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Paycom (PAYC) Q2 Earnings & Revenues Beat Estimates, Up Y/Y

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

The online payroll and human resource technology provider reported non-GAAP earnings of $1.26 per share, beating the Zacks Consensus Estimate of $1.12. The bottom line improved 29.9% from 97 cents per share reported in the year-ago quarter.

For the second quarter of 2022, Paycom reported revenues of $316.9 million, beating the consensus mark of $309.2 million and improving 31% 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 98.3% of total revenues) improved 31.1% to $311.5 million in the second quarter.

Adjusted gross profit climbed 29.6% from the year-ago period to $268.2 million. However, adjusted gross margin contracted 80 basis points (bps) on a year-on-year basis to 84.6%, primarily on the workforce returning to offices and aggressive hiring.

Paycom’s adjusted EBITDA surged 37.5% year over year to $119.6 million.

Adjusted EBITDA margin expanded 180 bps to 37.7%.

Balance Sheet & Cash Flow

Paycom exited the second quarter with cash and cash equivalents of $279 million compared with $360.6 million recorded in the previous quarter.

The company’s balance sheet comprises net long-term debt of $29 million compared with the previous quarter’s $28.7 million.

During second-quarter 2022, PAYC generated operating cash flow of $51.7 million. During the first six months of 2022, Paycom generated $169 million worth of operating cash flow.

Guidance

Paycom raised its guidance for full-year 2022. The company now predicts 2022 revenues between $1.354 billion and $1.356 billion compared with the earlier estimate of $1.333-$1.335 billion.

Adjusted EBITDA is now projected to be $546-$548 million compared with the prior guided range of $533-$535 million.

For the third quarter of 2022, Paycom estimates revenues between $327 million and $329 million. Management projects adjusted EBITDA of $117-$119 million.

Zacks Rank & Key Picks

Paycom currently carries a Zacks Rank #3 (Hold). Shares of PAYC have plunged 15.5% in the past year.

Some better-ranked stocks from the broader Computer and Technology sector are Taiwan Semiconductor (TSM - Free Report) , Clearfield (CLFD - Free Report) and Silicon Laboratories (SLAB - Free Report) , each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Taiwan Semiconductor's third-quarter 2022 earnings has been revised 10 cents northward to $1.70 per share over the past 30 days. For 2022, earnings estimates have moved 37 cents north to $6.30 per share in the past 30 days.

TSM's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 3.9%. Shares of the company have decreased 27.3% in the past year.

The Zacks Consensus Estimate for Clearfield's fourth-quarter fiscal 2022 earnings has been revised upward by 10 cents to 80 cents per share over the past seven days. For fiscal 2022, earnings estimates have moved 36 cents north to $3.13 per share in the past seven days.

Clearfield’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 33.9%. Shares of CLFD have soared 138.3% in the past year.

The Zacks Consensus Estimate for Silicon Laboratories’ third-quarter 2022 earnings has increased 22.9% to $1.02 per share over the past seven days. For 2022, earnings estimates have moved 14.2% up to $4.18 per share in the past seven days.

Silicon Laboratories’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 63.6%. Shares of SLAB have decreased 3.8% in the past year.