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1. Company Snapshot

1.a. Company Description

Paycom Software, Inc.provides cloud-based human capital management (HCM) solution delivered as software-as-a-service for small to mid-sized companies in the United States.It offers functionality and data analytics that businesses need to manage the employment life cycle from recruitment to retirement.


The company's HCM solution provides a suite of applications in the areas of talent acquisition, including applicant tracking, candidate tracker, background checks, on-boarding, e-verify, and tax credit services; and time and labor management, such as time and attendance, scheduling/schedule exchange, time-off requests, labor allocation, labor management reports/push reporting, and geofencing/geotracking, and Microfence, a proprietary Bluetooth.Its HCM solution also offers payroll applications comprising better employee transaction interface, payroll and tax management, Paycom pay, expense management, mileage tracker/fixed and variable rates, garnishment management, and GL concierge applications; and talent management applications that include employee self-service, compensation budgeting, performance management, position management, and Paycom learning and content subscriptions, as well as my analytics, which offer employment predictor reporting.In addition, its HCM solution provides manager on-the-go that gives supervisors and managers the ability to perform a variety of tasks, such as approving time-off requests and expense reimbursements; direct data exchange; ask here, a tool for direct line of communication to ask work-related questions; document and checklist; government and compliance; benefits administration/benefits to carrier; COBRA administration; personnel action and performance discussion forms; surveys; and affordable care act applications, as well as Clue, which securely collect, track, and manage the vaccination and testing data of the workforce.


Paycom Software, Inc.was founded in 1998 and is headquartered in Oklahoma City, Oklahoma.

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1.b. Last Insights on PAYC

Paycom Software, Inc.'s recent underperformance stems from AI-related sentiment, a slowing US labor market, and revenue headwinds from its BETI rollout. The company's valuation is compressed, trading at 9.7x EV/EBITDA and 16x forward earnings. Despite this, significant buybacks, up to 17% of market cap, and high operating efficiency could support shares. Federated Hermes Inc. and Associated Banc Corp have recently sold shares, while Amiral Gestion and Dillon & Associates Inc. have increased their holdings. Analysts have a consensus "Hold" rating on the stock.

1.c. Company Highlights

2. Paycom's Strong 2025 Results and Optimistic 2026 Guidance

In 2025, Paycom reported total revenue of $2.05 billion, with recurring and other revenue growth of 10% year-over-year to $1.94 billion. The company's adjusted EBITDA margin remained strong, expanding 180 basis points year-over-year to 43%, resulting in adjusted EBITDA of $882 million, up 14% year-over-year. In Q4 2025, total revenue was $544 million, up 10% year-over-year, and recurring and other revenue was $517 million, up 11% year-over-year. The company's EPS came out at $2.45, beating estimates of $2.44. The revenue retention rate increased to 91%, and the company experienced a record number of clients returning to the Paycom platform.

Publication Date: Feb -14

📋 Highlights
  • Revenue Growth:: Full-year 2025 total revenue reached $2.05 billion, with recurring revenue growing 10% YoY to $1.94 billion, driven by 11% YoY growth in Q4 to $517 million.
  • EBITDA Margin Expansion:: Full-year 2025 adjusted EBITDA rose 14% YoY to $882 million (43% margin), with Q4 margin at 43.4% ($236 million), reflecting 180 bps expansion.
  • Client Retention & Growth:: Revenue retention hit 91%, with record client returns, and 80% surge in IWant tool usage in January 2026, underscoring automation adoption.
  • 2026 Guidance:: Anticipates 6-7% total revenue growth ($2.175–2.195 billion) and 44% adjusted EBITDA margin midpoint ($960 million), with recurring revenue up 7-8% YoY.
  • Market Opportunity:: Targets the remaining 95% of the addressable market, leveraging AI/automation tools and expanding sales offices, while retaining 5% market share with no client concentration risk.

Revenue Growth and Client Retention

The company's revenue growth was driven by a combination of factors, including the successful onboarding of new sales offices and the return of previously lost customers. As Chad Richison noted, "the company is focused on delivering unparalleled value to its clients while continuing to attack the remaining 95% of the addressable market." The growth in recurring revenue is a testament to the company's ability to retain clients and expand its services.

Margin Expansion and Operating Efficiency

Paycom's adjusted EBITDA margin expansion was driven by the company's focus on operating efficiency and cost management. The company's investment in AI and automation has improved internal productivity and efficiency, allowing it to maintain strong margins. With an adjusted EBITDA margin of 43% in 2025, the company is well-positioned to continue delivering strong profitability.

Valuation and Growth Prospects

Paycom's valuation multiples suggest that the market has priced in a certain level of growth. With a P/E Ratio of 15.17 and an EV/EBITDA of 8.77, the company's valuation is reasonable compared to its growth prospects. Analysts estimate next year's revenue growth at 7.2%, which is slightly above the company's guided range of 6-7%. The company's focus on full solution automation and client ROI achievement is expected to drive continued growth.

Guidance and Outlook

For 2026, Paycom expects total revenue to be between $2.175 billion and $2.195 billion, representing 6-7% year-over-year growth. The company also expects full-year adjusted EBITDA in the range of $950 million to $970 million, representing an adjusted EBITDA margin of approximately 44% at the midpoint of the range. With a strong track record of delivering on guidance, Paycom is well-positioned to continue its growth trajectory.

3. NewsRoom

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Paycom Software Combines Exceptional Value Creation With Impressive Growth

Mar -03

Source: seekingalpha.com

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Paycom Software, Inc. (NYSE:PAYC) Given Consensus Recommendation of “Hold” by Brokerages

Feb -27

Source: defenseworld.net

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Paycom Promotes Shane Hadlock to President

Feb -19

Source: businesswire.com

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Paycom Software Q4: After The Massive Selloff, An Attractive Opportunity (Upgrade)

Feb -12

Source: seekingalpha.com

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Paycom's Q4 Earnings Surpass Expectations, Revenues Rise Y/Y

Feb -12

Source: zacks.com

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Investment Manager Doubles Down on Paycom, Acquires $95 Million Worth of Shares

Feb -12

Source: fool.com

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New Study Finds Paycom's IWant Has Delivered Significant ROI

Feb -12

Source: businesswire.com

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Paycom Software Analysts Lower Their Forecasts After Q4 Results

Feb -12

Source: benzinga.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (9.03%)

6. Segments

Recurring

Expected Growth: 9%

Paycom Software's 9% recurring growth is driven by increasing adoption of its human capital management (HCM) software, expansion into new markets, and high customer retention rates. The company's focus on innovation, strategic partnerships, and upselling/cross-selling opportunities also contribute to its growth momentum.

Implementation and Other

Expected Growth: 11%

Implementation and Other segment of Paycom Software, Inc. grew 11% driven by increased adoption of its human capital management (HCM) software, expansion of existing client relationships, and strategic partnerships. Additionally, the company's investments in sales and marketing initiatives, as well as its focus on customer satisfaction, contributed to the growth.

7. Detailed Products

Payroll

A comprehensive payroll processing system that automates payroll calculations, tax compliance, and benefits administration.

Time and Labor Management

A time-tracking and labor management system that helps organizations manage employee work hours, attendance, and leave.

Talent Management

A comprehensive talent management system that includes recruitment, onboarding, performance management, and learning management.

Human Capital Management (HCM)

A comprehensive HCM system that integrates payroll, time and labor management, talent management, and benefits administration.

Benefits Administration

A benefits administration system that helps organizations manage employee benefits, including health insurance, retirement plans, and other benefits.

Analytics and Reporting

A business intelligence and analytics platform that provides insights into HR, payroll, and benefits data.

8. Paycom Software, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Paycom Software, Inc. has a low threat of substitutes due to its unique human capital management software solutions, making it difficult for competitors to replicate its offerings.

Bargaining Power Of Customers

Paycom Software, Inc. has a medium bargaining power of customers, as its clients are primarily mid-sized to large businesses that have some negotiating power, but the company's software solutions are highly customized, limiting the customers' ability to switch providers.

Bargaining Power Of Suppliers

Paycom Software, Inc. has a low bargaining power of suppliers, as it is not heavily reliant on a single supplier, and its software development is primarily done in-house, reducing its dependence on external suppliers.

Threat Of New Entrants

Paycom Software, Inc. has a medium threat of new entrants, as the human capital management software market is highly competitive, but the company's established brand and customer base provide a barrier to entry for new competitors.

Intensity Of Rivalry

Paycom Software, Inc. operates in a highly competitive market, with several established players, leading to a high intensity of rivalry, as companies compete for market share and customers.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 14.81%
Debt Cost 3.95%
Equity Weight 85.19%
Equity Cost 9.76%
WACC 8.90%
Leverage 17.39%

11. Quality Control: Paycom Software, Inc. passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Paycom Software

A-Score: 4.7/10

Value: 3.1

Growth: 8.9

Quality: 8.4

Yield: 1.0

Momentum: 1.5

Volatility: 5.7

1-Year Total Return ->

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Stock-Card
Bentley Systems

A-Score: 4.6/10

Value: 1.1

Growth: 6.4

Quality: 7.5

Yield: 1.0

Momentum: 3.5

Volatility: 8.0

1-Year Total Return ->

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Stock-Card
Smartsheet

A-Score: 4.6/10

Value: 2.0

Growth: 7.4

Quality: 5.2

Yield: 0.0

Momentum: 7.0

Volatility: 5.7

1-Year Total Return ->

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Stock-Card
Riot Blockchain

A-Score: 4.4/10

Value: 5.6

Growth: 6.1

Quality: 6.5

Yield: 0.0

Momentum: 7.0

Volatility: 1.0

1-Year Total Return ->

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Stock-Card
Procore

A-Score: 4.3/10

Value: 4.4

Growth: 7.9

Quality: 3.9

Yield: 0.0

Momentum: 4.5

Volatility: 5.0

1-Year Total Return ->

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Stock-Card
Q2 Holdings

A-Score: 3.4/10

Value: 1.0

Growth: 7.4

Quality: 4.9

Yield: 0.0

Momentum: 2.5

Volatility: 4.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

134.11$

Current Price

134.11$

Potential

-0.00%

Expected Cash-Flows