Paycom Software (PAYC) reported first-quarter 2024 results, wherein both the top and bottom lines surpassed the Zacks Consensus Estimate and improved year over year.The online payroll and human resource technology provider reported non-GAAP earnings of $2.59 per share in the first quarter, beating the Zacks Consensus Estimate of $2.43. The bottom line improved 5.28% from $2.46 per share reported in the year-ago quarter.Paycom reported revenues of $499.9 million, beating the consensus mark of $495.9 million. ...

Financial Data and Key Metrics Changes - First quarter revenue reached $500 million, an increase of 11% compared to the same period last year [22] - Recurring revenue was $492 million, representing 98% of total revenues and also growing 11% year-over-year [22] - GAAP net income was $247 million, or $4.37 per diluted share, influenced by a one-time non-cash stock compensation benefit of $118 million [23] - Non-GAAP net income for the first quarter was $147 million, or $2.59 per diluted share [23] - Adjusted EBITDA was nearly $230 million, with a margin of 45.9% for the quarter [24] Business Line Data and Key Metrics Changes - The company released more product enhancements in Q1 than in the previous two quarters combined, focusing on automation and AI [10][11] - The introduction of Beti has significantly reduced payroll processing time for clients, enhancing client ROI [10][12] Market Data and Key Metrics Changes - The average daily balance of funds held on behalf of clients was approximately $2.6 billion, up 8% year-over-year [26] - The company has only captured about 5% of the total addressable market in the U.S., indicating significant growth potential [16] Company Strategy and Development Direction - The strategic focus for 2024 includes solution automation, client ROI achievement, and world-class service [9][12] - The company is expanding internationally, having launched native payroll solutions in Canada, Mexico, the UK, and Ireland [15][16] - The go-to-market strategy emphasizes the unique value proposition of Paycom's offerings, particularly the benefits of self-service payroll [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the effectiveness of their client value achievement strategy, which aims to improve client retention and ROI [36][42] - The company anticipates a reacceleration in revenue growth in the second half of 2024, driven by front-loaded strategic initiatives [60] Other Important Information - The company has a strong balance sheet with cash and cash equivalents of $371 million and no debt [26] - The Board approved a quarterly dividend of $0.375 per share, payable in mid-June [24] Q&A Session Summary Question: Can you frame your strategic initiatives in relation to market demand and hiring headwinds? - Management highlighted their focus on client value achievement and improving retention, while also maintaining sales initiatives for new clients [36] Question: Can you discuss the benefits of fewer rate cuts this year? - Management noted that fewer rate cuts could be beneficial towards the end of the year, but they are also considering extending the duration of funds [38] Question: What are your assumptions regarding churn and new bookings in your guidance? - Management indicated stability in new bookings and improvements in retention due to ongoing client value initiatives [42] Question: How is sales performance varying across different offices? - Management stated that the best offices have the best managers, and there is no saturation in the mid-market, with continued competitive opportunities [46] Question: How do you feel about sales capacity and plans for new sales offices? - Management reported improvements in sales capacity and indicated that opening new offices depends on the success of current managers [53] Question: How is pre-employment services revenue trending? - Management characterized pre-employment services as stable, reflecting new client acquisitions and current client trends [56] Question: Can you elaborate on the impact of strategic initiatives on revenue? - Management acknowledged that some initiatives may delay revenue opportunities but are essential for long-term client ROI [62] Question: What are the top investment priorities for potential incremental investments? - Management emphasized continued investment in R&D and automation as key priorities [76] Question: Can you discuss the competitive environment and any notable changes? - Management noted that the competitive landscape remains unchanged, with a focus on leveraging automation to enhance client ROI [95]

[Paycom Software, Inc. First Quarter 2024 Results](index=1&type=section&id=Paycom%20Software%2C%20Inc.%20Reports%20First%20Quarter%202024%20Results) [Financial Highlights](index=1&type=section&id=Financial%20Highlights%20for%20the%20First%20Quarter%20of%202024) Paycom reported strong Q1 2024 results with total revenues of $500 million, GAAP Net Income of $247 million, and Adjusted EBITDA of $230 million, driven by its Beti product strategy Q1 2024 Key Financial Metrics (vs. Q1 2023) | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $499.9M | $451.6M | +10.7% | | GAAP Net Income | $247.2M | $119.3M | +107.2% | | GAAP Diluted EPS | $4.37 | $2.06 | +112.1% | | Non-GAAP Net Income | $146.6M | $142.7M | +2.7% | | Non-GAAP Diluted EPS | $2.59 | $2.46 | +5.3% | | Adjusted EBITDA | $229.5M | $220.5M | +4.1% | - GAAP net income for Q1 2024 included a significant benefit of **$117.5 million** to general and administrative expenses, resulting from the forfeiture of the 2020 CEO performance award[4](index=4&type=chunk) - The company's strategy remains focused on expanding solution automation, increasing client ROI, and delivering world-class service, with the **Beti® product** leading this effort[2](index=2&type=chunk) - As of March 31, 2024, Paycom had **$371.3 million** in cash and cash equivalents and no total debt[5](index=5&type=chunk) [Financial Outlook](index=1&type=section&id=Financial%20Outlook) The company provided Q2 2024 revenue guidance of $434-$438 million and full-year 2024 revenue guidance of $1.86-$1.885 billion Financial Guidance | Period | Metric | Guidance Range | | :--- | :--- | :--- | | **Q2 2024** | Total Revenues | $434M - $438M | | | Adjusted EBITDA | $151M - $155M | | **Full Year 2024** | Total Revenues | $1.860B - $1.885B | | | Adjusted EBITDA | $720M - $730M | [Consolidated Financial Statements](index=4&type=section&id=Unaudited%20Consolidated%20Financial%20Statements) This section presents the unaudited consolidated financial statements, including Balance Sheets, Statements of Comprehensive Income, and Statements of Cash Flows [Unaudited Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Consolidated%20Balance%20Sheets) As of March 31, 2024, total assets reached $4.73 billion, with cash and equivalents at $371.3 million and total stockholders' equity at $1.44 billion Key Balance Sheet Items (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $371,325 | $294,025 | | Total current assets | $3,296,326 | $2,813,426 | | Total assets | $4,733,264 | $4,197,539 | | Total current liabilities | $2,942,312 | $2,534,643 | | Total liabilities | $3,295,201 | $2,894,503 | | Total stockholders' equity | $1,438,063 | $1,303,036 | [Unaudited Consolidated Statements of Comprehensive Income](index=5&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Comprehensive%20Income) Q1 2024 total revenues grew 10.7% to $499.9 million, with operating income at $285.8 million and GAAP Net Income at $247.2 million Q1 Income Statement Highlights (in thousands, except per share data) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total revenues | $499,881 | $451,637 | | Operating income | $285,814 | $160,432 | | Net income | $247,187 | $119,296 | | Earnings per share, diluted | $4.37 | $2.06 | [Unaudited Consolidated Statements of Cash Flows](index=6&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2024 net cash from operating activities was $148.6 million, with investing activities providing $42.3 million, and $21.2 million paid in dividends Cash Flow Summary (in thousands) | Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $148,636 | $146,103 | | Net cash provided by (used in) investing activities | $42,285 | $(40,618) | | Net cash provided by financing activities | $376,094 | $183,003 | - During the first quarter of 2024, Paycom paid **$21.2 million** in cash dividends and repurchased **15,681 shares** of common stock for **$3.1 million**[5](index=5&type=chunk)[21](index=21&type=chunk) [Reconciliation of GAAP to Non-GAAP Financial Measures](index=8&type=section&id=Unaudited%20Reconciliations%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) This section details reconciliations of GAAP to non-GAAP financial measures, including Adjusted EBITDA of $229.5 million and Non-GAAP Net Income of $146.6 million [Reconciliation of Net Income to Adjusted EBITDA and Non-GAAP Net Income](index=8&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20EBITDA%20and%20Non-GAAP%20Net%20Income) Q1 2024 GAAP Net Income of $247.2 million reconciles to Adjusted EBITDA of $229.5 million and Non-GAAP Net Income of $146.6 million, primarily adjusted for stock-based compensation Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net income | $247,187 | $119,296 | | Adjustments (Taxes, Interest, D&A) | $76,104 | $73,412 | | EBITDA | $323,291 | $192,708 | | Non-cash stock-based compensation | $(93,790) | $27,819 | | **Adjusted EBITDA** | **$229,501** | **$220,527** | Reconciliation of Net Income to Non-GAAP Net Income (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net income | $247,187 | $119,296 | | Non-cash stock-based compensation | $(93,790) | $27,819 | | Income tax effect on adjustments | $(6,749) | $(4,464) | | **Non-GAAP net income** | **$146,648** | **$142,651** | [Reconciliation of Expense and Profit Items](index=10&type=section&id=Reconciliation%20of%20Expense%20and%20Profit%20Items) This section details GAAP to non-GAAP adjustments for gross profit and expense lines, showing Q1 2024 adjusted gross margin at 84.9% and adjusted sales and marketing expenses at 22.0% of revenues Q1 2024 Adjusted vs. GAAP Margins (% of Revenues) | Metric | GAAP | Adjusted (Non-GAAP) | | :--- | :--- | :--- | | Gross Margin | 84.3% | 84.9% | | Sales and Marketing Expenses | 23.1% | 22.0% | | Research and Development Expenses | 10.1% | 9.0% | | Total R&D Costs | 16.1% | 14.3% | [Other Information](index=2&type=section&id=Other%20Information) This section provides supplementary information, including the rationale for non-GAAP measures and forward-looking statement disclaimers [Use of Non-GAAP Financial Information](index=2&type=section&id=Use%20of%20Non-GAAP%20Financial%20Information) Management uses non-GAAP measures to assess core business performance, enhance transparency for investors, and facilitate peer comparisons by excluding specific items - Management uses non-GAAP financial measures to supplement GAAP information for assessing core business performance, planning, and providing investors with greater transparency[10](index=10&type=chunk) - The company believes these non-GAAP metrics are useful for comparing its core operations across periods and against peer companies[10](index=10&type=chunk) [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) This section contains a standard safe harbor statement, cautioning that forward-looking statements are subject to risks and actual results may differ materially - Forward-looking statements in the report cover topics such as business strategy, future operating results, competition, and growth plans[14](index=14&type=chunk) - These statements are based only on information currently available, speak only as of the date of the release, and are subject to risks that could cause actual results to differ materially[15](index=15&type=chunk)

The most recent trading session ended with Paycom Software (PAYC) standing at $198.28, reflecting a -0.37% shift from the previouse trading day's closing. This change lagged the S&P 500's daily loss of 0.2%. Meanwhile, the Dow lost 0.6%, and the Nasdaq, a tech-heavy index, added 0.11%.Prior to today's trading, shares of the maker of human-resources and payroll software had gained 7.72% over the past month. This has outpaced the Computer and Technology sector's gain of 2.99% and the S&P 500's gain of 3.32% i ...

The most recent trading session ended with Paycom Software (PAYC) standing at $191.34, reflecting a +0.93% shift from the previouse trading day's closing. The stock exceeded the S&P 500, which registered a gain of 0.89% for the day. On the other hand, the Dow registered a gain of 1.03%, and the technology-centric Nasdaq increased by 1.25%.Shares of the maker of human-resources and payroll software have depreciated by 0.25% over the course of the past month, underperforming the Computer and Technology sector ...

In the latest trading session, Paycom Software (PAYC) closed at $188.25, marking a +0.75% move from the previous day. The stock's change was more than the S&P 500's daily loss of 0.19%. Elsewhere, the Dow gained 0.1%, while the tech-heavy Nasdaq lost 0.54%.Heading into today, shares of the maker of human-resources and payroll software had lost 0.07% over the past month, lagging the Computer and Technology sector's gain of 2.36% and the S&P 500's gain of 3.18% in that time.The investment community will be pa ...

In today’s fast-changing global markets, tech firms face unique challenges, requiring them to rethink risk management strategies. However, as these entities grapple with multiple headwinds and the talk of a potential artificial intelligence (AI) bubble, discerning investors are contemplating which stocks to sell.Nevertheless, the pivotal contribution of tech stocks in the S&P 500’s breaching the landmark 5,000 level cannot be denied. The remarkable performance is primarily attributable to the AI boom, which ...

Paycom Software (PAYC) is one of the stocks most watched by Zacks.com visitors lately. So, it might be a good idea to review some of the factors that might affect the near-term performance of the stock.Over the past month, shares of this maker of human-resources and payroll software have returned -4.7%, compared to the Zacks S&P 500 composite's +4.7% change. During this period, the Zacks Internet - Software industry, which Paycom falls in, has gained 11.1%. The key question now is: What could be the stock's ...

Cybersecurity and Data Protection - The company faces significant cybersecurity risks, including potential breaches that could compromise sensitive client data and harm its reputation[111]. - The company’s cybersecurity insurance may be inadequate to cover potential losses from breaches, which could lead to significant liabilities[113]. - Compliance with privacy and data protection laws could result in increased costs and potential fines, impacting the company's financial condition and reputation[157]. - The regulatory framework for privacy issues is rapidly evolving, with numerous state-level consumer privacy laws enacted, including California's CCPA and Virginia's new privacy statute[154][156]. - The California Privacy Rights Act (CPRA) went into effect in 2023, expanding upon the CCPA, and new data privacy statutes are set to take effect in multiple states later this year[156]. Business Operations and Growth - The company operates three fully redundant data centers in Oklahoma and Texas, which are critical for providing its SaaS solutions[115]. - The company is experiencing rapid growth in headcount and operations, which has placed significant demands on management and resources[134]. - The company is expanding its operations internationally, which involves regulatory, economic, and political risks that differ from those in the United States[138]. - The company must continue to expand its sales force to grow its client base and revenues, which may be constrained by the availability of qualified personnel[135]. - The company may pursue acquisitions to enhance its applications and capabilities, but lacks experience in integrating acquired businesses, which could disrupt operations[149]. Competition and Market Position - The company competes with major players in the HCM software market, including Automatic Data Processing, Oracle, and Workday, which may exert pricing pressures[123]. - The company’s annual revenue retention rate is influenced by client satisfaction, pricing, and competition, with fluctuations expected due to various factors[125]. - The company’s ability to innovate and develop new applications is crucial for maintaining competitiveness in a rapidly evolving market[120]. - The company’s applications must continuously adapt to technological changes to remain marketable and competitive[119]. - The company may face challenges in attracting larger clients due to demands for customized features and longer sales cycles[129]. Financial Risks and Conditions - The company maintains a consolidated interest coverage ratio requirement of at least 3.0 to 1.0 and a leverage ratio not exceeding 3.5 to 1.0, which may restrict business operations and financing activities[179]. - The company’s dividend payments are subject to financial results and the availability of statutory surplus, which may lead to changes in its recently adopted dividend policy[194]. - Adverse economic conditions, such as increased unemployment and inflation, could negatively impact the company’s business and financial condition[196]. - 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[197]. - A prolonged government shutdown may affect clients' ability to make timely payments, potentially impacting the company's operations and financial condition[198]. Legal and Regulatory Compliance - Changes in laws and regulations could materially affect the company's business, increasing costs and complicating the introduction of new applications[150]. - Regulatory scrutiny regarding anti-money laundering (AML) compliance could limit business activities and result in civil and criminal penalties[161]. - Compliance with employment-related laws and regulations could substantially increase the cost of doing business and expose the company to legal risks[167]. - The background check business is heavily regulated, with compliance costs potentially increasing due to evolving laws, which could adversely affect revenue and profitability[170]. - New "ban the box" and "fair chance" hiring laws may limit the use of criminal history in hiring decisions, impacting demand for background screening services[171]. Intellectual Property and Litigation - The company is dependent on its intellectual property for competitive advantage, and failure to protect these rights could impair its business[142]. - The company is subject to potential litigation regarding intellectual property infringement, which could result in costly legal battles and operational disruptions[144]. Financial Reporting and Accounting - Internal control over financial reporting is crucial; weaknesses could lead to material misstatements and loss of investor confidence[183]. - Changes in accounting principles could significantly affect reported financial results, impacting the interpretation of transactions[188]. - Future financial results may fluctuate significantly due to various uncontrollable factors, making it difficult to predict performance accurately[174]. Market and Investment Risks - The company’s investments are subject to market risk due to changes in interest rates, which may affect future investment income[324]. - A hypothetical increase or decrease in interest rates of 100 basis points would result in an approximately $19.2 million increase or decrease, respectively, in interest earned on funds held for clients over the ensuing 12-month period[325]. - 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, 2023[326]. - The company’s available-for-sale securities totaled $198.6 million, primarily consisting of U.S. treasury securities and certificates of deposit[323]. - As of December 31, 2023, the company recorded $51.9 million in goodwill and $50.1 million in other intangible assets, which may be subject to impairment charges affecting financial results[181].

Paycom Software (PAYC) is one of the stocks most watched by Zacks.com visitors lately. So, it might be a good idea to review some of the factors that might affect the near-term performance of the stock.Shares of this maker of human-resources and payroll software have returned -3% over the past month versus the Zacks S&P 500 composite's +5.1% change. The Zacks Internet - Software industry, to which Paycom belongs, has gained 15.5% over this period. Now the key question is: Where could the stock be headed in ...