Paycom Looks to Turn the Corner
Here's our initial take on Paycom Software's (NYSE: PAYC) fourth-quarter financial report.
Key Metrics
| Metric | Q4 2023 | Q4 2024 | Change | vs. Expectations |
|---|---|---|---|---|
| Total revenue | $434.6 million | $493.8 million | 14% | Beat |
| Adjusted earnings per share | $1.93 | $2.32 | 20% | Beat |
| Total client count | 36,820 | 37,543 | 2% | n/a |
| Recurring revenue | $406.1 million | $464.8 million | 14% | n/a |
Paying Off for Paycom
Paycom Software's fourth-quarter financial report showed incremental progress in the human capital management software specialist's efforts to mount a turnaround. Revenue growth of 14% for the quarter helped Paycom close 2024 with 11% annual sales gains. Similarly, an impressive finish to 2024 on the profit front was responsible for Paycom seeing adjusted profit rise 3% for the full year. Gains in client counts and stored data were small but maintained some upward momentum.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »
Founder/CEO Chad Richison was pleased that the company's strategic plan resulted in better results than expected to end 2024. The leader remains convinced that maximizing the level of automation in its software will be the key to its long-term success, and Richison recommitted Paycom to further investments in innovation and automation going forward.
Paycom did offer some views for 2025, and they suggested a further slowdown in growth. Revenue of between $2.015 billion and $2.035 billion would represent roughly 8% sales gains this year, with a roughly 9% increase in recurring revenue. Similarly, adjusted EBITDA of $820 million to $840 million would be about 6% to 8% higher than the final figure of $775.4 million for 2024.
Immediate Market Reaction
Paycom's guidance was a bit below expectations, but the better numbers from the fourth quarter were enough to limit losses. The stock fell less than half a percent in the first hour of trading in the after-hours session late Wednesday afternoon.
Yet one sign of disappointment came from the stock's volatility immediately after the release. Shares initially soared as much as 7%, only to fall by a similar percentage before recovering to roughly unchanged. That seems to indicate considerable uncertainty about Paycom's future and whether the latest results are positive or negative.
What to Watch
Paycom routinely highlights its innovative automation, such as the award that its GONE software for handling employee requests for time off won recently. Paycom estimates that GONE generates a return on investment of more than 800% over a three-year period, largely from time that HR professionals save by not having to do automatable tasks.
There's plenty of opportunity across nearly every industry for automation and technology to improve productivity. Paycom is looking for those potential gains, and investors hope that it will deliver them in a way that will benefit the company as well as its clients.
Helpful Resources
If you have done or seen any research on Paycom that would be of interest to Fool members, please share it in the comment section below!
Should you invest $1,000 in Paycom Software right now?
Before you buy stock in Paycom Software, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Paycom Software wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $813,868!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of February 7, 2025
Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Paycom Software. The Motley Fool has a disclosure policy.
Related Articles
National Debt Bomb Ignited? Musk Warns U.S. Will Be 1000% Bankrupt Without AI
TradingKey - Tesla (TSLA) CEO Elon Musk recently issued another warning regarding the rapidly ballooning U.S. national debt. He stated clearly that without artificial intelligence and robotics, the United States will inevitably head toward fiscal bankruptcy.
Tesla Stock Outlook: Competing With Rivian, Robotaxi Potential, and 2026 Prospects
There is much conversation about the prospect of investing in Tesla (TSLA) as we move closer to 2026. The volatility of its share price in 2025 is leading many investors to consider if they should purchase shares of Tesla given the alternatives available in terms of electric vehicles (Rivian, etc.).
Why Sanae Takaichi Winning Japan’s Diet Election Led to a Surge in Japanese Stock Indices？
TradingKey - Reports indicate that the ruling coalition led by Japanese Prime Minister Sanae Takaichi has secured a single-party majority in the parliamentary elections held on Sunday (February 8). Following the news, the yen weakened slightly, while the Nikkei Index surpassed 57,000 for the first t
A Crash After a Surge: Why Silver Lost 40% in a Week?
TradingKey - Spot silver (XAGUSD) prices continue to decline. Silver plunged 20% on Thursday, breaking below $71 per ounce, with the sell-off intensifying on Friday as prices fell further below $64. Compared to the all-time high set on January 29, silver prices have retraced more than 40%, wiping out nearly all gains accumulated over the previous month.
