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Paycom's (PAYC) Q2 Earnings & Revenues Beat Estimates, Up Y/Y

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Paycom Software PAYC reported second-quarter 2021 results on Tuesday. This online payroll and human resource technology provider’s adjusted earnings of 97 cents per share beat the Zacks Consensus Estimate by 16.9% and jumped 56.5% year over year.

Quarter in Detail

The company generated revenues of $242.1 million, which increased 33.3% from the year-earlier period and surpassed the consensus mark of $232.2 million as well. This year-over-year upswing was mainly driven by new client additions and continued focus on cross selling to existing clients.

Adjusted gross profit climbed 34.5% from the year-ago period to $206.9 million. Moreover, adjusted gross margin expanded 70 basis points (bps) on a year-on-year basis to 85.4%.

Paycom Software’s adjusted EBITDA increased 42.2% year on year to $87 million. Further, adjusted EBITDA margin advanced 220 bps to 35.9%.

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

Balance Sheet & Cash Flow

Paycom Software exited the quarter with cash and cash equivalents of $202.4 million compared with the $215.1 million recorded in the previous quarter.

The company’s balance sheet comprises net long-term debt of $28.3 million compared with the previous quarter’s $29.1 million.

Cash from operations was $57 million in the quarter. During the first-half of 2021, it generated an operating cash flow of $146.4 million.

Guidance

For the third quarter, Paycom Software estimates revenues to lie between $249 million and $251 million. Management projects adjusted EBITDA of $87-$89 million.

For full-year 2021, the company forecasts revenues and adjusted EBITDA in the range of $1.036-$1.038 billion and $410-$412 million, respectively.

Zacks Rank & Stocks to Consider

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

Better-ranked stocks in the broader technology sector include Microsoft MSFT, Cadence Design Systems CDNS and Texas Instruments TXN. While Microsoft sports a Zacks Rank #1 (Strong Buy), Cadence Design and Texas Instruments carries a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Microsoft, Cadence Design and Texas Instruments is currently pegged at 11.5%, 11.7% and 9.3%, respectively.


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