Paycom Software, Inc. (NYSE:PAYC) Q2 2025 Earnings Call Transcript

Paycom Software, Inc. (NYSE:PAYC) Q2 2025 Earnings Call Transcript August 6, 2025

Paycom Software, Inc. beats earnings expectations. Reported EPS is $2.06, expectations were $1.78.

Operator: Good afternoon. My name is Tamia, and I will be your conference operator today. At this time, I would like to welcome everyone to Paycom’s Second Quarter 2025 Financial Results Conference Call. [Operator Instructions] I will now turn the call over to James Samford, Head of Investor Relations. You may begin.

James Samford: Thank you, and welcome to Paycom’s earnings conference call for the second quarter of 2025. Certain statements made on this call that are not historical facts, including those related to 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 made on this call are reasonable, actual results may differ materially because the statements are based on our current expectations and subject to risks and uncertainties. These risks and uncertainties are discussed in our filings with the SEC, including our most recent annual report on Form 10-K.

You should refer to and consider these factors when relying on such forward-looking information. Any forward-looking statement made speaks 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 today’s call, we will refer to certain non-GAAP financial measures, including adjusted EBITDA, non-GAAP net income 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 and is available on our website at investors.paycom.com.

I will now turn the call over to Chad Richison, Paycom’s CEO and President. Chad?

Chad R. Richison: Thanks, James, and thank you to everyone joining our call today. I’ll focus my comments on our second quarter achievements and highlight our latest AI command-driven product, IWant. I’ll then turn it over to Bob for a review of our second quarter results and an update on our full year guidance. We will then take questions. With that, let’s get started. We delivered very strong second quarter results, and we are building on our momentum by continuing to strengthen recurring revenue growth and margin expansion in 2025. Outside sales continues to set records, and we recently released IWant, the most significant product in our company’s history. We already have the most automated solution in the industry, and I want delivers even more value to our clients through AI and automation.

I want will transform a client’s relationship with Paycom and with its own business. Hopefully, everyone has seen the in demo we linked in today’s earnings press release issued at the close of the market. If you did, you saw numerous use cases for in on the employee, manager, administrator and executive side of the software. You also saw how I want eliminates the need for a Paycom user to be trained on our software. With IWant’s command-driven AI users either type in or leverage voice-activated functionality to command the system, and IWant is designed to immediately provide the answer with accurate results. This means that navigation and asking others for system information is rendered obsolete. A critical component of AI is the data it pulls from.

And because IWant pulls from Paycom’s single database, it eliminates problems created by inconsistent or duplicative data sets. On the manager side, IWant supports HR teams and organization leaders with instant employee information. For example, a manager can use IWant to pull data on when an employee returns from vacation, see who’s clocked in for the day or analyze an employee’s pay history. These are just a few examples of the power of IWant. Before IWant, executives like myself were dependent upon others to complete reports and provide critical decision-making information. Today, and IWant’s executive mode executives using Paycom now have the information they need at their fingertips, enabling them to be daily users of our solution without ever having to be trained on the system.

Just tell it what you want and IWant delivers, making executives even smarter and more effective. Now I can quickly find any information about my staff available in our single database because we track the entire employee life cycle and have data from applicant tracking, onboarding, Paycom Learning, expenses, benefits, time and attendance, payroll, schedules, surveys and more, all accessible through IWant. Early feedback has been phenomenal with clients calling this a total game changer. IWant’s command-driven AI engine will increase usage among non-daily users in our system. And I fully expect IWant to increase satisfaction and client ROI. Voice-activated command-driven functionality is the future for all software and Paycom’s future started last week.

We invest in innovation to increase client value, and this is skilling strong sales for Paycom. Our sales teams continue to set new records every quarter, and I’m very pleased with their strong execution. Our sales force was recently recognized by Selling Power magazine as one of the best sales organizations in the country. This is a testament to our sales leadership, training and culture. Finally, Time Magazine listed Paycom amongst its best companies for a second consecutive year. Newsweek placed Paycom in the top 20 of their inaugural ranking of America’s best online platforms and comparably recognized Paycom for best career growth and best leadership teams. I’d like to thank our employees for their hard work and commitment that are reflected in these awards.

We had very strong results in the first half and we are set up for continued strong momentum for the rest of 2025 and beyond. With that, let me turn it over to Bob.

Robert D. Foster: Thank you, Chad. Before I review our second quarter 2025 results and our commentary for the remainder of 2025, I’d like to remind everyone that my comments related to certain financial measures will be on a non-GAAP basis. We delivered very strong second quarter results. Total revenue of $484 million increased 11% over the comparable prior year period with even faster growth in recurring and other revenue of 12% year-over-year, reaching $455 million. Interest on funds held for clients declined 11% year-over-year as expected to approximately $28 million in the second quarter of 2025. GAAP net income in the quarter was $89 million or $1.58 per diluted share based on 56.5 million shares. Non-GAAP net income for the second quarter increased 27% year-over-year to $117 million or $2.06 in per diluted share.

Profitability in the second quarter also increased significantly with adjusted EBITDA of $198 million, reflecting a 24% increase over the prior year period. Adjusted EBITDA margin was 41%, representing a 450 basis point increase over the prior year period. Margin strength in the quarter was driven by revenue upside efficiency gains in G&A and timing of marketing spend. We continue to invest in the areas of AI, product and R&D. And as Chad mentioned last week, we introduced our most innovative development to date, IWant. Based on the strength of the first half of 2025, I am pleased to report that Paycom is in a very strong financial position, and we are raising our revenue and adjusted EBITDA targets for the year. Our balance sheet is also very strong.

We ended the second quarter with cash and cash equivalents of $532 million and no debt. The average daily balance on funds held for clients was approximately $2.6 billion in the second quarter of 2025, up 10% over the prior year period. During the second quarter of 2025, we paid approximately $22 million in cash dividends. Earlier this week, the Board approved our quarterly dividend of $0.375 per share payable in mid-September. We also purchased roughly $33 million of common stock through net downs on vested stock during the second quarter of 2025. And we still have $1.44 billion remaining under our stock repurchase plan. Now let me turn to guidance for 2025. We continue to have success selling and onboarding new logos. Based on our strong first half results and our outlook for the remainder of the year, we are raising our full year revenue and adjusted EBITDA guidance ranges.

We now expect total revenue to be between $2.45 billion and $2.55 billion, up 9% year-over-year at the midpoint of the range. For the full year 2025, we expect recurring and other revenue to be up 10% year-over-year, including quarterly growth of approximately 10.5% and and 11% year-over-year in Q3 and Q4, respectively. Our revenue expectation for interest on funds held for clients is now $113 million in 2025, down 10% year-over-year, assuming 2 rate cuts later this year. Revenue upside along with continued automation of HCM and payroll manual tasks is driving margin improvement for Paycom. As a result, we are raising our full year adjusted EBITDA guidance range to between $872 million and $882 million. This represents a second increase to our prior adjusted EBITDA margin guidance to approximately 43% at the midpoint of the range.

We plan to increase our marketing and R&D budgets in the back half of the year in support of the Iowa product launch and additional innovation focused on AI and automation. Other forward-looking items include full year GAAP and non-GAAP tax rate of 27% and 26%, respectively, and stock compensation of approximately 7% of revenues. We are pleased to see employees across the organization executing very well, which is driving our solid performance year-to-date. Our go-to market and product strategies are working, and we are well positioned to deliver on our raised expectations for the year. With that, we will open the line for questions. Operator?

Q&A Session

Operator: [Operator Instructions] The first question comes from Raimo Lenschow with Barclays.

Raimo Lenschow: Two quick questions and congrats from me as well. The first chat is, if I think about IWant, how should we think about that in terms of a driver for the overall business? Is it just like it’s just differentiation tool and that basically helps you kind of against someone that doesn’t have that kind of clean data structure that you guys have. And so then you kind of sell better. And as far as I remember, there’s not that many guys out there as clean as you. Or do you think eventually down the road, there will be some monetization offerings as well? And then one for Bob, if you think about more AI, it probably means you need some GPUs, et cetera? How should we think about gross margin impacts that potentially could come there because obviously, they need a lot more money in computer?

Chad R. Richison: Yes. I’ll start, Raimo. IWant is Paycom’s voice command-driven AI tool. And it really just revolutionizes how people actually access and navigate a system now. And so think of any piece of software, any system in your life that you have to navigate. Imagine just commanding it. And we find that, that makes it easier for the employees. They don’t have to learn a system. They can just go in and command what they need or ask what they need. Employees don’t enroll in benefits all the time. There are certain things in our system that they don’t do all the time. And so there’s not a need for them to be experts at it. So on the employee side, it automates everything. Same thing on the client side. For me, I’m not a daily user in our applicant tracking system.

So if I wanted to get a resume, I had to make a phone call. I’m not a daily user of benefits administration system. And because I’m not a daily user, because I’m not set up as a user in those systems, I couldn’t get access to certain information without contacting people. Well, now I can get access to anything. I just ask IWant, it will go pull someone’s reside for me. It will pull all the past job history, pay history. It will tell me who’s all blocked in right now, who’s late for work today. So basically, right now, I’m an expert in our system because I’m utilizing the IWant command-driven tool, which allows me to interact with our system differently. And so what’s happening is as we turn this on and activated this for clients, more and more users and executives are actually engaging with the system, and it’s eliminating the need for them to communicate with others in their organization or slow down the chain of data moving.

And then I’ll let Bob take. And then as far as from a monetization process, I mean, this is everything. This is a different way to utilize software. I’m unfamiliar with any other SaaS company that has a command-driven navigation throughout their system. And so I do think this is going to be a thing for not only our industry, but any type of software where users are currently navigating. So I’ll stop that and let Bob answer the GPU question.

Robert D. Foster: Thank you, Raimo. Yes, we see that there will be a need. So we are going to use — we’re expanding margins as we’ve talked about. And those — we expect those to be up several percentage points throughout the rest of the year, and we’re going to take that and reinvest that back into CapEx, AI and equipment. And as a result, we do expect free cash flow to be similar to last year.

Operator: The next question comes from Mark Marcon with Baird.

Mark Steven Marcon: Congratulations on the strong quarter. Chad, the product is really slick. I like it. I’m wondering if you can talk a little bit about what the marketing plan is. Is it already turned on with all of your existing clients? If not, what do they need to do? What’s the training methodology just in terms of making them all aware of it and how they can use it? And then how are you going to unfold that in terms of national advertising? Are you going to switch your campaign in order to focus on this?

Chad R. Richison: All right. So the marketing plan for IWant, first of all, we turned on — we started turning on our first clients on July 31. We’ve turned on 10% of our clients so far this week. I would say by the end of this week, we’re at 15% to 20% activated. And by turning on, IWant doesn’t — you can still navigate our system if you want to. I mean you can still navigate it if you want to. But most people once they get on eat, they stop navigating and at the employee and other levels. And so it doesn’t — if someone wants to keep using the system after IWant the way they used to use it, they can. But once IWant’s there, we found that people don’t. And so activation is about turning it on and making sure people understand what IWant does.

If you ask it where the closest gas station is to your location, you’re not going to get a good response. So it’s important that people understand how to use IWant. And so we go through a list of about 20 prompts once we turn people on and they understand it and then they’re off to the races. And so we do expect to be able to activate all of our clients throughout the remainder of this quarter. There’s not really any lift to the client on this. This gets them easy access. I mean it’s almost a reward to reward for our sales reps for all the hard work they’ve been doing to get us to this point to reward for our service individuals for all the hard work they’ve been doing. Now they’re calling clients with very positive news. It’s a reward for these clients that have implemented these different modules, believe in the single database system, and now they get instant access to all of it without having to be trained or what have you.

And so this will be everything for us in the future. And really, I do see this being the way that every company, and I mean every company that has business-to-business type software, even consumer software. I see this as the way it’s going because there’s just no need to be trained in a software now that we have new tools available to us. As far as the training, there’s not much to it. And as far as the national advertising, our — we’re doing a lot of full solution automation. So IWant think of that as a way that you access it you still want to be set up on gone. You want to be having a decision in logic, you want to be set up on Betty. And then IWant is just how you get to access all that. You don’t have to become an expert. And so we’re really excited about it into the future.

And everything we develop now will have an IWant component to make sure we keep it clean.

Operator: The next question comes from Kevin McVeigh with UBS.

Kevin Damien McVeigh: Great. My congratulations as well. I guess in terms of IWant, how are you going to monetize it, Chad? Is it kind of part of kind of a base PEPM? Is it an individual? Or is it just a core package you have to adopt based on a certain number of modules? Any way to think about just the pricing and go-to-market motion on it?

Chad R. Richison: Yes. So I was with somebody in the elevator earlier, and I wanted to look them up and see how long they’ve been here and what the resume looked like and their job history and everything have Paycom. Well, that requires me to have some modules. So one way that IWant — IWant will also expose data that maybe you haven’t looked at in a long time, so you’re able to see it. But if I’m asking IWant — if one of our clients is asking I want for resume information, or if they asked them for prior work history information, and they’re not on our applicant tracking system, they’re not going to have success pulling that information. And so — and one way it will help us is I do think there’ll be more full solution deployments across our client base so that you get access.

Another way we do expect it to increase our sales volume to a revolutionary product. It’s easy to use. And I do think it’s going to, over time, impact our retention as these clients become more engaged in the software and get the full value available to them. IWant removes all the impediments to value. So now you just get, you didn’t have to work for it as much. And so we’re really excited about what it can do for us on all those fronts.

Operator: The next question comes from Steve Enders with Citi.

Steven Lester Enders: Okay. Great. I guess just to start, I just want to understand like what actually maybe was different versus what you were expecting coming into the quarter? Because it looks like the upside looks pretty solid versus maybe what we’ve seen in the past few quarters. So I guess, a, what has kind of happened there? And then, I guess, secondly, just as we think about in and what that means, is there any implications for what that means for Betty adoption or need to adopt Betty to get the kind of full functionality of IWant.

Chad R. Richison: Yes. I mean I think as far as the quarter, we’ve been talking about record sales and eventually, those things materialize and they turn into revenue as they start. That’s something that we’ve been focused on. I would say our sales organization has been doing a great job. And so we’ve had some outperformance there, and I think you’re seeing some of that here. And then as well as on the margin side, I mean, we continue to see efficiency through our full automation goals. And it does slow our pace of hiring a bit and also our willingness to backfill some open positions just because of all of the automation. So we’re getting some more efficiencies on that too. As far as implications for Betty adoption, it’s not required that you’ve implemented Beti to get value out of I want.

I do think that the more Paycom’s products that you use, which would include it, the greater the value you’re going to get from it. And the more questions that we’ll answer for you, the more insight it will give you. And so I do think IWant makes it easier to use all that additional functionality, but there’s not a requirement that someone would have Beti. Although I will say, I believe Beti is a very important product. And I still say that it’s the best way to do payroll for employees. And actually, we have a lot of clients boomerang back to us because they felt it when they left and the need for having accurate payrolls to prevent errors before they become problems.

Operator: The following comes from Jason Celino with KeyBanc.

Jason Vincent Celino: Yes. So admittingly, I looked at the demo 30 minutes before this, and it looks pretty intuitive and helpful. But Chad, I mean I think you’re calling it the biggest release since the company’s founding. That’s quite a bold statement, but you’re obviously not charging for it. How do you envision recognizing the full value that you’re providing here. I hear you on the full platform sales, but — and what are some other mile markers we can kind of think about?

Chad R. Richison: Well, I mean, I just mean what I said, it is the biggest. I mean, an F-16 is hard to fly. I mean sometimes you can have a lot of different people that know it, the more you add to it. But we’ve made it one button or a command that now you can fly the whole thing. So that’s what I mean is it’s our biggest development. I mean we’ve removed the barriers to value. The more you add, the more functionality you have in these types of systems and enterprise-type systems, it does require a level of training for someone to really to be able to deploy it. Even some employees require some level of training. This removes all of it. And so it’s the biggest innovation that we’ve ever done at our company since its founding just because of the impact that it has.

I mean I’m actually — I mean, clients are just overjoyed by it. I mean they’re really over joy. You walk the floor here in service. You hear them talking to our clients. I mean they’re just — they’re amazed and it’s working very well for them. And they deserve to have it. So I’m going to really stand by that. Not only is it the biggest development, I think by the time we do version 2 and 3, I don’t even know what else I could develop after that. as we have the full solution automation on the back end. So I’m going to really stick by that. And then how we’re going to recognize the full value, I think, was your other part is obviously in our go-to-market. It impacts that. And then again, when you remove barrier to value, that increases the value that your clients are getting.

And so when you can do that, and they don’t have to do that work. We do think that that’s going to create a more meaningful relationships with our clients or meaningful relationships they have with our system, and we do think that, that will impact retention.

Jason Vincent Celino: And then just a quick follow-up for Bob. The 12% you saw in recurring in the quarter, very impressive. Here you on the back half, the slight decel but — was there anything in second quarter from like a onetime perspective that — or timing related? Just trying to understand the beat and the implied decel in the second half.

Robert D. Foster: Yes. Thanks, Jason. No, there wasn’t anything on a onetime date other than the timing of the marketing spend that we’ve been pretty consistent about in the first and second quarter. And then, obviously, we have never now what we can anticipate in the fourth quarter for bonus runs and et cetera.

Operator: The next question comes from Daniel Jester with BMO Capital Markets.

Daniel William Jester: Bob, I wanted to go back to a question earlier in the comment you made about free cash flow. I just wanted to clarify, is that free cash flow dollars or is that free cash flow margin. And I wanted to see if you contemplated any sort of tax benefits from the new tax bill.

Robert D. Foster: Yes, Daniel, so that was margin. And we are evaluating the BBB now. There will be some cash flow benefit that in 2025, and that’s built into our guidance.

Daniel William Jester: Okay. And then just on the sales and marketing investments. I guess, should we anticipate — this is a very intuitive product, but maybe you want to devote a little more resource back to the base to sort of help people out in those initial phases. Is that where — is this maybe temporary investment that we’re going to be able to harvest in 2026? Or do you think there’s going to be a more substantial push?

Chad R. Richison: I think you’re talking about our sales and marketing spend as we look into the remainder of the year. We did know IWant was coming out. And so we have been preparing for that spend in the third and fourth quarter. I’ve always said with marketing, you don’t just throw dollars at it, you have to measure it. It’s got to be having a return. So we’re always cautious on marketing spend, and we measure it, but it’s our intent right now to maximize our budget in the third and fourth quarter for marketing just because of the opportunity that we have right now with this.

Operator: The next question comes from Jared Levine with TD Cowen.

Jared Marshall Levine: I just wanted to dig in, in terms of 2Q, you had a pretty notable sequential increase in the — within CapEx, specifically on PP&E and it sounds like you’re contemplating pretty healthy spend there as well for the remainder the year. Can you dig into what exactly you’re spending there and kind of when potentially that could taper off?

Chad R. Richison: Yes. I mean I can take a little bit of this, Bob, then you can jump in. We’ve always developed and hosted our own platforms. And as we move into AI, it does require a certain level of spend. So as we look at that, I do believe it to be more transitory in nature. But as we look at that, that’s going to be front-end loaded for us right now, and that’s really what we’re looking at. And a lot of that’s going to be through CapEx. I think Bob explained kind of we do expect to take the benefit that we’re receiving in the additional margin accretion right now and put that into some of these CapEx expenditures. And then we would expect our margin for free cash flow to be not dissimilar this year to what it was last year. Again, I do believe these spends will be more front-end loaded and transitory. So we’ll go from there. I don’t know, Bob, if you have anything to add to it?

Robert D. Foster: No. The only thing — one thing I’ll add, Chad, is that we see this as a growth opportunity for us, and we have the capital to take advantage of it right now, and that’s what we’re doing.

Jared Marshall Levine: Got it. And then just one more here. Can you talk about your back-to-base sales productivity by CRRs year-to-date?

Chad R. Richison: I mean they’ve been back in the field. So as I’ve mentioned before, it’s kind of a per territory basis we did kind of change the way that group books and starts deals a while back that I mentioned. And that really became the new normal, but they are having success. They’re more successful this year than what they were last year. And we’ll just see how that time works those out. I do think IWant is going to help them quite a bit because, again, in order for you to get the full solution automation, you need to have a full solution. And there’s no better way to get it than just asking for it, and that’s what IWant helps you with.

Operator: The following question comes from Alex Zukin with Wolfe Research.

Aleksandr J. Zukin: So maybe on IWant specifically, when you think about how it fits into the overall product strategy with Beti, maybe help us a little bit where you’re getting the most customer interest, what does success look like for IWant? And also, any update or mix around retention with Beti and kind of as you see that mix with Beti and IWant across your customers growing kind of where is the opportunity for retention in that well to go to?

Chad R. Richison: Yes. I think both produce significant retention opportunities. I mean, I think they’re both the best way to do something. But the way to think of IWant, I mean it just — it runs through our entire system. So Beti touches multiple modules. IWant touches every module and every piece of data in our system, every field, everywhere. So it’s quite a bit different. Your users of IWant is going to be everyone. Your users are Beti, you’re going to obviously have the employee at the time when they’re doing payroll and then you have the payroll department and what have you. Both significant and very important. But think of IWant is just a new way to access information. I mean you can look at this the way you access your bank, the way you would just talk to it and tell it what you need like I can go into IWant right now and say, I had a baby, need to add them.

[indiscernible]. I’m going to IWant right now and ask you somebody’s spouse or wife is, that does it. I mean they’ll bring it up for me. So I can ask it anything. If the data is in our system, it’s going to respond and give me that data. And so we’re really excited. And that’s really a giant change in our industry, but really any industry where you use software where you’re now voice-activated, command- driven throughout the software. So they work a little bit different than each other, but IWant just going to make Beti sweeter. I guess, would be a better way to put that.

Operator: The following comes from Bhavin Shah with Deutsche Bank.

Bhavin S. Shah: Chad, you just kind of mentioned earlier that you think the CapEx will be a little bit more transitory as you build this out? And kind of with you owning the entire tech stack and once inside customer base is up and running on IWant and extending usage, why shouldn’t there be more continued spend from a CapEx perspective as users kind of use it more and you’re kind of running through GPU cycles?

Chad R. Richison: Well, I mean, I think there’s a certain amount of spend you have to do just to get to the starting line. And then I think on an ongoing, it becomes more incremental. But I think as you’re looking at rolling out massive usage, like I said, I mean, we would expect to activate all of our clients this quarter. So there’s going to be a certain level of first hit as they’re using it, which we’re already seeing. And then in subsequent quarters and years, of course, we will add to that. Also kind of you see it over time, the cost of technology comes down, but the cost of power doesn’t. And so there’s just different things you have to look at as you go through building these things out. And we’ve incorporated all of that in our guidance and on our comments today.

Bhavin S. Shah: And just — I guess, just following on that, just given how like useful IWant books and how into it is, like why not more directly monetize it on a [indiscernible] basis or a usage basis versus kind of indirectly monetizing it on better sales and and driving attach above the modules?

Chad R. Richison: I believe that every client should access their data this way, and we’ve had clients that have been with us a long time, and there’s no reason to make them pay to get the value that’s available for them, where I really think that this is just going to take off for us. So I really just don’t think we need to do that plus. I don’t want to spend a lot of time having to go out and sell clients and charge them on things that I can really get them to use the full utilization of the system. And I believe that will create other opportunities for us both with these clients and definitely with prospects. So I think we have to be careful to stop and pick up the change on the ground when there’s opportunities out there. We remain disciplined and really help the clients achieve the value available to them.

Operator: The next question comes from Joshua Reilly with Needham.

Joshua Christopher Reilly: All right. I was just curious, maybe a little different angle and some of the other things we’ve been talking about, but how are you adjusting your sales and marketing processes internally with all the new different AI sales tools that are out there for front-end lead automation? And then also, along with that, the way that customers find you might be changing as well with organic Google search traffic declining TAM on a secular basis over time. How do you kind of square all these items up to manage sales efficiency over the next few years?

Chad R. Richison: Yes. I mean I would divide marketing separate from sales. I would say our marketing group has been using those tools efficiently for quite some time and continue — the tool is available to them and continue to seek more to that. I mean, from a sales process, we would right back to the way we were selling back in 2000. We went right back to that type of training, leverage and influence when Amy took over. And that’s been working very well. I’d love to think the product sells itself, but that’s not true. At the end of the day, you have to have great salespeople who are out there working with the client to help them understand the value that’s going to be created. And you have to have a very strong ROI case. So we’re going to continue to sell the way we’ve been selling.

But I would think about this as it just changes. I mean, it’s night and day. We rolled this out on July 30 — or 23 to our very first client. I mean, it’s night and day, how you utilize our system on a go-forward from a simplicity standpoint. And I do think that that’s going to leave itself into sales. I mean, again — and by the way, we turned our first client on July 23. I don’t think we gave it to sales until last Monday. So they’re just now a week in maybe at the most to actually being able to go out there and talk about it. So we’ll kind of see the impact that IWant has on the sales organization here over the coming quarters and years for sure.

Joshua Christopher Reilly: Just a quick follow-up. Is it fair to say that the new sales activity was up sequentially from Q1 to Q2? And how do you think about that in terms of visibility for revenue in the second half and how — what level of visibility that you have into the updated revenue guidance?

Chad R. Richison: What I would say is you know we’re talking about record sales in the first quarter, and we just reported second quarter and now we’ve talked about record sales in the second quarter. So obviously, those haven’t really lot of us haven’t started yet. So let’s say most of those haven’t started yet. And so those will be reflected in subsequent quarters. And we always guide to what we can see. But I would say there’s a level of excitement across Paycom right now that’s different than it’s been in a long time, and we’ve always been a pretty exciting company anyway.

Operator: The following comes from Siti Panigrahi with Mizuho.

Sitikantha Panigrahi: I want to ask about a demand environment, how you’re seeing in the first half and your expectation for second half. And then are you seeing any kind of changes in the competitive landscape, especially with all the consolidation that happened recently in your space?

Chad R. Richison: Yes. I mean I would say our demand environment remains strong. I’ve always said we also create demand. And remember, we have less than 5% of the total addressable market just in the U.S. even. And so there’s many opportunities. From a change in the competitive market, I think they all got a lot less competitive a couple of weeks ago, to be honest with you. And this is going to be a thing. I mean you guys kind of see this will be a thing moving forward. I mean our client feedback has been really good. I think that I know competitors will say they have the most automated, the most is the most staff. But if you can’t talk to it, it’s not the most automated, it’s not the most modern. People might want to drive an old car or a motorcycle or fly an old plane, I mean those things are nostalgic and cool.

The driving an old HCM system around it’s not cool. It’s just sad. So I do think that you’re going to see a lot of clients gravitate toward this type of experience because why should they work extra hard to get the value, which is why we created it in the first place.

Operator: The final question comes from Jake Roberge with William Blair.

Jacob Roberge: When you talk about IWant taking off for you, where do you think it shows up most? Is that new logos? Is it retention? Is it new product adoption? I guess, what should we be looking for on our end? And when do you think it actually starts showing up more meaningfully in the numbers?

Chad R. Richison: I mean I think it’s going to start showing up in all those areas. I mean I’m very bullish on it showing up in all those areas. Obviously, new sales new logo app has always been the largest opportunity. We have to increase and drive revenue growth. So I would definitely expect that to be probably the largest bucket of that. But I will also tell you, I expect to have a huge impact on our retention over time as people are using it becoming more acclimated to it. And I also think it’s going to have an impact on our CRRs being able to go out there and be able to talk to someone about if you want to be able to pull data from the complete employee life cycle. And if you want your employees to actually be able to leverage all this, it’s really important that you have these other modules that we have.

And so I also think it’s going to make an impact there. And I believe win backs. We’re already seeing that. I mean we’re seeing clients that are going from us a really short period of time come right back because of Beti or gone or some of these other things are just client service that they like. And this just changes all of that. I mean I don’t know how you go from being used to commanding a system and just telling it your problem that it solves. I don’t know how you go back to navigating and trying to find out how to fix your own problem. It just seems like people don’t usually go backwards in technology. They don’t do that too well. None of us even our consumer lives. None of us go backwards in technology very well. And I think that IWant has made it easier to access all the automation.

And I just — I think it would be very difficult for clients once they’re getting full value to want to have less.

Jacob Roberge: Okay. That’s helpful. And then can you talk about how the initial rollouts of the new offices in L.A., Raleigh and Providence have been going? And now it feels like the business is in a much healthier place. Should we expect a more regular cadence of office launches moving forward?

Chad R. Richison: Yes. I mean, I don’t know that we’ve had as much of a regular cadence, maybe there for a while when we’re doing 3 or 4. Our sales organization is doing very well right now. In fact, one of those offices, I’ll go it and call them out, I think it’s Providence, hit $1 million in new sales faster than anybody — any of our offices have ever gotten to it. So they’re ramping up well. And again, the more successful offices we have, the more successful managers we have, the more successful backfill for those managers we have, the better the opportunity we have to open up additional markets. And so that is a part of what we’re doing as well as increasing the dollar volume in every territory that kind of gets us to those next levels.

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

Chad R. Richison: Well, I want to thank everyone for joining the call today. We look forward to speaking with many of you over the coming months. We will be participating in several investor events this quarter, including Deutsche Bank Technology Conference on August 27 in Dana Point. Then on September 3, we will be attending the Citi Global TMT Conference in New York City. We will also be hosting meetings at the Wolfe TMT Conference in San Francisco on September 10. With the strong results and the recent launch IWant, I’m even more excited about how the future is shaping up for Paycom. I want to thank all of our employees for their contributions to our success. And with that, operator, you may end the call. Thank you.

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