Paycom (PAYC) Q4 2025 Earnings Call Transcript

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DATE

Wednesday, February 11, 2026 at 5 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Chad R. Richison
• Chief Financial Officer — Robert D. Foster
• Chief Operating Officer — Daniel William Jester

TAKEAWAYS

• Total Revenue -- Paycom Software (NYSE:PAYC) reported $544 million, up 10% year over year for the quarter, and $2.05 billion for the full year, exceeding the initial outlook.
• Recurring and Other Revenue -- $517 million for the quarter, up 11% year over year; $1.94 billion for the full year, a 10% increase.
• Adjusted EBITDA -- $236 million in the quarter with a 43.4% margin; full year adjusted EBITDA was $882 million, up 14%, with margin expanded 180 basis points to 43%.
• GAAP Net Income -- $114 million and $2.07 per diluted share for the quarter; $453 million and $8.08 per diluted share for the year.
• Non-GAAP Net Income -- $135 million for the quarter, up 4% year over year, or $2.45 per diluted share; $519 million for the year.
• Free Cash Flow -- $404 million for the year, up 20%, with free cash flow margin rising 180 basis points to approximately 20%.
• Capital Expenditures -- $275 million, about 13% of revenue, including approximately $100 million for expanding data center and automation/AI capacity; prior year CapEx was $197 million, or 10% of revenue.
• Share Repurchases -- Over 1,700,000 shares repurchased in 2025, representing 3% of outstanding shares, for $370 million; since 2023, nearly 4,200,000 shares repurchased (7% of shares) for $815 million.
• Dividends -- $85 million paid in cash dividends for 2025, with the next quarterly dividend of $0.0375 per share approved and payable in mid-March.
• Buyback Authorization Remaining -- $1.1 billion as of year-end.
• 2026 Revenue Guidance -- Targeting 6%-7% total revenue growth and 7%-8% recurring revenue growth, described as a decrease from last year's guidance.
• Retention Rate -- Improved to 91% for 2025, with management emphasizing further room to rise and being a "definite focus."
• Client Count Growth -- Client count grew approximately 5% in 2025.
• Product Usage (iWant) -- iWant usage increased 80% in January from Q4, with management attributing improved retention in part to this product.
• Sales Organization Expansion -- Sales teams expanded from 8 to 10, adding approximately 100 salespeople; recruitment of additional personnel and training initiatives underway.
• AI and Automation Initiatives -- Broad productivity and cost gains driven by automation; full solution automation and decisioning logic expanded throughout the platform.
• Restructuring -- Restructuring led to year-end headcount of 5,800 employees; no further internal employment strategy details disclosed.
• Sales Focus -- New logo additions cited as primary growth driver, with cross-sell through CRR organization contributing to full automation strategy.

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RISKS

• Chief Executive Officer Richison confirmed, "We did announce a restructuring last year and ended the year with about 5,800 employees," but withheld further detail on internal headcount plans, indicating potential near-term organizational changes or uncertainty.

SUMMARY

Management delivered quarterly and annual results with revenue, profit margins, and free cash flow meaningfully above the company's initial guidance. The 2026 outlook, however, projects a moderation in total and recurring revenue growth rates by roughly one percentage point compared to previous years, attributed explicitly to guidance discipline rather than weakening demand. Large investments in automation, AI, and sales force expansion were highlighted as key operational priorities, with product usage and client retention improvements presented as ongoing focuses. Strategic priorities now include capitalizing on new logo opportunities, expanded cross-sell via the CRR team, and efficiently capturing sales team productivity gains across both new offices and existing geographies.

• CEO Richison said, "We only have 5% of the total addressable market available to us," underscoring management's continued view of substantial future market opportunity.
• Management stated no changes to their guidance methodology for 2026 and affirmed intent to provide updates "throughout the year as we see that change."
• Recurring client “returns” and increased usage of the iWant platform were credited as drivers of improved retention and product engagement, with iWant described as featuring usage up 80% in January alone from fourth quarter.
• No indication from management or customer data suggested a decline in market demand or increased reluctance to purchase, contrasting the more cautious revenue guide.
• AI adoption and full automation remain positioned as core differentiators, with Paycom Software's platform now supporting rapid product iteration and expansion into adjacent industries.

INDUSTRY GLOSSARY

• CRR: Client Relations Representative; a sales and support function focused on driving adoption of new products and enhancing cross-sell within the existing client base.
• iWant: Paycom Software's proprietary user interface and workflow automation tool designed to streamline employee and executive access to HCM data and functionality.
• Full Solution Automation: Comprehensive automation of HR and payroll workflows, including autonomous decisioning logic, to minimize manual user inputs and increase operational efficiency.

Full Conference Call Transcript

Thank you, Chad. We delivered strong fourth quarter results with total revenue of $544 million, up 10% over the comparable prior year period, and recurring and other revenue of $517 million, up 11% year over year.

Robert D. Foster: Looking at 2025 full year results, we are very pleased with the execution throughout the year. Total revenue in 2025 came in at $2.05 billion, ahead of our initial outlook, with recurring and other revenue growth of 10% year over year to $1.94 billion compared to our initial expectation of 9% growth. We delivered even stronger fourth quarter and full year profit metrics that were driven by stronger revenues and operational gains from automation and cost discipline initiatives. Adjusted EBITDA margin remained strong in Q4 at 43.4%, or $236 million. Full year 2025 adjusted EBITDA grew 14% year over year to $882 million, representing a 180 basis point year over year margin expansion to 43%.

Turning to GAAP results, GAAP net income in the fourth quarter was $114 million, or $2.07 per diluted share based on 55 million shares. Full year 2025 GAAP net income was $453 million, or $8.08 per diluted share based on 56 million shares. Non-GAAP net income for the fourth quarter increased 4% year over year to $135 million, or $2.45 per diluted share. Full year 2025 non-GAAP net income was $519 million, or dollars and 24¢ per diluted share based off 6 million shares. Margin strength in the quarter and full year was broad based, driven by our continued focus on

Operator: Representing

Robert D. Foster: 33% margin, up 470 basis points over the prior year. Total CapEx of $275 million in 2025 represented approximately 13% of total revenues, compared to $197 million, or approximately 10% of total revenues in 2024. We invested approximately $100 million to expand our data center footprint and capabilities to support our automation and AI initiatives. Free cash flow, defined as operating cash flow less CapEx, was $404 million in 2025, up 20% year over year. Free cash flow margin expanded 180 basis points year over year to approximately 20%.

In 2025, we repurchased over 1,700,000.0 shares of common stock, or approximately 3% of our shares outstanding, for a total of $370 million, and we paid approximately $85 million in cash dividends. Since the beginning of 2023, we repurchased nearly 4,200,000.0 shares, or approximately 7% of shares outstanding, for approximately $815 million. We had approximately $1.1 billion remaining as of 12/31/2025 under our buyback authorization, and we continue to be opportunistic buyers of our stock. In addition, the board has approved our next quarterly dividend of $0.03 $75 per share payable in mid-March. Turning to the balance sheet, even after returning capital to stockholders through buybacks and dividends paid in 2025 we ended the year with a

Operator: The 2024. Coke 2026. We expect total revenue

Robert D. Foster: Midpoint of the range.

Operator: 2026. 2020 was a year of solid execution

Robert D. Foster: With very strong fundamentals.

Operator: Customer retention got better. But your guidance growth looks a bit like a slowdown from a They need to automate our

Chad R. Richison: Product rapidly, you know, as we now the product begins to decision itself in many different areas, and, you know, last year, you know, we have opportunities in sales and that is an area of focus that we have right now as we talked about, Raimo, at your conference in December. You know, the good thing is that our clients are happy, and retention is improving, and we have the most automated product in the industry. So, you know, I do think that when you look at it, I mean, bookings have been up every year. They were up 2025, continued that trend. Our expectation is no different from 2026.

We will have some inflection opportunities throughout the year, and as those materialize, those will be reflected in our numbers.

Operator: And then the follow-up that I had was, like, with the change in sales leadership, it is the beginning of the year. Should we think about, like, significant

Chad R. Richison: Changes of go to market, etcetera.

Operator: System. As we have been

Samad Samana: This year, the initial guide was for nine and you guys ended up doing about a point and change better than that. So as I think about this year's 7% to 8% outlook, is there any change to the guidance methodology? Should we think about it as a similar construct? And then kind of similarly thinking about maybe what are the upside nodes maybe as the year progresses? And then I have one follow-up.

Chad R. Richison: Yeah. And so, Samad, last year, we guided at 7% to 8% total revenue growth, and, you know, we just reported that we finished at nine. This year, we are guiding to 6% to 7% total revenue growth. So about a percent difference this year versus last year. Again, last year, we focused very much on sales, but also on the full value achievement of our client world-class service. We were able to see retention gains through that. Clients are happy. And, you know, as we focus on the new way to utilize our software, you know, we have been focused on our go to market strategies here.

Robert D. Foster: And, Samad, I will add that there has been no change. We are guiding to what we can see right now, and we will continue to update throughout the year as we see that change.

Samad Samana: Understood. And then maybe just understanding the growth algorithm, I think about the client count growth in 2025 being around 5%, and use that as a unit growth number. And I think about the 2026 growth, that again, 7% to 8% on recurring revenue. Should we think about that kind of similar unit growth, and then any ARPU expansion opportunities? Just help us understand what the different are to that 7% to 8% growth, and maybe where you see the room for, like, neither most conservatism or outperformance.

Chad R. Richison: New logo adds is going to be our biggest opportunity for growth. We have other opportunities as well now with adjacencies that are available to us. But new logo adds, that is what we are focused on. Our sales primarily come from our outside sales organization. They only focus on new logo adds. And, again, after a client has been with us for thirty days, that is when we moved toward the CRO

Operator: Your next question comes from the line of Mark Marcon with Baird. You may proceed.

Chad R. Richison: Good afternoon, and thanks for taking my questions. So you are coming off of a quarter where sequentially your year over year growth rate ended up accelerating. It hit 11.3% on the recurring side against a tough comp, which was up 14.5% the year before. And the guide basically does imply a bit of a slowdown. I am wondering what are you seeing in the field? And you did make a change with regards to sales leadership. So I am wondering, what are you seeing in the field? Obviously, all of the stocks across all of SaaS have been hit. Are clients expressing any sort of hesitation or longer decision cycles?

Anything that you are seeing that is different or that would suggest that things are going to slow down? Perhaps it is employment and just fewer seats. I do not know. Just wondering if you can give us any sense there. No. We are not seeing any change in the desire to buy our product. Again, for the last three months, we have been going through bringing everybody into training and going through what our product does now. We have released a lot of automation just since November. A lot of the product decisions itself. You do not have to log in. You do not have to move data. And you do not have to make decisions on things.

We have been talking about that for a long time. It was important for us to make sure our salespeople are going to market with that message. But, no, we have not seen any reluctance from people and prospects to make changes out there in the marketplace.

Robert D. Foster: That is great. And can you talk a little bit about the usage with regards to iWant at this point? I mean,

Chad R. Richison: It looks really slick. I am just wondering what the usage patterns are there and what the customer feedback has been. Yeah. So I definitely think iWant definitely contributed to help with our retention last year. As we mentioned in the prepared remarks, we are having a record number of clients return to Paycom Software, Inc. As they left for maybe something that they felt was a lower price but ended up being 10 times our cost. Specific to iWant, usage is up 80% in January alone from fourth quarter. iWant continues to generate greater and greater usage.

I think, especially at the employee level, it is really becoming the predominant way to access data, as well as for the C-suite level. I think that you still have user buyers and administrators that are used to certain parts of the system. Although they are gaining value through iWant, I also think that you have certain creatures of habit that are also Most thieves and see you might

Operator: Thanks for your care. I guess one of those kind of the few I live in, I am wondering the refund over the past spoke, many impact you know, really in terms

Operator: Getting incremental to share or direct the appointments to kind of the leading medical account when you supplied the line. Yeah. I would say shifted on quality. That is something that has been very important to us.

Chad R. Richison: I mean, it is hard to say that when you are in a sales environment that quality over quantity. But it is very, very important that we are out there doing things the right way because, like I said, we lost some clients that we just should not have lost because the value was there for them. Then as we brought those clients back on, and as we look at going to market to sell new clients, we want to make sure that all the clients get the full solution automation available to them upfront, and they have purchased for the right reasons.

As a sales organization, we have gotten together over the last three months and gone through all of our training to come out the other side of this. We are excited about that. We are also excited about what we see in the pipeline. Our opportunity has not changed. We only have 5% of the total addressable market available to us. We do have the most automated product, and we are beginning to see people crave that in a way that they are willing to digest automation.

Operator: Okay.

Operator: Great. And then

Jason Celino: I guess, just in terms of the guide, just wondering what you are assuming from an underlying employee level perspective and maybe how does that compare versus what you saw in Q4

Chad R. Richison: Yeah. Stabilization is what our expectation is, and that is what we saw in Q4 too. Without some dramatic change in unemployment, really what is going to impact us would be our execution of our strategy.

Operator: Your next question comes from the line of

Jason Celino: Celino with KeyBanc Capital Markets. You may proceed.

Jason Celino: Hi. Thanks for taking my question. This was the biggest new customer adds year since, I think, 2022. How much of this is maybe due to those new sales offices that have been ramping? Or those new returning customers that you talked about? And then what are some new incremental initiatives that are targeted toward new customers for 2026, if you have anything to share.

Chad R. Richison: Yeah. The new offices definitely spun up quicker than any offices in the past. To say that they were the largest contributor to the gain, I think, would be false there. We have done very well with our product throughout the year, and we continue to have strong go to market. In some areas, we have offices that do well over $9 million in sales. In areas, we have offices that do much, much, much lower than that. In some areas, we have a sales rep that will sell $4 million, as they did last year. All these are opportunities for this. We have had both pockets of success and pockets of opportunity.

As we have looked at our organization as a whole, we are very confident on the go-forward of capturing all that opportunity and continuing to maximize those pockets of success that we see across the board.

Jason Celino: Okay. And then retention, 91%. Nice to see the improvement. I think with iWant, part of that product was to improve retention, so it is nice to see. But maybe it was unrealistic for me to have wanted to see more improvement, no pun intended. It sounds like you are doing some training.

Operator: But

Jason Celino: You might have some more room to chop on getting retention back to us in years past. But maybe talk about the strategy there and then how to think about improvement in the years to come. Thanks.

Chad R. Richison: Sure. Providing world-class service to clients and making sure that they achieve the full value that is available to them has been our focus. I did expect retention would go up last year because of how hard we focused and how well the clients now are using and getting value from the product. Do I think retention still has room to rise? Absolutely. Not only do I think it has an opportunity, I think there is an expectation there across the board with all the work that we have done. We have that momentum going in the right direction right now. That is definitely a focus of ours.

Operator: Your next question comes from the line of Patrick O'Neil with Wolfe Research. You may proceed.

Samad Samana: Hey, guys. Thanks for taking my question. Can you just elaborate a little bit on how

Daniel William Jester: AI is improving internal productivity and efficiencies, and maybe which areas you are specifically seeing improvement? And then how are you thinking about balancing the benefits between bottom line expansion and reinvesting in the business for rough? Thanks.

Chad R. Richison: AI is helping us across the board. We can talk about speed of processing and all the different types of things that we have been able to do on our back end to really speed things up. I think there is a little misjudgment about the AI piece as materializing as a threat, a weapon that will be used against us. AI is our friend at Paycom Software, Inc., and I have worked very hard to ensure that the misunderstanding of AI's impact on us is not on our end. I believe as you look into a peep the future, we have opportunities now that we did not have in the past. The speed of development has increased.

The pace of the user buyer being able to digest it might lag a little bit, but we can develop a lot more today than we have been able to in the past. We are in this age of software development and, in some instances, replacement of specific software. Paycom Software, Inc. can get into every adjacent industry now within weeks or months. I will remind everybody that I was the first vibe coder back in 1998. There are several easy-to-displace industries that do not just sit ancillary to our industry, but they are dependent upon our industry of where the data starts.

Now that we can develop anything very quickly and use all these technologies to replace other industries in a matter of weeks or months, we are excited about what that looks like for our future as well.

Daniel William Jester: Super helpful. Thank you.

Operator: Your next question comes from the line of Daniel Jester with BMO. You may proceed.

Samad Samana: Yeah. Great. Thanks for taking my question. I think maybe I will just piggyback a little bit off the answer that you just

Daniel William Jester: Gave there, Chad. I think in your prepared remarks, you talked about building some tools maybe around iWant.

Samad Samana: And so if there is any examples you could share there, that would be great. I know that part of the thesis, though not the biggest one,

Daniel William Jester: Was about the ability to cross-sell, as

Samad Samana: Customers use iWant and want access to all the data and functionality. Are you seeing any evidence of that? Thanks.

Chad R. Richison: Yes. The way I would look at iWant is iWant allows someone to access the value that is there. They do not have to be an expert in the system. They do not have to be trained in the system. Through the other automation that we have built throughout our system, with iWant, it is much, much easier to access that. We continue to build out the iWant system. We continue to add more and more functionality to it. It continues to get stronger and stronger. We are putting out more products. We are putting out more products now than we ever have.

We do not necessarily announce it to the market, but our clients are experiencing it every day as we call them and turn them on these products and this automation. That is going to be our focus from this point forward. The goal of the Paycom Software, Inc. software is truly full solution automation to where you buy it, you configure it, and it does everything else for you. We have been focused on that. It is something I have been talking about. With the AI tools that we have right now, and additional that we have become aware of and begun to start using also, there are faster opportunities for us there.

I am going to say that there are still things you have to do on the back end with these types of things. We are excited about what is happening within our industry and definitely within our product and how this is all materializing for strong ROI for clients that utilize Paycom Software, Inc.

Daniel William Jester: That is great. Thanks, Chad. And then maybe, Bob, to you. I know that there was a lot of onetime capital spending this past year. Any color you can share with us about how we should expect CapEx and free cash flow to look in 2026? Thank you.

Robert D. Foster: Yeah, sure. So we did have that onetime expenditure like you

Operator: Mentioned.

Robert D. Foster: The way we look at that, though, is we do run this business with the long-term outlook. If we do see an opportunity again like that to invest and help our clients achieve even more ROI, we would take that. The positive thing there is we do have the EBITDA margins and the cash to do that.

Operator: Your next question comes from the line of Jared Levine with TD Cowen. You may proceed.

Daniel William Jester: Thank you. Can you give us a sense in terms of your January retention performance, just given the significance of that churn for the full year? And then as we look at the 2026 guidance here, what are you assuming in terms of retention versus 2025? Are you assuming any improvement or relatively stable

Chad R. Richison: Yeah. We disclose retention once a year. We did just disclose it for 2025. I will let my prior comments speak for themselves as far as how important usage and value attained is for a client in order to increase retention and how well I thought we did last year with this initiative and how more and more usage should be accretive for us into the future.

Daniel William Jester: Got it. And then can you give us your latest thoughts in terms of new sales office openings here as the change in sales leadership could impact potentially the pace of additional sales offices this year over the near term?

Chad R. Richison: Yeah. As I disclosed in the Barclays conference, we have expanded our sales teams to 10 from eight. That puts an extra 100 salespeople in the field. All salespeople now are experiencing a different level of training through our program. That is happening right now. We are hiring as many salespeople as we can right now. We would expect that those would give us an opportunity in the future to open up more offices. It is a goal of ours. It is also a goal of ours to capture the opportunity available to us in the office that we have opened.

Operator: Your next question comes from the line of Kevin McVeigh with UBS. You may proceed.

Samad Samana: Great. Thanks so much. Chad, your comments on GenAI were pretty helpful. I wonder

Jason Celino: Could you give us a sense of have you seen client

Chad R. Richison: Behavior patterns in terms of consumption across any modules change

Samad Samana: As a result of the GenAI adoption? I mean, obviously, one of the questions we get a lot is the perpetual displacement risk, which we do not subscribe to. But is there anything you can help the market understand that helps alleviate some of that concern, whether it is clients that have these tools that are still using Paycom Software, Inc., or leveraging different parts of your platform that they have not in the past, just to help dimensionalize and calibrate some of this concern.

Chad R. Richison: Yeah. I would say there are some clients that will run toward the full automation, or what you might be calling a GenAI consumption. But I will tell you, it is much more important that you meet them further than halfway there if you want to get them fully utilized and actually getting the value out of it. You have to make it easy for people to digest. That is what we have spent a lot of time doing. You release something great, like, why are they not using it? Well, it is not good enough for them to understand

Operator: How to

Chad R. Richison: Digest it or plug into it. Those are the things that we have been working on both with our software as well as our go to market to make sure that we are bridging all of those gaps. The telephone edge? One quick question on the guidance.

Samad Samana: What retention number is embedded in the 2026 guidance? And then

Operator: How much

Chad R. Richison: Buyback do you have in the 2026 estimates as well? We have not disclosed what type of retention. Obviously, we are happy with the retention, and I would be very disappointed if retention reversed. I think with all the work that we are doing, and all the value and happiness that clients are achieving right now, I think we are in a pretty good position for that. We just finished up January in retention to measurement throughout the year. We are going to continue to do our work this year to make sure that we finish strong at the 2026.

Robert D. Foster: On the buyback side, those are opportunistic as we are going through and taking a look at where the stock is and where we think there is a displacement. Those are just opportunities. We do not put anything into the guide on that.

Operator: Your next question comes from the line of Bhavin Shah with Deutsche Bank. You may proceed.

Chad R. Richison: Chad or Bob, there are clearly a lot of positives here with better client growth versus last year, along with an improvement in retention.

Daniel William Jester: Just trying to reconcile

Samad Samana: That with the recurring revenue guide for next year that would imply the smaller seller adds in several years.

Jason Celino: There a the change in sales training

Samad Samana: Or an increased emphasis on client service impacting

Jason Celino: Growth next year, or is it maybe iWant slowing down decision-making processes?

Samad Samana: Any insights in terms of what could be impacting growth will be helpful, especially as industry dynamics seem to be

Daniel William Jester: Somewhat stable.

Chad R. Richison: Yeah. You kind of know what is going on in fourth quarter there. You can see the sequential change and kind of how our revenue comes in week by week, day by day. You can see the sequential change as it goes into this year. Look at how that sequential change, also normalizing for the things I just mentioned, what that looked like for last year. I think when you come to that, you will see that our guide here is not incredibly dissimilar to last year's guide. It may be different than where we ended, but from where we started last year, we took the same approach. We are comfortable with the guide as we go into this year.

As I mentioned, we do have inflection opportunities throughout the year, and as those materialize, we will make sure we report those.

Operator: Thanks for taking my question.

Operator: Your next question comes from the line of Jacob Cody Smith with Guggenheim. You may proceed. Hey, thanks for taking my question. You talked about seeing momentum upmarket and winning larger deals, which is

Chad R. Richison: Really encouraging to see. First, is this an area where you are expanding sales capacity for 2026? Also, as you move upmarket to organizations that often have greater integration needs, is there a road map to expand API access while also balancing your core single database advantages? Do you view monetization of APIs as a growth lever in the future? Thanks. I think helping upmarket digest the importance of full solution automation is critical for them, and it is critical for us. Most of your upmarkets are only used to ordering food from the buffet. You go to the table, and you are like, hey, I would like to take your order. They are like, where is the buffet?

Hand me my plate. There is a whole different world here in how you plate these items to the upmarket and how they can easily plug into it. We have made it easier for ourselves to do that. Through full solution automation and what we are doing right now, evaluating Paycom Software, Inc. is very simple. It is very simple to evaluate it. I would say in the past,

Jason Celino: You know,

Chad R. Richison: With certain strategies that we had, it may have been simple to evaluate, but we still kept a little bit of it in the buffet line. As we have gone through this and we are dealing with full solution automation and decisioning logic, the system is decisioning everything. Before, just to give you an example, and I have talked about time off, you could talk about demotions, promotions, hiring. I can go through our entire system. But just with time off, you have an employee that requests time off tonight at 7:00 at night. They are trying to request next week off.

A manager the next day is dealing with overlapping decisions: who is going to be at the office to actually work? For some of us, paid time off is about who gets off work, but for the shift manager, time off is about who showed up to work. We have all been there where you did not have enough staff, so now you are losing revenue. These managers have to go through all types of decisions, and they have decision fatigue. Does the person even have enough time to request off? Do I have coverage? Do I have any overlapping shifts? Who asked first? Are any of these people on a write-up?

Is anybody of this that I let off going to hit overtime if I have to pull somebody else? You have to connect it to their schedule. You have to connect it to their shift. You have to connect it to time and attendance. The point is it is impossible to make good decisions on this on a regular basis unless you have implemented the Paycom Software, Inc. system, and the Paycom Software, Inc. system will decision all of that. So the employee, who already expects their time off as soon as they request it, gets what they need. The manager does not have to go through all the decisioning of these policies.

The policy administrator, who is the person that set all this stuff up in the beginning, gets consistent behavior as well across the board. That is just one item. I can take you through many different items where the system now will decision everything for a client and everything for an employee. The problem that oftentimes comes up is they do not have full documentation of the decisions that would be made in those scenarios. Those are the processes that before we were going through manually with them to discuss. Now we can go through even those in a more automated process to move them toward full decision automation through decisioning logic, which gets them full solution automation.

That is what we have been working on. We have the system. We are making sure that all of our current clients understand what is available to them so they do not just get sold on something and then go through another conversion process to come back with us. Then also our go to market. It is very important that we are doing it correct now. We have made it easier for a prospect to decide on Paycom Software, Inc.'s value and use it. It is very easy to evaluate Paycom Software, Inc. these days. It is only four simple steps, and we look forward to walking through that with every prospect out there.

Operator: Great. Thanks.

Operator: Your next question comes from the line of Joshua Christopher Reilly with Needham. You may proceed.

Operator: Yeah. Thanks for taking

Jason Celino: Most of my questions have been asked, but any update on how the CRR team performed in 2025 relative to 2024 sales productivity? And how much room do you see for improvement in 2026 cross-sell activity?

Operator: Yeah. I mean, I think

Chad R. Richison: CRRs have done a good job. They did exactly what we wanted them to do last year. They are doing a good job this year. CRR is a big part of the play when we talk about full solution automation and helping clients understand that value that is available to them. Absolutely, in some cases, there are products the clients do not currently have, which are needed to get to full solution automation. In addition to that, we are rapidly continuing to put out new products, and many of those have revenue opportunities associated with them. CRRs are a part of the play as we move forward through 2026 and beyond.

Joshua Christopher Reilly: Got it. And then just on the overall competitive landscape, have you seen any impact on your overall win rates or price competition from the marketplace as growth has not really decelerated significantly in the industry, but it has gone sideways? I am curious if that is leading to any changes in competitive dynamics.

Chad R. Richison: We are ambitious with what our expectations are for win rates both this year and going forward. When I look into last year, I would say they were up to court to consistent with what they have been in the past. We have a new view on what close rates should look like these days just because of the major differentiation between our product and what we see out there. We have made it, again, easier to sell and easier for a client to understand and achieve its full value. We are bullish on those opportunities this year.

Operator: Your next question comes from the line of Sitikantha Panigrahi with Mizuho. You may proceed.

Robert D. Foster: Thanks for taking my question. Chad,

Chad R. Richison: Just a follow-up to the prior question.

Sitikantha Panigrahi: ADP also talked about improving their retention rates slightly. How is that? Are you seeing any kind of changes to your business from that?

Operator: No.

Sitikantha Panigrahi: Okay. And then the other question that investors have is the AI impact to overall employment. How do you see that impacting Paycom Software, Inc. business? Are you well diversified? Do you expect it to be more in certain kinds of industry? Any color would be helpful.

Chad R. Richison: When I say we are not seeing it, I am not going to dismiss potential impacts for us to the future. I would say that we are not overexposed to any one industry, any one client, client size. Again, we only have 5% of the market. We are the most automated product in the industry and the best product for the best value that someone is going to achieve throughout the industry. When you look at that, I think that you could do some adjustments in employment, which, again, we have not seen. Even if you did, I still think our opportunity is intact for us. I will just leave it at that.

Operator: Great. Thank you.

Chad R. Richison: Thank you.

Operator: The last question comes from the line of Alan Berkovsky with BTIG. You may proceed.

Jason Celino: Hey. Thanks for squeezing me in here, guys. Strong margins. Can you share what the size and scope of the layoffs you did the past month was, as well as how you are thinking about the company's headcount trajectory over the next year in the context of realizing more and more AI efficiencies over time?

Chad R. Richison: Sure. We did announce a restructuring last year and ended the year with about 5,800 employees. We are not going to discuss internal employment trends or strategies associated with that. That will be the number that you will see in the K.

Operator: Thanks, guys.

Chad R. Richison: Alright. Thank you.

Operator: This concludes the question and answer portion of today's call. I will now turn the call back over to Mr. Chad Richison for closing remarks.

Chad R. Richison: Thanks, everyone, for joining the call today. I want to congratulate the 2025 Jim Thorpe Award winner, Caleb Downs from Ohio State University. This award recognizes the most outstanding defensive back in college football and also memorializes one of the greatest all-around athletes in history and a fellow Oklahoman, Jim Thorpe. I would also like to thank our employees for their contribution to Paycom Software, Inc.'s success in 2025. We remain focused on world-class service, full solution automation, and client ROI achievement, which is resonating across our client base. With that, operator, you may disconnect. Thank you.

Operator: This concludes today's conference call. You may now disconnect.

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