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Paycom (PAYC) Down 4.6% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Paycom Software (PAYC - Free Report) . Shares have lost about 4.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Paycom due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Paycom Q1 Earnings and Revenues Surpass Estimates
Paycom reported better-than-expected results for first-quarter 2023.
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.
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.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
At this time, Paycom has a great Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Paycom has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Paycom is part of the Zacks Internet - Software industry. Over the past month, Snap (SNAP - Free Report) , a stock from the same industry, has gained 26.4%. The company reported its results for the quarter ended March 2023 more than a month ago.
Snap reported revenues of $988.61 million in the last reported quarter, representing a year-over-year change of -7%. EPS of $0.01 for the same period compares with -$0.02 a year ago.
Snap is expected to post a loss of $0.05 per share for the current quarter, representing a year-over-year change of -150%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.5%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Snap. Also, the stock has a VGM Score of C.
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Paycom (PAYC) Down 4.6% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Paycom Software (PAYC - Free Report) . Shares have lost about 4.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Paycom due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Paycom Q1 Earnings and Revenues Surpass Estimates
Paycom reported better-than-expected results for first-quarter 2023.
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.
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.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
At this time, Paycom has a great Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Paycom has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Paycom is part of the Zacks Internet - Software industry. Over the past month, Snap (SNAP - Free Report) , a stock from the same industry, has gained 26.4%. The company reported its results for the quarter ended March 2023 more than a month ago.
Snap reported revenues of $988.61 million in the last reported quarter, representing a year-over-year change of -7%. EPS of $0.01 for the same period compares with -$0.02 a year ago.
Snap is expected to post a loss of $0.05 per share for the current quarter, representing a year-over-year change of -150%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.5%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Snap. Also, the stock has a VGM Score of C.