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Paycom (PAYC) Soars on Q1 Earnings Beat, New Dividend Policy
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Paycom Software (PAYC - Free Report) shares rose 2.1% during Tuesday’s extended trading session after the company reported stronger-than-expected first-quarter 2023 results and declared its first-ever dividend.
The online payroll and human resource technology provider reported non-GAAP earnings of $2.46 per share in the first quarter, beating the Zacks Consensus Estimate of $2.35. The bottom line improved 29.5% from the $1.90 per share reported in the year-ago quarter.
In the first quarter of 2023, Paycom reported revenues of $452 million, beating the consensus mark of $444.2 million and improving 28% year over year. This year-over-year upside was primarily driven by strong demand, new business wins and the adoption of recent new product offerings.
Paycom Software, Inc. Price, Consensus and EPS Surprise
Paycom’s recurring revenues (representing 98.4% of the total revenues) improved 27.6% to $444.4 million in the first quarter.
Adjusted gross profits climbed 27% from the year-ago period to $388.8 million. However, the adjusted gross margin contracted 50 basis points (bps) on a year-over-year basis to 86.1%.
Paycom’s adjusted EBITDA increased 29.6% year over year to $220.5 million. The adjusted EBITDA margin expanded 70 bps to 48.8%.
Balance Sheet & Cash Flow
Paycom exited the first quarter with cash and cash equivalents of $505.6 million compared with the $400.7 million recorded in the previous quarter. The company’s balance sheet comprised net long-term debt of $29 million, which remained flat sequentially.
In the first quarter of 2023, PAYC generated operating cash flow of $146.1 million.
Raised FY23 Guidance
Buoyed by a better-than-expected first-quarter performance, Paycom raised guidance for the full-year 2023. The company now projects revenues between $1.713 billion and $1.715 billion, up from the earlier range of $1.700-$1.702 billion. The forecast range for adjusted EBITDA was raised to $717-$719 million from the $700-$702 million band anticipated previously.
For the second quarter of 2023, Paycom forecasts revenues and adjusted EBITDA in the ranges of $397-$399 million and $152-$154 million, respectively.
New Shareholder Return Policy
Concurrent with its first-quarter financial result announcement, Paycom revealed that its board of directors approved a cash dividend, marking the company’s first-ever dividend policy. PAYC intends to pay out a quarterly cash dividend of 37.5 cents per share or $1.50 per share annually. The inaugural cash dividend is anticipated to be paid out in mid-June this year.
Zacks Rank & Other Stocks to Consider
Currently, Paycom carries a Zacks Rank #2 (Buy). Shares of PAYC have declined 7% year to date (YTD).
The Zacks Consensus Estimate for Wix.com’s first-quarter 2023 earnings has been revised upward to 23 cents per share from 16 cents per share 60 days ago. For 2023, earnings estimates have been revised northward by 7 cents to $1.49 per share in the past 60 days.
Wix.com's earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missing the same on one occasion, the average surprise being 225%. Shares of WIX have risen 9.9% YTD.
The Zacks Consensus Estimate for Zscaler's third-quarter fiscal 2023 earnings has been revised 6 cents northward to 39 cents per share in the past 60 days. For fiscal 2023, earnings estimates have been revised northward by 2 cents to $1.52 per share in the past 30 days.
Zscaler’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 29.7%. Shares of ZS have declined 22.3% YTD.
The Zacks Consensus Estimate for Adobe's second-quarter fiscal 2023 earnings has been revised upward by a couple of cents to $3.78 per share over the past 60 days. For fiscal 2023, earnings estimates have moved upward by 19 cents to $15.41 per share in the past 60 days.
Adobe's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 2.6%. Shares of ADBE have soared 9.5% YTD.
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Paycom (PAYC) Soars on Q1 Earnings Beat, New Dividend Policy
Paycom Software (PAYC - Free Report) shares rose 2.1% during Tuesday’s extended trading session after the company reported stronger-than-expected first-quarter 2023 results and declared its first-ever dividend.
The online payroll and human resource technology provider reported non-GAAP earnings of $2.46 per share in the first quarter, beating the Zacks Consensus Estimate of $2.35. The bottom line improved 29.5% from the $1.90 per share reported in the year-ago quarter.
In the first quarter of 2023, Paycom reported revenues of $452 million, beating the consensus mark of $444.2 million and improving 28% year over year. This year-over-year upside was primarily driven by strong demand, new business wins and the adoption of recent new product offerings.
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 98.4% of the total revenues) improved 27.6% to $444.4 million in the first quarter.
Adjusted gross profits climbed 27% from the year-ago period to $388.8 million. However, the adjusted gross margin contracted 50 basis points (bps) on a year-over-year basis to 86.1%.
Paycom’s adjusted EBITDA increased 29.6% year over year to $220.5 million. The adjusted EBITDA margin expanded 70 bps to 48.8%.
Balance Sheet & Cash Flow
Paycom exited the first quarter with cash and cash equivalents of $505.6 million compared with the $400.7 million recorded in the previous quarter. The company’s balance sheet comprised net long-term debt of $29 million, which remained flat sequentially.
In the first quarter of 2023, PAYC generated operating cash flow of $146.1 million.
Raised FY23 Guidance
Buoyed by a better-than-expected first-quarter performance, Paycom raised guidance for the full-year 2023. The company now projects revenues between $1.713 billion and $1.715 billion, up from the earlier range of $1.700-$1.702 billion. The forecast range for adjusted EBITDA was raised to $717-$719 million from the $700-$702 million band anticipated previously.
For the second quarter of 2023, Paycom forecasts revenues and adjusted EBITDA in the ranges of $397-$399 million and $152-$154 million, respectively.
New Shareholder Return Policy
Concurrent with its first-quarter financial result announcement, Paycom revealed that its board of directors approved a cash dividend, marking the company’s first-ever dividend policy. PAYC intends to pay out a quarterly cash dividend of 37.5 cents per share or $1.50 per share annually. The inaugural cash dividend is anticipated to be paid out in mid-June this year.
Zacks Rank & Other Stocks to Consider
Currently, Paycom carries a Zacks Rank #2 (Buy). Shares of PAYC have declined 7% year to date (YTD).
Some other top-ranked stocks from the broader technology sector are Wix.com (WIX - Free Report) , Zscaler (ZS - Free Report) and Adobe (ADBE - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Wix.com’s first-quarter 2023 earnings has been revised upward to 23 cents per share from 16 cents per share 60 days ago. For 2023, earnings estimates have been revised northward by 7 cents to $1.49 per share in the past 60 days.
Wix.com's earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missing the same on one occasion, the average surprise being 225%. Shares of WIX have risen 9.9% YTD.
The Zacks Consensus Estimate for Zscaler's third-quarter fiscal 2023 earnings has been revised 6 cents northward to 39 cents per share in the past 60 days. For fiscal 2023, earnings estimates have been revised northward by 2 cents to $1.52 per share in the past 30 days.
Zscaler’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 29.7%. Shares of ZS have declined 22.3% YTD.
The Zacks Consensus Estimate for Adobe's second-quarter fiscal 2023 earnings has been revised upward by a couple of cents to $3.78 per share over the past 60 days. For fiscal 2023, earnings estimates have moved upward by 19 cents to $15.41 per share in the past 60 days.
Adobe's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 2.6%. Shares of ADBE have soared 9.5% YTD.