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Paycom (PAYC) Q1 Earnings and Revenues Beat Estimates
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Paycom Software (PAYC - Free Report) recently reported stellar first-quarter 2020 results despite the unexpected rate cuts and spike in unemployment level due to the economic and business disruptions caused by the coronavirus outbreak. Notably, some of the company’s businesses are directly related to the number of headcounts at its client offices.
The company generated revenues of $242.4 million, which increased 21% from the year-earlier period and also outpaced the Zacks Consensus Estimate of $238 million. Further, the company’s first-quarter non-GAAP earnings per share came in at $1.33, which surpassed the Zacks Consensus Estimate of $1.26 and also grew 11.8% year on year.
Robust new business wins and the company’s high-margin recurring revenue business drove results. Recurring revenues of $238.5 million climbed 21% from the prior year, and constituted 98% of total revenues.
The company is benefiting from its differentiated employee strategy, measurement capabilities and comprehensive product offering. Paycom’s differentiated product offering — Direct Data Exchange — for all Paycom Software clients is boosting customer addition. Furthermore, the latest launch of Ask Here and Manager on-the-Go, both focusing on greater employee usage and efficiency, is a tailwind.
Margins
Adjusted gross profit jumped 23.1% from the year-ago period to $213.5 million. Adjusted gross margin expanded 130 basis points (bps) on a year-over-year basis to 88.1% as the company continues benefiting from high-margin recurring revenues and increasing customer-service efficiency.
Paycom Software’s adjusted EBITDA rose 14.1% year over year to $117.9 million. However, adjusted EBITDA margin contracted 300 bps to48.7%.
Balance Sheet & Cash Flow
Paycom Software exited the first quarter with cash and cash equivalents of $181.8 million compared with the $133.7 million recorded in the sequential quarter.
The company’s balance sheet comprises long-term debt of $32.2 million compared with the previous quarter’s $32.6 million.
Cash from operations was $82 million in the first quarter and the company repurchased approximately $8 million worth of its common stocks.
Guidance
Citing economic and business uncertainties of its clients, Paycom withdrew its outlook for full-year 2020.
Previously, the company had projected revenues in the range of $911-$913 million. Adjusted EBITDA was anticipated in the $384-$386 million band and adjusted gross margin in the 85-86% range.
The long-term earnings growth rate for Zoom, Pixelworks and InterDigital is currently pegged at 26.6%, 20%, and 15%, respectively.
Zacks Top 10 Stocks for 2020
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Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Paycom (PAYC) Q1 Earnings and Revenues Beat Estimates
Paycom Software (PAYC - Free Report) recently reported stellar first-quarter 2020 results despite the unexpected rate cuts and spike in unemployment level due to the economic and business disruptions caused by the coronavirus outbreak. Notably, some of the company’s businesses are directly related to the number of headcounts at its client offices.
The company generated revenues of $242.4 million, which increased 21% from the year-earlier period and also outpaced the Zacks Consensus Estimate of $238 million. Further, the company’s first-quarter non-GAAP earnings per share came in at $1.33, which surpassed the Zacks Consensus Estimate of $1.26 and also grew 11.8% year on year.
Robust new business wins and the company’s high-margin recurring revenue business drove results. Recurring revenues of $238.5 million climbed 21% from the prior year, and constituted 98% of total revenues.
Paycom Software, Inc.
Paycom Software, Inc. | Paycom Software, Inc. Quote
The company is benefiting from its differentiated employee strategy, measurement capabilities and comprehensive product offering. Paycom’s differentiated product offering — Direct Data Exchange — for all Paycom Software clients is boosting customer addition. Furthermore, the latest launch of Ask Here and Manager on-the-Go, both focusing on greater employee usage and efficiency, is a tailwind.
Margins
Adjusted gross profit jumped 23.1% from the year-ago period to $213.5 million. Adjusted gross margin expanded 130 basis points (bps) on a year-over-year basis to 88.1% as the company continues benefiting from high-margin recurring revenues and increasing customer-service efficiency.
Paycom Software’s adjusted EBITDA rose 14.1% year over year to $117.9 million. However, adjusted EBITDA margin contracted 300 bps to48.7%.
Balance Sheet & Cash Flow
Paycom Software exited the first quarter with cash and cash equivalents of $181.8 million compared with the $133.7 million recorded in the sequential quarter.
The company’s balance sheet comprises long-term debt of $32.2 million compared with the previous quarter’s $32.6 million.
Cash from operations was $82 million in the first quarter and the company repurchased approximately $8 million worth of its common stocks.
Guidance
Citing economic and business uncertainties of its clients, Paycom withdrew its outlook for full-year 2020.
Previously, the company had projected revenues in the range of $911-$913 million. Adjusted EBITDA was anticipated in the $384-$386 million band and adjusted gross margin in the 85-86% range.
Zacks Rank and Key Picks
Currently, Paycom carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the broader technology sector include Zoom Video Communications, Inc. (ZM - Free Report) , Pixelworks, Inc. (PXLW - Free Report) and InterDigital, Inc. (IDCC - Free Report) , each flaunting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term earnings growth rate for Zoom, Pixelworks and InterDigital is currently pegged at 26.6%, 20%, and 15%, respectively.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>