Paycom Software (PAYC) investor relations material

Business transformation and automation

• Transitioned from a single-database HR system to a fully automated, command-driven platform, reducing manual navigation and decision fatigue for users.

• Automation tools like Gone and Betty streamline HR tasks, providing consistency and removing barriers to value.

• AI assistant iOne enables users to interact with the system via natural language, eliminating the need for training or navigation.

• Rapid adoption of iOne, with rollout expanding from 10 to 2,000 clients in two weeks and targeting 100% client coverage.

• Automation strategy is central to both client value and internal efficiency, driving margin expansion.

AI product strategy and differentiation

• iOne operates across the entire HR system, leveraging a single source of truth for accurate, context-aware responses.

• AI models are designed to understand user intent and provide either direct answers or guide users to relevant information.

• Feedback from clients describes iOne as transformational, significantly reducing effort in HR processes.

• iOne supports multiple languages, enabling broader accessibility without additional training.

• Future AI roadmap includes more advanced automation, complex analysis, and direct data changes via AI commands.

Financial and operational investment

• Significant, front-loaded CapEx investment in AI infrastructure, increasing CapEx from 9% to 15% of revenue for the year, but expected to drop below 10% next year.

• Managing proprietary data centers allows for rapid deployment and long-term cost savings, with ongoing AI costs projected to be 95% lower than competitors.

• EBITDA to free cash flow conversion expected to improve as AI investments normalize.

• Tax changes will provide a temporary cash benefit in the second half of the year.