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1. Company Snapshot

1.a. Company Description

Paycom Software, Inc.provides cloud-based human capital management (HCM) solution delivered as software-as-a-service for small to mid-sized companies in the United States.It offers functionality and data analytics that businesses need to manage the employment life cycle from recruitment to retirement.


The company's HCM solution provides a suite of applications in the areas of talent acquisition, including applicant tracking, candidate tracker, background checks, on-boarding, e-verify, and tax credit services; and time and labor management, such as time and attendance, scheduling/schedule exchange, time-off requests, labor allocation, labor management reports/push reporting, and geofencing/geotracking, and Microfence, a proprietary Bluetooth.Its HCM solution also offers payroll applications comprising better employee transaction interface, payroll and tax management, Paycom pay, expense management, mileage tracker/fixed and variable rates, garnishment management, and GL concierge applications; and talent management applications that include employee self-service, compensation budgeting, performance management, position management, and Paycom learning and content subscriptions, as well as my analytics, which offer employment predictor reporting.In addition, its HCM solution provides manager on-the-go that gives supervisors and managers the ability to perform a variety of tasks, such as approving time-off requests and expense reimbursements; direct data exchange; ask here, a tool for direct line of communication to ask work-related questions; document and checklist; government and compliance; benefits administration/benefits to carrier; COBRA administration; personnel action and performance discussion forms; surveys; and affordable care act applications, as well as Clue, which securely collect, track, and manage the vaccination and testing data of the workforce.


Paycom Software, Inc.was founded in 1998 and is headquartered in Oklahoma City, Oklahoma.

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1.b. Last Insights on PAYC

Paycom Software, Inc.'s recent performance was negatively impacted by decelerating growth, with 2026 revenue guidance at 6-7%. Despite this, the company's Q4 results showed 10% revenue growth, expanding margins, and robust cash generation. Analysts have lowered their forecasts after Q4 results, citing a slowdown in top-line growth. The company's AI-driven innovations, such as IWant and Beti, are driving record 91% revenue retention. Oppenheimer Asset Management Inc. decreased its holdings by 6.1%, while Allspring Global Investments Holdings LLC trimmed its position by 78.5%.

1.c. Company Highlights

2. Paycom Q1 2026: Solid Growth, Strong Automation, and Shareholder Returns

Paycom delivered a robust first‑quarter performance with total revenues rising 8% year‑over‑year to $572 million, while recurring and other revenue climbed 9% to $544 million. GAAP net income hit $156 million ($3.04 per diluted share) and non‑GAAP net income reached $161 million ($3.15 per diluted share). Adjusted EBITDA expanded 50 basis points to $275 million, or 48.2% of revenue, underscoring healthy margin preservation. Staff noted that the 33% jump in IWant usage signals a shift toward AI‑driven solutions [1].

Publication Date: 08:04

📋 Highlights
  • Revenue Growth:: Total revenues reached $572 million (up 8% YoY), with recurring and other revenue at $544 million (9% YoY growth).
  • Profitability Metrics:: GAAP net income $156 million ($3.04/share) and non-GAAP $161 million ($3.15/share), with adjusted EBITDA of $275 million (48.2% margin, +50 bps YoY).
  • Share Repurchases and Dividends:: Repurchased 8.4 million shares ($1.06 billion) and paid $18 million in dividends, with $2 billion in new buyback authorization.
  • Automation Impact:: IWant AI usage surged 33% since Q4, driving client ROI, while automation strategy boosted service quality and retention.
  • Full-Year Guidance:: Revenue forecast $2.175–$2.195 billion, with adjusted EBITDA expected at $950–$970 million, reflecting confidence in growth and margins.

Revenue and Margin Performance

The company’s revenue mix continued to favor high‑margin recurring contracts, with recurring and other revenue representing 95% of total sales. Operating margin stayed near 23%, reflecting disciplined cost management and the impact of automation tools such as Beti, GONE, and IWant.

Profitability and Earnings per Share

GAAP EPS of $3.04 exceeded consensus estimates of $2.99, driven by a $5 million boost in non‑GAAP adjustments and a $1.06 billion share repurchase program that sharpened earnings per share. Non‑GAAP EPS of $3.15 further illustrates the company’s capacity to generate cash‑flow‑friendly profitability.

Guidance and Shareholder Yield

Paycom reaffirmed full‑year revenue guidance of $2.175 billion to $2.195 billion and adjusted EBITDA of $950 million to $970 million, both flat to slightly above prior forecasts. The board approved a new $2 billion buyback authorization and a quarterly dividend of $0.375 per share, reinforcing a dividend yield of 1.1% and a free‑cash‑flow yield of 5.92%.

Automation and Product Innovation

Automation initiatives are accelerating client ROI; IWant, an AI‑powered solution, increased usage by 33% from Q4, while Beti and GONE continue to streamline onboarding. The software development group’s rapid innovation cycle fuels new feature rollouts and keeps Paycom’s platform at the forefront of HR technology.

Customer Retention and Net Promoter Score

Customer retention rose year‑over‑year, and the Net Promoter Score improved, reflecting heightened satisfaction with world‑class service. The company’s focus on solving real‑life client problems, rather than merely adding features, underpins this positive trend.

Capital Allocation and Buyback Strategy

Capital expenditures were roughly 6% of revenue, but Paycom withheld full‑year guidance due to data‑center moratoriums and opportunities to expand power. The aggressive share repurchase—15% of outstanding shares in Q1—demonstrates confidence in the stock’s valuation and a commitment to returning capital to shareholders.

Valuation Outlook

With a P/E ratio of 14.89 and EV/EBITDA of 9.74, Paycom trades at a moderate premium relative to the broader technology sector, reflecting expectations of continued margin expansion and automation gains. The company’s ROIC of 21.47% and ROE of 31.03% signal efficient use of capital, positioning Paycom favorably for long‑term growth and shareholder value creation.

3. NewsRoom

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Paycom's Q1 Earnings Surpass Expectations, Revenues Rise Y/Y

May -07

Source: zacks.com

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Breakfast News: Arm's Growth Story Hits Speed Bump

May -07

Source: fool.com

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Paycom Software, Inc. (PAYC) Q1 2026 Earnings Call Transcript

May -07

Source: seekingalpha.com

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Paycom Software (PAYC) Q1 Earnings and Revenues Beat Estimates

May -06

Source: zacks.com

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Polen Focus Growth Portfolio Q1 2026 Portfolio Update

May -04

Source: seekingalpha.com

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Paycom Set to Report Q1 Earnings: What's in the Offing for the Stock?

May -04

Source: zacks.com

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The Bottom Fishing Club - Paycom Software: A Bargain Using Any Definition

May -01

Source: seekingalpha.com

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Paycom named top retail workforce management solution provider for second consecutive year

Apr -23

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (9.03%)

6. Segments

Recurring

Expected Growth: 9%

Paycom Software's 9% recurring growth is driven by increasing adoption of its human capital management (HCM) software, expansion into new markets, and high customer retention rates. The company's focus on innovation, strategic partnerships, and upselling/cross-selling opportunities also contribute to its growth momentum.

Implementation and Other

Expected Growth: 11%

Implementation and Other segment of Paycom Software, Inc. grew 11% driven by increased adoption of its human capital management (HCM) software, expansion of existing client relationships, and strategic partnerships. Additionally, the company's investments in sales and marketing initiatives, as well as its focus on customer satisfaction, contributed to the growth.

7. Detailed Products

Payroll

A comprehensive payroll processing system that automates payroll calculations, tax compliance, and benefits administration.

Time and Labor Management

A time-tracking and labor management system that helps organizations manage employee work hours, attendance, and leave.

Talent Management

A comprehensive talent management system that includes recruitment, onboarding, performance management, and learning management.

Human Capital Management (HCM)

A comprehensive HCM system that integrates payroll, time and labor management, talent management, and benefits administration.

Benefits Administration

A benefits administration system that helps organizations manage employee benefits, including health insurance, retirement plans, and other benefits.

Analytics and Reporting

A business intelligence and analytics platform that provides insights into HR, payroll, and benefits data.

8. Paycom Software, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Paycom Software, Inc. has a low threat of substitutes due to its unique human capital management software solutions, making it difficult for competitors to replicate its offerings.

Bargaining Power Of Customers

Paycom Software, Inc. has a medium bargaining power of customers, as its clients are primarily mid-sized to large businesses that have some negotiating power, but the company's software solutions are highly customized, limiting the customers' ability to switch providers.

Bargaining Power Of Suppliers

Paycom Software, Inc. has a low bargaining power of suppliers, as it is not heavily reliant on a single supplier, and its software development is primarily done in-house, reducing its dependence on external suppliers.

Threat Of New Entrants

Paycom Software, Inc. has a medium threat of new entrants, as the human capital management software market is highly competitive, but the company's established brand and customer base provide a barrier to entry for new competitors.

Intensity Of Rivalry

Paycom Software, Inc. operates in a highly competitive market, with several established players, leading to a high intensity of rivalry, as companies compete for market share and customers.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 14.81%
Debt Cost 3.95%
Equity Weight 85.19%
Equity Cost 9.76%
WACC 8.90%
Leverage 17.39%

11. Quality Control: Paycom Software, Inc. passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Paycom Software

A-Score: 4.7/10

Value: 3.1

Growth: 8.9

Quality: 8.4

Yield: 1.0

Momentum: 1.5

Volatility: 5.7

1-Year Total Return ->

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Stock-Card
Bentley Systems

A-Score: 4.6/10

Value: 1.1

Growth: 6.4

Quality: 7.5

Yield: 1.0

Momentum: 3.5

Volatility: 8.0

1-Year Total Return ->

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Stock-Card
Smartsheet

A-Score: 4.6/10

Value: 2.0

Growth: 7.4

Quality: 5.2

Yield: 0.0

Momentum: 7.0

Volatility: 5.7

1-Year Total Return ->

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Stock-Card
Riot Blockchain

A-Score: 4.4/10

Value: 5.6

Growth: 6.1

Quality: 6.5

Yield: 0.0

Momentum: 7.0

Volatility: 1.0

1-Year Total Return ->

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Stock-Card
Procore

A-Score: 4.3/10

Value: 4.4

Growth: 7.9

Quality: 3.9

Yield: 0.0

Momentum: 4.5

Volatility: 5.0

1-Year Total Return ->

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Stock-Card
Q2 Holdings

A-Score: 3.4/10

Value: 1.0

Growth: 7.4

Quality: 4.9

Yield: 0.0

Momentum: 2.5

Volatility: 4.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

138.44$

Current Price

138.44$

Potential

-0.00%

Expected Cash-Flows