PAYC Paycom Software Inc

Third Quarter Revenues of $452 million, up 11% from the comparable prior year period

Third Quarter GAAP Net Income of $73 million, representing 16% of total revenues, or $1.31 per diluted share

Third Quarter Non-GAAP Net Income of $93 million, or $1.67 per diluted share

Third Quarter Adjusted EBITDA of $171 million, representing 38% 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 September 30, 2024.

“We posted solid third quarter results and continue to make significant progress toward full-solution automation,” said Paycom founder, CEO and chairman, Chad Richison. “We already have the most automated solution in the industry and continue to deliver even stronger ROI to our clients.”

Financial Highlights for the Third Quarter of 2024

Total Revenues of $451.9 million represented a 11.2% increase compared to total revenues of $406.3 million in the same period last year. Recurring revenues of $445.0 million increased 11.6% from the comparable prior year period and constituted 98.5% of total revenues.

GAAP Net Income was $73.3 million, or $1.31 per diluted share, compared to GAAP net income of $75.2 million, or $1.30 per diluted share, in the same period last year.

Non-GAAP Net Income1 was $93.4 million, or $1.67 per diluted share, compared to $102.4 million, or $1.77 per diluted share, in the same period last year.

Adjusted EBITDA1 was $171.3 million, compared to $165.6 million in the same period last year.

Cash and Cash Equivalents were $325.8 million as of September 30, 2024, compared to $294.0 million as of December 31, 2023. During the quarter ended September 30, 2024, Paycom paid $21.0 million in cash dividends and repurchased 303,245 shares of common stock for $44.0 million, in the aggregate.

Total Debt was $0 as of September 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 and the year ending December 31, 2024.

Quarter Ending December 31, 2024:

Total Revenues in the range of $477 million to $484 million.

Adjusted EBITDA in the range of $184.5 million to $191.5 million.

Year Ending December 31, 2024:

Total Revenues in the range of $1.866 billion to $1.873 billion.

Adjusted EBITDA in the range of $745 million to $752 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, October 30, 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 167182 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)

 

 

 

September 30, 2024

 

 

December 31, 2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

325,757

 

 

$

294,025

 

Accounts receivable

 

 

20,576

 

 

 

16,442

 

Prepaid expenses

 

 

45,979

 

 

 

37,613

 

Inventory

 

 

1,331

 

 

 

1,383

 

Income tax receivable

 

 

10,341

 

 

 

18,391

 

Deferred contract costs

 

 

134,270

 

 

 

118,206

 

Current assets before funds held for clients

 

 

538,254

 

 

 

486,060

 

Funds held for clients

 

 

1,439,651

 

 

 

2,327,366

 

Total current assets

 

 

1,977,905

 

 

 

2,813,426

 

Property and equipment, net

 

 

553,597

 

 

 

498,197

 

Intangible assets, net

 

 

47,183

 

 

 

50,112

 

Goodwill

 

 

51,889

 

 

 

51,889

 

Long-term deferred contract costs

 

 

753,290

 

 

 

680,272

 

Operating lease right-of-use assets

 

 

77,958

 

 

 

73,762

 

Other assets

 

 

30,708

 

 

 

29,881

 

Total assets

 

$

3,492,530

 

 

$

4,197,539

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

35,044

 

 

$

13,875

 

Accrued commissions and bonuses

 

 

23,377

 

 

 

30,492

 

Accrued payroll and vacation

 

 

49,495

 

 

 

56,086

 

Deferred revenue

 

 

28,885

 

 

 

22,812

 

Operating lease liabilities

 

 

20,124

 

 

 

19,236

 

Accrued expenses and other current liabilities

 

 

63,110

 

 

 

64,066

 

Current liabilities before client funds obligation

 

 

220,035

 

 

 

206,567

 

Client funds obligation

 

 

1,439,648

 

 

 

2,328,076

 

Total current liabilities

 

 

1,659,683

 

 

 

2,534,643

 

Deferred income tax liabilities, net

 

 

140,228

 

 

 

143,750

 

Long-term deferred revenue

 

 

113,371

 

 

 

107,657

 

Long-term operating lease liabilities

 

 

60,660

 

 

 

56,713

 

Other long-term liabilities

 

 

53,936

 

 

 

51,740

 

Total long-term liabilities

 

 

368,195

 

 

 

359,860

 

Total liabilities

 

 

2,027,878

 

 

 

2,894,503

 

Commitments and contingencies

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock, $0.01 par value (100,000 shares authorized, 62,924 and 62,675 shares issued at September 30, 2024 and December 31, 2023, respectively; 55,885 and 56,528 shares outstanding at September 30, 2024 and December 31, 2023, respectively)

 

 

629

 

 

627

 

Additional paid-in capital

 

 

697,892

 

 

 

724,493

 

Retained earnings

 

 

1,795,476

 

 

 

1,469,981

 

Accumulated other comprehensive earnings (loss)

 

 

(180

)

 

 

(1,039

)

Treasury stock, at cost (7,039 and 6,147 shares at September 30, 2024 and December 31, 2023, respectively)

 

 

(1,029,165

)

 

 

(891,026

)

Total stockholders’ equity

 

 

1,464,652

 

 

 

1,303,036

 

Total liabilities and stockholders’ equity

 

$

3,492,530

 

 

$

4,197,539

 

 

Paycom Software, Inc.

Unaudited Consolidated Statements of Comprehensive Income

(in thousands, except per share amounts)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Recurring

 

$

445,002

 

 

$

398,763

 

 

$

1,367,298

 

 

$

1,237,706

 

Implementation and other

 

 

6,932

 

 

 

7,540

 

 

 

22,029

 

 

 

21,373

 

Total revenues

 

 

451,934

 

 

 

406,303

 

 

 

1,389,327

 

 

 

1,259,079

 

Cost of revenues

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

70,818

 

 

 

55,600

 

 

 

201,939

 

 

 

163,302

 

Depreciation and amortization

 

 

17,535

 

 

 

13,341

 

 

 

48,929

 

 

 

38,299

 

Total cost of revenues

 

 

88,353

 

 

 

68,941

 

 

 

250,868

 

 

 

201,601

 

Administrative expenses

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

104,477

 

 

 

101,162

 

 

 

326,865

 

 

 

311,171

 

Research and development

 

 

63,047

 

 

 

51,864

 

 

 

175,927

 

 

 

143,651

 

General and administrative

 

 

70,642

 

 

 

71,827

 

 

 

92,610

 

 

 

213,397

 

Depreciation and amortization

 

 

20,541

 

 

 

15,608

 

 

 

57,229

 

 

 

44,660

 

Total administrative expenses

 

 

258,707

 

 

 

240,461

 

 

 

652,631

 

 

 

712,879

 

Total operating expenses

 

 

347,060

 

 

 

309,402

 

 

 

903,499

 

 

 

914,480

 

Operating income

 

 

104,874

 

 

 

96,901

 

 

 

485,828

 

 

 

344,599

 

Interest expense

 

 

(789

)

 

 

(222

)

 

 

(2,353

)

 

 

(1,661

)

Other income (expense), net

 

 

4,229

 

 

 

5,362

 

 

 

14,025

 

 

 

17,549

 

Income before income taxes

 

 

108,314

 

 

 

102,041

 

 

 

497,500

 

 

 

360,487

 

Provision for income taxes

 

 

35,036

 

 

 

26,822

 

 

 

109,065

 

 

 

101,456

 

Net income

 

$

73,278

 

 

$

75,219

 

 

$

388,435

 

 

$

259,031

 

Earnings per share, basic

 

$

1.31

 

 

$

1.30

 

 

$

6.90

 

 

$

4.48

 

Earnings per share, diluted

 

$

1.31

 

 

$

1.30

 

 

$

6.89

 

 

$

4.46

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

55,929

 

 

 

57,825

 

 

 

56,307

 

 

 

57,871

 

Diluted

 

 

55,964

 

 

 

57,966

 

 

 

56,365

 

 

 

58,056

 

Comprehensive earnings:

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

73,278

 

 

$

75,219

 

 

$

388,435

 

 

$

259,031

 

Unrealized net gains on available-for-sale securities

 

 

101

 

 

 

1,232

 

 

 

1,256

 

 

 

2,047

 

Tax effect

 

 

24

 

 

 

(420

)

 

 

(397

)

 

 

(525

)

Other comprehensive income, net of tax

 

 

125

 

 

 

812

 

 

 

859

 

 

 

1,522

 

Comprehensive earnings:

 

$

73,403

 

 

$

76,031

 

 

$

389,294

 

 

$

260,553

 

 

Paycom Software, Inc.

Unaudited Consolidated Statements of Cash Flows

(in thousands)

 

 

 

Nine Months Ended September 30,

 

 

 

2024

 

 

2023

 

Cash flows from operating activities

 

 

 

 

 

 

Net income

 

$

388,435

 

 

$

259,031

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

106,158

 

 

 

82,959

 

Accretion of discount on available-for-sale securities

 

 

(112

)

 

 

(387

)

Non-cash marketing expense

 

 

1,202

 

 

 

1,263

 

Gain on disposition of property and equipment

 

 

(12

)

 

 

(33

)

Amortization of debt issuance costs

 

 

831

 

 

 

946

 

Stock-based compensation expense

 

 

(45,514

)

 

 

96,383

 

Loss on extinguishment of debt

 

 

—

 

 

 

1,222

 

Deferred income taxes, net

 

 

(3,827

)

 

 

3,889

 

Other

 

 

(97

)

 

 

18

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(4,134

)

 

 

7,295

 

Prepaid expenses

 

 

(7,970

)

 

 

(8,845

)

Inventory

 

 

869

 

 

 

375

 

Other assets

 

 

(1,657

)

 

 

(8,262

)

Deferred contract costs

 

 

(84,413

)

 

 

(87,604

)

Accounts payable

 

 

13,088

 

 

 

(8,131

)

Income taxes, net

 

 

8,050

 

 

 

(5,187

)

Accrued commissions and bonuses

 

 

(7,115

)

 

 

(8,016

)

Accrued payroll and vacation

 

 

(6,591

)

 

 

(3,863

)

Deferred revenue

 

 

11,787

 

 

 

10,902

 

Net change in operating right-of-use assets and operating lease liabilities

 

 

639

 

 

 

882

 

Accrued expenses and other current liabilities

 

 

3,896

 

 

 

15,732

 

Net cash provided by operating activities

 

 

373,513

 

 

 

350,569

 

Cash flows from investing activities

 

 

 

 

 

 

Purchases of investments from funds held for clients

 

 

(24,926

)

 

 

(25,000

)

Proceeds from investments from funds held for clients

 

 

200,000

 

 

 

25,000

 

Purchases of property and equipment

 

 

(141,549

)

 

 

(135,709

)

Proceeds from sale of property and equipment

 

 

13

 

 

 

67

 

Net cash provided by (used in) investing activities

 

 

33,538

 

 

 

(135,642

)

Cash flows from financing activities

 

 

 

 

 

 

Repurchases of common stock

 

 

(122,801

)

 

 

(74,994

)

Withholding taxes paid related to net share settlements

 

 

(14,415

)

 

 

(12,620

)

Dividends paid

 

 

(63,687

)

 

 

(43,367

)

Net change in client funds obligation

 

 

(888,428

)

 

 

(306,063

)

Payment of debt issuance costs

 

 

—

 

 

 

(649

)

Net cash used in financing activities

 

 

(1,089,331

)

 

 

(437,693

)

Decrease in cash, cash equivalents, restricted cash and restricted cash equivalents

 

 

(682,280

)

 

 

(222,766

)

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

 

$

1,740,480

 

 

$

2,186,329

 

 

Paycom Software, Inc.

Unaudited Consolidated Statements of Cash Flows, continued

(in thousands)

 

 

 

Nine Months Ended September 30,

 

 

 

2024

 

 

2023

 

Reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents

 

 

 

 

 

 

Cash and cash equivalents

 

$

325,757

 

 

$

484,028

 

Restricted cash included in funds held for clients

 

 

1,414,723

 

 

 

1,702,301

 

Total cash, cash equivalents, restricted cash and restricted cash equivalents, end of period

 

$

1,740,480

 

 

$

2,186,329

 

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

Non-cash investing and financing activities:

 

 

 

 

 

 

Purchases of property and equipment, accrued but not paid

 

$

3,640

 

 

$

8,011

 

Stock-based compensation for capitalized software

 

$

13,850

 

 

$

11,529

 

Right of use assets obtained in exchange for operating lease liabilities

 

$

17,507

 

 

$

21,023

 

 

Paycom Software, Inc.

Unaudited Reconciliations of GAAP to Non-GAAP Financial Measures

(in thousands, except per share amounts)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Net income to adjusted EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

73,278

 

 

$

75,219

 

 

$

388,435

 

 

$

259,031

 

Interest expense

 

 

789

 

 

 

222

 

 

 

2,353

 

 

 

1,661

 

Provision for income taxes

 

 

35,036

 

 

 

26,822

 

 

 

109,065

 

 

 

101,456

 

Depreciation and amortization

 

 

38,076

 

 

 

28,949

 

 

 

106,158

 

 

 

82,959

 

EBITDA

 

 

147,179

 

 

 

131,212

 

 

 

606,011

 

 

 

445,107

 

Non-cash stock-based compensation expense

 

 

24,156

 

 

 

33,198

 

 

 

(45,514

)

 

 

96,383

 

Loss on extinguishment of debt

 

 

—

 

 

 

1,222

 

 

 

—

 

 

 

1,222

 

Adjusted EBITDA

 

$

171,335

 

 

$

165,632

 

 

$

560,497

 

 

$

542,712

 

Net income margin

 

 

16.2

%

 

 

18.5

%

 

 

28.0

%

 

 

20.6

%

Adjusted EBITDA margin

 

 

37.9

%

 

 

40.8

%

 

 

40.3

%

 

 

43.1

%

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Net income to non-GAAP net income:

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

73,278

 

 

$

75,219

 

 

$

388,435

 

 

$

259,031

 

Non-cash stock-based compensation expense

 

 

24,156

 

 

 

33,198

 

 

 

(45,514

)

 

 

96,383

 

Loss on extinguishment of debt

 

 

—

 

 

 

1,222

 

 

 

—

 

 

 

1,222

 

Income tax effect on non-GAAP adjustments

 

 

(4,016

)

 

 

(7,263

)

 

 

(11,020

)

 

 

(17,347

)

Non-GAAP net income

 

$

93,418

 

 

$

102,376

 

 

$

331,901

 

 

$

339,289

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

55,929

 

 

 

57,825

 

 

 

56,307

 

 

 

57,871

 

Diluted

 

 

55,964

 

 

 

57,966

 

 

 

56,365

 

 

 

58,056

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share, basic

 

$

1.31

 

 

$

1.30

 

 

$

6.90

 

 

$

4.48

 

Earnings per share, diluted

 

$

1.31

 

 

$

1.30

 

 

$

6.89

 

 

$

4.46

 

Non-GAAP net income per share, basic

 

$

1.67

 

 

$

1.77

 

 

$

5.89

 

 

$

5.86

 

Non-GAAP net income per share, diluted

 

$

1.67

 

 

$

1.77

 

 

$

5.89

 

 

$

5.84

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Earnings per share to non-GAAP net income per share, basic:

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share, basic

 

$

1.31

 

 

$

1.30

 

 

$

6.90

 

 

$

4.48

 

Non-cash stock-based compensation expense

 

 

0.43

 

 

 

0.57

 

 

 

(0.81

)

 

 

1.67

 

Loss on extinguishment of debt

 

 

—

 

 

 

0.02

 

 

 

—

 

 

 

0.02

 

Income tax effect on non-GAAP adjustments

 

 

(0.07

)

 

 

(0.12

)

 

 

(0.20

)

 

 

(0.31

)

Non-GAAP net income per share, basic

 

$

1.67

 

 

$

1.77

 

 

$

5.89

 

 

$

5.86

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Earnings per share to non-GAAP net income per share, diluted:

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share, diluted

 

$

1.31

 

 

$

1.30

 

 

$

6.89

 

 

$

4.46

 

Non-cash stock-based compensation expense

 

 

0.43

 

 

 

0.57

 

 

 

(0.81

)

 

 

1.66

 

Loss on extinguishment of debt

 

 

—

 

 

 

0.02

 

 

 

—

 

 

 

0.02

 

Income tax effect on non-GAAP adjustments

 

 

(0.07

)

 

 

(0.12

)

 

 

(0.19

)

 

 

(0.30

)

Non-GAAP net income per share, diluted

 

$

1.67

 

 

$

1.77

 

 

$

5.89

 

 

$

5.84

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Adjusted gross profit:

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

451,934

 

 

$

406,303

 

 

$

1,389,327

 

 

$

1,259,079

 

Less: Total cost of revenues

 

 

(88,353

)

 

 

(68,941

)

 

 

(250,868

)

 

 

(201,601

)

Total gross profit

 

 

363,581

 

 

 

337,362

 

 

 

1,138,459

 

 

 

1,057,478

 

Plus: Non-cash stock-based compensation expense

 

 

3,873

 

 

 

2,868

 

 

 

11,027

 

 

 

8,606

 

Total adjusted gross profit

 

$

367,454

 

 

$

340,230

 

 

$

1,149,486

 

 

$

1,066,084

 

Gross margin

 

 

80.5

%

 

 

83.0

%

 

 

81.9

%

 

 

84.0

%

Adjusted gross margin

 

 

81.3

%

 

 

83.7

%

 

 

82.7

%

 

 

84.7

%

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Adjusted sales and marketing expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing expenses

 

$

104,477

 

 

$

101,162

 

 

$

326,865

 

 

$

311,171

 

Less: Non-cash stock-based compensation expense

 

 

(3,303

)

 

 

(6,851

)

 

 

(13,599

)

 

 

(18,367

)

Adjusted sales and marketing expenses

 

$

101,174

 

 

$

94,311

 

 

$

313,266

 

 

$

292,804

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

451,934

 

 

$

406,303

 

 

$

1,389,327

 

 

$

1,259,079

 

Sales and marketing expenses as a % of revenues

 

 

23.1

%

 

 

24.9

%

 

 

23.5

%

 

 

24.7

%

Adjusted sales and marketing expenses as a % of revenues

 

 

22.4

%

 

 

23.2

%

 

 

22.5

%

 

 

23.3

%

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Adjusted total administrative expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Total administrative expenses

 

$

258,707

 

 

$

240,461

 

 

$

652,631

 

 

$

712,879

 

Less: Non-cash stock-based compensation expense

 

 

(20,283

)

 

 

(30,330

)

 

 

56,541

 

 

 

(87,777

)

Adjusted total administrative expenses

 

$

238,424

 

 

$

210,131

 

 

$

709,172

 

 

$

625,102

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

451,934

 

 

$

406,303

 

 

$

1,389,327

 

 

$

1,259,079

 

Total administrative expenses as a % of revenues

 

 

57.2

%

 

 

59.2

%

 

 

47.0

%

 

 

56.6

%

Adjusted total administrative expenses as a % of revenues

 

 

52.8

%

 

 

51.7

%

 

 

51.0

%

 

 

49.6

%

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Adjusted research and development expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development expenses

 

$

63,047

 

 

$

51,864

 

 

$

175,927

 

 

$

143,651

 

Less: Non-cash stock-based compensation expense

 

 

(7,571

)

 

 

(5,617

)

 

 

(20,716

)

 

 

(17,514

)

Adjusted research and development expenses

 

$

55,476

 

 

$

46,247

 

 

$

155,211

 

 

$

126,137

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

451,934

 

 

$

406,303

 

 

$

1,389,327

 

 

$

1,259,079

 

Research and development expenses as a % of revenues

 

 

14.0

%

 

 

12.8

%

 

 

12.7

%

 

 

11.4

%

Adjusted research and development expenses as a % of revenues

 

 

12.3

%

 

 

11.4

%

 

 

11.2

%

 

 

10.0

%

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Total research and development costs:

 

 

 

 

 

 

 

 

 

 

 

 

Capitalized research and development costs

 

$

33,362

 

 

$

26,578

 

 

$

94,394

 

 

$

70,809

 

Research and development expenses

 

 

63,047

 

 

 

51,864

 

 

 

175,927

 

 

 

143,651

 

Total research and development costs

 

$

96,409

 

 

$

78,442

 

 

$

270,321

 

 

$

214,460

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

451,934

 

 

$

406,303

 

 

$

1,389,327

 

 

$

1,259,079

 

Total research and development costs as a % of revenues

 

 

21.3

%

 

 

19.3

%

 

 

19.5

%

 

 

17.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted total research and development costs:

 

 

 

 

 

 

 

 

 

 

 

 

Total research and development costs

 

$

96,409

 

 

$

78,442

 

 

$

270,321

 

 

$

214,460

 

Less: Capitalized non-cash stock-based compensation

 

 

(5,053

)

 

 

(3,777

)

 

 

(13,850

)

 

 

(11,529

)

Less: Non-cash stock-based compensation expense

 

 

(7,571

)

 

 

(5,617

)

 

 

(20,716

)

 

 

(17,514

)

Adjusted total research and development costs

 

$

83,785

 

 

$

69,048

 

 

$

235,755

 

 

$

185,417

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

451,934

 

 

$

406,303

 

 

$

1,389,327

 

 

$

1,259,079

 

Adjusted total research and development costs as a % of revenues

 

 

18.5

%

 

 

17.0

%

 

 

17.0

%

 

 

14.7

%

 

Paycom Software, Inc.

Unaudited Components of Non-Cash Stock-Based Compensation Expense

(in thousands)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Non-cash stock-based compensation expense:

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

$

3,873

 

 

$

2,868

 

 

$

11,027

 

 

$

8,606

 

Sales and marketing

 

 

3,303

 

 

 

6,851

 

 

 

13,599

 

 

 

18,367

 

Research and development

 

 

7,571

 

 

 

5,617

 

 

 

20,716

 

 

 

17,514

 

General and administrative

 

 

9,409

 

 

 

17,862

 

 

 

(90,856

)

 

 

51,896

 

Total non-cash stock-based compensation expense

 

$

24,156

 

 

$

33,198

 

 

$

(45,514

)

 

$

96,383

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241030180997/en/

Paycom Software, Inc. Investor Relations Contact: James Samford, 800-580-4505 investors@paycom.com