All right, good afternoon, everybody. My name is Mark Marcon. I follow Human Capital Technology and Solutions for Baird. Our next presenting company is Paycom, a growing SaaS provider of payroll and HCM solutions to companies with between 50 and 10,000 employees. That's grown very rapidly over the years, all on an organic basis, with some of the best margins in the industry. It's one of my favorite American success stories. Chad Richison, the CEO, founder, and chairman, you know, basically ended up starting up the company with an SBA loan and 13 credit cards, and, you know, was able to build that into, you know, one of the fastest growing and most successful companies within the space. We are always pleased to have you here, Chad. Then we've got Bob Foster, whose pleasure to welcome you to a Baird conference for the first time. Bob's the CFO. He joined the company back in 2022 and assumed the role of CFO in 2025. We've always had Craig over here with us, and it's a pleasure to meet you. I'm going to start off with a real softball. How do you feel about the Oklahoma Thunder? I think they're going to do very well. You know, we have an advertising agreement with them, so the more games they play, obviously the better it is for us. I think they'll sweep it in four. You think they're going to sweep it in four? I think Denver was probably their hardest, but we'll see. We'll see. There's going to be a lot of airing of Paycom Stadium. I've got one question I've been asking everybody, so I hope you indulge me. It's not a Paycom-specific question. You know, post-election, there was a lot of optimism with regards to the environment. You know, since the election, we've had Liberation Day and obviously a dampening of animal spirits. Right now, it seems like the equity markets are basically shrugging off tariff concerns. What are you seeing in terms of, you know, smaller and medium-sized businesses and up to the enterprises that you're dealing with from that perspective? Yeah, I mean, we're not seeing anything differently than, you know, really what we've seen in the past. I mean, you know, we have such a small part of the TAM right now. So, you know, when we're doing well, it's because of the plans that we had and the strategies that we deployed to do well. I mean, our two largest competitors from a size perspective, if you combine both of their client bases together, they have 1.7 million clients, and we have 36,000 clients. For us, there's always demand there. It's, you know, how are we going to go capture it? We have not seen anything politically or macro or otherwise that's impacting that to the negative for us. How has it impacted your spending programs? I mean, just in terms of just that general macro insight. I would say our spending is starting to change, but not because of that. It is really because of our product releases. And we have been focused on automation, not just for the client, but also on the back end for ourselves. The more we have focused on that, you know, the greater the impact that it has had on where we spend our money. That's great. Now I'd like to shift over to Paycom-specific questions. You know, Beti, it's a great product. I've demoed it multiple times. I think it's fantastic. I'm wondering if you can talk a little bit about the evolution of your approach to marketing Beti, to messaging around Beti, because when we think about it, it's like the most automated solution, the ROI, those are all things that are very tangible to HR decision makers. How are you? How's you? How's that evolution gone? Where are you in that journey in terms of marketing that? Yeah, and so, you know, we started off payroll in the early days, and then we added time and labor management and benefits, expenses, learning management, just all of that that we have today. It was all in a single system, as it still is today. You eliminated the need for integration. You know, if you kind of fast forward and we've developed more and more products that allow you to utilize a full system and make it count. Beti was one of those because we're doing the time and labor management. People are already using the expense management within our system. Obviously, we're doing the payroll and time-off requests and what have you. You were able to bring that all together and actually put it in the employee's hands where they could fix and edit payroll before they became issues after they were paid. You know, they were able to fix problems and prevent things from happening. And so, you know, that was a piece that we did, and we rolled that out, which really put the payroll in the people's hands. You know, as we look into the future, that changes even more. I mean, I mentioned this in December at a conference that I was at, and it's still true today. I mean, the future of our industry will all be command-driven. You will not navigate a system. And, you know, we expect we'll be rolling out our version here in the next, you know, this year. But the future of our industry, you'll tell the system what you want it to do, or you'll ask it for the information that you want it to give you. You will not go screen to screen and have to navigate it. That will be both at the employee and the employer level. There are so many things that, you know, there's not like 14 different ways to get a payroll right. There's only one. There's not many different ways to get your time card right. There's only one. I mean, it's either perfect or it's wrong. When you have something like that, when you're always trying to hit something that's exact, you can automate it. You've got to know what you're doing. The better we've gotten with these tools, which we're releasing a lot right now, the easier it is for us to see kind of what the future is going to look like. We have all this data, and that's different than our competitors. Our competitors, they try to exact the same type of result, but there are multiple systems and there's integration. When you move to a command-driven system, not unlike Beti, you require all those data pieces. For instance, if I asked, "Tell me about Mark's career," you know, in our system, and I'm using it on my phone right now, I can say, "Tell me about Mark's career." It's going to tell me everything you've done so far at Paycom, and because you used our applicant tracking system to apply, because we also have all of our pre-employment services, it's going to go through all of your past jobs too. I could even ask it, "Tell me about your performance." All your performance and compensation is in our system too. That is the point: today, in order to utilize systems, you have to become, I mean, maybe somewhat of an expert on the administration, especially on the back end. With a command-driven system, you're putting the information as well as the tasks in people's hands, and you're putting it in more people's hands than what you could have before. If I need to know something about a specific employee or department, I can obviously use our system. But it's been a while since I've gone into Advanced Report Writer and run a bunch of different reports. I might have to ask somebody to do that for me. A command-driven system, I don't have to ask anybody to do anything. I ask for it right then. It might be small. I might be asking. Give us an example of that. Okay, this could be an example. I'm about to promote this person. I need to make sure I'm giving them the right title. What's their boss's title? I mean, that might take me a second. I can go into the system and find it. I just asked the system. I can say, "Who's taking time off? What's the schedule look like in the next? Who's taking time off?" Anything that I have a question about. I wanted to see, I ran into someone in the hall the other day, and they're part of a dev group. I'm heavy into dev. I've been back since November. I’m like, "Where did this person come from? What was their hiring? What did they do before now? What did they do before this?" I mean, normally I'd have to ask somebody that. I just asked my prompt. It gave me their information. That is the way the future is going to be. It will all be command-driven. You will not navigate. You will command the system to go get what you want it to retrieve for you or to go do what you want it to do. That is just one thing that we are doing. You know, there is a lot, as we look into the future, there is a lot that we can do now that we could not before. And you've been leveraging AI, and you just released Ask Here. What percentage of those capabilities that you're talking about does Ask Here currently have? I mean, Ask Here is not, I mean, it's not command-driven yet. Ask Here is going through and filtering through their list of questions they've already answered all in the past, and it'll go through and filter through their handbook and things like that to answer a question for them. Absolutely, you know, we use AI in that. A lot of AI is used to determine what did you ask. You know, it might be your voice. It might be, you know, I can ask in our command-driven system, I can say, "When did you start?" Does that mean when did you clock in today? Did that mean when were you hired? What does that mean when did you start? That is part of AI. You have to be able to work with that. You have to be able to speak the language and know that these are the different variables of that speech. That is a lot of what we work with so that we know what to return you. My point is, in our business, you have to be 100% accurate or you get an F. I have always said that. If we are 99.99% accurate, we get an F. Someone did not get paid right. There are tax problems. There is liability, what have you. The good thing about our business, though, is it does calculate to an exact answer. Because of that, we are able to automate it a lot easier. When are we going to see this? I would say within the next, you know, two, three months, we'll start rolling things out. Within the next two to three months. So when I go to HR Tech, I'll be able to demo it? In October? Yeah. Let's see. I'm hoping. I've got it right here on my phone right now, but, you know, let's see. I mean, it sounds really powerful. I mean, can you actually run like applications? Like if you're running a business, could you actually put in there like how much would it cost to run a third shift? It's our system. If the data is in our system, you can come up with it. There'll be different variations of it. In the beginning, you'll be able to ask it any question about an employee, and it'll pull you any information that is in our system. That sounds pretty exciting. I'm sure our competitors will come out with one tomorrow and say they developed it. We'll see. We'll see. You know, your TrustRadius scores are really big. When I looked through the annual report, you said your number one priority was actually customer satisfaction. Can you talk a little bit about that just in terms of, you know, because when you went through the Beti transition initially, there were, you know, among some of your players, some of the people on your team, there were certain, you know, people that were a little bit heavy-handed in terms of talking to clients about switching over to Beti. How has that changed? What are you seeing in terms of your client scores, client scores fully utilizing the system, things of that nature? Yeah, I mean, we're doing a lot better with that, obviously. You know, we were so excited about Beti because of all the things it does for a client. I mean, we can look and see how many payroll issues each client has every payroll. And when you're able to prevent those, that really impacts the employee that's getting paid in a big way. It obviously impacts the client because they're the ones that have to pay to fix it and or live with an upset employee. I think there's a stat that says if you pay an employee wrong more than twice, there's a 50% chance they're leaving kind of thing. You know, people expect to get paid right. I mean, it's not a, it's just what we all expect. I think as you look into the future, and again, you're talking about Beti, we're not, I think we were disrupting a little bit of our client base. If you're on Beti, great. If you're not on Beti, you're still on the Paycom system. It's the most automated system. We want you to stay on Paycom. I do believe when you look at the future, it does make more sense for employees to be able to do things that only they know if it's correct or not anyway. It's not something that we've stopped on, but I think that we've recognized that our priority isn't always our client's priority at that moment. We haven't changed, you know, our goal of making sure that all clients get the opportunity to achieve the greatest ROI that we have to offer. What percentage of clients are now on Beti? You know, we haven't updated that. I think the last update, we probably said 65% 70%. It's more than that now. We haven't updated that because we see it as one client base, not two. It sounds like the client satisfaction scores are going up across the board. Is that correct? It is. I mean, there's been a very big focus. You know, I went back into, I had our product group forever, gave it up for five years, took it back over in 2023. And we have been really focused on not just Beti, not any one product, but the entire usage strategy. A lot of it comes down to configurations. You know, a business has the best intent to utilize a system of full automation, and then something changes in their business environment. They buy something, make a change, or something changes in ours, we are rolling something new out. It is very important for them to achieve that ROI for us to make it easy for them to digest changes and not have to do a lot of work to receive the value. We have been focused on that for quite some time now, and it is making an impact, as you see, in both whatever score you are looking at, as well as in our net promoter scores that we measure. When we think about like client retention, I mean, if the scores are going up, naturally, you would assume that client retention rates are going to start moving back up. Can you talk a little bit about that? I think we've talked about, we have the haves and the have-nots. We've been trying to, and it does not cost you anymore to use the system correctly. It's the same price. Say it's a hammer. I go to the store, I buy a hammer. I turn it around and use the claw side to beat in the nail. I mean, you know, it does not cost me anymore to turn it around and hit it in the nail the right way, you know. That is really about what we are doing right now to drive usage and to help clients achieve that ROI. I mean, your client retention scores had gone up into the 92%-93% range. Do you think we can get back there? That's our hope. Yeah, I mean, definitely. The hope is that the greater experience and the greater ROI that clients actually achieve, the longer they stay. You know, everything we are doing right now is about that. It's about increasing the value that the client can achieve, as well as increasing our opportunities to go to market. It's really both, you know. We're looking to deliver more of the product to clients that hadn't used us in the past, as well as working with our current client base to get them in a better position. I was going through your website. I saw a number of examples of, you know, clients that left you that have come back. Can you talk a little bit about how much you're, how often you're seeing that? Yeah, I mean, we increased our strategy to get clients back. You know, you think of a breakup, and, you know, sometimes you've got to go ask that person to come back to you. I think that we've been through that. We have a little bit different strategy for how we go after lost clients, no matter how long they've been gone, because they didn't impact their situation. Maybe they got a lower price. Maybe they got, but their situation didn't change. Our opportunity is going back out there and delivering on the promise that we know that we can deliver on. That's been a focus of ours. I'm wondering if we can switch over to go-to-market. You know, you had Amy take over sales. Can you talk a little bit about some of the things that she's done to fine-tune, you know, the training, the selection, you know, what sort of opportunities people go for and what that's done in terms of sales productivity? I mean, back to basics is all I would say. I would say that we eliminated a lot of the extra things that we implemented into training and just went back to the basics for us. I mean, our training had gotten to 17 weeks, primarily off-site. I mean, you know, and after about five weeks, you're untraining people, you know. We started implementing a lot more of the role play that we've done in the past and really focused people. I think we had a lot of elephant hunters and focused them on unit counts as well. There is a lot that we did. You know, Jeff York is still at the company, has been at the company. I know he retired as Chief Sales Officer. I mean, I would say he's probably the greatest sales mind out there. He continues to work with Amy every day as well. You know, together, they've kind of gone back to the basics, and it makes an impact on for us. It seems like it's working. I mean, if we take a look at like your, you know, your sales trajectory and your bookings, you know, there was a period of time where you were consistently growing, you know, 25%, 30% organically. Obviously, there's a lot of larger numbers, but it started trending down, and then it's stabilized, and it looks like it might even be trending up a little bit. Can you talk a little bit about, you know, what your aspirations are in terms of sales growth? Because we take a look, it's like, you know, take ADP and Paychex combined, you know, 1.8 million clients, you've got less than 40,000 clients. There's natural turn, there's natural opportunities. How are you thinking now about the potential revenue growth rate and the algorithm there? You know, as much as we can get, I mean, I do not really think of it in terms of a percentage other than, you know, to your point, there is 1.8 million clients out there with just the two. You add everybody else, there is a lot more of that. We have less than 40,000 clients. We are the most automated solution. So we should have more clients, and that is a focus of ours. I think it is very important that we remove impediments to value. You know, there is a lot of things you buy. I mean, you might buy a refrigerator that has technology in it. It can do a lot of things, but you got to set it all up. Do you, though? You know, there's different techniques now and into the future where a system can work with you to make sure that you're getting the full value and keep you up to date on it. That's really, I think, where we have the challenge. That's really the challenge of our industry. I don't know that it's just unique to Paycom, but it's something that we've been driving toward, and it's in our hands to be able to fix it. I mean, we can, so. Part of the growth algorithm is also coverage of territories. You've got 57 sales teams now. You just recently started up a group of them, but you went through several years where, you know, it was relatively, you know, stable without much change. How are you thinking about the number of sales teams that you could ultimately end up having, and what's that going to end up doing in terms of driving the growth? You know, when we looked at our opportunity, and again, a sales group is measured by the number of prospects in a territory. You know, about a couple thousand prospects in our sweet spot, that's a territory right there. At one time when I looked at it, we could have over 100 sales teams just with the number of prospects that we have out there. You know, you're not going to have one sales team in New York City, you know, or one sales team in Atlanta, but you would have one in Tulsa, you know. Some cities, you can have multiple teams. We looked at, you know, at that time, it was over 100. Today, we're at 57. We hadn't opened up, to your point, we hadn't opened up any sales offices in the last three years. This year, we opened up three. As you know, we take a current sales manager who's successful, we relocate them to a new city where they open it up, and then we backfill them with a sales rep who's ready to be sales manager. You know, our log jam kind of, or, you know, what's the, prevents us from being able to open up offices is if you have managers that aren't yet at the success level where we're ready to relocate them, or if you have a bench that's not ready to come in and backfill those managers from relocating. So when you have success in your sales organization, it kind of tells you when's the right time to do that. We did, and so we had an opportunity to do three this year. But I would say 100 total, you know, over time when it makes sense. How much time? I mean, I'd like to do it tomorrow, but, you know, it's a function of having the backfill and having success. I mean, given that algorithm in terms of having the. I don't know, Mark. I mean, it just kind of, I hope in my lifetime, you know. I mean, I don't know, you know. I'm sure you can make it happen if you want. I believe what we've also been doing is growing the amount that any one sales rep can sell to. I mean, we've got reps that sell $4 million, you know, for one sales rep. I mean, when we IPOed and worked with you, I mean, that's as a city would sell $4 million if you're lucky, you know. It is not just the number of sales teams that we add, it's also the amount, the productivity for any one sales rep's continuing to go up as well. Can you talk a little bit about the, you know, you're not only automating your clients' business processes, but you're automating your own. You already have some of the best, you know, EBITDA margins in the space, but for a while there, it was stagnant or potentially going down a little bit. Now it's starting to move back up. How should we think about the margins as you're continuing to automate? You know, they're the same thing. Automating for the client is automating for us, or automating for us is automating for the client. I mean, anything that we automate on the back end is to speed up a result for the client, whether that's on taxes, whether that's setting up EDI files or benefit carrier or whatever. Anything that we can automate on the back end is focused on client value. Whether we're doing it on the client side and there's just work that we don't have to do anymore, or whether we're doing it on the back end and it's impacting the service that's being delivered to a client, we will always have a high-touch service model. I'm not going to automate relationships, you know, but I think over time you'll see service people shift out of a task management into an influence of usage model, you know, because sometimes people like to call and talk to somebody about how do I this, that, and the other. I don't know that our system's going to mimic a conversation, but if you know the data you want, it'll bring you the data. If you know the task you want it to automate, it'll do that. I don't know that it's going to automate the conversation. I believe that's going to be done through our service individuals. I always see us having a high-touch sales model, high-touch conversion model, and high-touch service model, but we're not trying to see how many times we can touch it, if that makes sense. Where are you in that journey just in terms of automation? One yard line? I mean, with what our plan is and where we are today. I mean, I think if you looked at us compared to others, we're way, way beyond that, but I think for our own plan and what's possible today, you know. I mean, that implies that the margins could actually improve much more than just small incremental changes from a long-term perspective. Yeah, I wouldn't say that's our, I mean, you know, I wouldn't say that we're doing it for that reason, but I do think the more automation you have, everyone wins, right? The client wins because they're getting the value without having to crawl through the forest to get it. We win for the same reason. I mean, the only reason a client calls us is due to a deficiency in the product that we make. Why are they calling us? I mean, we make the product. We have control over all of it, you know, and so we can also, you know, provide the solution there as well. You recently completed your fifth office in your big corporate park, CapEx. You know, some people are assuming it may end up coming down a little bit. Can you talk a little bit about capital expenditures and capital allocation and, you know, how we should think about free cash flow conversion relative to EBITDA? Bob? Yep. No, we have, we finished a lot of the infrastructure at the corporate campus. Our data center in Arizona is online. When you look at the free cash flow, we had a good quarter, but we're also finding things. We're still investing in our product and development, and AI is not expensive or not inexpensive to roll out. We're still going to be opportunistic on how we spend that. We're not, we haven't guided the free cash flow, but we are, you know, we focus on it internally for sure. I mean, would you anticipate, even though AI is not inexpensive, would you anticipate that the free cash flow as a percentage of EBITDA is going to increase at least marginally over the next 12 months relative to where it's been? I don't know that we can guide to that. I mean, I think that we are, I think you're going to see a shift away from buildings into because we're substantially built. Even as you look at our employment base, we're still automating a lot. And then I think, you know, there is equipment and opportunities there. Fortunately, you know, even that's coming down at a pretty good rate and especially when the, what you can get from a capability. We are ambitious in what we're doing. I don't think we know yet, you know, we're doing what needs to be done and we haven't, I wouldn't know yet. I wouldn't say we don't know yet. We know what we're doing, but I think from a percentage standpoint, I don't think we're ready to talk about that yet. Unfortunately, I think we're out of time in this room, but we do have time for a breakout session. Please join me in thanking Chad and Bob for a terrific discussion.