Chad Richison - Founder, Chairman, President & CEO
Thanks, Craig and thank you to everyone joining our call today. I will spend a few minutes on the highlights of our fourth quarter 2018 results, review some of our notable achievements in 2018, and also discuss our goals for 2019. Following that, Craig will review our financials and then we will take questions.
2018 was a stellar year for Paycom with many achievements as we enhanced our offering, grew our team and continued to fulfill our mission to be the premier human capital management software provider to companies across the U.S.
We are making major shifts to drive innovation in our industry. I want to thank all of our employees who have become pioneers in this [REMOVIDO]. I believe we will look back on 2018 and realize that this year was just the beginning of a new way businesses and their employees leverage HCM technology to drive efficiencies and create deeper relationships with their staff.
We finished the year with very impressive results. Our 2018 fourth quarter revenue of $150.3 million represented growth of 32% over the comparable prior year period. Our full year 2018 revenue of $566.3 million grew 31% compared to 2017.
Our full year 2018 adjusted EBITDA was $240.9 million, representing an adjusted EBITDA margin of 43%. Our success allowed us to return value to our stockholders by repurchasing over 500,000 shares in the fourth quarter of 2018. With this combination of revenue growth and margin, we achieved the rule of 70, and this places Paycom in a very small group of companies with this profile.
We believe this strong performance is due at least, in part, to our strategy of working to promote employee usage of the Paycom system. We are educating our current and prospective clients about the benefits they can obtain when their employees have a direct relationship with the HR database.
This is a powerful message that resonates across every industry and within an entire organization from the C-suite to entry-level employees. We will continue to pursue this strategy in 2019, and are excited about the value we are helping create for our clients.
As we continue to drive employee usage of our software, we are providing our clients not only world-class technology but also, strategies to help their employees fully realize the value of our application. We have found that when an organizations employees have a direct relationship with the database, it creates significant efficiencies, which can result in a direct impact to our client's bottom line.
In fact, a recent study by Ernst & Young shows, on average, a single HR task or data entry point without self-service, costs an organization $4.39 to complete. If you think about that across the entire employment life cycle, the opportunities for cost savings for employers are substantial. This study examined tasks across the entire HR spectrum and identified many potential areas for cost savings that can be obtained with self-service technology.
These findings underscore our value proposition and imply that companies will continue to embrace HR technology to create efficiencies and drive enterprise value. We believe that Paycom solution is the best option to enable companies to achieve this goal.
I'm also pleased to share that our retention rate for 2018 increased to 92%. This rate had been steady at 91% for the prior six years. We believe this improvement was also helped at the margin by our employee-usage strategy. We're excited and gratified by this progress.
Looking at other areas of achievement in 2018, we opened four new sales offices, Salt Lake City, Rochester, Columbus and San Diego. This brings us to 49 [ph] teams. Our newer offices have been performing well per our expectations. As we look to 2019, we plan to open additional sales offices and look forward to sharing that news with you soon.
As of December 31, 2018, our headcount stood at 3,050 employees, as we have hired people across our organization to help build the foundation for our future growth. Recently, we welcome new personnel to bolster our existing management team in areas of learning and development, finance, marketing and core operations.
These individuals bring years of valuable experience and have worked for companies like Ernst & Young consulting, Procter & Gamble, ConAgra brands, PepsiCo, IBM and PricewaterhouseCoopers, just to name a few. We are eager to utilize their talents to help further our momentum.
Turning to other areas of expansion, we are excited to announce that we will soon break ground on our Texas operation center in Grapevine, Texas. Late last year, we finalized our agreement with the city of Grapevine, which includes a $5 million tax incentive. We anticipate we will break ground on this new project in the first half of 2019, and that it should take 18 to 24 months to complete. We expect this 14-acre campus will eventually house 1,000 jobs.
Paycom received national recognition from several organizations in 2018. In the fourth quarter, we earned three additional accolades. For the sixth consecutive year, we earned Top Workplace in Oklahoma Honors, and Glassdoor recognized us as one of the best places to work among large-sized U.S. companies in 2019. Both of these top workplace awards are extremely rewarding and a testament to the culture we continue to develop and grow.
Additionally, Paycom made Deloitte & Touche Technology Fast 500 list, a list of 500 fastest-growing technology, media telecommunication, life science and energy tech companies in North America.
Lastly, I want to congratulate the 2018 Paycom Jim Thorpe Award winner, Deandre Baker, from the University of Georgia. This award recognizes the most outstanding [indiscernible] back in college football and memorializes one of the greatest athletes in Jim Thorpe, who also happens to be an Oklahoman. Deandre showed true grit and determination throughout his collegiate career, and we're proud that we are able to honor his achievement. To sum up, 2018 was a banner year for Paycom, and we're excited to make 2019 another year of success.
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