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Paycom shares sink 9% as outlook trails estimates

Published 05/02/2024, 04:29 AM
© Reuters.

OKLAHOMA CITY - Paycom (NYSE:PAYC) Software, Inc. (NYSE: PAYC), a prominent provider of cloud-based human capital management software, reported first-quarter earnings that surpassed analyst expectations.

However, shares fell sharply by 9% due to the company's guidance for the second quarter and full year falling short of Wall Street estimates.

For the quarter ended March 31, 2024, Paycom announced revenues of $499.9 million, an 11% increase from the $451.6 million reported in the same quarter last year, and slightly above the consensus estimate of $495.94 million. The company's adjusted earnings per share (EPS) reached $2.59, beating the analyst estimate of $2.45.

Paycom's GAAP net income for the first quarter soared to $247.2 million, or $4.37 per diluted share, significantly higher than the previous year's $119.3 million, or $2.06 per diluted share.

This increase was attributed in part to a one-time benefit related to the forfeiture of the 2020 CEO performance award. The adjusted EBITDA for the quarter was $229.5 million, representing 46% of total revenues.

Despite the strong first-quarter results, Paycom's stock experienced a considerable drop due to the company's future financial outlook. The guidance provided for the second quarter of 2024 forecasts total revenues in the range of $434 million to $438 million, below the analyst consensus of $442.1 million.

Furthermore, the full-year revenue guidance is projected to be between $1.860 billion and $1.885 billion, which also falls short of the consensus estimate of $1.87 billion.

Chad Richison, Paycom's founder, Co-CEO, President, and Chairman, expressed confidence in the company's strategy, stating, "Led by Beti and our differentiated product strategy, we continue to deliver value to businesses that leverage HCM automation, while simplifying the lives of employees and HR teams across the globe." He emphasized the company's focus on expanding solution automation capabilities and increasing client ROI achievement.

The decline in Paycom's stock price reflects investor concerns over the company's ability to sustain its growth trajectory in the face of the provided guidance. Despite the current quarter's strong performance, the market's reaction suggests a cautious outlook for Paycom's growth prospects.

Paycom ended the quarter with $371.3 million in cash and cash equivalents, and it continues to operate with zero debt. The company also returned value to shareholders through $21.2 million in cash dividends and repurchased 15,681 shares of common stock for $3.1 million during the quarter.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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