We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Paycom Q3 Earnings Beat Estimates on Revenue Growth, Margin Gains
Read MoreHide Full Article
Key Takeaways
Paycom's Q3 earnings jumped 73.7% to $3.37 per share, while revenues grew 10.2% to $543.8 million.
PAYC's recurring revenues rose 11.3%, while adjusted EBITDA surged 38% with a 990-bps margin expansion.
PAYC raised its 2026 revenue outlook to $2.213-$2.218 billion and EBITDA guidance to $1.069-$1.079 billion.
Paycom Software, Inc. (PAYC - Free Report) reported better-than-expected third-quarter 2026 results, wherein both top and bottom lines surpassed the Zacks Consensus Estimate.
The online payroll and human resource technology provider reported non-GAAP earnings of $3.37 per share, which increased 73.7% year over year and beat the consensus estimate by 22.1%.
Revenues increased 10.2% year over year to $543.8 million, exceeding the consensus estimate by 1.6%. Results benefited from higher recurring revenues, increased automation adoption and improved operating efficiencies.
PAYC's Q3 Revenue Performance in Detail
Paycom’s Recurring and other revenues (representing 95.5% of total revenues) increased 11.3% year over year to $519.3 million from $466.5 million in the year-ago quarter. Our estimate for the company’s Recurring revenues was pegged at $508.1 million.
Paycom Software, Inc. Price, Consensus and EPS Surprise
Revenues from Interest on funds held for clients declined 8.6% to $24.5 million from $26.8 million in the prior-year quarter, contributing 4.5% to total revenues. Our estimate for the segment’s revenues was pegged at $25.2 million.
Paycom’s adjusted gross profit increased 11.5% year over year to $458.7 million. The adjusted gross margin expanded 100 basis points (bps) to 84.4%.
Adjusted EBITDA surged 38% year over year to $268.1 million. The adjusted EBITDA margin expanded 990 bps to 49.3%.
Paycom's Balance Sheet and Cash Flow Position
Paycom exited the third quarter with cash and cash equivalents of $193.9 million compared with $198 million at the end of the previous quarter. The company had outstanding long-term debt of $750 million as of Sept. 30, 2026, following a $150 million repayment during the quarter.
During the first nine months of 2026, PAYC generated operating cash flow of $613.9 million, compared with $482.8 million in the year-ago period.
Paycom repurchased approximately $3 million worth of shares and paid $16.7 million in cash dividends during the quarter. The company had $1.65 billion remaining under its share repurchase authorization at quarter-end.
PAYC Raises 2026 Revenue Outlook
Following the better-than-expected third-quarter performance, Paycom raised its 2026 guidance for revenues and adjusted EBITDA.
The company now expects total revenues between $2.213 billion and $2.218 billion, implying approximately 8% year-over-year growth. The updated outlook compares with the previous guidance range of $2.197 billion to $2.212 billion.
Recurring and other revenues are expected to increase approximately 9% year over year. Interest on funds held for clients is projected at approximately $107 million, up from the earlier expectation of $105 million.
Paycom raised its adjusted EBITDA guidance to $1.069-$1.079 billion from the previous range of $1.007-$1.022 billion. The revised outlook implies an adjusted EBITDA margin of 48.5% at the midpoint, representing an expansion of 550 bps from 2025.
Advanced Energy Industries shares have gained 1.5% in the year-to-date period. The Zacks Consensus Estimate for Advanced Energy Industries’ 2026 earnings indicates a year-over-year increase of 75%. Estimates have remained unchanged for the past 30 days.
Shares of AMETEK have jumped 15.5% year to date. The Zacks Consensus Estimate for AMETEK’s 2026 earnings suggests a year-over-year rise of 13.2%. Estimates have been revised upward in the past 30 days.
ASE Technology’s shares have surged 132.8% year to date. The Zacks Consensus Estimate for ASE Technology’s 2026 earnings indicates year-over-year growth of 129.8%. Estimates have been revised upward in the past seven days.
View the Zacks #1 Rank List
Image: Bigstock
Paycom Q3 Earnings Beat Estimates on Revenue Growth, Margin Gains
Key Takeaways
Paycom Software, Inc. (PAYC - Free Report) reported better-than-expected third-quarter 2026 results, wherein both top and bottom lines surpassed the Zacks Consensus Estimate.
The online payroll and human resource technology provider reported non-GAAP earnings of $3.37 per share, which increased 73.7% year over year and beat the consensus estimate by 22.1%.
Revenues increased 10.2% year over year to $543.8 million, exceeding the consensus estimate by 1.6%. Results benefited from higher recurring revenues, increased automation adoption and improved operating efficiencies.
PAYC's Q3 Revenue Performance in Detail
Paycom’s Recurring and other revenues (representing 95.5% of total revenues) increased 11.3% year over year to $519.3 million from $466.5 million in the year-ago quarter. Our estimate for the company’s Recurring revenues was pegged at $508.1 million.
Paycom Software, Inc. Price, Consensus and EPS Surprise
Paycom Software, Inc. price-consensus-eps-surprise-chart | Paycom Software, Inc. Quote
Revenues from Interest on funds held for clients declined 8.6% to $24.5 million from $26.8 million in the prior-year quarter, contributing 4.5% to total revenues. Our estimate for the segment’s revenues was pegged at $25.2 million.
Paycom’s adjusted gross profit increased 11.5% year over year to $458.7 million. The adjusted gross margin expanded 100 basis points (bps) to 84.4%.
Adjusted EBITDA surged 38% year over year to $268.1 million. The adjusted EBITDA margin expanded 990 bps to 49.3%.
Paycom's Balance Sheet and Cash Flow Position
Paycom exited the third quarter with cash and cash equivalents of $193.9 million compared with $198 million at the end of the previous quarter. The company had outstanding long-term debt of $750 million as of Sept. 30, 2026, following a $150 million repayment during the quarter.
During the first nine months of 2026, PAYC generated operating cash flow of $613.9 million, compared with $482.8 million in the year-ago period.
Paycom repurchased approximately $3 million worth of shares and paid $16.7 million in cash dividends during the quarter. The company had $1.65 billion remaining under its share repurchase authorization at quarter-end.
PAYC Raises 2026 Revenue Outlook
Following the better-than-expected third-quarter performance, Paycom raised its 2026 guidance for revenues and adjusted EBITDA.
The company now expects total revenues between $2.213 billion and $2.218 billion, implying approximately 8% year-over-year growth. The updated outlook compares with the previous guidance range of $2.197 billion to $2.212 billion.
Recurring and other revenues are expected to increase approximately 9% year over year. Interest on funds held for clients is projected at approximately $107 million, up from the earlier expectation of $105 million.
Paycom raised its adjusted EBITDA guidance to $1.069-$1.079 billion from the previous range of $1.007-$1.022 billion. The revised outlook implies an adjusted EBITDA margin of 48.5% at the midpoint, representing an expansion of 550 bps from 2025.
Paycom’s Zacks Rank & Stocks to Consider
Currently, PAYC carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader Zacks Computer and Technology sector include Advanced Energy Industries (AEIS - Free Report) , AMETEK (AME - Free Report) and ASE Technology (ASX - Free Report) . Advanced Energy Industries, AMETEK and ASE Technology sport a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Advanced Energy Industries shares have gained 1.5% in the year-to-date period. The Zacks Consensus Estimate for Advanced Energy Industries’ 2026 earnings indicates a year-over-year increase of 75%. Estimates have remained unchanged for the past 30 days.
Shares of AMETEK have jumped 15.5% year to date. The Zacks Consensus Estimate for AMETEK’s 2026 earnings suggests a year-over-year rise of 13.2%. Estimates have been revised upward in the past 30 days.
ASE Technology’s shares have surged 132.8% year to date. The Zacks Consensus Estimate for ASE Technology’s 2026 earnings indicates year-over-year growth of 129.8%. Estimates have been revised upward in the past seven days.