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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's recent performance was negatively impacted by its Q3 earnings miss, with EPS of $1.94 per share, falling short of the Zacks Consensus Estimate of $1.96 per share. Despite a 9.1% year-over-year revenue growth to $493 million, the company's earnings lag and softer guidance likely raised concerns among investors. Additionally, some analysts have expressed caution, with one firm labeling Paycom as the "Bear of the Day" due to its recent struggles. The company's revamped go-to-market strategy and AI-driven product, IWant, are expected to drive growth, but may not have been enough to offset concerns.

1.c. Company Highlights

2. Paycom's Q3 2025 Earnings: Strong Financials and Product Innovations

Paycom's third-quarter 2025 results demonstrated robust financial performance, with total revenues reaching $493 million, up 9.1% year-over-year. Recurring and other revenues were $467 million, a 10.6% increase. GAAP net income was $111 million or $1.96 per diluted share, while non-GAAP net income rose 17% year-over-year to $110 million or $1.94 per diluted share. Adjusted EBITDA was $194 million, a 13% increase, with an adjusted EBITDA margin of 39%, a 150 basis point increase over the prior year period.

Publication Date: Nov -13

📋 Highlights
  • Revenue Growth:: Total revenues reached $493 million (+9.1% YoY), with recurring revenue at $467 million (+10.6% YoY).
  • GAAP & Non-GAAP Earnings:: GAAP net income was $111 million ($1.96 per share), while non-GAAP net income rose 17% to $110 million ($1.94 per share).
  • AI Product Expansion:: IWant, Paycom’s AI tool, achieved widespread adoption, responding to millions of queries and driving engagement among C-suite executives and new users.
  • Capital Expenditures:: $100 million spent on AI-focused data center upgrades, a one-time investment expected to enhance free cash flow conversion long-term.
  • Shareholder Returns:: $319 million in stock buybacks (1.5M shares) and a $1.1 billion remaining buyback authorization, alongside a $0.375 quarterly dividend approval.

Revenue Growth and Guidance

The company expects to accelerate new logo acquisition and maintain double-digit recurring growth beyond FY '25. For the full year 2025, Paycom expects total revenue to be between $2.045 billion and $2.055 billion, with organic recurring and other revenue up 10% year-over-year. The revenue growth was impacted by a tough comp in Q3, but the company is focused on streamlining the sales process and enhancing the value proposition to drive new logo adds.

Product Innovations and AI Investments

The company launched its award-winning AI product, IWant, which has been enabled across its entire client base, transforming how clients and their employees engage with HR and payroll data. IWant has successfully responded to millions of queries, with a dramatic uptick in usage, especially among new users, including C-suite executives. The $100 million CapEx investment in data center and AI is expected to be accretive to free cash flow conversion in the future.

Operational Efficiency and Cost Savings

The company reduced its administrative workforce by 500 people, primarily due to automation efforts, and expects annualized cost savings to be part of the guide for next year. Some of these savings will be reinvested back into the business. The company is focused on revenue growth, with a goal to get back to 12-14% growth.

Valuation and Outlook

With a P/E Ratio of 20.75 and an EV/EBITDA of 11.64, the market is pricing in a certain level of growth. Analysts estimate next year's revenue growth at 8.9%. The company's ROIC is 18.89%, indicating efficient use of capital. The Dividend Yield is 0.89%, providing a relatively stable return. Given the company's strong financials, product innovations, and growth prospects, the current valuation appears reasonable.

3. NewsRoom

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Fisher Asset Management LLC Decreases Stake in Paycom Software, Inc. $PAYC

Dec -04

Source: defenseworld.net

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Oklahoma Sports Hall of Fame and Jim Thorpe Association Proudly Reveal the Paycom Jim Thorpe Award 2025 Finalists

Nov -25

Source: businesswire.com

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Paycom Software, Inc. $PAYC Shares Sold by Associated Banc Corp

Nov -25

Source: defenseworld.net

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Creative Planning Raises Stock Position in Paycom Software, Inc. $PAYC

Nov -24

Source: defenseworld.net

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Allworth Financial LP Has $190,000 Holdings in Paycom Software, Inc. $PAYC

Nov -19

Source: defenseworld.net

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Paycom Software, Inc. (NYSE:PAYC) Receives Consensus Rating of “Hold” from Analysts

Nov -19

Source: defenseworld.net

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Paycom: It's A Buy, With An Eye On The Future

Nov -11

Source: seekingalpha.com

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Paycom Software: It's Back To Where It Should Be (Rating Upgrade)

Nov -11

Source: seekingalpha.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: 5.7/10

Value: 2.2

Growth: 8.9

Quality: 8.4

Yield: 1.0

Momentum: 8.0

Volatility: 5.7

1-Year Total Return ->

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Stock-Card
Procore

A-Score: 4.6/10

Value: 4.4

Growth: 7.9

Quality: 3.8

Yield: 0.0

Momentum: 7.0

Volatility: 4.7

1-Year Total Return ->

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Stock-Card
Bentley Systems

A-Score: 4.6/10

Value: 0.3

Growth: 6.4

Quality: 7.3

Yield: 0.0

Momentum: 5.5

Volatility: 8.0

1-Year Total Return ->

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Stock-Card
Riot Blockchain

A-Score: 4.5/10

Value: 5.3

Growth: 6.3

Quality: 5.5

Yield: 0.0

Momentum: 9.0

Volatility: 1.0

1-Year Total Return ->

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Stock-Card
Smartsheet

A-Score: 4.1/10

Value: 2.5

Growth: 7.4

Quality: 4.6

Yield: 0.0

Momentum: 5.0

Volatility: 5.3

1-Year Total Return ->

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Stock-Card
Q2 Holdings

A-Score: 3.6/10

Value: 1.2

Growth: 7.6

Quality: 4.9

Yield: 0.0

Momentum: 3.0

Volatility: 5.0

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

166.14$

Current Price

166.14$

Potential

-0.00%

Expected Cash-Flows