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Paycom's (PAYC) Q1 Earnings & Revenues Surpass Estimates

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Paycom Software PAYC reported first-quarter 2021 results on Tuesday. This online payroll and human resource technology provider’s adjusted earnings of $1.47 per share beat the Zacks Consensus Estimate by 3.52% and rose 10.5% year over year.

Paycom Software, Inc. Price, Consensus and EPS Surprise

Paycom Software, Inc. Price, Consensus and EPS Surprise
Paycom Software, Inc. Price, Consensus and EPS Surprise

Paycom Software, Inc. price-consensus-eps-surprise-chart | Paycom Software, Inc. Quote

Revenues

The company generated revenues of $272.2 million, which increased 12.3% from the year-earlier period and surpassed the consensus mark of $271 million. This year-over-year increase was mainly driven by new client additions, which offset the negative impact of lower forms, filings and adjustments due to reduced hiring in COVID-impacted industries.

In its earnings conference call, Paycom noted that the 150-bp interest-rate cut in March 2020 that led to an additional weekly recurring revenue loss of $350,000 remained unchanged during the first quarter.

Margins

Adjusted gross profit increased 11% from the year-ago period to $236.9 million. However, adjusted gross margin contracted 110 bps on a year-on-year basis to 87%.

Paycom Software’s adjusted EBITDA increased 12.8% year on year to $133 million. Further, adjusted EBITDA margin advanced 20 bps to 48.9%

Balance Sheet & Cash Flow

Paycom Software exited the quarter with cash and cash equivalents of $215.1 million compared with the $151.7 million recorded in the prior year .

The company’s balance sheet comprises net long-term debt of $30.5 million compared with the previous quarter’s $30.9 million.

Cash from operations was $89.5 million in the quarter.

Guidance

For the second quarter, Paycom Software estimates revenues between $231 million and $233 million.

Management projects adjusted EBITDA of $80-$82 million.

Zacks Rank & Stocks to Consider

Paycom currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector include Lam Research Corporation LRCX, Vishay Intertechnology, Inc. VSH and LG Display Co., Ltd. LPL, each sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Lam Research, Vishay Intertechnology and LG Display is currently projected at 32.8%, 20.26% and 29.8%, respectively.

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