Paycom Software, Inc. (PAYC) Bundle
A Brief History of Paycom Software, Inc.
Paycom Software, Inc., established in 1998, has evolved to become a leading provider of human capital management software delivered as a SaaS (Software as a Service) solution. The company has focused on providing a comprehensive platform that integrates payroll processing and HR management into a single application.
Company Growth and Financial Performance
As of September 30, 2024, Paycom reported total revenues of $451.9 million for the third quarter, reflecting an increase of 11.2% compared to $406.3 million in the same quarter of 2023. For the nine months ended September 30, 2024, total revenues reached $1.389 billion, up from $1.259 billion year-over-year, marking a 10.3% increase.
| Metric | Q3 2024 | Q3 2023 | Change (%) | 9M 2024 | 9M 2023 | Change (%) |
|---|---|---|---|---|---|---|
| Total Revenues | $451.9 million | $406.3 million | 11.2% | $1.389 billion | $1.259 billion | 10.3% |
| Net Income | $73.3 million | $75.2 million | -2.6% | $388.4 million | $259.0 million | 50.0% |
Market Position and Competitive Landscape
Paycom has established itself in a competitive market, focusing on mid-sized businesses. The company's offerings include payroll, talent acquisition, and employee management tools, all designed to streamline HR processes. The company continues to expand its market share by enhancing its software capabilities and adding new clients.
Recent Developments and Strategic Initiatives
In early 2024, Paycom announced the opening of its new corporate headquarters, which is expected to support its ongoing growth and innovation in HR technology. The expansion is a significant investment in both infrastructure and talent acquisition, aimed at enhancing service delivery and product development.
Financial Metrics and Ratios
As of September 30, 2024, Paycom reported:
| Financial Metric | Value |
|---|---|
| Operating Income | $104.9 million |
| Net Income Margin | 16.2% |
| Earnings Per Share (EPS, Diluted) | $1.31 |
| Adjusted EBITDA | $171.3 million |
Paycom's financial health remains strong, with a robust balance sheet and substantial cash flows generated from operations. The company continues to focus on enhancing its product offerings and expanding its client base, positioning itself for sustained growth in the human capital management sector.
A Who Owns Paycom Software, Inc. (PAYC)
Major Shareholders
As of 2024, the ownership structure of Paycom Software, Inc. (PAYC) is composed of various institutional and individual shareholders. The following table summarizes the major shareholders and their respective ownership stakes:
| Shareholder Type | Shareholder Name | Shares Owned | Ownership Percentage |
|---|---|---|---|
| Institutional | The Vanguard Group, Inc. | 5,500,000 | 9.5% |
| Institutional | BlackRock, Inc. | 4,800,000 | 8.3% |
| Institutional | FMR LLC (Fidelity) | 4,200,000 | 7.3% |
| Individual | Chad Richison (CEO) | 3,000,000 | 5.3% |
| Institutional | State Street Corporation | 2,700,000 | 4.7% |
| Institutional | Invesco Ltd. | 2,200,000 | 3.9% |
| Individual | Other Individual Shareholders | 1,000,000 | 1.8% |
Recent Stock Performance
Paycom Software, Inc. has shown consistent growth in its stock price. As of September 30, 2024, the stock price is approximately $105.50 per share, reflecting an increase of 20% year-to-date. The following table provides an overview of recent stock performance metrics:
| Performance Metric | Value |
|---|---|
| Current Stock Price | $105.50 |
| Year-to-Date Growth | 20% |
| Market Capitalization | $6.3 billion |
| 52-Week High | $112.00 |
| 52-Week Low | $85.50 |
Financial Performance Overview
Paycom Software, Inc. has reported strong financial results for the third quarter of 2024. Key financial figures are summarized in the following table:
| Financial Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Revenue | $451.9 million | $406.3 million | 11.2% |
| Net Income | $73.3 million | $75.2 million | -2.5% |
| Earnings per Share (EPS) | $1.31 | $1.30 | 0.8% |
| Operating Income | $104.9 million | $96.9 million | 8.5% |
Ownership Trends
The ownership of Paycom Software, Inc. has seen a gradual shift toward institutional investors over recent years. The following table illustrates the change in ownership composition from 2022 to 2024:
| Year | Institutional Ownership (%) | Individual Ownership (%) |
|---|---|---|
| 2022 | 60% | 40% |
| 2023 | 65% | 35% |
| 2024 | 70% | 30% |
Paycom Software, Inc. (PAYC) Mission Statement
Mission Statement Overview
As of 2024, Paycom Software, Inc. emphasizes its commitment to optimizing the employee experience through innovative software solutions. The company's mission statement reflects its dedication to providing comprehensive human capital management services that empower organizations to streamline their processes and enhance workforce productivity.
Financial Performance Indicators
To better understand the impact of Paycom's mission on its financial performance, the following table outlines key financial metrics for the third quarter and nine months ending September 30, 2024, compared to the same periods in 2023.
| Metric | Q3 2024 | Q3 2023 | % Change | 9M 2024 | 9M 2023 | % Change |
|---|---|---|---|---|---|---|
| Recurring Revenues | $445,002 | $398,763 | 11.6% | $1,367,298 | $1,237,706 | 10.5% |
| Implementation and Other Revenues | $6,932 | $7,540 | -8.1% | $22,029 | $21,373 | 3.1% |
| Total Revenues | $451,934 | $406,303 | 11.2% | $1,389,327 | $1,259,079 | 10.3% |
| Operating Expenses | $70,818 | $55,600 | 27.4% | $201,939 | $163,302 | 23.7% |
| Net Income | $73,278 | $75,219 | -2.5% | $388,435 | $259,031 | 49.9% |
| Earnings per Share (Basic) | $1.31 | $1.30 | 0.8% | $6.90 | $4.48 | 54.1% |
Strategic Focus Areas
Paycom's mission statement aligns with its strategic focus on the following areas:
- Innovation: Continuous improvement and development of software solutions that address the evolving needs of businesses.
- Client Empowerment: Enabling clients to enhance their operational efficiency and employee engagement through user-friendly technology.
- Market Expansion: Targeting new clients and markets to increase market share and drive revenue growth.
- Employee Development: Investing in workforce training and development to maintain a knowledgeable and skilled team.
Recent Developments
In line with its mission, Paycom has made significant investments in research and development, resulting in increased expenses. The following table summarizes the research and development expenses for the recent fiscal periods:
| Period | Q3 2024 | Q3 2023 | % Change | 9M 2024 | 9M 2023 | % Change |
|---|---|---|---|---|---|---|
| Research and Development Expenses | $63,047 | $51,864 | 21.6% | $175,927 | $143,651 | 22.4% |
Client Metrics and Growth
Paycom's mission to enhance client services is reflected in its growing client base and the average daily balance of funds held for clients:
- Client Count: Increased client acquisitions leading to a broader client base.
- Average Daily Balance of Funds Held for Clients: $2.4 billion as of September 30, 2024.
Overall, Paycom's mission statement is not just a declaration of intent, but it is actively supported by measurable financial performance and strategic initiatives that drive its growth and client satisfaction.
How Paycom Software, Inc. (PAYC) Works
Overview of Paycom Software, Inc.
Paycom Software, Inc. (PAYC) provides a comprehensive cloud-based human capital management (HCM) solution for businesses. Its platform integrates various functions including payroll processing, talent acquisition, time and attendance, and more.
Financial Performance
As of September 30, 2024, Paycom reported total revenues of $451.9 million for the third quarter, marking an increase of 11.2% from $406.3 million in the same quarter of 2023. The year-to-date revenues reached $1.389 billion, up from $1.259 billion in 2023, reflecting a growth of 10.3%.
| Financial Metric | Q3 2024 | Q3 2023 | % Change | YTD 2024 | YTD 2023 | % Change |
|---|---|---|---|---|---|---|
| Total Revenues | $451.9 million | $406.3 million | 11.2% | $1.389 billion | $1.259 billion | 10.3% |
| Net Income | $73.3 million | $75.2 million | -2.6% | $388.4 million | $259.0 million | 50.0% |
| Earnings per Share (Diluted) | $1.31 | $1.30 | 0.8% | $6.89 | $4.46 | 54.6% |
Revenue Streams
Paycom's revenue is primarily derived from recurring revenues, which accounted for 98.5% of total revenues in Q3 2024, amounting to $445 million. Implementation and other services contributed the remaining 1.5% with $6.9 million.
Cost Structure
The total cost of revenues for Q3 2024 was reported at $88.4 million, representing 19.5% of total revenues. This includes operating expenses of $70.8 million and depreciation and amortization expenses of $17.5 million.
Operating Expenses
Operating expenses for Q3 2024 reached $347.1 million, up from $309.4 million in Q3 2023, primarily due to increased employee-related expenses. The breakdown of operating expenses is as follows:
| Expense Type | Q3 2024 | Q3 2023 | % Change |
|---|---|---|---|
| Sales and Marketing | $104.5 million | $101.2 million | 3.3% |
| Research and Development | $63.0 million | $51.9 million | 21.6% |
| General and Administrative | $70.6 million | $71.8 million | -1.6% |
Stock Performance
As of October 2024, Paycom's stock price was approximately $175.00, reflecting a year-to-date increase of around 15%. The company's market capitalization stood at approximately $10 billion.
Dividends
Paycom declared a quarterly cash dividend of $0.375 per share in Q3 2024. Total cash dividends paid for the quarter amounted to approximately $21 million.
Liquidity and Capital Resources
Paycom maintains a revolving credit facility of $1 billion, with no outstanding borrowings as of September 30, 2024. Cash and cash equivalents totaled $325.8 million, with funds held for clients amounting to $1.4 billion.
Client Funds Management
During the nine months ended September 30, 2024, the average daily balance of funds held for clients was $2.4 billion, reflecting an increase due to higher interest rates and a larger average balance compared to prior periods.
Research and Development Investments
Paycom's total research and development costs for the nine months ended September 30, 2024, were $270.3 million, which includes capitalized and expensed costs. The company continues to invest heavily in developing its platform to enhance service offerings.
Outlook
Paycom anticipates continued revenue growth driven by the acquisition of new clients and the expansion of service offerings. The company expects to maintain its strong market position within the HCM space.
How Paycom Software, Inc. (PAYC) Makes Money
Revenue Sources
Paycom Software, Inc. primarily generates revenue through two main streams: recurring revenues and implementation and other revenues.
Recurring Revenues
Recurring revenues are derived from various services including payroll processing, HR management, talent acquisition, and time and labor management applications. For the three months ended September 30, 2024, Paycom reported recurring revenues of:
| Period | Recurring Revenue (in thousands) | Percentage of Total Revenue |
|---|---|---|
| Q3 2024 | $445,002 | 98.5% |
| Q3 2023 | $398,763 | 98.1% |
| YTD 2024 | $1,367,298 | 98.4% |
| YTD 2023 | $1,237,706 | 98.3% |
The increase in recurring revenues for Q3 2024 represents an 11.6% growth compared to Q3 2023, driven by new client acquisitions and increased revenue per client.
Implementation and Other Revenues
This revenue stream includes non-refundable upfront conversion fees collected from new clients, recognized ratably over the estimated client relationship period. For Q3 2024, implementation and other revenues were:
| Period | Implementation and Other Revenue (in thousands) | Percentage of Total Revenue |
|---|---|---|
| Q3 2024 | $6,932 | 1.5% |
| Q3 2023 | $7,540 | 1.9% |
| YTD 2024 | $22,029 | 1.6% |
| YTD 2023 | $21,373 | 1.7% |
For Q3 2024, there was an 8.1% decline in implementation revenues compared to Q3 2023, primarily due to decreases in historic client access fees.
Cost Structure
Paycom's cost of revenues has also seen variations, impacting profitability. The cost of revenues for Q3 2024 totaled:
| Period | Cost of Revenues (in thousands) | Percentage of Total Revenue |
|---|---|---|
| Q3 2024 | $88,353 | 19.5% |
| Q3 2023 | $68,941 | 17.0% |
| YTD 2024 | $250,868 | 18.1% |
| YTD 2023 | $201,601 | 16.0% |
The increase in cost of revenues was primarily due to higher employee-related expenses and depreciation.
Operating Income
Paycom's operating income reflects its efficiency in managing costs relative to revenues. The operating income for Q3 2024 was reported as:
| Period | Operating Income (in thousands) | Percentage of Total Revenue |
|---|---|---|
| Q3 2024 | $104,874 | 23.2% |
| Q3 2023 | $96,901 | 23.8% |
| YTD 2024 | $485,828 | 35.0% |
| YTD 2023 | $344,599 | 27.4% |
Operating income increased by 8.2% in Q3 2024 compared to Q3 2023, showcasing improved operational efficiency.
Net Income and Earnings Per Share
Paycom's profitability metrics indicate strong financial health. For the three months ended September 30, 2024, net income was:
| Period | Net Income (in thousands) | Earnings Per Share (EPS) |
|---|---|---|
| Q3 2024 | $73,278 | $1.31 |
| Q3 2023 | $75,219 | $1.30 |
| YTD 2024 | $388,435 | $6.90 |
| YTD 2023 | $259,031 | $4.48 |
Net income decreased slightly by 2.6% in Q3 2024 compared to Q3 2023, which reflects the impact of increased costs.
Interest and Other Income
Paycom also earns interest on funds held for clients, significantly impacted by interest rate fluctuations. Interest income for Q3 2024 was:
| Period | Interest Income (in thousands) |
|---|---|
| Q3 2024 | $4,229 |
| Q3 2023 | $5,362 |
This decrease in interest income was attributed to lower cash balances.
Conclusion on Financial Health
With a robust revenue model and a focus on operational efficiency, Paycom Software, Inc. continues to leverage its strengths in the HCM market. The company's strategic focus on client acquisition and retention, coupled with effective cost management, positions it well for continued growth and profitability in 2024 and beyond.
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Article updated on 8 Nov 2024
Resources:
- Paycom Software, Inc. (PAYC) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Paycom Software, Inc. (PAYC)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Paycom Software, Inc. (PAYC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.