Paycom Software Inc at Citi TMT Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Steven Enders - Citi Infrastructure Investments LLC - Analyst : Chad, maybe we'll start with you. Just maybe take us through the transformation of Paycom over the past few years. And kind of maybe where are we on processing through some of the transition that you've been going through?

Question: Steven Enders - Citi Infrastructure Investments LLC - Analyst : Okay. That's great to hear. I'm definitely going to dig into a lot of the AI strategy in the product side. But Bob, before I do that, I want to talk to you a little bit, just in terms of -- you recently took over as CFO a couple of quarters ago, a few quarters ago now. Can you maybe just give us a brief intro about yourself and maybe some of the biggest areas of focus for you as you take over the CFO role?

Question: Steven Enders - Citi Infrastructure Investments LLC - Analyst : Okay. That's great to hear. Maybe going back to the AI product strategy. I think you launched IWant earlier this quarter. I guess, what makes it different versus maybe some other AI assistants that are in the marketplace, or what really differentiates what you're doing with it in the market?

Question: Steven Enders - Citi Infrastructure Investments LLC - Analyst : Sure. That makes sense. I guess, when you -- I guess now that IWant is out there, what's kind of been the feedback that you've gotten from the customers so far? And how is the rollout may be trending versus what you were expecting?

Question: Steven Enders - Citi Infrastructure Investments LLC - Analyst : So I guess with the opportunity with IWant, I mean, great to hear the adoption and that rollout so quickly. Do you view the opportunity more about the ability to take more share, find more customers? Or is there something about what you're doing with it that you can monetize directly within the customer base? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 03, 2025 / 6:50PM, PAYC.N - Paycom Software Inc at Citi TMT Conference

Question: Steven Enders - Citi Infrastructure Investments LLC - Analyst : Okay. I guess from that perspective, maybe where are we in terms of that actually beginning to impact or benefit the sales process or maybe what you're seeing in the pipeline?

Question: Steven Enders - Citi Infrastructure Investments LLC - Analyst : That makes sense. And I guess in terms of the investment behind it, I think you said there's a bigger push on the CapEx side of needing to be able to support the AI capabilities, build out the data center footprint. How should we think about maybe the magnitude of that? And how much investment you're putting to work here?

Question: Steven Enders - Citi Infrastructure Investments LLC - Analyst : That makes sense. I guess when you think then about -- you call this a transitory one-time spend, I guess, how do you think about the future roadmap for AI, what you're doing from a product perspective, and what more capabilities you could build in or would make sense to build in on the AI side?

Question: Steven Enders - Citi Infrastructure Investments LLC - Analyst : Okay. That makes sense. Maybe I'll ask it a little bit differently. Just you think of the future roadmap for Paycom from a product perspective, how does it maybe evolve further as the -- as AI capabilities become even more advanced as you're able to do more with some of the models out there?

Question: Steven Enders - Citi Infrastructure Investments LLC - Analyst : Yeah. I do want to ask about the margin, the CapEx comment there. I think you said 15% of this year.

Question: Steven Enders - Citi Infrastructure Investments LLC - Analyst : Okay. That makes sense. I guess with that investment you're making, just how maybe should we be thinking about EBITDA to free cash flow conversion rates? Is there any kind of change to that dynamic kind of moving forward here?

Question: Steven Enders - Citi Infrastructure Investments LLC - Analyst : Yeah, that makes sense. I have one last question on the model, then I'll open it up to the room. But just in terms of the tax bill that came out earlier this year, what impact does that maybe have on the margin? Or how are you thinking about what that can mean for free cash flow as well?

Question: Steven Enders - Citi Infrastructure Investments LLC - Analyst : Okay. Let's see if there's any questions in the room here. Okay. I'm going to ask about go-to-market a little bit. I do want to come back to AI after that. But just in terms of the go-to-market structure, I think you recently promoted Amy about a year ago, maybe a little more than that. I guess what has she done that's maybe helped drive some of the reacceleration in the business? And how do you think about maybe further opportunities to drive even better efficiency and productivity within the sales and marketing channel?

Question: Steven Enders - Citi Infrastructure Investments LLC - Analyst : I want to touch on the, I guess, the office openings that you did, which I mean, encouraging to hear Providence is doing so well right now. Does that make you feel more comfortable opening up more offices in the future? How do you kind of think about when or where it would make sense to start to open additional offices?

Question: Steven Enders - Citi Infrastructure Investments LLC - Analyst : Okay. And how are you feeling about bench strength right now?

Question: Steven Enders - Citi Infrastructure Investments LLC - Analyst : Okay. That makes sense. I do want to ask a little bit around just the broader marketplace right now and some of the competitive dynamics out there. I think there's been quite a bit of M&A over the past year or so in the HR payroll space. Has that changed maybe what you've seen in the market? Is it changing pricing or competitive dynamics at all? Just what have you seen?

Question: Steven Enders - Citi Infrastructure Investments LLC - Analyst : Okay. Have you started to see maybe some of those companies or some of those potential customers start to come up for -- as they come up for renewal, are they looking for alternatives? Are they coming to Paycom, looking for something different?

Question: Steven Enders - Citi Infrastructure Investments LLC - Analyst : No, that makes sense. I do want to ask about some of the leadership changes that I think happened in the past month or so, new CTO, new CAO. I guess, what do those changes indicate for you as a company? And how do you think about the key focus areas into that new leadership?

Question: Steven Enders - Citi Infrastructure Investments LLC - Analyst : Okay. That's good to hear. Just on the mid-market side, that opportunity, I think you've been indicating you're trying to move more up that way. I think you've done some things on the sales side to try to make that happen. Just what's resonating in that opportunity right now? And what are

Question: Steven Enders - Citi Infrastructure Investments LLC - Analyst : Okay. I mean, I guess, is there anything that's changing from a go-to-market perspective? Like you're building out a mid-market team to try to support that? Or does it -- any other kind of requirements to try to do that?

Question: Steven Enders - Citi Infrastructure Investments LLC - Analyst : Okay. That makes sense. I think one of the questions we tend to get from investors is, I think, sort of on the second half ramp-up on the revenue side, I think it's maybe pivoted from what gives you the confidence in that acceleration to now -- 2Q was so strong. How do we now think about the growth algorithm for the rest of the year from some of the prior comments about 4Q being the strongest? Just how do you think about that?

Question: Steven Enders - Citi Infrastructure Investments LLC - Analyst : Okay. And I guess, as we think about that acceleration and we think about beyond Q4, I guess, what does that mean kind of moving forward? I guess what other factors maybe should we be thinking about as we think about what happens beyond this year?

Question: Steven Enders - Citi Infrastructure Investments LLC - Analyst : Yeah. I guess, as you think about kind of the future of Paycom and what that looks like, I guess, where do you kind of see the most opportunity? What do you kind of view as kind of what you're most excited about is --?

Question: Steven Enders - Citi Infrastructure Investments LLC - Analyst : Sure. I guess what does that mean then, I guess, for the back-to-base motion? How do you feel about some of those reps who I think maybe there's a little bit of pause on their ability to go push product back into the base?

Question: Steven Enders - Citi Infrastructure Investments LLC - Analyst : Sure. We got about a little over a minute left. I want to see if there's any last questions in the room. I'm going to ask one more question, and we'll let you get out of here. Just in terms of your own internal use of AI, I guess, how are you leveraging it? How are you driving efficiencies within the organization? And what does that mean for kind of the go-forward margin opportunity?

Question: Steven Enders - Citi Infrastructure Investments LLC - Analyst : Awesome. Well, I think we can leave it there. But Chad, Bob, I want to thank you both for being here and thank everybody in the room.