Paycom Software Reports 45.4% Revenue Growth in the Fourth Quarter 2014; 40.3% Revenue Growth in Fiscal Year 2014

Paycom Software, Inc. (NYSE: PAYC):

Record Fourth Quarter Revenue of $44.0 Million, up 45.4% year-over-year
Record Full Year Revenue of $150.9 Million, up 40.3% year-over-year

Fourth Quarter GAAP and Pro Forma Net Income of $2.5 Million
Fourth Quarter Non-GAAP Net Income of $3.1 Million
Fourth Quarter GAAP and Pro Forma Earnings Per Share of $0.05
Fourth Quarter Non-GAAP Earnings Per Share of $0.06

Full Year GAAP and Pro Forma Net Income of $5.7 Million
Full Year Non-GAAP Net Income of $9.6 Million
Full Year GAAP and Pro Forma Earnings Per Share of $0.11
Full Year Non-GAAP Earnings Per Share of $0.19

Paycom Software, Inc. (“Paycom”) (NYSE: PAYC), a leading provider of a comprehensive, cloud-based solution for human capital management, today announced its financial results for the quarter and year ended December 31, 2014.

“Our momentum continued through the fourth quarter of 2014,” said Chad Richison, President and Chief Executive Officer of Paycom. “Companies across a wide range of sizes and industries are continuing to discover the benefits offered by the Paycom solution. With Paycom’s five new office openings announced earlier today and the addition of our newly launched learning management system, Paycom Learning, we believe Paycom is well positioned to continue its leadership in the human capital management industry.”

Financial Highlights for the Fourth Quarter of 2014

Total Q4’14 Revenue of $44.0 million increased 45.4% compared to $30.3 million in the same period last year, primarily due to the addition of clients in mature sales offices. Recurring revenues of $43.2 million increased 45.1% from the comparable prior year period, and comprised 98.0% of total revenues.

Q4’14 GAAP Net Income (Loss) was $2.5 million, or $0.05 per diluted share, compared to a loss of $(2.0) million, or $(0.04) per diluted share in the same period last year.

Q4’14 Adjusted EBITDA¹ was $7.8 million, compared to $3.5 million in the same period last year.

Q4’14 Pro Forma Net Income (Loss) was $2.5 million, or $0.05 per diluted share, compared to a loss of $(1.3) million, or $(0.03) per diluted share, in the same period last year.

Q4’14 Non-GAAP Net Income (Loss)¹ was $3.1 million, or $0.06 per diluted share, compared to a loss of $(0.1) million, or $0.00 per diluted share, in the same period last year.

Q4’14 Annualized New Recurring Revenue (“ANRR”) was $20.6 million, up from $14.3 million for the same period last year, representing 43.8% growth from the comparable prior year period.

Cash and Cash Equivalents were $25.1 million as of December 31, 2014.

Total Debt was $27.0 million as of December 31, 2014. This debt consisted solely of debt on the corporate headquarters.

Financial Highlights for the Full Year 2014

Total Full Year 2014 Revenue of $150.9 million increased 40.3% for the full year 2014 compared to $107.6 million for the full year 2013.

Full Year 2014 GAAP Net Income (Loss) was $5.7 million, or $0.11 per diluted share for the full year 2014, compared to $0.6 million, or $0.01 per diluted share for the full year 2013.

Full Year 2014 Adjusted EBITDA¹ was $27.0 million for the full year 2014, compared to $19.9 million for the full year 2013.

Full Year 2014 Pro Forma Net Income (Loss) was $5.7 million, or $0.11 per diluted share for the full year 2014, compared to $0.7 million, or $0.02 per diluted share, for the full year 2013.

Full Year 2014 Non-GAAP Net Income (Loss)¹ was $9.6 million, or $0.19 per diluted share for the full year 2014, compared to $2.7 million, or $0.06 per diluted share, for the full year 2013.

Full Year 2014 Annualized New Recurring Revenue (“ANRR”) was $59.6 million, up from $42.1 million for the full year 2013, representing 41.8% growth from the comparable prior year period.

¹ Adjusted EBITDA and non-GAAP net income (loss) are non-GAAP financial measures. Please see the discussion below under the heading "Use of Non-GAAP Financial Information" and the reconciliations at the end of this release for additional information concerning these non-GAAP financial measures.

Financial Outlook

Paycom provides the following expected financial guidance for the quarter ending March 31, 2015, and year ending December 31, 2015:

First Quarter 2015

Total Revenues in the range of $49 million to $50 million.

Adjusted EBITDA in the range of $9 million to $10 million.

Fiscal Year 2015

Total Revenues in the range of $194 million to $196 million.

Adjusted EBITDA in the range of $32 million to $34 million.

We have not reconciled the Adjusted EBITDA range for the quarter ending March 31, 2015 or the year ending December 31, 2015 to net income (loss) because applicable information for future periods, on which this reconciliation is based, is not readily available due to uncertainty regarding, and the potential variability of, depreciation and amortization, interest expense, taxes, stock-based compensation expense and other items. Accordingly, a reconciliation of these Adjusted EBITDA ranges to net income (loss) is not available at this time without unreasonable effort.

Use of Non-GAAP Financial Information

To supplement our financial information presented in accordance with generally accepted accounting principles in the United States (“GAAP”), we consider and have included certain non-GAAP financial measures in this press release, including Adjusted EBITDA and non-GAAP net income (loss). We use Adjusted EBITDA and non-GAAP net income (loss) as supplemental measures to review and assess our performance and for planning purposes. We define: (i) Adjusted EBITDA as net income, plus interest expense, taxes, depreciation and amortization, stock-based compensation expense, net loss on early extinguishment of debt and certain transaction expenses that are not core to our operations and (ii) non-GAAP net income (loss) as pro forma net income plus tax adjusted stock-based compensation expense, tax adjusted net loss on early extinguishment of debt and certain tax adjusted transaction expenses that are not core to our operations. Adjusted EBITDA and non-GAAP net income (loss) are metrics that we believe are useful to investors in evaluating our performance and facilitating comparison with other peer companies, many of which use similar non-GAAP financial measures to supplement results under GAAP.

Adjusted EBITDA and non-GAAP net income (loss) are not measures of financial performance under GAAP, and should not be considered a substitute for net income (loss) or pro forma net income (loss), as applicable, which we consider to be the most directly comparable GAAP measures. Adjusted EBITDA and non-GAAP net income (loss) have limitations as analytical tools, and when assessing our operating performance, you should not consider Adjusted EBITDA and non-GAAP net income (loss) in isolation, or as a substitute for “net income (loss),” “pro forma net income (loss)” or other Condensed Consolidated Statements of Income data prepared in accordance with GAAP. Adjusted EBITDA and non-GAAP net income (loss) may not be comparable to similar titled measures of other companies and other companies may not calculate such measures in the same manner as we do.

Conference Call Details:

In conjunction with this announcement, Paycom will host a conference call today, February 10, 2015 at 5:00 p.m. Eastern Time to discuss the company's financial results. To access this call, dial (888) 317-6003 (domestic) or (412)-317-6061 (international) with conference ID 0213765. A live webcast, as well as the replay of the conference call will be available on the Investor Relations page of the company's website at investors.paycom.com. A replay of this conference call can also be accessed by dialing (877)-344-7529 (domestic) or (412)-317-0088 (international) until February 26, 2015. The replay passcode is 10059646.

About Paycom

As a leader in payroll and HR technology, Oklahoma City-based Paycom redefines the human capital management industry by allowing companies to effectively navigate a rapidly changing business environment. Its cloud-based software solution is based on a core system of record maintained in a single database for all human capital management functions, providing the functionality that businesses need to manage the complete employment lifecycle, from recruitment to retirement. Paycom serves businesses of all sizes and in every industry. As one of the leading human capital management providers, Paycom has offices across the country and serves clients in all 50 states.

Forward-Looking Statements

Certain statements in this press release are, and certain statements on the teleconference call may be, forward looking statements within the meaning provided under the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are made only as of the date hereof. These statements involve known and unknown risks and uncertainties that may cause Paycom’s actual results to differ materially from those stated or implied by such forward-looking statements, as a result of various risks and uncertainties including: changes in the demand for our solution, pricing changes and the impact of competition; changes in technology; our ability to attract, hire and retain skilled employees; our ability to attract and retain clients and increase the number of applications utilized by our clients; our ability to develop and market new applications, improve our existing applications and increase the value of our solution; our ability to maintain or increase our revenues and revenue growth rate; our ability to successfully launch, sustain and drive revenue from new sales offices; the sufficiency of our cash and cash equivalents and cash generated from operations to meet our working capital and capital expenditure requirements; changes in laws regulating payroll taxes and employee benefits; the possibility of a security breach that disrupts operations or exposes client confidential data; and potentially unfavorable outcomes related to pending legal matters.

Other factors that may cause such differences include, but are not limited to, those discussed in our periodic filings with the Securities and Exchange Commission, including those discussed in the prospectus filed with the Securities and Exchange Commission on January 15, 2015, and in particular the section entitled “Risk Factors” of the prospectus. Paycom undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable securities laws.