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Paycom Software (PAYC - Free Report) reported stronger-than-expected second-quarter 2023 results. The online payroll and human resource technology provider reported non-GAAP earnings of $1.62 per share in the second quarter, beating the Zacks Consensus Estimate of $1.60. The bottom line improved 28.6% from the $1.26 per share reported in the year-ago quarter.
In the second quarter of 2023, Paycom reported revenues of $401.1 million, beating the consensus mark of $398.2 million and improving 26.6% 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 26.6% to $394.5 million in the second quarter. Our estimates for the company’s Recurring revenues were pegged at $391.7 million.
Paycom Software, Inc. Price, Consensus and EPS Surprise
The company’s revenues from the Implementation and Other segment improved to $6.6 million from $5.4 million in the year-ago quarter and contributed 1.6% to total sales. Our estimate for the division’s revenues was pegged at $6.6 million.
Adjusted gross profits climbed 25.1% from the year-ago period to $333.7 million. However, the adjusted gross margin contracted 100 basis points (bps) on a year-over-year basis to 83.2%.
Paycom’s adjusted EBITDA increased 30.9% year over year to $156.6 million. The adjusted EBITDA margin expanded 130 bps to 39%.
Balance Sheet & Cash Flow
Paycom exited the second quarter with cash and cash equivalents of $536.5 million compared with the $505.6 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 second quarter of 2023, PAYC generated operating cash flow of approximately $106 million and paid out $21.7 million in dividends. During the first six months of 2023, the company generated operating cash flow of approximately $252 million.
The dividend paid during the second quarter was Paycom’s inaugural cash dividend payout. Concurrent with its first-quarter 2023 financial result announcement in May 2023, 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.
Raised FY23 Guidance
Buoyed by a better-than-expected second-quarter performance, Paycom raised guidance for the full-year 2023. The company now projects revenues between $1.715 billion and $1.717 billion, up from the earlier range of $1.713-$1.715 billion. The forecast range for adjusted EBITDA was raised to $722-$724 million from the $717-$719 million band anticipated previously.
For the third quarter of 2023, Paycom forecasts revenues and adjusted EBITDA in the ranges of $410-$412 million and $156-$158 million, respectively.
Zacks Rank & Other Stocks to Consider
Currently, Paycom carries a Zacks Rank #2 (Buy). Shares of PAYC have declined 7% year to date (YTD).
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NVIDIA’s earnings beat the Zacks Consensus Estimate twice in the preceding four quarters while missing the same on two occasions, the average surprise being 0.3%. Shares of NVDA have surged 213% YTD.
The Zacks Consensus Estimate for Fortinet’s second-quarter 2023 earnings has remained unchanged at 34 cents per share in the past 60 days. For 2023, earnings estimates have remained unchanged at $1.46 per share in the past 60 days.
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Paycom (PAYC) Beats Q2 Earnings Estimates, Raises FY23 View
Paycom Software (PAYC - Free Report) reported stronger-than-expected second-quarter 2023 results. The online payroll and human resource technology provider reported non-GAAP earnings of $1.62 per share in the second quarter, beating the Zacks Consensus Estimate of $1.60. The bottom line improved 28.6% from the $1.26 per share reported in the year-ago quarter.
In the second quarter of 2023, Paycom reported revenues of $401.1 million, beating the consensus mark of $398.2 million and improving 26.6% 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 26.6% to $394.5 million in the second quarter. Our estimates for the company’s Recurring revenues were pegged at $391.7 million.
Paycom Software, Inc. Price, Consensus and EPS Surprise
Paycom Software, Inc. price-consensus-eps-surprise-chart | Paycom Software, Inc. Quote
The company’s revenues from the Implementation and Other segment improved to $6.6 million from $5.4 million in the year-ago quarter and contributed 1.6% to total sales. Our estimate for the division’s revenues was pegged at $6.6 million.
Adjusted gross profits climbed 25.1% from the year-ago period to $333.7 million. However, the adjusted gross margin contracted 100 basis points (bps) on a year-over-year basis to 83.2%.
Paycom’s adjusted EBITDA increased 30.9% year over year to $156.6 million. The adjusted EBITDA margin expanded 130 bps to 39%.
Balance Sheet & Cash Flow
Paycom exited the second quarter with cash and cash equivalents of $536.5 million compared with the $505.6 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 second quarter of 2023, PAYC generated operating cash flow of approximately $106 million and paid out $21.7 million in dividends. During the first six months of 2023, the company generated operating cash flow of approximately $252 million.
The dividend paid during the second quarter was Paycom’s inaugural cash dividend payout. Concurrent with its first-quarter 2023 financial result announcement in May 2023, 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.
Raised FY23 Guidance
Buoyed by a better-than-expected second-quarter performance, Paycom raised guidance for the full-year 2023. The company now projects revenues between $1.715 billion and $1.717 billion, up from the earlier range of $1.713-$1.715 billion. The forecast range for adjusted EBITDA was raised to $722-$724 million from the $717-$719 million band anticipated previously.
For the third quarter of 2023, Paycom forecasts revenues and adjusted EBITDA in the ranges of $410-$412 million and $156-$158 million, respectively.
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 NVIDIA (NVDA - Free Report) , Fortinet (FTNT - Free Report) and Salesforce (CRM - Free Report) . NVIDIA and Fortinet each sport a Zacks Rank #1 (Strong Buy), while Salesforce carries a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for NVIDIA's second-quarter fiscal 2024 earnings has remained unchanged at 92 cents per share in the past 60 days. For fiscal 2024, earnings estimates have increased by 13 cents to $7.79 per share in the past 30 days.
NVIDIA’s earnings beat the Zacks Consensus Estimate twice in the preceding four quarters while missing the same on two occasions, the average surprise being 0.3%. Shares of NVDA have surged 213% YTD.
The Zacks Consensus Estimate for Fortinet’s second-quarter 2023 earnings has remained unchanged at 34 cents per share in the past 60 days. For 2023, earnings estimates have remained unchanged at $1.46 per share in the past 60 days.
Fortinet’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 16.4%. Shares of FTNT have surged 60.2% YTD.
The Zacks Consensus Estimate for Salesforce's second-quarter fiscal 2024 earnings has been revised downward by a penny to $1.60 per share in the past 60 days. For fiscal 2024, earnings estimates have moved upward by 4 cents to $7.44 per share in the past 60 days.
Salesforce's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 15.5%. Shares of CRM have surged 70.3% YTD.