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Paycom Software (PAYC - Free Report) delivered solid third-quarter 2022 performance, wherein both the top and bottom lines surpassed the respective Zacks Consensus Estimate and rose year over year.
The online payroll and human resource technology provider reported non-GAAP earnings of $1.27 per share, beating the Zacks Consensus Estimate of $1.18. The bottom line improved 38% from 92 cents per share reported in the year-ago quarter.
For the third quarter of 2022, Paycom reported revenues of $334 million, beating the consensus mark of $328.1 million and improving 30% year over year. This year-over-year upside was primarily driven by new client additions and continued focus on cross-selling to existing clients.
Shares of PAYC have declined 33.2% in the past year.
Paycom Software, Inc. Price, Consensus and EPS Surprise
Paycom’s recurring revenues (representing 98.2% of total revenues) improved 30.6% to $328.2 million in the third quarter.
Adjusted gross profits climbed 309.6% from the year-ago period to $280.5 million. However, the adjusted gross margin contracted 10 basis points (bps) on a year-on-year basis to 83.9%, primarily on the workforce returning to offices and aggressive hiring.
Paycom’s adjusted EBITDA increased 40.5% year over year to $126 million. Adjusted EBITDA margin expanded 270 bps to 37.7%.
Balance Sheet & Cash Flow
Paycom exited the third quarter with cash and cash equivalents of $317.2 million compared with $279 million recorded in the previous quarter.
The company’s balance sheet comprises net long-term debt of $29 million, which remained flat sequentially.
During third-quarter 2022, PAYC generated an operating cash flow of $67.6 million. During the first nine months of 2022, the company generated $236.6 million worth of operating cash flow.
Guidance
Paycom raised its guidance for full-year 2022. The company now predicts 2022 revenues to be between $1.371 billion and $1.373 billion compared with the earlier estimate of $1.354-$1.356 billion.
Adjusted EBITDA is now projected to be in the $560-$562 million range compared with the prior guided range of $546-$548 million.
For the fourth quarter of 2022, Paycom estimates revenues between $366 million and $368 million. Management projects adjusted EBITDA of $144-$146 million.
The Zacks Consensus Estimate for Okta's third-quarter fiscal 2023 loss has been revised a penny downward to 31 cents per share over the past 60 days. For fiscal 2022, loss estimates have improved by 3 cents to 72 cents per share in the past 30 days.
OKTA’s earnings beat the Zacks Consensus Estimate in all the preceding four quarters, the average surprise being 45.5%. Shares of the company have declined 78.4% in the past year.
The Zacks Consensus Estimate for Zscaler's first-quarter fiscal 2023 earnings has been revised a penny north to 21 cents per share over the past 60 days. For fiscal 2023, earnings estimates have moved north by a penny to $1.18 per share in the past 30 days.
ZS' earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 28.6%. Shares of the company have declined 54.1% in the past year.
The Zacks Consensus Estimate for Digi’s fourth-quarter fiscal 2022 earnings has increased by 2 cents to 42 cents per share over the past 90 days. For fiscal 2022, earnings estimates have moved 1.2% down to $1.61 per share in the past 60 days.
DGII's earnings beat the Zacks Consensus Estimate in all the preceding four quarters, the average surprise being 28.6%. Shares of the company have improved 63.9% in the past year.
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Paycom's (PAYC) Q3 Earnings & Revenues Surpass Estimates
Paycom Software (PAYC - Free Report) delivered solid third-quarter 2022 performance, wherein both the top and bottom lines surpassed the respective Zacks Consensus Estimate and rose year over year.
The online payroll and human resource technology provider reported non-GAAP earnings of $1.27 per share, beating the Zacks Consensus Estimate of $1.18. The bottom line improved 38% from 92 cents per share reported in the year-ago quarter.
For the third quarter of 2022, Paycom reported revenues of $334 million, beating the consensus mark of $328.1 million and improving 30% year over year. This year-over-year upside was primarily driven by new client additions and continued focus on cross-selling to existing clients.
Shares of PAYC have declined 33.2% in the past year.
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 98.2% of total revenues) improved 30.6% to $328.2 million in the third quarter.
Adjusted gross profits climbed 309.6% from the year-ago period to $280.5 million. However, the adjusted gross margin contracted 10 basis points (bps) on a year-on-year basis to 83.9%, primarily on the workforce returning to offices and aggressive hiring.
Paycom’s adjusted EBITDA increased 40.5% year over year to $126 million. Adjusted EBITDA margin expanded 270 bps to 37.7%.
Balance Sheet & Cash Flow
Paycom exited the third quarter with cash and cash equivalents of $317.2 million compared with $279 million recorded in the previous quarter.
The company’s balance sheet comprises net long-term debt of $29 million, which remained flat sequentially.
During third-quarter 2022, PAYC generated an operating cash flow of $67.6 million. During the first nine months of 2022, the company generated $236.6 million worth of operating cash flow.
Guidance
Paycom raised its guidance for full-year 2022. The company now predicts 2022 revenues to be between $1.371 billion and $1.373 billion compared with the earlier estimate of $1.354-$1.356 billion.
Adjusted EBITDA is now projected to be in the $560-$562 million range compared with the prior guided range of $546-$548 million.
For the fourth quarter of 2022, Paycom estimates revenues between $366 million and $368 million. Management projects adjusted EBITDA of $144-$146 million.
Zacks Rank & Key Picks
Paycom currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader Computer and Technology sector are Okta (OKTA - Free Report) , Zscaler (ZS - Free Report) and Digi International (DGII - Free Report) . While Okta and Zscaler flaunt a Zacks Rank #1 (Strong Buy), Digi International carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Okta's third-quarter fiscal 2023 loss has been revised a penny downward to 31 cents per share over the past 60 days. For fiscal 2022, loss estimates have improved by 3 cents to 72 cents per share in the past 30 days.
OKTA’s earnings beat the Zacks Consensus Estimate in all the preceding four quarters, the average surprise being 45.5%. Shares of the company have declined 78.4% in the past year.
The Zacks Consensus Estimate for Zscaler's first-quarter fiscal 2023 earnings has been revised a penny north to 21 cents per share over the past 60 days. For fiscal 2023, earnings estimates have moved north by a penny to $1.18 per share in the past 30 days.
ZS' earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 28.6%. Shares of the company have declined 54.1% in the past year.
The Zacks Consensus Estimate for Digi’s fourth-quarter fiscal 2022 earnings has increased by 2 cents to 42 cents per share over the past 90 days. For fiscal 2022, earnings estimates have moved 1.2% down to $1.61 per share in the past 60 days.
DGII's earnings beat the Zacks Consensus Estimate in all the preceding four quarters, the average surprise being 28.6%. Shares of the company have improved 63.9% in the past year.