Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Paycom Software, Inc. Reports Second Quarter 2024 Results By: Paycom Software, Inc. via Business Wire July 31, 2024 at 16:05 PM EDT Second Quarter Revenues of $438 million, up 9% from the comparable prior year period Second Quarter GAAP Net Income of $68 million, representing 16% of total revenues, or $1.20 per diluted share Second Quarter Non-GAAP Net Income of $92 million, or $1.62 per diluted share Second Quarter Adjusted EBITDA of $160 million, representing 36% 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 June 30, 2024. “During the second quarter, our outside sales team delivered solid performance with robust new logo adds, as we continue to sell the most automated solution on the market,” said Paycom founder, CEO and chairman, Chad Richison. “We continue to extend our product lead as we eclipse the industry with even greater automation.” Financial Highlights for the Second Quarter of 2024 Total Revenues of $437.5 million represented a 9.1% increase compared to total revenues of $401.1 million in the same period last year. Recurring revenues of $430.4 million increased 9.1% from the comparable prior year period and constituted 98.4% of total revenues. GAAP Net Income was $68.0 million, or $1.20 per diluted share, compared to GAAP net income of $64.5 million, or $1.11 per diluted share, in the same period last year. Non-GAAP Net Income1 was $91.8 million, or $1.62 per diluted share, compared to $94.3 million, or $1.62 per diluted share, in the same period last year. Adjusted EBITDA1 was $159.7 million, compared to $156.6 million in the same period last year. Cash and Cash Equivalents were $346.5 million as of June 30, 2024, compared to $294.0 million as of December 31, 2023. During the quarter ended June 30, 2024, Paycom paid $21.2 million in cash dividends and repurchased 573,743 shares of common stock for $90.1 million, in the aggregate. Total Debt was $0 as of June 30, 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 September 30, 2024 and the year ending December 31, 2024. Quarter Ending September 30, 2024: Total Revenues in the range of $444 million to $449 million. Adjusted EBITDA in the range of $155 million to $159 million. Year Ending December 31, 2024: Total Revenues in the range of $1.860 billion to $1.875 billion. Adjusted EBITDA in the range of $727 million to $737 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, July 31, 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 399008 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 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) June 30, 2024 December 31, 2023 Assets Current assets: Cash and cash equivalents $ 346,456 $ 294,025 Accounts receivable 20,034 16,442 Prepaid expenses 46,529 37,613 Inventory 1,415 1,383 Income tax receivable — 18,391 Deferred contract costs 128,728 118,206 Current assets before funds held for clients 543,162 486,060 Funds held for clients 2,303,159 2,327,366 Total current assets 2,846,321 2,813,426 Property and equipment, net 531,884 498,197 Intangible assets, net 48,159 50,112 Goodwill 51,889 51,889 Long-term deferred contract costs 727,956 680,272 Other assets 106,535 103,643 Total assets $ 4,312,744 $ 4,197,539 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 14,997 $ 13,875 Income tax payable 10,281 — Accrued commissions and bonuses 22,227 30,492 Accrued payroll and vacation 60,533 56,086 Deferred revenue 31,432 22,812 Accrued expenses and other current liabilities 84,215 83,302 Current liabilities before client funds obligation 223,685 206,567 Client funds obligation 2,303,198 2,328,076 Total current liabilities 2,526,883 2,534,643 Deferred income tax liabilities, net 136,213 143,750 Long-term deferred revenue 110,928 107,657 Other long-term liabilities 112,189 108,453 Total long-term liabilities 359,330 359,860 Total liabilities 2,886,213 2,894,503 Commitments and contingencies Stockholders’ equity: Common stock, $0.01 par value (100,000 shares authorized, 62,887 and 62,675 shares issued at June 30, 2024 and December 31, 2023, respectively; 56,151 and 56,528 shares outstanding at June 30, 2024 and December 31, 2023, respectively) 629 627 Additional paid-in capital 667,197 724,493 Retained earnings 1,743,608 1,469,981 Accumulated other comprehensive earnings (loss) (305 ) (1,039 ) Treasury stock, at cost (6,736 and 6,147 shares at June 30, 2024 and December 31, 2023, respectively) (984,598 ) (891,026 ) Total stockholders’ equity 1,426,531 1,303,036 Total liabilities and stockholders’ equity $ 4,312,744 $ 4,197,539 Paycom Software, Inc. Unaudited Consolidated Statements of Comprehensive Income (in thousands, except per share amounts) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Revenues Recurring $ 430,400 $ 394,522 $ 922,296 $ 838,943 Implementation and other 7,112 6,617 15,097 13,833 Total revenues 437,512 401,139 937,393 852,776 Cost of revenues Operating expenses 67,451 54,617 131,121 107,702 Depreciation and amortization 16,433 12,811 31,394 24,958 Total cost of revenues 83,884 67,428 162,515 132,660 Administrative expenses Sales and marketing 106,864 106,435 222,388 210,009 Research and development 62,371 49,118 112,880 91,787 General and administrative 70,072 75,965 21,968 141,570 Depreciation and amortization 19,181 14,927 36,688 29,052 Total administrative expenses 258,488 246,445 393,924 472,418 Total operating expenses 342,372 313,873 556,439 605,078 Operating income 95,140 87,266 380,954 247,698 Interest expense (782 ) (602 ) (1,564 ) (1,439 ) Other income (expense), net 4,787 6,183 9,796 12,187 Income before income taxes 99,145 92,847 389,186 258,446 Provision for income taxes 31,175 28,331 74,029 74,634 Net income $ 67,970 $ 64,516 $ 315,157 $ 183,812 Earnings per share, basic $ 1.20 $ 1.11 $ 5.58 $ 3.17 Earnings per share, diluted $ 1.20 $ 1.11 $ 5.57 $ 3.17 Weighted average shares outstanding: Basic 56,451 57,920 56,499 57,895 Diluted 56,771 58,033 56,548 58,050 Comprehensive earnings: Net income $ 67,970 $ 64,516 $ 315,157 $ 183,812 Unrealized net gains on available-for-sale securities 318 (235 ) 1,155 815 Tax effect (128 ) 95 (421 ) (105 ) Other comprehensive income, net of tax 190 (140 ) 734 710 Comprehensive earnings: $ 68,160 $ 64,376 $ 315,891 $ 184,522 Paycom Software, Inc. Unaudited Consolidated Statements of Cash Flows (in thousands) Six Months Ended June 30, 2024 2023 Cash flows from operating activities Net income $ 315,157 $ 183,812 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 68,082 54,010 Accretion of discount on available-for-sale securities (108 ) (253 ) Non-cash marketing expense 798 839 Loss (Gain) on disposition of property and equipment 12 (21 ) Amortization of debt issuance costs 552 620 Stock-based compensation expense (69,670 ) 63,185 Deferred income taxes, net (7,798 ) 1,706 Other (161 ) 111 Changes in operating assets and liabilities: Accounts receivable (3,592 ) 6,650 Prepaid expenses (8,345 ) (10,597 ) Inventory 431 336 Other assets (3,445 ) (9,057 ) Deferred contract costs (55,198 ) (62,489 ) Accounts payable 91 (10,277 ) Income taxes, net 28,672 3,645 Accrued commissions and bonuses (8,265 ) (6,560 ) Accrued payroll and vacation 4,197 4,954 Deferred revenue 11,891 6,817 Accrued expenses and other current liabilities 7,431 24,560 Net cash provided by operating activities 280,732 251,991 Cash flows from investing activities Purchases of investments from funds held for clients — (25,000 ) Proceeds from investments from funds held for clients 165,000 25,000 Purchases of property and equipment (93,335 ) (83,422 ) Proceeds from sale of property and equipment 13 44 Net cash provided by (used in) investing activities 71,678 (83,378 ) Cash flows from financing activities Repurchases of common stock (80,761 ) — Withholding taxes paid related to net share settlements (12,410 ) (11,067 ) Dividends paid (42,400 ) (21,731 ) Net change in client funds obligation (24,878 ) (201,552 ) Net cash (used in) financing activities (160,449 ) (234,350 ) Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents 191,961 (65,737 ) 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 $ 2,614,721 $ 2,343,358 Paycom Software, Inc. Unaudited Consolidated Statements of Cash Flows (in thousands) Six Months Ended June 30, 2024 2023 Reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents Cash and cash equivalents $ 346,456 $ 536,545 Restricted cash included in funds held for clients 2,268,265 1,806,813 Total cash, cash equivalents, restricted cash and restricted cash equivalents, end of period $ 2,614,721 $ 2,343,358 Supplemental disclosures of cash flow information: Non-cash investing and financing activities: Purchases of property and equipment, accrued but not paid $ 8,507 $ 11,968 Stock-based compensation for capitalized software $ 8,797 $ 7,752 Right of use assets obtained in exchange for operating lease liabilities $ 11,933 $ 16,341 Paycom Software, Inc. Unaudited Reconciliations of GAAP to Non-GAAP Financial Measures (in thousands, except per share amounts) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net income to adjusted EBITDA: Net income $ 67,970 $ 64,516 $ 315,157 $ 183,812 Interest expense 782 602 1,564 1,439 Provision for income taxes 31,175 28,331 74,029 74,634 Depreciation and amortization 35,614 27,738 68,082 54,010 EBITDA 135,541 121,187 458,832 313,895 Non-cash stock-based compensation expense 24,120 35,366 (69,670 ) 63,185 Adjusted EBITDA $ 159,661 $ 156,553 $ 389,162 $ 377,080 Net income margin 15.5 % 16.1 % 33.6 % 21.6 % Adjusted EBITDA margin 36.5 % 39.0 % 41.5 % 44.2 % Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net income to non-GAAP net income: Net income $ 67,970 $ 64,516 $ 315,157 $ 183,812 Non-cash stock-based compensation expense 24,120 35,366 (69,670 ) 63,185 Income tax effect on non-GAAP adjustments (255 ) (5,620 ) (7,004 ) (10,084 ) Non-GAAP net income $ 91,835 $ 94,262 $ 238,483 $ 236,913 Weighted average shares outstanding: Basic 56,451 57,920 56,499 57,895 Diluted 56,771 58,033 56,548 58,050 Earnings per share, basic $ 1.20 $ 1.11 $ 5.58 $ 3.17 Earnings per share, diluted $ 1.20 $ 1.11 $ 5.57 $ 3.17 Non-GAAP net income per share, basic $ 1.63 $ 1.63 $ 4.22 $ 4.09 Non-GAAP net income per share, diluted $ 1.62 $ 1.62 $ 4.22 $ 4.08 Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Earnings per share to non-GAAP net income per share, basic: Earnings per share, basic $ 1.20 $ 1.11 $ 5.58 $ 3.17 Non-cash stock-based compensation expense 0.43 0.61 (1.23 ) 1.09 Income tax effect on non-GAAP adjustments — (0.09 ) (0.13 ) (0.17 ) Non-GAAP net income per share, basic $ 1.63 $ 1.63 $ 4.22 $ 4.09 Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Earnings per share to non-GAAP net income per share, diluted: Earnings per share, diluted $ 1.20 $ 1.11 $ 5.57 $ 3.17 Non-cash stock-based compensation expense 0.42 0.61 (1.23 ) 1.09 Income tax effect on non-GAAP adjustments — (0.10 ) (0.12 ) (0.18 ) Non-GAAP net income per share, diluted $ 1.62 $ 1.62 $ 4.22 $ 4.08 Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Adjusted gross profit: Total revenues $ 437,512 $ 401,139 $ 937,393 $ 852,776 Less: Total cost of revenues (83,884 ) (67,428 ) (162,515 ) (132,660 ) Total gross profit 353,628 333,711 774,878 720,116 Plus: Non-cash stock-based compensation expense 4,163 3,353 7,154 5,738 Total adjusted gross profit $ 357,791 $ 337,064 $ 782,032 $ 725,854 Gross margin 80.8 % 83.2 % 82.7 % 84.4 % Adjusted gross margin 81.8 % 84.0 % 83.4 % 85.1 % Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Adjusted sales and marketing expenses: Sales and marketing expenses $ 106,864 $ 106,435 $ 222,388 $ 210,009 Less: Non-cash stock-based compensation expense (4,802 ) (6,040 ) (10,296 ) (11,516 ) Adjusted sales and marketing expenses $ 102,062 $ 100,395 $ 212,092 $ 198,493 Total revenues $ 437,512 $ 401,139 $ 937,393 $ 852,776 Sales and marketing expenses as a % of revenues 24.4 % 26.5 % 23.7 % 24.6 % Adjusted sales and marketing expenses as a % of revenues 23.3 % 25.0 % 22.6 % 23.3 % Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Adjusted total administrative expenses: Total administrative expenses $ 258,488 $ 246,445 $ 393,924 $ 472,418 Less: Non-cash stock-based compensation expense (19,957 ) (32,013 ) 76,824 (57,447 ) Adjusted total administrative expenses $ 238,531 $ 214,432 $ 470,748 $ 414,971 Total revenues $ 437,512 $ 401,139 $ 937,393 $ 852,776 Total administrative expenses as a % of revenues 59.1 % 61.4 % 42.0 % 55.4 % Adjusted total administrative expenses as a % of revenues 54.5 % 53.5 % 50.2 % 48.7 % Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Adjusted research and development expenses: Research and development expenses $ 62,371 $ 49,118 $ 112,880 $ 91,787 Less: Non-cash stock-based compensation expense (7,775 ) (6,639 ) (13,145 ) (11,897 ) Adjusted research and development expenses $ 54,596 $ 42,479 $ 99,735 $ 79,890 Total revenues $ 437,512 $ 401,139 $ 937,393 $ 852,776 Research and development expenses as a % of revenues 14.3 % 12.2 % 12.0 % 10.8 % Adjusted research and development expenses as a % of revenues 12.5 % 10.6 % 10.6 % 9.4 % Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Total research and development costs: Capitalized research and development costs $ 31,186 $ 22,878 $ 61,032 $ 44,231 Research and development expenses 62,371 49,118 112,880 91,787 Total research and development costs $ 93,557 $ 71,996 $ 173,912 $ 136,018 Total revenues $ 437,512 $ 401,139 $ 937,393 $ 852,776 Total research and development costs as a % of revenues 21.4 % 17.9 % 18.6 % 16.0 % Adjusted total research and development costs: Total research and development costs $ 93,557 $ 71,996 $ 173,912 $ 136,018 Less: Capitalized non-cash stock-based compensation (5,208 ) (4,155 ) (8,797 ) (7,752 ) Less: Non-cash stock-based compensation expense (7,775 ) (6,639 ) (13,145 ) (11,897 ) Adjusted total research and development costs $ 80,574 $ 61,202 $ 151,970 $ 116,369 Total revenues $ 437,512 $ 401,139 $ 937,393 $ 852,776 Adjusted total research and development costs as a % of revenues 18.4 % 15.3 % 16.2 % 13.6 % Paycom Software, Inc. Unaudited Components of Non-Cash Stock-Based Compensation Expense (in thousands) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Non-cash stock-based compensation expense: Operating expenses $ 4,163 $ 3,353 $ 7,154 $ 5,738 Sales and marketing 4,802 6,040 10,296 11,516 Research and development 7,775 6,639 13,145 11,897 General and administrative 7,380 19,334 (100,265 ) 34,034 Total non-cash stock-based compensation expense $ 24,120 $ 35,366 $ (69,670 ) $ 63,185 View source version on businesswire.com: https://www.businesswire.com/news/home/20240731559443/en/Contacts Paycom Software, Inc. Investor Relations Contact: James Samford, 800-580-4505 investors@paycom.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Paycom Software, Inc. Reports Second Quarter 2024 Results By: Paycom Software, Inc. via Business Wire July 31, 2024 at 16:05 PM EDT Second Quarter Revenues of $438 million, up 9% from the comparable prior year period Second Quarter GAAP Net Income of $68 million, representing 16% of total revenues, or $1.20 per diluted share Second Quarter Non-GAAP Net Income of $92 million, or $1.62 per diluted share Second Quarter Adjusted EBITDA of $160 million, representing 36% 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 June 30, 2024. “During the second quarter, our outside sales team delivered solid performance with robust new logo adds, as we continue to sell the most automated solution on the market,” said Paycom founder, CEO and chairman, Chad Richison. “We continue to extend our product lead as we eclipse the industry with even greater automation.” Financial Highlights for the Second Quarter of 2024 Total Revenues of $437.5 million represented a 9.1% increase compared to total revenues of $401.1 million in the same period last year. Recurring revenues of $430.4 million increased 9.1% from the comparable prior year period and constituted 98.4% of total revenues. GAAP Net Income was $68.0 million, or $1.20 per diluted share, compared to GAAP net income of $64.5 million, or $1.11 per diluted share, in the same period last year. Non-GAAP Net Income1 was $91.8 million, or $1.62 per diluted share, compared to $94.3 million, or $1.62 per diluted share, in the same period last year. Adjusted EBITDA1 was $159.7 million, compared to $156.6 million in the same period last year. Cash and Cash Equivalents were $346.5 million as of June 30, 2024, compared to $294.0 million as of December 31, 2023. During the quarter ended June 30, 2024, Paycom paid $21.2 million in cash dividends and repurchased 573,743 shares of common stock for $90.1 million, in the aggregate. Total Debt was $0 as of June 30, 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 September 30, 2024 and the year ending December 31, 2024. Quarter Ending September 30, 2024: Total Revenues in the range of $444 million to $449 million. Adjusted EBITDA in the range of $155 million to $159 million. Year Ending December 31, 2024: Total Revenues in the range of $1.860 billion to $1.875 billion. Adjusted EBITDA in the range of $727 million to $737 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, July 31, 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 399008 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 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) June 30, 2024 December 31, 2023 Assets Current assets: Cash and cash equivalents $ 346,456 $ 294,025 Accounts receivable 20,034 16,442 Prepaid expenses 46,529 37,613 Inventory 1,415 1,383 Income tax receivable — 18,391 Deferred contract costs 128,728 118,206 Current assets before funds held for clients 543,162 486,060 Funds held for clients 2,303,159 2,327,366 Total current assets 2,846,321 2,813,426 Property and equipment, net 531,884 498,197 Intangible assets, net 48,159 50,112 Goodwill 51,889 51,889 Long-term deferred contract costs 727,956 680,272 Other assets 106,535 103,643 Total assets $ 4,312,744 $ 4,197,539 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 14,997 $ 13,875 Income tax payable 10,281 — Accrued commissions and bonuses 22,227 30,492 Accrued payroll and vacation 60,533 56,086 Deferred revenue 31,432 22,812 Accrued expenses and other current liabilities 84,215 83,302 Current liabilities before client funds obligation 223,685 206,567 Client funds obligation 2,303,198 2,328,076 Total current liabilities 2,526,883 2,534,643 Deferred income tax liabilities, net 136,213 143,750 Long-term deferred revenue 110,928 107,657 Other long-term liabilities 112,189 108,453 Total long-term liabilities 359,330 359,860 Total liabilities 2,886,213 2,894,503 Commitments and contingencies Stockholders’ equity: Common stock, $0.01 par value (100,000 shares authorized, 62,887 and 62,675 shares issued at June 30, 2024 and December 31, 2023, respectively; 56,151 and 56,528 shares outstanding at June 30, 2024 and December 31, 2023, respectively) 629 627 Additional paid-in capital 667,197 724,493 Retained earnings 1,743,608 1,469,981 Accumulated other comprehensive earnings (loss) (305 ) (1,039 ) Treasury stock, at cost (6,736 and 6,147 shares at June 30, 2024 and December 31, 2023, respectively) (984,598 ) (891,026 ) Total stockholders’ equity 1,426,531 1,303,036 Total liabilities and stockholders’ equity $ 4,312,744 $ 4,197,539 Paycom Software, Inc. Unaudited Consolidated Statements of Comprehensive Income (in thousands, except per share amounts) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Revenues Recurring $ 430,400 $ 394,522 $ 922,296 $ 838,943 Implementation and other 7,112 6,617 15,097 13,833 Total revenues 437,512 401,139 937,393 852,776 Cost of revenues Operating expenses 67,451 54,617 131,121 107,702 Depreciation and amortization 16,433 12,811 31,394 24,958 Total cost of revenues 83,884 67,428 162,515 132,660 Administrative expenses Sales and marketing 106,864 106,435 222,388 210,009 Research and development 62,371 49,118 112,880 91,787 General and administrative 70,072 75,965 21,968 141,570 Depreciation and amortization 19,181 14,927 36,688 29,052 Total administrative expenses 258,488 246,445 393,924 472,418 Total operating expenses 342,372 313,873 556,439 605,078 Operating income 95,140 87,266 380,954 247,698 Interest expense (782 ) (602 ) (1,564 ) (1,439 ) Other income (expense), net 4,787 6,183 9,796 12,187 Income before income taxes 99,145 92,847 389,186 258,446 Provision for income taxes 31,175 28,331 74,029 74,634 Net income $ 67,970 $ 64,516 $ 315,157 $ 183,812 Earnings per share, basic $ 1.20 $ 1.11 $ 5.58 $ 3.17 Earnings per share, diluted $ 1.20 $ 1.11 $ 5.57 $ 3.17 Weighted average shares outstanding: Basic 56,451 57,920 56,499 57,895 Diluted 56,771 58,033 56,548 58,050 Comprehensive earnings: Net income $ 67,970 $ 64,516 $ 315,157 $ 183,812 Unrealized net gains on available-for-sale securities 318 (235 ) 1,155 815 Tax effect (128 ) 95 (421 ) (105 ) Other comprehensive income, net of tax 190 (140 ) 734 710 Comprehensive earnings: $ 68,160 $ 64,376 $ 315,891 $ 184,522 Paycom Software, Inc. Unaudited Consolidated Statements of Cash Flows (in thousands) Six Months Ended June 30, 2024 2023 Cash flows from operating activities Net income $ 315,157 $ 183,812 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 68,082 54,010 Accretion of discount on available-for-sale securities (108 ) (253 ) Non-cash marketing expense 798 839 Loss (Gain) on disposition of property and equipment 12 (21 ) Amortization of debt issuance costs 552 620 Stock-based compensation expense (69,670 ) 63,185 Deferred income taxes, net (7,798 ) 1,706 Other (161 ) 111 Changes in operating assets and liabilities: Accounts receivable (3,592 ) 6,650 Prepaid expenses (8,345 ) (10,597 ) Inventory 431 336 Other assets (3,445 ) (9,057 ) Deferred contract costs (55,198 ) (62,489 ) Accounts payable 91 (10,277 ) Income taxes, net 28,672 3,645 Accrued commissions and bonuses (8,265 ) (6,560 ) Accrued payroll and vacation 4,197 4,954 Deferred revenue 11,891 6,817 Accrued expenses and other current liabilities 7,431 24,560 Net cash provided by operating activities 280,732 251,991 Cash flows from investing activities Purchases of investments from funds held for clients — (25,000 ) Proceeds from investments from funds held for clients 165,000 25,000 Purchases of property and equipment (93,335 ) (83,422 ) Proceeds from sale of property and equipment 13 44 Net cash provided by (used in) investing activities 71,678 (83,378 ) Cash flows from financing activities Repurchases of common stock (80,761 ) — Withholding taxes paid related to net share settlements (12,410 ) (11,067 ) Dividends paid (42,400 ) (21,731 ) Net change in client funds obligation (24,878 ) (201,552 ) Net cash (used in) financing activities (160,449 ) (234,350 ) Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents 191,961 (65,737 ) 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 $ 2,614,721 $ 2,343,358 Paycom Software, Inc. Unaudited Consolidated Statements of Cash Flows (in thousands) Six Months Ended June 30, 2024 2023 Reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents Cash and cash equivalents $ 346,456 $ 536,545 Restricted cash included in funds held for clients 2,268,265 1,806,813 Total cash, cash equivalents, restricted cash and restricted cash equivalents, end of period $ 2,614,721 $ 2,343,358 Supplemental disclosures of cash flow information: Non-cash investing and financing activities: Purchases of property and equipment, accrued but not paid $ 8,507 $ 11,968 Stock-based compensation for capitalized software $ 8,797 $ 7,752 Right of use assets obtained in exchange for operating lease liabilities $ 11,933 $ 16,341 Paycom Software, Inc. Unaudited Reconciliations of GAAP to Non-GAAP Financial Measures (in thousands, except per share amounts) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net income to adjusted EBITDA: Net income $ 67,970 $ 64,516 $ 315,157 $ 183,812 Interest expense 782 602 1,564 1,439 Provision for income taxes 31,175 28,331 74,029 74,634 Depreciation and amortization 35,614 27,738 68,082 54,010 EBITDA 135,541 121,187 458,832 313,895 Non-cash stock-based compensation expense 24,120 35,366 (69,670 ) 63,185 Adjusted EBITDA $ 159,661 $ 156,553 $ 389,162 $ 377,080 Net income margin 15.5 % 16.1 % 33.6 % 21.6 % Adjusted EBITDA margin 36.5 % 39.0 % 41.5 % 44.2 % Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net income to non-GAAP net income: Net income $ 67,970 $ 64,516 $ 315,157 $ 183,812 Non-cash stock-based compensation expense 24,120 35,366 (69,670 ) 63,185 Income tax effect on non-GAAP adjustments (255 ) (5,620 ) (7,004 ) (10,084 ) Non-GAAP net income $ 91,835 $ 94,262 $ 238,483 $ 236,913 Weighted average shares outstanding: Basic 56,451 57,920 56,499 57,895 Diluted 56,771 58,033 56,548 58,050 Earnings per share, basic $ 1.20 $ 1.11 $ 5.58 $ 3.17 Earnings per share, diluted $ 1.20 $ 1.11 $ 5.57 $ 3.17 Non-GAAP net income per share, basic $ 1.63 $ 1.63 $ 4.22 $ 4.09 Non-GAAP net income per share, diluted $ 1.62 $ 1.62 $ 4.22 $ 4.08 Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Earnings per share to non-GAAP net income per share, basic: Earnings per share, basic $ 1.20 $ 1.11 $ 5.58 $ 3.17 Non-cash stock-based compensation expense 0.43 0.61 (1.23 ) 1.09 Income tax effect on non-GAAP adjustments — (0.09 ) (0.13 ) (0.17 ) Non-GAAP net income per share, basic $ 1.63 $ 1.63 $ 4.22 $ 4.09 Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Earnings per share to non-GAAP net income per share, diluted: Earnings per share, diluted $ 1.20 $ 1.11 $ 5.57 $ 3.17 Non-cash stock-based compensation expense 0.42 0.61 (1.23 ) 1.09 Income tax effect on non-GAAP adjustments — (0.10 ) (0.12 ) (0.18 ) Non-GAAP net income per share, diluted $ 1.62 $ 1.62 $ 4.22 $ 4.08 Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Adjusted gross profit: Total revenues $ 437,512 $ 401,139 $ 937,393 $ 852,776 Less: Total cost of revenues (83,884 ) (67,428 ) (162,515 ) (132,660 ) Total gross profit 353,628 333,711 774,878 720,116 Plus: Non-cash stock-based compensation expense 4,163 3,353 7,154 5,738 Total adjusted gross profit $ 357,791 $ 337,064 $ 782,032 $ 725,854 Gross margin 80.8 % 83.2 % 82.7 % 84.4 % Adjusted gross margin 81.8 % 84.0 % 83.4 % 85.1 % Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Adjusted sales and marketing expenses: Sales and marketing expenses $ 106,864 $ 106,435 $ 222,388 $ 210,009 Less: Non-cash stock-based compensation expense (4,802 ) (6,040 ) (10,296 ) (11,516 ) Adjusted sales and marketing expenses $ 102,062 $ 100,395 $ 212,092 $ 198,493 Total revenues $ 437,512 $ 401,139 $ 937,393 $ 852,776 Sales and marketing expenses as a % of revenues 24.4 % 26.5 % 23.7 % 24.6 % Adjusted sales and marketing expenses as a % of revenues 23.3 % 25.0 % 22.6 % 23.3 % Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Adjusted total administrative expenses: Total administrative expenses $ 258,488 $ 246,445 $ 393,924 $ 472,418 Less: Non-cash stock-based compensation expense (19,957 ) (32,013 ) 76,824 (57,447 ) Adjusted total administrative expenses $ 238,531 $ 214,432 $ 470,748 $ 414,971 Total revenues $ 437,512 $ 401,139 $ 937,393 $ 852,776 Total administrative expenses as a % of revenues 59.1 % 61.4 % 42.0 % 55.4 % Adjusted total administrative expenses as a % of revenues 54.5 % 53.5 % 50.2 % 48.7 % Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Adjusted research and development expenses: Research and development expenses $ 62,371 $ 49,118 $ 112,880 $ 91,787 Less: Non-cash stock-based compensation expense (7,775 ) (6,639 ) (13,145 ) (11,897 ) Adjusted research and development expenses $ 54,596 $ 42,479 $ 99,735 $ 79,890 Total revenues $ 437,512 $ 401,139 $ 937,393 $ 852,776 Research and development expenses as a % of revenues 14.3 % 12.2 % 12.0 % 10.8 % Adjusted research and development expenses as a % of revenues 12.5 % 10.6 % 10.6 % 9.4 % Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Total research and development costs: Capitalized research and development costs $ 31,186 $ 22,878 $ 61,032 $ 44,231 Research and development expenses 62,371 49,118 112,880 91,787 Total research and development costs $ 93,557 $ 71,996 $ 173,912 $ 136,018 Total revenues $ 437,512 $ 401,139 $ 937,393 $ 852,776 Total research and development costs as a % of revenues 21.4 % 17.9 % 18.6 % 16.0 % Adjusted total research and development costs: Total research and development costs $ 93,557 $ 71,996 $ 173,912 $ 136,018 Less: Capitalized non-cash stock-based compensation (5,208 ) (4,155 ) (8,797 ) (7,752 ) Less: Non-cash stock-based compensation expense (7,775 ) (6,639 ) (13,145 ) (11,897 ) Adjusted total research and development costs $ 80,574 $ 61,202 $ 151,970 $ 116,369 Total revenues $ 437,512 $ 401,139 $ 937,393 $ 852,776 Adjusted total research and development costs as a % of revenues 18.4 % 15.3 % 16.2 % 13.6 % Paycom Software, Inc. Unaudited Components of Non-Cash Stock-Based Compensation Expense (in thousands) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Non-cash stock-based compensation expense: Operating expenses $ 4,163 $ 3,353 $ 7,154 $ 5,738 Sales and marketing 4,802 6,040 10,296 11,516 Research and development 7,775 6,639 13,145 11,897 General and administrative 7,380 19,334 (100,265 ) 34,034 Total non-cash stock-based compensation expense $ 24,120 $ 35,366 $ (69,670 ) $ 63,185 View source version on businesswire.com: https://www.businesswire.com/news/home/20240731559443/en/Contacts Paycom Software, Inc. Investor Relations Contact: James Samford, 800-580-4505 investors@paycom.com
Second Quarter Revenues of $438 million, up 9% from the comparable prior year period Second Quarter GAAP Net Income of $68 million, representing 16% of total revenues, or $1.20 per diluted share Second Quarter Non-GAAP Net Income of $92 million, or $1.62 per diluted share Second Quarter Adjusted EBITDA of $160 million, representing 36% 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 June 30, 2024. “During the second quarter, our outside sales team delivered solid performance with robust new logo adds, as we continue to sell the most automated solution on the market,” said Paycom founder, CEO and chairman, Chad Richison. “We continue to extend our product lead as we eclipse the industry with even greater automation.” Financial Highlights for the Second Quarter of 2024 Total Revenues of $437.5 million represented a 9.1% increase compared to total revenues of $401.1 million in the same period last year. Recurring revenues of $430.4 million increased 9.1% from the comparable prior year period and constituted 98.4% of total revenues. GAAP Net Income was $68.0 million, or $1.20 per diluted share, compared to GAAP net income of $64.5 million, or $1.11 per diluted share, in the same period last year. Non-GAAP Net Income1 was $91.8 million, or $1.62 per diluted share, compared to $94.3 million, or $1.62 per diluted share, in the same period last year. Adjusted EBITDA1 was $159.7 million, compared to $156.6 million in the same period last year. Cash and Cash Equivalents were $346.5 million as of June 30, 2024, compared to $294.0 million as of December 31, 2023. During the quarter ended June 30, 2024, Paycom paid $21.2 million in cash dividends and repurchased 573,743 shares of common stock for $90.1 million, in the aggregate. Total Debt was $0 as of June 30, 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 September 30, 2024 and the year ending December 31, 2024. Quarter Ending September 30, 2024: Total Revenues in the range of $444 million to $449 million. Adjusted EBITDA in the range of $155 million to $159 million. Year Ending December 31, 2024: Total Revenues in the range of $1.860 billion to $1.875 billion. Adjusted EBITDA in the range of $727 million to $737 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, July 31, 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 399008 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 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) June 30, 2024 December 31, 2023 Assets Current assets: Cash and cash equivalents $ 346,456 $ 294,025 Accounts receivable 20,034 16,442 Prepaid expenses 46,529 37,613 Inventory 1,415 1,383 Income tax receivable — 18,391 Deferred contract costs 128,728 118,206 Current assets before funds held for clients 543,162 486,060 Funds held for clients 2,303,159 2,327,366 Total current assets 2,846,321 2,813,426 Property and equipment, net 531,884 498,197 Intangible assets, net 48,159 50,112 Goodwill 51,889 51,889 Long-term deferred contract costs 727,956 680,272 Other assets 106,535 103,643 Total assets $ 4,312,744 $ 4,197,539 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 14,997 $ 13,875 Income tax payable 10,281 — Accrued commissions and bonuses 22,227 30,492 Accrued payroll and vacation 60,533 56,086 Deferred revenue 31,432 22,812 Accrued expenses and other current liabilities 84,215 83,302 Current liabilities before client funds obligation 223,685 206,567 Client funds obligation 2,303,198 2,328,076 Total current liabilities 2,526,883 2,534,643 Deferred income tax liabilities, net 136,213 143,750 Long-term deferred revenue 110,928 107,657 Other long-term liabilities 112,189 108,453 Total long-term liabilities 359,330 359,860 Total liabilities 2,886,213 2,894,503 Commitments and contingencies Stockholders’ equity: Common stock, $0.01 par value (100,000 shares authorized, 62,887 and 62,675 shares issued at June 30, 2024 and December 31, 2023, respectively; 56,151 and 56,528 shares outstanding at June 30, 2024 and December 31, 2023, respectively) 629 627 Additional paid-in capital 667,197 724,493 Retained earnings 1,743,608 1,469,981 Accumulated other comprehensive earnings (loss) (305 ) (1,039 ) Treasury stock, at cost (6,736 and 6,147 shares at June 30, 2024 and December 31, 2023, respectively) (984,598 ) (891,026 ) Total stockholders’ equity 1,426,531 1,303,036 Total liabilities and stockholders’ equity $ 4,312,744 $ 4,197,539 Paycom Software, Inc. Unaudited Consolidated Statements of Comprehensive Income (in thousands, except per share amounts) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Revenues Recurring $ 430,400 $ 394,522 $ 922,296 $ 838,943 Implementation and other 7,112 6,617 15,097 13,833 Total revenues 437,512 401,139 937,393 852,776 Cost of revenues Operating expenses 67,451 54,617 131,121 107,702 Depreciation and amortization 16,433 12,811 31,394 24,958 Total cost of revenues 83,884 67,428 162,515 132,660 Administrative expenses Sales and marketing 106,864 106,435 222,388 210,009 Research and development 62,371 49,118 112,880 91,787 General and administrative 70,072 75,965 21,968 141,570 Depreciation and amortization 19,181 14,927 36,688 29,052 Total administrative expenses 258,488 246,445 393,924 472,418 Total operating expenses 342,372 313,873 556,439 605,078 Operating income 95,140 87,266 380,954 247,698 Interest expense (782 ) (602 ) (1,564 ) (1,439 ) Other income (expense), net 4,787 6,183 9,796 12,187 Income before income taxes 99,145 92,847 389,186 258,446 Provision for income taxes 31,175 28,331 74,029 74,634 Net income $ 67,970 $ 64,516 $ 315,157 $ 183,812 Earnings per share, basic $ 1.20 $ 1.11 $ 5.58 $ 3.17 Earnings per share, diluted $ 1.20 $ 1.11 $ 5.57 $ 3.17 Weighted average shares outstanding: Basic 56,451 57,920 56,499 57,895 Diluted 56,771 58,033 56,548 58,050 Comprehensive earnings: Net income $ 67,970 $ 64,516 $ 315,157 $ 183,812 Unrealized net gains on available-for-sale securities 318 (235 ) 1,155 815 Tax effect (128 ) 95 (421 ) (105 ) Other comprehensive income, net of tax 190 (140 ) 734 710 Comprehensive earnings: $ 68,160 $ 64,376 $ 315,891 $ 184,522 Paycom Software, Inc. Unaudited Consolidated Statements of Cash Flows (in thousands) Six Months Ended June 30, 2024 2023 Cash flows from operating activities Net income $ 315,157 $ 183,812 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 68,082 54,010 Accretion of discount on available-for-sale securities (108 ) (253 ) Non-cash marketing expense 798 839 Loss (Gain) on disposition of property and equipment 12 (21 ) Amortization of debt issuance costs 552 620 Stock-based compensation expense (69,670 ) 63,185 Deferred income taxes, net (7,798 ) 1,706 Other (161 ) 111 Changes in operating assets and liabilities: Accounts receivable (3,592 ) 6,650 Prepaid expenses (8,345 ) (10,597 ) Inventory 431 336 Other assets (3,445 ) (9,057 ) Deferred contract costs (55,198 ) (62,489 ) Accounts payable 91 (10,277 ) Income taxes, net 28,672 3,645 Accrued commissions and bonuses (8,265 ) (6,560 ) Accrued payroll and vacation 4,197 4,954 Deferred revenue 11,891 6,817 Accrued expenses and other current liabilities 7,431 24,560 Net cash provided by operating activities 280,732 251,991 Cash flows from investing activities Purchases of investments from funds held for clients — (25,000 ) Proceeds from investments from funds held for clients 165,000 25,000 Purchases of property and equipment (93,335 ) (83,422 ) Proceeds from sale of property and equipment 13 44 Net cash provided by (used in) investing activities 71,678 (83,378 ) Cash flows from financing activities Repurchases of common stock (80,761 ) — Withholding taxes paid related to net share settlements (12,410 ) (11,067 ) Dividends paid (42,400 ) (21,731 ) Net change in client funds obligation (24,878 ) (201,552 ) Net cash (used in) financing activities (160,449 ) (234,350 ) Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents 191,961 (65,737 ) 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 $ 2,614,721 $ 2,343,358 Paycom Software, Inc. Unaudited Consolidated Statements of Cash Flows (in thousands) Six Months Ended June 30, 2024 2023 Reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents Cash and cash equivalents $ 346,456 $ 536,545 Restricted cash included in funds held for clients 2,268,265 1,806,813 Total cash, cash equivalents, restricted cash and restricted cash equivalents, end of period $ 2,614,721 $ 2,343,358 Supplemental disclosures of cash flow information: Non-cash investing and financing activities: Purchases of property and equipment, accrued but not paid $ 8,507 $ 11,968 Stock-based compensation for capitalized software $ 8,797 $ 7,752 Right of use assets obtained in exchange for operating lease liabilities $ 11,933 $ 16,341 Paycom Software, Inc. Unaudited Reconciliations of GAAP to Non-GAAP Financial Measures (in thousands, except per share amounts) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net income to adjusted EBITDA: Net income $ 67,970 $ 64,516 $ 315,157 $ 183,812 Interest expense 782 602 1,564 1,439 Provision for income taxes 31,175 28,331 74,029 74,634 Depreciation and amortization 35,614 27,738 68,082 54,010 EBITDA 135,541 121,187 458,832 313,895 Non-cash stock-based compensation expense 24,120 35,366 (69,670 ) 63,185 Adjusted EBITDA $ 159,661 $ 156,553 $ 389,162 $ 377,080 Net income margin 15.5 % 16.1 % 33.6 % 21.6 % Adjusted EBITDA margin 36.5 % 39.0 % 41.5 % 44.2 % Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net income to non-GAAP net income: Net income $ 67,970 $ 64,516 $ 315,157 $ 183,812 Non-cash stock-based compensation expense 24,120 35,366 (69,670 ) 63,185 Income tax effect on non-GAAP adjustments (255 ) (5,620 ) (7,004 ) (10,084 ) Non-GAAP net income $ 91,835 $ 94,262 $ 238,483 $ 236,913 Weighted average shares outstanding: Basic 56,451 57,920 56,499 57,895 Diluted 56,771 58,033 56,548 58,050 Earnings per share, basic $ 1.20 $ 1.11 $ 5.58 $ 3.17 Earnings per share, diluted $ 1.20 $ 1.11 $ 5.57 $ 3.17 Non-GAAP net income per share, basic $ 1.63 $ 1.63 $ 4.22 $ 4.09 Non-GAAP net income per share, diluted $ 1.62 $ 1.62 $ 4.22 $ 4.08 Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Earnings per share to non-GAAP net income per share, basic: Earnings per share, basic $ 1.20 $ 1.11 $ 5.58 $ 3.17 Non-cash stock-based compensation expense 0.43 0.61 (1.23 ) 1.09 Income tax effect on non-GAAP adjustments — (0.09 ) (0.13 ) (0.17 ) Non-GAAP net income per share, basic $ 1.63 $ 1.63 $ 4.22 $ 4.09 Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Earnings per share to non-GAAP net income per share, diluted: Earnings per share, diluted $ 1.20 $ 1.11 $ 5.57 $ 3.17 Non-cash stock-based compensation expense 0.42 0.61 (1.23 ) 1.09 Income tax effect on non-GAAP adjustments — (0.10 ) (0.12 ) (0.18 ) Non-GAAP net income per share, diluted $ 1.62 $ 1.62 $ 4.22 $ 4.08 Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Adjusted gross profit: Total revenues $ 437,512 $ 401,139 $ 937,393 $ 852,776 Less: Total cost of revenues (83,884 ) (67,428 ) (162,515 ) (132,660 ) Total gross profit 353,628 333,711 774,878 720,116 Plus: Non-cash stock-based compensation expense 4,163 3,353 7,154 5,738 Total adjusted gross profit $ 357,791 $ 337,064 $ 782,032 $ 725,854 Gross margin 80.8 % 83.2 % 82.7 % 84.4 % Adjusted gross margin 81.8 % 84.0 % 83.4 % 85.1 % Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Adjusted sales and marketing expenses: Sales and marketing expenses $ 106,864 $ 106,435 $ 222,388 $ 210,009 Less: Non-cash stock-based compensation expense (4,802 ) (6,040 ) (10,296 ) (11,516 ) Adjusted sales and marketing expenses $ 102,062 $ 100,395 $ 212,092 $ 198,493 Total revenues $ 437,512 $ 401,139 $ 937,393 $ 852,776 Sales and marketing expenses as a % of revenues 24.4 % 26.5 % 23.7 % 24.6 % Adjusted sales and marketing expenses as a % of revenues 23.3 % 25.0 % 22.6 % 23.3 % Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Adjusted total administrative expenses: Total administrative expenses $ 258,488 $ 246,445 $ 393,924 $ 472,418 Less: Non-cash stock-based compensation expense (19,957 ) (32,013 ) 76,824 (57,447 ) Adjusted total administrative expenses $ 238,531 $ 214,432 $ 470,748 $ 414,971 Total revenues $ 437,512 $ 401,139 $ 937,393 $ 852,776 Total administrative expenses as a % of revenues 59.1 % 61.4 % 42.0 % 55.4 % Adjusted total administrative expenses as a % of revenues 54.5 % 53.5 % 50.2 % 48.7 % Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Adjusted research and development expenses: Research and development expenses $ 62,371 $ 49,118 $ 112,880 $ 91,787 Less: Non-cash stock-based compensation expense (7,775 ) (6,639 ) (13,145 ) (11,897 ) Adjusted research and development expenses $ 54,596 $ 42,479 $ 99,735 $ 79,890 Total revenues $ 437,512 $ 401,139 $ 937,393 $ 852,776 Research and development expenses as a % of revenues 14.3 % 12.2 % 12.0 % 10.8 % Adjusted research and development expenses as a % of revenues 12.5 % 10.6 % 10.6 % 9.4 % Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Total research and development costs: Capitalized research and development costs $ 31,186 $ 22,878 $ 61,032 $ 44,231 Research and development expenses 62,371 49,118 112,880 91,787 Total research and development costs $ 93,557 $ 71,996 $ 173,912 $ 136,018 Total revenues $ 437,512 $ 401,139 $ 937,393 $ 852,776 Total research and development costs as a % of revenues 21.4 % 17.9 % 18.6 % 16.0 % Adjusted total research and development costs: Total research and development costs $ 93,557 $ 71,996 $ 173,912 $ 136,018 Less: Capitalized non-cash stock-based compensation (5,208 ) (4,155 ) (8,797 ) (7,752 ) Less: Non-cash stock-based compensation expense (7,775 ) (6,639 ) (13,145 ) (11,897 ) Adjusted total research and development costs $ 80,574 $ 61,202 $ 151,970 $ 116,369 Total revenues $ 437,512 $ 401,139 $ 937,393 $ 852,776 Adjusted total research and development costs as a % of revenues 18.4 % 15.3 % 16.2 % 13.6 % Paycom Software, Inc. Unaudited Components of Non-Cash Stock-Based Compensation Expense (in thousands) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Non-cash stock-based compensation expense: Operating expenses $ 4,163 $ 3,353 $ 7,154 $ 5,738 Sales and marketing 4,802 6,040 10,296 11,516 Research and development 7,775 6,639 13,145 11,897 General and administrative 7,380 19,334 (100,265 ) 34,034 Total non-cash stock-based compensation expense $ 24,120 $ 35,366 $ (69,670 ) $ 63,185 View source version on businesswire.com: https://www.businesswire.com/news/home/20240731559443/en/
