Why Is Paycom (PAYC) Up 1.3% Since Last Earnings Report?

Core Viewpoint - Paycom Software reported lower-than-expected Q3 2025 earnings, with revenues increasing year-over-year but missing earnings estimates, leading to questions about future performance [3][4][10]. Financial Performance - Paycom reported non-GAAP earnings of $1.94 per share, missing the Zacks Consensus Estimate of $1.96, but showing a 16.2% increase year-over-year [3]. - Revenues reached $493.3 million, exceeding the consensus mark of $492.4 million, and reflecting a 9.1% year-over-year growth driven by sales momentum, international expansion, and AI integration [4]. - Recurring revenues, which constitute 94.6% of total revenues, improved by 10.6% to $466.5 million, surpassing estimates [5]. - Adjusted gross profits increased by 11.9% to $411.3 million, with an adjusted gross margin expanding by 210 basis points to 83.4% [6]. Cash Flow and Balance Sheet - As of September 30, 2025, Paycom had cash and cash equivalents of $375 million, down from $532.2 million in the previous quarter, and no debt [7]. - In Q3, the company generated operating cash flow of approximately $177.8 million, paid out $21.1 million in dividends, and repurchased $223.4 million of its common stock [8]. Guidance and Estimates - Paycom reiterated its revenue guidance for 2025, forecasting revenues between $2.045 billion and $2.055 billion, with recurring revenues expected to grow by 10% year-over-year [10]. - The company anticipates adjusted EBITDA between $872 million and $882 million, indicating an EBITDA margin of approximately 43% at the midpoint [10]. - Recent estimates have shown a downward trend, with a Zacks Rank of 3 (Hold) indicating expectations for an in-line return in the coming months [11][13]. Industry Context - Paycom operates within the Zacks Internet - Software industry, where competitor Pinterest reported revenues of $1.05 billion for the last quarter, reflecting a year-over-year increase of 16.8% [14].