah, I mean, for us on that, it's all really about new logo ads. you know, I mean, increases in employment from existing base or decreases. I can't say that that's had a meaningful impact on us one way or the other, with the exception of the, what I'm gonna call, maybe a 6-month to 12-month period in COVID where it went down and then, you know, back up. You had some significant fluctuations then. Since stabilization, you know, it's not gonna be, employee gains and/or at this time, we don't really have the employee, you know, employees leaving, that would impact that. For us, it's new logos. We added over 3,000 clients to Beti in this first quarter, that's been going, really well. I don't know if Craig would have anything to add to that. No, I would agree with Chad. I mean, it's primarily new logo wins and that's what's driving the recurring revenue. Great. You just came out of Club. What are you seeing just in terms of sales force productivity, you know, how much more did people have to do in order to qualify for Club? What regions are you know, really starting to see some real pickups in terms of traction? You know, we had that President's Club in Hawaii, which was the very same place that we had it at our initial President's Club 15 years prior. I was able to actually talk about, you know, the numbers from that first Club and now. You know, we've continued to accelerate the amount that any one sales rep can sell. Our top sales reps continue to sell more than they have in the past. This year again, I mean, we had a rookie sales rep that sold over $2 million. You know, when we IPO'd, that would have been great for a city, now we have a rookie rep selling that. You know, the numbers continue to go up as we've had a, you know, we've continued to develop product. We've put more into the product, so it produces more value. Of course, it costs a little more than what it used to. You know, we're getting better at marketing and landing leads that... You know, we're also getting better at closing because we have a very strong differentiator, and we're back out in the field. I think that's was a big part of it, too, for us to get back out face-to-face because these are big decisions for companies to make. I think we present well in person. I would expect, you know, another record to be broke next year as we've already got some reps that are, you know, very close to what our top rep finished at last year. You know, that's... Which is always how we've achieved our numbers, is sales performance continuing to get stronger. Thank you for your question. The next question is from the line of Brian Schwartz with Oppenheimer. Your line is now open. Yeah, hi. Thanks for taking my questions this afternoon. I'll congratulate a real nice, fine start to the year for the business. Chad, I wanted to ask you, I saw that you announced a Global HCM solution and capability this quarter, and just wanted to ask you on the strategy behind that. Is the strategy more to extend the reach and capabilities of your multinational customers, or is there an opportunity that you see in the future of targeting international markets? If I could ask one other question along this new solution, how should we think about the solution in terms of the impact to the margin, whether it can be accretive or dilutive to the overall business? I mean, on the first question, you know, I mean, I think people can talk about, you know, whether it's a single database or willingness to integrate with multiple systems and what have you. The fact is, you know, there's one type of employee. I mean, the employees are the same and, you know, they like doing their own payroll. For us, you know, international and laying the groundwork with Global HCM is the first step to going all the way up market. I mean, there's, you know, there's never really been an issue for us in scalability of the system. It's really been about the buying decisions that you'll oftentimes see way up market. Well, employees these days, you know, they don't have a high tolerance for system complexity in any stage of product that they use. I think we've got a very simplified product that does very complex things. You know, I would say there might've been one thing that we were missing to be able to go work with the largest companies in the world, and I don't think we're gonna be missing that one thing very much longer. That said, I mean, our system still does work well. We have a lot of clients that have, you know, definitely we're having success up market. We have a lot of clients that are 10,000 employees and more. We have clients that even, you know, like our system so much, they were willing to work around it to use it for other countries. Now they don't have to do that on the HCM side, you know, we would be planning to roll out Beti in other countries throughout this year. Yeah, I would say on the margin front, I mean, we wouldn't call out, you know, that it would be, you know, accretive or you know, it should follow the same profile fairly similar to what our current clients are doing. I mean, obviously, we'll have some R&D costs as it relates to building some of this out. In terms of just the overall margins, it should be very similar. Thank you. Thank you for your question. The next question is from the line of Joshua Reilly with Needham. Your line is now open. Hi there. Thanks for taking my questions. On the international, product here, when you say you're building Beti on a global basis, does that mean that you plan to build native payroll solutions in some international countries? Or is Beti gonna sit on top of the existing payroll solutions used by customers with an international presence? We would be building Beti out in each country. Okay. We are building Beti out. We are building Beti out, would be the better way to say that. Okay. You are building a native payroll in some of these international countries? Correct. Got it. Okay. Have you increased your advertising spend sequentially from Q4? In the past you've said that increasing that spend implies more confidence around demand. Is that accurate that you're seeing more demand in Q1 than Q4? I mean, we continue to see strong demand. We saw the strong demand in Q4, too. You know, oftentimes Q4, you know, sometimes you can advertise a little bit stronger than others, depending on elections, depending on how many ads are running. You know, oftentimes you can be competing against that and what the ad dollars cost. You know, sometimes the juice isn't worth the squeeze there. You know, you have some holidays. We do monitor our advertising spend weekly, and we monitor the lead generation from it. You know, we're constantly making moves in method to how we generate more leads. Got it. Thanks, guys. Mm-hmm. Thank you for your question. The next question is from the line of Siti Panigrahi with Mizuho. Your line is now open. Thank you. Thanks for taking my question. Chad, in this macro environment, we keep hearing, you know, small businesses kind of under pressure right now. They're cautious in terms of, you know, commit to any kind of investment in this environment. Wondering, what are you hearing from your customer base? Any color would be helpful. Yeah, I mean, we're not hearing a lot right now. I mean, now, you know, I would say a part of that is, we're, you know, very focused on growth and landing new logos. We're not seeing losses from clients going out of business any different than what we had seen in the past, again, with the exception of the COVID time period. I really can't call out much, and it might just be, you know, where we're focused. Again, only about 5% of our revenue is derived from companies that have less than 50 employees. You know, and 95% of it is derived from companies that are larger than that, obviously. We're continuing to grow at the top end of our range. It's probably our fastest growing segment. You know, I'm not saying things couldn't be happening down market. It's just from the data that we have, it's not something that, you know, that we could call out on our end. That's super helpful. A follow-up for Craig. If I heard your client fund balance, I think $2.4 billion you said, that's almost kind of 9% on a year-over-year growth, compared to, you know, other years, which was pretty high. Is there anything that we should, you know, anything that caused the slowdown? Also, any color in terms of interest income, any float income, contribution this quarter? I can take the first question. I'll let Craig handle the interest income. From a float balance perspective, you know, the larger the client, the less days you hold onto that money. You know, that money clears very quickly with large clients. You know, which if you're handling a small business, you might hold onto that for a month or a quarter. You're handling a large client, you're holding onto that for about 24 hours. There's larger amounts, but it impacts your ever steady balance a little bit because it's clearing out of there so quickly with the larger clients. I'll let Craig handle the second part. Yeah. I would say on the, you know, on the interest income on our client funds, you know, we called out last quarter, you know, we're realizing around 80% of the Fed funds rate. You know, part of that's because it's layered in. You know, we have some investments that are a little bit longer term. You know, I mean, the banks don't give you the full amount as the Fed raises those rates. That's kind of what we've said last quarter, and we really wouldn't update that any. Great. Thank you. Great quarter. Thank you. Thank you for your question. The next question is from the line of Bryan Bergin with TD Cowen. Your line is now open. It's actually Jared Levine on for Brian tonight. In terms of retention, how did 1Q revenue retention compare to 1Q 2022, were there any notable changes based on clients with under 50 employees and then those clients with 50+ employees? Yeah. We provide, you know, retention at the end of each year, you know, fluctuates quarter to quarter. You know, I kinda said on the last call we have the have and the have-nots here at Paycom, and that was related to Beti. You know, our Beti retention rate last year was better than 99% than anybody that had Beti. I expect our, you know, retention to remain strong and even an increase as a, you know, increase a larger percentage as, you know, more clients use the product the right way to achieve the maximum ROI that's available to them. Yeah, for retention, I've also said in the past, typically, regardless of it, I'm not comparing it from last first quarter to this first quarter. Typically, you know, for, especially for larger clients of any of our competitors, retentions, you know, oftentimes, starts off lower the first of the year and continues to increase throughout the year because less clients usually leave, you know, in the fourth quarter, if you will. Nothing to call out special in the first quarter. I would just say we've been very stable and, you know, the companies that use Beti do better. Got it. As my follow-up, what is your adjusted gross margin expectation for this fiscal year? More specifically looking at 1Q, what weighed on that adjusted gross margin within that operating expense line item? Yeah, I mean, you know, we didn't guide to the adjusted gross margin. I mean, it's been very stable, you know, over the last few years and at 85%-86%. I mean, typically, if it gets too high, it's, you know, we may be a little bit behind on hiring. You know, that's usually what would cause it to creep up some. You know, it fluctuates based on how our hiring trends are because those are the individuals that are bringing on the, you know, handling the new business that we're bringing on, and we have to hire them ahead of the revenue growth, and that way they can be trained up and ready to, you know, capture those clients. Great. Thank you. Thank you for your question. The next question is from the line of Jason Celino with KeyBank. Your line is now open. Hey, thanks, guys, for taking my questions. Chad, in the press release for Global HCM a few weeks ago, you mentioned that you've been working on the product for two years. Since it doesn't include Beti yet, you know, why not just wait until you had developed it for some of those countries first? Maybe can you just talk about the timing on why move now? Sure. Well, you were gonna have to do first things first. You were gonna have to have it. As I mentioned, with Raimo's very first question, we have a demand for Global HCM right now as we have clients that are storing, client or employees that they have in other countries in our system right now, and somewhat rigging the system. We have demand right now for HCM, and you have to have first things first. I mean, with Beti, everything's connected. It's not like it's payroll only. You have to have time and attendance. You have to have expense management. You have to have paid time off. You have to have these other products within the system to work Beti. I wouldn't say that we're developing just payroll only. We're developing Beti, the Beti process, internationally. You know, we looked at, you know, kind of us two following, what the, what the competition does out there with international. I mean, quite honestly, I think it was unimpressive from an ROI strategy that it produces for clients. Our clients now are used to using Beti, and so I think they're gonna expect that internationally, and I think that's how we win. You know, I would say it's the beginning, foundation, for what we're doing, but also we have demand for that product in of itself right now. Okay. Yeah, that's fair. You know, you have mentioned that, you know, some of your customers are kind of jerry-rigging, you know, yeah, onto your system already. How is there any way to know how many of your customers have international employees or offices? You know, it's our larger clients. It would be our larger clients in many of those cases. You know, not gonna give out a specific number, but I mean, the revenue opportunity's there for them. Of course, when you look at our just prospect base that's out there, you know, over time, this will increase the size of companies that we prospect. Okay. Great. Thanks a lot. Mm-hmm. Thank you. Thank you for your question. The next question is from the line of Arvind Ramnani with Piper Sandler. Your line is now open. Hi. Thanks for taking my question. I just wanted to ask about, you know, some of the churn, kinda benefit you see from churn from legacy players. You know, are you seeing any kind of change in sort of the competitive dynamics, or sort of the win rates, that you've historically seen from some of the legacy players? Yeah, I mean, I wouldn't call out anybody in particular. We're getting much stronger. You know, when we released Beti in 2021, I think it was July of 2021, we very first even started selling it. You know, we've gotten a lot better at our value proposition and how we actually go to market with it. I think it took some learning. It was somewhat hard to teach old dog new tricks, you know, from our standpoint of our sales force. When we started selling Beti, we were all virtual sales. You know, we've made a bunch of changes dramatically. I definitely think having a stronger value proposition as we've had with Beti as well as us being face to face is helping our close ratio out there. I would say it would be competitor agnostic. When we have a strategic buyer, That takes the time to really try to achieve the return on investment that implementing any one of these products would, you know, promise to produce, we do very well. Terrific. You know, certainly within the technology world, there's, you know, a lot of conversation with ChatGPT and AI. You know, just wanted to sort of get your perspective either, you know, sort of expected impact to to pick on specifically, but even to the HCM space. You know, do you think this is a space that's, you know, gonna susceptible to change or kind of some pressure from ChatGPT, or you think it's not yet kind of relevant to your space or to your company? No, I definitely think it'll be relevant. You know, you can use AI for multiple things. There are areas that you can use it for that are better than others. You know, there are front-end things you can use it for direct to the client. There are back-end things that you can use it for that a client may never see. You know, when you're talking about AI, it has many uses, you know, some of which is front-end and some back-end. You know, I don't want to talk specifically about what exactly, you know, we're using it for already internally and what our opportunities would be into the future. In answer to your question, yeah, I do think that, you know, over time, you know, AI is gonna be a thing in our industry. terrific. Thank you very much. Mm-hmm. Thank you for your question. The next question is from the line of Jackson Ader with SVB. Your line is now open. Great. Thanks for taking our questions, guys. The first one is on, Chad, you mentioned hiring and maybe being able to kind of hoover up some of the tech talent that have been coming from some of the larger maybe tech layoffs. It sounded like that was more on the developer or the R&D side. I was curious whether you've also been able to maybe pick up additional sales people along the way as well? Yeah, I mean, well, I called out R&D because that's a side that, you know, we oftentimes hire people that have, you know, experience with technology, writing code, and what have you. You know, our sales people, you know, we typically look for people with less than two years outside sales experience. We do take change in careers, what have you. We do have specific education requirements for that position. You know, I wouldn't necessarily say it was difficult for us to hire jobs, but what has changed on the sales side is you get a little bit more time to look. There for a while, I mean, if you had a salesperson that you had, that you were interviewing, you had a week or two to make a decision 'cause they were getting 12 offers. you know, I would say today that's slowed down quite a bit. I would say you're able to take a little bit more time than what you were able to do when we were very compressed in time during the interview process to hire sales people. I'd say that's changed some on the sales side. I called out technology because we're just, we're seeing it. We're seeing it. Right. Okay. All right, cool. That's great. One quick follow-up. Just, like, on the mechanics of the Beti payroll rollout. You're, you're in 180 countries with Global HCM. Like, do you roll out Beti one country at a time? Is it, you know, are we gonna see, like, 180 press releases for all the different countries? Is it, you know, a block here, a block there? Just mechanically, how is that rollout gonna work? There's about 16 to 20 countries that represent about, well, over 80% of the opportunity. You know, I would expect us to be rolling those out first, as you look at it. Yeah, I mean, over time, you know, it's, we build things ourselves. I would expect us to continue to roll them out. You know, there's 16 to 20 countries that are gonna be first. Yep. Okay. All right, great. Thank you. Thank you for your question. The next question is from the line of Alex Zukin with Wolfe Research. Your line is now open. Hey, guys. Thanks for taking the question. Most of my questions have been asked, but I guess maybe on the topic of just pipeline and sales, you know, expansion efficiency, I guess, how do you think about office openings, territory expansion through the rest of the year, maybe sales hiring into the back half of this year to get ready for next year? Just any kinda commentary around that, particularly as it would relate or compare to last year? Then just a quick follow-up. Yeah. That... You know, opening up offices continues to be a big part of our strategy. We've continued to open up offices, I think, a year ago, was it? Last year. Maybe about 15 months ago, let's call it. 14 or so. We opened up 5 offices from December through February. You know, those offices are maturing very well and continue to mature, and we'll continue to open up offices. You know, for us, our bottleneck on being able to open up offices is capacity of our management group being ready to do that. We have to both backfill for, you know, managers that may not be accomplishing their goals as well as, you know, we have to expand. You know, over the course of 25 years, you know, I think we've done that pretty well. It, it is a, it's a part of our growth strategy, and we'll continue to, open up offices when we're able. Perfect. Then I guess maybe just a quick financial question. Free cashflow was really, really strong here in Q1, I think quite a bit stronger than we were modeling. What's the right way to think about that progression as we head through the year? In general, you know, as you're seeing Beti adoption specifically get better, I think last quarter you mentioned it was you know, almost 50% penetration for Beti. Where does... Like, Like, what's the target for this year, and how much does that... How much more efficient is an incremental Beti sale than, you know, a traditional one? I'll take the free cash flow question. You know, I mean, first quarter was strong. You know, as we look out through the rest of the year, we've called out kind of what our CapEx is going to be. We're wrapping up our building in Oklahoma City, a large building here. You know, CapEx will be a little bit more back-end loaded, you know, in terms of how it flows throughout this year. That's kind of the way I would look at the free cash flow for the year. And then on the Beti penetration. Yeah, I can take that. you know, I think the question was how much more efficient is an. Yeah Beti sale. I mean, Beti is a very nominal sale to a current client, you know, from that perspective. I mean, it's not an expensive item and drives a significant amount of ROI. What I would say on new clients that come in with Beti because, you know, they all have to, I would say the biggest margin impact's for them than us. You know, I've always said it costs you the same whether you use the system correctly or not. You know, the charge is the same. You may as well, you know, try to get the most value out of the system by using it the right way. When someone uses Beti, it returns a significant, there's a significant return on investment to the client. For us, you know, you might see some positive margin impact by those clients that use Beti have less paper cuts caused to themselves, and therefore, you know, on the margin, they require less service for us to be able to provide them, and less services around what I would call more of our low margin activities, which is gonna be, you know, amending amended returns and other issues that could come out by having payroll done wrong. Understood. Thank you, guys. Thank you for your question. The next question is from the line of Bhavin Shah with Deutsche Bank. Your line is now open. Great. Thanks for taking the question. Just a couple for Craig. Craig, if I just look at your 1Q sequential growth on 4Q on recurring revenue, it looks like it trended a little bit lower versus the prior 1Qs. I know the declining mix of tax forms revenue has an impact here, but any other commentary on linearity of go lives or even growth within the tax forms, and how that's trending? I would say, you know, we've called out the tax forms. You know, I mean, obviously they don't grow at quite the same rate as the rest of our revenue, but they become a smaller portion of our overall revenue. You know, I would say that that's kind of what we've seen on those tax forms filings. They've, you know, they don't have the same growth rate as the rest of our revenue. Yeah, I'd say it a little bit differently. Since 1998 when we started the company, we've only added 1 product to our year-end services, and that was. ACA ... ACA. That's it, in 25 years. Meanwhile, our monthly recurring revenue products, you know, we've continued to add products that we charge on a monthly recurring basis for them. The monthly recurring, you know, is just growing at a rate much more so than our annual recurring. Over time, you know, the annual recurring amount represents a smaller amount of a, of a client's bill because of that. Got it. Helpful. Just one follow-up on float revenue and just your philosophy on reinvesting some of the upside here. Can you just remind us of your philosophy and if anything's changed at all given some of the announcements on kind of your global initiatives? Yeah. I know, I mean, we still invest in pretty short-term investments, you know, very safe. You know, we're looking at CDs, commercial paper, treasury notes and then some overnight. We're still very safe on our investments and fairly short term. You know, as we do global, you know, we'll look at those opportunities as well. Thanks again for taking my questions. Thank you for your question. The next question is from the line of Daniel Jester with BMO Capital. Your line is now open. Hey, thanks for taking my question, good afternoon, everybody. Maybe wanna tackle Global HCM in a different way. You know, if I think about the sort of new products you've launched in the last couple years, Beti, DDX, like, you know, that goes into theoretically the entire customer base. You know, for Beti, I think we saw the impact on your business, like, relatively quickly. I'm just trying to size up, like on Global HCM, it's not gonna go into all of your customers. So is your large customer opportunity so big that it actually can move the needle this year? Is Global HCM something that you're just thinking about from, like, a multi-year perspective, laying the groundwork, and it's not gonna look like Beti affecting the numbers this year? It's a long question, but hopefully I got all my point across. Thank you. Yeah. I mean, we just came out with Global HCM. I do think it'll be, you know, somewhat accretive to our numbers this year, more so in subsequent years. It's a significant system. I think it'll allow us to continue to go further up. You know, even just the Global HCM side, you know, increases our TAM by about 50%. I mean, it's available there. You know, as we continue to add the payroll to it, I just think that puts us on a different playing field for us to continue to go up-market, as well as serve those clients of ours that currently have international presence and, you know, might not be using our system, you know, the way they're gonna be using it into the future. Okay. thanks. As a follow-up, maybe just on the dividend and the buyback and capital allocation, you haven't really been utilizing that buyback authorization in the last few quarters. I'm wondering, maybe just refresh us on your thinking about doing the dividend when you haven't been using other levers that you already have had in place. Thank you. Well, I would... You know, for one thing, you know, we did buy back over $100 million last year, so we've been, you know, maybe not the last couple of quarters, but for sure last year, we continued to do buybacks. Over $100 million. Over time, we've, you know, bought back $600 million and 4.7 million shares. You know, I would expect that, you know, it'll be a balance between buybacks and dividends as we kinda look to the future. Thank you for your question. The next question is from the line of Kevin McVeigh with Credit Suisse. Your line is now open. Great. Thank you, and congrats on the terrific results. I think I know the answer, but the source of the upside and then, you know, the raise beat kind of the quarter as well. That was new logo, primarily? Just wanted to understand where that's at relative to expectations initially. Yeah. New logos drive our growth. You know, you see when interest rates go up, we've talked about how we're achieving roughly 80% of that as it moves. You know, obviously that impacts us positively as well. For us, you know, what's always driven our revenue has been new logo adds. As you think about kinda the move internationally and up-market, does that impact the implementation strategy at all in terms of, you know, I know upfront you try to be very opportunistic around modules, things like that? Is that the same strategy as you kinda scale it, the client base? Yeah. I mean, it's... Well, our implementation strategy as you continue to add other countries, yeah, I mean, it is gonna change implementation to some extent. That will, you know, a lot of that will be determined by the, you know, origination of the client. Where's the client? Are they in Nebraska? Are they in Mexico? Are they in the U.K.? Where's the client? You know, you have different time zones and everything else where sometimes people are awake, sometimes they're not. You know, definitely, you know, it changes your implementation strategy as you go global. Great. Thank you. I don't know that many of our methods will change as much as it would be, you know, modifying them, to meet the needs of the country that we are in. Thank you for your question. The last question comes from the line of Robert Simmons with D.A. Davidson. Your line is now open. Hey, thanks for taking the question. I was wondering, do you have customers who are now using Global HCM? And if so, what's been the early feedback? We have some companies that are starting to pilot it. I think there's a couple. You know, a lot of Global HCM was developed with current client feedback from that perspective. Just seeing what they're trying to accomplish, what they're using, and then just making a decision that we had just to take our current systems and, you know, be able to put them to where they could be used in 180 countries and in 15 languages. We would expect more and more clients throughout this year to use the Global HCM piece of Paycom. Got it. On the dividend, how are you thinking about adjusting that going forward? Will it be as% of GAAP EPS or free cash flow or some other metric? No, I mean, right now it's, you know, we're looking at it as a fixed amount, $1.50, you know, over the next year, $0.375 a, you know, a quarter. I mean, right now it's, you know, basically, you know, about a 50%, 0.5% dividend yield based on, you know, our current share price. We would look at it, you know, as that $1.50 and then adjust it as we, you know, see fit in the future. Got it. Thank you very much. Thank you for your question. There are no additional questions waiting at this time. I'll pass the conference back to Chad Richison for closing remarks. All right. I wanna thank everyone for joining the call today. Our employees' efforts continue to put Paycom in a great position, and we're off to a great start in 2023. Thank you to the Paycom team. Over the next quarter, we'll be hosting meetings at five conferences, beginning with the Needham Technology & Media Conference and the MoffettNathanson Technology, Media, and Telecom Conference, both of which will be held in New York. Following that, we'll be attending the JP Morgan TMT Conference in Boston and the Jefferies Software Conference in Newport Beach. We'll also be presenting at the Baird Global Consumer, Technology & Services Conference in New York in early June. We look forward to catching up with many of you soon. Operator, you may disconnect. Thank you. That concludes the conference call. Thank you for your participation. You may now disconnect your line.