First Quarter Revenues of $500 million, up 11% from the
comparable prior year period
First Quarter GAAP Net Income of $247 million, representing 49%
of total revenues, or $4.37 per diluted share
First Quarter Non-GAAP Net Income of $147 million, or $2.59 per
diluted share
First Quarter Adjusted EBITDA of $230 million, representing 46%
of total revenues
Paycom Software, Inc. (“Paycom,” “we” and “our”) (NYSE: PAYC), a
leading provider of comprehensive, cloud-based human capital
management software, today announced its financial results for the
quarter ended March 31, 2024.
“Led by Beti and our differentiated product strategy, we
continue to deliver value to businesses that leverage HCM
automation, while simplifying the lives of employees and HR teams
across the globe,” said Paycom's founder, Co-CEO, President and
Chairman, Chad Richison. “Throughout 2024, we remain focused on
expanding our solution automation capabilities, increasing client
ROI achievement and delivering world-class service across our
organization. These pillars are expected to fuel our momentum for
years to come.”
Financial Highlights for the First
Quarter of 2024
Total Revenues of $499.9 million represented a 10.7%
increase compared to total revenues of $451.6 million in the same
period last year. Recurring revenues of $491.9 million increased
10.7% from the comparable prior year period and constituted 98.4%
of total revenues.
GAAP Net Income was $247.2 million, or $4.37 per diluted
share, compared to GAAP net income of $119.3 million, or $2.06 per
diluted share, in the same period last year. During the first
quarter of 2024, GAAP net income included a benefit to general and
administrative expenses of $117.5 million related to the forfeiture
of the 2020 CEO performance award.
Non-GAAP Net Income1 was $146.6 million, or $2.59 per
diluted share, compared to $142.7 million, or $2.46 per diluted
share, in the same period last year.
Adjusted EBITDA1 was $229.5 million, compared to $220.5
million in the same period last year.
Cash and Cash Equivalents were $371.3 million as of March
31, 2024, compared to $294.0 million as of December 31, 2023.
During the quarter ended March 31, 2024, Paycom paid $21.2 million
in cash dividends and repurchased 15,681 shares of common stock for
$3.1 million, in the aggregate.
Total Debt was $0 as of March 31, 2024 and December 31,
2023.
1Adjusted EBITDA, non-GAAP net income and
non-GAAP net income per diluted share 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 and
other non-GAAP financial measures.
Financial Outlook
Paycom provides the following expected financial guidance for
the quarter ending June 30, 2024 and the year ending December 31,
2024.
Quarter Ending June 30, 2024: Total
Revenues in the range of $434 million to $438 million.
Adjusted EBITDA in the range of $151 million to $155
million. Year Ending December 31, 2024: Total
Revenues in the range of $1.860 billion to $1.885 billion.
Adjusted EBITDA in the range of $720 million to $730
million.
We have not reconciled the forward-looking adjusted EBITDA
ranges presented above and discussed on the teleconference call to
net income, nor the forward-looking adjusted EBITDA margins and
forward-looking non-GAAP effective income tax rate discussed on the
teleconference call to comparable GAAP measures, because applicable
information for future periods, on which these reconciliations
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, reconciliations
of the forward-looking adjusted EBITDA ranges to net income, the
forward-looking adjusted EBITDA margins to net income margin, and
the forward-looking non-GAAP effective income tax rate to the GAAP
effective income tax rate are 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 present certain non-GAAP financial measures in this
press release and on the related teleconference call, including
adjusted EBITDA, non-GAAP net income, adjusted gross profit,
adjusted gross margin, adjusted sales and marketing expenses,
adjusted total administrative expenses, adjusted research and
development expenses, adjusted total research and development
costs, adjusted EBITDA margin and non-GAAP effective income tax
rate. Management uses these non-GAAP financial measures 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, non-cash stock-based compensation
expense, certain transaction expenses that are not core to our
operations (if any) and any loss on the extinguishment of debt,
(ii) non-GAAP net income as net income plus non-cash stock-based
compensation expense, certain transaction expenses that are not
core to our operations (if any) and any loss on the extinguishment
of debt, all of which are adjusted for the effect of income taxes,
(iii) adjusted gross profit as gross profit plus applicable
non-cash stock-based compensation expense, (iv) adjusted gross
margin as gross profit plus applicable non-cash stock-based
compensation expense, divided by total revenues, (v) each adjusted
expense item as the GAAP expense amount less applicable non-cash
stock-based compensation expense, (vi) adjusted total research and
development costs as total research and development costs
(including the capitalized portion) less applicable non-cash
stock-based compensation (including the capitalized portion), (vii)
adjusted EBITDA margin as adjusted EBITDA (calculated as described
in clause (i)) divided by total revenues, and (viii) non-GAAP
effective income tax rate as the provision for income taxes plus
the income tax effect on non-GAAP adjustments divided by non-GAAP
net income (calculated as described in clause (ii)) plus the
provision for income taxes and the income tax effect on non-GAAP
adjustments. The non-GAAP financial measures presented in this
press release and discussed on the related teleconference call
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, paying dividends, repurchasing common stock and other
purposes. Management believes that the non-GAAP measures presented
in this press release and discussed on the related teleconference
call, 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.
The non-GAAP financial measures presented in this press release
and discussed on the related teleconference call are not measures
of financial performance under GAAP and should not be considered a
substitute for net income, gross profit, gross margin, research and
development expenses, sales and marketing expenses, administrative
expenses, total research and development costs and GAAP effective
income tax rate. Non-GAAP financial measures have limitations as
analytical tools, and when assessing our operating performance, you
should not consider these non-GAAP financial measures in isolation,
or as a substitute for the consolidated statements of income data
prepared in accordance with GAAP. The non-GAAP financial measures
that we present may not be comparable to similarly 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, May 1, 2024, at 5:00 p.m. Eastern time to
discuss its financial results. To access this call, dial (833)
470-1428 (domestic) or (404) 975-4839 (international) and provide
420270 as the access code. 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.
About Paycom
For 25 years, Paycom Software, Inc. (NYSE: PAYC) has simplified
businesses and the lives of their employees through easy-to-use HR
and payroll technology to empower transparency through direct
access to their data. And thanks to its industry-first solution,
Beti®, employees now do their own payroll and are guided to find
and fix costly errors before payroll submission. From onboarding
and benefits enrollment to talent management and more, Paycom’s
software streamlines processes, drives efficiencies and gives
employees power over their own HR information, all in a single app.
Recognized nationally for its technology and workplace culture,
Paycom can now serve businesses of all sizes in the U.S. and
internationally.
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 Paycom’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; competition; trends, opportunities and risks affecting
our business, industry and financial results; future expansion or
growth plans and potential for future growth, including
internationally; 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 return on
investment for users of our solution; our ability to attract and
retain qualified employees and key personnel; future regulatory,
judicial and 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 plans regarding our
capital expenditures and investment activity as our business grows,
including with respect to research and development and the
expansion of our corporate headquarters and other facilities; our
plans to pay cash dividends; our plans to repurchase shares of our
common stock through a stock repurchase plan; and our expected
income tax rate for future periods. In addition, forward-looking
statements also consist of statements involving trend analyses and
statements including such words as “anticipate,” “believe,”
“could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,”
“potential,” “should,” “will,” “would,” and similar expressions or
the negative of such terms or other comparable terminology. These
forward-looking statements are based only on information currently
available to us, 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 most recent Annual Report on Form 10-K.
We do not undertake any obligation to update or revise the
forward-looking statements to reflect events that occur or
circumstances that exist after the date on which such statements
were made, except to the extent required by law.
Paycom Software, Inc.
Unaudited Consolidated Balance
Sheets
(in thousands, except per share
amounts)
March 31, 2024
December 31, 2023
Assets
Current assets:
Cash and cash equivalents
$
371,325
$
294,025
Accounts receivable
19,997
16,442
Prepaid expenses
50,809
37,613
Inventory
1,807
1,383
Income tax receivable
—
18,391
Deferred contract costs
124,397
118,206
Current assets before funds held for
clients
568,335
486,060
Funds held for clients
2,727,991
2,327,366
Total current assets
3,296,326
2,813,426
Property and equipment, net
520,182
498,197
Intangible assets, net
49,136
50,112
Goodwill
51,889
51,889
Long-term deferred contract costs
712,935
680,272
Other assets
102,796
103,643
Total assets
$
4,733,264
$
4,197,539
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
20,969
$
13,875
Income tax payable
17,282
—
Accrued commissions and bonuses
20,091
30,492
Accrued payroll and vacation
42,497
56,086
Deferred revenue
27,604
22,812
Accrued expenses and other current
liabilities
85,438
83,302
Current liabilities before client funds
obligation
213,881
206,567
Client funds obligation
2,728,431
2,328,076
Total current liabilities
2,942,312
2,534,643
Deferred income tax liabilities, net
133,454
143,750
Long-term deferred revenue
109,435
107,657
Other long-term liabilities
110,000
108,453
Total long-term liabilities
352,889
359,860
Total liabilities
3,295,201
2,894,503
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value (100,000
shares authorized, 62,719 and 62,675 shares issued at March 31,
2024 and December 31, 2023, respectively; 56,557 and 56,528 shares
outstanding at March 31, 2024 and December 31, 2023,
respectively)
627
627
Additional paid-in capital
634,818
724,493
Retained earnings
1,697,191
1,469,981
Accumulated other comprehensive earnings
(loss)
(495
)
(1,039
)
Treasury stock, at cost (6,162 and 6,147
shares at March 31, 2024 and December 31, 2023, respectively)
(894,078
)
(891,026
)
Total stockholders’ equity
1,438,063
1,303,036
Total liabilities and stockholders’
equity
$
4,733,264
$
4,197,539
Paycom Software, Inc.
Unaudited Consolidated
Statements of Comprehensive Income
(in thousands, except per share
amounts)
Three Months Ended March
31,
2024
2023
Revenues
Recurring
$
491,896
$
444,421
Implementation and other
7,985
7,216
Total revenues
499,881
451,637
Cost of revenues
Operating expenses
63,670
53,085
Depreciation and amortization
14,961
12,147
Total cost of revenues
78,631
65,232
Administrative expenses
Sales and marketing
115,524
103,574
Research and development
50,509
42,669
General and administrative
(48,104
)
65,605
Depreciation and amortization
17,507
14,125
Total administrative expenses
135,436
225,973
Total operating expenses
214,067
291,205
Operating income
285,814
160,432
Interest expense
(782
)
(837
)
Other income (expense), net
5,009
6,004
Income before income taxes
290,041
165,599
Provision for income taxes
42,854
46,303
Net income
$
247,187
$
119,296
Earnings per share, basic
$
4.37
$
2.06
Earnings per share, diluted
$
4.37
$
2.06
Weighted average shares
outstanding:
Basic
56,546
57,867
Diluted
56,552
57,991
Comprehensive earnings:
Net income
$
247,187
$
119,296
Unrealized net gains on available-for-sale
securities
837
1,050
Tax effect
(293
)
(200
)
Other comprehensive income, net of tax
544
850
Comprehensive earnings
$
247,731
$
120,146
Paycom Software, Inc.
Unaudited Consolidated
Statements of Cash Flows
(in thousands)
Three Months Ended March
31,
2024
2023
Cash flows from operating
activities
Net income
$
247,187
$
119,296
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
32,468
26,272
Accretion of discount on
available-for-sale securities
(73
)
(124
)
Non-cash marketing expense
398
418
Loss (Gain) on disposition of property and
equipment
10
(13
)
Amortization of debt issuance costs
276
308
Stock-based compensation expense
(93,790
)
27,819
Deferred income taxes, net
(10,489
)
(1,650
)
Other
(100
)
78
Changes in operating assets and
liabilities:
Accounts receivable
(3,555
)
5,041
Prepaid expenses
(13,888
)
(6,984
)
Inventory
182
385
Other assets
572
2,923
Deferred contract costs
(37,640
)
(38,519
)
Accounts payable
2,980
(4,645
)
Income taxes, net
35,673
24,933
Accrued commissions and bonuses
(10,401
)
(10,845
)
Accrued payroll and vacation
(13,636
)
(8,835
)
Deferred revenue
6,570
3,386
Accrued expenses and other current
liabilities
5,892
6,859
Net cash provided by operating
activities
148,636
146,103
Cash flows from investing
activities
Purchases of investments from funds held
for clients
—
(25,000
)
Proceeds from investments from funds held
for clients
90,000
25,000
Purchases of property and equipment
(47,728
)
(40,618
)
Proceeds from sale of property and
equipment
13
—
Net cash provided by (used in) investing
activities
42,285
(40,618
)
Cash flows from financing
activities
Withholding taxes paid related to net
share settlements
(3,052
)
(626
)
Dividends paid
(21,209
)
—
Net change in client funds obligation
400,355
183,629
Net cash provided by financing
activities
376,094
183,003
Increase in cash, cash equivalents,
restricted cash and restricted cash equivalents
567,015
288,488
Cash, cash equivalents, restricted cash
and restricted cash equivalents
Cash, cash equivalents, restricted cash
and restricted cash equivalents, beginning of period
2,422,760
2,409,095
Cash, cash equivalents, restricted cash
and restricted cash equivalents, end of period
$
2,989,775
$
2,697,583
Paycom Software, Inc.
Unaudited Consolidated
Statements of Cash Flows
(in thousands)
Three Months Ended March
31,
2024
2023
Reconciliation of cash, cash
equivalents, restricted cash and restricted cash
equivalents
Cash and cash equivalents
$
371,325
$
505,590
Restricted cash included in funds held for
clients
2,618,450
2,191,993
Total cash, cash equivalents, restricted
cash and restricted cash equivalents, end of period
$
2,989,775
$
2,697,583
Supplemental disclosures of cash flow
information:
Non-cash investing and financing
activities:
Purchases of property and equipment,
accrued but not paid
$
9,070
$
6,991
Stock-based compensation for capitalized
software
$
3,589
$
3,597
Right of use assets obtained in exchange
for operating lease liabilities
$
5,080
$
1,933
Paycom Software, Inc.
Unaudited Reconciliations of
GAAP to Non-GAAP Financial Measures
(in thousands, except per share
amounts)
Three Months Ended March
31,
2024
2023
Net income to adjusted EBITDA:
Net income
$
247,187
$
119,296
Interest expense
782
837
Provision for income taxes
42,854
46,303
Depreciation and amortization
32,468
26,272
EBITDA
323,291
192,708
Non-cash stock-based compensation
expense
(93,790
)
27,819
Adjusted EBITDA
$
229,501
$
220,527
Net income margin
49.4
%
26.4
%
Adjusted EBITDA margin
45.9
%
48.8
%
Three Months Ended March
31,
2024
2023
Net income to non-GAAP net
income:
Net income
$
247,187
$
119,296
Non-cash stock-based compensation
expense
(93,790
)
27,819
Income tax effect on non-GAAP
adjustments
(6,749
)
(4,464
)
Non-GAAP net income
$
146,648
$
142,651
Weighted average shares outstanding:
Basic
56,546
57,867
Diluted
56,552
57,991
Earnings per share, basic
$
4.37
$
2.06
Earnings per share, diluted
$
4.37
$
2.06
Non-GAAP net income per share, basic
$
2.59
$
2.47
Non-GAAP net income per share, diluted
$
2.59
$
2.46
Three Months Ended March
31,
2024
2023
Earnings per share to non-GAAP net
income per share, basic:
Earnings per share, basic
$
4.37
$
2.06
Non-cash stock-based compensation
expense
(1.66
)
0.48
Income tax effect on non-GAAP
adjustments
(0.12
)
(0.07
)
Non-GAAP net income per share, basic
$
2.59
$
2.47
Three Months Ended March
31,
2024
2023
Earnings per share to non-GAAP net
income per share, diluted:
Earnings per share, diluted
$
4.37
$
2.06
Non-cash stock-based compensation
expense
(1.66
)
0.48
Income tax effect on non-GAAP
adjustments
(0.12
)
(0.08
)
Non-GAAP net income per share, diluted
$
2.59
$
2.46
Three Months Ended March
31,
2024
2023
Adjusted gross profit:
Total revenues
$
499,881
$
451,637
Less: Total cost of revenues
(78,631
)
(65,232
)
Total gross profit
421,250
386,405
Plus: Non-cash stock-based compensation
expense
2,991
2,385
Total adjusted gross profit
$
424,241
$
388,790
Gross margin
84.3
%
85.6
%
Adjusted gross margin
84.9
%
86.1
%
Three Months Ended March
31,
2024
2023
Adjusted sales and marketing
expenses:
Sales and marketing expenses
$
115,524
$
103,574
Less: Non-cash stock-based compensation
expense
(5,494
)
(5,476
)
Adjusted sales and marketing expenses
$
110,030
$
98,098
Total revenues
$
499,881
$
451,637
Sales and marketing expenses as a % of
revenues
23.1
%
22.9
%
Adjusted sales and marketing expenses as a
% of revenues
22.0
%
21.7
%
Three Months Ended March
31,
2024
2023
Adjusted total administrative
expenses:
Total administrative expenses
$
135,436
$
225,973
Less: Non-cash stock-based compensation
expense
96,781
(25,434
)
Adjusted total administrative expenses
$
232,217
$
200,539
Total revenues
$
499,881
$
451,637
Total administrative expenses as a % of
revenues
27.1
%
50.0
%
Adjusted total administrative expenses as
a % of revenues
46.5
%
44.4
%
Three Months Ended March
31,
2024
2023
Adjusted research and development
expenses:
Research and development expenses
$
50,509
$
42,669
Less: Non-cash stock-based compensation
expense
(5,370
)
(5,258
)
Adjusted research and development
expenses
$
45,139
$
37,411
Total revenues
$
499,881
$
451,637
Research and development expenses as a %
of revenues
10.1
%
9.4
%
Adjusted research and development expenses
as a % of revenues
9.0
%
8.3
%
Three Months Ended March
31,
2024
2023
Total research and development
costs:
Capitalized research and development
costs
$
29,846
$
21,353
Research and development expenses
50,509
42,669
Total research and development costs
$
80,355
$
64,022
Total revenues
$
499,881
$
451,637
Total research and development costs as a
% of revenues
16.1
%
14.2
%
Adjusted total research and development
costs:
Total research and development costs
$
80,355
$
64,022
Less: Capitalized non-cash stock-based
compensation
(3,589
)
(3,597
)
Less: Non-cash stock-based compensation
expense
(5,370
)
(5,258
)
Adjusted total research and development
costs
$
71,396
$
55,167
Total revenues
$
499,881
$
451,637
Adjusted total research and development
costs as a % of revenues
14.3
%
12.2
%
Paycom Software, Inc.
Unaudited Components of
Non-Cash Stock-Based Compensation Expense
(in thousands)
Three Months Ended March
31,
2024
2023
Non-cash stock-based compensation
expense:
Operating expenses
$
2,991
$
2,385
Sales and marketing
5,494
5,476
Research and development
5,370
5,258
General and administrative
(107,645
)
14,700
Total non-cash stock-based compensation
expense
$
(93,790
)
$
27,819
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240501499636/en/
Paycom Software, Inc. Investor Relations Contact: James Samford,
800-580-4505 investors@paycom.com
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