Shares of Paycom Software (NYSE:PAYC) plummeted 38% in premarket trading today, following the company's downward revision of its full-year revenue forecast and Q3 earnings report. The firm's Q3 results showed adjusted earnings exceeded expectations, but revenue fell short.
The company has revised its full-year revenue projection to between $1.68 billion and $1.684 billion, which falls below analysts’ estimates of $1.714 billion and the company's own initial forecast. Additionally, the firm's fourth-quarter guidance also underperformed consensus expectations, with a lower-than-expected adjusted EBITDA predicted.
Analysts at William Blair have linked the trimmed guidance to the adoption of Beti, a do-it-yourself payroll tool that reduces billable items. While this tool is affecting short-term revenue growth, it is projected to potentially increase market share in the future.
In response to these concerns, analysts from Oppenheimer and Mizuho have downgraded their ratings and revised their price targets for Paycom Software.
InvestingPro Insights
According to InvestingPro, Paycom Software (PAYC) holds more cash than debt on its balance sheet and yields a high return on invested capital, which are positive indicators for the company's financial health. Furthermore, the company has been consistently increasing earnings per share, which is a positive sign for investors.
InvestingPro data shows that Paycom Software has a market capitalization of $8480M USD and a P/E ratio of 41.95. The company has seen a revenue growth of 28.55% in the last twelve months as of Q2 2023, with a gross profit margin of 87.2%. These numbers suggest that despite the recent dip in share prices, the company maintains a strong financial standing.
There are more than 20 additional InvestingPro Tips available for PAYC, providing a comprehensive view of the company's financial situation and performance. These tips can be a valuable resource for investors seeking to make informed decisions about their investments.
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