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Paycom Software (PAYC) Q4 Earnings & Revenues Beat; Stock Up
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Shares of Paycom Software, Inc. (PAYC - Free Report) went up more than 10% in after-hours trading after the company reported better-than-expected fourth-quarter 2016 results. Also, an encouraging first-quarter and fiscal 2017 revenue guidance positively impacted the share price.
The company’s adjusted income per share (including stock-based compensation) came in at 15 cents per share, which beat the Zacks Consensus Estimate of 9 cents. Also, reported earnings increased from 9 cents earned in the year-ago quarter.
Further, Paycom Software’s stock price history reveals that the company has not disappointed for a long time. In fact, over the past one year, shares of Paycom Software have risen a whopping 108.6%, outperforming the Zacks Categorized Internet-Software industry, which has showcased an increase of just 30.2%.
Quarter Details
Paycom Software reported revenues of $87.8 million, which increased 34.8% from the year-ago quarter. Revenues also beat the Zacks Consensus Estimate of $86 million. The year-over-over increase was driven by the addition of new clients and product development initiatives coupled with better-than-expected performance from Paycom's single database architecture.
Moreover, revenues were impacted positively by a 35.7% increase in recurring revenues, which more than offset 1.3% decline in implementation and other revenues on a year-over-year basis.
The company’s adjusted gross margin (including stock-based compensation) decreased 187 basis points (bps) on a year-over-year basis to 82.4%, primarily due to higher cost of sale.
Paycom Software’s adjusted operating margin (including stock-based compensation) increased from 9.6% reported in the year-ago quarter to 14.4%, primarily due to lower operating expenses as a percentage of revenues and higher revenue base. As a percentage of revenues, expenses decreased to 67.9% during the quarter from 74.5% reported in the year-ago period.
Adjusted net income (including stock-based compensation) came in at $8.6 million compared with $5.2 million reported in the year-ago quarter.
Balance Sheet & Cash Flow
Paycom Software exited the fourth quarter with cash and cash equivalents of $60.2 million compared with $74.5 million in the previous quarter. Receivables were $1.3 million compared with $1.5 million in the previous quarter.
Paycom Software’s balance sheet comprises long-term debt of $28.7 million compared with $29 million reported in the previous quarter. The company reported cash flow from operations of $98.9 million during the twelve-months ended Dec 31, 2016.
During the quarter, the company repurchased 634,506 shares under the $50 million share repurchase program.
Guidance
For the first quarter of fiscal 2017, Paycom Software expects revenues in a range of $114.5 million to $116.5 million. The Zacks Consensus Estimate is pegged at $114 million. Adjusted EBITDA is expected to be approximately in a range of $42 million to $44 million.
Paycom Software provided fiscal 2017 guidance. The company expects revenues in a range of $422 million to $424 million. The Zacks Consensus Estimate is pegged at $417 million. Adjusted EBITDA is expected to be approximately in a range of $113 million to $115 million.
Our Take
Paycom Software reported outstanding fourth-quarter 2016 results and provided an encouraging first quarter and fiscal 2017 revenue guidance. Also, both the top and the bottom line increased on a year-over-year basis.
Revenue growth seems to be steady and was positively impacted by higher recurring revenues and higher traction in cloud-based offerings. Better-than-expected demand for advanced human capital management and payroll software solutions during the reported quarter were the other positives.
We believe that the higher adoption of Paycom Software’s Affordable Care Act (“ACA”) dashboard application that tracks employee count, employee status and health care plan affordability will act as a tailwind for the company in the long run. Also, Paycom Software might witness long-term growth by successfully cross-selling newer products to the existing client base, which will boost revenues, going forward.
Nevertheless, competition from companies like Paylocity Holding Corporation (PCTY - Free Report) , Intuit Inc. (INTU - Free Report) and Paychex, Inc. remains a headwind.
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Paycom Software (PAYC) Q4 Earnings & Revenues Beat; Stock Up
Shares of Paycom Software, Inc. (PAYC - Free Report) went up more than 10% in after-hours trading after the company reported better-than-expected fourth-quarter 2016 results. Also, an encouraging first-quarter and fiscal 2017 revenue guidance positively impacted the share price.
The company’s adjusted income per share (including stock-based compensation) came in at 15 cents per share, which beat the Zacks Consensus Estimate of 9 cents. Also, reported earnings increased from 9 cents earned in the year-ago quarter.
Further, Paycom Software’s stock price history reveals that the company has not disappointed for a long time. In fact, over the past one year, shares of Paycom Software have risen a whopping 108.6%, outperforming the Zacks Categorized Internet-Software industry, which has showcased an increase of just 30.2%.
Quarter Details
Paycom Software reported revenues of $87.8 million, which increased 34.8% from the year-ago quarter. Revenues also beat the Zacks Consensus Estimate of $86 million. The year-over-over increase was driven by the addition of new clients and product development initiatives coupled with better-than-expected performance from Paycom's single database architecture.
Moreover, revenues were impacted positively by a 35.7% increase in recurring revenues, which more than offset 1.3% decline in implementation and other revenues on a year-over-year basis.
The company’s adjusted gross margin (including stock-based compensation) decreased 187 basis points (bps) on a year-over-year basis to 82.4%, primarily due to higher cost of sale.
Paycom Software’s adjusted operating margin (including stock-based compensation) increased from 9.6% reported in the year-ago quarter to 14.4%, primarily due to lower operating expenses as a percentage of revenues and higher revenue base. As a percentage of revenues, expenses decreased to 67.9% during the quarter from 74.5% reported in the year-ago period.
Adjusted net income (including stock-based compensation) came in at $8.6 million compared with $5.2 million reported in the year-ago quarter.
Balance Sheet & Cash Flow
Paycom Software exited the fourth quarter with cash and cash equivalents of $60.2 million compared with $74.5 million in the previous quarter. Receivables were $1.3 million compared with $1.5 million in the previous quarter.
Paycom Software’s balance sheet comprises long-term debt of $28.7 million compared with $29 million reported in the previous quarter. The company reported cash flow from operations of $98.9 million during the twelve-months ended Dec 31, 2016.
During the quarter, the company repurchased 634,506 shares under the $50 million share repurchase program.
Guidance
For the first quarter of fiscal 2017, Paycom Software expects revenues in a range of $114.5 million to $116.5 million. The Zacks Consensus Estimate is pegged at $114 million. Adjusted EBITDA is expected to be approximately in a range of $42 million to $44 million.
Paycom Software provided fiscal 2017 guidance. The company expects revenues in a range of $422 million to $424 million. The Zacks Consensus Estimate is pegged at $417 million. Adjusted EBITDA is expected to be approximately in a range of $113 million to $115 million.
Our Take
Paycom Software reported outstanding fourth-quarter 2016 results and provided an encouraging first quarter and fiscal 2017 revenue guidance. Also, both the top and the bottom line increased on a year-over-year basis.
Revenue growth seems to be steady and was positively impacted by higher recurring revenues and higher traction in cloud-based offerings. Better-than-expected demand for advanced human capital management and payroll software solutions during the reported quarter were the other positives.
We believe that the higher adoption of Paycom Software’s Affordable Care Act (“ACA”) dashboard application that tracks employee count, employee status and health care plan affordability will act as a tailwind for the company in the long run. Also, Paycom Software might witness long-term growth by successfully cross-selling newer products to the existing client base, which will boost revenues, going forward.
Nevertheless, competition from companies like Paylocity Holding Corporation (PCTY - Free Report) , Intuit Inc. (INTU - Free Report) and Paychex, Inc. remains a headwind.
Currently, Paycom Software has a Zacks Rank #3 (Hold). A better-ranked stock in the technology sector is Seagate Technology plc (STX - Free Report) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here
Seagate has a long-term EPS growth rate of 8.17%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>