Earnings Call: Q4 2015

Feb 9, 2016

Good afternoon, and welcome to the Paycom 4th Quarter Year End 2015 Earnings Conference Call. All participants will be in listen only mode. Please note this event is being recorded. I would now like to turn the conference over to Craig Bolte, Chief Financial Officer. Please go ahead. Thank you and good afternoon. Before we get started, I would like to note that certain statements made during this conference call that are not historical facts, including those regarding our future plans, objectives and expected performance are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements represent our outlook only as of the date of this conference call. While we believe any forward looking statements we have made are reasonable, actual results could differ materially because the statements are based on our current expectations and are subject to risks and uncertainties. These risks and uncertainties are discussed in our filings with the Securities and Exchange Commission, including our annual report on Form 10 ks for the year ended December 31, 2014, and our quarterly report on Form 10 Q for the quarter ended September 30, 2015. You should refer to these and consider these factors when relying on such forward looking information. Any forward looking statements speak only as of the date on which it is made, and we do not undertake and expressly disclaim any obligation to update or alter our forward looking statements whether as a result of new information, future events or otherwise, except as required by applicable law. Also during the course of today's call, we will refer to certain non GAAP financial measures. A reconciliation showing GAAP versus non GAAP results is included in the press release that we issued after the close of the market today, which is available on our website at investors. Acom.com. I will now turn the call over to Chad Richison, AECOM's President and Chief Executive Officer. Thanks, Craig, and thank you to everyone joining us on today's call. I'm very pleased to welcome everyone today for our Q4 and full year 2015 earnings call. We had an excellent 4th quarter, which capped an outstanding year. 2015 was our 1st full year as a public company and Paycom enjoyed continued success with our full year revenue growth accelerating over 2014. Before I begin the discussion of our results, I want to take a moment to express how proud I am of our team. Our success is a direct result of their hard work and efforts. Additionally, I would like to thank our clients for allowing us to serve them. We are committed to providing the very best payroll and human capital management services to our clients and we are honored every day that they have selected Paycom to help them meet the needs of their business. We'll look forward to continued success. Now I'll turn to our results for the Q4 and full year of 2015. As we announced in our press release earlier today, Paycom enjoyed continued momentum in the Q4 of 2015. Our revenue for the Q4 of 2015 was $65,100,000 representing growth of 48% compared to the comparable prior year period. As a reminder, the Q4 was our best quarter in 2014 and therefore was our toughest comparable for the year. So I'm particularly proud of this performance. Revenue for the full year of 2015 was 224 $700,000 which represents growth of 49% over 2014. Our retention rate was at least 91% for the 5th year in a row. This milestone underscores our high level of client satisfaction. Craig will go through our financials in detail later on the call, but I wanted to take a moment to highlight our adjusted EBITDA, which was 21% of total revenue for the full year of 2015, up from 18% for the full year 2014. Paycom has been able to post impressive growth for several years, while also achieving significant profitability. This result is a testament to our efficient business model as well as our focus on disciplined growth. It also indicates that we are bringing on profitable revenue as we grow. We believe that we are one of the few public technology companies that has achieved multiple consecutive years of high growth, while also demonstrating consistent and increasing profitability. As another indication of our continued growth, we recently announced our next slate of new office openings. As you may have read in our recent press release, in January, we opened 6 new sales offices, bringing the total number of sales teams to 42 nationwide. Our new sales offices are located in Chicago, Cleveland, Pasadena, Sacramento, San Antonio and Stanford, Connecticut. This will be our 2nd office in Chicago, while the remaining 5 offices will represent new territories for Paycom. We believe that large metropolitan areas like Chicago have the potential to host several sales teams. We are excited about our prospects in these new regions and our ongoing sales office expansion. As a reminder, we opened new offices with proven sales managers from an existing territory and then backfill those managers with high performing sales representatives who have demonstrated strong leadership skills. It typically takes a new sales team 24 months to reach maturity. So while we expect these new offices will make minimal contributions this year, we believe they are poised to drive growth in 2017, 2018 and beyond. I met recently with the sales managers that will be leading these new teams. I'm pleased to report that they are all extremely energized to take on their new roles and to capitalize on the opportunity of introducing the Paycom solution to these markets. Our team was on a roll in 2015 receiving several awards. Paycom received national recognition as a best place to work among large sized U. S. Companies by winning a 2016 Glassdoor Employees' Choice Award. For the past 2 years, Paycom ranked within the top twenty of Glassdoor's best places to work for list, making this the 3rd straight year Paycom has earned a workplace accolade from the popular career website. Additionally, for the 3rd consecutive year, Paycom was named one of Oklahoma's top workplaces after being ranked the 2nd best place to work on the Oklahoman's Top Workplaces list. The top workplaces list are based solely on the results of employee feedback and we feel the award is a validation of the effort we put into making Paycom a great place to build a career. Our total headcount at the close of 2015 was 1461, up from 10 21 employees at the end of 2014. I've spoken on prior calls about how our single database platform allows us to enhance our solution and develop new functionality very rapidly and cost effectively. We believe this is a competitive advantage and we are excited to continue delivering innovation for our clients in 2016 and beyond. 2015 was a very productive year for Paycom from a product perspective. In February, we introduced our learning management system, Paycom Learning. This application formalizes company's training processes and seamlessly updates through other pertinent applications allowing companies to develop their talent quickly and most GL Concierge is one of the few software applications in the human capital management space to operate based on payroll and gives financial professionals intuitive reporting, enriched audit trails, customizable file layouts and real time alerts all through Paycom's single database technology. Following the release of our Affordable Care Act dashboard in 2014, we introduced our comprehensive Affordable Care Act compliance offering enhanced ACA in September of 2015. This application provides clients with continued access to an ACA dashboard and also filing of the required IRS forms, plus additional real time compliance related data reports and alerts. In addition to these three new offerings, we also rolled out numerous updates and enhancements to our platform. We are committed to ongoing improvement of our system and providing enhancements to our clients so that they can benefit from the result of our R and D efforts. The strength of our platform has allowed us to become what we believe to be one of the fastest growing profitable public companies in our industry and we will continue to invest in our R and D group, so that we are able to maintain this position. This is a good time to share some examples of notable client wins during the Q4. First, we signed a rehabilitation center with nearly 8,000 employees. This client came to us from a large legacy provider. We estimate they are saving over $700,000 annually from a combination of eliminating separate systems and the manual processes and unproductive labor that their previous system required. Next, we brought onboard a casino organization with approximately 2,300 employees. This company had been managing its payroll in house and also using several point solutions from a variety of vendors that resulted in delays and frustrations from manual paper based processes. I'm pleased to report that this client loves the functionality, automation and ease of use offered by the Paycom solution. Finally, we signed a retail services company that provides solutions to large grocery chains. This client has approximately 2,000 employees and also had been using a large legacy provider. This organization operates across 48 states, so compliance was a key concern as well as a need for automating its benefit process and having a central database where all crucial HR information could be stored. Each of these three clients enabled multiple Paycom applications, continuing the trend of new clients taking greater and greater portions of our solutions suite. To conclude, 2015 was a year of substantial progress for Paycom. We executed against our goals, adding sales teams, expanding our offering and continuing to capture market share in the outsourced payroll and HCM industry. We look forward to continued success in 2016. I will now turn the call over to Craig for an update on our financials and our guidance. Thanks, Chad. Before I review our Q4 results and also our outlook for the Q1 fiscal year 2016, I would like to remind everyone that my comments related certain financial measures will be on a non GAAP basis. Adjusted EBITDA and non GAAP net income are non GAAP financial measures that exclude stock based compensation and other non recurring charges, including transaction expenses related to our initial public offering and our follow on public offering. A reconciliation of our GAAP to non GAAP results is included in our press release. Our 4th quarter was robust with total revenues of $65,100,000 representing year over year growth of 48% from the comparable prior year period. For the full year 2015, total revenue was $224,700,000 representing growth of 49% over 2014. Within total revenues, recurring revenue was 63 point $6,000,000 for the Q4 of 2015, representing 98% of total revenues for the quarter and growing 47% from the comparable prior year period. For the full year 2015, total recurring revenue was $220,000,000 representing growth of 48% over the comparable prior year period. ANRR was $40,600,000 for the Q4 of 2015 compared to $20,600,000 in the same period last year, representing growth of 97%. Because of the demand for our ACA solution, we had a substantial number of clients implement our solution in the Q4 that we believe would normally have launched our solution in January of this year. Therefore, we estimate approximately 25% or $10,000,000 of our 4th quarter ANRR was pulled forward into the 4th quarter with the majority of these transactions occurring during December. Without this contribution, we estimate represented nearly 48% growth over the comparable prior year period. Total adjusted gross profit for the Q4 was $55,000,000 representing an adjusted gross margin of 84.4%. This compares to 82.8% in the Q4 of 2014. For 2016, we anticipate that adjusted gross margin will be within a range of 82% to 84%. Turning to operating expenses. As a reminder, we pay commissions to our sales representatives based solely on new sales at the time of the client's 1st monthly billing cycle. This is a one time commission that we recoup over the life of the client relationship. When we experienced strong sales performance in a quarter as we did in the Q4 of 2015, there is the potential for us to see increased expenses in that quarter depending on the timing of the clients' onboard process. Driven by our strong sales performance in the 4th quarter, adjusted sales and marketing expense was 30,500,000 dollars For the Q4, total adjusted administrative expenses were $47,400,000 This compares to 30,700,000 dollars in the Q4 of 2014. Adjusted R and D expense for the full year 2015 increased 98% from the comparable prior year period. As Chad detailed, we will continue to invest in our solution to maintain our competitive advantage. Adjusted EBITDA was 10 point 5 of total revenue in the Q4 of 2014. Adjusted EBITDA was impacted primarily from the commission expense due to the strong sales performance I mentioned earlier. Adjusted EBITDA for the full year 2015 was $48,100,000 or 21.4 percent of total revenue compared to 17.9% in 2014, an increase of 3.50 basis points. This improvement was driven by scale and ongoing efficiency enhancements across the organization. Non GAAP net income for the Q4 of 20 15 was $6,000,000 or $0.10 per diluted share based on approximately 58,000,000 shares versus $3,100,000 or $0.06 per diluted share based on approximately 54,000,000 shares a year ago. For the full year 2015, non GAAP net income was $23,400,000 For the full year 2015, earnings per share were $0.40 based on approximately 58,000,000 diluted shares. The effective tax rate for the Q4 and the full year of 2015 was positively impacted by the extension of the R and D tax credit in late 2015. Turning to the balance sheet, we ended the quarter with cash and cash equivalents of $50,700,000 and debt of $25,900,000 As a reminder, this debt represents the financing of our corporate headquarters. Cash from operations was $9,000,000 for the 4th quarter $43,000,000 for the full year 2015, reflecting our strong revenue performance and the profitability of our business model. With that, let me turn to guidance for the Q1 and for fiscal 20 16. For the Q1 of 2016, we expect total revenues in the range of $82,000,000 to $84,000,000 representing a growth rate over the comparable prior year period of approximately 50% at the midpoint of the range. We expect adjusted EBITDA for the Q1 in the range of $21,000,000 to $23,000,000 representing an adjusted EBITDA margin of approximately 27% at the midpoint of the range. For fiscal 2016, we expect revenue in a range of 309,000,000 dollars to $311,000,000 or approximately 38% year over year growth at the midpoint of the range. We expect adjusted EBITDA for fiscal 2016 in the range of $63,000,000 to $65,000,000 representing an adjusted EBITDA margin of approximately 21% at the midpoint of the range. For 2016, we anticipate an effective tax rate of approximately 38%, primarily due to the extension of the R and D tax credit and also the Section 199 deduction. With that, we will open the line for questions. Operator? Thank you. We will now begin the question and answer session. Our first question is from Michael Nimerov at Credit Suisse. Hi, guys. Can you hear me? Yes. Nice quarter. Unfortunately, your stock is one of the many that aren't probably fully reflecting the really strong prospects over the next couple of years, but hopefully that will work itself out over time. Just a question, because based on the number of new offices that you're opening, because you're not significantly increasing the number of new offices in 2016, it's 6 over 5. I'm just trying to figure out what kind of productivity increases that you're building into your forecasts to keep the growth rate pretty high over the next couple of years in 2017 when the new offices in 2016 start to really affect the numbers? Yes. And so thanks, Mike. So we have continued to increase the amount that anyone executive sales rep can sell as well as sales team. I don't know that we hit a ceiling yet on how much a team can sell. I mean, I've talked about this in the past how we continue to increase from $3,000,000 to $6,000,000 and we continue on for any one city. And so we're definitely increasing the productivity and how we're doing that is by selling more deals, selling larger deals and then of course selling more modules into each client. And then also Chad on the ANRR, I know it's not a perfect proxy for bookings in the quarter. And if you look at what you did in the second half of twenty fifteen, I mean, it's truly remarkable, over 100% in Q3 and over 90 percent in Q4. Just trying to level set because we're going to build the models and investors are going to have some expectations for 2016. Where would you think where would you like the expectation to be for the ANRR growth given the phenomenal growth in that number and that figure in the back half of twenty fifteen and twenty sixteen? Well, as we've discussed in the past, I mean, we do not give guidance as to the ANRR number. We are providing revenue guidance. ANRR, as you know, does turn in to revenue. So we do expect ANR to be strong moving forward. So I'd probably stop with that. And just lastly for Jud. The EBITDA guidance, implied EBITDA guidance for Q1, the strongest it's ever been. I'm just curious where we which line items should we see the most as everyone's aware, I mean our revenue is recurring, I mean 98% of our revenue is recurring. So we bring that into the year with us into Q1. So we're expecting a Q1. Craig, you can talk more to the leverage on that. Yes. In Q1, we'll see a slight amount more of seasonality than we have in the past because of the 1094 and 1095 filings. And then also the sales and marketing, the way we our sales and marketing year starts over on February 1, we see that ramp up throughout the year, those commission expenses. And so we do commission salespeople more based on how much they sell and our year starts over beginning February 1. So naturally commission rates are going to be lower in the back half of the first quarter. Got it. Thanks guys. Congratulations on a great quarter and a fantastic year. Thanks, Mike. The next question is from John DiFucci at Jefferies. Thank you. Chad, I know you don't forecast ANRR or you probably do, but you don't tell us it, provide guidance for it. But you did say or Craig said that there was some ANRR that was pulled forward and that was part of the reason why it was so strong this quarter and it was strong really strong in the quarter before. Craig, can you remind us or Chad, I didn't catch as to why that pull forward happened this quarter? And I guess, what could be implied is that next quarter, we'd see a significant moderation in the growth rate of ANRR because of that. Should that be our conclusion with that and without giving us guidance on ANRR? Yes. I mean, obviously, we're still in the middle of the quarter and ANRR is a calculated commission amount based on starts, which is why it's really not something that we guide on because it's based on when a deal starts. Back to your original question on the reason why we saw the pull forward. ACA obviously is something that it's real and it's here this year. And so in order for us to perform the task for a client that's needed for them to be compliant with ACA, they had to onboard with us in 2015. It's been our business that we bring clients on and we will actually provide them year end services provided that they are with us for the month of December. And so that required deals that would have most likely started in January as indicated by what would be normal for us in past years. Those deals started early and they started at the end of December. And as we went through and we estimated that amount, we came up with approximately 25 percent of the ANRR that we had, our deals that pulled into 4th quarter as it relates to ANRR. Okay. Quarter to get a little more on ANR. Yes. I mean, John, we're going to have the pull forward. I mean, we definitely had the pull forward. I mean, those are deals that would have normally started in January. In our business, it isn't necessarily common for companies to onboard in December. It doesn't mean it doesn't happen and there are reasons why a company would look to onboard in December based on their confidence in their current year end process that they're going to undertake. ACA added another level to that obviously. And so this is revenue we were going to experience anyway, but it just so happened we did have that pull forward into December. Okay. Great, Chad. And if I may follow-up because I know these are kind of the questions we're going to get tomorrow and you'll get them too along the way. But so really strong business, right, ANR last couple of quarters. I mean strong before that, but even stronger now. You had a little pull forward here, but that's okay. Even without that, it was a strong it's a really strong quarter. And ANRR, as you pointed out and we know, turns into revenue in the future and that's evidenced by your guidance, especially for the Q1. But what it implies is that the guidance for the year, which again is significantly above where the Street is, but it implies the growth rate throughout the year will in revenue will actually deteriorate or decline or decelerate, how's that, in the back half. I guess I just want to make sure that like what does that mean? And this is their first you're giving guidance for the year and the beginning of the year. So I just wonder if there's some conservatism in there or is there something in that guidance of a deceleration of growth into the back half that there's something we're not thinking about? Is there something that we should be thinking about of how the business may develop over the year? No. I mean, we've traditionally had a strong first quarter due to annual tax form filings that again continue to recur. And so we're going to have a little bit more of that this year with the Form 1094 and 1095 with ACA, which we'll file Q1 of every year for clients to have that service. And so we're going to receive a little bit of uplift on that. Okay. Okay, great. Thanks a lot, Chad. Nice job. You bet. Thank you. The next question is from Raimo Lenschow at Barclays. Hey, thanks for taking my questions. Congrats. Can I stay on John's point a little bit? Chad, remember the quarters before when we talked about ACA, you kind of kept mentioning that that's kind of a small revenue item for you. And at the end of the day, people are going often staying with their provider because ADP will give you an ACA module. And the €10,000,000 you point out now, is that ACA revenue or is that a customer going on the payroll and ACA will be a small module of that? Just wanted to clarify. That is correct. The latter. Those are customers that started early with everything, including ACA. I mean, with everything they're going to start with, including ACA. So those are clients that onboarded early with ACA. I do not believe that clients choose us for ACA alone. These are deals I think we would have gotten anyway regardless of ACA. I mean as an HR leader of a midsized company, you're not going to make the decision or you should not make the decision to make a change to a payroll service that's going to also be doing time and labor, talent acquisition, HR and talent management. You're not going to make that decision based on one piece of the functionality. And so it is something that clients have to have ACA, I believe you should use somebody who's an expert in complexity, which we are. And I believe that clients need to find someone to do that. But I'm unfamiliar with a competitor of ours that doesn't have an ACA offering. So, and whether ours is better or what have you, there has to be a strong business case or value proposition for someone to change their culture, move all their data and learn new systems. And you just it's not something we've seen happen based on 1 module piece. And so this is pull forward of deals that would have normally started in January because there wasn't a great reason for them to start in December. But due to ACA, we now had a better reason for them to start in December and we onboarded them. Perfect. Very clear. Thanks, Chad. On the sales office opening, you mentioned 6 already in January. As we think about a year, is that kind of the number for the year? Historically, we are very front end loaded for the year and then maybe you had like a couple like in February, March. Is 6% the number or is that just the January number? 6 is the number that we have opened this year. It's the best year we've ever had in opening up have you. And so we're comfortable absorbing the 6 that we've opened. And then as the year moves on, I mean, we'll review at that time. Okay, perfect. And then one last question. How do you think about the whole balance between growth and EBITDA and the EBITDA level? So if I look this year, you achieved adjusted EBITDA of around 21%. I think guidance midpoint is around 21%. Is that kind of for you, healthy profitability is much better than the competition and so the rest of the money I reinvest or how do you think about leverage as you run the company? Some point, be able to have, some leverage in the model. I'll some point be able to have some leverage in the model. We are a high growth company and we focus on that, but we're also out there selling profitable business. And so, we in a perfect world, we would expect to continue to grow at a high level while also also having some leverage in the model on a go forward basis. Okay, lovely. Thank you. Well done. All right. Thank you. The next question is from Mark Murphy at JPMorgan. Yes. Thank you very much for taking my question. And I will add my congratulations on the strong results. Chad, you had mentioned closing a rehabilitation center. And I believe you said it has 8,000 employees. So I wanted to ask you, first of all, did I hear that correctly? What issues were they encountering, in particular, with their legacy provider? And then also, I'm curious where does that customer rank now within your customer base in terms of size? And what I'm trying to get at is whether you think that's a one off or if you see other prospects of that size in the pipeline? Yes. And so size doesn't necessarily dictate complexity in the past. And so that is a definitely at the larger end of clients that we've onboarded. And so as far as what exactly they were experiencing, I don't know of all the very specific issues that they were experiencing, but it's not uncommon for as we go through and work our value proposition and then deliver an ROI. It's not uncommon for us to look at both soft cost and hard cost savings and there's a number of techniques that we go through to do that. I don't necessarily want to telegraph that on today's call, but yes, but we're able to come up with a number as we have collaborative meetings with the client. Thank you. And then I wanted to also follow-up on some of the other questions about this concept of the ANRR pull forward. And really, I have a very simple question. Do you think that, that could recur in Q1 or even in Q2? Or is that a one time event due to sort of unusual year end characteristics tied to this ACA phenomenon? Well, I will answer that this way. If you're not currently on our system and having been on our system since the first December, we will not be providing ACA services and filings for those companies for 2016. And so the other piece to your question I guess is yes we will onboard clients this year who are looking to get compliant with ACA as it relates for 2016 to be filed in 2017 and we will onboard those clients throughout the year. But as I explained earlier, they're taking the payroll, the time and attendance in other areas. And so ACA is a piece of that and not the driving force behind why someone makes a decision. Okay. Craig, I wanted to ask you as well, in terms of the Q1 revenue guidance, I think you mentioned or you were speaking to this in terms of the EBITDA guidance, but the sequential increment is nearly $20,000,000 at the high end of the range. And it seems unusually strong. I think you alluded to part of this in terms of some of the 10.99s or 10.95 the deep processing of year end payroll linked tax forms and all that. Is there a way you could dig a little bit deeper into that? Because I think we're going to try to be gauging for our model what the underlying dynamic is there and just perhaps how much of that is seasonal versus what will recur? Well, it should all recur. It will just recur in the Q1 of subsequent years. I mean, these aren't one off charges. These are recurring annual charges. Yes. So understood, but I think we're so we're trying to understand from a modeling perspective that you have business that recurs once per year annually and you have business that recurs all four quarters throughout the year. So I think we're just trying to understand what portion of that is that is related to those forms and therefore what kind of a sequential drop off to model in Q2? And I'm just trying to understand if it's any different than what we've seen in prior years because again that the revenue guidance is just is so unusually strong for Q1. Yes, Mark, so as you're looking at the out quarters, we've given the full year guidance as well as the Q1. So the balance of that would be spread over the remaining three quarters. And as you've seen in the past, the 2nd quarter is typically stronger than the or the 3rd quarter is stronger than the second and then the 4th steps up as well. So we would expect from a modeling perspective to be very similar to what you've seen in the past. And then that additional step up in Q1 would be primarily related to those forms filings. And as Chad mentioned, that will be a recurring revenue item that we'll follow every year. The next question is from Brendan Barney of Pacific Crest Securities. Thanks so much. Craig, in your prepared comments, you called out the large sales and marketing expense related to the upside in commissions. If you hadn't had this big benefit to ANRR, the one time thing related to ACA, what would that do you have any sense of what that sales and marketing expense might have come in at? We really haven't looked at expense might have come in at? We really haven't looked at that specifically, but I mean, obviously, it would have made an impact on the adjusted EBITDA for the year. And we did sorry. Well, just to add on that, I mean, we did what we did mention, there was 10,000,000 dollars in pull forward into December. And so the commission rate associated with $10,000,000 you could probably expect to be some of that. Got it. And then Chad, we've seen strong results across a number of your competitors who have already reported as well. So we've seen this general upswell part of it. You've talked about some of the ACA component of it. Are there other factors other than that that are driving so many folks to look at reengaging around their payroll and then the other parts of their HR platform? Yes. I mean, again, I'll go back to ACA as a component of our overall value proposition and the product we sell. And again, I'm unfamiliar with any client that would go to us just for ACA alone. And so what we've developed throughout the years and what we continue to sell as an overall product, us being better at selling product, having more mature sales staff, then being able to sell more. I really do believe that's what's been driving our growth. ACA has been a timely conversation. I mean, anytime you get an opportunity to talk to a client about additional complexity, reciprocity law, lived in, worked in, states, reciprocity law, lived in, worked in, states changing labor laws, overtime laws or what have you, that gives us an opportunity. And so ACA has done that. It's provided us an opportunity. We do expect there to be that there has been some uplift. I mean, we're not going ignore the fact that ACA is a revenue generating item for us just like direct deposit and some of the other items that we charge for. And so we expect ACA to be a good product for us as far as on a moving forward basis. We don't expect ACA revenue in 2016 to be any higher than low single digits of our overall revenue. And so again, it's timely for us to be able to have these discussions with people. It does help us get someone that might have onboarded a month from now to onboard now, especially if you're sitting in 2015 because there's still a lot of complexity to it and a lot of it's knowledge base, what does someone really know about it. I do expect in 2016, 2017 and in subsequent years for the buzz surrounding ACA to dissipate somewhat as it relates to the filing piece of it because people are going to understand it. And we've seen this happen over and over again as the leaders in Washington make changes to complexity in either tax codes and other areas. And we benefit from that because part of what we do is educate ourselves in order to become experts in complexity. Chad, we spent a lot of time talking about the ACA, but you've got 2 other products that came that got released last year with the GEO Concierge as well as your LMS solutions. Give us any sense of what percent of revenues those ended up representing? No. We're not going to break out the additional of those or any of our other products. I just wanted to point that out on the ACA. But Paycom Learning is doing very well. It is the 1st year for that product as well as GL Concierge. We take a methodical approach to us developing products based on need and how we're going to sell it as well as client usage. And so everything we develop is on purpose and we expect those products to continue to be strong for us as well. And then lastly, Chad, you've obviously seen the market has been very worried about macro weakness in the economy, the prospect of recession. Anything that you're seeing with all the different businesses that you work in that suggests any real slowing that's going on? I mean, obviously, anything that hurts the overall economy, I think, can have an impact on all businesses and the things that impact our clients can have an impact on us. Now, I mean we've provided the numbers, we've provided the guidance. So as far as do we feel like it's going to have a specific negative impact on us. We feel like we'll weather through what it is. And I do believe the HCM industry is different. We're not just a technology company. We are providing a very valuable service and no one should be doing the payroll by themselves, no one. We never converted a payroll of someone doing it in house that it was correct ever. And I've been doing this a long time. And so I don't believe that's going away. We've solved the problem with technology, but the fact is the service itself is extremely valuable. And I don't see companies going backwards and starting to do their own taxes and everything else based on maybe they lost a few employees or what have you. And that said, we haven't necessarily seen any impact major impact on our business at this point. The next question is from Brad Reback at Stifel. Great. Thanks very much. Maybe just building on Brendan's question at the end there on the economy a little more. Chad, if you think back to 2,009, can you give us a sense of what, if any, impact employment levels or changes in employment levels you saw in the installed base? I mean, 2,009, we were a high grower in 2,009. Sometimes these types of pullbacks in the economy create opportunities for us because we're looking to go in and create additional efficiencies. And for companies that are looking to streamline processes in times like this, in order to become a more efficient organization, we're a better solution. And so and oftentimes pullbacks like this allow us to go in and be much more competitive. And so because people are looking at it, right? I mean, when things are good, people aren't necessarily looking to streamline efficiencies maybe the way they should. When you have pullback, people are forced to do that. We're a better look for at that time. And we made some changes in our business at that time. Look for at that time. And we made some changes in our business at that time to make sure we're handling guaranteed funds properly and other items that have survived us throughout the years. And so like again, I'm saying I'm not an expert on the economy. We've been doing this for 18 years. This is going to be a year for us. Next year is going to be a year and we're going to continue on. I mean, we're in our own lane here and we're going to continue to do our business. Great. Thanks very much. All right. Thank you. The next question is from Jim MacDonald at First Analysis. Yes. Good quarter, guys. Just going off that last question, you say you're in your own lane, but can you give us an update on competition? Are you seeing anything different out there? Not from well, let me say this. Competition is ever changing as far as what competitors provide and that's been the case from the beginning. I mean we've had a very strong competitive market. There are a few of us that do it. I think from a full service perspective, I'm unfamiliar of anybody of any size since we came into the picture in 1998. So I mean as far as the players, I mean I think the players are substantially the same depending on where you're at. And the flavor of what they provide is it changes here and there and so do we. And just a couple of clarifying questions on the ACA. You provide some of it on a per form basis, but do you provide any of it on a monthly basis? And if so, what is the split between the 2? So we provide an ACA dashboard, which clients are able to use as a stand alone product. We also have enhanced ACA, which is an ongoing monthly service, that we provide, which has additional service pieces embedded in it. And then at the end of each year, we also provide the Form 1095 and then as well as 1094. And so that's the those are the components that make up our ACA revenue or any revenue associated with And can you give us a clue as to how much is onetime is for the form and how much is recurring? We do not provide that breakout. But as I did state earlier, we do not expect all of ACA revenue combined to be more than the low single digits of a revenue next year. And just for interest, what percent are required to be compliant this year, are required to be compliant this year have implemented ACA with us. But I don't have an exact number as to those that are using another option for that. Right. Congratulations again. All right. Thank you. The next question is from Mark Marcon at Baird. I'd like to add my congratulations in the 17 years that I've followed all the public payroll companies. This is one of the best quarters I've ever seen from anybody. So congrats on the great year. Thank you. With regards to one of the questions that I've been getting is just with regards to your more mature offices, I know they're all growing, but particularly those in Oklahoma and Houston, what are you seeing there just in terms of the growth rates? We don't disclose any one office, but I mean those offices you've named specifically are doing very well. I mean they're mature offices. They've been open for a while. They've had the same managers in them for a little while. And so any place where we've had a manager in there for some period of time is going to be a strong office for us. Yes. But I mean no degradation in terms of the opportunities that you're seeing out of those offices just because of what's happening in the oil patch? No, absolutely not. I mean, again, I think it has to do with our size and the overall TAM that we still have left to capture. I mean, we're still 1.5% of our overall TAM. So there's still a lot of room for us out there. And I think that's really more a factor of we get to choose who we sell. We're sometimes we pick up the phone and there's someone saying they want to convert. But oftentimes we choose who we're going to sell, whether we're working with the referral source or going through our targeted prospecting methods or some other techniques that we use. And so we're going to continue to sell into those markets, and we haven't seen any type of a pullback. Great. And then with regards to the ACA revenue that you recognized here in December, I mean, you pulled forward 10,000,000 dollars but it sounds like even for this quarter, you gave us the 2016 ACA kind of contribution. For this quarter was even less than that, right, as a percentage? Well, what I will say just to kind of tweak that a little bit, we pulled forward $10,000,000 in ANRR, not necessarily revenue, right. So $10,000,000 in ANRR. Completely understood. Businesses started early. Yes. Okay. I'm sorry, maybe I missed the question. I was just saying that the ACA contribution for this last quarter was fairly de minimis, was it not? We do not I haven't gone through that number. We did a calculation based on next year. But I mean you wouldn't expect you wouldn't from an overall year perspective, yes, I mean it would have to be a much smaller number. You gave us that number last quarter, Chad. That's the reason why I was asking is because it kind of size things so that people could get a perspective in terms of look, we haven't seen that yet. Just switching over to the EBITDA guidance for the full year. Given the revenue growth, if you the guidance basically implies no EBITDA margin expansion for 2016. If that's the case, would that basically be a function of we're going to continue to invest behind technology and R and D that will continue to grow in a fairly rapid rate. And then in addition to that, there's a possibility that we're going to continue the strong sales performance and so we want to leave some room in terms of sales and marketing for increased commissions if that comes through. Does that Yes, I mean, I would say the I mean, obviously, we're going to continue to invest in R and D as we have, but it seems like the largest impact we have on a successful quarter are sales commissions and you start to see that as you head throughout the year. And just to remind people, your commissions basically are being paid on the ANRR during the time period when the ANRR is disclosed? That is correct. That is correct. Great. Thank you very much and congrats. All right. Thank you. All right. Well, I think that's it. So thanks to everyone for joining us on the call. I'd like to extend thanks again to the team here at Paycom. We had a terrific year and we're all looking forward to another successful year here in 2016. So thanks for joining us. We'll see everybody later. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.