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 and year ended December 31, 2023.
“I am proud of the way we closed 2023 with better-than-expected results, capping a year of outstanding product innovation and employee engagement,” said Paycom’s founder, Co-CEO and Chairman, Chad Richison. “Our goals for 2024 are primarily focused on three key areas: providing world-class service, solution automation, and client ROI achievement. Through the execution of these initiatives, we will be well-positioned for 2024 and beyond.”
Financial Highlights for the Fourth Quarter of 2023
Total Revenues of $434.6 million represented a 17.3% increase compared to total revenues of $370.6 million in the same period last year. Recurring revenues of $427.3 million increased 17.4% from the comparable prior year period, and constituted 98.3% of total revenues.
GAAP Net Income was $81.8 million, or $1.43 per diluted share, compared to GAAP net income of $80.0 million, or $1.38 per diluted share, in the same period last year.
Non-GAAP Net Income1was $110.2 million, or $1.93 per diluted share, compared to $100.2 million, or $1.73 per diluted share, in the same period last year.
Adjusted EBITDA1 was $176.6 million, compared to $163.9 million in the same period last year.
Cash and Cash Equivalents were $294.0 million as of December 31, 2023, compared to $400.7 million as of December 31, 2022. During the quarter ended December 31, 2023, Paycom paid $21.5 million in cash dividends and repurchased 1,192,351 shares of common stock for $212.9 million.
Total Debt was $0 as of December 31, 2023, compared to $29.0 million as of December 31, 2022.
Financial Highlights for the Full Year 2023
Total Revenues of $1,693.7 million represented a 23.2% increase compared to total revenues of $1,375.2 million last year. Recurring revenues of $1,665.0 million increased 23.2% from last year, and constituted 98.3% of total revenues.
GAAP Net Income was $340.8 million, or $5.88 per diluted share, compared to GAAP net income of $281.4 million, or $4.84 per diluted share, last year.
Non-GAAP Net Income1was $449.5 million, or $7.75 per diluted share, compared to $357.2 million, or $6.14 per diluted share, last year.
Adjusted EBITDA1 was $719.3 million, compared to $579.7 million last year.
1Adjusted EBITDA, non-GAAP net income and non-GAAP net income per diluted share 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.
Business Highlights
Paycom earned multiple workplace awards, including Newsweek’s Greatest Workplaces for Parents and Families, Newsweek’s Greatest Workplaces for Diversity, Top Workplaces Oklahoma, and Top Workplaces Dallas/Fort Worth.
Paycom expanded globally with Global HCM™ and native payroll processing in Mexico and Canada.
Paycom released new products Everyday™ and GONE™.
Total client count increased to 36,820 as of December 31, 2023, up 1% from the prior year-end. On a parent company grouping basis, client count as of December 31, 2023 increased to 19,481, up 2% from the prior year-end.
Annual revenue retention rate for the year ended December 31, 2023 was 90%2, down from 91% for the prior year.
Paycom stored data for over 6.8 million persons employed by its clients during the year ended December 31, 2023, up 5% year-over-year.
2During the year ended December 31, 2023, we modified the methodology for our annual revenue retention rate calculation. See the discussion below under the heading “Annual Revenue Retention Rate Calculation.”
Financial Outlook
Paycom provides the following expected financial guidance for the quarter ending March 31, 2024 and the year ending December 31, 2024.
Quarter Ending March 31, 2024:
Total Revenues in the range of $494 million to $497 million.
Adjusted EBITDA in the range of $218 million to $222 million.
Year Ending December 31, 2024:
Total Revenues in the range of $1.860 billion to $1.885 billion.
Adjusted EBITDA in the range of $720 million to $730 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 and forward-looking non-GAAP effective income tax rate discussed on the teleconference call to comparable GAAP measures, 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 and other items. 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 non-GAAP effective income tax rate to the GAAP effective income tax rate are not available at this time 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 non-GAAP effective income tax rate. 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), the change in fair value of our interest rate swap (if any) and any loss on the extinguishment of debt, (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), the change in fair value of our interest rate swap (if any) and any loss on the extinguishment of debt, 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) non-GAAP effective income tax rate as the provision for income taxes plus the income tax effect on non-GAAP adjustments divided by non-GAAP net income (calculated as described in clause (ii)) plus the provision for income taxes and the income tax effect on non-GAAP adjustments. 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, paying dividends, 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, total research and development costs and GAAP effective income tax rate. 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.
Annual Revenue Retention Rate Calculation
Historically, we calculated annual revenue retention rate as total revenues minus revenue attrition, divided by total revenues. Revenue attrition is equal to the actual recurring fees paid by clients during the 12 months preceding the respective dates on which they last processed payroll with us. Throughout 2023, as we increased our engagement efforts with clients and our efforts to reduce attrition, it was important for us to identify revenue attrition more quickly. In July 2023, we implemented operational changes related to how we mobilize our services department to manage relationships with clients that have missed a payroll, as well as a contemporaneous change to our standard services agreement. These strategic operational and contractual changes accelerate the point at which a client is deemed “lost” for purposes of our annual revenue retention rate calculation. Further, we are now excluding interest earned on funds held for clients from the calculation, which has been immaterial to date. Based on the new methodology, the annual revenue retention rates for the years ended December 31, 2023, 2022 and 2021 were 90%, 91% and 94%, respectively, with losses concentrated primarily among smaller clients. These changes to the annual revenue retention rate calculation had no impact on reported financial results. We believe these increased engagement efforts and operational changes contributed to an increase in the revenue retention rate in the month of January 2024 compared to the same period in the prior year.
Conference Call Details
In conjunction with this announcement, Paycom will host a conference call today, February 7, 2024, 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 791144 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
For 25 years, Paycom Software, Inc. (NYSE:PAYC) has simplified businesses and the lives of their employees through easy-to-use HR and payroll technology to empower transparency through direct access to their data. And thanks to its industry-first solution, Beti®, employees now do their own payroll and are guided to find and fix costly errors before payroll submission. From onboarding and benefits enrollment to talent management and more, Paycom’s software streamlines processes, drives efficiencies and gives employees power over their own HR information, all in a single app. Recognized nationally for its technology and workplace culture, Paycom can now serve businesses of all sizes in the U.S. and internationally.
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; competition; trends, opportunities and risks affecting our business, industry and financial results; future expansion or growth plans and potential for future growth, including internationally; 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; the return on investment for users of our solutions; 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 pay cash dividends; our plans to repurchase shares of our common stock through a stock repurchase plan; and our expected income tax rate for future periods. 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 are based only on information currently available to us, 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 and Quarterly Report on Form 10-Q. We do not undertake any obligation to update or revise the forward-looking statements to reflect events that occur 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) |
||||||||
|
|
|
December 31, 2023 |
|
December 31, 2022 |
||||
|
Assets |
|
|
|
|
||||
|
Current assets: |
|
|
|
|
||||
|
Cash and cash equivalents |
|
$ |
294,025 |
|
|
$ |
400,730 |
|
|
Accounts receivable |
|
|
16,442 |
|
|
|
22,843 |
|
|
Prepaid expenses |
|
|
37,613 |
|
|
|
34,056 |
|
|
Inventory |
|
|
1,383 |
|
|
|
1,607 |
|
|
Income tax receivable |
|
|
18,391 |
|
|
|
5,583 |
|
|
Deferred contract costs |
|
|
118,206 |
|
|
|
96,378 |
|
|
Current assets before funds held for clients |
|
|
486,060 |
|
|
|
561,197 |
|
|
Funds held for clients |
|
|
2,327,366 |
|
|
|
2,202,975 |
|
|
Total current assets |
|
|
2,813,426 |
|
|
|
2,764,172 |
|
|
Property and equipment, net |
|
|
498,197 |
|
|
|
402,448 |
|
|
Intangible assets, net |
|
|
50,112 |
|
|
|
54,017 |
|
|
Goodwill |
|
|
51,889 |
|
|
|
51,889 |
|
|
Long-term deferred contract costs |
|
|
680,272 |
|
|
|
567,974 |
|
|
Other assets |
|
|
103,643 |
|
|
|
62,013 |
|
|
Total assets |
|
$ |
4,197,539 |
|
|
$ |
3,902,513 |
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
||||
|
Current liabilities: |
|
|
|
|
||||
|
Accounts payable |
|
$ |
13,875 |
|
|
$ |
16,054 |
|
|
Accrued commissions and bonuses |
|
|
30,492 |
|
|
|
28,439 |
|
|
Accrued payroll and vacation |
|
|
56,086 |
|
|
|
45,023 |
|
|
Deferred revenue |
|
|
22,812 |
|
|
|
19,825 |
|
|
Accrued expenses and other current liabilities |
|
|
83,302 |
|
|
|
59,990 |
|
|
Current liabilities before client funds obligation |
|
|
206,567 |
|
|
|
169,331 |
|
|
Client funds obligation |
|
|
2,328,076 |
|
|
|
2,207,706 |
|
|
Total current liabilities |
|
|
2,534,643 |
|
|
|
2,377,037 |
|
|
Deferred income tax liabilities, net |
|
|
143,750 |
|
|
|
141,033 |
|
|
Long-term deferred revenue |
|
|
107,657 |
|
|
|
97,591 |
|
|
Long-term debt |
|
|
— |
|
|
|
29,000 |
|
|
Other long-term liabilities |
|
|
108,453 |
|
|
|
75,245 |
|
|
Total long-term liabilities |
|
|
359,860 |
|
|
|
342,869 |
|
|
Total liabilities |
|
|
2,894,503 |
|
|
|
2,719,906 |
|
|
Commitments and contingencies |
|
|
|
|
||||
|
Stockholders’ equity: |
|
|
|
|
||||
|
Common stock, $0.01 par value (100,000 shares authorized, 62,675 and 62,518 shares issued at December 31, 2023 and December 31, 2022, respectively; 56,528 and 57,867 shares outstanding at December 31, 2023 and December 31, 2022, respectively) |
|
|
627 |
|
|
|
625 |
|
|
Additional paid-in capital |
|
|
724,493 |
|
|
|
576,622 |
|
|
Retained earnings |
|
|
1,469,981 |
|
|
|
1,196,968 |
|
|
Accumulated other comprehensive earnings (loss) |
|
|
(1,039 |
) |
|
|
(3,703 |
) |
|
Treasury stock, at cost (6,147 and 4,651 shares at December 31, 2023 and December 31, 2022, respectively) |
|
|
(891,026 |
) |
|
|
(587,905 |
) |
|
Total stockholders’ equity |
|
|
1,303,036 |
|
|
|
1,182,607 |
|
|
Total liabilities and stockholders’ equity |
|
$ |
4,197,539 |
|
|
$ |
3,902,513 |
|
|
Paycom Software, Inc. |
||||||||||||||||
|
Unaudited Consolidated Statements of Comprehensive Income |
||||||||||||||||
|
(in thousands, except per share amounts) |
||||||||||||||||
|
|
|
|
|
|
||||||||||||
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
||||||||||||
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
Revenues |
|
|
|
|
|
|
|
|
||||||||
|
Recurring |
|
$ |
427,270 |
|
|
$ |
364,008 |
|
|
$ |
1,664,976 |
|
|
$ |
1,351,856 |
|
|
Implementation and other |
|
|
7,325 |
|
|
|
6,600 |
|
|
|
28,698 |
|
|
|
23,362 |
|
|
Total revenues |
|
|
434,595 |
|
|
|
370,608 |
|
|
|
1,693,674 |
|
|
|
1,375,218 |
|
|
Cost of revenues |
|
|
|
|
|
|
|
|
||||||||
|
Operating expenses |
|
|
60,397 |
|
|
|
47,541 |
|
|
|
223,699 |
|
|
|
169,806 |
|
|
Depreciation and amortization |
|
|
14,292 |
|
|
|
11,530 |
|
|
|
52,591 |
|
|
|
42,935 |
|
|
Total cost of revenues |
|
|
74,689 |
|
|
|
59,071 |
|
|
|
276,290 |
|
|
|
212,741 |
|
|
Administrative expenses |
|
|
|
|
|
|
|
|
||||||||
|
Sales and marketing |
|
|
106,446 |
|
|
|
92,727 |
|
|
|
417,617 |
|
|
|
346,561 |
|
|
Research and development |
|
|
55,300 |
|
|
|
39,569 |
|
|
|
198,951 |
|
|
|
148,343 |
|
|
General and administrative |
|
|
74,740 |
|
|
|
60,021 |
|
|
|
288,137 |
|
|
|
239,130 |
|
|
Depreciation and amortization |
|
|
16,697 |
|
|
|
13,386 |
|
|
|
61,357 |
|
|
|
49,764 |
|
|
Total administrative expenses |
|
|
253,183 |
|
|
|
205,703 |
|
|
|
966,062 |
|
|
|
783,798 |
|
|
Total operating expenses |
|
|
327,872 |
|
|
|
264,774 |
|
|
|
1,242,352 |
|
|
|
996,539 |
|
|
Operating income |
|
|
106,723 |
|
|
|
105,834 |
|
|
|
451,322 |
|
|
|
378,679 |
|
|
Interest expense |
|
|
(266 |
) |
|
|
(949 |
) |
|
|
(1,927 |
) |
|
|
(2,536 |
) |
|
Other income (expense), net |
|
|
5,455 |
|
|
|
9,104 |
|
|
|
23,004 |
|
|
|
13,435 |
|
|
Income before income taxes |
|
|
111,912 |
|
|
|
113,989 |
|
|
|
472,399 |
|
|
|
389,578 |
|
|
Provision for income taxes |
|
|
30,155 |
|
|
|
34,038 |
|
|
|
131,611 |
|
|
|
108,189 |
|
|
Net income |
|
$ |
81,757 |
|
|
$ |
79,951 |
|
|
$ |
340,788 |
|
|
$ |
281,389 |
|
|
Earnings per share, basic |
|
$ |
1.43 |
|
|
$ |
1.38 |
|
|
$ |
5.91 |
|
|
$ |
4.86 |
|
|
Earnings per share, diluted |
|
$ |
1.43 |
|
|
$ |
1.38 |
|
|
$ |
5.88 |
|
|
$ |
4.84 |
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
||||||||
|
Basic |
|
|
57,229 |
|
|
|
57,867 |
|
|
|
57,707 |
|
|
|
57,928 |
|
|
Diluted |
|
|
57,229 |
|
|
|
58,037 |
|
|
|
57,974 |
|
|
|
58,175 |
|
|
Comprehensive earnings (loss): |
|
|
|
|
|
|
|
|
||||||||
|
Net income |
|
$ |
81,757 |
|
|
$ |
79,951 |
|
|
$ |
340,788 |
|
|
$ |
281,389 |
|
|
Unrealized net gains (losses) on available-for-sale securities |
|
|
1,454 |
|
|
|
124 |
|
|
|
3,501 |
|
|
|
(4,757 |
) |
|
Tax effect |
|
|
(312 |
) |
|
|
(14 |
) |
|
|
(837 |
) |
|
|
1,054 |
|
|
Other comprehensive income (loss), net of tax |
|
|
1,142 |
|
|
|
110 |
|
|
|
2,664 |
|
|
|
(3,703 |
) |
|
Comprehensive earnings (loss) |
|
$ |
82,899 |
|
|
$ |
80,061 |
|
|
$ |
343,452 |
|
|
$ |
277,686 |
|
|
Paycom Software, Inc. |
||||||||
|
Unaudited Consolidated Statements of Cash Flows |
||||||||
|
(in thousands) |
||||||||
|
|
|
Year Ended December 31, |
||||||
|
|
|
2023 |
|
2022 |
||||
|
Cash flows from operating activities |
|
|
|
|
||||
|
Net income |
|
$ |
340,788 |
|
|
$ |
281,389 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
||||
|
Depreciation and amortization |
|
|
113,948 |
|
|
|
92,699 |
|
|
Accretion of discount on available-for-sale securities |
|
|
(520 |
) |
|
|
(1,020 |
) |
|
Non-cash marketing expense |
|
|
1,658 |
|
|
|
1,734 |
|
|
Loss (Gain) on disposition of property and equipment |
|
|
23 |
|
|
|
(150 |
) |
|
Amortization of debt issuance costs |
|
|
1,225 |
|
|
|
847 |
|
|
Stock-based compensation expense |
|
|
129,806 |
|
|
|
94,898 |
|
|
Loss on extinguishment of debt |
|
|
1,222 |
|
|
|
— |
|
|
Cash paid for derivative settlement |
|
|
— |
|
|
|
205 |
|
|
Gain on derivative |
|
|
— |
|
|
|
(1,559 |
) |
|
Deferred income taxes, net |
|
|
2,557 |
|
|
|
(3,210 |
) |
|
Other |
|
|
122 |
|
|
|
(206 |
) |
|
Changes in operating assets and liabilities: |
|
|
|
|
||||
|
Accounts receivable |
|
|
6,401 |
|
|
|
(13,353 |
) |
|
Prepaid expenses |
|
|
(6,617 |
) |
|
|
(6,497 |
) |
|
Inventory |
|
|
224 |
|
|
|
(224 |
) |
|
Other assets |
|
|
(43,431 |
) |
|
|
(13,907 |
) |
|
Deferred contract costs |
|
|
(127,657 |
) |
|
|
(122,440 |
) |
|
Accounts payable |
|
|
(5,155 |
) |
|
|
11,676 |
|
|
Income taxes, net |
|
|
(12,808 |
) |
|
|
10,830 |
|
|
Accrued commissions and bonuses |
|
|
2,053 |
|
|
|
6,082 |
|
|
Accrued payroll and vacation |
|
|
11,063 |
|
|
|
10,764 |
|
|
Deferred revenue |
|
|
13,053 |
|
|
|
15,990 |
|
|
Accrued expenses and other current liabilities |
|
|
57,082 |
|
|
|
555 |
|
|
Net cash provided by operating activities |
|
|
485,037 |
|
|
|
365,103 |
|
|
Cash flows from investing activities |
|
|
|
|
||||
|
Purchases of investments from funds held for clients |
|
|
(25,000 |
) |
|
|
(268,718 |
) |
|
Proceeds from investments from funds held for clients |
|
|
25,000 |
|
|
|
382,230 |
|
|
Purchases of intangible assets |
|
|
(4,244 |
) |
|
|
(4,120 |
) |
|
Purchases of property and equipment |
|
|
(192,587 |
) |
|
|
(132,678 |
) |
|
Proceeds from sale of property and equipment |
|
|
119 |
|
|
|
— |
|
|
Net cash used in investing activities |
|
|
(196,712 |
) |
|
|
(23,286 |
) |
|
Cash flows from financing activities |
|
|
|
|
||||
|
Proceeds from the issuance of debt |
|
|
— |
|
|
|
29,000 |
|
|
Repurchases of common stock |
|
|
(286,618 |
) |
|
|
(94,652 |
) |
|
Withholding taxes paid related to net share settlements |
|
|
(13,927 |
) |
|
|
(5,171 |
) |
|
Payments on long-term debt |
|
|
(29,000 |
) |
|
|
(29,287 |
) |
|
Dividends paid |
|
|
(64,838 |
) |
|
|
— |
|
|
Net change in client funds obligation |
|
|
120,370 |
|
|
|
361,133 |
|
|
Payment of debt issuance costs |
|
|
(647 |
) |
|
|
(6,436 |
) |
|
Net cash (used in) provided by financing activities |
|
|
(274,660 |
) |
|
|
254,587 |
|
|
Increase in cash, cash equivalents, restricted cash and restricted cash equivalents |
|
|
13,665 |
|
|
|
596,404 |
|
|
Cash, cash equivalents, restricted cash and restricted cash equivalents |
|
|
|
|
||||
|
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period |
|
|
2,409,095 |
|
|
|
1,812,691 |
|
|
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period |
|
$ |
2,422,760 |
|
|
$ |
2,409,095 |
|
|
Paycom Software, Inc. |
||||||
|
Unaudited Consolidated Statements of Cash Flows |
||||||
|
(in thousands) |
||||||
|
|
|
Year Ended December 31, |
||||
|
|
|
2023 |
|
2022 |
||
|
Reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents |
|
|
|
|
||
|
Cash and cash equivalents |
|
$ |
294,025 |
|
$ |
400,730 |
|
Restricted cash included in funds held for clients |
|
|
2,128,735 |
|
|
2,008,365 |
|
Total cash, cash equivalents, restricted cash and restricted cash equivalents, end of period |
|
$ |
2,422,760 |
|
$ |
2,409,095 |
|
|
|
|
|
|
||
|
Supplemental disclosures of cash flow information: |
|
|
|
|
||
|
Cash paid for interest, net of amounts capitalized |
|
$ |
985 |
|
$ |
507 |
|
Cash paid for income taxes |
|
$ |
139,914 |
|
$ |
100,578 |
|
Non-cash investing and financing activities: |
|
|
|
|
||
|
Purchases of property and equipment, accrued but not paid |
|
$ |
9,025 |
|
$ |
5,899 |
|
Stock-based compensation for capitalized software |
|
$ |
14,657 |
|
$ |
8,965 |
|
Right of use assets obtained in exchange for operating lease liabilities |
|
$ |
50,315 |
|
$ |
21,467 |
|
Paycom Software, Inc. |
||||||||||||||||
|
Unaudited Reconciliations of GAAP to Non-GAAP Financial Measures |
||||||||||||||||
|
(in thousands, except per share amounts) |
||||||||||||||||
|
|
|
|
|
|
||||||||||||
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
||||||||||||
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
Net income to adjusted EBITDA: |
|
|
|
|
|
|
|
|
||||||||
|
Net income |
|
$ |
81,757 |
|
|
$ |
79,951 |
|
|
$ |
340,788 |
|
|
$ |
281,389 |
|
|
Interest expense |
|
|
266 |
|
|
|
949 |
|
|
|
1,927 |
|
|
|
2,536 |
|
|
Provision for income taxes |
|
|
30,155 |
|
|
|
34,038 |
|
|
|
131,611 |
|
|
|
108,189 |
|
|
Depreciation and amortization |
|
|
30,989 |
|
|
|
24,916 |
|
|
|
113,948 |
|
|
|
92,699 |
|
|
EBITDA |
|
|
143,167 |
|
|
|
139,854 |
|
|
|
588,274 |
|
|
|
484,813 |
|
|
Non-cash stock-based compensation expense |
|
|
33,423 |
|
|
|
24,083 |
|
|
|
129,806 |
|
|
|
94,898 |
|
|
Loss on extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
1,222 |
|
|
|
— |
|
|
Adjusted EBITDA |
|
$ |
176,590 |
|
|
$ |
163,937 |
|
|
$ |
719,302 |
|
|
$ |
579,711 |
|
|
Net income margin |
|
|
18.8 |
% |
|
|
21.6 |
% |
|
|
20.1 |
% |
|
|
20.5 |
% |
|
Adjusted EBITDA margin |
|
|
40.6 |
% |
|
|
44.2 |
% |
|
|
42.5 |
% |
|
|
42.2 |
% |
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
||||||||||||
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
Net income to non-GAAP net income: |
|
|
|
|
|
|
|
|
||||||||
|
Net income |
|
$ |
81,757 |
|
|
$ |
79,951 |
|
|
$ |
340,788 |
|
|
$ |
281,389 |
|
|
Non-cash stock-based compensation expense |
|
|
33,423 |
|
|
|
24,083 |
|
|
|
129,806 |
|
|
|
94,898 |
|
|
Loss on extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
1,222 |
|
|
|
— |
|
|
Income tax effect on non-GAAP adjustments |
|
|
(4,984 |
) |
|
|
(3,873 |
) |
|
|
(22,331 |
) |
|
|
(19,053 |
) |
|
Non-GAAP net income |
|
$ |
110,196 |
|
|
$ |
100,161 |
|
|
$ |
449,485 |
|
|
$ |
357,234 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
||||||||
|
Basic |
|
|
57,229 |
|
|
|
57,867 |
|
|
|
57,707 |
|
|
|
57,928 |
|
|
Diluted |
|
|
57,229 |
|
|
|
58,037 |
|
|
|
57,974 |
|
|
|
58,175 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Earnings per share, basic |
|
$ |
1.43 |
|
|
$ |
1.38 |
|
|
$ |
5.91 |
|
|
$ |
4.86 |
|
|
Earnings per share, diluted |
|
$ |
1.43 |
|
|
$ |
1.38 |
|
|
$ |
5.88 |
|
|
$ |
4.84 |
|
|
Non-GAAP net income per share, basic |
|
$ |
1.93 |
|
|
$ |
1.73 |
|
|
$ |
7.79 |
|
|
$ |
6.17 |
|
|
Non-GAAP net income per share, diluted |
|
$ |
1.93 |
|
|
$ |
1.73 |
|
|
$ |
7.75 |
|
|
$ |
6.14 |
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
||||||||||||
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
Earnings per share to non-GAAP net income per share, basic: |
|
|
|
|
|
|
|
|
||||||||
|
Earnings per share, basic |
|
$ |
1.43 |
|
|
$ |
1.38 |
|
|
$ |
5.91 |
|
|
$ |
4.86 |
|
|
Non-cash stock-based compensation expense |
|
|
0.58 |
|
|
|
0.42 |
|
|
|
2.25 |
|
|
|
1.64 |
|
|
Loss on extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
0.02 |
|
|
|
— |
|
|
Income tax effect on non-GAAP adjustments |
|
|
(0.08 |
) |
|
|
(0.07 |
) |
|
|
(0.39 |
) |
|
|
(0.33 |
) |
|
Non-GAAP net income per share, basic |
|
$ |
1.93 |
|
|
$ |
1.73 |
|
|
$ |
7.79 |
|
|
$ |
6.17 |
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
||||||||||||
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
Earnings per share to non-GAAP net income per share, diluted: |
|
|
|
|
|
|
|
|
||||||||
|
Earnings per share, diluted |
|
$ |
1.43 |
|
|
$ |
1.38 |
|
|
$ |
5.88 |
|
|
$ |
4.84 |
|
|
Non-cash stock-based compensation expense |
|
|
0.58 |
|
|
|
0.41 |
|
|
|
2.24 |
|
|
|
1.63 |
|
|
Loss on extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
0.02 |
|
|
|
— |
|
|
Income tax effect on non-GAAP adjustments |
|
|
(0.08 |
) |
|
|
(0.06 |
) |
|
|
(0.39 |
) |
|
|
(0.33 |
) |
|
Non-GAAP net income per share, diluted |
|
$ |
1.93 |
|
|
$ |
1.73 |
|
|
$ |
7.75 |
|
|
$ |
6.14 |
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
||||||||||||
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
Adjusted gross profit: |
|
|
|
|
|
|
|
|
||||||||
|
Total revenues |
|
$ |
434,595 |
|
|
$ |
370,608 |
|
|
$ |
1,693,674 |
|
|
$ |
1,375,218 |
|
|
Less: Total cost of revenues |
|
|
(74,689 |
) |
|
|
(59,071 |
) |
|
|
(276,290 |
) |
|
|
(212,741 |
) |
|
Total gross profit |
|
|
359,906 |
|
|
|
311,537 |
|
|
|
1,417,384 |
|
|
|
1,162,477 |
|
|
Plus: Non-cash stock-based compensation expense |
|
|
2,007 |
|
|
|
946 |
|
|
|
10,613 |
|
|
|
4,671 |
|
|
Total adjusted gross profit |
|
$ |
361,913 |
|
|
$ |
312,483 |
|
|
$ |
1,427,997 |
|
|
$ |
1,167,148 |
|
|
Gross margin |
|
|
82.8 |
% |
|
|
84.1 |
% |
|
|
83.7 |
% |
|
|
84.5 |
% |
|
Adjusted gross margin |
|
|
83.3 |
% |
|
|
84.3 |
% |
|
|
84.3 |
% |
|
|
84.9 |
% |
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
||||||||||||
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
Adjusted sales and marketing expenses: |
|
|
|
|
|
|
|
|
||||||||
|
Sales and marketing expenses |
|
$ |
106,446 |
|
|
$ |
92,727 |
|
|
$ |
417,617 |
|
|
$ |
346,561 |
|
|
Less: Non-cash stock-based compensation expense |
|
|
(5,503 |
) |
|
|
(5,473 |
) |
|
|
(23,870 |
) |
|
|
(18,659 |
) |
|
Adjusted sales and marketing expenses |
|
$ |
100,943 |
|
|
$ |
87,254 |
|
|
$ |
393,747 |
|
|
$ |
327,902 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Total revenues |
|
$ |
434,595 |
|
|
$ |
370,608 |
|
|
$ |
1,693,674 |
|
|
$ |
1,375,218 |
|
|
Sales and marketing expenses as a % of revenues |
|
|
24.5 |
% |
|
|
25.0 |
% |
|
|
24.7 |
% |
|
|
25.2 |
% |
|
Adjusted sales and marketing expenses as a % of revenues |
|
|
23.2 |
% |
|
|
23.5 |
% |
|
|
23.2 |
% |
|
|
23.8 |
% |
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
||||||||||||
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
Adjusted total administrative expenses: |
|
|
|
|
|
|
|
|
||||||||
|
Total administrative expenses |
|
$ |
253,183 |
|
|
$ |
205,703 |
|
|
$ |
966,062 |
|
|
$ |
783,798 |
|
|
Less: Non-cash stock-based compensation expense |
|
|
(31,416 |
) |
|
|
(23,137 |
) |
|
|
(119,193 |
) |
|
|
(90,227 |
) |
|
Adjusted total administrative expenses |
|
$ |
221,767 |
|
|
$ |
182,566 |
|
|
$ |
846,869 |
|
|
$ |
693,571 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Total revenues |
|
$ |
434,595 |
|
|
$ |
370,608 |
|
|
$ |
1,693,674 |
|
|
$ |
1,375,218 |
|
|
Total administrative expenses as a % of revenues |
|
|
58.3 |
% |
|
|
55.5 |
% |
|
|
57.0 |
% |
|
|
57.0 |
% |
|
Adjusted total administrative expenses as a % of revenues |
|
|
51.0 |
% |
|
|
49.3 |
% |
|
|
50.0 |
% |
|
|
50.4 |
% |
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
||||||||||||
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
Adjusted research and development expenses: |
|
|
|
|
|
|
|
|
||||||||
|
Research and development expenses |
|
$ |
55,300 |
|
|
$ |
39,569 |
|
|
$ |
198,951 |
|
|
$ |
148,343 |
|
|
Less: Non-cash stock-based compensation expense |
|
|
(4,759 |
) |
|
|
(2,948 |
) |
|
|
(22,273 |
) |
|
|
(11,063 |
) |
|
Adjusted research and development expenses |
|
$ |
50,541 |
|
|
$ |
36,621 |
|
|
$ |
176,678 |
|
|
$ |
137,280 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Total revenues |
|
$ |
434,595 |
|
|
$ |
370,608 |
|
|
$ |
1,693,674 |
|
|
$ |
1,375,218 |
|
|
Research and development expenses as a % of revenues |
|
|
12.7 |
% |
|
|
10.7 |
% |
|
|
11.7 |
% |
|
|
10.8 |
% |
|
Adjusted research and development expenses as a % of revenues |
|
|
11.6 |
% |
|
|
9.9 |
% |
|
|
10.4 |
% |
|
|
10.0 |
% |
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
||||||||||||
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
Total research and development costs: |
|
|
|
|
|
|
|
|
||||||||
|
Capitalized research and development costs |
|
$ |
25,935 |
|
|
$ |
17,572 |
|
|
$ |
96,744 |
|
|
$ |
66,407 |
|
|
Research and development expenses |
|
|
55,300 |
|
|
|
39,569 |
|
|
|
198,951 |
|
|
|
148,343 |
|
|
Total research and development costs |
|
$ |
81,235 |
|
|
$ |
57,141 |
|
|
$ |
295,695 |
|
|
$ |
214,750 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Total revenues |
|
$ |
434,595 |
|
|
$ |
370,608 |
|
|
$ |
1,693,674 |
|
|
$ |
1,375,218 |
|
|
Total research and development costs as a % of revenues |
|
|
18.7 |
% |
|
|
15.4 |
% |
|
|
17.5 |
% |
|
|
15.6 |
% |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Adjusted total research and development costs: |
|
|
|
|
|
|
|
|
||||||||
|
Total research and development costs |
|
$ |
81,235 |
|
|
$ |
57,141 |
|
|
$ |
295,695 |
|
|
$ |
214,750 |
|
|
Less: Capitalized non-cash stock-based compensation |
|
|
(3,128 |
) |
|
|
(2,420 |
) |
|
|
(14,657 |
) |
|
|
(8,965 |
) |
|
Less: Non-cash stock-based compensation expense |
|
|
(4,759 |
) |
|
|
(2,948 |
) |
|
|
(22,273 |
) |
|
|
(11,063 |
) |
|
Adjusted total research and development costs |
|
$ |
73,348 |
|
|
$ |
51,773 |
|
|
$ |
258,765 |
|
|
$ |
194,722 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Total revenues |
|
$ |
434,595 |
|
|
$ |
370,608 |
|
|
$ |
1,693,674 |
|
|
$ |
1,375,218 |
|
|
Adjusted total research and development costs as a % of revenues |
|
|
16.9 |
% |
|
|
14.0 |
% |
|
|
15.3 |
% |
|
|
14.2 |
% |
|
Paycom Software, Inc. |
||||||||||||
|
Unaudited Components of Non-Cash Stock-Based Compensation Expense |
||||||||||||
|
(in thousands) |
||||||||||||
|
|
|
|
|
|
||||||||
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
||||||||
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||
|
Non-cash stock-based compensation expense: |
|
|
|
|
|
|
|
|
||||
|
Operating expenses |
|
$ |
2,007 |
|
$ |
946 |
|
$ |
10,613 |
|
$ |
4,671 |
|
Sales and marketing |
|
|
5,503 |
|
|
5,473 |
|
|
23,870 |
|
|
18,659 |
|
Research and development |
|
|
4,759 |
|
|
2,948 |
|
|
22,273 |
|
|
11,063 |
|
General and administrative |
|
|
21,154 |
|
|
14,716 |
|
|
73,050 |
|
|
60,505 |
|
Total non-cash stock-based compensation expense |
|
$ |
33,423 |
|
$ |
24,083 |
|
$ |
129,806 |
|
$ |
94,898 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240207705297/en/