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Paycom (PAYC) Q4 Recurring Sales Soar on Business Expansion

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Paycom Software, Inc.’s (PAYC - Free Report) total revenues for recently reported fourth-quarter 2023 results surged 19.4% year over year to $434.6 million and surpassed the Zacks Consensus Estimate of $422.6 million. The robust top-line performance was mainly driven by a 17.4% increase in Recurring revenues.

Fourth-quarter Recurring revenues of $427.3 million represented 98.3% of total sales and came ahead of our model estimate of $414.8 million. The company’s sustained focus on expanding its product portfolio and global presence is aiding Recurring revenue growth.

In 2023, Paycom delivered a lot of innovation on the international front. The online payroll and human resource technology provider launched the Global HCM product last year, through which companies of all sizes can now use this product across 180 countries and in 15 languages and dialects. It also developed and launched native payrolls in Canada and Mexico.

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

The continued strong adoption of its Beti solution also contributed to the Recurring revenue growth during the fourth quarter. Beti, at the forefront of Paycom's artificial intelligence (AI) and automation strategy, has delivered exceptional value to clients. A third-party study revealed significant benefits, including a  more than 80% reduction in errors, a 90% reduction in payroll processing time and improved employee engagement. These outcomes translate into tangible cost savings and productivity gains for Paycom's clientele, fostering long-term loyalty and revenue retention.

Furthermore, the recently launched AI-powered time-off application, GONE, is witnessing robust adoption. By automating decision-making processes related to time-off requests, GONE streamlines operations, enhances user experience and minimizes conflicts. Clients experience immediate benefits, such as accelerated decision-making, improved efficiency and heightened employee satisfaction. This translates into enhanced client ROI and strengthens Paycom's competitive positioning in the human capital management software market.

The success of Beti and GONE underscores Paycom's commitment to product innovation and client-centricity. By addressing critical pain points in HR and payroll processes, these solutions have become indispensable tools for businesses seeking operational excellence and cost optimization. As a result, Paycom has witnessed a surge in demand for its products, driving revenue growth and bolstering profitability.

Zacks Rank & Stocks to Consider

Currently, Paycom Software carries a Zacks Rank #3 (Hold). Shares of PAYC have plunged 39.3% over the past year.

Some better-ranked stocks from the broader technology sector are CrowdStrike Holdings (CRWD - Free Report) , (AMZN - Free Report) and NVIDIA Corporation (NVDA - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for CrowdStrike’s fiscal 2024 earnings has been revised upward by a penny to $2.95 per share in the past 60 days, suggesting year-over-year growth of 91.6%. The long-term estimated earnings growth rate for the stock stands at 36.1%. Shares of CRWD have jumped 184.8% over the past year.

The Zacks Consensus Estimate for Amazon’s 2024 earnings has been revised upward by 36 cents to $4.03 per share in the past seven days, which calls for an increase of 39% on a year-over-year basis. The long-term expected earnings growth rate for the stock is pegged at 28.1%. AMZN stock has returned 72.9% over the past year.

The consensus mark for NVIDIA’s fiscal 2024 earnings has been revised downward by a penny to $12.30 per share over the past 30 days, indicating a whopping 268.3% increase from fiscal 2023. It has a long-term earnings growth expectation of 13.5%. In the trailing 12 months, NVDA stock has surged 211.7%.

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