My previous investment thought on Paycom Software, Inc. (NYSE: PAYC ) was a buy rating because the business was moving in the right direction, with sales execution improving, better user satisfaction, and the international growth I focus on long-term investments while incorporating short-term shorts to uncover alpha opportunities. My investment approach revolves around bottom-up analysis, delving into the fundamental strengths and weaknesses of individual companies. My investment duration is the medium to l ...

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Core Insights - Paycom Software, Inc. (PAYC) reported a total revenue increase of 10.5% year over year to $483.6 million for Q2 2025, exceeding the Zacks Consensus Estimate of $472 million, primarily driven by a 12.2% rise in recurring revenues [1][9] Revenue Breakdown - Recurring revenues reached $455.1 million, accounting for 94% of total sales, and surpassed the model estimate of $445.5 million, largely due to the growing adoption of automation tools, Beti and GONE [2][9] Product Insights - Beti, a payroll management tool, has seen strong adoption, contributing to client satisfaction and retention, with some former clients returning due to its effectiveness [3][9] - GONE automates time-off requests and vacation tracking, enhancing operational efficiency and accuracy, which supports the increase in recurring revenues as more clients utilize these features [4][9] Future Outlook - Management anticipates that Beti and GONE will continue to be significant contributors to recurring revenue growth in the latter half of 2025, alongside the recent introduction of the new AI tool, IWant [5]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission File Number: 001-36393 Paycom Software, Inc. (Exact name of registrant as specified in its charter) Delaware FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 or (State or other juri ...

Core Insights - Paycom Software, Inc. (PAYC) shares increased by 9.7% after reporting better-than-expected Q2 2025 results, with non-GAAP earnings of $2.06 per share, surpassing the Zacks Consensus Estimate of $1.78 [1][9] Financial Performance - The company's bottom line rose by 27.2% year over year, driven by higher revenues, improved operating efficiency, and lower income taxes [2] - Paycom's revenues reached $483.6 million, exceeding the consensus estimate of $472 million, marking a 10.5% year-over-year increase, attributed to sales momentum, international expansion, and AI integration [3][9] - Recurring revenues, which constitute 94% of total revenues, grew by 12.2% to $455.1 million, surpassing the estimate of $445.5 million [4] - Adjusted gross profits increased by 12.4% to $402.3 million, with the adjusted gross margin expanding by 140 basis points to 83.2% [5] - Adjusted EBITDA rose by 24.2% year over year to $198.3 million, with the adjusted EBITDA margin improving from 36.5% to 41% [5] Cash Flow and Balance Sheet - As of June 30, 2025, Paycom had cash and cash equivalents of $532.2 million and no debt [6] - The company generated operating cash flow of approximately $122.5 million in Q2 and $305 million in the first half of 2025, while returning $21.8 million in dividends and repurchasing $32.6 million in stock [6][7] Guidance Update - Following the strong Q2 performance, Paycom raised its 2025 revenue guidance to a range of $2.045-$2.055 billion, up from the previous range of $2.023-$2.038 billion [8] - The company expects recurring revenues to grow by 9% year over year and increased its forecast for revenues from interest on client-held funds to $113 million [8] - Adjusted EBITDA guidance for 2025 was raised to between $872 million and $882 million, indicating an EBITDA margin of approximately 43% at the midpoint [10]

Company Performance - Paycom Software (PAYC) reported quarterly earnings of $2.06 per share, exceeding the Zacks Consensus Estimate of $1.78 per share, and up from $1.62 per share a year ago, representing an earnings surprise of +15.73% [1] - The company posted revenues of $483.6 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 2.46% and increasing from $437.51 million year-over-year [2] - Paycom has consistently outperformed consensus EPS and revenue estimates over the last four quarters [2] Stock Performance - Paycom shares have increased approximately 8.9% since the beginning of the year, compared to a 7.1% gain for the S&P 500 [3] - The stock's immediate price movement will largely depend on management's commentary during the earnings call [3] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $1.93 on revenues of $488.9 million, and for the current fiscal year, it is $8.95 on revenues of $2.03 billion [7] - The estimate revisions trend for Paycom was unfavorable prior to the earnings release, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Industry Context - The Internet - Software industry, to which Paycom belongs, is currently ranked in the top 32% of over 250 Zacks industries, suggesting a favorable environment for stocks in this sector [8]

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $484 million, an increase of 11% year-over-year, with recurring and other revenue growing by 12% to $455 million [12][16] - GAAP net income was $89 million, or $1.58 per diluted share, while non-GAAP net income increased by 27% to $117 million, or $2.6 per diluted share [12][13] - Adjusted EBITDA reached $198 million, reflecting a 24% increase year-over-year, with an adjusted EBITDA margin of 41%, up 450 basis points from the prior year [13][14] - Cash and cash equivalents at the end of Q2 were $532 million, with no debt, and the average daily balance on funds held for clients was approximately $2.6 billion, up 10% year-over-year [14][15] Business Line Data and Key Metrics Changes - The introduction of the AI-driven product, iWant, is expected to enhance client engagement and satisfaction, potentially increasing recurring revenue [6][10] - The sales team has set new records every quarter, indicating strong performance across business lines [10] Market Data and Key Metrics Changes - The company has less than 5% of the total addressable market in the U.S., indicating significant growth opportunities [90] - The competitive landscape has shifted, with recent consolidations making the market less competitive for the company [90][91] Company Strategy and Development Direction - The company is focusing on innovation and automation, with significant investments in AI and product development, particularly with the launch of iWant [10][14] - The marketing strategy for iWant includes gradual activation for existing clients, with expectations to activate all clients by the end of the quarter [30][32] - The company plans to increase marketing and R&D budgets in the second half of the year to support the iWant product launch [17][59] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand environment and the company's ability to create demand, with expectations for continued strong performance in the second half of 2025 [90] - The management team highlighted the positive client feedback regarding iWant and its potential to revolutionize user interaction with the software [9][92] Other Important Information - The company has been recognized by various publications for its sales organization and workplace culture, indicating a strong internal environment [10][11] - The board approved a quarterly dividend of $0.0375 per share, reflecting the company's strong financial position [15] Q&A Session Summary Question: How should iWant be viewed in terms of business impact? - Management views iWant as a revolutionary tool that simplifies user interaction with the system, enhancing overall engagement and efficiency [21][25] Question: What is the marketing plan for iWant? - The marketing plan includes gradual activation for clients, with training on usage prompts to ensure effective implementation [30][32] Question: How will iWant be monetized? - iWant is expected to be part of the base platform, enhancing overall product adoption and retention rather than being directly monetized [37][38] Question: What were the key drivers for the strong quarter? - Record sales and operational efficiencies contributed to the strong performance, with management noting the impact of automation on hiring and margins [42][43] Question: How is the demand environment and competitive landscape? - The demand environment remains strong, with management noting a decrease in competition due to recent market consolidations [90][91] Question: What is the outlook for future office openings? - The company is seeing success in new office openings, with plans for more regular launches as sales performance improves [99]

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $484 million, an increase of 11% year-over-year, with recurring and other revenue growing by 12% to $455 million [13][14] - GAAP net income was $89 million, or $1.58 per diluted share, while non-GAAP net income increased by 27% to $117 million, or $2.60 per diluted share [13][14] - Adjusted EBITDA rose by 24% year-over-year to $198 million, with an adjusted EBITDA margin of 41%, reflecting a 450 basis point increase [14][15] - Cash and cash equivalents at the end of Q2 were $532 million, with no debt [15] Business Line Data and Key Metrics Changes - The introduction of the AI-driven product "iWant" is expected to enhance client engagement and satisfaction, potentially increasing recurring revenue [6][10] - The sales team has set new records every quarter, indicating strong performance across business lines [11] Market Data and Key Metrics Changes - The average daily balance on funds held for clients was approximately $2.6 billion, up 10% year-over-year [15] - Interest on funds held for clients declined by 11% year-over-year to approximately $28 million [13] Company Strategy and Development Direction - The company is focusing on innovation, particularly in AI and automation, to enhance client value and drive sales growth [11][15] - The launch of iWant is seen as a transformative step in how clients interact with the software, aiming to eliminate the need for extensive training [6][10] - The company is raising its revenue and adjusted EBITDA guidance for the year based on strong first-half results [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand environment and the potential for continued growth, citing less competition in the market [94][95] - The company anticipates that iWant will significantly impact new sales, retention, and overall client engagement [100] Other Important Information - The company plans to increase marketing and R&D budgets in the latter half of the year to support the iWant product launch [18] - Paycom has been recognized in various rankings, including being listed among the best companies by Time Magazine and Newsweek [11] Q&A Session Summary Question: How does iWant fit into the overall business strategy? - Management described iWant as a revolutionary tool that simplifies user interaction with the system, enhancing overall client experience and engagement [20][22] Question: What are the implications for gross margins with increased AI usage? - Management acknowledged the need for additional investment in technology but expects margins to improve as automation increases efficiency [28] Question: What is the marketing plan for iWant? - The marketing plan includes activating clients gradually, with expectations to have 15-20% of clients activated shortly after launch [31][32] Question: How will iWant be monetized? - iWant is expected to be part of the base platform, enhancing overall product adoption and retention without direct charges for its use [39][41] Question: What was different in Q2 compared to expectations? - Management noted record sales and efficiency gains as key factors contributing to better-than-expected performance [43][45] Question: How is the demand environment and competitive landscape? - The demand environment remains strong, with management noting a decrease in competition due to recent market consolidations [94][95]

Exhibit 99.1 Paycom Software, Inc. Reports Second Quarter 2025 Results Second Quarter Revenues of $484 million, up 11% year-over-year Second Quarter GAAP Net Income of $89 million, representing 19% of total revenues, or $1.58 per diluted share Second Quarter Non-GAAP Net Income of $117 million, or $2.06 per diluted share Second Quarter Adjusted EBITDA of $198 million, representing 41% of total revenues OKLAHOMA CITY – August 6, 2025 – (BUSINESS WIRE) – Paycom Software, Inc. ("Paycom," "we" and "our") (NYSE: ...

Key Takeaways PAYC's Q2 revenues are projected at $472M, up 7.9% Y/Y on recurring sales and AI-led client growth.AI-enhanced tools like Beti and GONE are likely boosting efficiency, adoption, and retention.Slower hiring and economic uncertainty may have tempered demand for payroll services.Paycom Software, Inc. ((PAYC) is set to report second-quarter 2025 results on Aug. 6, after market close.The Zacks Consensus Estimate for second-quarter earnings is pinned at $1.78 per share, indicating a year-over-year i ...