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Paycom Software falls 8% after Q2 results, seen as a 'rare self-inflicted wound'
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Published Aug 02, 2023 08:14AM ET
© Reuters. Paycom Software (PAYC) falls 8% after Q2 results, seen as a 'rare self-inflicted wound'
Paycom Software (NYSE:PAYC) shares fell 7.7% in pre-open Wednesday after the company reported decelerating subscriber revenue growth.
For Q2, the company reported an adjusted EPS of $1.62 on revenue of $401.1 million. Analysts were looking for a profit per share of $1.60 on revenue of $398.1M. Sales rose 27% year-over-year but the gross margin fell 60 basis points.
“We delivered another strong quarter, which was highlighted by strong revenue growth and margin expansion as demand for our differentiated HR and payroll solution continues to increase,” said Paycom’s founder, chairman and CEO, Chad Richison.
“We strengthened our product set with innovative developments and expanded our TAM to include larger North American organizations with both domestic and foreign employees.”
For this quarter, the company sees revenue of $411M while FY revenue is seen at $1.716B. The consensus stood at $412M and $1.71B, respectively.
Jefferies analysts commented:
“While mgmt sounded confident on overall demand and newer offerings, we expect the NT slowdown to overshadow that and weigh on the stock.”
Oppenheimer analysts remain bullish as they believe fundamentals are still solid.
“Paycom remains wellpositioned to gain share and achieve the 2023 financial goals given its attractive allin-one, organically developed HCM platform technologies and strong sales efficiency. However, the 2Q results and higher guidance targets may not support PAYC’s current valuation multiples, since the multiples increased at a larger magnitude than the estimate revisions in 2Q in anticipation of a much better outcome in 2023 than the prior view,” the analysts wrote.
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