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Riding High: Paycom Software

Paycom-press-release-061917-lt.jpg

Shares of Paycom Software Inc. (PAYC) are up over 50% year-to-date compared to a modest 18% rise by Dow Jones U.S. Software Index for the same period.

Paycom Software is a provider of comprehensive, cloud-based human capital management software delivered as Software-as-a-Service.

Human capital management, or HCM, is an approach to employee staffing that perceives people as assets (human capital) whose current value can be measured and whose future value can be enhanced through investment. (Source: TechTarget). HCM comprises of various processes such as recruitment, training, scheduling, payroll, performance management and benefits planning. (Source: FinancialForce).

IT research agency, International Data Corp., has estimated that the U.S. market for HCM applications (excluding payroll services and expense management) will total $8.8 billion in 2017.

According to the Company, its user-friendly software allows for easy adoption of its solution by employees, enabling self management of their HCM activities in the cloud, which reduces the administrative burden on employers and increases employee productivity.

Paycom's HCM solution finds applications in talent acquisition, time and labor management, payroll, talent management and HR management. The Company serves over 17,800 clients of diverse nature.

Paycom derives most of its revenue from payroll processing. The U.S. market for payroll services will be $17.7 billion in 2017, estimates the IDC.

There has been year-over-year growth in the Company's revenue and earnings. Based on its total revenues, Paycom has grown at about 44% CAGR from January 1, 2012 through December 31, 2016. The Company, which reported a loss in 2012, reversed to profit the following year and has been improving its profitability since then.

Metrics20122013201420152016
Total revenues$76.8Mln$107.6Mln$150.9Mln$224.6Mln$329Mln
Net income(loss)($406)K$607K$5.7Mln$20.9Mln$43.8Mln
EPS($0.01)$0.01$0.11$0.36$0.74

Momentum continues...

In the first quarter ended March 31, 2017, the Company's net income increased to $28 million or $0.47 per share from $19 million or $0.33 per share in the same period last year. On a non-GAAP basis, the net income was $28 million or $0.47 per share in Q1, 2017, up from $19 million or $0.33 per share in the year-ago quarter.

Paycom's total revenues in the recent first quarter were $119.5 million, which represented a 33% increase over total revenues of $90.1 million in the same period last year. This is the first time that quarterly revenue surpassed the $100 million mark.

The Company ended March 31, 2017, with cash of $93 million and total debt of $32 million.

Growing Sales Team...

Paycom has been increasing the number of its sales teams across the U.S. So far this year, the Company has opened two sales offices - the one in Milwaukee, Wisconsin was opened on April 20, 2017 and the one in Richmond, Virginia was opened as recently as June 1, 2017. As per the latest update, Paycom's total number of sales teams is 44 across the U.S.

The Company believes that its sales office expansion strategy allows it to better develop its current and potential sales managers and provides a more solid foundation for future sales performance.

PAYC touched an all-time high of $69.74 on June 16, 2017, before closing the day's trading at $69.36, up 1.94%.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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