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Paycom (PAYC) Q1 Earnings & Revenues Top Estimates, Rise Y/Y

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Paycom Software (PAYC - Free Report) delivered solid first-quarter 2022 performance, wherein the top and the bottom line surpassed the Zacks Consensus Estimate.

The online payroll and human resource technology provider reported non-GAAP earnings of $1.90 per share, beating the Zacks Consensus Estimate of $1.76. The bottom line improved 29.3% from $1.47 per share reported in the year-ago quarter.

For the first quarter of 2022, Paycom reported revenues of $353.5 million, beating the consensus mark of $343.3 million and improving 29.9% year over year. This year-over-year upside was primarily driven by new client additions and continued focus on cross-selling to existing clients.

Paycom Software, Inc. Price, Consensus and EPS Surprise

Paycom Software, Inc. Price, Consensus and EPS Surprise

Paycom Software, Inc. price-consensus-eps-surprise-chart | Paycom Software, Inc. Quote

Quarter in Detail

Paycom’s recurring revenues (representing 98.5% of total revenues) improved 30% to $348.2 million in the first quarter.

Adjusted gross profit climbed 29.9% from the year-ago period to $353.5 million. However, adjusted gross margin contracted 40 basis points (bps) on a year-on-year basis to 86.6%, primarily on the workforce returning to offices and aggressive hiring.

Paycom’s adjusted EBITDA increased 27.9% year over year to $170.1 million. Adjusted EBITDA margin contracted 80 bps to 48.1%.

Balance Sheet & Cash Flow

Paycom exited the first quarter with cash and cash equivalents of $360.6 million compared with $278 million recorded in the previous quarter.

The company’s balance sheet comprises net long-term debt of $28.7 million compared with the previous quarter’s $29.2 million.

During first-quarter 2022, PAYC generated operating cash flow of $117.2 million.

Guidance

Paycom revised its guidance for full-year 2022. The company now forecasts 2022 revenues between $1.333 billion and $1.335 billion compared to the earlier estimate of $1.314-$1.316 billion.

Adjusted EBITDA is now projected to be $533-$535 million compared to the prior guided range of $524-$526 million.

For the second quarter of 2022, Paycom estimates revenues between $308 million and $310 million. Management projects adjusted EBITDA of $111-$113 million.

Zacks Rank & Key Picks

Paycom currently carries a Zacks Rank #3 (Hold). Shares of PAYC have plunged 18.5% in the past year.

Some better-ranked stocks from the broader Computer and Technology sector are Zacks Rank #1 (Strong Buy) Avnet (AVT - Free Report) and Gogo (GOGO - Free Report) , and Zacks Rank 2 (Buy) Analog Devices (ADI - Free Report) . You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Avnet's fourth-quarter fiscal 2022 earnings has been revised 55 cents northward to $1.96 per share over the past seven days. For 2022, earnings estimates have moved north by 20.5% to $6.83 per share in the past seven days.

Avnet's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 21.2%. Shares of AVT have risen 5.6% in the past year.

The Zacks Consensus Estimate for Gogo's first-quarter 2022 earnings has been revised downward by a penny to 13 cents per share over the past 30 days. For 2022, Gogo's earnings estimates have moved north by 25% to 65 cents per share in the past 60 days.

Gogo's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 65%. Shares of GOGO have risen 74.6% in the past year.

The Zacks Consensus Estimate for Analog Devices' second-quarter fiscal 2022 earnings has been revised upward by 4 cents to $2.12 per share over the past 30 days. For fiscal 2022, earnings estimates have moved north by 11 cents to $8.43 per share in the past 30 days.

Analog Devices' earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 6%. Shares of ADI have rallied 4.6% in the past year.


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