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Paycom's (PAYC) Q3 Earnings and Revenues Surpass Estimates
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Paycom Software (PAYC - Free Report) reported better-than-anticipated third-quarter 2020 results on Wednesday. The online payroll and human resource technology provider’s adjusted earnings of 70 cents per share beat the Zacks Consensus Estimate of 56 cents and remained flat year over year.
Revenues
The company generated revenues of $196.5 million, which increased 12.3% from the year-earlier period as well as surpassed the consensus mark of $192 million. This year-over-year increase was mainly driven by new client additions which offset the negative impact of interest-rate cuts and lower headcounts at client offices.
In its earnings conference call, Paycom noted that lower headcounts at its pre-pandemic client offices resulted in approximately $2-million weekly recurring revenue loss during the quarter. Moreover, the 150-basis-point interest-rate cut in March led to an additional weekly recurring revenue loss of $350,000.
Paycom Software, Inc. Price, Consensus and EPS Surprise
Adjusted gross profit increased 11.7% from the year-ago period to $166.8 million. However, adjusted gross margin contracted 40 basis points (bps) on a year-over-year basis to 84.9%.
Paycom Software’s adjusted EBITDA inched up 1.4% year on year to $67.5 million. However, adjusted EBITDA margin shrunk 370 bps to 34.3%.
Balance Sheet & Cash Flow
Paycom Software exited the September-end quarter with cash and cash equivalents of $156.4 million compared with the $113.5 million recorded in the prior quarter.
The company’s balance sheet comprises long-term debt (including current maturities) of $31.3 million compared with the previous quarter’s $31.8 million.
Cash from operations was $174.3 million in the first nine months of 2020, and the company repurchased approximately $52 million worth of its common stock.
Guidance
For the fourth quarter, Paycom Software estimates revenues between $212 million and $214 million. The Zacks Consensus Estimate is pegged at $212.9 million.
Management projects adjusted EBITDA in the range of $76 million to $78 million.
The long-term earnings growth rate for NVIDIA, Paylocity and Covetrus is currently pegged at 20.1%, 20%, and 31.6%, respectively.
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Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
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Paycom's (PAYC) Q3 Earnings and Revenues Surpass Estimates
Paycom Software (PAYC - Free Report) reported better-than-anticipated third-quarter 2020 results on Wednesday. The online payroll and human resource technology provider’s adjusted earnings of 70 cents per share beat the Zacks Consensus Estimate of 56 cents and remained flat year over year.
Revenues
The company generated revenues of $196.5 million, which increased 12.3% from the year-earlier period as well as surpassed the consensus mark of $192 million. This year-over-year increase was mainly driven by new client additions which offset the negative impact of interest-rate cuts and lower headcounts at client offices.
In its earnings conference call, Paycom noted that lower headcounts at its pre-pandemic client offices resulted in approximately $2-million weekly recurring revenue loss during the quarter. Moreover, the 150-basis-point interest-rate cut in March led to an additional weekly recurring revenue loss of $350,000.
Paycom Software, Inc. Price, Consensus and EPS Surprise
Paycom Software, Inc. price-consensus-eps-surprise-chart | Paycom Software, Inc. Quote
Margins
Adjusted gross profit increased 11.7% from the year-ago period to $166.8 million. However, adjusted gross margin contracted 40 basis points (bps) on a year-over-year basis to 84.9%.
Paycom Software’s adjusted EBITDA inched up 1.4% year on year to $67.5 million. However, adjusted EBITDA margin shrunk 370 bps to 34.3%.
Balance Sheet & Cash Flow
Paycom Software exited the September-end quarter with cash and cash equivalents of $156.4 million compared with the $113.5 million recorded in the prior quarter.
The company’s balance sheet comprises long-term debt (including current maturities) of $31.3 million compared with the previous quarter’s $31.8 million.
Cash from operations was $174.3 million in the first nine months of 2020, and the company repurchased approximately $52 million worth of its common stock.
Guidance
For the fourth quarter, Paycom Software estimates revenues between $212 million and $214 million. The Zacks Consensus Estimate is pegged at $212.9 million.
Management projects adjusted EBITDA in the range of $76 million to $78 million.
Zacks Rank & Other Stocks to Consider
Paycom currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader technology sector include NVIDIA Corporation (NVDA - Free Report) , Paylocity Holding Corporation (PCTY - Free Report) and Covetrus, Inc. , all carrying a Zacks Rank #2, at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term earnings growth rate for NVIDIA, Paylocity and Covetrus is currently pegged at 20.1%, 20%, and 31.6%, respectively.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>