Paycom Reports 6.1% Revenue Growth to $530.5 Million, Net Income Falls 43.6%

Paycom Software, Inc. reported its financial results for the first quarter of 2025, revealing total revenues of $530.5 million, a 6.1% increase from $499.9 million in the same period last year. The growth was primarily driven by a rise in recurring and other revenues, which reached $500.0 million, up from $466.0 million in the prior year. However, net income fell significantly to $139.4 million, down 43.6% from $247.2 million in the first quarter of 2024, resulting in diluted earnings per share of $2.48 compared to $4.37 a year earlier.

The company's financial performance was impacted by a substantial increase in administrative expenses, which rose to $260.8 million from $135.4 million in the previous year. This increase was largely due to a $117.5 million reversal of stock-based compensation expense related to the forfeiture of a restricted stock award following a leadership change. Additionally, research and development expenses increased by 23.4% to $62.3 million, reflecting ongoing investments in product development. Operating income also declined to $185.1 million, down 35.2% from $285.8 million in the prior year.

In terms of operational metrics, Paycom's average daily balance of funds held for clients increased to $2.9 billion from $2.6 billion year-over-year. The company reported a total of 57,819,755 shares of common stock outstanding as of April 29, 2025, including 1,802,238 shares of restricted stock. Paycom continues to focus on expanding its client base and enhancing product adoption, with a strategic emphasis on automation and user engagement across its human capital management solutions.

Looking ahead, Paycom remains optimistic about its growth prospects, particularly as it continues to develop new applications and expand its market presence. The company plans to open additional sales offices and enhance its service offerings to attract larger clients, which it views as a significant opportunity for revenue growth. However, management acknowledged potential challenges, including economic conditions that could impact client spending and hiring practices. The company expects to maintain sufficient liquidity through its operating cash flow and a $1.0 billion revolving credit facility, which remains untapped as of the end of the quarter.