Paycom Software (PAYC 2.04%), which sells cloud-based human resources and payroll management software, reported first-quarter results that beat analyst estimates. The shares plunged, though, after the company cut it second-quarter revenue outlook.
The results, released yesterday, showed that Paycom adjusted net income rose 2.8% to $146.6 million, or earning per share (EPS) of $2.59, up from $142.7 million, or EPS of $2.46 in the year-ago period. The latest EPS topped the average analyst estimate of $2.45. Revenue rose 10.7% to $499.9 million, also ahead of Wall Street forecasts of $495.9 million, according to FactSet.
But the company cut its second-quarter revenue forecast to a range of $434 million to $438 million, less than the average estimate of $442 million, according Yahoo Finance. Paycom didn't change its full-year revenue projection The shares plunged as much as 14%.
| Metric | Q1 2024 Actual | Q1 2024 Estimate | Q1 2023 Actual | % Change YoY |
|---|---|---|---|---|
| EPS (Non-GAAP) | $2.59 | $2.45 | $2.46 | 5.3% |
| Revenue | $499.9 million | $495.94 million | $451.6 million | 10.7% |
| GAAP Net Income | $247.2 million | N/A | $119.3 million | 107.1% |
| Adjusted EBITDA | $229.5 million | N/A | $220.5 million | 4.1% |
Data source: Company results from company. Analyst estimates from FactSet.
Company overview
Paycom's software offers companies an all-encompassing human resources solution, from employee recruitment to retirement on a single, cloud-based platform. This simplifies complex HR processes for businesses of all sizes, enhancing efficiency and compliance. Recent initiatives have focused on expanding Paycom's automated payroll product, Beti.
Paycom's emphasis on a proprietary, secure, cloud-based system ensures adaptability and reliability. A direct sales force and investment in R&D further sustain the company's competitive edge and client satisfaction.
Quarter highlights
Paycom's first-quarter net income based on generally accepted accounting principles (GAAP) more than doubled, to $247.2 million versus $119.3 million in the year-earlier period. Much of the increase reflected a one-time benefit of $117.5 million from the forfeiture of a 2020 performance award to the CEO.
Looking ahead, Paycom expects sustained revenue growth and continued investment in R&D. Management's forward-looking statements reiterate the importance of technological advancements and market expansion.
Investors are advised to monitor Paycom's execution of its growth strategies and product development initiatives.
