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Paycom Software, Inc. PAYC reported better-than-expected fourth-quarter 2024 results. The online payroll and human resource technology provider reported non-GAAP earnings of $2.32 per share, which beat the Zacks Consensus Estimate of $1.99. Moreover, the bottom line soared 20.2% year over year, mainly driven by higher revenues, operating efficiency and lower share counts.
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Paycom reported revenues of $493.8 million, which beat the consensus mark of $481.1 million. The top line climbed 13.6% year over year. The figure was also above the high end of management’s guidance of $477-$484 million. The top line benefited from increased sales momentum, international expansion and artificial intelligence (AI) integration in its products.
Paycom’s Q4 Results in Detail
Recurring revenues (representing 94% of the total revenues) improved 14.5% to $464.8 million in the fourth quarter. Our estimate for the metric was pegged at $472.9 million.
Paycom Software, Inc. Price, Consensus and EPS Surprise
Paycom Software, Inc. price-consensus-eps-surprise-chart | Paycom Software, Inc. Quote
Revenues from the Implementation and Other segment increased to $29 million from $28.5 million in the year-ago quarter and contributed 6% to total sales. Our estimate for the segment’s revenues was pegged at $7.3 million.
Adjusted gross profits increased 14% from the year-ago period to $412.6 million. Moreover, the adjusted gross margin expanded 30 basis points (bps) on a year-over-year basis to 83.6%.
Adjusted EBITDA increased 21.7% year over year to $214.9 million. The adjusted EBITDA margin improved from 40.6% to 43.5%.
Paycom’s Full-Year 2024 Performance in Brief
The company's full-year revenues increased 11.2% year over year to $1.88 billion, which beat the Zacks Consensus Estimate of $1.87 billion. Recurring revenues rose 10.9% to $1.76 billion, while revenues from Interest on funds held for clients increased 15.6% to $124.9 million. Our model estimates for recurring and interest on-funds revenues were pegged at $1.84 billion and $29.4 million, respectively.
Adjusted gross margin and adjusted EBITDA margin contracted 130 basis points each to 83% and 41.2%, respectively. Its adjusted EPS for 2024 increased 5.9% to $8.21 and surpassed the consensus mark of $7.87.
Paycom’s Balance Sheet & Cash Flow
Paycom exited the fourth quarter with cash and cash equivalents of $402 million compared with $325.8 million recorded in the previous quarter. The company had no debt as of Dec. 31, 2024, as it paid off all its long-term debt at the end of 2023.