Paycom Software(PAYC)

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Paycom Software (PAYC) Tops Q3 Earnings and Revenue Estimates
ZACKSĀ· 2024-10-30 22:20
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]
Paycom Software(PAYC) - 2024 Q3 - Quarterly Results
2024-10-30 20:10
```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, BetiĀ®, which allows employees to do their own payroll[7](index=7&type=chunk) ```
Paycom Set to Report Q3 Earnings: What's in Store for the Stock?
ZACKSĀ· 2024-10-25 16:26
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]
Earnings Preview: Paycom Software (PAYC) Q3 Earnings Expected to Decline
ZACKSĀ· 2024-10-23 15:07
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 ...
Paycom Software: Long-Term Growth Prospect Remains Intact
Seeking AlphaĀ· 2024-09-29 06:32
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].
Navigating The Uncertainties Of Investing In Paycom: The Unresolved Risks And Potential Upside
Seeking AlphaĀ· 2024-09-28 07:01
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 ...
Paycom Software: Despite Short-Term Challenges, Poised For Strong Annual Revenue Growth
Seeking AlphaĀ· 2024-09-27 11:42
PayCom Software, Inc. (NYSE: PAYC ) is a US company specialising in the development of cloud-based human resource management (HRM) and payroll software, whose share price has fallen by around 70% since the end of 2021. Unsurprisingly, a staggeringly large increase was priced into the I am a full-time investor focusing on high-quality and growth companies. One of my other major areas is stocks with high starting dividends and low valuations. I regularly use EVA framework in addition to the normal accounting ...
Paycom (PAYC) Dips 23% YTD: What Should Investors Do Now?
ZACKSĀ· 2024-08-21 13:31
Paycom Software, Inc. (PAYC) has witnessed a challenging year, with its stock down more than 23% year to date (YTD), significantly underperforming the broader market. In contrast, the S&P 500 and the Zacks Computer and Technology sector have seen gains of 17.6% and 22.5%, respectively. Paycom's performance has also lagged behind key competitors like SAP SE (SAP) , Automatic Data Processing, Inc. (ADP) and Paychex, Inc. (PAYX) , which have posted YTD gains of 40.9%, 13.5% and 5.2%, respectively. This dispari ...
Paycom Software(PAYC) - 2024 Q2 - Earnings Call Transcript
2024-08-01 00:34
Financial Data and Key Metrics Changes - Second quarter revenue reached $438 million, up 9% year-over-year, and recurring revenue was $430 million, representing 98% of total revenues [13][14] - GAAP net income was $68 million, or $1.20 per diluted share, while non-GAAP net income was $92 million, or $1.62 per diluted share [14] - Adjusted EBITDA for the quarter was nearly $160 million, with a margin of 36.5%, exceeding expectations due to expense discipline [14][15] Business Line Data and Key Metrics Changes - The company reported a 24% increase in units sold in the second quarter compared to the same period last year, with year-to-date unit growth at approximately 15% [34][27] - The automation solutions, Beti and GONE, have shown significant client adoption, with clients reporting reduced payroll processing times and improved efficiency [7][9] Market Data and Key Metrics Changes - The average daily balance of funds held on behalf of clients was approximately $2.4 billion, up 8% year-over-year [15] - The company has expanded its international presence, with Beti now available in Canada, Mexico, Ireland, and the UK, contributing to new client acquisitions [11][11] Company Strategy and Development Direction - The company is focused on enhancing client ROI through product innovation and automation, aiming to solidify its position as a leader in the industry [5][10] - Investments in AI and automation are expected to drive long-term value for clients and shareholders [12][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 10% revenue growth and a 39% adjusted EBITDA margin for fiscal 2024, narrowing revenue guidance to $1.86 billion to $1.875 billion [17][18] - The company plans to continue opportunistic stock buybacks, having repurchased approximately 790,000 shares for $120 million during the quarter [15][16] Other Important Information - The CFO announced plans to retire within the next 9 to 12 months, after nearly 19 years with the company [13] - The company has increased its buyback authorization to $1.5 billion, extending it for another two years [16] Q&A Session Summary Question: Perception of Beti in Installed Base - Management noted that new clients are increasingly adopting Beti, leading to significant reductions in payroll processing times for existing clients [19][20] Question: Sales Hiring Cadence - The company is better staffed in sales than in recent years, with a focus on unit growth and sales skills development [21][22] Question: Guidance Outlook Changes - The narrowing of guidance was attributed to increased visibility and the timing of various initiatives [24][25] Question: Sales Performance and Unit Growth - The company reported a 24% increase in units sold in the second quarter compared to the previous year, with strong July starts indicating continued momentum [33][34] Question: Impact of Payroll Runs on Guidance - Management confirmed that factors affecting payroll run opportunities remain consistent, with confidence in sales and service organizations [36][37] Question: Beti Adoption Update - Beti adoption continues to rise, with new clients starting with higher usage rates than before [42][43] Question: Float Revenue and Fed Fund Rate Assumptions - The company is considering extending the duration of its float revenue investments in light of potential rate cuts [64] Question: Competitive Landscape for New Client Wins - The company continues to compete with established players in the industry, maintaining a consistent approach to client acquisition [66][67]
Is a Beat in Store for Paycom (PAYC) This Earnings Season?
ZACKSĀ· 2024-07-26 15:25
Paycom Software (PAYC) is scheduled to report second-quarter 2024 results after market close on Jul 31. PAYC projects revenues between $434 million and $438 million for the second quarter. The Zacks Consensus Estimate for revenues is pegged at $436.2 million, indicating an increase of 8.7% year over year. The consensus mark for earnings is pegged at $1.58 per share, suggesting a 2.5% decline from the prior-year quarter. Paycom estimates adjusted EBITDA in the range of $151-$155 million in the quarter to be ...