UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 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 March 31, 2025 or ☐ 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 (State or other jur ...

Paycom Software, Inc.'s (PAYC) shares gained 2.1% during Wednesday’s extended trading session after the company reported better-than-expected first-quarter 2025 results. The online payroll and human resource technology provider reported non-GAAP earnings of $2.80 per share, which beat the Zacks Consensus Estimate of $2.60.Moreover, the bottom line increased 8% year over year, mainly driven by higher revenues, operating efficiency and lower share counts. Paycom has an impressive earnings surprise history. It ...

Paycom Software (PAYC) came out with quarterly earnings of $2.80 per share, beating the Zacks Consensus Estimate of $2.60 per share. This compares to earnings of $2.59 per share a year ago. These figures are adjusted for non-recurring items. There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations ...

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $531 million, a 6% increase year-over-year, with recurring and other revenue reaching $500 million, up 7% year-over-year [12][16] - GAAP net income was $139 million, or $2.48 per diluted share, while non-GAAP net income was $158 million, or $2.80 per diluted share [13] - Adjusted EBITDA for the quarter was $253 million, a 10% increase year-over-year, representing a 48% margin, which is a 180 basis point increase from the prior year [13][14] - Cash and cash equivalents at the end of Q1 2025 were $521 million, with no debt [14] Business Line Data and Key Metrics Changes - The automation solutions, such as "Gone" and "Betty," are driving significant ROI for clients, with "Gone" delivering up to 800% ROI [6][7] - Sales in Q1 2025 saw a meaningful increase in book sales and the number of units sold compared to the same period last year [9][10] - The company successfully onboarded a 2,500-employee restaurant group, showcasing the effectiveness of its integrated software solutions [10] Market Data and Key Metrics Changes - The average daily balance on funds held for clients was approximately $2.9 billion in Q1 2025 [14] - Interest on funds held for clients declined 10% year-over-year to approximately $31 million due to rate cuts in 2024 [12] Company Strategy and Development Direction - The company is focused on full solution automation and enhancing client ROI through product innovations and automation initiatives [6][17] - Paycom aims to expand its international presence, particularly in Europe, following its authorization as a payment institution from the Central Bank of Ireland [45][59] - The company continues to invest in AI and R&D to improve operational efficiencies and client service [14][17] Management's Comments on Operating Environment and Future Outlook - Management noted that there has been no significant impact from macroeconomic pressures such as tariffs, and they continue to monitor the situation [21][73] - The company raised its full-year revenue guidance to between $2.023 billion and $2.038 billion, expecting an 8% year-over-year increase at the midpoint [16] - Management expressed confidence in the company's strong momentum and ability to deliver better results throughout 2025 [11][17] Other Important Information - The company paid approximately $21 million in cash dividends during Q1 2025 and has $1.47 billion remaining under its stock repurchase plan [15] - Paycom was recognized as one of America's best large employers by Forbes and ranked as one of the most trustworthy companies in America by Newsweek [10] Q&A Session Summary Question: Impact of tariffs and volatility on business - Management indicated limited direct exposure to tariffs and is monitoring the situation closely [21][22] Question: Examples of efficiency gains impacting EBITDA - Management highlighted automation in expense management and reduced service tickets as key areas of efficiency gains [23] Question: Status of new offices and their ramp-up - New offices are expected to mature in about 24 months, but the company is better prepared for quicker ramp-up due to prior experience [27] Question: Sales process improvements - Management noted enhancements in sales training and processes leading to increased sales and new client acquisitions [31] Question: Free cash flow dynamics and mid-market opportunity - Management reported strong traction in the mid-market segment and emphasized ongoing improvements in free cash flow [38][40] Question: International expansion and payment institution authorization - The authorization allows for better operations in Europe, with a focus on U.S.-based companies with international operations [45][59] Question: Gross retention trends - Management reported positive indicators for retention, including increased client satisfaction and utilization of products [63] Question: Competitor pricing strategies - Management noted no significant changes in competitor pricing or discounting strategies [69] Question: Demand trends amid macro pressures - Management stated that they have not seen any negative impact from macro pressures in April [73] Question: Changes in hiring plans due to AI efficiencies - Management confirmed that while hiring plans have been adjusted, they remain focused on maintaining a high-touch service model [78]

Exhibit 99.1 Paycom Software, Inc. Reports First Quarter 2025 Results First Quarter Revenues of $531 million, up 6% year-over-year First Quarter GAAP Net Income of $139 million, representing 26% of total revenues, or $2.48 per diluted share First Quarter Non-GAAP Net Income of $158 million, or $2.80 per diluted share First Quarter Adjusted EBITDA of $253 million, representing 48% of total revenues OKLAHOMA CITY – May 7, 2025 – (BUSINESS WIRE) – Paycom Software, Inc. ("Paycom," "we" and "our") (NYSE: PAYC), ...

Paycom Software, Inc. (PAYC) is set to report first-quarter 2025 results on May 7, after market close.The Zacks Consensus Estimate for first-quarter earnings is pinned at $2.60 per share, indicating a year-over-year increase of 0.4%. The consensus estimate for the bottom line has been revised downward by 3 cents over the past 60 days.The Zacks Consensus Estimate for Paycom’s first-quarter revenues is pegged at $525.6 million, suggesting a rise of approximately 5.2% from the year-ago quarter’s sales of $499. ...

Core Viewpoint - Paycom Software (PAYC) presents an attractive investment opportunity for those seeking to minimize exposure to tariffs [1] Company Summary - Paycom Software is highlighted as a stock that could be appealing to investors looking to avoid tariff-related risks [1]

Cybersecurity and Data Management Risks - The company faces significant cybersecurity risks, including potential breaches that could harm client trust and lead to reduced usage of its solutions [118]. - The company has experienced unauthorized access incidents through third-party vendors, highlighting vulnerabilities in its data management processes [119]. - The SaaS network infrastructure is critical for operations, with potential disruptions from human error, telecommunications failures, and cyber-attacks [122]. - The company has licensed a third-party large language model (LLM) that processes sensitive data, and any breach or compliance failure could lead to significant legal and financial repercussions [149]. - The use of open source software in applications may expose the company to additional risks, including potential litigation and the requirement to release source code [155]. - The company faces risks related to compliance with evolving privacy and data protection laws, which could result in financial penalties and reputational harm [166]. Competitive Landscape and Client Retention - The company must continuously innovate and enhance its applications to remain competitive in the rapidly evolving HCM software market [125]. - The competitive landscape includes major players like Oracle, SAP, and Workday, which may exert pricing pressures and affect client retention [131]. - The company’s annual revenue retention rate is influenced by client satisfaction, pricing, and competition, with potential declines if clients do not renew or purchase additional applications [133]. - The company’s ability to attract new clients and retain existing ones is critical for its financial health, with potential adverse effects from any decline in client usage [133]. - The company faces challenges in attracting and retaining larger clients, including demand for customized features and longer sales cycles [138]. - The company’s ability to attract new clients and retain existing ones may be impacted by the imposition of sales and use taxes in certain jurisdictions [180]. Leadership and Human Resources - The success of the company is heavily dependent on the leadership of key executives, particularly the CEO, and the potential loss of such leadership could adversely impact operations [139]. - The company must attract and retain qualified personnel, including software developers and product managers, to enhance and introduce new applications, which is critical for revenue growth [140]. - The technology industry is experiencing high employee mobility, making it challenging for the company to retain qualified personnel amidst competition for talent [141]. Regulatory and Compliance Challenges - International expansion efforts present risks, including regulatory compliance, brand recognition, and local market familiarity, which could adversely affect business operations [145]. - The company relies on third-party relationships for essential services, and any failure in these partnerships could negatively impact service delivery and brand reputation [147]. - Compliance costs may increase due to regulatory scrutiny of automation initiatives, particularly those utilizing AI, impacting operations and financial results [158]. - Future legislative and regulatory actions could adversely affect the company's ability to pursue its automation strategy, impacting operations and financial results [159]. - Changes in laws and regulations could increase operational costs, decrease revenues, and complicate the introduction of new applications [162]. - Regulatory changes could render developed applications unnecessary, adversely affecting the company's reputation and business operations [164]. - The adoption of new regulations regarding AI and machine learning may limit the company's operational efficiency and increase costs [171]. - Adverse tax laws or regulations could increase the costs of the company's solutions and applications, negatively impacting business and financial condition [178]. - The company is subject to significant governmental regulation in its background check business, and changes in laws could materially affect revenue and profitability [183]. Financial Performance and Market Risks - The company has recorded a total of $51.9 million in goodwill and $46.2 million in other intangible assets as of December 31, 2024 [193]. - The company is required to maintain a consolidated interest coverage ratio of not less than 3.0 to 1.0 and a consolidated leverage ratio of not greater than 3.25 to 1.0, stepping down to 3.0 to 1.0 by December 31, 2025 [191]. - The company has historically experienced seasonality in revenues, particularly related to payroll tax filing forms processed in the first quarter, which positively impacts recurring revenues [188]. - The company may face increased costs and liabilities due to compliance with evolving employment-related laws and regulations, which could adversely affect financial results [181]. - The company has the potential for significant fluctuations in financial results due to various uncontrollable factors, impacting stock value [187]. - The company may incur damages and expenses from lawsuits related to employment law violations, which could materially affect financial condition [181]. - The company’s guidance for future performance is based on projections that are inherently speculative and may vary significantly from actual results [198]. - The company may seek acquisitions to enhance technical capabilities or growth opportunities, but this could divert management's attention and disrupt operations [160]. - There is a risk that the company may not successfully integrate acquired businesses, which could lead to impairment charges affecting operating results [161]. Economic Conditions and Cash Management - Adverse economic conditions could negatively impact the company’s business, operating results, or financial condition, particularly if clients reduce spending on HCM services [208]. - The company collects and remits client funds to taxing authorities, and any loss of access to these funds could adversely impact its cash position and results of operations [209]. - Uncertainty regarding federal budgetary matters may adversely impact the U.S. economy and affect clients' ability to make timely payments to the company [210]. - As of December 31, 2024, the company had corporate cash and cash equivalents totaling $402.0 million and funds held for clients amounting to $3.7 billion [332]. - The company had available-for-sale securities totaling $24.7 million, which included a U.S. treasury security with an original maturity of two years [332]. - A hypothetical increase or decrease in interest rates of 100 basis points would result in an approximately $23.9 million increase or decrease in interest earned on funds held for clients over the ensuing 12-month period [335]. - An immediate increase in interest rates of 100 basis points would have resulted in a $0.5 million reduction in the aggregate market value of the company's fixed rate securities as of December 31, 2024 [336]. - An immediate decrease in interest rates of 100 basis points would have resulted in a $0.5 million increase in the aggregate market value of the company's fixed rate securities as of December 31, 2024 [336]. - The company’s investments are subject to market risk due to changes in interest rates, which may adversely affect future investment income [333]. - The company’s payment of dividends is at the discretion of its Board of Directors and may change based on financial results and availability of statutory surplus [207].

Core Insights - Paycom Software, Inc. reported better-than-expected fourth-quarter 2024 results with non-GAAP earnings of $2.32 per share, surpassing the Zacks Consensus Estimate of $1.99 and reflecting a year-over-year increase of 20.2% driven by higher revenues, operating efficiency, and lower share counts [1][4] Financial Performance - The company reported revenues of $493.8 million for Q4 2024, exceeding the consensus mark of $481.1 million and showing a year-over-year growth of 13.6%, benefiting from increased sales momentum, international expansion, and AI integration [2][3] - Recurring revenues, which account for 94% of total revenues, improved by 14.5% to $464.8 million, while revenues from the Implementation and Other segment increased to $29 million from $28.5 million in the previous year [3] - Adjusted gross profits rose 14% year over year to $412.6 million, with an adjusted gross margin expanding by 30 basis points to 83.6% [4] - Adjusted EBITDA increased by 21.7% year over year to $214.9 million, with the adjusted EBITDA margin improving from 40.6% to 43.5% [4] Full-Year Performance - For the full year 2024, Paycom's revenues increased by 11.2% to $1.88 billion, surpassing the Zacks Consensus Estimate of $1.87 billion [5] - Recurring revenues rose by 10.9% to $1.76 billion, while revenues from interest on funds held for clients increased by 15.6% to $124.9 million [5][6] - The adjusted EPS for 2024 increased by 5.9% to $8.21, exceeding the consensus mark of $7.87 [6] Balance Sheet and Cash Flow - As of December 31, 2024, Paycom had cash and cash equivalents of $402 million, up from $325.8 million in the previous quarter, and had no debt after paying off all long-term debt at the end of 2023 [7] - The company generated an operating cash flow of approximately $533.9 million in 2024, paid out $84.8 million in dividends, and repurchased $145 million worth of its common stock [7][8] 2025 Guidance - For 2025, Paycom forecasts revenues between $2.015 billion and $2.035 billion, with recurring revenues expected to grow by 9% year over year [9] - The company projects to generate $110 million from interest on funds held for clients in 2025 and expects adjusted EBITDA to be between $820 million and $840 million, translating to an EBITDA margin of approximately 41% at the mid-point [10]

Financial Data and Key Metrics Changes - Full-year 2024 revenue reached $1.88 billion, representing an 11% organic growth compared to 2023 [26] - Fourth-quarter total revenue was $494 million, reflecting a growth of approximately 14% year-over-year [27] - Full-year GAAP net income was $502 million, or $8.92 per diluted share, while non-GAAP net income was $462 million, or $8.21 per diluted share [28] - Full-year adjusted EBITDA was $775 million, with a margin of 41.2%, and fourth-quarter adjusted EBITDA was $215 million, with a margin of 43.5% [29] Business Line Data and Key Metrics Changes - Recurring and other revenue for the full year was $1.76 billion, also up 11% compared to 2023 [26] - Interest on funds held for clients was $125 million, up approximately 16% year-over-year [26] - The company ended 2024 with approximately 37,500 clients, a growth rate of 2% compared to 2023 [34] Market Data and Key Metrics Changes - Clients with more than 1,000 employees grew by 12% year-over-year [34] - Paycom's annual revenue retention rate in 2024 was 90%, consistent with 2023 [34] Company Strategy and Development Direction - The company aims to maintain momentum in 2025 by focusing on full solution automation, client ROI achievement, and delivering world-class service [10] - Paycom is transitioning to an annual revenue and adjusted EBITDA guidance framework, expecting total revenue for fiscal 2025 to be between $2.015 billion to $2.035 billion, or approximately 8% year-over-year growth at the midpoint [37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to perform well in 2025 and beyond, citing strong demand for automated solutions [24] - The first quarter of 2025 is expected to be the low point of the year, with recurring and other revenue growth anticipated to accelerate to consistent double digits in subsequent quarters [39] Other Important Information - The company repurchased over 900,000 shares of common stock in 2024, totaling $145 million, and paid over $84 million in cash dividends [32] - The company ended 2024 with cash and cash equivalents of $402 million and zero debt [33] Q&A Session Summary Question: What drove the decision to not provide quarterly guidance anymore? - Management stated that the long-term focus aligns better with their business model and the guidance reflects strong growth expectations [45] Question: Can you discuss renewal rates and expectations for improvement? - Management noted stability in renewal rates and expressed hope for stronger retention moving forward [46] Question: What are the expectations for the CRR team in 2025? - Management emphasized a focus on client satisfaction and the role of CRRs in upselling products to enhance client ROI [52] Question: How do you view the competitive environment following recent acquisitions? - Management indicated no changes in their view of the competitive landscape, emphasizing that competition benefits clients [112] Question: What are the expectations for EBITDA margins in 2025? - Management guided for a lower EBITDA margin at the beginning of the year, with expectations to accelerate through the year [140]