Paycom’s second quarter results drew a positive response from the market, with management attributing outperformance to strong recurring revenue growth and expanded operating margins. CEO Chad Richison highlighted the release of IWant—an AI-powered, command-driven interface—as a major milestone, noting that it streamlines access to Paycom’s platform and enhances user engagement across all roles. Management cited record sales activity and efficiency gains from automation as key contributors to the quarter’s momentum.
Is now the time to buy PAYC? Find out in our full research report (it’s free).
Paycom (PAYC) Q2 CY2025 Highlights:
- Revenue: $483.6 million vs analyst estimates of $472 million (10.5% year-on-year growth, 2.5% beat)
- Adjusted EPS: $2.06 vs analyst estimates of $1.78 (15.6% beat)
- Adjusted Operating Income: $150.7 million vs analyst estimates of $134.5 million (31.2% margin, 12.1% beat)
- The company slightly lifted its revenue guidance for the full year to $2.05 billion at the midpoint from $2.03 billion
- EBITDA guidance for the full year is $877 million at the midpoint, above analyst estimates of $852.8 million
- Operating Margin: 23.2%, up from 21.7% in the same quarter last year
- Billings: $484.6 million at quarter end, up 9.4% year on year
- Market Capitalization: $12.11 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Paycom’s Q2 Earnings Call
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Raimo Lenschow (Barclays) asked about IWant’s role as a differentiator and monetization potential. CEO Chad Richison described IWant as foundational to Paycom’s approach and expects it to drive more full-solution deployments, while CFO Robert Foster noted reinvestment of margin gains into AI and infrastructure.
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Mark Steven Marcon (Baird) inquired about IWant’s rollout and marketing plan. Richison explained that activation began with a subset of clients and will expand to all this quarter, emphasizing the ease of use and minimal training required.
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Kevin Damien McVeigh (UBS) questioned IWant’s go-to-market and pricing model. Richison stated that IWant will support cross-selling additional modules and expects it to increase sales volume as clients seek greater value from the platform.
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Bhavin S. Shah (Deutsche Bank) pressed on CapEx needs as AI adoption grows. Richison described upfront investments as necessary for rollout, but expects ongoing AI-related expenses to become more incremental after the initial phase.
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Joshua Christopher Reilly (Needham) explored adjustments to sales and marketing strategy in light of new AI tools and changing digital lead generation trends. Richison said the company is leveraging traditional and modern sales tactics, expecting IWant to enhance sales effectiveness over time.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be closely monitoring (1) the pace of IWant activation and resulting impact on client adoption and retention, (2) the scale and effectiveness of increased marketing and R&D investment aimed at supporting the AI roadmap, and (3) how capital expenditures for AI infrastructure influence margin trends. Execution on full-solution adoption and continued automation gains will also be key areas of focus.
Paycom currently trades at $215.22, down from $222.86 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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