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The company’s adjusted earnings per share (including stock-based compensation) came in at 18 cents per share, which beat the Zacks Consensus Estimate of 13 cents. Also, reported earnings increased from 10 cents earned in the year-ago quarter.
Quarter Details
Paycom Software reported revenues of $73.9 million, which not only increased 50.9% from the year-ago quarter but also came ahead of the Zacks Consensus Estimate of $71 million. The year-over-over increase was driven by robust sales growth coupled with better-than-expected performance from Paycom's single database architecture.
Moreover, revenues were impacted positively by a 51.6% increase in recurring revenues and a whopping 20.4% increase in implementation and other revenues on a year-over-year basis.
The company’s adjusted gross margin (excluding one-time items but including stock-based compensation) increased 32 basis points (bps) on a year-over-year basis to 83.9%, primarily due to a higher revenue base.
Paycom Software’s adjusted operating margin (including stock-based compensation) decreased from 22.1% reported in the year-ago quarter to 21.7%, primarily due to higher operating expenses as a percentage of revenues. As a percentage of revenues, expenses increased to 62.3% during the quarter from 60.1% reported in the year-ago period.
The company’s adjusted net income (excluding one-time items but including stock-based compensation) came in at $10.4 million, which improved from $5.9 million reported in the year-ago quarter.
Balance Sheet & Cash Flow
Paycom Software exited the second quarter with cash and cash equivalents of $80.9 million compared with $72.1 million in the previous quarter. Receivables were $2.8 million compared with $2.6 million in the previous quarter.
Paycom Software’s balance sheet comprises long-term debt of $28.3 million compared with $24.7 million reported in the previous quarter. The company reported cash flow from operations of $54.5 million during the six-months ended Jun 30, 2016.
Guidance
For the third quarter of 2016, Paycom Software expects revenues in a range of $75 million to $77 million. The Zacks Consensus Estimate is pegged at $77 million. Adjusted EBITDA is expected to be approximately in a range of $13 million to $15 million.
Paycom Software raised its 2016 guidance. The company now expects revenues in a range of $325 million to $327 million (previous guidance $320 million to $322 million). The Zacks Consensus Estimate is pegged at $322 million. Adjusted EBITDA is expected to be approximately in a range of $83 million to $85 million.
Paycom Softwarereported better-than-expected second-quarter 2016 results, with the top- and bottom line surpassing the Zacks Consensus Estimate. Also, year-over-year comparisons on both counts were favorable. The company raised its 2016 revenue guidance.
Revenue growth seems to be steady and was positively impacted by higher recurring revenues and higher traction in cloud-based offerings. Better-than-expected demand for advanced human capital management and payroll software solutions during the reported quarter were the other positives.
We believe that the higher adoption of Paycom Software’s Affordable Care Act (“ACA”) dashboard application that tracks employee count, employee status and health care plan affordability will act as a tailwind for the company in the long run. Also, Paycom Software might witness long-term growth by successfully cross-selling newer products to the existing client base, which will boost revenues, going forward.
Nevertheless, competition from companies like Paylocity Holding Corporation (PCTY - Free Report) , Intuit Inc. (INTU - Free Report) and Paychex, Inc. remains a headwind.
Currently, Paycom Software has a Zacks Rank #3 (Hold). However, a better-ranked stock in the technology space is Facebook, Inc. , carrying a Zacks Rank #1 (Strong Buy).
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Paycom Software (PAYC) Beats on Q2 Earnings & Revenues
Paycom Software, Inc. (PAYC - Free Report) reported better-than-expected second-quarter 2016 results.
The company’s adjusted earnings per share (including stock-based compensation) came in at 18 cents per share, which beat the Zacks Consensus Estimate of 13 cents. Also, reported earnings increased from 10 cents earned in the year-ago quarter.
Quarter Details
Paycom Software reported revenues of $73.9 million, which not only increased 50.9% from the year-ago quarter but also came ahead of the Zacks Consensus Estimate of $71 million. The year-over-over increase was driven by robust sales growth coupled with better-than-expected performance from Paycom's single database architecture.
Moreover, revenues were impacted positively by a 51.6% increase in recurring revenues and a whopping 20.4% increase in implementation and other revenues on a year-over-year basis.
The company’s adjusted gross margin (excluding one-time items but including stock-based compensation) increased 32 basis points (bps) on a year-over-year basis to 83.9%, primarily due to a higher revenue base.
Paycom Software’s adjusted operating margin (including stock-based compensation) decreased from 22.1% reported in the year-ago quarter to 21.7%, primarily due to higher operating expenses as a percentage of revenues. As a percentage of revenues, expenses increased to 62.3% during the quarter from 60.1% reported in the year-ago period.
The company’s adjusted net income (excluding one-time items but including stock-based compensation) came in at $10.4 million, which improved from $5.9 million reported in the year-ago quarter.
Balance Sheet & Cash Flow
Paycom Software exited the second quarter with cash and cash equivalents of $80.9 million compared with $72.1 million in the previous quarter. Receivables were $2.8 million compared with $2.6 million in the previous quarter.
Paycom Software’s balance sheet comprises long-term debt of $28.3 million compared with $24.7 million reported in the previous quarter. The company reported cash flow from operations of $54.5 million during the six-months ended Jun 30, 2016.
Guidance
For the third quarter of 2016, Paycom Software expects revenues in a range of $75 million to $77 million. The Zacks Consensus Estimate is pegged at $77 million. Adjusted EBITDA is expected to be approximately in a range of $13 million to $15 million.
Paycom Software raised its 2016 guidance. The company now expects revenues in a range of $325 million to $327 million (previous guidance $320 million to $322 million). The Zacks Consensus Estimate is pegged at $322 million. Adjusted EBITDA is expected to be approximately in a range of $83 million to $85 million.
PAYCOM SOFTWARE Price, Consensus and EPS Surprise
PAYCOM SOFTWARE Price, Consensus and EPS Surprise | PAYCOM SOFTWARE Quote
Our Take
Paycom Softwarereported better-than-expected second-quarter 2016 results, with the top- and bottom line surpassing the Zacks Consensus Estimate. Also, year-over-year comparisons on both counts were favorable. The company raised its 2016 revenue guidance.
Revenue growth seems to be steady and was positively impacted by higher recurring revenues and higher traction in cloud-based offerings. Better-than-expected demand for advanced human capital management and payroll software solutions during the reported quarter were the other positives.
We believe that the higher adoption of Paycom Software’s Affordable Care Act (“ACA”) dashboard application that tracks employee count, employee status and health care plan affordability will act as a tailwind for the company in the long run. Also, Paycom Software might witness long-term growth by successfully cross-selling newer products to the existing client base, which will boost revenues, going forward.
Nevertheless, competition from companies like Paylocity Holding Corporation (PCTY - Free Report) , Intuit Inc. (INTU - Free Report) and Paychex, Inc. remains a headwind.
Currently, Paycom Software has a Zacks Rank #3 (Hold). However, a better-ranked stock in the technology space is Facebook, Inc. , carrying a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>