Paycom Software(PAYC) - 2024 Q1 - Quarterly Results

Paycom Software, Inc. First Quarter 2024 Results Financial Highlights 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] - 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] - As of March 31, 2024, Paycom had $371.3 million in cash and cash equivalents and no total debt[5] Financial Outlook 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 This section presents the unaudited consolidated financial statements, including Balance Sheets, Statements of Comprehensive Income, and Statements of Cash Flows Unaudited Consolidated Balance Sheets 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 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 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][21] Reconciliation of GAAP to Non-GAAP Financial Measures 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 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 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 This section provides supplementary information, including the rationale for non-GAAP measures and forward-looking statement disclaimers Use of Non-GAAP Financial Information 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] - The company believes these non-GAAP metrics are useful for comparing its core operations across periods and against peer companies[10] Forward-Looking Statements 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] - 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]