Paycom (NYSE:PAYC) Software Inc., a provider of comprehensive, cloud-based human capital management software, is witnessing a decline in demand for its HR and payroll solutions due to sticky inflation and elevated borrowing costs, resulting in the company trimming its annual revenue outlook. Contrarily, Automatic Data Processing (NASDAQ:ADP) has exceeded its profit goals.
Paycom reported its Q3 revenue for the period ending September 30 at $406.3 million, slightly under the anticipated $411.2 million. Despite this, the firm saw solid revenue and earnings growth in Q3 with a net income of $75.2 million ($1.30/share), a significant jump from last year's $52 million (90 cents/share). Paycom's adjusted EPS reached $1.77, ahead of projections of $1.61.
However, Paycom's Q4 revenue forecast falls short of expectations. The company anticipates its Q4 revenue to be between $420-$425 million, which is lower than the estimated $452.3 million. This has led to Paycom cutting its annual revenue outlook to between $1.679-$1.684 billion.
Under CEO Chad Richison's guidance, the company also anticipates an adjusted EBITDA between $169-$174 million for Q4, which is below the expected $189 million.
Despite the trimmed outlook, there was noticeable movement in payroll-related software shares following the announcement. The company noted an increase in net income to $1.30 per share from 90 cents a year ago.
InvestingPro Insights
InvestingPro's real-time data and expert tips provide additional insights into Paycom Software Inc.'s current financial situation. According to InvestingPro, Paycom's market cap stands at 14.19 billion USD, with a P/E ratio of 45.28 as of the second quarter of 2023. The company's revenue for the same period was reported at 1557.55 million USD, marking a growth of 28.55%.
Two key InvestingPro Tips for Paycom include the company's high return on invested capital and its strong cash position, which exceeds its debt. These factors, combined with the company's impressive gross profit margins of 87.2%, suggest that Paycom is well-positioned to weather current market challenges.
Additionally, InvestingPro offers numerous other tips for understanding the complexities of investing in companies like Paycom. The platform's comprehensive data and expert insights can be a valuable resource for investors looking to make informed decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.