Paycom Software Inc.
PAYCBusiness Overview
ticker: PAYC step: 01 generated: 2026-05-13 source: quick-research
Paycom Software Inc. (PAYC) — Business Overview
Business Description
Paycom is a cloud-based human capital management (HCM) and payroll software company serving U.S. businesses with 50 to 10,000 employees. Founded in 1998 as one of the first online payroll processors, Paycom has evolved into a full-suite HCM platform covering payroll, benefits, talent management, time & attendance, and HR compliance — all in a single, unified database. The company's differentiating innovation is Beti (2021), an automated payroll system that moves the payroll-check function from HR staff to employees, reducing payroll errors and client support costs. FY2025 revenue: $2.05B.
Revenue Model
Paycom operates a pure SaaS subscription model. Recurring and other revenues represent ~93% of total revenue, making the business highly predictable. Pricing is per-employee-per-month (PEPM) within client companies — revenue scales with client employee counts and products subscribed. New product penetration (Beti, scheduling, learning management) drives revenue per client higher. The single-database architecture avoids integration complexity that plagues multi-system HCM competitors.
Products & Services
- Payroll & Tax: Core payroll processing + Beti employee-driven payroll automation
- Time & Labor Management: Scheduling, punch-in, overtime tracking
- Talent Acquisition: Applicant tracking, onboarding workflows
- HR Management: Benefits administration, COBRA, ACA compliance, document management
- Learning & Development: LMS for employee training
- IWant: AI-driven natural language command engine for employee/manager queries (launched 2025)
- Beti International: Expanding automated payroll to UK and Ireland
Customer Base & Go-to-Market
Mid-market U.S. companies with 50-10,000 employees are the target. Sales are direct (no channel partners); Paycom's sales model is geography-based with reps in regional markets. Customer acquisition is expensive but generates sticky, multi-year recurring revenue — Paycom's single-database approach means switching costs are high once a client has migrated all HR data. International expansion (UK, Ireland) is nascent but represents a new growth vector.
Competitive Position
Paycom competes with Paychex, ADP (for smaller clients), UKG, Ceridian (Dayforce), and Workday (for larger enterprises). Paycom's differentiation is the unified single-database (no middleware) and Beti's employee-driven payroll model. The Beti feature is genuinely differentiated — no major competitor offers true employee-owned payroll at scale. ~5% market share in its target segment suggests significant runway, though growth has decelerated to 10% as the mid-market becomes more penetrated.
Key Facts
- Founded: 1998
- Headquarters: Oklahoma City, OK
- Employees: ~6,500
- Exchange: NYSE
- Sector / Industry: Technology / Application Software (HCM)
- Market Cap: ~$7B
Financial Snapshot
ticker: PAYC step: 04 generated: 2026-05-13 source: quick-research
Paycom Software Inc. (PAYC) — Financial Snapshot
Income Statement Summary
| Metric | FY2022 | FY2023 | FY2024 | YoY |
|---|---|---|---|---|
| Revenue | ~$1.38B | $1.69B | $1.88B | +11.2% |
| Gross Margin | ~82% | ~83% | ~83% | |
| Operating Margin | ~22% | ~25% | ~26% | |
| Net Income | ~$282M | ~$340M | ~$420M | +23.5% |
| EPS (diluted) | ~$4.80 | $5.91 | $8.93 | +51.1% |
FY2022 EPS boosted by share buybacks. Revenue growth has decelerated from 25-30% in 2021-2022 to ~11% in FY2024 and ~9% in FY2025 ($2.05B), reflecting Beti-related pricing and mid-market saturation pressures.
Cash Flow & Balance Sheet (FY2024)
| Metric | Value |
|---|---|
| Free Cash Flow | $341M |
| Operating Cash Flow | ~$530M |
| Capital Expenditures | ~$190M |
| Cash & Equivalents | ~$350M |
| Total Debt | $0 (debt-free) |
Key Ratios (approximate)
- P/E: ~13x (at ~$116 price) | EV/EBITDA: ~8x | FCF Yield: ~5%
- Gross Margin: ~83% | Adjusted EBITDA Margin: ~44% (FY2026 guided)
- Net Cash: Positive; no debt; initiated dividend in 2026
Growth Profile
Paycom's growth story has evolved from a hyper-growth HCM disruptor (~25-30% revenue CAGR 2015-2022) to a maturing mid-market SaaS compounder. The Beti rollout caused a one-time revenue headwind (clients needed fewer HR staff → smaller client footprint) but improved retention and margins. FY2025 revenue grew 10% to $2.05B. Management guided FY2026 to $2.175-$2.195B (+6-7%) — below consensus — causing a sharp stock selloff near 52-week lows. Adjusted EBITDA margins are expanding toward 44% in 2026, showing operating leverage even as revenue growth slows.
Forward Estimates
- FY2026 Guidance: Revenue $2.175-$2.195B (+6-7%); adj. EBITDA $950-$970M (~44% margin)
- First dividend initiated: 2026 — signals cash generation confidence and mature capital allocation
- Price target raised to $130 (May 2026) by at least one analyst; consensus ~$171 (Buy)
- Stock near 52-week lows (~$116) post-guidance cut — significant value argument at ~8x EBITDA
Deeper Financial Analysis
The fundamental tier adds 9 additional research dimensions for $PAYC.