PAYC Cconference Call tidbits

We expanded our R&D group, growing adjusted R&D cost to 8% of revenue for the full year. We have always been very efficient with our R&D spend. Our high productivity has been enabled by the fact that our solution was based on a single data base.

The ACA law could possibly be totally repealed so that there no longer would be a requirement for businesses to report employee information. With that possibility in mind, if this was the last month for ACA billing and next month it is gone, we estimate that we would need to replace just 3% of our revenue for the remainder of the year. As a reminder, we don’t just assist our clients with tax and regulatory compliance, we provide a comprehensive set of software solutions including recruiting, compensation, training, HR, benefits admin, and many others. So while the immediate elimination of ACA would have a minor impact on our revenue from some of our current clients, it wouldn’t impact our overall value proposition, or our new business on-boarding pace.

We are not giving 2018 guidance today but I can tell you that we are set up to be a very good grower over the next several years

And as far as the guidance, I am unaware of any company that had a higher growth rate in our industry then us last year. I am also unaware of any company that’s guiding to a higher growth rate then us this year. So I think we are coming off the toughest comp out there, and we are pretty proud about what’s going on, and all indications from our sales staff (which I stay close to), is that we are in really good shape as we head into this year.

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That is interesting, because TD earnings estimates for 2017 is only $1.02 vs $0.97 for 2016. Clearly not very impressive. It appears that the market doesn’t believe the earnings estimates.

Randy
Long PAYC

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