Paycom Software, Inc. (PAYC) Q2 2026 Earnings Report, Transcript and Summary

Good afternoon. My name is Hillary and I will be your conference operator today. At this time, I would like to welcome everyone to Paycom's Second Quarter 2026 Financial Results Conference Call. [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 second quarter of 2026. 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 Founder and CEO. Chad?

Thanks, James and thank you to everyone joining our call today. I'll briefly comment on some of the new product launches and achievements so far this year. Then I will pass the call over to our President, Shane Hadlock and then Bob will review our second quarter results and full year guidance. We will then take questions. Let's get started. We delivered another solid quarter with results coming in ahead of expectations. The benefit of our software's full solution automation, coupled with world-class service, continue to drive industry-leading ROI, which is resonating in the market. With our strong first half results, we are well positioned to exceed our initial 2026 plan on both a revenue and profitability basis. Demand for automation is increasing and our platform remains the most intelligent solution in the industry. Thanks to our early focus on data integrity and consolidation, we continue to expand our automation capabilities with AI and automated decisioning to deliver even more value to our clients. Earlier this year, we announced the release of our Career and Succession Planning solution and we are seeing solid client adoption. This is another automated product that equips leaders with a solution to more easily identify and develop talent, ensuring organizations are better prepared for the future. With this product, organizations have reliable data to discover workforce talent gaps and assess talent readiness. A client of ours with over 500 employees who is already using our Performance and Paycom Learning products, added Career and Succession Planning. And for the first time, they have all key positions and successors identified. They were very pleased with how quickly they could identify leadership gaps and fill them with people who were developed to step into the roles. Clients are thrilled with this new functionality and the automation it creates for career development and succession. In July, we released our latest automated product, Asset Management. This solution enables businesses to manage their physical and digital assets, which represent one of their largest budgetary spends, ensuring those investments are deployed, tracked and recovered through our automated software. The launch of Asset Management expands our capabilities into an entirely new multibillion-dollar TAM that fits perfectly within our software ecosystem. By combining Asset Management with the automated tools already in the Paycom system, we help our clients strengthen the security of their assets, bolster compliance and reduce lost property. Not only can organizations track all of their assets across their locations but they can also identify the exact resources a position requires, which ensures a consistent deployment and retrieval of all company assets. Even though it was just released a few weeks ago, client feedback has been very strong and they are already adopting this new technology. Asset Management marks the 45th product we have developed, hosted, distributed and serviced over our nearly 28 years in business. We take great pride in our ability to consistently release industry-leading technology that generates tremendous ROI for our clients. Now I would like to turn the call over to Shane Hadlock. Prior to his role as our President, he served as our Chief Client Officer, where he was instrumental in increasing retention, driving world-class service, building strong groups of leaders and delivering tremendous automation across the organization. With that, let me turn the call over to Shane.

Thanks, Chad. We are driving innovation across our industry. And this quarter, we released Project Arc. Project Arc was the largest system-wide release we have had in our company's history. This new release fundamentally changes the way clients and their employees experience Paycom. Clients love the new scalability and customization. This new release gives each user a unique experience, helping them quickly find the information and action items most relevant to them. Our clients say that their managers are raving about how customizable the system is, making it easier for them to do their jobs. One of our clients with a few thousand employees said that they were impressed with the new Arc release because it provides great customization and performance for their employees, managers and organization. In addition to the new customizable features, Project Arc included significant updates to enhance the performance, scalability and functionality of our software. These changes to system performance and scalability have produced an experience for our clients that is much more efficient. In fact, a client of ours with over 10,000 employees reported their system performance increased by 4x. Client feedback has been incredible and they are enjoying the benefits of this customization and improved scale, making the industry's most intelligent solution even more powerful. Our award-winning AI solution, IWant, continues to accelerate speed to value for our clients by providing them with system intelligence that automates events and tasks within the system. For many new employees and new users of our software, utilizing IWant is their first interaction of our software, making it easier than ever to use. As we roll out more AI and automation across the platform, we are driving measurable value for our clients and their employees. IWant has been a game changer for our clients and the industry. I am proud of our team and all the work we have accomplished over the course of the year to drive efficiency and client satisfaction. Across the board, we have great talent at Paycom, especially in the leadership team. We have a deep and experienced bench with institutional knowledge and a competitive mindset that sets us apart. I would like to thank our employees for their contributions to an excellent first half of 2026 and the robust results year-to-date. We are building strong momentum on a variety of new products to further automate businesses. During the quarter, our product and culture received several accolades. Paycom earned the 2026 Top Rated Award from TrustRadius, which reflects strong client satisfaction across multiple HR and payroll categories. I was also pleased to see Paycom was named to Newsweek's Greatest Workplaces in Tech, and our sales organization was included in Selling Power's 60 Best Companies to Sell For. These awards highlight our differentiated product set, client satisfaction and elite sales program. This is an exciting time to be part of Paycom. With that, let me turn the call over to Bob.

Thank you, Shane. Second quarter results were strong with total revenue of $531 million, up 10% over the comparable prior year period and recurring and other revenue of $505 million, up 11% year-over-year. Revenue strength in the quarter was broad-based, reflecting consistent product demand conditions and increased client satisfaction. Our focus on process automation and leveraging our own technology is driving increased productivity across the organization that is fundamentally strengthening our business. Our efforts over the last several quarters are driving sustainable margin expansion and earnings growth. GAAP net income increased 20% in the second quarter to $107 million or $2.34 per diluted share based on an average of 46 million shares outstanding. Non-GAAP net income for the second quarter was $128 million or $2.78 per diluted share. Adjusted EBITDA in the second quarter came in at $235 million, representing a 320 basis point year-over-year margin expansion to 44.2%. Based on the strength of our results in the first half, we are well positioned to deliver industry-leading EBITDA margins, record free cash flow and accelerated earnings per share growth in 2026. We continue to identify what we view as a valuation disconnect in the market during the second quarter and opportunistically repurchased approximately 2.6 million shares of common stock or approximately 6% of our shares outstanding for a total of $346 million. Over the first 6 months of the year, we reduced shares outstanding by 20% by repurchasing nearly 11 million shares of common stock, returning approximately $1.4 billion to stockholders. We ended the second quarter with approximately 44 million shares outstanding and $1.66 billion remaining on our buyback authorization. We also paid approximately $18 million in cash dividends during the second quarter. On August 3, the Board approved our next quarterly dividend of $0.375 per share payable in early September. Turning to the balance sheet. We continue to enjoy a very strong liquidity position. We ended the quarter with cash and cash equivalents of $198 million and have drawn down a total of $900 million on our $2.1 billion revolving credit facility to support our year-to-date stock repurchases. The average daily balance of funds held for clients was approximately $2.9 billion in the second quarter of 2026, up 9% over the prior year period. Now let me turn to guidance for 2026. Based on the strength of our first half results and more visibility heading into the second half, we can confidently increase our revenue and adjusted EBITDA guidance ranges. We expect total revenues to be between $2.197 billion and $2.212 billion or between 7% and 8% year-over-year growth. We now expect full year recurring and other revenue to be up 8% to 9% year-over-year. Included in total revenue outlook is interest on funds held for clients of approximately $105 million, which assumes current rates hold for the remainder of the year. Finally, as we continue to benefit from the impact of our automation initiatives, full year adjusted EBITDA is now expected to be between $1.007 billion and $1.022 billion, representing a record adjusted EBITDA margin of 46% at the midpoint of the range. Our strong first half results have bolstered our conviction in our 2026 plan and in our full solution automation strategy. We are executing well across the organization. Our clients are increasingly pleased with our platform and their ROI achievement and we continue to opportunistically return value to stockholders through our capital allocation strategy. We'd like to thank our employees for their commitment to our vision and their contribution to our strong first half results. With that, let's open the line for questions. Operator?

[Operator Instructions] Your first question comes from the line of Raimo Lenschow from Barclays.

Congrats from me. It's a great quarter. And if I look through my model, Chad, it's like the biggest beat you had for a while, revenue accelerated very nicely. Was there anything special in this quarter, like one-off factors or something that drove that? Can you speak to that strength? I mean you gave some of the pointers already but I have a lot of clients kind of wondering, well, this is really, really good. So what happened here? And then I have one quick follow-up for Bob.

No, it was broad-based, nothing new, all from the same buckets that we've always had in the past.

Okay. Perfect. And anything on the new products contributing already? Or is it just -- well, it seems to be almost too early for that.

Yes. I mean, obviously, some of the products that we produced last year are starting to contribute to that. We did release 2 significant products, I would say, in the last 3 months, one of them in the last couple of weeks. I would say their contribution to this quarter wouldn't have been meaningful but they would -- one of them would have contributed a little bit. But we do look for both of those to contribute more as we move into the future.

Your next question comes from the line of Samad Samana from Jefferies.

Chad, you guys have always had a very strong sales distribution team. I'm curious, you've talked a lot about AI and the impact of solutions you're creating for clients. I'm curious what you guys are doing from an internal AI enablement perspective for your sales organization and how that's driving productivity and how you might think about that influencing sales office expansion or head count growth? And then I have one follow-up.

Yes. I don't know that I would say AI as much. Definitely AI helps us in the prospecting and identifying certain prospects and maybe what trends they had before. We are a high-touch sales organization. And so we do that high-touch sales model. I will say that over time, especially over the last couple of years, including into this year, we have allowed our clients to buy in-app. And so it does somewhat circumvent the book sales process as they can buy directly from us. Career and Succession Planning was actually a product that allowed for that.

Understood. And maybe just a follow-up in terms of the capital allocation, especially given kind of the very aggressive buyback in the first half of the year and I think that's paid off in spades. Should we think about capital allocation being a bit more balanced going forward? Should we think that the buyback remains the top priority? Just help us think about kind of building dry powder versus the level of buybacks we've seen in the first half of the year.

You bet. When you think of CapEx, first, I mean, I kind of want to frame it this way. Last year, we spent over $100 million to prepare data centers to host our own AI models. And this year alone, that spend will lead to about $100 million savings in R&D and another $30 million or more in IWant response fees that would have come from a third party. And as an added bonus, we use some of the excess capacity to improve the performance of our systems with greater processing power. So we do believe last year's investments will produce even greater value as we move into 2027. And then, Bob, you want to comment on the CapEx?

Yes, I do. Let me comment Samad, too, on the CapEx. It will be a little more normalized than in the past. But when we look at the results, especially as it flows down through EBITDA, I want to go ahead, that flows all the way through to free cash flow. So I want to kind of make a onetime comment on free cash flow given how the market has consistently underestimated the strength of our business model over the last few quarters. What I would tell you is that based on the strong first half results and what we have visibility into for the rest of 2026, we do expect free cash flow to exceed $650 million in 2026. And then maybe, Samad, on the CapEx, approximately 6%. And then I'll give you the tax numbers, too, for the models. GAAP tax rate is 29%, non-GAAP tax rate is 27% and stock-based comp is 3% of revenues in 2026.

Your next question comes from the line of Steve Enders from Citibank.

Okay. Great. Actually, maybe just following up on the last point on free cash flow. I guess maybe what is maybe different now that's driving the incremental free cash flow and some better conversion rates coming from EBITDA this year? And I guess, how do we think about -- is there like a framework for maybe what that conversion rate will look like moving forward beyond '26? Maybe just following up on the last point on free cash flow. I guess I just want to get a better sense for what is driving the, I guess, improved free cash flow for this year? Like what are the levers that are coming through right now? And then I guess, how should we think about maybe a framework moving forward for free cash flow conversion rates from EBITDA or just what that trend will look like going into the future?

We're just dealing with a very brief technical difficulty. [Technical Difficulty] Thank you so much for your patience. We will now continue the call. I would like to ask Steve Enders to please reask your question.

Yes. I guess I just want to follow up on the free cash flow commentary that you just gave. I guess want to understand, I guess, what are the levers that are really, I guess, kind of supporting the improved free cash flow outlook for this year? And then I guess, similarly, is there a framework to maybe think about EBITDA to free cash flow moving forward into future years?

Yes, Steve. So last year, actually, at your conference, we talked about we were conscious of the fact that EBITDA margin and free cash flow margin had to begin to get closer and closer. So that -- what was driving it this year and it is sustainable, was it was broad-based, too. It was efficiencies in how we do our processes and it was efficiencies in our labor workforce. And we'll continue to drive those efficiencies in the future.

Okay. That's helpful. And then on just, I guess, sales productivity rates, I know there was a big focus tail end of last year to retrain the sales force. Just I guess, where are we at in terms of sales productivity trends and the impact that retraining is having? And would you say we're kind of back to typical levels at this point? Or just how are you kind of thinking about the incremental improvement that can come from the sales productivity?

Sure. With an enhanced system, it did require somewhat of an enhanced sales process just to make sure that our clients are able to achieve the full ROI that's available to them and we want to make sure we're presenting that to them on first call. And so we have -- sales has been doing great. As a reminder, we have many reps still going through training. And also, as a reminder, we expanded our teams of 8 to teams of 10. So you have 100 of our new sales reps. Over 100 of the new sales reps are also additional headcount for sales.

Your next question comes from the line of Raimo Lenschow from Barclays.

I think I asked my question already but the follow-up question I wanted to have for Bob was, if you think about the -- your rate assumptions for the year, like obviously, there's a debate around what's going to happen to the rates. Like what's driving your thinking about like a stable rate, like using the current rates for the year there?

Sure, Raimo. We -- in our assumptions that there would not be any kind of rate increase or cut through the rest of the year. Even if there were, it would have a minimal impact on this year.

Your next question comes from the line of Jason Celino from KeyBanc Capital Markets.

Great. Maybe just following up on Enders' last question around sales productivity. With the acceleration that we're seeing in recurring, how much would you credit the performance in second quarter being from the better training from last year and the expanded headcount?

Bookings came in as expected. We have 2 categories of book sales. One is sales to new prospects and we also have sales to current clients. As I kind of mentioned earlier at the beginning of the call, over the last couple of years, we've implemented more in-app purchase capabilities and that somewhat skips the book sales process. But bookings have come in as expected and we would expect as we add more and more reps to the field. And as they grow those pipelines, we would expect that the additional rep headcount would be accretive to future book sales.

Great. And then maybe just a quick one for Bob. When we think about the second half, the recurring growth profile, anything we should think about in terms of seasonality in Q3 or Q4?

No, there's -- this is my favorite question. Thanks, Jason. The calendars -- we -- the seasonality, you have probably one more Wednesday maybe in the third quarter and then you have a little bit of tough comp in the fourth quarter. But as you know, we look at that and smooth that out over the 2 quarters, so we look at it 6 months. So...

Your next question comes from the line of Mark Marcon from Baird.

Congratulations on the strong results. I had a couple of questions. One, Chad and Shane, I was just wondering, how would you describe the current pipeline? I went to SHRM, I've gone to a couple of other smaller conferences and -- where you appeared and your booth was just packed. And it seems like there's a lot of interest in the automation story. And so I'm wondering what's the shape of the pipeline now? Your revenue projections assume a little bit of decel relative to the first half. And I know you're trying to be conservative but it seems like you've got a lot of really good momentum right now. So I was just wondering if you could talk about that and potentially also along those lines, what you would expect from the new products in terms of what they can add? And then I've got a follow-up just on the financials.

Yes, sure. Pipelines remain very strong. In a perfect world, your pipeline turns into backlog of clients ready to implement. And so that's what we look for. But pipelines remain strong and they'll continue to build as more and more reps enter their territory. As far as product contributions into the future, we've done a lot of development in the last year and we've got a lot more that will be coming out in the next year. The one thing that hosting our own models has done has really allowed us to move very quickly in dev. It's also saved us on token expense, which we do have token expense but we have a lot less of it now that we run our own models internally. And it's also allowed us to deploy our AI engine like IWant, if you will. And I think someone would be hard-pressed to find a client of ours that hasn't used IWant. And so I think as you look into the future, we'll continue to be adding products that add value to the client. And then those, of course, will be hosted by us. We've had 45 products now that we've developed, released, hosted, distributed and serviced. And so we've gotten really good at that process. And I think that it's become a little bit easier to do some of those things. And so it's an opportunity for us to accelerate that as we look into the future.

That's great. And then just as a follow-up, can you talk a little bit about like the R&D expense? It went down fairly significantly here in Q2 at the same time that the G&A actually went up a little bit. And I was just wondering, is that just a change in the allocation? Or are you getting more efficiencies? Obviously, the whole total, you're seeing great improvement in terms of the margins, which is terrific. But just wondering about the pieces moving around.

From an R&D perspective, I can take that and let Bob more take the G&A. I mean, we are developing differently than what we ever have in the past. I mean we're organized differently. Our structure is different. The process that product goes through is different, that a product would go through to get all the way through to release is different. And so I would say that's quite a bit different for us and our performance is very high. So we've been able to do all of this and increase productivity and client satisfaction with the product. And so from an R&D perspective, I would say that we've become much more effective. And that has also led to great efficiencies on that line. And then, Bob, if you want to...

Yes. On the G&A, it did go up a little bit. Biggest category is probably around professional services and some of that was related to a onetime expense. We expanded our -- and renewed our line of credit. There was a great interest in that. So we're proud that people believe in our robust business model and that's what led to some of that in the G&A.

Your next question comes from the line of Jared Levine from TD Cowen.

It was good to hear that bookings came in line with your expectations in 2Q. I guess, have you seen that inflection that you were hoping for in terms of when you went into this year? Just directionally, any kind of color in terms of kind of the momentum here would be helpful on the bookings front and how you're kind of seeing things progress into 3Q so far?

Yes. I mean I would say that my expectations are always higher than what could maybe even reasonably be achieved. But what I will say this is, yes, bookings came in as expected. And also, just a stat to share is that our new reps coming out of training are getting up to productivity much faster than they ever have in the past and we're having great success with that. And so all this bodes well as we look into the future.

Got it. And then in terms of -- we've seen multiple of your competitors pushing more into managed services. I guess, how are you thinking about this opportunity, if at all?

I think we look at everything that has a positive impact on a client and can produce a strong ROI for them. And we also try to automate everything that we can. And we think that's very important, asking the questions why and what are you going to do with that so that we can go ahead and complete it for them. So we're going to continue to focus on that. We do have preemployment services. I think we're probably one of the largest preemployment service companies in the U.S. I think at one time, we were about fourth. That side of our service business continues to be very strong and is up a measurable amount for this year.

Your next question comes from the line of Daniel Jester from BMO Capital Markets.

Maybe first on IWant. Is there anything you can share about sort of how that ramped from a usage perspective in the quarter? And as you go back to customers that have been with you for a long time, have you seen any change in their willingness to adopt IWant and all of the functionality it provides?

Yes, not really any change. I would say the more you work with a consistent model that delivers accurate responses, the better you get at knowing how to ask it a question. And the better you get at asking questions, the less time it takes for you to get that response. And in our environment, your consecutive responses per second, that helps that become more efficient as well. So -- but yes, we continue to see great uptake. Nobody goes backwards in technology once you're used to using something. Once you're there, nobody steps away and goes backwards from that. We've said in the past that IWant is the predominant way that employees -- new employees experience our system. As we completed Project Arc, it put that even more in the spotlight. IWant will continue to grow in capability but it's very also important that we be accurate. We come up with AI functionality all the time and agents all the time and I always have the same question for the people that create it. I'm like, well, is it cool or is it accurate? And if I don't get an accurate response, I mean, we continue to work until we can produce that. And so we've been focused on that and IWant does deliver a very reliable, efficient way for someone to achieve all the value that's available to them in the Paycom system.

Your next question comes from the line of Jacob Smith from Guggenheim.

Revenue from customers above 1,000 employees was growing faster than total in past quarters. So I was wondering if you could provide an update on what you're seeing there. And as the sales org goes to market with a full solution automation pitch, are you seeing average deal size or module count at initial entry any higher this quarter, particularly upmarket?

I wouldn't say that the profile of size of clients changed in the second quarter here. I think we continue to produce value across the board, regardless of the client size, industry or location.

Okay. And just as a quick follow-up, Chad, you talked about, at the beginning of the year, the goal of expanding sales capacity across offices. And on the last call, you mentioned new reps were coming through training and ramping faster than pretty much any class in a number of years. Can you give us an update on where you stand on that capacity expansion? Are you at the pace of hiring you'd like to be? And is this year more about driving productivity higher with existing reps or ramping new reps?

Both. I would say it's both. Definitely, productivity with existing reps continues to increase. With new reps, it takes a second. I mean your initial productivity gains you're going to get are always going to be with your current reps. New reps, it takes a second. They can get the value proposition. They understand the pitch. But then you go out there and you run into some situations that you have to get through and it takes sometimes a new rep a little bit longer to get that. So they stay in the game and then they start having success and then that confidence starts to build and then they start selling more and more and more. And so our existing reps are going to obviously outsell a lot more than our new reps but we do have so many new reps that we put in the field that we're very excited about what that's going to mean for us as we head both throughout this year and then as well as we go into next year.

Your next question comes from the line of Kevin McVeigh from UBS.

Congratulations on the results. I mean, it feels like the business is structurally different, right? I mean the pacing of the margin, the revenue you're delivering, is that primarily the standup of the data centers last year? Are you in the early phases of AI across the expense structure with more to come? And from a revenue perspective going forward, is it going to shift from more of a fixed with a variable component as opposed to PEPM? Any way to think about how the business model will be impacted? Clearly, you're in a good position and able to leverage it. But just anything that we can help because the results have been and continue to be exceptional.

Yes. I mean, I would say that the whole world is probably still a little bit in the early stages of AI. I would say we jumped in head first with everything we had last year, not just in product but in infrastructure and everything else. And then -- then we started using it to develop and become a lot stronger at that. And we started using it in areas of our service, how to identify things. And so we're becoming better and better at it. I wouldn't say we use AI for AI's sake. I mean automation matters and there's a great amount of accuracy you get with automation. And in our industry, you only get points for being accurate. And so that's always been a focus of ours. So we see that to continue. What was the other question from a fixed variable? I don't -- I'm not 100% sure on your revenue question, except to say our pricing model does follow somewhat industry norm. It is proprietary to us but it does follow industry norms and we do look to deliver to our clients the greatest amount of ROI for that spend with us.

Your next question comes from the line of Bhavin Shah from Deutsche Bank.

Congrats on the strong quarter. It's nice to see all the new product releases. As you move into other adjacencies such as asset management, how do you have to think about adjusting maybe the go-to-market motion to account for the different potential end buyers that you might be dealing with outside of just the HR departments?

Yes. I mean we've had spend management for a while. We have other areas that impact the accounting department or the office of the CFO, if you will. I mean there's never been a deal that we've ever done where we weren't integrating with a general ledger system and what have you. Also, I mean, CFOs care about labor and what HCM system is deployed because for most -- for a lot of companies anyway, labor is one of their largest expenses. And so asset management does flow naturally into what we already do. Our same sales organization that we have now are well equipped to go sell our asset management as it both has a impact and provisioning for employees. And then it also has a total asset tracking system as well. And so we feel like that folds in nicely with what we're selling anyway.

Got it. And maybe just a quick follow-up for Bob. Just in terms of the strength you saw in the first half of the year, especially on the growth side, why not invest more into the business, just given what you're seeing happening versus kind of flow to the bottom line and that strong EBITDA that we saw, you guys guide to?

Yes. Well, we are continuing to invest in the business in different ways. So -- and you'll see that and that's why we believe it's -- we're just smart about how we do it and it's sustainable. So again, we are worried about the growth side and the efficiency side.

Your next question comes from the line of Patrick O'Neill from Wolfe Research.

Just a quick one for me. How would you characterize the client employment growth in the first half of the year? And then maybe if the growth was positive, what was the benefit in the first half? And what's implied in the guidance from here following the impressive raise to the full year outlook?

I mean client employment growth would have just been stable, same, consistent with -- as it's been every year in the past with the exception of when it went down about 14% during COVID and then it came right back not long after that, may have been a little more than 14% that went down. But really since that time, we've had stability. And we would expect that and all of our guidance going forward would expect stability in that.

Your next question comes from the line of Allan Verkhovski from U.S. Bancorp.

Given the sequential decline in OpEx, how are you thinking about Paycom's head count growth through year-end? You mentioned earlier you're seeing labor efficiencies. So more color there would be helpful.

Sure. So our focus is product automation and that drives cost efficiencies in many areas, including labor. We update our employment numbers annually and we had 5,770 employees as of our last update that we gave on the February earnings call. We're focused on client ROI achievement, not necessarily our cost. The ROI achievement is higher with automation. And while there's no limit to what can be automated, there is a limit on labor efficiency as we do believe there's a strong human aspect to developing, selling, converting and servicing business.

This concludes the question-and-answer portion of today's call. I will now turn the call back to Mr. Chad Richison for closing remarks. Thank you.

Thanks, everyone, for joining the call today. We look forward to speaking with many of you at the Deutsche Bank conference on August 26 in Dana Point and the Citi conference in New York City on September 8. I want to thank our employees for their contributions over the first half of the year. With that, operator, you may end the call.

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