KeyBanc has elevated its price target for Paycom (PAYC, Financial) from $245 to $270, maintaining an Overweight rating. This decision reflects increased confidence in the company's performance. Paycom recently reported a $6 million outperformance in its first-quarter recurring revenue, attributed to improved execution. The company also experienced a substantial rise in booked sales and units sold, underscoring its positive growth trajectory.
PAYC Key Business Developments
Release Date: May 07, 2025
- Total Revenue: $531 million, a 6% increase year-over-year.
- Recurring and Other Revenue: $500 million, up 7% year-over-year.
- Interest on Funds Held for Clients: $31 million, a 10% decline year-over-year.
- GAAP Net Income: $139 million or $2.48 per diluted share.
- Non-GAAP Net Income: $158 million or $2.80 per diluted share.
- Adjusted EBITDA: $253 million, a 10% increase year-over-year, with a 48% margin.
- Cash and Cash Equivalents: $521 million with no debt.
- Funds Held for Clients: Average daily balance of $2.9 billion.
- Cash Dividends Paid: $21 million in the first quarter.
- Stock Repurchase: $5 million of common stock repurchased; $1.47 billion remaining under repurchase plan.
- Full-Year Revenue Guidance: Expected between $2.023 billion and $2.038 billion, up approximately 8% year-over-year.
- Full-Year Adjusted EBITDA Guidance: Expected between $843 million and $858 million, with a margin expansion to approximately 42%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Paycom Software Inc (PAYC, Financial) reported a 6% increase in total revenue for the first quarter of 2025, reaching $531 million.
- The company's Net Promoter Score increased by 16 points year-over-year, indicating improved customer satisfaction.
- Paycom's automation solutions, such as GONE and Beti, are delivering significant ROI for clients, with GONE achieving up to 800% ROI according to a Forrester study.
- The company successfully onboarded new clients, including a 2,500-employee restaurant group, highlighting strong sales performance.
- Paycom Software Inc (PAYC) has a strong balance sheet with $521 million in cash and no debt, supporting its financial stability and growth potential.
Negative Points
- Interest on funds held for clients declined by 10% year-over-year, representing a headwind for Paycom Software Inc (PAYC).
- The company faces potential risks from macroeconomic factors such as tariffs and employment trends, which could impact client businesses and, consequently, Paycom.
- Despite strong revenue growth, the company experienced a 12% year-over-year decline in expected interest on funds held for clients for the full year 2025.
- Paycom Software Inc (PAYC) anticipates a decrease in free cash flow due to ongoing investments in AI and technological assets.
- The company is experiencing some seasonality in its revenue, with Q1 forms business not growing at the same rate as other segments.
