EXCEEDING ESTIMATES
Paycom beats estimates on earnings and revenue
Pay com Software Inc. continued its growth streak in the third quarter, posting increases of 31% on revenue and 36% on net income compared to the previous year.
The Oklahoma City-based provider of human resource management software beat its own estimates on both figures, along with adjusted earnings before interest, taxes, depreciation and amortization (EBITDA).
Paycom founder and CEO Chad Rich is on said the company had a particularly strong quarter because of new cl i ent additions and demand for its products.
“We continue to expand our market share from a small base in a very large and growing HCM market by delivering tremendous value to our clients through innovative tools and a focus on employee usage,” Richison said after the markets closed Tuesday.
Third-quarter growth led Paycom to raise its outlook for the year, and it now expect store port at least $733 million in total revenue when the fourth quarter ends, officials said.
Revenue this quarter rose to $175 million, or 31% higher than last year's thirdquarter haul of $133 million. Recurring revenue contributed to 98% of the total.
Net income was $39.2 million, or 67 cents per diluted share. In 2018, net income was $ 28. 8 mill i on, or 49 cents per diluted share.
Earnings per share on income adjusted for onetime items was $41.1 million, or 70 cents per share. Last year's earnings per share reached 52 cents.
In a call with analysts, Richison said that Paycom's Direct Data Exchange (DDX) service has generated interest from companies that are larger than Paycom usually targets for business.
DDX offers quantifiable data on how employees use the Paycom software and could reduce costs to the employer the more it's used, Richison said.
“To put the potential cost savings in perspective, while
our clients are achieving an average DDX s core approaching 90%, if all of
our clients were operating at a 100% DDX score we estimate they could save an aggregate of nearly half a billion dollars annually,” he said. “Until the launch of the DDX, no one in our industry, let alone HR professionals,
knew what appropriate employee usage looked like or how to measure it, and now we can take it a step further and attribute a measurable estimate of ROI to incentivize further employee usage.”
Pay com also announced that it purchased 107.5 acres adjacent to its Oklahoma City headquarters. Chief Financial Officer Craig Boelte said the land could be used for future expansion but did not announce any plans.