Revenue and Growth - Revenue growth rate and annual revenue retention rate declined in 2023 and remained under pressure throughout 2024[63] - Recurring revenues increased to $445.0 million for the three months ended September 30, 2024, up 11.6% from $398.7 million in the same period in 2023[65] - Total revenues for the nine months ended September 30, 2024, were $1,389.3 million, a 10.3% increase from $1,259.1 million in the same period in 2023[65] - Adjusted EBITDA for Q3 2024 was $171.3 million, compared to $165.6 million in Q3 2023[91] - Net income for Q3 2024 was $73.3 million, compared to $75.2 million in Q3 2023[91] - Earnings per share (diluted) for Q3 2024 was $1.31, compared to $1.30 in Q3 2023[94] - Non-GAAP net income per share (diluted) for Q3 2024 was $1.67, compared to $1.77 in Q3 2023[94] Client and Market Expansion - The company expanded its target client size range to include organizations with more than 10,000 employees in 2023[63] - The company's Global HCM solution and expansion into international markets are expected to attract larger companies with global presence[63] - The company plans to open additional sales offices to further expand market presence[61] - The company's revenue is primarily generated through its sales force and client relations representatives[61] Financial Operations and Cash Flow - The company collects funds from clients in advance, typically disbursed within 1 to 30 days, with some funds held for up to 120 days[63] - The company's average funds held for clients balance and interest earned are expected to increase with new applications and client base expansion[63] - The average daily balance of funds held for clients was $2.4 billion for the nine months ended September 30, 2024, up from $2.2 billion in the same period in 2023[65] - Interest earned on corporate funds decreased to $4.2 million for the three months ended September 30, 2024, compared to $6.5 million in the same period in 2023[75] - Net cash provided by operating activities increased by 7% to $373.513 million for the nine months ended September 30, 2024, compared to $350.569 million in the same period in 2023[83] - Cash provided by investing activities increased by 125% to $33.538 million for the nine months ended September 30, 2024, compared to a negative $135.642 million in the same period in 2023[83] - Cash used in financing activities increased by 149% to $1.089 billion for the nine months ended September 30, 2024, compared to $437.693 million in the same period in 2023[83] - Corporate cash and cash equivalents as of September 30, 2024, totaled $325.8 million[96] - Funds held for clients cash and cash equivalents as of September 30, 2024, totaled $1.4 billion[96] Expenses and Costs - Operating expenses increased by $15.2 million for the three months ended September 30, 2024, primarily due to an $8.9 million increase in employee-related expenses[66] - Research and development expenses increased by $11.2 million for the three months ended September 30, 2024, driven by higher employee-related costs[68] - Capitalized portion of research and development costs increased by 26% to $33.4 million for the three months ended September 30, 2024, compared to $26.6 million in 2023[69] - General and administrative expenses decreased by $1.2 million for the three months ended September 30, 2024, due to a reduction in employee-related expenses[71] - Non-cash stock-based compensation expense decreased by 27% to $24.2 million for the three months ended September 30, 2024, compared to $33.2 million in 2023[72] - Depreciation and amortization expense increased due to the development of additional technology and the corporate headquarters expansion placed into service in April 2024[73] - Interest expense increased for the three and nine months ended September 30, 2024, due to the timing of the corporate headquarters expansion project[74] - Interest expense for Q3 2024 was $789,000, compared to $222,000 in Q3 2023[91] - Depreciation and amortization for Q3 2024 was $38.1 million, compared to $28.9 million in Q3 2023[91] - Non-cash stock-based compensation expense for Q3 2024 was $24.2 million, compared to $33.2 million in Q3 2023[91] Tax and Financial Commitments - The effective income tax rate for the nine months ended September 30, 2024, was 21.9%, down from 28.1% in the same period in 2023, primarily due to a tax benefit related to the forfeiture of the 2020 CEO Performance Award[76] - The company maintains a $1.0 billion senior secured revolving credit facility, with no outstanding borrowings as of September 30, 2024[77] - The stock repurchase plan was increased to $1.5 billion, with $1.49 billion available for repurchases as of September 30, 2024[78] - Quarterly cash dividends of $0.375 per share were declared, with total cash dividends paid amounting to $20.956 million for the quarter ended September 30, 2024[79][80] - The company repurchased 892,669 shares of common stock at an average cost of $153.70 per share during the nine months ended September 30, 2024[78] - The company committed to annual payments escalating from $4.0 million in 2021 to $6.1 million in 2035 for the naming rights to the Oklahoma City arena[82] Technology and Product Impact - The company's revenue is seasonal, with higher recurring revenues in the first and fourth quarters due to payroll tax filings and unscheduled payroll runs[63] - The company's Beti technology has reduced billable corrections and unscheduled payroll runs, impacting revenue[63] - The company's payroll application is the foundation of its solution, with all clients required to utilize it to access other applications[63]

Paycom's Q3 results and forward guidance suddenly have investors feeling very bullish again.Paycom Software (PAYC 23.62%) stock is surging in Thursday's trading following the company's recently published third-quarter results. The company's share price was up 24.7% as of 2:15 p.m. ET.Paycom published its Q3 results after the market closed yesterday, and sales and earnings for the period beat Wall Street's targets. In addition to the Q3 beats, the company also issued strong guidance for the current quarter.P ...

Core Insights - Paycom Software's shares have increased by 28% this week, indicating strong market performance [1] - The company reported third-quarter earnings that exceeded analysts' expectations, with an 11% revenue growth and improved guidance for 2024 [2] - Paycom's focus on automation in human capital management (HCM) is beginning to yield positive results [2][3] Company Performance - Paycom's automation solutions, such as Beti and Gone, are designed to streamline payroll and time-off requests, significantly enhancing operational efficiency [3] - A new customer using Beti has achieved an 85% reduction in payroll processing time, while the Gone solution has saved clients an estimated five weeks of work hours across various departments [4] - The company's net promoter score increased by 24 points in Q3, indicating higher customer satisfaction compared to competitors like ADP, Workday, and Paychex [4] Financial Metrics - Paycom has increased its R&D spending from 2% to 12% of revenue over the past decade, while maintaining a strong free cash flow margin of 21% [5] - September marked Paycom's strongest sales month ever, contributing to a double-digit revenue growth rate in Q3, with potential for continued growth [6] - Despite holding less than 5% market share in its niche, the outlook for Paycom remains positive as businesses seek to optimize their HCM processes [6]

Paycom Software, Inc. (PAYC) reported better-than-expected third-quarter 2024 results. The online payroll and human resource technology provider reported non-GAAP earnings of $1.67 per share for the third quarter, beating the Zacks Consensus Estimate of $1.62.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.However, the bottom line declined 5.6% year over year as the benefits of higher revenues and lower share count were more than offset by increased operating expenses, interest expe ...

Core Viewpoint - Paycom Software (PAYC) reported quarterly earnings of $1.67 per share, exceeding the Zacks Consensus Estimate of $1.62 per share, but down from $1.77 per share a year ago, indicating a 5.65% year-over-year decline in earnings [1][2] Financial Performance - The company achieved revenues of $451.93 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 1.14% and reflecting a year-over-year increase from $406.3 million [2] - Over the last four quarters, Paycom has consistently exceeded consensus EPS estimates and revenue estimates [2] Stock Performance and Outlook - Paycom shares have declined approximately 19% since the beginning of the year, contrasting with the S&P 500's gain of 22.3% [3] - The current consensus EPS estimate for the upcoming quarter is $1.96 on revenues of $482.33 million, and for the current fiscal year, it is $7.79 on revenues of $1.87 billion [7] Industry Context - The Internet - Software industry, to which Paycom belongs, is currently ranked in the top 33% of over 250 Zacks industries, suggesting a favorable industry outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Paycom's stock performance [5][6]

```markdown [Financial Highlights](index=1&type=section&id=Financial%20Highlights) Paycom reported solid third-quarter 2024 results with total revenues of $451.9 million, an 11.2% increase year-over-year While GAAP Net Income saw a slight decrease to $73.3 million, Adjusted EBITDA grew to $171.3 million The company continued its capital return program, paying $21.0 million in dividends and repurchasing $44.0 million of common stock Q3 2024 Key Financial Metrics | Metric | Q3 2024 | Q3 2023 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $451.9M | $406.3M | +11.2% | | GAAP Net Income | $73.3M | $75.2M | -2.5% | | GAAP Diluted EPS | $1.31 | $1.30 | +0.8% | | Adjusted EBITDA | $171.3M | $165.6M | +3.4% | | Non-GAAP Net Income | $93.4M | $102.4M | -8.8% | | Non-GAAP Diluted EPS | $1.67 | $1.77 | -5.6% | - Recurring revenues constituted **98.5%** of total revenues, growing **11.6%** from the prior year period to **$445.0 million**[2](index=2&type=chunk) - The company maintained a strong balance sheet with **$325.8 million** in cash and cash equivalents and **zero total debt** as of September 30, 2024[2](index=2&type=chunk) - During the third quarter, Paycom returned capital to shareholders by paying **$21.0 million** in cash dividends and repurchasing **303,245 shares** for **$44.0 million**[2](index=2&type=chunk) [Financial Outlook](index=1&type=section&id=Financial%20Outlook) Paycom provided its financial guidance for the fourth quarter and the full fiscal year ending December 31, 2024 The company anticipates total revenues for the full year to be in the range of $1.866 billion to $1.873 billion, with Adjusted EBITDA expected between $745 million and $752 million Q4 and Full Year 2024 Financial Guidance | Period | Metric | Guidance Range | | :--- | :--- | :--- | | **Q4 2024** | Total Revenues | $477M - $484M | | | Adjusted EBITDA | $184.5M - $191.5M | | **Full Year 2024** | Total Revenues | $1.866B - $1.873B | | | Adjusted EBITDA | $745M - $752M | - The company has not reconciled forward-looking Adjusted EBITDA to net income due to the uncertainty and potential variability of items such as depreciation, amortization, taxes, and stock-based compensation[4](index=4&type=chunk) [Consolidated Financial Statements](index=4&type=section&id=Consolidated%20Financial%20Statements) The unaudited consolidated financial statements detail Paycom's financial position and performance The balance sheet shows a decrease in total assets primarily due to a reduction in funds held for clients The income statement reflects revenue growth but also increased operating expenses The cash flow statement indicates positive cash from operations, offset by significant cash used in financing activities, including share repurchases and dividends [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) As of September 30, 2024, Paycom's balance sheet showed total assets of $3.49 billion, a decrease from $4.20 billion at year-end 2023 This change was primarily driven by a decrease in 'Funds held for clients' and the corresponding 'Client funds obligation' Cash and cash equivalents increased to $325.8 million, and the company remained debt-free Selected Balance Sheet Data (in thousands) | Account | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $325,757 | $294,025 | | Total current assets | $1,977,905 | $2,813,426 | | Total assets | $3,492,530 | $4,197,539 | | Client funds obligation | $1,439,648 | $2,328,076 | | Total liabilities | $2,027,878 | $2,894,503 | [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) For the third quarter of 2024, Paycom generated total revenues of $451.9 million, up from $406.3 million in the same period last year Operating income increased to $104.9 million from $96.9 million However, a higher provision for income taxes led to a slight decrease in GAAP Net Income to $73.3 million, compared to $75.2 million in Q3 2023 Q3 Income Statement Highlights (in thousands) | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Total Revenues | $451,934 | $406,303 | | Total Operating Expenses | $347,060 | $309,402 | | Operating Income | $104,874 | $96,901 | | Net Income | $73,278 | $75,219 | | Diluted EPS | $1.31 | $1.30 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2024, net cash provided by operating activities was $373.5 million Investing activities provided $33.5 million, primarily from proceeds from investments held for clients Financing activities used $1.09 billion, largely due to a net decrease in client funds obligation ($888.4 million), common stock repurchases ($122.8 million), and dividend payments ($63.7 million) - Key cash flow movements for the first nine months of 2024 include: - Net cash from operating activities: **$373.5 million** - Net cash provided by investing activities: **$33.5 million** - Net cash used in financing activities: **$(1,089.3) million**[11](index=11&type=chunk) - Major uses of cash in financing activities for the nine-month period were stock repurchases (**$122.8 million**) and dividends paid (**$63.7 million**)[11](index=11&type=chunk) [Reconciliations of GAAP to Non-GAAP Financial Measures](index=9&type=section&id=Reconciliations%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) Paycom provides reconciliations for several non-GAAP financial measures, including Adjusted EBITDA and Non-GAAP Net Income, to their most directly comparable GAAP measures These adjustments primarily exclude non-cash stock-based compensation expense, depreciation, amortization, and taxes For Q3 2024, Net Income of $73.3 million was reconciled to an Adjusted EBITDA of $171.3 million and a Non-GAAP Net Income of $93.4 million Q3 2024 Net Income to Adjusted EBITDA Reconciliation (in thousands) | Line Item | Amount | | :--- | :--- | | Net income | $73,278 | | Interest expense | $789 | | Provision for income taxes | $35,036 | | Depreciation and amortization | $38,076 | | Non-cash stock-based compensation | $24,156 | | **Adjusted EBITDA** | **$171,335** | Q3 2024 Net Income to Non-GAAP Net Income Reconciliation (in thousands) | Line Item | Amount | | :--- | :--- | | Net income | $73,278 | | Non-cash stock-based compensation | $24,156 | | Income tax effect on adjustments | $(4,016) | | **Non-GAAP net income** | **$93,418** | - The company's Adjusted EBITDA margin was **37.9%** for Q3 2024, compared to **40.8%** in Q3 2023 The Gross Margin was **80.5%** in Q3 2024, down from **83.0%** in the prior year period[13](index=13&type=chunk)[17](index=17&type=chunk) [Other Information](index=2&type=section&id=Other%20Information) This section includes important disclosures regarding the company's use of non-GAAP financial measures, forward-looking statements, and general company information Paycom explains that non-GAAP metrics are used by management to assess core business performance and provide investors with greater transparency The forward-looking statements section outlines potential risks and uncertainties that could affect future results - Paycom uses non-GAAP financial measures like adjusted EBITDA and non-GAAP net income to supplement GAAP results, believing they provide greater transparency into core business operations and facilitate comparisons with peer companies[5](index=5&type=chunk) - The report contains forward-looking statements regarding business strategy, future operating results, and growth plans, which are based on currently available information and are subject to business and economic risks[8](index=8&type=chunk) - Paycom positions itself as a provider of easy-to-use HR and payroll technology, highlighting its industry-first solution, Beti®, which allows employees to do their own payroll[7](index=7&type=chunk) ```

Core Viewpoint - Paycom Software (PAYC) is expected to report third-quarter 2024 results with anticipated revenues between $444 million and $449 million, reflecting a year-over-year growth of approximately 10% from $406.3 million in the same quarter last year [1][2] Financial Performance Expectations - The Zacks Consensus Estimate for PAYC's revenues is $446.9 million, while the consensus for earnings per share (EPS) is $1.62, indicating a decline of 8.5% year-over-year [1] - Adjusted EBITDA is projected to be in the range of $155 million to $159 million, suggesting an adjusted EBITDA margin of around 35% at the midpoint [1] - PAYC has consistently beaten the Zacks Consensus Estimate in the past four quarters, with an average surprise of 6.7% [1] Growth Drivers - The anticipated performance is likely supported by an expanding client base due to product innovations and a high-margin recurring revenue model, with recurring revenues estimated at $437.3 million, indicating a year-over-year growth of 9.7% [2] - Investments in artificial intelligence (AI), automation, and international expansion are expected to enhance sales growth [2][3] Challenges - The company's performance may be negatively impacted by headcount reductions among its clients due to macroeconomic uncertainties, leading to lower transaction volumes and reduced spending on payroll and human capital management services [3] - The uncertain macroeconomic environment and geopolitical issues are contributing to these challenges [3] Earnings ESP and Zacks Rank - Currently, PAYC has an Earnings ESP of -0.35% and a Zacks Rank of 4 (Sell), indicating lower odds of an earnings beat compared to other stocks [4]

Paycom Software (PAYC) is expected to deliver a year-over-year decline in earnings on higher revenues when it reports results for the quarter ended September 2024. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price.The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on Octo ...

Core Insights - Paycom (NYSE: PAYC) has demonstrated a strong growth trajectory, achieving over 29% annual revenue growth for the past decade, resulting in the company generating more than 10 times its 2014 revenue in recent years [1]. Group 1 - Paycom's revenue growth has been consistent and significant, indicating a robust business model and market demand for its services [1].

Over the last several years, almost everything that could go wrong has gone wrong for Paycom (NYSE: PAYC ). Since late 2021, the company's revenue and earnings have decelerated, and it has gone from one of the most attractive growth I have been a Merchant Seaman that has traveled the world for over 30 years. Within the last 15 years, I developed a very intense interest in investing. I learned a lot of what I know about investing from The MF. Also because I have a engineering background, I often tend to grav ...