Earnings Call: Q2 2019

Jul 30, 2019

Good afternoon, and welcome to the Paycom Software Second Quarter 2019 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 James Sanford, Head of Investor Relations. Please go ahead. Thank you, and good afternoon, and welcome to Paycom's Q2 2019 earnings conference call. 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 or make in this presentation 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 most recent Annual Report on Form 10 ks. You should refer to and consider these factors when relying on such forward looking information. Any forward looking statements made speak only as of the date on which this 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, including adjusted EBITDA, non GAAP net income, adjusted gross profit, adjusted gross margin and certain adjusted expenses. We use these non GAAP financial measures to review and assess our performance and for planning purposes. A reconciliation schedule 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. Paycom.com. I will now turn the call over to Chad Richison, Paycom's President and Chief Executive Officer. Chad? Thanks, James, and thank you to everyone joining us on our call today. I'll begin my remarks by reviewing another strong quarter and provide you with some perspective on how our groundbreaking direct data exchange and employee usage initiatives are redefining the relationship employees have with their human capital management or HCM software in the workplace. I'll finish by discussing some additional business highlights, then Craig will review our financials and outlook before taking your questions. The 2nd quarter results came in strong, thanks to robust new business adds and we remain well positioned for another excellent full year. Q2 revenue was approximately $169,000,000 representing growth of 31.5% versus the comparable prior year period. Our adjusted EBITDA of $69,400,000 represented a 41% margin. With these results and our momentum, we are raising guidance for the full year, which Craig will discuss in more detail in his remarks. Employee usage of HCM Technology is the future of our industry and our clients and their employees are embracing the digital transformation faster than ever. With Paycom, they can measure the estimated ROI on their HCM investments and benefit from higher employee engagement, increased productivity and better job satisfaction. Our early investments in employee usage are driving strong sales growth, but we believe this digital transformation is still in the early stages. Last quarter, we released our direct data exchange or DDX for all of our clients. A highly differentiated enhancement to our software offering that reports all data changes made directly into the HCM database by employees as well as all duplicative data changes typically input by other client representatives. As employee usage gains traction, our clients can track the financial benefits of eliminating these duplicative data input. Clients choose the pace of their digital transformation and Paycom can go as fast or as slow as they want. However, we are seeing clients embrace the transformation at a faster pace today than a year ago. Before the DDx, no one in our industry, let alone HR professionals, knew what appropriate employee usage look like or how to measure it. Now they can and they are embracing it. Turning to our sales initiatives. In addition to continuing to innovate our product offering, we are also innovating our sales strategy as buying habits across the industry continue to change with more companies becoming comfortable buying online. This means group. We recently brought one of our most successful outside sales managers to lead our inside sales initiative because we have found that prospective clients are embracing this nontraditional sales efforts. We also recently opened a new sales office in New Orleans. While we continue to expand our sales footprint, I want to emphasize that the largest driver of our sales growth is coming from the sheer mass of our existing sales force and their increased productivity. On the technology side, we continue to add talent to our outstanding development teams to focus on new products and software enhancements. We are experiencing a lot of success and I'm very pleased with the product line. In fact, we recently released Ask Here to all of our clients. This newest tool gives employees a direct line of communication to ask work related questions of their company representatives and receive timely answers all through the convenience of Paycom's self-service technology. I'm excited about the many benefits companies and their employees gain, such as one online communication resource that ensures all inquiries are addressed, actions are taken and eliminating the needs for employees to follow-up through email, phone call or added foot traffic. Now employees don't need to know exactly who to ask questions to as this functionality empowers them to ask any business question, which is then routed to the most appropriate client representative with the relevant expertise. This latest innovation further enhances the employee employer experience and strengthens the client's employee usage initiatives. To conclude, we believe Paycom is leading the digital transformation of the HCM industry, which positions us well to deliver value to our clients and their employees throughout the year and beyond. With that, I'll turn the call over to Craig for a review of our financials and updated guidance. Craig? Before I review our Q2 results for 2019 as well as discuss our outlook for the Q3 and full year 2019, I would like to remind everyone that my comments related to certain financial measures will be on a non GAAP basis. As Chad mentioned, we were pleased with our 2nd quarter results with total revenues of $169,300,000 representing growth of 31.5% over the prior year period. Our revenue growth continues to be primarily driven by new business wins. Within total revenues, recurring revenue was 100 and $66,000,000 for the Q2 of 2019, representing 98% of total revenues for the quarter and growing 31.1% from the comparable prior year period. Total adjusted gross profit for the 2nd quarter was $144,400,000 representing an adjusted gross margin of 85.3%. For the full year 2019, we anticipate that our adjusted gross margin will be within a range of 84 percent to 85%. Total adjusted administrative expenses were $85,900,000 for the quarter as compared $61,700,000 in the Q2 of 2018. Adjusted sales and marketing expense for the Q2 of 2019 was $39,000,000 as compared to $30,200,000 in the Q2 of 2018. Adjusted R and D expense was $16,300,000 in the Q2 of 2019 or 9.6 percent of total revenues. Total adjusted R and D costs, including the capitalized portion, were $22,300,000 in the Q2 of 2019 compared to $14,600,000 in the prior year period. Adjusted EBITDA was $69,400,000 or 41 percent of total revenues in the Q2 of 2019 compared to $53,500,000 in the Q2 of 2018. Our GAAP net income for the Q2 was at $48,800,000 or $0.83 per diluted share based on approximately 58,000,000 shares versus 35,700,000 dollars or $0.61 per diluted share based on approximately 59,000,000 shares in the prior year period. Our effective income tax rate was 6.9% for the Q2 and 16.1% for the 6 months ended June 30, 2019. For the full year, we expect our effective income tax rate to be roughly 22% to 23%. For the 3rd quarter, anticipate non cash stock based compensation expense to be approximately $5,000,000 to $7,000,000 Non GAAP net income for the Q2 of 2019 was 43 point $7,000,000 or $0.75 per diluted share based on approximately 58,000,000 shares versus 34,800,000 or $0.59 per diluted share in the prior year period. We anticipate fully diluted shares outstanding will be approximately 58,000,000 shares in the Q3 of 2019. Turning to the balance sheet, we ended the quarter with cash and cash equivalents of $94,800,000 and total debt of $33,500,000 As a reminder, this debt represents a financing of expansion related construction at our corporate headquarters. The average daily balance of funds held on behalf of clients was approximately $1,200,000,000 in the Q2 of 2019. Now let me turn to guidance. For the Q3 of 2019, we expect total revenues in the range of 170 $1,000,000 to $172,000,000 representing a growth rate over the comparable prior year period of approximately 28% at the midpoint of the range. We expect adjusted EBITDA for the Q3 in the range of $61,000,000 to $63,000,000 representing an adjusted EBITDA margin of approximately 36% at the midpoint of the range. For fiscal 2019, we are increasing our revenue guidance to a range of $728,000,000 dollars to $730,000,000 or approximately 29% year over year growth at the midpoint of the range. We are also increasing our full year Our first question comes from Raimo Lenschow with Barclays. Please go ahead. Hey, first of all, congrats from me for another great quarter. Chet, my question is around the new sales strategy. Can you expand a little bit on the move towards inside sales? That's obviously like a big step for you because you had a very strong direct model. Inside sales historically has been more kind of slightly lower in the market. Like how do you plan of like how big is that going to get? And how do you try to do the client segmentation? Thank you. Yes. So I appreciate the question. So this isn't a shift in strategy. We've been having success selling online. You did allude to the fact that we've had a small inside sales organization here. That does sell the smaller either prospects that call us or potentially clients that have an easier situation. But anyway, we continue to have increased lead volume and in both inside and outside sales. And these inside sales efforts are just augmenting our traditional sales model. It's not replacing it. And so this should be accretive. The plans we have to continue to expand our footprint in outside sales haven't changed. As I just mentioned, we did open up an office in New Orleans. So we continue to open up new offices in a staggered approach when it makes sense. But we also are having increased lead volume coming in through inside sales. And in addition to innovating our product, we're also innovating our sales strategy as well. And so but I wouldn't call this a shift in strategy. We're expanding in both areas. Perfect. It would be interesting. I'm going to follow it. Thank you. Thank you. The next question comes from Samad Samana with Jefferies. Please go ahead. Hi, this is Howard Ma on for Samad. Thanks for taking the question. I have one for Chad and one for Craig. So for Chad, I'm curious, are you seeing any cases of larger customers that are showing resistance to this fully employee self-service approach to HR? So it could be whether due to organizational complexities or industry or regulatory barriers. And I guess another way of asking is on the flip side, are there any industry verticals that are that have fewer organizational complexities and thus they're more so it could be 5,000 to 10000 employees, but they're more likely to switch to self-service. And then for Craig, I'm looking at the revenue guidance and if I want to back into EBITDA, I think implies that you guys are going to see tremendous sales and marketing leverage in 4Q. And so is that true? And then if that is true, what are the drivers? Thank you. Yes. So I'll take the first question. I mean, I'm sure I could single out a specific prospect that for one reason or another might not embrace the strategy of employees having a direct relationship with the database. But I can't think of a good reason why any prospect regardless of size wouldn't want their employees to have a direct relationship with the database. In fact, I believe that's what the enterprise market's been trying to build to with the multiple interfaces. And now you're even seeing companies lay over areas of technology onto those back end so that employees can actually have some level of experience with their data. And so now I think whether you're a large client or a large prospect, whether you're a smaller prospect, this is the future of our industry and we're experiencing that future today. And so I would expect that all enterprise level type clients would receive the same type of value that the others. And we're actually seeing that. We do continue to sell at the upper end of our range and even above that. And so our lead generations actually continues to drive results for us in those areas. I'll let Craig answer the guidance question. Yes. In terms of the adjusted EBITDA in the back half, we would expect to see some leverage in the sales and marketing, but also in the G and A line as well, kind of in the back half. Okay. And if I may, just a follow-up, Craig. Have you guys updated long term operating margin guidance, long term targets or sales and marketing? What that could be over the I mean, like can we see it perhaps dip below 20% of sales over the next few years? We have not given any long term guidance on adjusted EBITDA. Okay, great. Thank you. The next question comes from Mark Murphy with JPMorgan. Please go ahead. Hi, this is Pinjalem on behalf of Mark. Congrats on the quarter guys. Two questions from me. Chad, you said you have opened one office this year. I think it was 4 offices in the first half of last year. How do you feel about the balance between the need for office openings and the productivity gains of the existing office? And in that context, I mean, could you talk about how sales productivity per mature office is tracking maybe versus last year? Yes. Well, first, I'd say without productivity gains, you don't need to open up any offices. Productivity gains are very important. And so we continue to drive that. We've opened up a lot of offices. I've said this in the past, now we're at 50 And at once those offices are full, they're averaging about 8 reps each. And so that's 400 reps for us and that's quite a bit out there in the U. S. Right now. And so when we look at the TAM we already have covered, there's quite a bit there already. And so, yes, we are going to continue to expand at times when it makes sense to us, but we also want to capture everything that's available to us now as well. And so again, I didn't say this to signal a shift in strategy. It's more a little bit and I wouldn't necessarily say it's a shift, but we are seeing some buying habits change and a willingness depending on situation for people to buy online. And as I said earlier, as we're innovating our product, we're also innovating our sales strategy. I don't think people are going to potentially buy the same way 10 years from now that they're buying right now. And we want to be looking at that and what does that mean. I think the reasons why they buy actually as we look into the future will probably be similar to why they're buying right now as far as that goes. But I think how they buy, it can be a little bit different. We're not changing what we're doing though. I just want to say that. We did open up an office, New Orleans. We do continue to focus on expanding that footprint. So anyway, I would just leave it with that. 2nd part of the question. Yes. Well, just to follow-up on that. I know you don't disclose the revenue retention number quarterly, but any qualitative comment about directionally how that is trending this year so far would be helpful. And I've gotten this question a few times. How should investors think about a net dollar retention number that is something gross retention plus including upsells? Yes. Well, I mean, we've measured our retention the same since 2007 and it's a trailing 12 and so we've measured it the same. Last year was the very first time we saw an increase in that over a period of about 7 years. And so obviously, we're looking to increase that this year. Retention is something that improves throughout the year. You're going to typically have your largest losses in the beginning and then retention improves throughout the year. And so that's why we update it once a year to stay consistent. But it's been our focus to focus on retention and really what drives that is client satisfaction and the ROI that they're generating off of using the software and how we're able to increase that ROI for them as well as for their employees. And so those types of things drive retention for us and we're in the middle of the year and we'll report that number at the end of this year. Okay. Thank you. The next question comes from Brad Reback with Stifel. Please go ahead. Great. Thanks very much. Chad, can you update us a bit on how the price increase in the quarter was received? Sure. So we made mention of a modest price increase last quarter. And moving forward, we're not going to communicate any pricing in the future as we don't want to discuss our pricing strategy for our competitors. But I will say this and I've said this in the past, as we drive greater ROI for our clients, it would only make sense that we would have the opportunity to share in the value that we're creating with our R and D spend. Ultimately, our clients are going to decide our value and I feel really good about the amount of no fee functionality we've added into the product to drive ROI for our clients as well as their employees. And I believe the clients are having a positive response to that enhancement. Great. Thanks very much. All right. Thank you. The next question comes from Brent Bracelin with KeyBanc Capital Markets. Please go ahead. Thank you. One for Chad here and then a follow-up for Craig. Chad, just given the tight labor market, it seems like improving employee experience is gaining kind of industry momentum as a tool to increase employee retention. I know this data direct exchange product is early, but can you just talk about what portion of the customer base has kind of embraced the new product so far? It's only out there for 1 quarter. Is this 5%, 10% of the customer base now adopting the product and just trying to gauge how fast this product can be embraced by the existing customer base given it is so differentiated? Thanks. Yes. And so the short answer is currently 95% of our clients have clicked through the DDX 5 times or more. And the DDX has been out for 4 months. So we started to shift to employee usage to drive incremental ROI for the client and the employee about 3 years ago. We've already got 95% on click through. Currently, if we look at our clients usage in aggregate for all of them, we're in the high 80s. But I will say this, I mean, a high 80 isn't a B plus on the DDX. But it does show that clients are progressing. And how we see that, even how they're using it, now we're having clients that want us to break down the DDX per user and per department. And that tells us they're focused on it and they're using it to improve their scores as they're completing the digital transformation in HCM. Got it. Very helpful. And then just a follow-up for Craig here. Obviously, growth in billings, revenue growth and billings growth accelerated this quarter. That's against the backdrop of sales office locations kind of being flat here for the last 4 or 5 quarters. How much of that acceleration in growth was driven by kind of productivity gains, higher attach rates of different modules or the price increase? Any additional color there on what drove the acceleration would be super helpful. Thanks. I mean, as we mentioned in the script, new client wins is the majority of the revenue acceleration. We have 49 of our 50 offices are out there that are bringing on new clients. And so that's going to represent the majority of that revenue acceleration. Got it. Thank you. The next question comes from Mark Marcon with Baird. Please go ahead. Good afternoon. Let me add my congratulations. I was wondering if you could talk a little bit about the large client initiative and what we're seeing there in terms of the 2,000 to 5,000 employee range. Just what the pipeline looks like, what the receptivity is, how incremental has that been to the acceleration that we've seen in terms of the revenue growth? And then I've got a follow-up. Thanks. Yes. And so we had been selling above the 2,000 employee range for quite a long time before we actually formalized it and said, okay, now we're moving up to 5,000 and now we're even seeing clients come in above that. So I would just say that we are continuing to get more of those, but we also have more at bats because we have more reps. And then as our value proposition is getting stronger, people who may not have been as interested in it 6 years ago are more interested in it now because the value proposition continues to get stronger. Okay. And then with regards to just the acceleration in terms of the revenue growth, I know the new logos have always been the primary contributor. But to what extent relative to prior second quarters and kind of adjusting for seasonality, would the additional attach rates in terms of modules versus more pace per control and then of course the pricing be impacting the acceleration? And can you also talk a little bit about the Ask Here module and is that an additional incremental charge? Okay. Well, first I'll tell you, I mean, as far as I think you're talking about the revenue growth and what really does that encompass and you talked about pricing upsell new logo ads. Yes, that's relative to the past. I wouldn't say that it's changed much at all as in the past. I mean, I know that our new client wins percentage and our upsell percentage are very consistent as they have been in the where we did have an upside in the where we did have an upside in internal upsells to current clients just because of the sheer mass that kind of all came on at once. With the exception of that, our percentages have been very consistent and always over weighted very heavy toward the new logo side. As for the Ask Here, like the DDX and even like our app, Ask Here is one of those no fee functionality products that we do include within our stack so that people will use the product correctly. And so AskEAR helps employees embrace the technology even more. Ascare has a lot of benefits for both the company as well as the employee with as an online communication resource where they can ask their inquiries online and it's set up by the client to have each question and each subject is answered by the expertise of that organization or client representative. And so we just believe this strengthens employee usage and further drives the ROI for the business. And so in answer to your question, though, we aren't charging separately for AskEAR. Terrific. Congrats again. Thank you. The next question comes from Brian Schwartz with Oppenheimer. Please go ahead. Yes. Hi. Thanks for taking my question this afternoon. Just have one. I think, Chad, we've talked before in the past, I know it hasn't been the business sales strategy. It's been a new customer acquisition story. And clearly that's working really well. We have talked about in the past about maybe, tapping the installed base going back to increase the usage and get full penetration within the install base. I don't know if I know any software company that has full penetration. The question I wanted to ask you was on the expansion of the inside sales force. Clearly, it sounds like that's geared towards continuing the new customer acquisition. But over time, do you think there's an opportunity to maybe leverage those investments and maybe look back into the installed base and see if you can further the penetration within that base? Thanks. Sure. Well, first of all, I appreciate the question. It allows me to put a little bit more clarity around the inside sales efforts and strategy that I was mentioning earlier. You are correct. Those inside sales are completely for new business wins. They are not for upsells to current clients. When I was talking about how we relocated a manager to be able to build inside sales, that's to handle new business leads. That's not upsells to current clients. We have now and continue to have and have had for some time a group of client relations reps that do upside or upsells to current clients And they also help us focus on usage and that group's really done both. As I've said in the past, it's important that clients use the products that we've sold them correctly before we're selling them additional products. And so we focused on that. I wouldn't ever say that our companies ever had this opinion that, yes, we're just going to sell them some things now and then come back later and really sell them what they need. We've always been focused in making sure that the clients have what they need when they need it. But at some level, you have to earn the right through an ROI achievement to sell the additional products. And so but I just wanted to state that. We have not ignored inside sales. It's not some grand plan that someday we're going to come back and start selling everybody all the products they really need. We do that today and we're focused on usage. In fact, something I said earlier about the DDX, I said in high 80s is not a B. At Paycom, our DDX score, when I looked at it on Thursday, was 99.7, all right? Well, for this month, we've had 164,000 or 165,000 changes so far. 164,700 of those were made by employees. We had about 300 changes made by HR. So we have a 97.99.7 percent DDX score. So if we had an 88% DDX score, that wouldn't be a B just because of the sure amount of changes that HR would have made. I mean, if we had that type of score, you're probably looking at closer to 20,000 changes that HR would have made. And so that's why it's important and that's why I brought it out. The DDX, we're watching our clients get there in aggregate. Everyone's excited about it and that's really what's helping us drive results. And also we're seeing it makes it easier for people to understand what they're buying. If you look at this industry over time where you're bolting on all these things, even as I explained it to investors, it can get kind of difficult to understand, okay, what is everything someone's doing? As we're looking at you're looking into the DDX, I do think it makes it easier for a client to understand what they're buying and what their ROI is going to be. And because of that, you're seeing some buying habits change. Thank you very much. The next question comes from Shankar Subramanian with Bank of America. Please go ahead. Hi, thanks for taking my question and congrats on the results. I just have a couple of questions. One on your marketing spend. I know the last couple of years you've kind of accelerated the spend in marketing and you've done you've seen good results. Can you talk about how much of that benefit you have seen in the first half in terms of your results? And then maybe qualitatively comment on how you're thinking about second half in terms of your marketing spend? Yes. So we did do the national ad campaign last year. We actually continue to use those assets. Some of those assets we had to actually repurchase rights to. We've done that. We do continue to use that. We do have strong marketing initiatives both this quarter as well as through the end of the year and that is all baked into our current guidance. And we are having success with showing an industry how to use a product a different way. Got it. Got it. And from a competitive trend perspective, any change you've seen notably over the past 3 months? Is that particularly with Ultimate going private? Any kind of color on that would be helpful. I have not. It's usual suspects for us as far as who's out there. Okay, perfect. Thank you, guys. Thank you. The next question comes from Ryan MacDonald with Needham. Please go ahead. Hey guys, this is Josh on for Ryan. I was just wondering what applications and or modules are you are helping driving the greatest increase in employee usage on the platform today? Maybe just some color on that would be helpful. Sure. It's somewhat going to depend on the client as far as when you're talking about what product drives the greatest usage for them. If you have hourly employees with schedules and they're swap, you're going to have a lot of usage in the system. If you have a salaried employees, you're not going to have as much time and attendance, you might be in other areas of usage. And so it's really somewhat client specific. We're going to deliver it all to them that meets their needs at the time obviously. And then how they're using it is going to really depend on what type of industry they're in, how many employees they have, are they decentralized or more of their people in one area. And so usage is different per client, but 100% usage looks like 100% usage. We might be talking about the difference in a client that made 200,000 changes total in their database for a month versus a client that only made 80,000 because they have a different employee base that doesn't require the same level of data input and retrieval that you're going to have with other types of employee bases. Okay, great. And then just one other question. When looking at your larger customers with 2,000 employees and above, how much room is there for seat expansion with these customers? Or are they typically getting every employee on the initial deal sign? Well, for seat expansion, you would have it from the beginning. I mean, for us, let's say this, they wanted to add additional master users or department users, even after all their employees are users, they can add as many users as they want. We don't we charge on a per employee basis as far as number of users. They can have as many users as they want on the platform. But for your larger customers, you're typically signing up every employee in the company initially? Well, for any sized organization, we are signing up every employee because we have to do the payroll, we have to input all the totals, we have to balance. So even terminated employees are set up in our system. So anybody that had balances and we work through that with the client. And so you might have terminated employees that want access to their data. And it would be a best practice to keep an HCM technology turned on for terminated employees so that you do not have to respond on certain issues that they can actually gather that information for themselves. So from an employee side, we're going to set up all. Okay, great. Thanks guys. Thank you. The next question comes from Drew Kootman with Cantor Fitzgerald. Please go ahead. Hi, guys. Good quarter. Just wanted to ask on, as you guys move into those larger businesses, I know you guys have already sold to that group, but just are you seeing any changes from what the client needs? Do you have to change your sales tactic at all as you move up that group? No. I would no, we're not changing our sales tactics. It's the same group. What I will say is this though, as you move up, what's the difference in an employee that works for a 200 employee company and an employee that works for a 10,000 employee company? There's no difference. In the past, the difference was the size of the company. And that is still important because size of company and how they're set up is going to give you some type of view of complexity and what have you. But the employee users are the same. An employee at a 300 employee company is going to be needing and using the same type of thing that employee at a 3,000 employee company. And so as far as when you're making an impact to an employee, those 10,000 employee companies, they see their employees as the same way as a 300 employee company might see them as far as a user. I mean, you're going to have department leads and salespeople and everything else. And so that's I think what's more evening out for everyone, which is making it easier for people to understand the value proposition. I mean, in our industry, oftentimes people bought off of the brochure and then you're trying to figure out what you have over the next 3 years of conversion. And so with this, you're seeing it upfront. You know what you're aiming for. And we're having all getting a lot of leads just from rank and file employees that leave one company and go into another company and don't really want to work with multiple systems and really go backwards in technology. Got it. And then just one quick follow-up on the really strong adjusted EBITDA. Any color on what led to that higher number especially versus the guidance you guys were expecting? I mean, primarily you saw the revenue beat flow through to the adjusted EBITDA line, very similar. So it was really a lot of the revenue beat that was able to flow through to the bottom line. Got it. Thank you. This concludes our question and answer session. I would like to turn the conference back over to Chad Richison for any closing remarks. All right. Well, I want to thank everyone for joining us on the call today. Next month, we'll be on the road meeting with investors at the following conferences. I'll be presenting at the KeyBanc Technology Leadership Forum on August 13 in Vail, and Craig and James will be hosting investor meetings at both the Oppenheimer and Canaccord Technology and Growth Conferences in Boston on August 6, Technology and Growth Conferences in Boston on August 6th August 7th. We appreciate your continued interest in Paycom and look forward to meeting with many of you soon. Thanks, operator. You may disconnect. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.