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Paycom Software, Inc. Reports Third Quarter 2023 Results

Third Quarter Revenues of $406 million, up 22% from the comparable prior year period

Third Quarter GAAP Net Income of $75 million, representing 19% of total revenues, or $1.30 per diluted share

Third Quarter Non-GAAP Net Income of $102 million, of $1.77 per diluted share

Third Quarter Adjusted EBITDA of $166 million, representing 41% of total revenues

Paycom Software, Inc. (“Paycom,” “we” and “our”) (NYSE: PAYC), a leading provider of comprehensive, cloud-based human capital management software, today announced its financial results for the quarter ended September 30, 2023.

“Our third quarter fundamentals were strong with solid revenue and earnings growth,” said Paycom’s founder, chairman and CEO, Chad Richison. “Our innovations have transformed the payroll and HCM industry for 25 years, and we’re excited to deliver even stronger value to our clients for years to come.”

Financial Highlights for the Third Quarter of 2023

Total Revenues of $406.3 million represented a 21.6% increase compared to total revenues of $334.2 million in the same period last year. Recurring revenues of $398.8 million increased 21.5% from the comparable prior year period, and constituted 98.1% of total revenues.

GAAP Net Income was $75.2 million, or $1.30 per diluted share, compared to GAAP net income of $52.2 million, or $0.90 per diluted share, in the same period last year.

Non-GAAP Net Income1 was $102.4 million, or $1.77 per diluted share, compared to $73.4 million, or $1.27 per diluted share, in the same period last year.

Adjusted EBITDA1 was $165.6 million, compared to $126.0 million in the same period last year.

Cash and Cash Equivalents were $484.0 million as of September 30, 2023, compared to $400.7 million as of December 31, 2022. During the quarter ended September 30, 2023, Paycom paid $21.6 million in cash dividends and repurchased 263,824 shares of common stock for a total of $76.5 million.

Total Debt was $29.0 million as of September 30, 2023 and December 31, 2022.

1Adjusted EBITDA and non-GAAP net income are non-GAAP financial measures. Please see the discussion below under the heading "Use of Non-GAAP Financial Information" and the reconciliations at the end of this release for additional information concerning these and other non-GAAP financial measures.

Financial Outlook

Paycom provides the following expected financial guidance for the quarter and the year ending December 31, 2023.

Quarter Ending December 31, 2023:

Total Revenues in the range of $420 million to $425 million.

Adjusted EBITDA in the range of $169 million to $174 million.

Year Ending December 31, 2023:

Total Revenues in the range of $1.679 billion to $1.684 billion.

Adjusted EBITDA in the range of $712 million to $717 million.

We have not reconciled the forward-looking adjusted EBITDA ranges presented above and discussed on the teleconference call to net income, nor the forward-looking adjusted EBITDA margins and forward-looking non-GAAP effective income tax rate discussed on the teleconference call to comparable GAAP measures, because applicable information for future periods, on which these reconciliations would be based, is not readily available due to uncertainty regarding, and the potential variability of, depreciation and amortization, interest expense, taxes, non-cash stock-based compensation expense and other items. Accordingly, reconciliations of the forward-looking adjusted EBITDA ranges to net income, the forward-looking adjusted EBITDA margins to net income margin, and the forward-looking non-GAAP effective income tax rate to the GAAP effective income tax rate are not available at this time without unreasonable effort. During the teleconference call, we also refer to a forward-looking estimate of our implied revenue growth rate plus adjusted EBITDA margin, or the “Rule of 65”. Because we are unable to reconcile forward-looking adjusted EBITDA margin to net income margin without unreasonable effort, we are unable to reconcile the “Rule of 65” to a comparable GAAP measure without unreasonable effort.

Use of Non-GAAP Financial Information

To supplement our financial information presented in accordance with generally accepted accounting principles in the United States (“GAAP”), we present certain non-GAAP financial measures in this press release and on the related teleconference call, including adjusted EBITDA, non-GAAP net income, adjusted gross profit, adjusted gross margin, adjusted sales and marketing expenses, adjusted total administrative expenses, adjusted research and development expenses, adjusted total research and development costs, adjusted EBITDA margin, and “Rule of 65”. Management uses these non-GAAP financial measures as supplemental measures to review and assess the performance of our core business operations and for planning purposes. We define (i) adjusted EBITDA as net income plus interest expense, taxes, depreciation and amortization, non-cash stock-based compensation expense, certain transaction expenses that are not core to our operations (if any), the change in fair value of our interest rate swap and any loss on the extinguishment of debt, (ii) non-GAAP net income as net income plus non-cash stock-based compensation expense, certain transaction expenses that are not core to our operations (if any), the change in fair value of our interest rate swap and any loss on the extinguishment of debt, all of which are adjusted for the effect of income taxes, (iii) adjusted gross profit as gross profit plus applicable non-cash stock-based compensation expense, (iv) adjusted gross margin as gross profit plus applicable non-cash stock-based compensation expense, divided by total revenues, (v) each adjusted expense item as the GAAP expense amount less applicable non-cash stock-based compensation expense, (vi) adjusted total research and development costs as total research and development costs (including the capitalized portion) less applicable non-cash stock-based compensation (including the capitalized portion), (vii) adjusted EBITDA margin as adjusted EBITDA (calculated as described in clause (i)) divided by total revenues, and (viii) “Rule of 65” as revenue growth rate (expressed as a percentage) plus adjusted EBITDA margin (calculated as described in clause (vii)) and (ix) non-GAAP effective income tax rate as the provision for income taxes plus the income tax effect on non-GAAP adjustments divided by non-GAAP net income (calculated as described in clause (ii)) plus the provision for income taxes and the income tax effect on non-GAAP adjustments. The non-GAAP financial measures presented in this press release and discussed on the related teleconference call provide investors with greater transparency to the information used by management in its financial and operational decision-making. We believe these metrics are useful to investors because they facilitate comparisons of our core business operations across periods on a consistent basis, as well as comparisons with the results of peer companies, many of which use similar non-GAAP financial measures to supplement results under GAAP. In addition, adjusted EBITDA is a measure that provides useful information to management about the amount of cash available for reinvestment in our business, repurchasing common stock and other purposes. Management believes that the non-GAAP measures presented in this press release and discussed on the related teleconference call, when viewed in combination with our results prepared in accordance with GAAP, provide a more complete understanding of the factors and trends affecting our business and performance.

The non-GAAP financial measures presented in this press release and discussed on the related teleconference call are not measures of financial performance under GAAP and should not be considered a substitute for net income, gross profit, gross margin, research and development expenses, sales and marketing expenses, administrative expenses and total research and development costs. Non-GAAP financial measures have limitations as analytical tools, and when assessing our operating performance, you should not consider these non-GAAP financial measures in isolation, or as a substitute for the consolidated statements of income data prepared in accordance with GAAP. The non-GAAP financial measures that we present may not be comparable to similarly titled measures of other companies and other companies may not calculate such measures in the same manner as we do.

Conference Call Details:

In conjunction with this announcement, Paycom will host a conference call today, October 31, 2023, at 5:00 p.m. Eastern time to discuss its financial results. To access this call, dial (833) 470-1428 (domestic) or (929) 526-1599 (international) and provide 539600 as the access code. A live webcast as well as the replay of the conference call will be available on the Investor Relations page of Paycom’s website at investors.paycom.com.

About Paycom

For 25 years, Paycom Software, Inc. (NYSE:PAYC) has simplified businesses and the lives of their employees through easy-to-use HR and payroll technology to empower transparency through direct access to their data. And thanks to its industry-first solution, Beti®, employees now do their own payroll and are guided to find and fix costly errors before payroll submission. From onboarding and benefits enrollment to talent management and more, Paycom’s software streamlines processes, drives efficiencies and gives employees power over their own HR information, all in a single app. Recognized nationally for its technology and workplace culture, Paycom can now serve businesses of all sizes in the U.S. and internationally.

Forward-Looking Statements

Certain statements in this press release are, and certain statements on the related teleconference call may be, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are any statements that refer to Paycom’s estimated or anticipated results, other non-historical facts or future events and include, but are not limited to, statements regarding our business strategy; anticipated future operating results and operating expenses, cash flows, capital resources, dividends and liquidity; trends, opportunities and risks affecting our business, industry and financial results; future expansion or growth plans and potential for future growth, including internationally; our ability to attract new clients to purchase our solution; our ability to retain clients and induce them to purchase additional applications; our ability to accurately forecast future revenues and appropriately plan our expenses; market acceptance of our solution and applications; our expectations regarding future revenues generated by certain applications; our ability to attract and retain qualified employees and key personnel; future regulatory, judicial and legislative changes; how certain factors affecting our performance correlate to improvement or deterioration in the labor market; our plan to open additional sales offices and our ability to effectively execute such plan; the sufficiency of our existing cash and cash equivalents to meet our working capital and capital expenditure needs over the next 12 months; our plans regarding our capital expenditures and investment activity as our business grows, including with respect to research and development and the expansion of our corporate headquarters and other facilities; our plans to pay cash dividends; our plans to repurchase shares of our common stock through a stock repurchase plan; and our expected income tax rate for future periods. In addition, forward-looking statements also consist of statements involving trend analyses and statements including such words as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “should,” “will,” “would,” and similar expressions or the negative of such terms or other comparable terminology. These forward-looking statements are based only on information currently available to us, speak only as of the date hereof and are subject to business and economic risks. As such, our actual results could differ materially from those set forth in the forward-looking statements as a result of the factors discussed in our filings with the Securities and Exchange Commission, including but not limited to those discussed in our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q. We do not undertake any obligation to update or revise the forward-looking statements to reflect events that occur or circumstances that exist after the date on which such statements were made, except to the extent required by law.

 

Paycom Software, Inc.

 

Unaudited Consolidated Balance Sheets

 

(in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

September 30, 2023

 

 

December 31, 2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

484,028

 

 

$

400,730

 

Accounts receivable

 

 

15,548

 

 

 

22,843

 

Prepaid expenses

 

 

40,561

 

 

 

34,056

 

Inventory

 

 

836

 

 

 

1,607

 

Income tax receivable

 

 

10,770

 

 

 

5,583

 

Deferred contract costs

 

 

111,877

 

 

 

96,378

 

Current assets before funds held for clients

 

 

663,620

 

 

 

561,197

 

Funds held for clients

 

 

1,899,346

 

 

 

2,202,975

 

Total current assets

 

 

2,562,966

 

 

 

2,764,172

 

Property and equipment, net

 

 

468,282

 

 

 

402,448

 

Intangible assets, net

 

 

51,088

 

 

 

54,017

 

Goodwill

 

 

51,889

 

 

 

51,889

 

Long-term deferred contract costs

 

 

645,611

 

 

 

567,974

 

Other assets

 

 

76,265

 

 

 

62,013

 

Total assets

 

$

3,856,101

 

 

$

3,902,513

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

6,889

 

 

$

16,054

 

Accrued commissions and bonuses

 

 

20,423

 

 

 

28,439

 

Accrued payroll and vacation

 

 

41,160

 

 

 

45,023

 

Deferred revenue

 

 

22,730

 

 

 

19,825

 

Accrued expenses and other current liabilities

 

 

77,065

 

 

 

59,990

 

Current liabilities before client funds obligation

 

 

168,267

 

 

 

169,331

 

Client funds obligation

 

 

1,901,643

 

 

 

2,207,706

 

Total current liabilities

 

 

2,069,910

 

 

 

2,377,037

 

Deferred income tax liabilities, net

 

 

145,465

 

 

 

141,033

 

Long-term deferred revenue

 

 

105,588

 

 

 

97,591

 

Long-term debt

 

 

29,000

 

 

 

29,000

 

Other long-term liabilities

 

 

84,829

 

 

 

75,245

 

Total long-term liabilities

 

 

364,882

 

 

 

342,869

 

Total liabilities

 

 

2,434,792

 

 

 

2,719,906

 

Commitments and contingencies

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock, $0.01 par value (100,000 shares authorized, 62,655 and 62,518 shares issued at September 30, 2023 and December 31, 2022, respectively; 57,700 and 57,867 shares outstanding at September 30, 2023 and December 31, 2022, respectively)

 

 

627

 

 

 

625

 

Additional paid-in capital

 

 

687,723

 

 

 

576,622

 

Retained earnings

 

 

1,410,659

 

 

 

1,196,968

 

Accumulated other comprehensive earnings (loss)

 

 

(2,181

)

 

 

(3,703

)

Treasury stock, at cost (4,955 and 4,651 shares at September 30, 2023 and December 31, 2022, respectively)

 

 

(675,519

)

 

 

(587,905

)

Total stockholders’ equity

 

 

1,421,309

 

 

 

1,182,607

 

Total liabilities and stockholders’ equity

 

$

3,856,101

 

 

$

3,902,513

 

 
 

Paycom Software, Inc.

 

Unaudited Consolidated Statements of Comprehensive Income

 

(in thousands, except per share amounts)

 

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Recurring

 

$

398,763

 

 

$

328,150

 

 

$

1,237,706

 

 

$

987,848

 

Implementation and other

 

 

7,540

 

 

 

6,017

 

 

 

21,373

 

 

 

16,762

 

Total revenues

 

 

406,303

 

 

 

334,167

 

 

 

1,259,079

 

 

 

1,004,610

 

Cost of revenues

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

55,600

 

 

 

44,169

 

 

 

163,302

 

 

 

122,265

 

Depreciation and amortization

 

 

13,341

 

 

 

10,935

 

 

 

38,299

 

 

 

31,405

 

Total cost of revenues

 

 

68,941

 

 

 

55,104

 

 

 

201,601

 

 

 

153,670

 

Administrative expenses

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

101,162

 

 

 

91,114

 

 

 

311,171

 

 

 

253,834

 

Research and development

 

 

51,864

 

 

 

40,366

 

 

 

143,651

 

 

 

108,774

 

General and administrative

 

 

71,827

 

 

 

60,693

 

 

 

213,397

 

 

 

179,109

 

Depreciation and amortization

 

 

15,608

 

 

 

12,625

 

 

 

44,660

 

 

 

36,378

 

Total administrative expenses

 

 

240,461

 

 

 

204,798

 

 

 

712,879

 

 

 

578,095

 

Total operating expenses

 

 

309,402

 

 

 

259,902

 

 

 

914,480

 

 

 

731,765

 

Operating income

 

 

96,901

 

 

 

74,265

 

 

 

344,599

 

 

 

272,845

 

Interest expense

 

 

(222

)

 

 

(1,018

)

 

 

(1,661

)

 

 

(1,587

)

Other income (expense), net

 

 

5,362

 

 

 

2,041

 

 

 

17,549

 

 

 

4,331

 

Income before income taxes

 

 

102,041

 

 

 

75,288

 

 

 

360,487

 

 

 

275,589

 

Provision for income taxes

 

 

26,822

 

 

 

23,135

 

 

 

101,456

 

 

 

74,151

 

Net income

 

$

75,219

 

 

$

52,153

 

 

$

259,031

 

 

$

201,438

 

Earnings per share, basic

 

$

1.30

 

 

$

0.90

 

 

$

4.48

 

 

$

3.48

 

Earnings per share, diluted

 

$

1.30

 

 

$

0.90

 

 

$

4.46

 

 

$

3.46

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

57,825

 

 

 

57,865

 

 

 

57,871

 

 

 

57,949

 

Diluted

 

 

57,966

 

 

 

58,033

 

 

 

58,056

 

 

 

58,193

 

Comprehensive earnings (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

75,219

 

 

$

52,153

 

 

$

259,031

 

 

$

201,438

 

Unrealized net gains (losses) on available-for-sale securities

 

 

1,232

 

 

 

(2,705

)

 

 

2,047

 

 

 

(4,881

)

Tax effect

 

 

(420

)

 

 

492

 

 

 

(525

)

 

 

1,068

 

Other comprehensive income (loss), net of tax

 

 

812

 

 

 

(2,213

)

 

 

1,522

 

 

 

(3,813

)

Comprehensive earnings (loss)

 

$

76,031

 

 

$

49,940

 

 

$

260,553

 

 

$

197,625

 

 
 

Paycom Software, Inc.

 

Unaudited Consolidated Statements of Cash Flows

 

(in thousands)

 

 

 

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities

 

 

 

 

 

 

Net income

 

$

259,031

 

 

$

201,438

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

82,959

 

 

 

67,783

 

Accretion of discount on available-for-sale securities

 

 

(387

)

 

 

(872

)

Non-cash marketing expense

 

 

1,263

 

 

 

1,320

 

Gain on disposition of property and equipment

 

 

(33

)

 

 

 

Amortization of debt issuance costs

 

 

946

 

 

 

532

 

Stock-based compensation expense

 

 

96,383

 

 

 

70,815

 

Loss on extinguishment of debt

 

 

1,222

 

 

 

 

Cash paid for derivative settlement

 

 

 

 

 

205

 

Gain on derivative

 

 

 

 

 

(1,559

)

Deferred income taxes, net

 

 

3,889

 

 

 

(4,841

)

Other

 

 

18

 

 

 

(227

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

7,295

 

 

 

(5,406

)

Prepaid expenses

 

 

(8,845

)

 

 

(11,203

)

Inventory

 

 

375

 

 

 

27

 

Other assets

 

 

(15,773

)

 

 

(10,104

)

Deferred contract costs

 

 

(87,604

)

 

 

(86,634

)

Accounts payable

 

 

(8,131

)

 

 

4,159

 

Income taxes, net

 

 

(5,187

)

 

 

1,245

 

Accrued commissions and bonuses

 

 

(8,016

)

 

 

(3,320

)

Accrued payroll and vacation

 

 

(3,863

)

 

 

1,810

 

Deferred revenue

 

 

10,902

 

 

 

12,585

 

Accrued expenses and other current liabilities

 

 

24,125

 

 

 

(1,106

)

Net cash provided by operating activities

 

 

350,569

 

 

 

236,647

 

Cash flows from investing activities

 

 

 

 

 

 

Purchases of investments from funds held for clients

 

 

(25,000

)

 

 

(268,718

)

Proceeds from investments from funds held for clients

 

 

25,000

 

 

 

328,731

 

Purchases of property and equipment

 

 

(135,709

)

 

 

(92,041

)

Proceeds from sale of property and equipment

 

 

67

 

 

 

 

Net cash used in investing activities

 

 

(135,642

)

 

 

(32,028

)

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from the issuance of debt

 

 

 

 

 

29,000

 

Repurchases of common stock

 

 

(74,994

)

 

 

(94,652

)

Withholding taxes paid related to net share settlements

 

 

(12,620

)

 

 

(5,017

)

Payments on long-term debt

 

 

 

 

 

(29,287

)

Dividends paid

 

 

(43,367

)

 

 

 

Net change in client funds obligation

 

 

(306,063

)

 

 

(92,478

)

Payment of debt issuance costs

 

 

(649

)

 

 

(6,437

)

Net cash used in financing activities

 

 

(437,693

)

 

 

(198,871

)

(Decrease) increase in cash, cash equivalents, restricted cash and restricted cash equivalents

 

 

(222,766

)

 

 

5,748

 

Cash, cash equivalents, restricted cash and restricted cash equivalents

 

 

 

 

 

 

Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period

 

 

2,409,095

 

 

 

1,812,691

 

Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period

 

$

2,186,329

 

 

$

1,818,439

 

 
 

Paycom Software, Inc.

 

Unaudited Consolidated Statements of Cash Flows

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

Reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents

 

 

 

 

 

 

Cash and cash equivalents

 

$

484,028

 

 

$

317,163

 

Restricted cash included in funds held for clients

 

 

1,702,301

 

 

 

1,501,276

 

Total cash, cash equivalents, restricted cash and restricted cash equivalents, end of period

 

$

2,186,329

 

 

$

1,818,439

 

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

Non-cash investing and financing activities:

 

 

 

 

 

 

Purchases of property and equipment, accrued but not paid

 

$

8,011

 

 

$

3,355

 

Stock-based compensation for capitalized software

 

$

11,529

 

 

$

6,545

 

Right of use assets obtained in exchange for operating lease liabilities

 

$

21,023

 

 

$

14,385

 

Paycom Software, Inc.

Unaudited Reconciliations of GAAP to Non-GAAP Financial Measures

(in thousands, except per share amounts)

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net income to adjusted EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

75,219

 

 

$

52,153

 

 

$

259,031

 

 

$

201,438

 

Interest expense

 

 

222

 

 

 

1,018

 

 

 

1,661

 

 

 

1,587

 

Provision for income taxes

 

 

26,822

 

 

 

23,135

 

 

 

101,456

 

 

 

74,151

 

Depreciation and amortization

 

 

28,949

 

 

 

23,560

 

 

 

82,959

 

 

 

67,783

 

EBITDA

 

 

131,212

 

 

 

99,866

 

 

 

445,107

 

 

 

344,959

 

Non-cash stock-based compensation expense

 

 

33,198

 

 

 

24,492

 

 

 

96,383

 

 

 

70,815

 

Loss on extinguishment of debt

 

 

1,222

 

 

 

 

 

 

1,222

 

 

 

 

Change in fair value of interest rate swap

 

 

 

 

 

1,668

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

165,632

 

 

$

126,026

 

 

$

542,712

 

 

$

415,774

 

Net income margin

 

 

18.5

%

 

 

15.6

%

 

 

20.6

%

 

 

20.1

%

Adjusted EBITDA margin

 

 

40.8

%

 

 

37.7

%

 

 

43.1

%

 

 

41.4

%

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net income to non-GAAP net income:

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

75,219

 

 

$

52,153

 

 

$

259,031

 

 

$

201,438

 

Non-cash stock-based compensation expense

 

 

33,198

 

 

 

24,492

 

 

 

96,383

 

 

 

70,815

 

Loss on extinguishment of debt

 

 

1,222

 

 

 

 

 

 

1,222

 

 

 

 

Change in fair value of interest rate swap

 

 

 

 

 

1,668

 

 

 

 

 

 

 

Income tax effect on non-GAAP adjustments

 

 

(7,263

)

 

 

(4,882

)

 

 

(17,347

)

 

 

(15,180

)

Non-GAAP net income

 

$

102,376

 

 

$

73,431

 

 

$

339,289

 

 

$

257,073

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

57,825

 

 

 

57,865

 

 

 

57,871

 

 

 

57,949

 

Diluted

 

 

57,966

 

 

 

58,033

 

 

 

58,056

 

 

 

58,193

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share, basic

 

$

1.30

 

 

$

0.90

 

 

$

4.48

 

 

$

3.48

 

Earnings per share, diluted

 

$

1.30

 

 

$

0.90

 

 

$

4.46

 

 

$

3.46

 

Non-GAAP net income per share, basic

 

$

1.77

 

 

$

1.27

 

 

$

5.86

 

 

$

4.44

 

Non-GAAP net income per share, diluted

 

$

1.77

 

 

$

1.27

 

 

$

5.84

 

 

$

4.42

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Earnings per share to non-GAAP net income per share, basic:

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share, basic

 

$

1.30

 

 

$

0.90

 

 

$

4.48

 

 

$

3.48

 

Non-cash stock-based compensation expense

 

 

0.57

 

 

 

0.42

 

 

 

1.67

 

 

 

1.22

 

Loss on extinguishment of debt

 

 

0.02

 

 

 

 

 

 

0.02

 

 

 

 

Change in fair value of interest rate swap

 

 

 

 

 

0.03

 

 

 

 

 

 

 

Income tax effect on non-GAAP adjustments

 

 

(0.12

)

 

 

(0.08

)

 

 

(0.31

)

 

 

(0.26

)

Non-GAAP net income per share, basic

 

$

1.77

 

 

$

1.27

 

 

$

5.86

 

 

$

4.44

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Earnings per share to non-GAAP net income per share, diluted:

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share, diluted

 

$

1.30

 

 

$

0.90

 

 

$

4.46

 

 

$

3.46

 

Non-cash stock-based compensation expense

 

 

0.57

 

 

 

0.42

 

 

 

1.66

 

 

 

1.22

 

Loss on extinguishment of debt

 

 

0.02

 

 

 

 

 

 

0.02

 

 

 

 

Change in fair value of interest rate swap

 

 

 

 

 

0.03

 

 

 

 

 

 

 

Income tax effect on non-GAAP adjustments

 

 

(0.12

)

 

 

(0.08

)

 

 

(0.30

)

 

 

(0.26

)

Non-GAAP net income per share, diluted

 

$

1.77

 

 

$

1.27

 

 

$

5.84

 

 

$

4.42

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Adjusted gross profit:

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

406,303

 

 

$

334,167

 

 

$

1,259,079

 

 

$

1,004,610

 

Less: Total cost of revenues

 

 

(68,941

)

 

 

(55,104

)

 

 

(201,601

)

 

 

(153,670

)

Total gross profit

 

 

337,362

 

 

 

279,063

 

 

 

1,057,478

 

 

 

850,940

 

Plus: Non-cash stock-based compensation expense

 

 

2,868

 

 

 

1,396

 

 

 

8,606

 

 

 

3,725

 

Total adjusted gross profit

 

$

340,230

 

 

$

280,459

 

 

$

1,066,084

 

 

$

854,665

 

Gross margin

 

 

83.0

%

 

 

83.5

%

 

 

84.0

%

 

 

84.7

%

Adjusted gross margin

 

 

83.7

%

 

 

83.9

%

 

 

84.7

%

 

 

85.1

%

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Adjusted sales and marketing expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing expenses

 

$

101,162

 

 

$

91,114

 

 

$

311,171

 

 

$

253,834

 

Less: Non-cash stock-based compensation expense

 

 

(6,851

)

 

 

(5,280

)

 

 

(18,367

)

 

 

(13,186

)

Adjusted sales and marketing expenses

 

$

94,311

 

 

$

85,834

 

 

$

292,804

 

 

$

240,648

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

406,303

 

 

$

334,167

 

 

$

1,259,079

 

 

$

1,004,610

 

Sales and marketing expenses as a % of revenues

 

 

24.9

%

 

 

27.3

%

 

 

24.7

%

 

 

25.3

%

Adjusted sales and marketing expenses as a % of revenues

 

 

23.2

%

 

 

25.7

%

 

 

23.3

%

 

 

24.0

%

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Adjusted total administrative expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Total administrative expenses

 

$

240,461

 

 

$

204,798

 

 

$

712,879

 

 

$

578,095

 

Less: Non-cash stock-based compensation expense

 

 

(30,330

)

 

 

(23,096

)

 

 

(87,777

)

 

 

(67,090

)

Adjusted total administrative expenses

 

$

210,131

 

 

$

181,702

 

 

$

625,102

 

 

$

511,005

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

406,303

 

 

$

334,167

 

 

$

1,259,079

 

 

$

1,004,610

 

Total administrative expenses as a % of revenues

 

 

59.2

%

 

 

61.3

%

 

 

56.6

%

 

 

57.5

%

Adjusted total administrative expenses as a % of revenues

 

 

51.7

%

 

 

54.4

%

 

 

49.6

%

 

 

50.9

%

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Adjusted research and development expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development expenses

 

$

51,864

 

 

$

40,366

 

 

$

143,651

 

 

$

108,774

 

Less: Non-cash stock-based compensation expense

 

 

(5,617

)

 

 

(3,039

)

 

 

(17,514

)

 

 

(8,115

)

Adjusted research and development expenses

 

$

46,247

 

 

$

37,327

 

 

$

126,137

 

 

$

100,659

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

406,303

 

 

$

334,167

 

 

$

1,259,079

 

 

$

1,004,610

 

Research and development expenses as a % of revenues

 

 

12.8

%

 

 

12.1

%

 

 

11.4

%

 

 

10.8

%

Adjusted research and development expenses as a % of revenues

 

 

11.4

%

 

 

11.2

%

 

 

10.0

%

 

 

10.0

%

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Total research and development costs:

 

 

 

 

 

 

 

 

 

 

 

 

Capitalized research and development costs

 

$

26,578

 

 

$

16,995

 

 

$

70,809

 

 

$

48,835

 

Research and development expenses

 

 

51,864

 

 

 

40,366

 

 

 

143,651

 

 

 

108,774

 

Total research and development costs

 

$

78,442

 

 

$

57,361

 

 

$

214,460

 

 

$

157,609

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

406,303

 

 

$

334,167

 

 

$

1,259,079

 

 

$

1,004,610

 

Total research and development costs as a % of revenues

 

 

19.3

%

 

 

17.2

%

 

 

17.0

%

 

 

15.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted total research and development costs:

 

 

 

 

 

 

 

 

 

 

 

 

Total research and development costs

 

$

78,442

 

 

$

57,361

 

 

$

214,460

 

 

$

157,609

 

Less: Capitalized non-cash stock-based compensation

 

 

(3,777

)

 

 

(2,365

)

 

 

(11,529

)

 

 

(6,545

)

Less: Non-cash stock-based compensation expense

 

 

(5,617

)

 

 

(3,039

)

 

 

(17,514

)

 

 

(8,115

)

Adjusted total research and development costs

 

$

69,048

 

 

$

51,957

 

 

$

185,417

 

 

$

142,949

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

406,303

 

 

$

334,167

 

 

$

1,259,079

 

 

$

1,004,610

 

Adjusted total research and development costs as a % of revenues

 

 

17.0

%

 

 

15.5

%

 

 

14.7

%

 

 

14.2

%

 
 

Paycom Software, Inc.

Unaudited Components of Non-Cash Stock-Based Compensation Expense

(in thousands)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Non-cash stock-based compensation expense:

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

$

2,868

 

 

$

1,396

 

 

$

8,606

 

 

$

3,725

 

Sales and marketing

 

 

6,851

 

 

 

5,280

 

 

 

18,367

 

 

 

13,186

 

Research and development

 

 

5,617

 

 

 

3,039

 

 

 

17,514

 

 

 

8,115

 

General and administrative

 

 

17,862

 

 

 

14,777

 

 

 

51,896

 

 

 

45,789

 

Total non-cash stock-based compensation expense

 

$

33,198

 

 

$

24,492

 

 

$

96,383

 

 

$

70,815

 

 

Contacts

Paycom Software, Inc.

Investor Relations Contact:

James Samford, 800-580-4505

investors@paycom.com

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