Paycom Software Inc (PAYC) — Q3 2025 Earnings Call Transcript

Thank you, and welcome to Paycom's earnings conference call for the third 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.

Thanks, James, and thank you to everyone joining our call today. I'll briefly comment on third quarter results and recent product innovations. I'll then turn it over to Bob for a review of our third quarter results and our full year guidance. We will then take questions. Let's get started. Third quarter results came in strong with double-digit organic recurring revenue growth and continued margin expansion, setting us up to exceed our full year financial plan for 2025. In addition to strong financials, we also executed the launch of our award-winning and industry-first command-driven AI product, IWant. Now enabled across our entire client base, IWant is transforming how our clients and their employees engage with their HR and payroll data. IWant has already successfully responded to millions of queries from employees, managers and executives, extending the power of our full solution automation. We are seeing a dramatic uptick in usage, especially among new users, which include the C-suite and newly onboarded employees of our clients. The intuitive nature of IWant means new employees no longer need training on the system and are able to utilize the full solution upon hire. I'm particularly encouraged by the engagement we are seeing among the C-suite. Traditionally, executives have not been daily users of HCM solutions. With IWant, thousands of C-suite executives are already pulling data and insights directly from the Paycom system, and the feedback has been phenomenal. I'm confident that command-driven functionality is the future for all software. Beti is another example of automation that delivers significant ROI and is driving new sales. This award-winning payroll solution reduces payroll processing labor by up to 90%, while also cutting the time spent correcting payroll errors by up to 85%. Beti not only protects employees against insufficient funds by ensuring the payroll is correct prior to payday, but it also eliminates human interaction with non-revenue-generating tasks associated with voided payments, check reversals, ledger updates and post-payroll adjustments, just to name a few. Beti also enhances payroll compliance, ensuring accurate tax withholding, along with wage and hour accuracy, which reduces employer liability because employees have control over the accuracy of their check. Additionally, automation and perfect payroll with Beti is also attracting former clients back to Paycom. Recently, two clients who were not previous Beti users came back to Paycom, thanks to Beti. One of these was a large auto group who after leaving Paycom had numerous issues processing multiple payrolls across their more than 25 locations that impacted their employees. They quickly realized the mistake they made and reached out to us to come back. Upon the return, they were quick to adopt Beti because of the payroll automation and paycheck transparency. The second example of an organization returning was a manufacturing company whose employees quickly voiced frustration over the switch away from Paycom, especially managers who lost access to the information they were accustomed to, resulting in a slowdown in revenue-generating work. This organization pointed to Beti as a significant reason for the return and a game changer with 100% accurate payrolls, thanks to Beti identifying and notifying employees of items that need attention prior to payday. Beti continues to be a powerful differentiator for us in the market as we continue to drive even more automation and deliver very strong ROI to our clients. To facilitate the automation experience, including IWant and future AI developments in the pipeline, we significantly expanded our data center capabilities, spending roughly $100 million of AI-focused CapEx on our Phoenix and Oklahoma City data centers. We front-loaded this CapEx to match the timing of our IWant rollout in Q3. Owning and operating advanced data centers is a sustainable competitive advantage for Paycom, particularly for clients who have reservations about opening up their critical data to external large language models. IWant hosted by Paycom only draws from Paycom's single database, which eliminates conflicts created by inconsistent or duplicative external data sets, significantly improving data integrity and the quality of the user experience. Thanks to our product innovation and our focus on world-class service, client satisfaction trends remain strong. We provide high-touch personal service and our clients appreciate our service levels now more than ever. We complement our high-touch service model with full solution automation, which drives service operation efficiency. As a result, we've seen a 20% to 30% year-over-year decline in internal tickets and inbound client call volume. These are positive influencers on client satisfaction. With our strong third quarter results and the outlook for the remainder of 2025, we are set to deliver a milestone year with over $2 billion in total revenues, all through organic growth and near record level adjusted EBITDA margins. Paycom has been leading our industry in innovation and client ROI achievement since we were founded. Now with automated products like IWant, Beti and GONE, we are well positioned for continued strong performance in the future. I want to thank all of our employees for their consistent contribution to Paycom's success and also thank our clients for trusting us to deliver unmatched value through full solution automation. With that, let me turn it over to Bob.

Thank you, Chad. Before I review our third quarter 2025 results and updated outlook for 2025, I'd like to remind everyone that my comments related to certain financial measures will be on a non-GAAP basis. We delivered strong third quarter results with total revenues of $493 million, up 9.1% over the comparable prior year period and recurring and other revenues of $467 million, up 10.6% year-over-year. Interest on funds held for clients declined 11% year-over-year to $27 million in the third quarter of 2025. GAAP net income in the quarter was $111 million or $1.96 per diluted share based on 56 million shares. Included in GAAP net income is a tax-adjusted one-time gain of approximately $26 million or $0.47 per diluted share related to the modification of our naming rights agreement. Non-GAAP net income for the third quarter increased 17% year-over-year to $110 million or $1.94 per diluted share. Profitability continues to increase as we realize operational efficiencies and deliver consistent margin expansion. Even with the 11% decline in interest on funds held by clients in the third quarter, our robust business model produced a 13% year-over-year increase in adjusted EBITDA to $194 million. Adjusted EBITDA margin in the quarter was 39%, representing a 150 basis point increase over the prior year period. Margin strength in the quarter was driven by automation and operating efficiencies in service, support and in general and administrative areas. As we indicated in our last earnings call, we ramped up marketing spend in the third quarter to support our product and brand strategies, including marketing related to our recent launch of IWant. Feedback has been very positive, and we look forward to seeing the benefits from our marketing initiatives in the quarters to come. We continue to invest in the areas of sales, personal service, new client operations and our product. With our solid Q3 results, we are on track to deliver on our full year plan for double-digit organic recurring and other revenue growth and expanding adjusted EBITDA margins. Our single database and our owned and operated data centers are competitive differentiators that enable us to rapidly develop and deploy new automations to benefit all our clients. During the quarter, we launched our most advanced automation solution ever, IWant, which is now enabled to our entire client base. To support IWant, we front-loaded a significant CapEx investment in advanced AI hardware and equipment within our data centers. More specifically, we invested approximately $100 million into our data centers, and that spend is now largely complete. This investment provides us a multi-year capacity runway to support our AI initiatives. Over the last two months, we repurchased $319 million of common stock in the open market, buying back over 1.5 million shares or almost 3% of shares outstanding as of the end of August 2025. Since the beginning of 2023, we have returned over $1 billion to shareholders through our buyback and dividend program. During that period, we repurchased 4.1 million shares of common stock for $806 million or approximately 7% of our 2022 year-end shares outstanding. We paid approximately $213 million in dividends. We still have approximately $1.1 billion remaining under our buyback authorization as of October 31, 2025, and a revolving credit facility of $1 billion available for us to execute on. Earlier this week, the Board approved our quarterly dividend of $0.375 per share payable in mid-December. Even with these significant uses of cash in the quarter, our balance sheet remains very strong. We ended the third quarter with cash and cash equivalents of $375 million and no debt. The average daily balance on funds held for clients was approximately $2.5 billion in the third quarter of 2025, up 9% over the prior year period. Now let me turn to guidance for 2025. Based on our strong year-to-date results, we are well positioned to meet our full year revenue and adjusted EBITDA guidance ranges. We continue to expect total revenue to be between $2.045 billion and $2.055 billion, up 9% year-over-year at the midpoint of the range. Within revenues, we expect organic full year recurring and other revenue to be up 10% year-over-year and interest on funds held for clients to be down 10% year-over-year to $113 million, assuming one additional rate cut later this year. Our full year adjusted EBITDA guidance range is $872 million to $882 million, representing year-over-year adjusted EBITDA margin expansion of 160 basis points to near record levels at approximately 43% at the midpoint of the range. Other forward-looking items include full year GAAP and non-GAAP tax rates of 27% and 26%, respectively, and stock compensation of approximately 7% of revenues. We delivered strong results in the third quarter and reinvested our capital into data centers, while at the same time, returning significant cash to shareholders through buybacks and dividends. 2025 has been a strong year, and we are well positioned for a robust 2026 and beyond.

Chad, a question I frequently receive from investors right now is that your historical performance levels were somewhat higher. Can you share your insights on what you're currently observing? Is it related to the economy or other factors that could be influencing the situation, as it appears to diverge slightly from your usual track record?

Yes. Well, in 2025, we did change the way we guide. We broke out recurring revenue. We broke out our interest tax. And we provided a wider range at the beginning. I would point out that since providing that initial range, revenues have raised by $25 million, and adjusted EBITDA has been raised by $47 million at the midpoint so far this year. So I know that people might want a little bit different type of number. I will say that I'm very proud of the hard work that we've done and are doing. And I believe the accomplishments that we've made both this year and last year really set us up for a strong foundation for our future growth opportunities. So I would say that we didn't really guide to beat by certain amounts. I would say that we came out with a good guide. And then throughout the year, we were able to raise, and I feel like 2025 is going to be a good year for us.

Okay, perfect. In terms of IWant, which was a highlight from the HR Tech Conference, how does it help to drive additional conversations for you? You entered the market early and it seems like you're quite unique. What feedback are the sales team providing regarding its impact on lead generation and pipeline development?

Yes. So while we're seeing a complete change as new employees are added onto our system. Most of them are utilizing IWant versus any level of navigation. We've been able to engage the C-suites into the system again. The types of users at the C-suite level and administrative level at some level needed the information and were always able to receive information through others that work for them. But with IWant, they're able to do it directly. I mean as far as being first, I've heard people say they have AI. I've seen a brochure. We don't experience that when we're working with their clients. And our AI initiatives would have cost us for our full capacity opportunity about $25 million a quarter. So we've spent about $100 million this year setting it up ourselves, which we've done all of our own database and our own data centers since 1998. So I don't know who our competitors are using for AI, but it sounds like they got a really good deal on it.

Regarding IWant, I demonstrated it at HR Tech to a group of investors, and I found it quite impressive. Could you provide more insight into the usage patterns you're observing? You mentioned an increase in executive usage. How often are executives using it? Is it being used broadly at this point? What data do you have on how frequently executives interact with it? Additionally, could you share what feedback you’re receiving from the sales teams about its potential for the upcoming selling season?

When you consider IWant, think of it as an easier way to access the value available. Currently, we are focusing on decision automation and fully automating our system due to widespread decision fatigue. People haven't necessarily grown tired of making decisions; in many instances, they have simply given up. IWant provides an easy way to tap into that value. For current users familiar with our system, using it is already straightforward, which slightly adjusts their behavior and expands what they can do. For new users, such as new employees gaining access, IWant becomes their primary method of using our software. Looking ahead, I anticipate that more individuals will turn to IWant to navigate and manage our system for making changes and obtaining information compared to those who navigate in the traditional manner.

Great. Can you discuss your cost of service? Your operating cost of revenue showed a nice sequential decline, and a significant drop year-over-year. Can you elaborate on those efficiencies? There were also some press reports regarding personnel changes. Are those expected to impact the fourth quarter, and how should we consider that?

Yes. Any changes we've made will mainly benefit us in 2026. We're currently very focused on growth and various initiatives. While not everything will take effect next year, we have the plans in place. We have a backlog of development either already completed or in progress, which has led to a reduction of about 500 administrative positions. As the founder of this company, it deeply saddens me to let people go through no fault of their own. I don't anticipate going through that again because there is still plenty of work available. However, we have always aimed to automate administrative tasks that hinder the flow or accuracy of data and information, though this doesn't always lead to staff reductions. We've consistently worked towards becoming more efficient, and you can see that already starting to take effect prior to any impacts from these reductions on our numbers.

Okay. Great. This is George Curso on for Steve. Just wanted to follow up on the demand environment. If you could characterize what you saw out there in terms of sales cycles, retention, et cetera. Any color commentary would be great.

Yes. Demand remains strong. I mean we have a very differentiated product. We're going at it a different way. And so demand remains strong. I mean we still have less than 5% of the total addressable market even here just in the U.S. And so we create the demand that's available to us. We do continue to capture it. We do talk about retention once a year. We'll be reporting that next year. I will say how proud I've been of our people and all the work that we're doing internally, and they know what we're doing. And we do expect all this work to have a meaningful impact on the value that clients are achieving. And then in turn, over time, we would expect that to have a favorable impact on retention as well.

Okay, great. I wanted to follow up on the $100 million in capital expenditures for data center and AI investments. Given your free cash flow figure, it seems larger than expected. Should we consider that our free cash flow number, excluding this investment, is essentially $100 million higher than what you've reported? Also, could you remind us of the major components of that spending and why you believe this is a one-time investment?

Yes, when you develop something and assess capacity, you need to run models to see how many users are accessing it simultaneously, ensuring you have sufficient capacity. This is our system today. We have many employees and users at our clients, and this is the primary way they utilize the system. The usage of our systems has changed significantly. Therefore, we had to invest to ensure we had the capacity for our current needs and future growth. I don't anticipate spending at this level in the coming years, but we are focused on growth and providing the best product. Our offering is something clients actively use once we transition them. Thus, when expecting that level of usage, it's essential to invest in preparation. We opted to handle this ourselves as we've been in the data center business since 1998. We believe this will enhance our free cash flow conversion moving forward. Also, when we interact with clients of our competitors who have AI, we don’t see the same issues, and we’re unsure how they cover their costs since renting that capability can be quite expensive.

This is Zane Meehan on for Jason today. I was just hoping for a little extra color on the 3Q recurring revenue results. I understand that it was a tough comp, but anything worth noting on that deceleration in the growth rate, maybe possibly softer workforce levels in the platform? Or is there anything one-time in nature that's worth calling out?

Yes. There's nothing one-time in nature. I think if you remember back to Q2, we had certain levers hit in Q2 that may or may not could have hit in Q3. We also provided some color on what recurring revenue growth would be in Q3 at around 10.5%. And for the fourth quarter, we said that would be 11%. So it came in right above where we thought it would.

Okay. Great. Regarding the workforce levels, were they in line with your expectations? One of your competitors mentioned that they expect levels to remain flat for the rest of the year. Is that your perspective as well?

We've only seen stability in the employment numbers, and we're not seeing it react any differently than what it has in the past with the exception of the COVID time period.

This is Jason John for Alex Zukin. So more of a high-level question, you've talked about you guys are less than 5% TAM penetration right now. What is the latest thinking on how to actually accelerate that new logo acquisition and at the same time, maintain double-digit recurring growth even beyond the FY '25 time frame? And where do you see the greatest white space opportunity in terms of modules, customer segments or verticals?

I think our biggest opportunity is going to come from new logo adds. I mean we're very focused on that right now. We're streamlining the ability for our prospects to see the value a lot easier. We've shifted the value and what we're focused on, I would say, shifted that enhanced the value that our clients can receive. We're seeing that, I mean we have clients that have left that come right back, and we have clients that are getting great value out of the software now. And so I think it's our opportunity as we move forward, continue to make it easier for prospects to buy from us, which you have to have enhanced sales skills, and you have to have a product that actually delivers the value that you're promising. And I feel really good about the work that we've done in both of those areas that set us up really well as we continue into both next year and the future.

Great. And as you previously mentioned, the FY '25 free cash flow will be similar to last year. And given your comment that the AI-related CapEx investment are largely completed in this quarter, does that free cash flow outlook still hold? And should we view that Q3 as the peak quarter for the CapEx investment?

Yes. Well, I was just saying I don't know of any major CapEx opportunities for next year or even the year after from a CapEx perspective.

So I want to spend a moment on the product. And now with IWant that you have executives using the product more, are there opportunities in your mind to beyond just AI, build more products on the platform, which serve a broader set of use cases with your clients?

Yes, absolutely that we're focused on that. We're putting out a lot of automation right now, and we'll continue to release product sets that create value for our clients. And there's a lot of opportunity there. I mean I'm not going to telegraph all the things that we're working on, but there's a lot more in front of us to automate than what we've even automated up to this point. Decision fatigue is real. And when it exists in the HCM business and the HCM market, it exists in every single module that we have, there are opportunities to automate. And you do want to automate decisions where you expect a consistent behavior and adherence. And so we've been focused on that as we've created our software. We're getting a lot of positive responses from both prospects and clients around that. I think as you move into the future, we'll have a lot more of that. And of course, then also we'll be automating a lot more areas of the HCM process.

Great. And then maybe just a quick one about how you're seeing the new offices ramp? And any change in your philosophy in terms of how you're thinking about adding sales capacity as we go into next year?

We have shifted our focus on developing sales rep managers for our backfill. We are optimistic about the next couple of years as we aim to expand and open more offices. Our progress hinges on success at the sales rep and sales manager levels. Therefore, all our efforts are geared towards achieving greater success than we have previously experienced. This year has been very successful, and it could potentially be a record year. However, I believe there are opportunities to leverage the strong value of our product to accelerate growth. We are currently concentrated on this as an organization.

In terms of IWant, are there any initial signs of it driving increasing product attach rates to date?

Yes. With IWant, the more of our product you use, the more information you can access. It's important because IWant also eliminates the need for navigation. New employees typically receive some level of training on our system, but with IWant, we aren't seeing that necessity for new arrivals. You simply request what you need, and it directs you there. Changing usage patterns can be challenging, and a change should only occur if there's a chance for greater efficiency or quicker access. We're observing this with newly onboarded employees as well as traditional users who may not have been fully utilizing all the modules available to them.

Great. And then in terms of the 540 employees impacted by the recent layoff announcement there, can you talk about expectations surrounding annualized cost savings and how much of that will be reinvested back into the business?

Yes, that will be part of our guidance for next year. We are concentrated on automation, and I want to clarify that implementing automation does not necessarily mean we are reducing staff levels. I wouldn't want to experience that again. However, I believe that as we look ahead, there will be opportunities for us to improve efficiency without employees losing their jobs without any fault of their own.

Bob, regarding the fourth quarter guidance, you mentioned in the past that fourth quarter growth should be the highest of the year; however, the guidance is a bit lower than what we saw in the second and third quarters. Considering the strong performance in the third quarter, one would expect the fourth quarter to benefit from that. Is this a matter of being conservative, or should we consider other factors when looking at fourth quarter recurring revenue? Additionally, is fourth quarter a good indicator for next year's exit rate?

Yes, it's above the third quarter number. I mentioned earlier that there were some factors in the second quarter that might have influenced the third quarter results. However, there’s nothing to be concerned about as we move into next year or the upcoming quarter. We are pleased with our current position and the momentum we've experienced over the past six months as we approach 2026. Our guidance reflects what we can currently observe. It's important to remember that the fourth quarter includes bonus runs and unscheduled runs, so we don't yet know how those will impact our results.

That's fair, and I appreciate that. And just one quick follow-up. You talked about kind of spending on marketing for IWant. How do we think about the timing of those kind of investments playing back from a top of funnel to conversion perspective?

I mean we spend very well on marketing. We measure it on a weekly basis. Our marketing spend is very strategic, and we would expect a return from our marketing dollars. There is a point where you can get a diminishing return off the amount that you spend, and we're always mindful of that as we focus on marketing and our growth initiatives for both the fourth quarter and beyond.

If you look at the strong bookings from the past few quarters, I'm curious about how this has impacted revenue in Q3 and Q4. Did some projects that began earlier in the year get delayed to Q4 or 2026? I’d like to understand how this might be affecting the revenue upside for Q3.

No. I mean when a deal starts in a quarter matters. If I start the deal at the very first of the quarter, I get 100% of the revenue dollars for that quarter. If I started the last month of the quarter, I'm getting one-third of the revenue dollars for that. So in any given quarter, you have some of that happen. But I don't have anything to call out of any changes of what we expected or any difference from what we expected out of book sales and starts for the third and fourth quarter.

This is Phil on for Siti. It sounds like IWant is pretty differentiated in the market. Is there an opportunity to eventually maybe monetize the product more directly? Or should we view this as more of like a retention and module cross-sell play?

Well, IWant came out in July, we have 100% of our clients and all of their employees have it. So I would think that you would kind of look at the monetization of IWant coming through increased sales and increased retention as we move forward over time with a differentiated strategy. Again, IWant helps you access value and automation that's been created. So IWant is a part of it, but there's a lot more there of value. Again, it's not something I want to sit here and telegraph all the things that we're doing. But all of that to say is if you're talking to our clients today, I think you're going to find a different value achievement that they have today maybe than what they had a couple of years ago. And then I think as you look into the future, that continues to accelerate.

If I reflect on the stock performance so far this year and the upcoming catalysts, I believe we are improving our execution strategy. Our sales team is becoming more effective, and we should soon see a reduction in data center build-out expenses, which will likely increase our free cash flow. These factors are all positive for the stock. However, this quarter's numbers are not as strong as we would like. There is significant opportunity ahead, primarily tied to execution. I wonder what could go right in terms of execution over the next few quarters to help us return to growth rates of 12% to 14%. We are also anticipating an improvement in cash flow, but there may be challenges that could make achieving this difficult.

Yes. Well, we're focused right now on revenue growth. I really feel good about all the work that we've done to set ourselves up in every other area. And so we're really focused on that. That doesn't mean we're not focused on product innovation, and we're not focused on service and the full client value achievement. I just feel like we've set ourselves up very well now to attack the revenue growth opportunity. I'm not confirming what our growth rates are going to be next year, and we're not setting guidance right now. But what I will say is that over the last two years, we've done a significant amount of work that needed to be done throughout our organization. And as we sit here today, we're all focused on one thing, and that's capturing more market share, and that's available to us now. We have a very differentiated product. It's meaningful. It's not a brochure. It's something you actually achieve value from once you start using it. And so as time goes on, I think we're going to have more and more opportunities to create greater distance. I do think the more growth you have, obviously, with strong margins in both operating, adjusted EBITDA and others, that's going to be accretive to the rest of our financial profile, including free cash flow conversion and a lot of the other things that you spoke about as we look into 2026.

You talked about IWant moving the impediments to value for customers with no change management required to use it. We see some AI systems out there that users may use initially, but then go back to how they've operated before. Can you share a little bit about the ramp and consistency of usage you're seeing so far? I think that would be helpful in demonstrating the stickiness of the product.

Sure. Well, IWant is a quicker way to access this data and information. First of all, it's the only way to access it for certain people because they were never set up on any of the systems. I, as a CEO, am not set up on our benefit system to go run benefit information. I'm not set up on our applicant tracking or talent acquisition system. I'm not set up on our payroll to run all the payroll stuff or HR or any of it, expenses, any of it. With IWant, I can go in, and I get access to everything. I don't need to know how to use it. I don't need to know how to do anything. I just tell it the information that I want. If I'm needing to navigate through something as an employee or a manager or what have you, same thing. I can both access information or it will put me where I need to be, to be able to make these changes. And so we're continuing to both do that through IWant as well as the functionality you're accessing is more automated today as well. So you really attack it from both sides. But IWant is removing the impediments of usage that were there in any level of complicated usage, and it speeds everything up. And so you do see new employees utilizing it because it's just a much quicker way for them to either get to where they need to go or be able to pull information. We're not seeing people use it a couple of times and then stop using it. I will say that when you looked at it in the early days, people didn't know how to use it. If you ask IWant where the closest pizza restaurant is to you, it's not going to be real successful in answering that question. And so people had to kind of learn how to use it to their benefit. And it's been a short period of time. Again, we've had IWant out since July. And every client we have has it and all their employees do now.

And just on gross margins, are you guys doing anything to optimize the usage of GPUs to better handle the millions of queries you're already seeing, whether it be in the underlying large language model or just teaching users what they can and can't do? And can that over time, potentially extend the runway of these GPU investments as you get more experience running these workloads in your own data centers?

Yes. I mean, obviously, there's a lot you have to do to optimize. It matters how many times you're hitting it. It matters how you're filtering through. We use these things to also look at nonresponse rates and everything else. So there's a lot that we go through to be able to analyze. And this is a daily analyzation of what's going on within our product. So I don't want to describe everything that we're doing. It does matter though, how you develop something to how much capacity of the GPU you're going to actually utilize or need. And we've gone through those processes. That's kind of what I talked about of you have to load test for lack of a better word, what your expectations are on simultaneous inquiries and responses. And so we run through that. And obviously, we work to continue to make it more and more efficient as we move forward. Again, we did make a significant purchase in what we went to set up. We didn't set up a little bit of a process here. We knew 100% of all of our clients would be on it. And so we made the purchase to meet that. We also looked at utilizing public cloud type data centers, if you will, to be able to host for us and utilizing their GPUs. And with where we see ourselves going in the future and what the costs were associated with just being able to handle our current load, initial load for IWant, we felt it better for us to go ahead and just set up and buy our own plus that way we have control over it, and it's operating just as all the rest of our business has for the last 27 years of operating our own data centers. So it's really worked for us. I do think it's going to be a key differentiator into the future. And I think as our competitors actually take it from a brochure and an earnings call to install it at a client level, I think you'll start to see maybe either some changes in their financials or what they do with that. But our AI is costing us money, and you saw that being spent in the third quarter.

All right. Well, I want to thank everyone for joining the call today. We look forward to speaking with many of you at the UBS Conference on December 1 in Scottsdale and the Barclays Conference in San Francisco on December 10. I'd like to thank our employees for their contributions throughout this year and our clients for their continued commitment to Paycom. With that, operator, you may disconnect.