Paycom (PAYC 7.40%), a leading provider of cloud-based human capital management (HCM) software, reported second quarter 2025 results on August 6, 2025. The company posted GAAP revenue of $483.6 million, exceeding analyst expectations of $472.0 million in GAAP revenue. Non-GAAP earnings per share (EPS) reached $2.06, well above the $1.78 consensus non-GAAP EPS estimate. Recurring revenues remained strong at 94.1% of total sales. Management raised its full-year outlook for both revenue and adjusted EBITDA margin, reflecting ongoing strength in sales execution and product innovation. Overall, the quarter demonstrated robust growth, improved profitability, and continued progress in key strategic initiatives.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $2.06 | $1.78 | $1.62 | 27.2% |
| Revenue (GAAP) | $483.6 million | $472.0 million | $437.5 million | 10.5% |
| Adjusted EBITDA | $198.3 million | $159.7 million | 24.1% | |
| Net Income (GAAP) | $89.5 million | $68.0 million | 31.6% | |
| Adjusted EBITDA Margin | 41.0% | 36.5% | 4.5 pp |
Source: Analyst estimates provided by FactSet.
Business overview and recent focus
Paycom provides a suite of cloud-based software applications that manage the entire employment process, from recruitment to retirement. Its platform is delivered as Software-as-a-Service (SaaS), allowing clients to handle payroll, talent management, benefits, and human resource (HR) administration in one place. A key differentiator is its single database architecture, which streamlines HR operations and reduces errors caused by using multiple systems.
Recently, Paycom has focused on strengthening product automation and improving the employee experience. A major part of this effort is the introduction of new artificial intelligence (AI) features such as IWant, a command-driven AI tool. The company is also expanding international capabilities, investing in research and development (R&D), and targeting larger clients with more scalable solutions. Ongoing innovation and a broad product portfolio are critical to maintaining its competitive position and sustaining recurring revenue growth.
Quarter highlights: Data and developments
The quarter saw solid gains in all major financial metrics and significant product advances. Total GAAP revenue grew by $46.1 million from the prior year period, rising to $483.6 million. This was $11.6 million above analyst estimates for GAAP revenue, a difference of 2.45% (GAAP). Non-GAAP EPS rose $0.44 year over year, supported by both stronger sales and improved margins.
Recurring and other revenues reached $455.1 million, representing 94.1% of total revenue and growing 12.2% over the same quarter last year (GAAP). The company’s CEO noted that the sales team delivered “robust new logo adds” and highlighted the impact of AI-enabled tools in driving market demand. Paycom introduced IWant, its command-driven AI engine, which enhances workflow automation and strengthens its competitive differentiation. The period also saw continued investment in automation through products such as Beti, an employee-driven payroll solution, and GONE, a fully automated time-off management tool. These innovations aim to minimize manual entry and increase both client and employee satisfaction.
Margin expansion stood out as one of the quarter’s most notable achievements. Adjusted EBITDA reached $198.3 million, up 24.1% compared to Q2 2024. The adjusted EBITDA margin rose 4.5 percentage points year-over-year, settling at 41.0%. GAAP net income increased by $21.5 million to $89.5 million, with net income margin climbing to 18.5% (GAAP). Operating leverage was partly driven by internal automation, as Paycom used its own platform to improve efficiency. R&D spending (GAAP) went up 20% year-over-year to $74.8 million, and sales and marketing expense increased by 8.5% year-over-year. The company also saw a significant rise in non-cash stock-based compensation, reaching $38.4 million.
International expansion progressed with Paycom receiving regulatory approval as a payment institution from the Central Bank of Ireland. This step enables the company to serve European operations for multinational clients, marking a foundation for future growth outside the United States. Paycom had no outstanding debt at the end of the quarter. The company repurchased about $32.6 million in shares and paid $21.8 million in dividends—a 2.8% increase compared to the prior year’s payout.
Looking ahead: Guidance and watch points
Paycom raised its full-year 2025 guidance. Management now projects total revenue between $2.045 billion and $2.055 billion for 2025, signaling about 9% year-over-year growth at the midpoint. Adjusted EBITDA is guided to a range of $872 million to $882 million (around 43% margin), up from the earlier forecast. Recurring revenue is expected to grow by approximately 10%. The guidance assumes two interest rate cuts by year-end.
Investors should watch for continued progress in automation, especially after the launch of the IWant AI engine and increased R&D investment. The company is closely monitoring expense growth, as research and development expenses and stock-based compensation increased at a faster rate than total revenue year-over-year. Paycom’s recurring revenue model, robust cash flow, and expanding international reach remain important metrics going forward. No substantial changes to dividend policy were signaled beyond the recent increase.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
