Earnings Call: Q1 2014

May 15, 2014

Afternoon, and welcome to the Paycom First Quarter Fiscal 2014 Results Teleconference. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions. Please also note today's event is being recorded. I would now like to turn the conference call over to Mr. Craig Bolte, Chief Financial Officer of Paycom. Mr. Bolte, you may begin. 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 since the statements are based on our current expectations and are subject to risks and uncertainties. These risks and uncertainties are discussed in our final prospectus filed with the SEC on April 15, 2014. You should refer to and consider these factors when relying on such forward looking information. We do not undertake and expressly disclaim any obligation to update or alter its 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 schedule showing GAAP versus non GAAP results is currently available in our press release that we issued after the close of the market today, which is located on our website at www.paycom.com. I will turn the call over to Mr. Chad Richison, Paycom's President and Chief Executive Officer. Chad? Thanks, Craig. I'd like to welcome everyone to our 1st quarterly conference call as a public company following our initial public offering, which priced on April 14. Here at Paycom, we are very confident in our future and it is personally satisfying to see the software as a service technology company that I founded in 1998 expand from payroll solutions in the cloud to an end to end human capital management suite. Today, we are the only human capital management company with a single database end to end product in the market. We capture employee data from the applicant all the way to retirement and everything in between, providing functionality and talent acquisition, time and labor, comprehensive payroll, talent management and human resources. All the functionality is included in one application, which eliminates the need for integration with other systems, making it easy to use and more efficient to manage. Because the data is in one place, it is accurate, trusted and highly impactful. While others claim to manage the entire employment lifecycle, they are often dependent upon partners and rarely provide the full service payroll function that is mission critical to facilitate the employment lifecycle. At Paycom, we truly have a single end to end offering. Now before we dive into the results, I'd like to thank our employees. Many of these this group are also investors in our company. I would also like to thank our clients, our investors and our advisors who are essential to getting us here. I'd also like to welcome the many new investors we met during our road show. We look forward to continued conversation with you over these years. I'll begin today's call with highlights from the Q1. And since this is our Q1 as a public company, I'll spend a little more time than usual introducing you to Paycom. I'll then turn the call over to Craig to walk through our financial results in greater detail and provide you with our Q2 and full year outlook. I will then outline some of our key initiatives for 2014 before turning it over to the operator for your questions. So let's dig into the Q1. We continued our solid momentum in the Q1 with a 34% increase in total revenue to $37,000,000 approximately 99% of which was recurring revenue. Annualized new recurring revenue, which is an estimate of the annualized amount of the 1st full month of new client revenue, increased to a record of nearly $12,600,000 in the Q1, up from roughly $9,600,000 for the same quarter last year. This was a very busy quarter as well for our technology team. In addition to growing our technical headcount by 61% since the end of 2013, the bulk of which are programmers and developers. We launched several new applications and enhancements, including a new survey tool and enhanced employee self-service features, including mobile. We also launched a new data analytics tool called Paycom Report Center, which we are also very excited about. Paycom Survey is a newly launched product that touches every user in an organization from top down or from C suite to the employee. In a matter of minutes, an HR administrator can create an employee survey with just a few clicks push out the survey to get a pulse of the workforce. The solution is built from a single database and can be used in conjunction with our deep analytics and reporting tools to gain valuable insight into manager performance, employee onboarding and departure trends. During the Q1, we completed our employee self-service redesign, which includes responsive coding that dynamically adapts to any screen resolution that the employee may be using. This is truly a consumerized user interface that effectively rightsizes the content to fit the device or screen that employees use on a daily basis, whether on a tablet, a smartphone, a laptop or a high definition monitor. This is just another example of how we build technology with the end user as our starting point. This redesign makes engaging with data and analytics even more user friendly than it already was and provides a crisp clean view of our solutions. We are receiving overwhelmingly positive feedback from employees and managers who use our platform as their daily communication portal. Included in the redesign, we also added a new employee self-service feature called employee directory, which allows real time access of all employee information as defined by HR policies. Employees love this because there's one less browser and one less database to log into. It puts all relevant, accurate and secure information at their fingertips. We launched most of our redesign in the Q1 and already we are seeing a change in behavior and usage. Employee login frequency is up 170% year over year and employees are now engaging with our products 3 to 5 times more than they used to. Finally, we launched Paycom's multi client code development. This feature is particularly useful for our larger clients and enterprises that have employees spread across separate business entities and tax identification numbers. If an employee transfers from one entity to another, companies traditionally had to transfer the records and tax codes. With Paycom's single database architecture, information now moves seamlessly when transferring employees, which maintains the integrity of the tax and compliance reporting chain. I'm very pleased our clients are pulling our technology development teams deeper into the product suite and strengthening our competitive position in the market. Due to increased demand, we expanded our geographic footprint ahead of our expectations, opening 5 new sales offices in Baltimore, Indianapolis, Philadelphia, Portland and Silicon Valley. We now have 31 sales teams in 30 offices around the country with coverage in 25 of the 50 largest MSAs in the United States. As we've seen with our newly opened offices, we expect to see meaningful contributions from these locations as the year progresses. As a reminder, we typically seed our new offices with experienced sales managers, which makes the ramp up to revenue more efficient. And as I will get into later, we're seeing that the strong demand for our technology is making it even easier to sell as well as expand into new geographies. Craig will speak to our financial performance in more detail later on the call. But needless to say, I believe we're off to a very good start as a public company and I'm excited about our growth opportunity. Since this is our first call as a public company, I want to take a few extra minutes to provide additional background on Paycom and describe our technology, our opportunity and our growth drivers. I founded Paycom in 1998 with the vision of transforming the payroll and human resources industry with an automated software as a service solution that included not only the functionality, but the added benefit of real time reporting and analytics. Paycom is the only SaaS HCM provider offering a single database platform for the entire employment lifecycle. It's a key differentiator that sets us apart from other players in this space. We're disrupting a large and growing HCM market. At our core, we are a technology company with deep roots in SaaS architecture. Our comprehensive solution was developed on single database architecture in the cloud to solve the data integrity dilemma faced by many businesses. With Paycom, an individual's information exists only one time and in one location. And because our solution is built to manage the entire employment lifecycle, which includes comprehensive payroll and tax reporting, there isn't a need to integrate with another database Because our applications span the entire employment lifecycle, our clients can streamline the full range of employment processes from recruiting and hiring through termination or retirement and everything in between. While our single instance multi tenant SaaS solution is fully scalable across clients of all sizes, we derive 86% of our revenue from businesses which have between 50,000 to 2,000 employees. Without Paycom, these businesses are forced to integrate and patch together multiple products and databases to complete the entire employment lifecycle, leaving them with data integrity issues and decreased usage. While we believe we have the most comprehensive solution in the market, we are continuously innovating and expanding our SaaS solution to meet the evolving demands of our clients. Our internal and proprietary development process is 100% focused on the end user from the frontline employee to the reporting and analytical requirements of the C suite. Based on client feedback, sales team input and proactive innovation analysis, our R and D group assesses best of breed functionality and then performs a rigorous development process and quality specifications. Once approved, our developer teams can turn the high quality new applications around very efficiently. Our SaaS solution and single database uses standardized development processes, which allows us to ramp up valuable technology talent very quickly as well. While we are a technology company first, we have been very successful at turning our sales organizations into a key competitive strength. Our go to market approach is built on 2 core principles. Number 1, ensuring we are targeting companies that have a high probability of becoming long term customers with high upsell potential. Number 2, ensuring we have the right sales reps and the right sales leaders selling the Paycom way. We have developed our sales processes internally and we use our proprietary CRM to manage sales activity and deal flow. We have deliberately developed a sales recruiting, sales training and sales production process that is not dependent on any third party. We traditionally promote from within and have a very low turnover amongst those reps who have achieved what we call executive rep status. We also have a dedicated team of client specialists that provide personalized one to one client support. They work hand in hand with our sales professionals to ensure seamless implementation as the client switches over to and deepens use of our solution. These efforts combined with our industry leading SaaS solution helps us maintain a high annual revenue retention rate, which over the past few years has been consistently 91%. So in summary, this is a very exciting time for Paycom. It's just the beginning really and we're bringing enterprise class solutions to the small and medium business market in a profitable and efficient way. We have multiple vectors to drive sustainable growth and we'll remain focused on developing new products and features that our clients want. We will continue to increase our penetration within our existing markets, add new clients and enter new geographies. There is a tremendous white space opportunity ahead of us and we will continue to strategically meet the market demand with our disciplined approach. Now let me stop there and turn the call over to Craig to walk through our financial results. Thanks, Chad. I would also like to reiterate how pleased we are with the company's performance in the Q1. I will review our Q1 financial results as well as our guidance for the Q2 and full year 2014 in detail in a moment. Before doing so, I want to quickly review a few key elements of our financial model as this is our Q1 as a public company. One of the attractive characteristics of our business is that approximately 99% of our revenues are recurring revenues based on fees clients pay us for our talent acquisition, time and labor management, payroll, talent management and HR management applications. The services related to recurring revenues are rendered during each client's payroll period with the agreed upon fee being charged and collected as part of our processing of the client's payroll. Collectibility is reasonably assured as the fees are collected through an automated clearinghouse or a direct wire transfer as part of the client's payroll cycle. Because of the recurring nature of our SaaS based business and high retention rate, we have excellent visibility. We charge implementation fees for the deployment of our solution and generate other revenue from as part of our time and attendance services. Implementation revenues are recorded as deferred revenues and recognized over the life of the client, which is estimated to be 10 years. Because this is a cloud based SaaS model, we enjoy high gross margins of roughly 80% with cost of sales largely consisting of hosting and support costs for our applications along with employee related expenses for client support, delivery and bank charges. We operate our own data centers and have been consistently benefiting from scale advantages to drive leverage. We can pay commissions to our sales reps based solely on new sales at the time of their 1st monthly billing cycle. This is a one time commission pay, which we recoup over the life of the client relationship. While the impact of rapid growth puts near term pressure from the sales and marketing expense line, this is more than offset over the long term given the predictable recurring nature of our client relationships. With this background in mind, let's review our results for the Q1. As a reminder, as I review our fiscal Q1 results and our outlook for the Q2 in 2014, my comments related to certain financial measures, including adjusted EBITDA and net income are on a non GAAP basis, which excludes stock based compensation and other non recurring charges, including transaction expenses relating to the initial public offering. Total revenue in the Q1 of 2014 grew to a record $37,000,000 an increase of 34.1 percent compared to the same period last year. Within total revenue, recurring revenue was $36,500,000 representing 98.6 percent of our revenue and growing 34% year over year. Implementation and other revenue of $500,000 was up 42.4% over the prior year period. As a reminder, the Q1 is a seasonally strong quarter due to annual tax form filings. Annualized new recurring revenue or ANRR, a key performance indicator for us was $12,600,000 up from 9 point $6,000,000 in the same period last year. The strong growth that we saw in total revenue and annualized new recurring revenue was driven by accelerated growth of new clients and increasing average revenue per client as we continue to move upstream to larger clients. Our solid results are being bolstered by success of our sales force and adding new clients in our mature offices, which are offices that have been open for at least 24 months, adding new clients in our more recently opened sales offices and selling additional applications to existing clients. Total gross profit for the Q1 was $30,100,000 representing a gross margin of 81.3%. This compares to gross margin of 82.4% in the prior year period. The year over year decline in gross margin was largely a timing issue related to investments in headcount to support our growth. Turning to operating expenses. Total administrative expenses of 26,900,000 dollars increased 56.6 percent year over year as we continue to invest ahead of our growth opportunity by adding new sales offices, adding to our R and D talent and incremental cost of being a public company. As Chad highlighted in his remarks, we increased our technical staff by 61% since the end of 2013. Adjusted EBITDA was $6,600,000 or 17.7 percent of revenue compared to $8,200,000 or 29.6 percent of revenue in the Q1 of 2013. The decrease in adjusted EBITDA was primarily due to increased investment to support our growth, including sales commissions, new office openings and increased headcount. We are pleased that we opened 5 new offices in the Q1, more than we have in any prior year and setting us up well for continued growth in 2014 and beyond. Non GAAP net income was $1,600,000 or $0.03 per diluted share based on 48,400,000 shares versus $2,400,000 or $0.05 per diluted share based on 47,900,000 shares in the year ago period. Turning to the balance sheet, we ended the quarter with cash equivalents of $13,100,000 and debt of $86,300,000 In April, we successfully completed our IPO raising $64,300,000 In concurrence with the IPO, we repaid $65,000,000 of debt, leaving our only outstanding debt relating to our Oklahoma City headquarters and data center facility. With that, let me turn to guidance for the Q2 and for fiscal 2014. For the Q2, we expect total revenue in the range of $31,000,000 to $32,000,000 representing a growth rate of 31.8% at the midpoint. We expect adjusted EBITDA in the range of $4,000,000 to $5,000,000 representing an EBITDA margin of 14.3% at the midpoint. Excluded from our non GAAP adjusted EBITDA outlook for Q2, our stock based compensation of $100,000 transaction expenses of $300,000 and a one time adjustment of $4,100,000 related to the early payoff of our debt. For fiscal 2014, we expect total revenue to be between $139,000,000 to $142,000,000 or 30.6 percent year over year growth at the midpoint. We expect adjusted EBITDA in the range of 19,000,000 dollars to $22,000,000 representing an EBITDA margin of 14.6% at the midpoint. Excluded from our non GAAP adjusted EBITDA outlook for fiscal 2014, our stock based compensation of $400,000 transaction expenses of 1,100,000 dollars and a one time adjustment of $4,100,000 related to the early payoff of our debt. In summary, we are seeing very strong demand for our solutions and we plan to continue to invest in the areas of R and D and sales and marketing to fuel our high recurring revenue growth, while at the same time delivering attractive profitability. With that, I'd like to turn it back to Chad. Thanks, Craig. As you can see, we are very excited about the future of Paycom and have high expectations. Before we open it up for questions, I want to lay out 3 key initiatives for driving continued profitable growth in 2014. 1st, 1st, and we will continue to go deeper into the product suite throughout the year. We look forward to consistently adding new functionality like the recent survey tool and mobile employee self-service and reporting modules. 2nd, we will continue to invest in our people, attracting new talent and getting them up to speed the Paycom way is critical to our long term success. We have been very successful in this regard and expect to continue to add to our deep bench of R and D and sales teams. Finally, our sales office growth strategy is working and we are confident this is the right go to market model. We added 5 cities in the Q1 because the demand was there and we were able to attract the talent we needed to Just to give you a little more perspective, we had planned on opening 3 new offices in the Q1 of this year and one more in the remainder of the year. We exceeded our internal goals and opened 5 new offices because what we are finding is that the demand for our product is exceeding our expectations. At the same time, we are getting better at developing our sales talent and they are ramping up to productivity faster. Our value proposition is resonating with businesses as they experience the benefits of our single database solution. As important as SaaS is, it's not a standalone solution. The product has to be differentiated. Paycom's key differentiator is that our SaaS solution uses a single database to provide all functionality included, eliminating the need to patch together multiple solution, which allows a business to turn what was disparate data into actionable information. Because of that, we are winning our clients over and they're changing the nature of their employee communications and processes. We really appreciate your interest in the Paycom story and this is just the beginning. Paycom is off to a great start as a public company. We are excited about our current growth prospects and the opportunity for our company in the coming years. I believe we are well positioned to sustain and build upon the positive business momentum we have well into the future. With that, I'd like to turn the call back to the operator and open up the lines to take any questions. Ladies and gentlemen, we'll now begin the question and answer session. And our first question comes from Raimo Schall from Barclays. Please go ahead with your question. Hey, thank you and congratulations to the Q1 as a public company. A couple of questions for me. First, can you talk a little bit about the mix this quarter between payroll and non payroll? And talk and Chad, maybe talk a little bit about the opportunity like obviously, at the moment, the majority of the business is still at payroll. But as you kind of roll out new businesses like you've mentioned this quarter with the surveying business, how does it work in terms of kind of monetizing that? And how do you see that market versus the payroll market in terms of as an opportunity? All right. Well, first, Raimo, thanks for congratulating us and we're looking forward to this. So to answer your question, payroll is the core of any business function as you look at it. So 100% of all the companies that we work with, they do have our payroll offering. Over the years, payrolls represented a smaller percent of the overall. It's starting to even though we have clients that do 100% of all of our clients do have the payroll offering, we've done a good job at developing out the entire employment lifecycle. So in answer to your question, I believe that payroll will continue to see growth in the payroll side, but the other offerings, popularity that we've had in the other offerings are going to continue to grow as well. Okay. And then like on the investment side for the year, so obviously you kind of overachieved in Q1. I mean, how do we have to think about it like what triggers like extra spending versus non extra spending if I think about the rest of the year? And how do you think about these new offices that you do kind of do then you try to do it at the beginning of the year and then the rest of the year, there's nothing like you just kind of let them go live and kind of start performing and then you do that the next thing next year? Help us to understand that process that goes on at the peak on there. All right. And so from the sales, it looks like there was a couple of questions there. I'm going to take the first one. But as far as the sales office openings, we've traditionally had a lot of success starting these in the beginning of the year just because they're able to ramp up by the end of the year, you're able to get staffed. We do onboard several clients, even though it's well distributed throughout the year, we do onboard several clients as well in January. And so we like to get those onboarded and not really open up offices potentially at the 1st of a quarter. What happened in the 1st of the year is we saw some large opportunities. I mean, we've had increased demand for our products in certain areas. And we actually had the staff that was in a good position that we could actually promote into these new positions. And so we captured that opportunity due to the demand that we had for our software. So in a way, if I think about it, so 2 things the 2 things basically came together, which doesn't really what happened like so you had the right people and the right city and just the 2 of them came together, so it would be silly not to use it. Is that the way to think about it? Yes. That's correct. And we're always going to look at the opportunity that way. For us, anyway, the larger that we become as a technology company as well as a sales organization, over time, you have more technology to sell. So you do have a lot more pull for your product as well as you have a deeper bench of future leaders. And so over time, it becomes it's never easy, but it does become easier for us to open up additional offices. Yes. Okay, perfect. Thank you. And then one last question for me is like maybe it's more for Greg or actually maybe for both of you. If I compare Paycom with other companies, I mean, you're using kind of option for employees a lot less than the other guys, a lot less. Can you talk a little bit about why that is and how you're incentivizing your people? Could you restate that question, Primo? Yes. So I was trying to say like if you look at Paycom and I've looked at how extensively you use option well, actually you're not using options to employees extensively. If I look at the charge that you have compared to other technology companies coming out of the valley. Like can you talk a little bit about how you kind of motivate the people? I mean a lot of these other companies say I need give up options to get the employees happy, etcetera. What's your thinking behind that? And how are you doing it? Okay. I'll take that one, Jim. All right. Go ahead. Final, what we've done is we have probably 200 to 300 employees that are actual owners of the company through the through our options plan. Prior to our reorganization on January 1, we were an LLC and we were able to use incentive units to incent the employees. So our valuation of those was significantly less. And as part of the conversion on January 1, there are still owners in the company, but our comp charge was significantly less. As we move forward, we will continue to put plans in place to incent our people and keep them involved. Perfect. Okay. Thank you. Our next question comes from Sterling Auty from JPMorgan. Please go ahead with your technical people. Are all of those being accounted for inside of R and D? And I want to make sure that I heard correct. I want to understand kind of where you're allocating that talent to today? And maybe the follow on to that is have you hired what you want to hire in the technical area for 2014? Or is there still more investment to come? I'll take the first part of that question, Sterling. Part of our R and D is capitalized as self developed software. So what you're seeing on the income statement isn't the full amount of the R and D spend. So then I'll turn it over to Chad. Right. And so we increased our technical headcount by 61% this quarter and these are programmers, developers and what call QA as well as product development. All of our development most all of our development and definitely what this group coming in will be working on, it's all future development. It's not maintenance of the product. And so we have a lot of plans to continue to bring our SaaS technology to the market. And we have some ambitious items that we'd like to go ahead and get completed as well. And so as the opportunity presents itself in the future, we'll continue to grow our R and D staff. And my follow-up question is, when you look at that 50% percent to your core market where you've got 86% of your customers currently, some of the larger players obviously aren't standing still. I think they're investing in SaaS related solutions also. Where do you think you are in terms of the head start that you've got on them? And the investment that you're making, is this going to be enough to kind of sustain that lead? Well, that's a good question. I cannot speak for the others. I think you do have companies that are around that are actually trying to they are actually in the process of converting to SaaS. This is a very serious industry that we're in and we're really in an industry where if you're 99.9% accurate, you get an F. So everything really has to be locked up. So we will continue to spend on the R and D side as we need to. And we've attracted a lot more research and development talent over the last year. Got you. Thank you. Our next question comes from Richard Davis from Canaccord. Please go ahead with your question. Hey, thanks very much. You kind of talked about it at a high level before, but kind of in who and in what percentages are you replacing incumbent vendors? Who do you see the most? And I'm sure we'll be asking you this over the quarters years as we go along to see how that evolves. All right. Well, most of the time, the overwhelming majority of the time we are replacing an incumbent provider. And most of the time, they have 1 or 2 well, most of the time, yes, at least 1 or 2 databases on the small end that we're replacing. As you move further up market, it could be 3 or more. Obviously, the largest legacy providers are the ones that we're going to run into the most and we continue to have a lot of success competing against both them and others. No names? Well, that's all right. I understand who they are. That's fine. I was just teasing you. And then one other question that sometimes I get is, is having a single database kind of one of the key differentiating, is that one is that the most important reason that I pick your guys in a competitive take off? Or I mean, obviously, it depends on the customer, etcetera. But is that a plurality of the reasoning behind me as a potential customer choosing you guys? Yes. I think it's really what the single database provides on the back end. So it's really about the functionality and experience you can have with the single database. So that you're not you do not have the need to integrate or patch together multiple systems to actually use your data, which we actually turn into information. Got it. Great. Thank you so much. You bet. Thank you. And our next question comes from Brad Reback from Stifel. Please go ahead with your question. Hey, guys. How are you? Hey, Brad. Craig, I think you mentioned during the prepared remarks that you've had success moving up market with some of your more recent customer additions. Could you maybe give us some sense if you look at the average customer that you acquired here in the Q1 versus what the average customer looked like a year ago or 2 years ago from where they're starting and how much upmarket you've been able to go? Thanks. Our average customer count is trending the way it has been trending for years now, which it continues to trend up. And this is Chad, by the way. Yes, Chad, but Chad, I'm sorry, not average customer count, but the size, the average customer size, what that customer looks like today versus what that customer looked like 2 years ago. Are you getting bigger customers? Yes, we are. Our actual employee size per customer continues to trend up. 50,000 to 2000 employees is a broad range and there's a lot of opportunity for us to capture in that range. And really that's the market segment that's highly dependent upon the information and we have a very strong value proposition for them. Okay. Thanks a lot. You bet. Thank you. Our next question comes from Brendan Barney from Pacific Crest Securities. Please go ahead with your question. Thanks so much. Chad, just following a little bit on Brad's comment. One of the things we'd heard from other companies this quarter was some difficulty in closing larger transactions. We saw some of them get delayed and pushed out a little bit. I'm wondering if you saw any of that in yours. I'm not sure that the ones we heard about were kind of in the size range. It might have been quite a bit larger. I was wondering if you saw any changes in that, the characteristics of closing some of your larger deals. Thanks for the question. And no, Brendan, we have not seen any changes in that. As we reported, our ANRR for this Q1 was a record for us and a lot of that has to do with our ability to close businesses right in our wheelhouse. Terrific. And then you continue to build out the sales force and go city by city. And I was wondering how sales hiring was. That was another thing we heard this quarter from many companies is sort of some challenges in getting all the hiring they wanted done. I was wondering how that looked for you guys through the quarter? Well, thanks for the question. This quarter, we actually exceeded our sales office opening expectations with actually being able to open 5 and a lot of that was due to the demand for our technology, but also our ability to find and source candidates to actually come and work for us. And so we have not experienced any problem with finding talent. And in terms of sales talent, are you still sourcing that primarily from some of your competitors who have kind of larger and slower or are there some new sources? Right. And so we do not traditionally hire from competitors. But that said, we're going to remain open to anyone that's talented in the sales process and wants to actually come work for Paycom and do things the Paycom way. We're always open to those individuals. Great. Thanks so much. All right. Thank you. All right. Well, I want sorry, go ahead. Are there any other questions? All right. Yes. Any other questions? Sir, at this time, I'm showing no additional questions. I would like to turn the conference back over for any closing remarks. All right. Well, I want to thank everybody for participating in today's call and for your interest in Paycom. We're very proud of the hard work and dedication of our employees and we're excited about the huge opportunities ahead of us and we look forward to speaking with everybody next quarter. So thank you. Ladies and gentlemen, that does conclude today's conference call. We do thank you for attending. You may now disconnect your telephone line.