Paycom Software Reports 11.2% Revenue Growth, Net Income Decline in Q3 2024

Paycom Software, Inc. reported significant financial developments in its 10-Q filing for the quarter ending September 30, 2024. The company achieved total revenues of $451.9 million for the three months ended September 30, 2024, marking an 11.2% increase from $406.3 million in the same period of 2023. Recurring revenues also rose to $445.0 million, up 11.6% from $398.8 million year-over-year. For the nine months ended September 30, 2024, total revenues reached $1.39 billion, compared to $1.26 billion for the same period in 2023.

Despite the revenue growth, net income for the third quarter decreased slightly to $73.3 million from $75.2 million in the prior year, while net income for the nine-month period increased significantly to $388.4 million from $259.0 million. Earnings per share (EPS) for the third quarter remained stable at $1.31, compared to $1.30 in 2023, while the nine-month EPS rose to $6.90 from $4.48.

Operating income for the third quarter was $104.9 million, an 8.2% increase from $96.9 million in the previous year. However, operating expenses surged by 27.4% to $70.8 million, driven by increased employee-related costs and other operational expenses. The company reported a notable increase in depreciation and amortization expenses, reflecting investments in technology and corporate expansion.

Paycom's total assets decreased to $3.49 billion as of September 30, 2024, down from $4.20 billion at the end of 2023. Total liabilities also fell to $2.03 billion from $2.89 billion, while total stockholders’ equity increased to $1.46 billion from $1.30 billion. Retained earnings rose to $1.80 billion, up from $1.47 billion at the end of 2023.

In terms of strategic developments, Paycom National Trust Bank received final approval from the OCC to operate as a national trust bank, enhancing its client funds management capabilities. The company has $1.49 billion available for stock repurchases under its plan, which allows for up to $1.5 billion in repurchases through August 2026. During the nine months ended September 30, 2024, Paycom repurchased 892,669 shares at an average cost of $153.70 per share.

Overall, while Paycom experienced revenue growth and improved profitability over the nine-month period, it faced challenges in the third quarter, including increased operating expenses and a slight decline in net income compared to the previous year.