Paycom shares fall 9% as outlook falls below expectations

OKLAHOMA CITY – Paycom (NYSE:) Software, Inc. (NYSE: PAYC), a prominent provider of cloud-based human capital management software, reported first-quarter earnings that topped analysts' expectations.

However, the company's shares fell sharply 9% as the company's second-quarter and full-year guidance fell short of Wall Street expectations.

For the quarter ended March 31, 2024, Paycom announced revenue of $499.9 million, an increase of 11% from $451.6 million in the same period last year and slightly higher than the consensus estimate of $495.94 million. The company's adjusted earnings per share (EPS) came to $2.59, beating analysts' expectations of $2.45.

Paycom's first-quarter GAAP net income soared to $247.2 million, or $4.37 per diluted share, significantly higher than the previous year's $119.3 million, or $2.06 per diluted share.

Part of this growth is attributable to one-time benefits related to the elimination of the 2020 CEO Performance Award. Adjusted EBITDA for the quarter was $229.5 million, accounting for 46% of total revenue.

Despite strong first-quarter results, Paycom's stock price fell sharply due to the company's future financial outlook. Guidance for the second quarter of 2024 forecasts total revenue in the range of $434 million to $438 million, below analysts' consensus estimate of $442.1 million.

In addition, full-year revenue guidance is expected to be between US$1.860 billion and US$1.885 billion, which is also lower than the market consensus of US$1.87 billion.

Paycom founder, co-CEO, president and chairman Chad Richison is confident in the company's strategy, saying: “Under Beti's leadership and our differentiated product strategy, we will continue to deliver value to enterprises leveraging HCM automation while simplifying A member of the Life Global Staff and Human Resources team. He emphasized the company's focus on expanding solution automation capabilities and improving customer return on investment.

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The decline in Paycom's stock price reflects investor concerns about the company's ability to maintain its growth trajectory given the guidance it has provided. Despite strong results for the quarter, market reaction suggests Paycom is cautious about its growth prospects.

Paycom ended the quarter with $371.3 million in cash and cash equivalents and continues to operate with zero debt. The company also returned value to shareholders through a $21.2 million cash dividend and repurchased 15,681 shares of common stock for $3.1 million during the quarter.

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