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Paycom Software, Inc. Reports Third Quarter 2022 Results

Third Quarter Revenues of $334 million, up 30% from the comparable prior year period

Third Quarter GAAP Net Income of $52 million, representing 16% of total revenues, or $0.90 per diluted share

Third Quarter Non-GAAP Net Income of $73 million, or $1.27 per diluted share

Third Quarter Adjusted EBITDA of $126 million, representing 38% of total revenues

Paycom Software, Inc. (“Paycom,” “we” and “our”) (NYSE: PAYC), a leading provider of comprehensive, cloud-based human capital management software, today announced its financial results for the quarter ended September 30, 2022.

“We delivered high quality third quarter results that further strengthened our world class fundamentals. Our very strong results reflect outstanding execution and robust demand for self-service, user-friendly solutions in payroll and human capital management,” said Paycom’s founder and CEO, Chad Richison. “We have a massive opportunity ahead of us, a leading product platform, and a go-to-market strategy designed to deliver rapid and profitable growth for years to come.”

Financial Highlights for the Third Quarter of 2022

Total Revenues of $334.2 million represented a 30.4% increase compared to total revenues of $256.2 million in the same period last year. Recurring revenues of $328.2 million increased 30.6% from the comparable prior year period, and constituted 98.2% of total revenues.

GAAP Net Income was $52.2 million, or $0.90 per diluted share, compared to GAAP net income of $30.4 million, or $0.52 per diluted share, in the same period last year.

Non-GAAP Net Income1 was $73.4 million, or $1.27 per diluted share, compared to $53.6 million, or $0.92 per diluted share, in the same period last year.

Adjusted EBITDA1 was $126.0 million, compared to $89.7 million in the same period last year.

Cash and Cash Equivalents were $317.2 million as of September 30, 2022, compared to $278.0 million as of December 31, 2021.

Total Debt, Net was $29.0 million as of September 30, 2022, compared to $29.2 million as of December 31, 2021.

1 Adjusted EBITDA and non-GAAP net income are non-GAAP financial measures. Please see the discussion below under the heading "Use of Non-GAAP Financial Information" and the reconciliations at the end of this release for additional information concerning these and other non-GAAP financial measures.

Financial Outlook

Paycom provides the following expected financial guidance for the quarter and the year ending December 31, 2022.

Quarter Ending December 31, 2022:

Total Revenues in the range of $366 million to $368 million.

Adjusted EBITDA in the range of $144 million to $146 million.

Year Ending December 31, 2022:

Total Revenues in the range of $1.371 billion to $1.373 billion.

Adjusted EBITDA in the range of $560 million to $562 million.

We have not reconciled the forward-looking adjusted EBITDA ranges presented above and discussed on the teleconference call to net income, nor the forward-looking adjusted EBITDA margins discussed on the teleconference call to net income margin, because applicable information for future periods, on which these reconciliations would be based, is not readily available due to uncertainty regarding, and the potential variability of, depreciation and amortization, interest expense, taxes, non-cash stock-based compensation expense, change in fair value of our interest rate swap and other items. Further, we have not reconciled the forward-looking adjusted gross margin discussed on the teleconference call to GAAP gross margin because applicable information for future periods, on which this reconciliation would be based, is not readily available due to uncertainty regarding, and the potential variability of, cost of revenues, including non-cash stock-based compensation expense. Accordingly, reconciliations of the forward-looking adjusted EBITDA ranges to net income, the forward-looking adjusted EBITDA margins to net income margin and the forward-looking adjusted gross margin to gross margin are not available at this time without unreasonable effort. During the teleconference call, we also refer to a forward-looking estimate of our implied revenue growth rate plus adjusted EBITDA margin, or the “Rule of 70.” Because we are unable to reconcile forward-looking adjusted EBITDA margin to net income margin without unreasonable effort, we are unable to reconcile the “Rule of 70” to a comparable GAAP measure without unreasonable effort.

Use of Non-GAAP Financial Information

To supplement our financial information presented in accordance with generally accepted accounting principles in the United States (“GAAP”), we present certain non-GAAP financial measures in this press release and on the related teleconference call, including adjusted EBITDA, non-GAAP net income, adjusted gross profit, adjusted gross margin, adjusted sales and marketing expenses, adjusted total administrative expenses, adjusted research and development expenses, adjusted total research and development costs, adjusted EBITDA margin and “Rule of 70”. Management uses these non-GAAP financial measures as supplemental measures to review and assess the performance of our core business operations and for planning purposes. We define (i) adjusted EBITDA as net income plus interest expense, taxes, depreciation and amortization, non-cash stock-based compensation expense, certain transaction expenses that are not core to our operations (if any) and the change in fair value of our interest rate swap, (ii) non-GAAP net income as net income plus non-cash stock-based compensation expense, certain transaction expenses that are not core to our operations (if any) and the change in fair value of our interest rate swap, all of which are adjusted for the effect of income taxes, (iii) adjusted gross profit as gross profit plus applicable non-cash stock-based compensation expense, (iv) adjusted gross margin as gross profit plus applicable non-cash stock-based compensation expense, divided by total revenues, (v) each adjusted expense item as the GAAP expense amount less applicable non-cash stock-based compensation expense, (vi) adjusted total research and development costs as total research and development costs (including the capitalized portion) less applicable non-cash stock-based compensation (including the capitalized portion), (vii) adjusted EBITDA margin as adjusted EBITDA (calculated as described in clause (i)) divided by total revenues and (viii) “Rule of 70” as revenue growth rate (expressed as a percentage) plus adjusted EBITDA margin (calculated as described in clause (vii)). The non-GAAP financial measures presented in this press release and discussed on the related teleconference call provide investors with greater transparency to the information used by management in its financial and operational decision-making. We believe these metrics are useful to investors because they facilitate comparisons of our core business operations across periods on a consistent basis, as well as comparisons with the results of peer companies, many of which use similar non-GAAP financial measures to supplement results under GAAP. In addition, adjusted EBITDA is a measure that provides useful information to management about the amount of cash available for reinvestment in our business, repurchasing common stock and other purposes. Management believes that the non-GAAP measures presented in this press release and discussed on the related teleconference call, when viewed in combination with our results prepared in accordance with GAAP, provide a more complete understanding of the factors and trends affecting our business and performance.

The non-GAAP financial measures presented in this press release and discussed on the related teleconference call are not measures of financial performance under GAAP and should not be considered a substitute for net income, gross profit, gross margin, research and development expenses, sales and marketing expenses, administrative expenses and total research and development costs. Non-GAAP financial measures have limitations as analytical tools, and when assessing our operating performance, you should not consider these non-GAAP financial measures in isolation, or as a substitute for the consolidated statements of income data prepared in accordance with GAAP. The non-GAAP financial measures that we present may not be comparable to similarly titled measures of other companies and other companies may not calculate such measures in the same manner as we do.

Conference Call Details:

In conjunction with this announcement, Paycom will host a conference call today, November 1, 2022, at 5:00 p.m. Eastern time to discuss its financial results. To access this call, dial (833) 470-1428 (domestic) or (404) 975-4839 (international) and provide 010496 as the access code. A live webcast as well as the replay of the conference call will be available on the Investor Relations page of Paycom’s website at investors.paycom.com.

About Paycom

As a leader in payroll and HR technology, Oklahoma City-based Paycom redefines the human capital management industry by allowing companies to effectively navigate a rapidly changing business environment. Its cloud-based software solution is based on a core system of record maintained in a single database for all human capital management functions, providing the functionality that businesses need to manage the complete employment lifecycle, from recruitment to retirement. Paycom has the ability to serve businesses of all sizes and in every industry. As one of the leading human capital management providers, Paycom serves clients in all 50 states from offices across the country.

Forward-Looking Statements

Certain statements in this press release are, and certain statements on the related teleconference call may be, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are any statements that refer to Paycom’s estimated or anticipated results, other non-historical facts or future events and include, but are not limited to, statements regarding our business strategy; anticipated future operating results and operating expenses, cash flows, capital resources, dividends and liquidity; trends, opportunities and risks affecting our business, industry and financial results; future expansion or growth plans and potential for future growth; our ability to attract new clients to purchase our solution; our ability to retain clients and induce them to purchase additional applications; our ability to accurately forecast future revenues and appropriately plan our expenses; market acceptance of our solution and applications; our expectations regarding future revenues generated by certain applications; our ability to attract and retain qualified employees and key personnel; future regulatory, judicial and legislative changes; how certain factors affecting our performance correlate to improvement or deterioration in the labor market; our plan to open additional sales offices and our ability to effectively execute such plan; the sufficiency of our existing cash and cash equivalents to meet our working capital and capital expenditure needs over the next 12 months; our plans regarding our capital expenditures and investment activity as our business grows, including with respect to research and development and the expansion of our corporate headquarters and other facilities; our plans to repurchase shares of our common stock through a stock repurchase plan; our expected income tax rate for future periods; and the impact of the coronavirus (COVID-19) pandemic on our business, results of operations, cash flows, financial condition and liquidity. In addition, forward-looking statements also consist of statements involving trend analyses and statements including such words as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “should,” “will,” “would,” and similar expressions or the negative of such terms or other comparable terminology. These forward-looking statements speak only as of the date hereof and are subject to business and economic risks. As such, our actual results could differ materially from those set forth in the forward-looking statements as a result of the factors discussed in our filings with the Securities and Exchange Commission, including but not limited to those discussed in our most recent Annual Report on Form 10-K. We do not undertake any obligation to update or revise the forward-looking statements to reflect events or circumstances that exist after the date on which such statements were made, except to the extent required by law.

Paycom Software, Inc.

 

Unaudited Consolidated Balance Sheets

 

(in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

September 30, 2022

 

 

December 31, 2021

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

317,163

 

 

$

277,978

 

Accounts receivable

 

 

14,896

 

 

 

9,490

 

Prepaid expenses

 

 

39,717

 

 

 

23,729

 

Inventory

 

 

1,471

 

 

 

1,131

 

Income tax receivable

 

 

15,168

 

 

 

16,413

 

Deferred contract costs

 

 

90,832

 

 

 

76,724

 

Current assets before funds held for clients

 

 

479,247

 

 

 

405,465

 

Funds held for clients

 

 

1,749,115

 

 

 

1,846,573

 

Total current assets

 

 

2,228,362

 

 

 

2,252,038

 

Property and equipment, net

 

 

383,860

 

 

 

348,953

 

Intangible assets, net

 

 

54,993

 

 

 

58,028

 

Goodwill

 

 

51,889

 

 

 

51,889

 

Long-term deferred contract costs

 

 

536,942

 

 

 

461,852

 

Other assets

 

 

58,524

 

 

 

42,385

 

Total assets

 

$

3,314,570

 

 

$

3,215,145

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

10,211

 

 

$

5,772

 

Accrued commissions and bonuses

 

 

19,037

 

 

 

22,357

 

Accrued payroll and vacation

 

 

36,069

 

 

 

34,259

 

Deferred revenue

 

 

19,546

 

 

 

16,277

 

Current portion of long-term debt

 

 

 

 

 

1,775

 

Accrued expenses and other current liabilities

 

 

58,797

 

 

 

63,397

 

Current liabilities before client funds obligation

 

 

143,660

 

 

 

143,837

 

Client funds obligation

 

 

1,754,095

 

 

 

1,846,573

 

Total current liabilities

 

 

1,897,755

 

 

 

1,990,410

 

Deferred income tax liabilities, net

 

 

139,368

 

 

 

145,504

 

Long-term deferred revenue

 

 

94,465

 

 

 

85,149

 

Net long-term debt, less current portion

 

 

29,000

 

 

 

27,380

 

Other long-term liabilities

 

 

77,602

 

 

 

72,988

 

Total long-term liabilities

 

 

340,435

 

 

 

331,021

 

Total liabilities

 

 

2,238,190

 

 

 

2,321,431

 

Commitments and contingencies

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock, $0.01 par value (100,000 shares authorized, 62,517 and 62,298 shares issued at September 30, 2022 and December 31, 2021, respectively; 57,867 and 58,012 shares outstanding at September 30, 2022 and December 31, 2021, respectively)

 

 

625

 

 

 

623

 

Additional paid-in capital

 

 

550,302

 

 

 

465,594

 

Retained earnings

 

 

1,117,017

 

 

 

915,579

 

Accumulated other comprehensive earnings (loss)

 

 

(3,813

)

 

 

 

Treasury stock, at cost (4,650 and 4,286 shares at September 30, 2022 and December 31, 2021, respectively)

 

 

(587,751

)

 

 

(488,082

)

Total stockholders’ equity

 

 

1,076,380

 

 

 

893,714

 

Total liabilities and stockholders’ equity

 

$

3,314,570

 

 

$

3,215,145

 

Paycom Software, Inc.

 

Unaudited Consolidated Statements of Comprehensive Income

 

(in thousands, except per share amounts)

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Recurring

 

$

328,150

 

 

$

251,306

 

 

$

987,848

 

 

$

756,665

 

Implementation and other

 

 

6,017

 

 

 

4,888

 

 

 

16,762

 

 

 

13,873

 

Total revenues

 

 

334,167

 

 

 

256,194

 

 

 

1,004,610

 

 

 

770,538

 

Cost of revenues

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

44,169

 

 

 

34,766

 

 

 

122,265

 

 

 

92,612

 

Depreciation and amortization

 

 

10,935

 

 

 

7,914

 

 

 

31,405

 

 

 

22,751

 

Total cost of revenues

 

 

55,104

 

 

 

42,680

 

 

 

153,670

 

 

 

115,363

 

Administrative expenses

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

91,114

 

 

 

69,745

 

 

 

253,834

 

 

 

200,485

 

Research and development

 

 

40,366

 

 

 

31,077

 

 

 

108,774

 

 

 

84,012

 

General and administrative

 

 

60,693

 

 

 

59,980

 

 

 

179,109

 

 

 

160,234

 

Depreciation and amortization

 

 

12,625

 

 

 

9,407

 

 

 

36,378

 

 

 

25,503

 

Total administrative expenses

 

 

204,798

 

 

 

170,209

 

 

 

578,095

 

 

 

470,234

 

Total operating expenses

 

 

259,902

 

 

 

212,889

 

 

 

731,765

 

 

 

585,597

 

Operating income

 

 

74,265

 

 

 

43,305

 

 

 

272,845

 

 

 

184,941

 

Interest expense

 

 

(1,018

)

 

 

 

 

 

(1,587

)

 

 

 

Other income (expense), net

 

 

2,041

 

 

 

244

 

 

 

4,331

 

 

 

1,019

 

Income before income taxes

 

 

75,288

 

 

 

43,549

 

 

 

275,589

 

 

 

185,960

 

Provision for income taxes

 

 

23,135

 

 

 

13,170

 

 

 

74,151

 

 

 

38,687

 

Net income

 

$

52,153

 

 

$

30,379

 

 

$

201,438

 

 

$

147,273

 

Earnings per share, basic

 

$

0.90

 

 

$

0.52

 

 

$

3.48

 

 

$

2.55

 

Earnings per share, diluted

 

$

0.90

 

 

$

0.52

 

 

$

3.46

 

 

$

2.53

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

57,865

 

 

 

57,935

 

 

 

57,949

 

 

 

57,843

 

Diluted

 

 

58,033

 

 

 

58,190

 

 

 

58,193

 

 

 

58,192

 

Comprehensive earnings (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

52,153

 

 

$

30,379

 

 

$

201,438

 

 

$

147,273

 

Unrealized net gains (losses) on available-for-sale securities

 

 

(2,705

)

 

 

 

 

 

(4,881

)

 

 

 

Tax effect

 

 

492

 

 

 

 

 

 

1,068

 

 

 

 

Other comprehensive income (loss), net of tax

 

 

(2,213

)

 

 

 

 

 

(3,813

)

 

 

 

Comprehensive earnings (loss)

 

$

49,940

 

 

$

30,379

 

 

$

197,625

 

 

$

147,273

 

Paycom Software, Inc.

Unaudited Consolidated Statements of Cash Flows

(in thousands)

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

 

2022

 

 

2021

 

 

Cash flows from operating activities

 

 

 

 

 

 

 

Net income

 

$

201,438

 

 

$

147,273

 

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

 

67,783

 

 

 

48,254

 

 

Accretion of discount on available-for-sale securities

 

 

(872

)

 

 

(276

)

 

Non-cash marketing expense

 

 

1,320

 

 

 

618

 

 

Loss on disposition of property and equipment

 

 

 

 

 

146

 

 

Amortization of debt issuance costs

 

 

532

 

 

 

27

 

 

Stock-based compensation expense

 

 

70,815

 

 

 

76,364

 

 

Cash paid for derivative settlement

 

 

205

 

 

 

(558

)

 

Gain on derivative

 

 

(1,559

)

 

 

(305

)

 

Deferred income taxes, net

 

 

(4,841

)

 

 

12,630

 

 

Other

 

 

(227

)

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

 

(5,406

)

 

 

(3,874

)

 

Prepaid expenses

 

 

(11,203

)

 

 

(8,789

)

 

Inventory

 

 

27

 

 

 

97

 

 

Other assets

 

 

(10,104

)

 

 

671

 

 

Deferred contract costs

 

 

(86,634

)

 

 

(68,041

)

 

Accounts payable

 

 

4,159

 

 

 

1,659

 

 

Income taxes, net

 

 

1,245

 

 

 

236

 

 

Accrued commissions and bonuses

 

 

(3,320

)

 

 

(1,272

)

 

Accrued payroll and vacation

 

 

1,810

 

 

 

11,609

 

 

Deferred revenue

 

 

12,585

 

 

 

11,051

 

 

Accrued expenses and other current liabilities

 

 

(1,106

)

 

 

2,117

 

 

Net cash provided by operating activities

 

 

236,647

 

 

 

229,637

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

Purchases of investments from funds held for clients

 

 

(268,718

)

 

 

(170,760

)

 

Proceeds from investments from funds held for clients

 

 

328,731

 

 

 

195,000

 

 

Purchases of intangible assets

 

 

 

 

 

(1,500

)

 

Purchases of property and equipment

 

 

(92,041

)

 

 

(86,718

)

 

Net cash used in investing activities

 

 

(32,028

)

 

 

(63,978

)

 

Cash flows from financing activities

 

 

 

 

 

 

 

Proceeds from issuance of debt

 

 

29,000

 

 

 

 

 

Repurchases of common stock

 

 

(94,652

)

 

 

 

 

Withholding taxes paid related to net share settlements

 

 

(5,017

)

 

 

(61,149

)

 

Payments on long-term debt

 

 

(29,287

)

 

 

(1,331

)

 

Net change in client funds obligation

 

 

(92,478

)

 

 

1,346,479

 

 

Payment of debt issuance costs

 

 

(6,437

)

 

 

 

 

Net cash used in (provided by) financing activities

 

 

(198,871

)

 

 

1,283,999

 

 

Increase in cash, cash equivalents, restricted cash and restricted cash equivalents

 

 

5,748

 

 

 

1,449,658

 

 

Cash, cash equivalents, restricted cash and restricted cash equivalents

 

 

 

 

 

 

 

Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period

 

 

1,812,691

 

 

 

1,585,275

 

 

Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period

$

1,818,439

$

3,034,933

Paycom Software, Inc.

Unaudited Consolidated Statements of Cash Flows

(in thousands)

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

 

2022

 

 

2021

 

 

Reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

317,163

 

 

$

230,926

 

 

Restricted cash included in funds held for clients

 

 

1,501,276

 

 

 

2,804,007

 

 

Total cash, cash equivalents, restricted cash and restricted cash equivalents, end of period

 

$

1,818,439

 

 

$

3,034,933

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

 

Non-cash investing and financing activities:

 

 

 

 

 

 

 

Purchases of property and equipment, accrued but not paid

 

$

3,355

 

 

$

5,994

 

 

Stock-based compensation for capitalized software

 

$

6,545

 

 

$

5,108

 

 

Right of use assets obtained in exchange for operating lease liabilities

$

14,385

$

4,439

Paycom Software, Inc.

Unaudited Reconciliations of GAAP to Non-GAAP Financial Measures

(in thousands, except per share amounts)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net income to adjusted EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

52,153

 

 

$

30,379

 

 

$

201,438

 

 

$

147,273

 

Interest expense

 

 

1,018

 

 

 

 

 

 

1,587

 

 

 

 

Provision for income taxes

 

 

23,135

 

 

 

13,170

 

 

 

74,151

 

 

 

38,687

 

Depreciation and amortization

 

 

23,560

 

 

 

17,321

 

 

 

67,783

 

 

 

48,254

 

EBITDA

 

 

99,866

 

 

 

60,870

 

 

 

344,959

 

 

 

234,214

 

Non-cash stock-based compensation expense

 

 

24,492

 

 

 

28,991

 

 

 

70,815

 

 

 

76,364

 

Change in fair value of interest rate swap

 

 

1,668

 

 

 

(158

)

 

 

 

 

 

(863

)

Adjusted EBITDA

 

$

126,026

 

 

$

89,703

 

 

$

415,774

 

 

$

309,715

 

Net income margin

 

 

15.6

%

 

 

11.9

%

 

 

20.1

%

 

 

19.1

%

Adjusted EBITDA margin

 

 

37.7

%

 

 

35.0

%

 

 

41.4

%

 

 

40.2

%

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net income to non-GAAP net income:

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

52,153

 

 

$

30,379

 

 

$

201,438

 

 

$

147,273

 

Non-cash stock-based compensation expense

 

 

24,492

 

 

 

28,991

 

 

 

70,815

 

 

 

76,364

 

Change in fair value of interest rate swap

 

 

1,668

 

 

 

(158

)

 

 

 

 

 

(863

)

Income tax effect on non-GAAP adjustments

 

 

(4,882

)

 

 

(5,626

)

 

 

(15,180

)

 

 

(26,798

)

Non-GAAP net income

 

$

73,431

 

 

$

53,586

 

 

$

257,073

 

 

$

195,976

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

57,865

 

 

 

57,935

 

 

 

57,949

 

 

 

57,843

 

Diluted

 

 

58,033

 

 

 

58,190

 

 

 

58,193

 

 

 

58,192

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share, basic

 

$

0.90

 

 

$

0.52

 

 

$

3.48

 

 

$

2.55

 

Earnings per share, diluted

 

$

0.90

 

 

$

0.52

 

 

$

3.46

 

 

$

2.53

 

Non-GAAP net income per share, basic

 

$

1.27

 

 

$

0.92

 

 

$

4.44

 

 

$

3.39

 

Non-GAAP net income per share, diluted

 

$

1.27

 

 

$

0.92

 

 

$

4.42

 

 

$

3.37

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Earnings per share to non-GAAP net income per share, basic:

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share, basic

 

$

0.90

 

 

$

0.52

 

 

$

3.48

 

 

$

2.55

 

Non-cash stock-based compensation expense

 

 

0.42

 

 

 

0.50

 

 

 

1.22

 

 

 

1.32

 

Change in fair value of interest rate swap

 

 

0.03

 

 

 

 

 

 

 

 

 

(0.01

)

Income tax effect on non-GAAP adjustments

 

 

(0.08

)

 

 

(0.10

)

 

 

(0.26

)

 

 

(0.47

)

Non-GAAP net income per share, basic

 

$

1.27

 

 

$

0.92

 

 

$

4.44

 

 

$

3.39

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Earnings per share to non-GAAP net income per share, diluted:

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share, diluted

 

$

0.90

 

 

$

0.52

 

 

$

3.46

 

 

$

2.53

 

Non-cash stock-based compensation expense

 

 

0.42

 

 

 

0.50

 

 

 

1.22

 

 

 

1.31

 

Change in fair value of interest rate swap

 

 

0.03

 

 

 

 

 

 

 

 

 

(0.01

)

Income tax effect on non-GAAP adjustments

 

 

(0.08

)

 

 

(0.10

)

 

 

(0.26

)

 

 

(0.46

)

Non-GAAP net income per share, diluted

 

$

1.27

 

 

$

0.92

 

 

$

4.42

 

 

$

3.37

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Adjusted gross profit:

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

334,167

 

 

$

256,194

 

 

$

1,004,610

 

 

$

770,538

 

Less: Total cost of revenues

 

 

(55,104

)

 

 

(42,680

)

 

 

(153,670

)

 

 

(115,363

)

Total gross profit

 

 

279,063

 

 

 

213,514

 

 

 

850,940

 

 

 

655,175

 

Plus: Non-cash stock-based compensation expense

 

 

1,396

 

 

 

1,256

 

 

 

3,725

 

 

 

3,381

 

Total adjusted gross profit

 

$

280,459

 

 

$

214,770

 

 

$

854,665

 

 

$

658,556

 

Gross margin

 

 

83.5

%

 

 

83.3

%

 

 

84.7

%

 

 

85.0

%

Adjusted gross margin

 

 

83.9

%

 

 

83.8

%

 

 

85.1

%

 

 

85.5

%

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Adjusted sales and marketing expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing expenses

 

$

91,114

 

 

$

69,745

 

 

$

253,834

 

 

$

200,485

 

Less: Non-cash stock-based compensation expense

 

 

(5,280

)

 

 

(3,417

)

 

 

(13,186

)

 

 

(10,567

)

Adjusted sales and marketing expenses

 

$

85,834

 

 

$

66,328

 

 

$

240,648

 

 

$

189,918

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

334,167

 

 

$

256,194

 

 

$

1,004,610

 

 

$

770,538

 

Sales and marketing expenses as a % of revenues

 

 

27.3

%

 

 

27.2

%

 

 

25.3

%

 

 

26.0

%

Adjusted sales and marketing expenses as a % of revenues

 

 

25.7

%

 

 

25.9

%

 

 

24.0

%

 

 

24.6

%

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Adjusted total administrative expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Total administrative expenses

 

$

204,798

 

 

$

170,209

 

 

$

578,095

 

 

$

470,234

 

Less: Non-cash stock-based compensation expense

 

 

(23,096

)

 

 

(27,735

)

 

 

(67,090

)

 

 

(72,983

)

Adjusted total administrative expenses

 

$

181,702

 

 

$

142,474

 

 

$

511,005

 

 

$

397,251

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

334,167

 

 

$

256,194

 

 

$

1,004,610

 

 

$

770,538

 

Total administrative expenses as a % of revenues

 

 

61.3

%

 

 

66.4

%

 

 

57.5

%

 

 

61.0

%

Adjusted total administrative expenses as a % of revenues

 

 

54.4

%

 

 

55.6

%

 

 

50.9

%

 

 

51.6

%

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Adjusted research and development expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development expenses

 

$

40,366

 

 

$

31,077

 

 

$

108,774

 

 

$

84,012

 

Less: Non-cash stock-based compensation expense

 

 

(3,039

)

 

 

(1,827

)

 

 

(8,115

)

 

 

(5,394

)

Adjusted research and development expenses

 

$

37,327

 

 

$

29,250

 

 

$

100,659

 

 

$

78,618

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

334,167

 

 

$

256,194

 

 

$

1,004,610

 

 

$

770,538

 

Research and development expenses as a % of revenues

 

 

12.1

%

 

 

12.1

%

 

 

10.8

%

 

 

10.9

%

Adjusted research and development expenses as a % of revenues

 

 

11.2

%

 

 

11.4

%

 

 

10.0

%

 

 

10.2

%

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Total research and development costs:

 

 

 

 

 

 

 

 

 

 

 

 

Capitalized research and development costs

 

$

16,995

 

 

$

13,157

 

 

$

48,835

 

 

$

39,160

 

Research and development expenses

 

 

40,366

 

 

 

31,077

 

 

 

108,774

 

 

 

84,012

 

Total research and development costs

 

$

57,361

 

 

$

44,234

 

 

$

157,609

 

 

$

123,172

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

334,167

 

 

$

256,194

 

 

$

1,004,610

 

 

$

770,538

 

Total research and development costs as a % of revenues

 

 

17.2

%

 

 

17.3

%

 

 

15.7

%

 

 

16.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted total research and development costs:

 

 

 

 

 

 

 

 

 

 

 

 

Total research and development costs

 

$

57,361

 

 

$

44,234

 

 

$

157,609

 

 

$

123,172

 

Less: Capitalized non-cash stock-based compensation

 

 

(2,365

)

 

 

(1,757

)

 

 

(6,545

)

 

 

(5,108

)

Less: Non-cash stock-based compensation expense

 

 

(3,039

)

 

 

(1,827

)

 

 

(8,115

)

 

 

(5,394

)

Adjusted total research and development costs

 

$

51,957

 

 

$

40,650

 

 

$

142,949

 

 

$

112,670

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

334,167

 

 

$

256,194

 

 

$

1,004,610

 

 

$

770,538

 

Adjusted total research and development costs as a % of revenues

 

 

15.5

%

 

 

15.9

%

 

 

14.2

%

 

 

14.6

%

Paycom Software, Inc.

Unaudited Components of Non-Cash Stock-Based Compensation Expense

(in thousands)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Non-cash stock-based compensation expense:

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

$

1,396

 

 

$

1,256

 

 

$

3,725

 

 

$

3,381

 

Sales and marketing

 

5,280

 

 

 

3,417

 

 

 

13,186

 

 

 

10,567

 

Research and development

 

3,039

 

 

 

1,827

 

 

 

8,115

 

 

 

5,394

 

General and administrative

 

14,777

 

 

 

22,491

 

 

 

45,789

 

 

 

57,022

 

Total non-cash stock-based compensation expense

 

$

24,492

 

 

$

28,991

 

 

$

70,815

 

 

$

76,364

 

 

Contacts

Paycom Software, Inc.

Investor Relations Contact:

James Samford, 800-580-4505

investors@paycom.com

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