Paycom (NYSE:PAYC) Software Inc., a prominent player in the payroll and HR software industry, witnessed a significant drop in its share price following a disappointing Q4 forecast and a subdued 2024 outlook. The company anticipates Q4 revenues to be between $420 million-$425 million and adjusted EBITDA to range from $169 million-$174 million, falling short of analysts' projections of $452 million and $189 million, respectively.
The firm's projected revenue growth for 2024 is estimated at a modest 10%-12%, considerably lower than the previously expected 21%. CFO Craig Boelte attributed these conservative forecasts to strategic decisions, including the impact of the Beti payroll product which has resulted in fewer billable items.
Despite the downturn, Jefferies analysts maintained a Buy rating for Paycom. The analysts pointed out that the slowdown was due to company-specific issues rather than broader macroeconomic factors. They also emphasized healthy new bookings and customer retention rates.
For Q3, Paycom reported robust financials with net income of $75.2 million, an increase from $52 million year-on-year. The company's revenue stood at $406.3 million, and adjusted EPS was $1.77, exceeding expectations of $1.61. CEO Chad Richison acknowledged these strong Q3 fundamentals.
InvestingPro Insights
InvestingPro real-time data and tips provide a comprehensive perspective on Paycom Software Inc's financial health and performance. The company holds a substantial market cap of $14.19 billion and a P/E ratio of 45.28, indicating a high earnings multiple. Over the last twelve months as of Q2 2023, Paycom has generated a revenue of $1557.55 million with a growth rate of 28.55%.
InvestingPro tips reveal that Paycom yields a high return on invested capital and holds more cash than debt on its balance sheet. This robust financial position allows management to continue dividend payments. Despite trading near its 52-week low, the company's strong earnings and impressive gross profit margins of 87.2% are promising signs.
For a more in-depth analysis and additional tips, consider exploring the InvestingPro platform, which offers 20 more insightful tips for Paycom. This will enable readers to make well-informed investment decisions.
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