Chad R. Richison
Chairman of the Board, President, Chief Executive Officer, Director at Paycom Software
Thanks, James, and thank you to everyone joining our call today. We ended 2021 with a very strong quarter, and I'd like to thank all of our employees for the outstanding effort they put in to making 2021 a great success. I will spend a few minutes on the highlights of our fourth quarter 2021 results. Then I will review some of our notable achievements throughout the year. Following that, Craig will review our financials and our guidance, and then we will take questions. 2021 was a very strong year for Paycom. We extended our platform to the employee even further through innovations like BETI, which enables employees to do their own payroll, and we are seeing very strong adoption and record employee usage as measured by the DDX. Strong demand continues to bolster our sales momentum, and record new client sales in 2021 have positioned us to deliver another year of rapid growth in 2022.
For years, I have been predicting the end of the old model, whereby HR and payroll personnel's routine of inputting data for employees, is replaced by a self-service model that provides employees direct access to the database. The old model is dying and that is good for both the business and the employee. Paycom is leading this transformation. We will continue to automate the processes that generate maximum ROI for our clients. Our 2021 fourth quarter revenue of $285 million came in very strong, up 29% year-over-year. Our full year 2021 revenue of $1,056,000,000 grew 25% compared to 2020. Employee usage, which is at a record high, is a key driver of revenue retention, and I'm pleased to announce that Paycom's annual revenue retention rate increased once again to 94% this year, which is a validation of the strong ROI our clients are achieving. Our full year 2021 adjusted EBITDA was $419 million, representing an adjusted EBITDA margin of nearly 40%. The sum of our 2021 revenue growth rate and adjusted EBITDA margin resulted in us hitting the Rule of 65, reflecting the solid demand for our solutions and the profitability of our business model and was well ahead of our stated goal to reach the Rule of 60.
As you can see with our full year 2022 guidance, we are starting strong with the Rule of 65. Our marketing plan throughout 2021 continue to perform well, delivering strong demo leads throughout the year as we spent aggressively on advertising. More importantly, our sales teams are successfully closing these leads, which is the key driver to our revenue growth. In her first year as our Chief Sales Officer, Holly Faurot has executed fabulously on her sales plan, and I'm very pleased with the coordination we are seeing across the sales and marketing organizations. We are capitalizing on the shortcomings of disparate HCM systems that are failing both the employees who struggle to use them and the businesses that struggle just to make them work. Our proven single-database platform just works better, and we continue to differentiate ourselves with easy-to-use solutions that enhance the employee experience and generate maximum ROI for our clients.
In response to increasing demand in 2021, we expanded the upper end of our target client size range from 5,000 to 10,000 employees as we are seeing success selling to larger clients. We are also concurrently expanding geographically to meet the increased demand. In addition to the Manhattan office we announced a few months ago, we recently opened four outside sales offices in the following locations: Las Vegas, Jacksonville, New England and South Jersey. We have now opened five offices in the last five months. That said, I'd remind everyone that we still only have approximately 5% of the TAM today, so there's plenty of runway ahead to expand and continue to capture market share. Paycom received national recognition from several organizations in 2021. Our latest innovation, BETI, was awarded a Top HR Product of the Year honor. As a workplace, we earned a top 20 ranking in best places to work in the U.S. by Top Workplaces, and we were named a top workplace in Oklahoma for the ninth consecutive year. We were also named the best company for women to work. These awards are a testament to our execution and thriving corporate culture.
As of December 31, 2021, our headcount stood at 5,385 employees, up 28% year-over-year as we continue to have great success attracting and retaining high-quality talent to further bolster our future growth. Additionally, I want to congratulate the 2021 Paycom Jim Thorpe Award winner, Coby Bryant from the University of Cincinnati. This award recognizes the most outstanding defensive back in college football and memorializes Jim Thorpe, who is one of the greatest all-around athletes in history. Jim Thorpe also happened to be in Oklahoma. To sum up, we are executing well on all fronts with innovative solutions, high employee usage and increasing revenue retention. Robust market demand and our proven go-to-market strategy are fueling strong new client revenue momentum. I'd like to thank our employees for help making 2021 such a strong year, and we are set up to do even better in 2022 and we're off to a great start.
With that, I'll turn the call over to Craig for a review of our financials and guidance. Craig?