Record Second Quarter Revenue of $98.2 million, up 33% from
comparable prior year period
Record Second Quarter GAAP Net Income of $14.2 million, up 36%
from comparable prior year period, or $0.24 per diluted share
Record Second Quarter Adjusted EBITDA of $27.8 million, up 23%
from comparable prior year period
Record Second Quarter non-GAAP Net Income of $15.2 million, or
$0.26 per diluted share
Paycom Software, Inc. (“Paycom”) (NYSE: PAYC), a leading
provider of comprehensive, cloud-based human capital management
software, today announced its financial results for the quarter
ended June 30, 2017.
“Our second-quarter results reflect the strength of our position
as more companies look to technology to help attract, retain and
manage their talent,” said Paycom’s founder and CEO, Chad Richison.
“Our software solution is well-positioned to help our clients
achieve these goals and to drive growth for Paycom throughout the
year.”
Financial Highlights for the Second
Quarter of 2017
Total Revenue of $98.2 million represented a 33%
increase compared to total revenue of $73.9 million in the same
period last year. Recurring revenues of $96.4 million also
increased 33% from the comparable prior year period, and
constituted 98% of total revenues.
GAAP Net Income was $14.2 million, or $0.24 per diluted
share, compared to GAAP net income of $10.4 million, or $0.18 per
diluted share, in the same period last year.
Adjusted EBITDA1 was $27.8 million, compared to
$22.6 million in the same period last year.
Non-GAAP Net Income1 was $15.2 million, or $0.26
per diluted share, compared to $12.4 million, or $0.21 per diluted
share, in the same period last year.
Cash and Cash Equivalents were $68.1 million as of June
30, 2017.
Total Debt was $34.6 million as of June 30, 2017. This
debt consisted solely of debt on our corporate headquarters.
1 Adjusted EBITDA and non-GAAP net income are non-GAAP financial
measures. Please see the discussion below under the heading "Use of
Non-GAAP Financial Information" and the reconciliations at the end
of this release for additional information concerning these
non-GAAP financial measures.
Financial Outlook
Paycom provides the following expected financial guidance for
the quarter ending September 30, 2017 and year ending December 31,
2017:
Quarter Ending September 30, 2017
Total Revenues in the range of $99
million to $101 million.
Adjusted EBITDA in the range of $21
million to $23 million.
Year Ending December 31, 2017
Total Revenues in the range of $429.5
million to $431.5 million.
Adjusted EBITDA in the range of $122.5
million to $124.5 million.
We have not reconciled the Adjusted EBITDA ranges for the
quarter ending September 30, 2017 or the year ending December 31,
2017 to net income because applicable information for future
periods, on which this reconciliation would be based, is not
readily available due to uncertainty regarding, and the potential
variability of, depreciation and amortization, interest expense,
taxes, non-cash stock-based compensation expense and other items.
Accordingly, a reconciliation of these Adjusted EBITDA ranges to
net income is not available at this time without unreasonable
effort.
Use of Non-GAAP Financial Information
To supplement our financial information presented in accordance
with generally accepted accounting principles in the United States
(“GAAP”), we consider and have included certain non-GAAP financial
measures in this press release, including Adjusted EBITDA and
non-GAAP net income. Management uses Adjusted EBITDA and non-GAAP
net income as supplemental measures to review and assess the
performance of our core business operations and for planning
purposes. We define: (i) Adjusted EBITDA as net income plus
interest expense, taxes, depreciation and amortization, and
non-cash stock-based compensation expense; and (ii) non-GAAP net
income as net income plus non-cash stock-based compensation
expense, which is adjusted for the effect of income taxes. Adjusted
EBITDA and non-GAAP net income are metrics that provide investors
with greater transparency to the information used by management in
its financial and operational decision-making. We believe these
metrics are useful to investors because they facilitate comparisons
of our core business operations across periods on a consistent
basis, as well as comparisons with the results of peer companies,
many of which use similar non-GAAP financial measures to supplement
results under GAAP. In addition, Adjusted EBITDA is a measure that
provides useful information to management about the amount of cash
available for reinvestment in our business, repurchasing common
stock and other purposes. Management believes that the non-GAAP
measures presented in this press release, when viewed in
combination with our results prepared in accordance with GAAP,
provide a more complete understanding of the factors and trends
affecting our business and performance.
Adjusted EBITDA and non-GAAP net income are not measures of
financial performance under GAAP and should not be considered a
substitute for net income, which we consider to be the most
directly comparable GAAP measure. Adjusted EBITDA and non-GAAP net
income have limitations as analytical tools, and when assessing our
operating performance, you should not consider Adjusted EBITDA or
non-GAAP net income in isolation, or as a substitute for net income
or other consolidated statements of income data prepared in
accordance with GAAP. Adjusted EBITDA and non-GAAP net income may
not be comparable to similar titled measures of other companies and
other companies may not calculate such measures in the same manner
as we do.
Conference Call Details:
In conjunction with this announcement, Paycom will host a
conference call today, Aug. 1, 2017, at 5:00 p.m. Eastern time to
discuss its financial results. To access this call, dial (866)
270-1533 (domestic) or (412) 317-0797 (international) and announce
Paycom as the conference name to the operator. A live webcast as
well as the replay of the conference call will be available on the
Investor Relations page of Paycom’s website at investors.paycom.com. A replay of this conference
call can also be accessed by dialing (877) 344-7529 (domestic) or
(412) 317-0088 (international) until Aug. 8, 2017. The replay
passcode is 10108905.
About Paycom
As a leader in payroll and HR technology, Oklahoma City-based
Paycom redefines the human capital management industry by allowing
companies to effectively navigate a rapidly changing business
environment. Its cloud-based software is based on a core system of
record maintained in a single database for all human capital
management functions, providing the functionality that businesses
need to manage the complete employment lifecycle, from recruitment
to retirement. Paycom has the ability to serve businesses of all
sizes and in every industry. As one of the leading human capital
management providers, Paycom serves clients in all 50 states from
sales offices across the country.
Forward-Looking Statements
Certain statements in this press release are, and certain
statements on the related teleconference call may be,
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements are any statements that refer to the Company’s estimated
or anticipated results, other non-historical facts or future events
and include, but are not limited to, statements regarding our
business strategy; anticipated future operating results and
operating expenses, cash flows, capital resources, dividends and
liquidity; trends, opportunities and risks affecting our business,
industry and financial results; future expansion or growth plans
and potential for future growth; our ability to attract new clients
to purchase our solution; our ability to retain clients and induce
them to purchase additional applications; our ability to accurately
forecast future revenues and appropriately plan our expenses;
market acceptance of our solution and applications; our
expectations regarding future revenues generated by certain
applications; the impact of future regulatory, judicial, or
legislative changes; how certain factors affecting our performance
correlate to improvement or deterioration in the labor market; our
plan to open additional sales offices and our ability to
effectively execute such plan; the sufficiency of our existing cash
and cash equivalents to meet our working capital and capital
expenditure needs over the next 12 months; our ability to expand
our corporate headquarters within an expected timeframe; our plans
regarding our capital expenditures and investment activity as our
business grows, including with respect to research and development;
our expected income tax rate for future periods; and our plans to
purchase shares of our common stock through a stock repurchase
plan. In addition, forward-looking statements also consist of
statements involving trend analyses and statements including such
words as “anticipate,” “believe,” “could,” “expect,” “may,”
“might,” “plan,” “possible,” “potential,” “project,” “should,”
“would,” and similar expressions or the negative of such terms or
other comparable terminology. These forward-looking statements
speak only as of the date hereof and are subject to business and
economic risks. As such, our actual results could differ materially
from those set forth in the forward-looking statements as a result
of the factors discussed in our filings with the Securities and
Exchange Commission, including but not limited to those discussed
in our Annual Report on Form 10-K for the year ended December 31,
2016. We do not undertake any obligation to update or revise the
forward-looking statements to reflect events or circumstances that
exist after the date on which such statements were made, except to
the extent required by law.
Paycom Software, Inc. Consolidated Balance
Sheets (in thousands, except share amounts)
(unaudited) June 30,
December 31, 2017 2016
Assets Current assets: Cash and cash equivalents $
68,117 $ 60,158 Accounts receivable 1,803 1,339 Prepaid expenses
5,737 4,475 Inventory 520 675 Income tax receivable 3,547
692 Current assets before funds held for
clients 79,724 67,339 Funds held for clients 787,015
858,244 Total current assets 866,739 925,583 Property
and equipment, net 116,957 96,848 Deposits and other assets 1,326
1,215 Goodwill 51,889 51,889 Intangible assets, net 1,065 1,871
Deferred income tax assets, net 7,967 1,207
Total assets $ 1,045,943 $ 1,078,613
Liabilities and Stockholders' Equity Current liabilities:
Accounts payable $ 3,439 $ 3,737 Accrued commissions and bonuses
5,236 8,003 Accrued payroll and vacation 5,857 4,769 Deferred
revenue 6,040 5,230 Current portion of long-term debt 1,139 1,113
Accrued expenses and other current liabilities 19,726
17,798 Current liabilities before client funds
obligation 41,437 40,650 Client funds obligation 787,015
858,244 Total current liabilities 828,452
898,894 Long-term deferred revenue 38,964 34,481 Net long-term
debt, less current portion 33,479 28,711
Total long-term liabilities 72,443
63,192 Commitments and contingencies Stockholders' equity:
Common stock, $0.01 par value (100,000,000
shares authorized, 59,520,637 and 58,453,283 shares issued at June
30, 2017 and December 31, 2016, respectively; 57,938,217 and
57,331,022 shares outstanding at June 30, 2017 and December 31,
2016, respectively)
595 585 Additional paid-in capital 114,287 95,452 Retained earnings
110,283 70,448
Treasury stock, at cost (1,582,420 and
1,122,261 shares at June 30, 2017 and December 31, 2016,
respectively)
(80,117 ) (49,958 ) Total stockholders' equity
145,048 116,527 Total liabilities and
stockholders' equity $ 1,045,943 $ 1,078,613
Paycom Software, Inc. Consolidated Statements of
Income (in thousands, except per share and share
amounts) (unaudited) Three
Months Ended June 30, Six Months Ended June
30, 2017 2016
2017 2016
Revenues Recurring $ 96,351 $ 72,492 $ 214,265 $
161,396 Implementation and other 1,876 1,388
3,470 2,610 Total revenues
98,227 73,880 217,735
164,006
Cost of revenues Operating expenses
15,609 10,479 30,695 21,264 Depreciation and amortization
2,267 1,386 4,327 2,572
Total cost of revenues 17,876 11,865
35,022 23,836
Administrative
expenses Sales and marketing 34,070 24,766 70,918 53,428
Research and development 8,095 4,202 14,892 8,062 General and
administrative 26,657 15,220 44,483 30,426 Depreciation and
amortization 2,440 1,823 4,666
3,546 Total administrative expenses
71,262 46,011 134,959
95,462 Total operating expenses 89,138
57,876 169,981 119,298 Operating
income 9,089 16,004 47,754 44,708 Interest expense (281 ) (170 )
(538 ) (481 ) Other income, net 149 116
244 150 Income before income taxes
8,957 15,950 47,460 44,377 Provision for income taxes (5,264
) 5,529 7,625 15,368 Net
income $ 14,221 $ 10,421 $ 39,835 $ 29,009
Earnings per share, basic $ 0.24 $ 0.18 $ 0.69 $ 0.50
Earnings per share, diluted $ 0.24 $ 0.18 $ 0.67 $ 0.49
Weighted
average shares outstanding: Basic 57,898,914
57,591,556 57,623,107 57,362,232
Diluted 58,816,442 58,697,229
58,817,181 58,707,213
Paycom Software, Inc. Consolidated Statements of Cash
Flows (in thousands) (unaudited)
Six Months Ended June 30, 2017
2016 Cash flows from operating
activities Net income $ 39,835 $ 29,009 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation and amortization 8,993 6,118 Amortization of debt
issuance costs 59 63 Net loss on disposition of property and
equipment — 3 Stock-based compensation expense 17,524 4,817
Deferred income taxes, net (6,760 ) (4,936 ) Changes in operating
assets and liabilities: Accounts receivable (464 ) (421 ) Prepaid
expenses (1,262 ) (605 ) Inventory 434 652 Deposits and other
assets (111 ) 350 Accounts payable (319 ) 2,619 Income taxes, net
(2,855 ) 12,114 Accrued commissions and bonuses (2,767 ) (5,635 )
Accrued payroll and vacation 1,088 3,640 Deferred revenue 5,293
4,675 Accrued expenses and other current liabilities (3,395
) 2,091 Net cash provided by operating activities
55,293 54,554
Cash flows from
investing activities Net change in funds held for clients
71,229 (337,611 ) Purchases of property and equipment
(21,909 ) (24,340 ) Net cash provided by (used in) investing
activities 49,320 (361,951 )
Cash flows
from financing activities Proceeds from issuance of long-term
debt 5,440 3,903 Repurchases of common stock (15,187 ) (3,490 )
Withholding taxes paid related to net share settlement (14,973 ) —
Principal payments on long-term debt (562 ) (448 ) Net change in
client funds obligation (71,229 ) 337,611 Payment of debt issuance
costs (143 ) — Net cash (used in) provided by
financing activities (96,654 ) 337,576
Increase in cash and cash equivalents 7,959 30,179
Cash and cash
equivalents Beginning of period 60,158
50,714 End of period $ 68,117 $ 80,893
Paycom Software, Inc. Reconciliation of GAAP to
non-GAAP Financial Measures (in thousands)
(unaudited) Three months ended June
30, Six months ended June 30, 2017
2016 2017
2016 Net income to
Adjusted EBITDA: Net income $ 14,221 $ 10,421 $ 39,835 $ 29,009
Interest expense 281 170 538 481 Provision for income taxes (5,264
) 5,529 7,625 15,368 Depreciation and amortization expense
4,707 3,209 8,993 6,118
EBITDA 13,945 19,329 56,991 50,976 Non-cash stock-based
compensation expense 13,839 3,269
17,527 4,622 Adjusted EBITDA $ 27,784
$ 22,598 $ 74,518 $ 55,598
Three months ended June 30, Six months ended June
30, 2017 2016
2017 2016 Net income to
non-GAAP net income: Net income $ 14,221 $ 10,421 $ 39,835 $
29,009 Non-cash stock-based compensation expense 13,839 3,269
17,527 4,622 Income tax effect on non-GAAP adjustments
(12,883 ) (1,258 ) (14,479 ) (1,762 ) Non-GAAP
net income $ 15,177 $ 12,432 $ 42,883 $ 31,869
Weighted average shares outstanding: Basic 57,898,914
57,591,556 57,623,107 57,362,232 Diluted 58,816,442 58,697,229
58,817,181 58,707,213 Earnings per share, basic $ 0.24 $ 0.18 $
0.69 $ 0.50 Earnings per share, diluted $ 0.24 $ 0.18 $ 0.67 $ 0.49
Non-GAAP net income per share, basic $ 0.26 $ 0.22 $ 0.74 $ 0.56
Non-GAAP net income per share, diluted $ 0.26 $ 0.21 $ 0.73 $ 0.54
Three months ended June 30, Six months
ended June 30, 2017 2016
2017 2016
Earnings per share to non-GAAP net income per share, basic:
Earnings per share, basic $ 0.24 $ 0.18 $ 0.69 $ 0.50 Non-cash
stock-based compensation expense 0.24 0.06 0.30 0.09 Income tax
effect on non-GAAP adjustment (0.22 ) (0.02 )
(0.25 ) (0.03 ) Non-GAAP net income per share, basic $ 0.26
$ 0.22 $ 0.74 $ 0.56
Three months ended June 30, Six months ended June 30,
2017 2016
2017 2016 Earnings per share
to non-GAAP net income per share, diluted: Earnings per share,
diluted $ 0.24 $ 0.18 $ 0.67 $ 0.49 Non-cash stock-based
compensation expense 0.24 0.05 0.30 0.08 Income tax effect on
non-GAAP adjustment (0.22 ) (0.02 ) (0.24 )
(0.03 ) Non-GAAP net income per share, diluted $ 0.26
$ 0.21 $ 0.73 $ 0.54
Three
months ended June 30, Six months ended June 30,
2017 2016 2017
2016 Adjusted gross profit:
Total revenues $ 98,227 $ 73,880 $ 217,735 $ 164,006 Less: Total
cost of revenues (17,876 ) (11,865 ) (35,022 )
(23,836 ) Total gross profit 80,351 62,015 182,713 140,170
Plus: Non-cash stock-based compensation expense 1,220
301 1,711 414 Total
adjusted gross profit $ 81,571 $ 62,316 $ 184,424 $ 140,584 Total
gross profit % 82 % 84 % 84 % 85 % Total adjusted gross profit % 83
% 84 % 85 % 86 %
Three months ended June 30,
Six months ended June 30, 2017
2016 2017 2016
Adjusted sales and marketing expenses: Sales and
marketing expenses $ 34,070 $ 24,766 $ 70,918 $ 53,428 Less:
Non-cash stock-based compensation expense (1,559 )
(792 ) (2,492 ) (1,069 ) Total adjusted sales and
marketing expenses $ 32,511 $ 23,974 $ 68,426
$ 52,359 Total revenues $ 98,227 $ 73,880 $ 217,735 $
164,006 Total adjusted sales and marketing expenses as a % of
revenues 33.1 % 32.4 % 31.4 % 31.9 %
Three months
ended June 30, Six months ended June 30,
2017 2016 2017
2016 Adjusted administrative
expenses: Administrative expenses $ 71,262 $ 46,011 $ 134,959 $
95,462 Less: Non-cash stock-based compensation expense
(12,619 ) (2,968 ) (15,816 ) (4,208 ) Total
adjusted administrative expenses $ 58,643 $ 43,043 $ 119,143 $
91,254 Total revenues $ 98,227 $ 73,880 $ 217,735 $ 164,006
Total adjusted administrative expenses as a % of revenues 59.7 %
58.3 % 54.7 % 55.6 %
Three months ended June
30, Six months ended June 30, 2017
2016 2017
2016 Adjusted research and development
expenses: Research and development expenses $ 8,095 $ 4,202 $
14,892 $ 8,062 Less: Non-cash stock-based compensation expense
(621 ) (131 ) (780 ) (180 ) Total
adjusted research and development expenses $ 7,474 $ 4,071 $ 14,112
$ 7,882 Total revenues $ 98,227 $ 73,880 $ 217,735 $ 164,006
Total adjusted research and development expenses as a % of revenues
7.6 % 5.5 % 6.5 % 4.8 %
Three months ended June
30, Six months ended June 30, 2017
2016 2017
2016 Total research and development costs:
Capitalized research and development costs $ 3,507 $ 1,961 $ 6,383
$ 3,707 Research and development expenses 8,095
4,202 14,892 8,062 Total
research and development costs $ 11,602 $ 6,163 $
21,275 $ 11,769 Total revenues $ 98,227 $
73,880 $ 217,735 $ 164,006 Total research and development costs as
a % of total revenues 11.8 % 8.3 % 9.8 % 7.2 %
Total
adjusted research and development costs: Total research and
development costs $ 11,602 $ 6,163 $ 21,275 $ 11,769 Less:
Capitalized non-cash stock-based compensation (968 ) (251 ) (1,317
) (361 ) Less: Non-cash stock-based compensation expense
(621 ) (131 ) (780 ) (180 ) Total adjusted
research and development costs $ 10,013 $ 5,781 $
19,178 $ 11,228 Total revenues $ 98,227 $
73,880 $ 217,735 $ 164,006 Total adjusted research and development
costs as a % of total revenues 10.2 % 7.8 % 8.8 % 6.8 %
Paycom Software, Inc. Breakout of Non-Cash
Stock-Based Compensation Expense (in thousands)
(unaudited)
Three months ended June 30, Six months ended June
30, 2017 2016 2017 2016 Non-cash
stock-based compensation expense: Operating expenses $ 1,220 $
301 $ 1,711 $ 414 Sales and marketing 1,559 792 2,492 1,069
Research and development 621 131 780 180 General and administrative
10,439 2,045 12,544 2,959 Total
non-cash stock-based compensation expense $ 13,839 $ 3,269 $ 17,527
$ 4,622
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170801006553/en/
Paycom Software, Inc.Media Contact:Kathy Oden-Hall,
800-580-4505CMOKathy.Oden-Hall@paycom.comorInvestor Relations
Contact:David Niederman, 855-603-1620investors@paycom.com
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