Paycom Software (PAYC - Free Report) reported third-quarter 2021 results on Tuesday. This online payroll and human resource technology provider’s adjusted earnings of 92 cents per share beat the Zacks Consensus Estimate by a penny and jumped 31.4% year over year.
Quarter in Detail
The company generated revenues of $256.2 million, which increased 30.4% from the year-earlier period and surpassed the consensus mark of $250.4 million as well. This year-over-year upswing was mainly driven by the new client additions and continued focus on cross selling to the existing clients.
The adjusted gross profit climbed 28.8% from the year-ago period to $214.8 million. However, the adjusted gross margin contracted 110 basis points (bps) on a year-on-year basis to 83.8%, mainly on the workforce returning to offices as well as aggressive hiring.
Paycom Software’s adjusted EBITDA increased 32.9% year on year to $89.7 million. However, the adjusted EBITDA margin shrunk 210 bps to 35.9% chiefly due to a lower gross margin and increased investments in sales & marketing and research & development.
Balance Sheet & Cash Flow
Paycom Software exited the third quarter with cash and cash equivalents of $230.9 million compared with the $202.4 million recorded in the previous quarter.
The company’s balance sheet comprises net long-term debt of $27.8 million compared with the previous quarter’s $28.3 million.
Cash from operations was $83.2 million in the quarter. During the first-half of 2021, it generated an operating cash flow of $229.6 million.
Guidance
Buoyed by the better-than-expected third-quarter performance, Paycom Software raised its revenue and adjusted EBITDA outlook for full-year 2021. The company now forecasts 2021 revenues between $1.045 billion and $1.047 billion, up from the previous range of $1.036-$1.038 billion. The adjusted EBITDA projection has now been revised upward to $413-$415 million from the $410-$412 million anticipated earlier.
For the fourth quarter, Paycom Software estimates revenues to lie between $274.5 million and $276.5 million. Management projects an adjusted EBITDA of $103-$105 million.
Zacks Rank & Stocks to Consider
Paycom Software currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the broader technology sector include Applied Materials (AMAT - Free Report) , Advanced Micro Devices (AMD - Free Report) and Perficient (PRFT - Free Report) , all carrying a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term earnings growth rate for Applied Materials, Advanced Micro Devices and Perficient is currently pegged at 19.4%, 44.6% and 18%, respectively.
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Paycom Software (PAYC - Free Report) reported third-quarter 2021 results on Tuesday. This online payroll and human resource technology provider’s adjusted earnings of 92 cents per share beat the Zacks Consensus Estimate by a penny and jumped 31.4% year over year.
Quarter in Detail
The company generated revenues of $256.2 million, which increased 30.4% from the year-earlier period and surpassed the consensus mark of $250.4 million as well. This year-over-year upswing was mainly driven by the new client additions and continued focus on cross selling to the existing clients.
The adjusted gross profit climbed 28.8% from the year-ago period to $214.8 million. However, the adjusted gross margin contracted 110 basis points (bps) on a year-on-year basis to 83.8%, mainly on the workforce returning to offices as well as aggressive hiring.
Paycom Software’s adjusted EBITDA increased 32.9% year on year to $89.7 million. However, the adjusted EBITDA margin shrunk 210 bps to 35.9% chiefly due to a lower gross margin and increased investments in sales & marketing and research & development.
Balance Sheet & Cash Flow
Paycom Software exited the third quarter with cash and cash equivalents of $230.9 million compared with the $202.4 million recorded in the previous quarter.
The company’s balance sheet comprises net long-term debt of $27.8 million compared with the previous quarter’s $28.3 million.
Cash from operations was $83.2 million in the quarter. During the first-half of 2021, it generated an operating cash flow of $229.6 million.
Guidance
Buoyed by the better-than-expected third-quarter performance, Paycom Software raised its revenue and adjusted EBITDA outlook for full-year 2021. The company now forecasts 2021 revenues between $1.045 billion and $1.047 billion, up from the previous range of $1.036-$1.038 billion. The adjusted EBITDA projection has now been revised upward to $413-$415 million from the $410-$412 million anticipated earlier.
For the fourth quarter, Paycom Software estimates revenues to lie between $274.5 million and $276.5 million. Management projects an adjusted EBITDA of $103-$105 million.
Zacks Rank & Stocks to Consider
Paycom Software currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the broader technology sector include Applied Materials (AMAT - Free Report) , Advanced Micro Devices (AMD - Free Report) and Perficient (PRFT - Free Report) , all carrying a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term earnings growth rate for Applied Materials, Advanced Micro Devices and Perficient is currently pegged at 19.4%, 44.6% and 18%, respectively.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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