Paycom Software, Inc.

What Paycom does

Paycom sells payroll and human-resources software for hiring, employee records, scheduling, compensation and related tasks. Clients pay recurring fees linked to employees, payroll processing and application use. The company also earns interest while holding payroll and tax money before paying it on clients' behalf. Its shares trade on the New York Stock Exchange as PAYC.

Growth, costs and profitability

Q3 recurring and other revenue grew 11.3% to $519.3 million. Management cites new clients, additional applications and pricing, partly offset by customer losses among smaller businesses. Interest on client funds fell to $24.5 million from $26.8 million as rates declined.

Q3 development expense fell to $38.5 million from $74.1 million; capitalized development fell to $17.4 million from $43.5 million. Paycom attributes lower staff costs to headcount reductions and says internal automation has improved efficiency. Sales and marketing fell to $108.0 million from $125.7 million, primarily on lower advertising costs. The company launched Asset Management in July 2026.

Earlier expectations and November's outlook

In August, Paycom expected 2026 revenue of $2.197 billion to $2.212 billion and adjusted EBITDA of $1.007 billion to $1.022 billion. November 4's ranges are $2.213 billion to $2.218 billion and $1.069 billion to $1.079 billion. November projects approximately 9% recurring and other revenue growth, compared with August's 8% to 9% range. The client-fund interest forecast increased from $105 million to $107 million.

Adjusted EBITDA was $268.1 million in Q3, versus $194.3 million a year earlier, with a margin of 49.3% versus 39.4%. It removes interest, taxes, depreciation, amortization and stock compensation, and excludes naming-rights gains. The current $11 million legal-settlement charge remains included. GAAP Q3 net income was $133.2 million, or $2.99 per diluted share; adjusted net income was $150.0 million, or $3.37 per diluted share.

Cash, borrowing and capital returns

Operating cash flow over nine months was $613.9 million, versus $482.8 million a year earlier. Property and equipment purchases fell to $77.4 million from $197.4 million, leaving issuer-defined free cash flow of $536.5 million versus $285.4 million. Favorable working capital and tax-payment timing also supported cash generation.

Corporate cash was $193.9 million at September 30, compared with $198.0 million in June and $370.0 million at year-end 2025. A separate $3.891 billion of client funds has matching payroll and tax obligations.

Paycom borrowed $900 million during the first half to support share repurchases and repaid $150 million in Q3, leaving $750 million outstanding. The $2.125 billion secured revolving facility matures April 23, 2031. Paycom reported covenant compliance at September 30. An additional $750 million incremental facility would require new lender commitments and conditions.

Nine-month cash share repurchases were $1.391 billion, excluding employee withholding-tax payments. Common shares outstanding were about 44.3 million at September 30, versus 55.3 million a year earlier. The May 4 replacement buyback program had $1.653 billion remaining. On November 2, the board declared its regular $0.375 dividend, payable December 7 to holders of record November 23.

On September 1, an entity affiliated with Founder and Chief Executive Officer Chad Richison adopted a trading plan allowing up to 1.09 million shares to be sold from December 2026 through June 1, 2027.

The next results can test whether recurring revenue growth and high margins persist with fewer staff and lower development costs, while cash flow supports debt reduction and shareholder returns.