Investments in AI and self-service technology are making HR functions including payroll easier than ever. And if payroll companies’ recent earnings are any indication, that’s not hurting their bottom lines.
As these solutions have gained traction, payroll services companies wrapped up 2022 with strong earnings:
- Paychex reported a total revenue increase of 7% YoY to $1.2 billion for the quarter ended November 30.
- Paycom boasted total revenue of $334.2, up 30% YoY for the quarter ended September 30.
- Paycor saw total revenue of $118.3 million, an increase of 28% YoY for the quarter ended September 30.
It’s all about self-service and AI. Paycom’s president and CEO, Chad Richison, highlighted sales of Beti—an automated payroll solution launched in July 2021—on his company’s earnings call, touting the platform’s ability to allow employees to change their own payroll information, which, he said, protects companies from risk while avoiding “the negative consequences associated with your pay not matching what you expected to be paid.”
“We’re not short on opportunities right now,” Richison said on the call. “We’re out there making businesses more efficient by making the employees do the payroll themselves. I don’t see why that would slow down for us.”
Paycom, he said, plans to continue shifting marketing and sales efforts to the product, which he said is used by about 50% of its current clients.
Top brass at Paychex, meanwhile, boasted efforts of the last several years “to look much more like a technology company” than a “perfectly well-functioning tech services business.”
Paychex in September launched Paychex Voice Assist, an AI feature for its full-service payroll and HR platform, Paychex Flex. Additional solutions and features for Flex were announced in November, including for recruiting, onboarding, and time and attendance management.
“The digital adoption that’s happening in the marketplace is a benefit [to Paychex],” President and CEO John Gibson said on the company’s earnings call. “Employees and employers don’t want to talk to us anymore…they want to be able to do it themselves whenever they want to do it…We’re investing in that looking for ways to drive efficiencies there.”
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Efficiency is the name of the game at Paycor, too. In October, it acquired Talenya, an AI-driven recruiting platform that aims to provide its clients faster, cheaper talent sourcing. Though CFO Adam Ante noted plans to integrate the two platforms, he said it isn’t expected to affect financials this fiscal year.
Looking forward, Ante said on the call that products like Talenya don’t require the same level of customer servicing as its payroll services, so they can help pad Paycor’s margins.
Don’t forget marketing and advertising. Raul Villar Jr., Paycor’s CEO, said the Cincinnati-based company's Bengals and PAC12 sports sponsorships have driven brand awareness and new business development.
Villar said Paycor counted more digital impressions in the last quarter than the entire previous fiscal year, and suggested a relationship between the deal and visibility in tier-one markets outside the Midwest.
Over at Paycom, officials said marketing has also impacted sales.
“I think our marketing has changed dramatically, even since the beginning of the pandemic when we start spending,” Richison said. “We’re able to do things with, I’m not gonna call them indirect leads, but softer employee-driven leads that come from rank-and-file employees that are just tired of dealing with the consequences of having their check wrong.”—AD
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