Paycom at Citi’s 2025 Conference: AI and Automation Drive Growth

On Wednesday, 03 September 2025, Paycom (NYSE:PAYC) presented at Citi’s 2025 Global Technology, Media and Telecommunications Conference. The company’s leadership discussed its strategic focus on automation and artificial intelligence, highlighting both opportunities and challenges. While Paycom anticipates strong revenue growth through AI investments, the company also faces financial headwinds from capital expenditures.

Key Takeaways

- Paycom is transforming into a full automation strategy with its IWant™ AI assistant.

- The company expects significant revenue growth from new logo acquisitions and module upselling.

- CapEx investments in AI infrastructure are substantial but considered one-time expenses.

- Paycom’s operating margins are expanding despite interest rate headwinds.

- Leadership changes and new office openings mark strategic growth initiatives.

Financial Results

- Paycom reported strong sales and revenue growth in the first two quarters of 2025, preceding the full rollout of IWant™.

- The company anticipates continued sales acceleration through the remainder of the year.

- CFO Bob Foster emphasized sales as the primary driver of growth into the next year.

- A tax bill will impact cash benefits in Q3 and Q4, though it will be less significant next year.

- CapEx expenses are projected to be around 15% of revenue this year due to AI investments, but expected to drop below 10% next year.

Operational Updates

- IWant™, Paycom’s AI assistant, is now integrated across its entire system, with over 50% client usage and a full rollout planned by mid-September.

- The company is managing its own Tier Four data centers to optimize costs and control, investing $125-130 million in AI infrastructure.

- Recent leadership changes include internal promotions, with Shane overseeing IT and Service, and Rachel leading product and software development.

- Paycom opened three new offices this year, including a record-breaking opening in Providence.

Future Outlook

- Future versions of IWant™ will enhance automation capabilities, positioning Paycom’s system as a central "brain" for HR functions.

- The company sees new logo acquisitions as a major growth opportunity, targeting mid-market and increasingly up-market clients.

- Paycom views M&A activity in the payroll space as an opportunity for expansion.

Q&A Highlights

- The rollout of IWant™ has proceeded faster than anticipated, aiding the upsell of additional modules.

- Paycom’s sales strategy now focuses on achieving specific deal sizes before moving upmarket.

- The company’s competitive advantage lies in its automation capabilities, which many competitors lack.

For further details, readers are invited to refer to the full transcript below.

Full transcript - Citi’s 2025 Global Technology, Media and Telecommunications Conference:

Steve Enders, Software Research Team, Citi: Good to go? Sounds like we’re mic’d up. So alright. Welcome back, everybody, to, I guess, the afternoon of day one of the Citi, Global TMT Conference. I’m Steve Enders, part of the software research team here at, here at Citi.

With us for this session, we have, both Chad and Bob from, from from Paycom. Wanna thank you both for, for being here. Thank you. Chad, maybe we’ll start with you. Just maybe take us through the the transformation of Paycom over the past past few years and kind of maybe where are we on on processing through some of the the transition that that you’ve been going through?

Chad Richison, CEO, Paycom: Yeah. So I would say, you know, we started off, you know, obviously online. We developed, all of our system ourselves. We developed a single database system, which means, no matter it it manages an employee from hire to retire. So no matter if it’s applicant tracking, onboarding, time and attendance, labor management, time off, payroll, benefits, learning management, and you can just continue on background checks.

So all of that’s done in a single system. And we’ve always done that. And, by having a single system, it meant that, it was easier for clients to utilize it. It meant that it was easier for employees to utilize the system. You asked about our transformation.

And so the transformation that we’ve really moved to is in instead of having people use the system so much, it’s actually automating the system to where someone doesn’t have to use the system as much. Because we’re in a single database and we have all the data in one place, it’s made it easier for us to automate. By automation, I mean things like Gone. Mhmm. You know, prior to Gone, you had to actually manage time off.

You had to approve, you know, can someone take this time off? Who’s gonna backfill their schedule? Do they have enough time? What have you. With Gone, that’s all automated.

The employees work with Gone. There’s no decisioning that needs to happen. And what I found is our clients, prospects, a lot of people, they get decisioning fatigue. You’re asked to make the same decision over and over. And what happens, you develop a little bit of inconsistency in how you make decisions.

Even I do that myself. I mean, depending on when you send me an email, might get a yes or a no, depending on how much of it I actually want to read. You know? And so But what I would say is, when you have automation, you get consistency. And you remove barriers to value.

And so that’s what Gone has done, that’s what Beti®’s done, and now with the transformation that we’ve made to a command driven system, which removes even, more impediments to value, because you don’t need to know how to navigate them. You don’t need to know how to pull information. You just ask the system. And what we are seeing is we have clients now and employees of our clients now that are not navigating the system at all. They don’t even have menu items.

They just have IWant™ set up, their choice, and, it works for them. So we’re having a lot of success, and and and the the word I would use is, you know, we’ve transformed into a full automation strategy. That’s very important, for us as well as the clients and the value they’re able to achieve from our software.

Steve Enders, Software Research Team, Citi: Okay. That’s great to, great to hear. Definitely gonna dig into a lot of the AI strategy in in the product side. But, Bob, before we do that, I’m gonna talk talk to you a little bit. Just in terms of you recently took over as CFO a couple quarters ago, a few quarters ago now?

Yeah. Can you maybe just give us a a a brief, you know, brief intro about yourself and maybe some of the biggest areas of focus for you as you take over the the CFO role?

Bob Foster, CFO, Paycom: Yeah. Well, first of all, was very lucky to step into a role that has such a robust business model. Prior to joining Paycom, Chad and I had met I had a global payroll business that I was running. And then prior to that, I’d spent a long time with And a couple of things that Craig and Chad had started prior to me that we continued is the execution and the discipline around our processes and how we think about the business. And we’ve grown so fast, and now it was really time to think about, as Chad said, the automation strategy and what that means not just for our clients but for us internally.

And you’re seeing some of that in our operating margin expansions. And even with some of the headwinds with interest rates, we’re still able to expand margins. So we we have a robust business model that we’re gonna continue to focus on.

Steve Enders, Software Research Team, Citi: Okay. That’s that’s great to hear. Maybe going back to the AI product strategy. You know, I think you launched IWant™ earlier this this quarter. I guess, what makes it different versus maybe some other AI assistants that are in in the marketplace?

Or or what really differentiates what you’re doing, with it in the market? Well, I mean, I

Chad Richison, CEO, Paycom: would say it works, would be number one. But, I mean, number two, you know, it’s over it’s the it’s over the entire system. You know? I’m not asking a question about a document that’s sitting somewhere. It’s over the entire system.

So I want either gonna answer your question or put you on third base. So, you know, you may ask it you know, I may ask it a question about who’s logged in right now. It’s going to tell me the people who are clocked in right now. If I ask the schedule, it’s gonna take me to the schedule, if that makes sense. So I want to either either gonna answer your question or it’s gonna navigate you to the appropriate spot.

I don’t know of anybody that’s doing that. I mean, I’m not saying someone couldn’t, but we’re not seeing anybody do that out in the industry. It’s very important that you have a single source of truth when you’re going to automate something. You know? If we had multiple data sources that we’re having to pull for from, that’d be difficult.

If our strategy was to buy best in breed technologies and integrate them, it would be difficult to produce iWant. I’m not saying we couldn’t, but, I would have to somehow have all that data in one spot and cleansed. Mhmm. If not, you get a lot of distortion. Even as we were developing iWant, there was a couple of times I mean, I remember there was one time I came out, and I’m like, this thing is just gonna smash everything.

This is incredible. And then I went in the next day, and, you know, it wasn’t working well because we had thrown something else into it. And so what you feed into a model, is important, but AI at its best used, most accurately as the best source of truth. And then the only other thing you need is something that understands the human intent. Like, what did you mean when you said when did someone start?

Did you mean when did they start this project? Did you mean when did their shift start today? Or did you mean when were they hired? And so we have gotten really good at understanding which what question they’re asking based on past questions they’ve asked as well as based on the type of employee they’re asking about. And so, anyway, all that’s to say is I think you’re gonna see more and more people leveraging AI so that they can actually remove the impediments to value and get there quicker.

True.

Steve Enders, Software Research Team, Citi: That makes sense. I guess when you I guess now that IWant™s out there, you know, what’s kind of in the feedback that you you’ve gotten from the the the customer so far? And and how is the rollout maybe trending versus what you were what you were expecting?

Chad Richison, CEO, Paycom: I mean, they say it’s life changing, transformational. I mean, you know, so much of these things, they’ve just given up on. It’s so some so their tasks are so daunting when you’re running HR, payroll, benefits, recruiting, what have you. It’s just so daunting. And a lot of the things and activities that are just, you know, need to be done in these processes, a lot of people have just given up on.

It’s just so difficult to do. And so the one thing with IWant™, it gives them all that back. You know, you get all the value without the effort. You know, we we developed iWant. We started using it ourselves.

We thought we’d roll it out to 10 clients, and within the first two weeks, we’d rolled it out to 2,000. Wow. And, today, we’re well over 50%. By by September 15 here in ten days, we’ll be at a 100% rolled out on that one. Wow.

So and that’s the clients. They just don’t want it. Yeah. You know, we we went to a company. One call closed a company the other day because, you know, they’re they have some they have Spanish speaking employees.

They didn’t know how they were gonna teach their employees how to use our system. They spoke Spanish into it. It worked for them. That’s how they’re doing it. You know, you don’t need to train.

You don’t need training. Just have to be able to speak. So that’s a that’s a different way. And I will say this, if you look ten years out, probably five, maybe three, there shouldn’t be a piece of software that you’re navigating. Why would you navigate anything?

Why do you have to know where to go? Mhmm. There’s AI now. There’s there’s other opportunities. So I think all software that’s still navigable is gonna die.

Mhmm. You know? And the only thing that’s gonna be left those that are, you know, command driven automation.

Steve Enders, Software Research Team, Citi: So I guess with the opportunity with iWant, you know, I mean, great to hear the the adoption and that that rollout so quickly. Do you view the opportunity more about the ability to take more share, find more customers? Or is there something about what you’re doing with that that you can monetize directly within the the customer base?

Chad Richison, CEO, Paycom: I would say there’s three primary buckets. You know, I want we did not charge additional for because I wanted everyone to get the value. You know, it’s it’s not all the time your customer service rep calls you, and you’re getting value for free, and you didn’t have to do any work. There’s a lot of things. You know, Gone was free.

Mhmm. There’s some things you had to change on your side as a business to get it. With iWant, we just teach you how to use it. And, you know, once you know how to use it, it’s revolutionary for you. And so it was very important to be able to do The monetization of iWant, though, you know, we’ll see we will see reflected in in in probably three primary ways.

One will be, yes, increase sales. And why do you wanna do it the old way? Doesn’t make any sense. How hard do you wanna work? How hard do you wanna pay somebody just so you can work at their software?

It doesn’t make sense. Well, when you buy a software that works for you and it’s automated so it will be increased sales, for sure. It’s going to increase retention. I do believe that it removes so much of the impediments to usage currently. I do think it’s gonna have a an impact on our retention.

And then the other thing I think you’re gonna have, cells that are have more modules attached. Last, I want, right now, your work history, and you didn’t have our applicant tracking module. It was just it’ll only give you all your work history that you’ve had at Citi. Mhmm. If you’re if Citi was using the applicant tracking module, well, then it would give you all your work history from ever.

So do you wanna buy the applicant tracking module or not? And so you’ll have additional modules as well that people want to add because of the value they’re gonna get. Okay. I guess from that perspective, maybe where are we in terms of that actually beginning to impact or benefit the sales process or maybe what you’re seeing in pipeline? Well, you’ve seen very strong first quarter led into second quarter.

We’re having strong sales. Revenues coming in well, and that had nothing to do with IWant™. We started using IWant™ ourselves mid July and turned it on for our first clients around July 24. So it’s it’s still early innings in that. But, you know, I mean, it is accelerating ourselves in the field, and I would say that there’s a lot of excitement around our with our service groups and our clients right now of of getting something valuable like this that does nothing but add value and ROI for the client without the additional expense associated with it.

Steve Enders, Software Research Team, Citi: That makes sense. And I guess in terms of the investment behind it, You know, I think you you said there’s a bigger push on the CapEx side of of needing to be able to support the AI capabilities, build out the data center footprint. How should we think about maybe the magnitude of that and, you know, how much investment you’re putting to work here? Well, I think

Chad Richison, CEO, Paycom: it’s first important to understand, we we manage our own data centers and always have. In fact, in 02/2014, there were 13 tier four data centers, and we were one of them. So we’ve always managed our own data centers. You know what? I believe we have the best margins in our industry and probably some of the best margins in software.

I mean, you know, that’s like a plan. It’s not just something we happen to fall into. Mhmm. You know? And and part of that plan is managing our own data centers to be able to have control.

And, when we’re managing a data center, it’s just for us. We don’t have other clients in there. It’s just us. Right. So we were able to spin up iWant and, what we needed for it pretty quickly because we do have our own data centers.

And so our spend, I looked at it like this, we can spend 10 to $12,000,000 a month with a third party leveraging GPUs, their resources or what have you, or we can spend a 125,000,000 to a $130,000,000 ourselves within our own data center. And it’s not like we had to go build data centers. We already had them. Mhmm. What we had to do is you gotta go get, you know, 18 megs of power.

You have to get cooling systems. You have to get batteries. Yes. You have to buy the GPUs. But, I mean, the cost of GPUs come down over time.

We have the GPUs. So the way I would look at it, so like I said on our earnings call, you know, it’s it’s front end loaded loaded and it’s transitory. On an ongoing basis, our our AI cost compared to our competitors, I mean, will be 95% less. So we will. This year, our CapEx, you know, we kind of mentioned that, what we thought at the beginning of the year and the change to that, we kind of mentioned on the last quarter.

You know, this year, our our our CapEx expense had we not spent any on AI, our CapEx expense probably would have finished around 9%. Because of AI, it’s going to finish around 15% this year. But next year, it’s going to be well under 10%. You know, it’s a one time transitory type thing that we’ve done in the past. I mean, if you, you know, if you just look at what we’ve done in the past, these types of things, because we’re already set up to actually manage our data and we do better when we do that, it’s actually going to allow us to do it for a lot less on an ongoing basis.

Again, I can spend a $130,000,000 one year and then, you know, 10% of that or less every year, or I can spend a $130,000,000 every year. Yeah. It’s going up. So Okay. That was the decision that we made to do that.

Steve Enders, Software Research Team, Citi: That makes that makes sense. I guess when you think then about you you call this a transitory onetime spend. I guess, how do you think about the future road map for AI, what you’re doing from a product perspective, and what more capabilities you could build in or would make sense to build in on

Chad Richison, CEO, Paycom: the AI side? Mean, I want goes to version 1.1, then version 1.2, then but I will say, you know, in the future, you’ll be committing all your changes that way too. Won’t just be collecting the data. It won’t just be navigating to the right spot. You’ll be committing all your changes that way too.

So in the future, you’ll be able to do very complex summary and calculation and analysis. So, I mean, it’s the future. It leverages a lot of other development that we do, which is the automation behind it.

Steve Enders, Software Research Team, Citi: Mhmm.

Chad Richison, CEO, Paycom: Very important. You know, I want leverages the Gone automation. I want leverages the Beti® automation. You really need to have it all. I mean, it’s you know, one’s food, one’s water.

Yeah. I mean, you can live with them for a little bit, but you kinda need both to have a healthy life, and that’s kinda where we’re at right now. Okay. That makes that makes sense. Maybe ask

Steve Enders, Software Research Team, Citi: you a little bit differently. Just you think of the the future road map for for for Paycom from a product perspective. How does it maybe evolve further as the as AI capabilities become even more advanced as you’re able to do more with with some of the the models out there? I mean, you know, when

Chad Richison, CEO, Paycom: you think about us in the future, you know, you you really I I would want someone to think about just a brain that handles the HR function, the payroll functions, the benefit administration functions, background checks, onboarding, just everything for a client for what we serve, and the client doesn’t have to be involved in it. And so employees can connect directly to the brain, if you will, which is a fully automated system that actually handles everything that the employees need. We’re getting close to that. I mean, we still have more to go. Yep.

But that’s the trajectory of where we’re moving. And, I mean, that’s what the future’s gonna be. Yep. I do wanna ask about the the margin, the the the the the CapEx comment there. I think you said 15% of of this year.

Would have been 9%. The six extra is all AI, and most of that’s over an eight week period that we spent it. Okay. So it’s not like it doesn’t keep going. Yeah.

We’re already almost spin it all. Does that say you don’t have to you know, you buy a vehicle, you don’t have to keep putting gas in it, change it, whatever? Well, sure. But the expense associated with that, a lot of it is already inherent in our model because we already have data centers. Sure.

We already manage them all ourselves and always have. Yep. So it’s really just about the estimation of number of GPUs that we have, how many we’re going to need in the future, and the power associated with actually being able to, keep them out powered and what have you. And then, of course, you run your own data center. Whatever you buy for your primary, you have to buy for your backup.

Mhmm. I mean, we don’t know, we’re always buying too. Yep. You know? It’s like Noah’s Ark.

I mean, if you’re building data centers, you have to have those backups.

Steve Enders, Software Research Team, Citi: Okay. That makes, that that makes sense. I guess with the that investment you’re making, just how maybe should we be thinking about EBITDA to free cash flow conversion rates? Is there any kind of change to that dynamic kind of moving forward here?

Bob Foster, CFO, Paycom: Yes. We’re focused on that. We know it’s a focus of investors too, we talk about it internally. We don’t guide to free cash flow. But going forward, Chad has said, as he mentioned that that gap is going to narrow going into the future, because, you know, we’re we generate a lot of cash and even these GPUs.

Chad and I talked one night and you don’t have to talk to anybody else. Got enough cash? You can go buy them if that’s what we decide. So we’re focused on that and you’ll start to see that converge.

Chad Richison, CEO, Paycom: Okay. We don’t know what else we’re we would we don’t have any appetite to, you know, build more buildings and things like that. So we don’t really you know, it’s hard for me to think of what would impact free cash flow to the negative as we look further into the out years. Now we’ll say this. This opportunity came about.

We looked at this last year. This wasn’t something that we were putting in place. We needed to make sure we could develop it. We didn’t know. We had to go through that process.

As we got closer to closer, we’re like, we have something. Yeah. Then I’m like, we’re gonna put 10 clients on it, and we ended up putting a couple thousand on it, like, the first two weeks kind of thing. Yeah. It’s like, oh, we’re gonna need a bigger boat.

You know? And so then you start doing that, but then you’re set up to go. Yeah. We kinda know what it’ll be like on a go forward. Sure.

But if we did need to spend to add more, that means we came out with even more technology and value, which would increase the revenue as well. Sure. But as I sit here today, you know, those things will happen. I don’t know that it’s going to necessarily increase our spend though. We’re looking at our a lot of it’s also how you developed it.

You know, if you’re hitting it if you’re hitting a GPU five times when you could be hitting it twice, changes your capacity. Yep. Makes that that makes sense. And one last question

Steve Enders, Software Research Team, Citi: on the model, then I’ll open it up to the, to to the room. But just in terms of, yep, the the tax bill that that came out earlier this year, what impact does that maybe have on the margin or how are you thinking about what that can mean for free cash flow as well?

Bob Foster, CFO, Paycom: So we talked about a little bit on the call. We were just looking at it last quarter. It’s going to have an impact in the third and fourth quarter on cash benefit. We won’t have to make certain tax payments, so that’ll help. It won’t be as much cash wise next year.

Margin wise, it’s a balance sheet item.

Steve Enders, Software Research Team, Citi: Okay. Let’s see if there’s any any questions in the room here. Okay. I’m gonna ask about go to market, a little bit. I do wanna come back to AI after that.

But, just in terms of the, the the the go to market structure, I think you recently, promoted Amy about a year ago, maybe a little more than that. I guess what has she done that’s maybe helped drive some of the reacceleration in the business? And how do you think about maybe further opportunities to drive even better efficiency and productivity within the the sales and marketing channel? Yeah. I mean, I think, you know, it

Chad Richison, CEO, Paycom: was important for us to simplify our process. You know, our product has become a lot more simplified, a lot more automated, and I think that we were able to focus our sales force on that and what the value is for the clients. Our go to market changed a little bit in how new reps go out there and achieve quota of certain size of deals before they move further upmarket. That helped drive additional unit growth in our core, which was very helpful to us. So, you know, we were able to open up three offices this year.

That was helpful for us. In fact, Providence has got to a million dollars faster than any city we’ve ever opened, got to a million dollars in sales. So Wow. There’s some acceleration on on that side. We continue to be called and be pulled up market.

Prospects of any different size, mean, they need automation. And a lot of these systems well, no, I don’t know of a system that has any automation in it, to be honest with you, of any major provider of any large system in our industry that has any automation. So, you know, you can say, well, no. It’ll go crawl your employee handbook and tell you what t shirt you can wear on a Friday. But, I mean, that’s not really automation.

You know, automations, functions, and tasks, and actually automating something that somebody does every day. You know? You take a 100 employee company, how many times do they have to request time off and and manage that in a day versus a thousand employee company or a 10,000 employee company or a 100,000 employee company. I mean, you get what I’m saying? And so the larger the company is, the more automation they require, and there’s just nothing out there.

We’re getting calls on those kind of things right now too and I think that will be an opportunity. I want to

Steve Enders, Software Research Team, Citi: touch on the, I guess, office openings that you did which I mean encouraging to hear Providence is doing so well right now. Does that make you feel more comfortable opening up more offices in the future? How do you kind of think about, you know, when or where it would make sense to to to start to open additional offices? You know,

Chad Richison, CEO, Paycom: we haven’t changed that algorithm of how we open up offices and and how they mature and when’s the right time to do that. Opening up offices is always about bench strength. Mhmm. And and how’s our bench strength? And when we can do it, we do it.

So that really tells us, you know, what those opportunities are. Okay.

Steve Enders, Software Research Team, Citi: And how are you feeling about bench strength right now?

Chad Richison, CEO, Paycom: I mean, you know, well, you don’t have bench strength unless you have strong sales, and we have very strong sales right now coming through, and so that builds a lot of bench strength. Yep. Those are the people that are being successful.

Steve Enders, Software Research Team, Citi: Okay. That makes that that makes sense. I do want to ask a little bit around just the broader marketplace right now and some of the competitive dynamics out there. I think there’s been quite a bit of M and A over the past year or so in the HR payroll space. Has that changed maybe what you’ve seen in the market?

Is it changing pricing or competitive dynamics at all? Just yeah. What have you what have you seen?

Chad Richison, CEO, Paycom: I mean, you know, I’ve I’ve never seen a a payroll company, you know, go private and get better. So, you know and I’ll just say that about that. I I do think there’s opportunities there. I think anytime, you know, you have, mergers or acquisitions like that, I think it creates opportunities, but I will say that that it’s not a reason for someone to use us because this company got bought. I mean, you have to have value.

You have to have an ROI. Never a part of our ROI strategy was they’re bad, we’re good. You know? It’s what are you exactly creating in value. ROI is measured by a with a dollar sign in front of it and a plus.

You know? And so how much is that is based on what can we provide, not based off who got bought. Mhmm. But I do think it’s gonna create further opportunities for us. Okay.

Have you started to

Steve Enders, Software Research Team, Citi: see maybe some of those companies or some of those, yeah, potential customers start to come up for you know, as they come up for renewal, are they looking for alternatives? Are they coming to Paycom looking for something different? Or I

Chad Richison, CEO, Paycom: mean, you’re talking about the the the two that were just announced in the last month and a half. I’d say it’s a little early.

Steve Enders, Software Research Team, Citi: Mhmm.

Chad Richison, CEO, Paycom: You know? But, I mean, we’ve had some in the past where it does kinda create those opportunities, but I would say it’s still kinda early. Yes.

Steve Enders, Software Research Team, Citi: Okay. No. That makes that that that makes sense. I do wanna ask about some of the leadership changes that, I think, happened in the past month or month month or so. New CTO, CAO.

I guess what do those changes indicate for you as a company? And how do you think about the key focus areas under that new leadership?

Chad Richison, CEO, Paycom: Well, it’s a normal evolution. These are both people that have worked for Paycom twelve plus years, so it’s a normal evolution. You know, Shane had run all of IT. Then he became our Chief Client Officer and actually ran service. He’s got an IT background in service that really helped our clients be able to automate certain functions from them on the service side.

And then so as Brad Smith is kinda moving into his new role, Shane’s the natural to take over for that and then shares the role of COO with Randy because they’re doing that together. Rachel, you know, I I went back and took a product back. I had product forever, gave it up for about four or five years, didn’t give it up but worked on other things, and then took product back over in October 2023. And Rachel started running it at that time. And then so her and I have worked daily on on all things product and automation, and she runs at this time.

She’s running all of our product as well as software development groups. Okay. That’s that’s great to hear.

Steve Enders, Software Research Team, Citi: Just on the the mid market side, that opportunity, I think you’ve been indicating you’re trying to move more up that way. I think you’ve done some things on the on the sales side to try to make that happen. Just, you know, what’s resonating in that opportunity right now? And what are you doing from a go to market perspective to go after that and try to capture that?

Chad Richison, CEO, Paycom: I’d say we’re focused on mid market. I would say we’re up and but we continue to get up market opportunities. We’ve been able to sell a lot of them. They’re very happy. So that’s very, you know, that’s very helpful to us.

I would just say this, I mean, we have 37,000 clients. Mhmm. Our two largest competitors have 1,700,000 clients combined. So there’s a lot of opportunity for us regardless of market, regardless of mid market, up market, what have you. Sure.

We’re being pulled more up market, I think, just because of the automation. We are focused on mid market. And then we have a lot of smaller businesses, too. The under-fifty employee market represents about 3.5% of our revenue. So it is much smaller piece, but we do have that market there as well.

Steve Enders, Software Research Team, Citi: I Okay. Mean, I guess, is there anything that’s changing from a go to market perspective? Like you’re building out a mid market team to try to support that or does it, you know, any other kind of requirements to try to do that?

Chad Richison, CEO, Paycom: No. We’re we’ve been doing I mean, we’ve been doing what we’ve been doing now for twenty seven years. That’s been our market, I would say, there for a while. We had different reps maybe going elephant hunting a little bit too much, you know, we focused them more on, you know, what they need to be focused on.

Steve Enders, Software Research Team, Citi: Okay. That makes that makes sense. I think one of the questions we tend to get from investors is, I think, sort of on the second half ramp up on the revenue side. I think it’s maybe pivoted from what gives you the confidence in that acceleration to now 2Q is so strong. How do we now think about the growth algorithm for the rest of the year from some of the prior comments around 4Q being the strongest?

Just how do you think about that?

Chad Richison, CEO, Paycom: We’ve already got the sales. I mean, a lot of it, you know what I mean? Sales are already coming in. So you kind of and that’s the way you look at it. And a lot of it started even before.

I’ll let Bob kind of continue on it. But mine would be sales growth.

Bob Foster, CFO, Paycom: The sales growth and starting earlier in the year with the record sales and have the waterfall go through. Q2 was strong, but, you know, we still if

Chad Richison, CEO, Paycom: you look at the stat comps too, it’s still accelerating growth into Q3 and Q4. So we’re still excited about it. Okay. And I guess as we think about that acceleration and we think about beyond Q4, I guess what does that mean kind

Steve Enders, Software Research Team, Citi: of moving forward? I guess what other factors maybe should we be thinking about as we think about what happens beyond this year?

Bob Foster, CFO, Paycom: I think as we always say, you know, sales is our number one driver of growth going into next year. And as Chad’s mentioned, he’s pretty happy with where sales is and the momentum that they’ve gained. So, as we start to look to ’26 and ’27, you know, the levers all look pretty positive that we can pull.

Steve Enders, Software Research Team, Citi: Yeah. I guess as you think about kind of the future of Paycom and and and what that looks like, I guess, where do kind of see the most opportunity? What do you kind of view as or kind of what you’re most excited about is is

Chad Richison, CEO, Paycom: New logo ads, I mean, is our biggest opportunity. Okay. As said, we have 37,000 clients. Our two largest competitors have 1,700,000 combined. So, I mean, new logo ads is our biggest opportunity.

Our product now, I mean, was telling someone the other day, it feels a little bit like 2012 where we had just got the single database and it’s like we have something that nobody’s had. It feels like that now, I mean, with the opportunity that we have here. So, you know, I think we’re very excited about it as we look into the future but for us, I mean, it’s going to be new logo ads because it’s I think that’s an important part for our clients. It’s important for us to get them on the right the right product.

Steve Enders, Software Research Team, Citi: Sure. I guess, what does that mean then, I guess, for the back to base motion? How do you feel about, you know, some of those reps who think maybe there’s a little bit of pause on on their ability to go push product back into the base? Yeah.

Chad Richison, CEO, Paycom: I mean, iWant’s gonna drive a lot of that right now because, iWant exposes weaknesses in your setup. It exposes weaknesses in your configuration. It’ll expose weakness in maybe systems that have ours that you’re not even utilizing. And so, you know and I mean that I mean, exposes weaknesses in a good way. Yep.

You know? People are seeing data they hadn’t even seen before in some cases. And so I want Will to provide additional opportunities for our CRRs to upsell clients’ products that provide them strong ROI and value.

Steve Enders, Software Research Team, Citi: Sure. We’ve about a little over a minute left. Want to see if there’s any last questions in the room. I’m gonna ask one more question, and we’ll let you get out get out of here. Just in terms of, your own internal use of of AI, I guess, are you leveraging it?

How are you driving efficiencies within the organization? And what does that mean for kind of the go forward margin opportunity?

Chad Richison, CEO, Paycom: I mean, it’s gonna have a a a positive impact on our margins going forward. You know, we eat our own cooking, so there’s a lot of automation. And, I mean, we’re using AI to help us develop software, spec software, test software, deploy software. Sure. You know?

And then you have some of the same thing on the tax service and other side. And so, you know, when you can automate something, I think it’s important to do so. I mean, Paycom will always have an individual to talk to that services our clients. So, you know, we’re always going to have that. We’re always going to have a human touch model.

But I’ve kind of said it at Paycom, and I’ve been kind of bullish on this to the extent someone’s taken data out of this system and putting it into this system or taken data out of this spreadsheet into that spreadsheet. Well, that job’s going away and that’s gonna be going away everywhere. Yep. So because automation’s here.

Steve Enders, Software Research Team, Citi: Awesome. Well, I think we can we can leave it there. But, Chad, Bob, I thank you both for being here and thank everybody in the room.

Chad Richison, CEO, Paycom: Thank you.

Steve Enders, Software Research Team, Citi: See you. Sounds great.

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