Good afternoon. My name is Sierra, and I'll be your conference operator today. At this time. I would like to welcome everyone to Paycom's Fourth Quarter and Full-Year 2023 Financial Results Conference Call. All lines have been placed on-mute to prevent any background noise. After the speakers' remarks, there will be a Q&A session. [Operator Instructions] I will now turn the call over to James Samford, Head of Investor Relations. You may begin.

Thank you, and welcome to Paycom's earnings conference call for the fourth quarter and full-year 2023. 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 and quarterly report on Form 10-Q. 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, 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 and is available on our website at investors.paycom.com. I will now turn the call over to Chad Richison, Paycom's President and Co-CEO. Chad?

Thanks, James, and thank you to everyone joining our call today. We ended 2023 with better-than-expected results, thanks to the considerable coordinated efforts of our team across the organization. Before digging into the quarterly results and achievements in 2023, I'd like to discuss today's announcements about the promotion of Chris Thomas to Co-CEO. Following that, I will briefly introduce Chris who previously served as our COO. Craig will then review our financials and our guidance before taking questions. With that, let's get started. As Founder and CEO of Paycom, my position has provided me the opportunity to work with great leaders who have built Paycom into a world-class HR and payroll software company. One such leader is Chris Thomas. He is someone I have extreme confidence in and a leader I can share responsibilities with at Paycom. I've been preparing this opportunity for Chris and myself to work even more closely together for some time now. Today's announcement further illustrates the trust I have in our leadership. Personally, this is very exciting, because it allows me to invest further in the areas that I'm passionate about, which are the ones where I can have the largest impact for our clients. In this new role for Chris, Paycom will be even stronger than ever before. A key area of my continued focus will be product innovation and strategy. And Chris will continue to focus on operating other aspects of the business. Our collaboration has strengthened Paycom and I'm excited for what we will do going forward. In the last several months, we continued to strengthen our leadership team with the addition of Jason Clark as Chief Administrative Officer and Steve Sturges as Chief Marketing Officer. Jason was the CEO of one of the region's largest workers' comp insurance companies. Having worked…

Thanks, Chad. I'm honored to help lead such an incredible organization. I want to personally thank you for the guidance, tools and insights you provided me through the years. Having had the opportunity to lead approximately 10 departments over my tenure, like product, service, learning, HCM, implementation impacts to name a few, I feel even more prepared to help leap Paycom into future. I am proud of our leadership group who have strategized and built the client value achievement strategy. We spent a lot of quality time throughout the year, especially last quarter having meaningful engagements with our clients and the feedback has been very encouraging. We are strengthening our relationships and relentlessly pursuing solutions that deliver high ROI for our clients. The innovations in automation and user experience are resonating across our client base, delivering immediate and measurable value to our clients will deliver long-term value to Paycom. As a result, our service and client relations groups are working together more closely than ever before, which is driving further ROI for our clients. We're going to continue to generate even more momentum as we engage clients to help them maximize their value when using our system. With that, I'll turn the call over to Craig for a review of our financials and guidance. Craig?

Thanks, Chris. Before I review our fourth quarter and full-year results for 2023 and our outlook for the first quarter and full-year 2024, I would like to remind everyone that my comments related to certain financial measures will be on a non-GAAP basis. We ended the year with solid results with full-year 2023 revenue of $1.694 billion up 23% compared to 2022. Fourth quarter results were better-than-expected, with total revenues of $435 million, representing growth of 17% over the comparable prior year period. Our revenue growth was driven by new business wins, partially offset by lower cross-selling to existing clients. Within total revenues, recurring revenue was $427 million for the fourth quarter of 2023, representing 98% of total revenues for the quarter and growing 17% from the comparable prior year period. We delivered strong net income and adjusted EBITDA in 2023. Full year GAAP net income was $341 million or $5.88 per diluted share based on approximately 58 million shares. Non-GAAP net income for 2023 was $449 million or $7.75 per diluted share, up 26% from the prior year on a per share basis. In the fourth quarter, GAAP net income of $82 million and non-GAAP net income of $110 million represented a $1.43 and $1.93 per diluted share, respectively, based on approximately 57 million shares. Full year adjusted EBITDA was $719 million representing full year margin of 42.5%, up over 30 basis points year-over-year. Fourth quarter adjusted EBITDA was $177 million, representing a quarterly margin of 40.6% for the quarter. During the fourth quarter, we repurchased approximately 1.2 million shares of common stock or approximately 2% of our shares outstanding for a total of $213 million and we paid over $21 million in cash dividends. As of December 31st, 2023, we have repurchased over 6.1 million shares, and when…

[Operator Instructions] Our first question today comes from Raimo Lenschow with Barclays. Please proceed.

Hey, thank you and all the best to the new management structure from me. Two questions. One, Chad, can you just speak a little bit to retention in 2023, and customer growth in 2023 because if I do the math right, it was like a 1% growth, which seems unusual for you guys. Can you talk a little bit about like factors we saw there, and that probably kind of linked in with that 90% retention number? And then on EBITDA guide, Craig for you, and if I look at this year, we're kind of guiding down a little bit on EBITDA margin. Can you talk a little bit maybe about some of the projects or some of the work you're doing there that kind of drives that? Thank you.

Sure, Raimo. I'll take -- I might take both of those actually. As it relates to retention, this year we reported 90% versus 91% from last year. Kind of looking at retention, we typically don't discuss it based on client size, but the main part of the attrition was really in that down-market side. If you remember, we added a lot of smaller clients during COVID where we used to have five individuals -- five sales people in that group and we increased that to actually 10 teams of 8. So we added a lot of smaller clients during that time. And that was really what we saw as it related to the retention and that group to pressure on that down-market group. And they are the ones that are most impacted by the macro, the higher interest rates, the higher inflation. As it relates to the margins, what I would say is we've really started at 39% to 41% for the last four, five years, and that's really where we wanted to start this year. And it really gives us the room to invest where we need to invest in the areas of innovation and sales to continue to drive revenue growth.

Okay. Perfect. Makes sense. Thank you.

Thank you.

Our next question comes from Samad Samana with Jefferies. Please proceed.

Hi, good evening. Thanks for taking my questions and welcome to the new members of management. Maybe my question follows up a little bit on Raimo's. I'd like to dig deeper into the retention change. It's gone from 94% down to 90%, that's about 4 points. Is that all due to the surge in clients that you added in during the COVID period, and I guess the question is maybe what is causing the attrition beyond that being is it business failure ticking up, is it non-controllable churn, maybe help us think through what is causing that at the low-end?

Yeah, I mean at the low-end it's typically more going out of business, but that group of clients are more impacted by the macro. We also changed the way we marked our clients' loss where we're pulling that forward a little bit, Samad, where we're marking them quicker than we have in the past and that way we can get back out, and really, we tried to sell some of those as are still in implementation, so.

Great. And then maybe just as I think through the fourth quarter, it was well-ahead of what the guidance was, just trying to unpack that with rates, maybe looking like they're clicking down, have you seen any change in either -- and the employment market things, have you seen any change in either pre-employment services doing better-than-expected bonus runs, maybe help us think through the strength that you saw in the fourth quarter versus the guidance you gave after the third quarter?

Yeah, I mean. I would say, we probably went into fourth quarter a little more conservative than what we have in the past, after a kind of our Q3 results. We were really looking at where the downside could be or what can happen in fourth quarter, and I would say things came in better than what we expected.

Great. Appreciate taking my questions.

Our next question comes from Mark Marcon with Jefferies. Please proceed. Baird, I apologize.

Can you hear me?

Yeah.

Hello? Can you hear me?

Hey, Mark. We can hear you. Hey Mark, we can hear you.

Okay. Great. Thanks. Hey, can you talk a little bit about the traction with the sales force and what you're seeing just in terms of new client growth, because I'm looking at the implied ex-float revenue growth for the first quarter and you did mentioned the retention is lower, so understand part of that, but I'm wondering, can you just talk a little bit about sales effectiveness and what you're seeing there?

Yeah. I mean, we've had a lot of success with sales effectiveness. Obviously, we're selling a differentiated solution that brings differentiated value. We did mention on the call that we've had more success in the 500 and above. I think we called out, 11% growth in that group, 18% growth in the group that has 2000 or more. And so, we have been pressured more at the lower end of our market and also there's a resource aspect, as we look to onboard clients and what we're going through there, how we use our resources to best impact client value. And so, we're having a lot of success there in the market. Oftentimes, you are trading off -- you are trading off on a unit basis, oftentimes small units for a little bit larger type units, and I'm talking about employee size.

Great. And then can you talk a little bit about the specific areas of investment that you would be making, you're starting the year out slightly more conservative EBITDA target, what are the specific areas where you're going to invest a little bit more, I imagine part of that is product which you ended up referencing, but I'm wondering if there's any other areas that we should look to?

Growth has always been first prize for us, so I mean, that's really what we're focused on. When we're talking about an impact on the -- from an adjusted EBITDA perspective, I mean, we're focused on the three areas that we talked about with solution automation, world-class service and then client ROI achievement. But those don't necessarily -- we've got the staff to do those things. Those are things we're working through and continuing to impact quite positively. From an additional expense perspective, that's going to be growth initiatives related.

Great. Thank you.

Thank you.

Our next question today comes from Brian Schwartz with Oppenheimer. Please proceed.

Yeah. Hi, thanks for taking my question this afternoon. Chad, wanted to ask you along the lines of the sales effectiveness, what you're seeing in terms of cycles and as well as the top of the funnel momentum? Are you seeing any changes in that aspect of the sales?

I mean, that's a good question. We've continued to go further at market, I've mentioned it on the call. And there is a little bit different motion as we work through that process and as we've gotten better at it. And so, as you go further up market, you're going to have, it might take you a little bit longer than what it would then if you're in the mid-market. For us, it's still about the work of the sales individual. I mean, it really does determine how strong a sales individual is in regards to the process that's being worked and how quickly a client can see that value and then onboard onto the system. So, I would say it's more specific to an individual salesperson. And then I would add to that that as you go up market, you have more people that you talk to, more stakeholders within any company, and you want to make sure you cover all those bases as you move toward.

Thank you. And the follow-up question I had on the project investments, just thinking about that on the sales and the distribution side. Is there anything you can share with us how you're thinking about the pace of either new offices, or new sales rep hiring this year, maybe versus what you did last year in 2023? Thanks.

We're heading into 2024 really well staffed in sales. So I think that -- even it have to play itself out, but as everyone knows. I mean, our sales office openings are based on the capacity that we have internally to be able to do that. And all I would say is that we're better staffed going into 2024 than what we have been in a while for managers all the way out. And so, those opportunities as they make sense for us -- as it makes sense for us to do it, we'll be looking at that throughout the year.

Our next question comes from Joshua Reilly with Needham. Please proceed.

Yeah, thanks for taking my questions. Maybe just some more color on the customers you're seeing attrition with, in the cohort of those who have adopted Beti versus the remaining customers yet to adopt Beti. Are you seeing higher attrition with those that are yet to adopt Beti?

I mean, we want to begin talking about our retention as one number, whether someone's on Beti or not, they are client of ours, we want them to be a client of ours. Obviously, I've called this out in the past, it continues to hold true, those companies that use our system fully get the most value out of it. And obviously we have a lower, much lower attrition with businesses that use Beti versus those that don't.

Got it. That's helpful. And then what are you seeing an average headcount for customer and what assumptions are you making in guidance in terms of average headcount per customer? If you -- and then just following-up on that, if you expect it's going be flat year-over-year in '24, is that somewhat of a headwind to growth versus a normal year for you guys? Thanks.

I mean, we've seen -- the headcount for customer has been very stable. And so, as we're looking at 2024 guidance, we're expecting the same, very stable, as it relates to headcount per customer.

Our next question comes today from Steve Enders of Citi. Please proceed.

Okay. Great. Thanks for taking the question. And maybe for Chad, just when we get a better sense for, I guess why now is the right time to shift to a Co-CEO structure and why is the time for you to be focusing more on the product and strategic side of the business today?

Yeah, well. I mean, it's been 25 years and I have the right person to do it with, this wasn't -- I mean, this is something that we've been going through. As Chris mentioned on his prepared remarks, I mean, Chris has taken a tour through the company and has operated 10 of our significant departments already in the company. And so, it's something that I've been excited about, but I mean, the long and the short is, I mean innovations where I oftentimes supply my greatest gifts and that's where I'm best at it, and there are new technologies and toys to build with now. It's an exciting time. I've had a lot of fun running special projects that in September of last year, our product department which I've mentioned this at the Barclays Conference, began reporting to me again. So I've really enjoyed working with them. I've been focused on that as well as our sales strategy. And look, I'm not retiring. I mean I don't even know what that would look like. I'd like to compete, be part of a team and the long and the short, Chris and I can accomplish more together than I could alone.

Okay. That's helpful. And then maybe we can get an update on how the Beti adoption is going, pushing that back into the base and maybe how things have -- like, what the expectations are for this year for where they could potentially go?

Yeah. I mean, I'm not going to say we're pushing Beti back into the base. I think that to the extent a client sees the value and they're ready to use Beti within their organization, we're there to provide that. We are meeting clients where they live in usage right now, and helping them achieve value, regardless, whether they use Beti or not. I will say though, as I continue to say, Beti drives a lot of efficiencies for businesses. It makes a giant impact for both them and their employees. Our go-to-market strategy has been 100% Beti since July of 2021, and in regards to current clients, we're meeting them where they live and we're helping them achieve value because our systems are very robust without Beti. And it keeps getting missed but GONE is a very significant product. I mean it automated quite a lot for a business. And so, a lot of our clients are achieving a lot of value through using that product as well right now.

Our next question today comes from Kevin Veigh with UBS. Please proceed.

Great. Thanks so much. And congratulations on the better-than-expected results. Just wanted to talk about the buyback for a minute. I mean it seems like, maybe the first time it's been scale. Just any thoughts around that and as we think about the buyback into '24, again it looks like the average share [repurchase price about $1.78] (ph), just want to start there, so any thoughts on that?

Yeah, so for the quarter we bought back a little over 2% of the company. And for the full year, I think we bought back 1.5 million shares. So we've been active buying back stock of the company. We still have a significant amount left on our buyback program. So we look to be -- and we've always been very opportunistic as we're looking to buy shares back.

Then if you think about kind of the Beti adoption across existing clients, and the implementation, has that kind of run its course at this point or is there any way to think about how that flexes over the course of 2024?

Well, I believe there'll continue to be clients that see and want to utilize the value of Beti. And so, yes, we will have more clients and as they see the value and choose to come on to Beti to actually achieve that value, we're going to be there to help them. I will say we're meeting clients where they live with our product right now. And that's a good place for us. That's a good place for clients. We're meeting them where they live and we're helping them achieve the value available to them in the software, whether they use Beti or not, it's a single database system. It's very easy-to-use and there's all kinds of areas where our clients are receiving value, especially right now, as we've even introduced GONE, that's giving us more-and-more conversations because everybody wants to automate time-off request. I mean there's nobody that doesn't want to automate time-off request. So we're having a lot of success with that as well right now.

Great. Thank you.

Thank you.

Our next question comes from Siti Panigrahi with Mizuho. Please proceed.

Thanks for taking my question. I wanted to ask about CRR strategy. I know last -- last few quarters you talked about how CRR going to focus on cross-selling Beti. But what I understand, it's normally focused. So what's the CRR strategy right now? Are they cross-selling any other module? And how should we think about that cannibalization opportunity that earlier you talked about CRR by spending more time pushing Beti, how is that going to change and the impact for 2024?

Sure, so what I would say is, even as we looked into this year, it wasn't as much that the CRRs were out-pushing Beti as much as they were out converting the Beti's that had already, told us they are wanting to go. And that does take some time with the CRRs to do that and that time they spent doing that, making sure we get appropriate usage, prevented them from being able to do certain other task. I mean, I would say that right now, and I've been saying this even probably mentioned this on last quarter, we're not preventing a CRR from going out and selling, there's just a certain criteria of usage that we look for both before you sell a client a product as well as after you sold a client a product to make sure that the value is being achieved. So I would just say that there is a little bit different process that they go through now in regards to selling, as you've heard me say before, it's easier to sell a client a product and to get them to actually use it the correct way to achieve value and we've been very focused on both of those pieces, both in last year and that will continue into 2024.

Thanks, Chad. And then last quarter you talked about some of the impact from macro, mainly like pre-employment checks, those kind of services. How has that been trending since then?

Yeah. I would say, you know, we talked a little bit about it last quarter that it was still positive, but not growing at the rate that we had -- had been experiencing in the past. I would say it's still similar. I mean, the market is tight, you're not seeing people change jobs as much as what you may have in the past, but it's still up, it's just that it's still a little soft in that area on the pre-employment services.

Thank you.

Our next question today comes from Jared Levine with TD Cowen. Please proceed.

Thank you. In terms of the competitive environment, have you noticed any change in 1Q or 4Q, and if so, is it broad-based or limited to certain competitors?

No, I mean, it's always been a very highly competitive environment. I've -- without naming them, I've talked to talked about our competitors. I still think we're primarily the new company and we celebrated 25 years last year. So all that's to say, I think we've all known each other for a long-time, we've all been highly competitive, and that's always been the case.

Got it. And then looking at the...

And that’s a positive thing.

Yeah. Then looking at the 1Q guidance here, how does the absolute dollar form filings revenue embedded within that, why don't you guys compare it to the 1Q '23 form fillings revenue, just in terms of how much of a headwind year-on-year the growth that represents?

Yeah. I mean the forms filing is somewhat of a headwind in Q1. We've seen that for several years ago, really not any new forms after the ACA forms came out, so I mean, it's kind of been the same type of forms that we typically file. We've talked about the number of people that we have on our system and that's typically -- that growth rate typically follows kind of the forms filing growth for the quarter.

Great. Thank you.

Our next question comes from Jason Celino with KeyBanc. Please proceed.

Great. Thanks for taking my questions. Maybe, Craig, you talked about a wider range, the guidance this year based on different scenarios, where I think you said, interest rates and other strategic initiatives. Maybe can you just talk about what to expect into the low-end versus what you're baking in at the high-end?

I mean, there's different things that we're factoring in on the full year guide. This is much wider than what we've done in the past. I mean, the main driver is going to be the fed funds rate and what they do with that. You've heard anywhere from 3% to 7% decreases in rates. So we wanted to make sure we gave a range that we could fit that in if any of those scenarios happen.

Okay. Perfect. And then on the customer growth for going-forward, maybe for 2024, internally, what types of initiatives like marketing, targeting, do you plan to implement or do to trying to reaccelerate that? Thanks.

Yeah, so we're very focused on our go-to-market strategy. We focus on the revenue opportunities available to us. I wouldn't say it's just a unit game. But you're playing both sides of that, obviously, because it's unit does help with the revenue. And so, we're not changing a whole lot when it comes to our strategy. I think our message is getting cleaner. And like we like I said in the call, I mean, we just put out another report in regards to Beti's value. We do continue to have a lot of interest about businesses using Beti and then again just a single database system.

Okay. Great. Thank you.

Our next question comes from Arvind Ramnani with Piper Sandler. Please proceed.

Hi, thanks for taking my question. I had a couple of questions on Beti. I guess, like have you seen any sort of client attrition, that's like attrition from existing clients or some clients -- prospective clients who are choosing to kind of go a different direction, because they don't like Beti. I mean, has there been any kind of negative or pushback on Beti from customers or is that largely been quite positive?

No, we're having a lot of success with Beti. I think you're talking about head-to-head where someone might choose not to use Beti and continue to do it the way it's been done traditionally. That really comes down to the sales person, and having somebody that understands the value and then also spending the time with the client and all the stakeholders and working through that, so that you know they can actually see the ROI available for them.

Great. And I guess that some kind of want to kind of use the latest version of Paycom, do they have the ability to use Beti, but say like, hey, in terms of like us self-certifying the payroll, if that's something they want to give the employees, is that -- are you able to turn-on and off that option where you say like even all of Beti accept this turn-on, turn-off option?

So, we have 31 modules and those are chosen by the client, how they use those. Now, many of our modules are tied together. And so, it's through one module that you get the value of the other, but that wouldn't be the case with all 31. I would say there's some 34 -- sorry 34 modules, I would say there's some core modules that are going to be critical for a client to be able to actually process a payroll for tax depositing and everything else. And then there's some other modules, you know that that's more driven at the client choice of whether or not they want to provide that solution to their organization or whether or not they have that covered in another area.

Just last question here is like, if someone has payroll but they are basically not the ability to kind of run payroll through all but seem like employees are not required to certify their paycheck every two weeks. Is that a possibility or no?

Yeah, that's client dependent on exactly what they require in that. That’s up to them.

Perfect. Thank you.

Our next question comes from Bhavin Shah with Deutsche Bank. Please proceed.

Great. Thanks for taking my questions. Chad, I think you spoke about some of your strategic initiatives kind of impacting 2024 topline. Can you maybe just provide a little bit more further insight into which ones are having the greatest impact on revenue and how long do you think these kind of headwinds from these strategic initiatives last, is it a one-year thing, or do you think it will take multiple years to play-out?

Yeah, in terms of our strategic initiatives for '24, I mean obviously it could have an impact on the topline as well as some of the expenses as well and I would say that a lot of those are going to impact '24 and maybe have a small tail on that?

Got it. And then. I guess maybe one clarification, I think from what at least I understand and please correct me if I'm wrong, it appears like for your messaging today that you're perhaps a little bit less aggressive in terms of pushing Beti into the customer base versus your prior commentary. If that's true, why wouldn't this decrease some of the kind of revenue headwinds that you talked about last quarter that Beti might be creating in fiscal '24?

Yeah. I mean, we talked about some of the headwinds that Beti maybe creating, we've talked about that last quarter, and I mean, Beti has a great benefit to the customer. I mean it eliminates errors and those accrue as value to the customer. And we've looked at that and what that as a headwind that might be to us and really that's from eliminating some of those services that we charge for, and we've estimated that to be approximately 5% of revenue. But we wouldn't expect all of that to go away. So that's kind of as we've gone through and really looked at those areas of our business, that could be impacted, that's kind of what we looked at.

Got it. Thanks for taking my questions.

Our next question today comes from Daniel Jester with BMO. Please proceed.

Great. Thanks for taking my question. Just on the gross margin trajectory, I know it's less of a focus than EBITDA. But three straight years of compression exiting 2023, as we think about 2024 and some of the investments you're making, should we think that gross margin compresses again or how should we be thinking about that for the year ahead?

Yeah. I mean we don't, we don't guide to gross margin, only there's several things that go into that. One of the largest impacts to gross margin is really headcount on our service side. And so, we're well staffed going as we're exiting 2023 and those costs continue to carry on into 2024.

Okay. Great. And then on the Global HCM, great to hear about native payroll in Canada and Mexico out there. Are you actually paying people in both those countries today and when -- and if that's the case, can you just give us a flavor for kind of who or just who you you're displacing, is it some of your maybe US-based peers or is that maybe local providers, a little more color on kind of the international trajectory? Thank you.

Sure. The Global HCM side, again, we're talking about for Canada and Mexico. Global HCM, you can use for many of the -- for all the countries, but our Global HCM side, you're going to displace more of our typical vendors that we may see and then I would say on the payroll side, it's a mixed bag, but it's oftentimes we're replacing an in-country partner or an in-country vendor on the payroll side for both Canada and Mexico, which we are up and running and now we did announced today that we've added UK to that. But as far as Canada and Mexico, we're running in those countries right now.

Great. Thank you.

Great. Thank you.

Our final question today comes from Adam Bergere with Bank of America. Please proceed.

Hey, thanks for taking my question. Can you talk about sales productivity and the retention rate assumptions embedded into the 2024 guide, and how that compares to what you saw in 2023? Thanks.

Yeah, I'll take the sales productivity. I mean, we've got a great sales organization. We always have. We've had a great sales strategy. We're continuing to get a lot of people involved with our sales organization. We've done a great job training them and we're set-up to go through this year. We did a great job last year throughout the year selling, we had a lot of things working with us on that as we moved throughout the year, we kind of talked about the Beti cannibalization or the displacement of certain fees. Craig talked about that being 5% still total out there, we've seen portions of that 5% already down 20%. So again, that's a successful win for the client. I do think that it takes a certain skillset to be able to go in and work with the client within our industry and we're having a lot of success there. So we do expect that we're going to sell more this year than what we sold last year and last year was a good sales year.

Yeah, and in terms of the retention, as we mentioned, the parts that impacted retention the most this year was really at the low-end of the market. And we're exposed to the low-end of the market very small. I mean we're less than 5% that has under 50 employees. And it's actually closer to 3.5%, so as we're moving into the current year, we have already mentioned that the initial looks are positive. So that's kind of the way we look at that.

All right. Thank you. And then just a follow-up to that last point. Are you investing a little less incrementally in that lower end of the market, then would you say? Thanks.

Yes. I would say, we are investing a little less.

Thank you for your questions. This concludes the Q&A portion of today's call. I will now turn the call back over to Mr. Chad Richison, for closing remarks.

Well, thanks everyone for joining the call today. I want to congratulate the 2023 Paycom Jim Thorpe Award Winner, Trey Taylor from the US Air Force Academy. This award recognizes the most outstanding defensive back in college football and memorializes Jim Thorpe, who is one of the greatest all-around athletes in history. Jim Thorpe also happen to be in Oklahoma. We plan on participating in the KeyBanc and Morgan Stanley Conferences in March and seeing many of you in-person throughout the coming months. I like to congratulate Chris and thank all our employees for their contribution to Paycom's success. Operator, you may end the call.

This concludes today's conference call. You may now disconnect.