Paycom Software, Inc. Reports Third Quarter 2018 Results
Third Quarter Revenues of $133.3 million, up 32% from comparable prior year period
Third Quarter GAAP Net Income of $28.8 million, or $0.49 per diluted share, up 38% from comparable prior year period, as
adjusted1
Third Quarter Adjusted EBITDA of $49.2 million, up 22% from comparable prior year period, as adjusted1
Third Quarter Non-GAAP Net Income of $30.6 million, or $0.52 per diluted share, up 32% from comparable year period, as
adjusted1
Paycom Software, Inc. (“Paycom”) (NYSE: PAYC), a leading provider of comprehensive, cloud-based human capital management
software, today announced its financial results for the quarter ended September 30, 2018.
“The digital transformation of the Human Capital Management industry continues to progress and organizations across virtually
every industry are recognizing the power they gain in giving their employees a direct relationship with their HR and payroll
software database,” said Paycom’s founder and CEO, Chad Richison. “I believe we are driving this transition for businesses and
their employees and our ability to lead in this area is underscored by our strong third quarter results.”
Financial Highlights for the Third Quarter of 2018
Total Revenues of $133.3 million represented a 32% increase compared to total revenues of $101.3 in the same period
last year. Recurring revenues of $130.8 million increased 31% from the comparable prior year period and constituted 98% of total
revenues.
GAAP Net Income was $28.8 million, or $0.49 per diluted share, compared to GAAP net income of $20.9 million, or $0.35 per
diluted share, in the same period last year, as adjusted1.
Adjusted EBITDA2 was $49.2 million, compared to $40.4 million in the same period last year, as
adjusted1.
Non-GAAP Net Income2 was $30.6 million, or $0.52 per diluted share, compared to $23.2 million, or
$0.39 per diluted share, in the same period last year, as adjusted1.
Cash and Cash Equivalents were $85.0 million as of September 30, 2018.
Total Debt was $34.8 million as of September 30, 2018.
1 Effective January 1, 2018, we adopted the requirements of Accounting Standards Update (“ASU”) No.
2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). All prior period amounts and disclosures have been
recast to comply with the new standards, as indicated by the “as adjusted” footnote.
2 Adjusted EBITDA and non-GAAP net income 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 and the year ending December 31, 2018. Please note
that this guidance reflects the January 1, 2018 adoption of ASU 2014-09:
Quarter Ending December 31, 2018
Total Revenues in the range of $142.5 million to $144.5 million.
Adjusted EBITDA in the range of $49.5 million to $51.5 million.
Year Ending December 31, 2018
Total Revenues in the range of $558.5 million to $560.5 million.
Adjusted EBITDA in the range of $233.0 million to $235.0 million.
We have not reconciled the Adjusted EBITDA ranges for the quarter or the year ending December 31, 2018 to net income because
applicable information for future periods, on which this reconciliation would be based, is not readily available due to uncertainty
regarding, and the potential variability of, depreciation and amortization, interest expense, taxes, non-cash stock-based
compensation expense, change in fair value of our interest rate swap and other items. Accordingly, a reconciliation of these
Adjusted EBITDA ranges to net income 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. Management uses Adjusted EBITDA and non-GAAP net income as supplemental measures to review and assess the
performance of our core business operations and for planning purposes. We define (i) Adjusted EBITDA as net income plus
interest expense, taxes, depreciation and amortization, non-cash stock-based compensation expense, certain transaction expenses
that are not core to our operations (if any) and the change in fair value of our interest rate swap and (ii) non-GAAP net
income as net income plus non-cash stock-based compensation expense, certain transaction expenses that are not core to our
operations (if any) and the change in fair value of our interest rate swap, all of which are adjusted for the effect of income
taxes. Adjusted EBITDA and non-GAAP net income are metrics that provide investors with greater transparency to the information used
by management in its financial and operational decision-making. We believe these metrics are useful to investors because they
facilitate comparisons of our core business operations across periods on a consistent basis, as well as comparisons with the
results of peer companies, many of which use similar non-GAAP financial measures to supplement results under GAAP. In addition,
Adjusted EBITDA is a measure that provides useful information to management about the amount of cash available for reinvestment in
our business, repurchasing common stock and other purposes. Management believes that the non-GAAP measures presented in this press
release, when viewed in combination with our results prepared in accordance with GAAP, provide a more complete understanding of the
factors and trends affecting our business and performance.
Adjusted EBITDA and non-GAAP net income are not measures of financial performance under GAAP and should not be considered a
substitute for net income, which we consider to be the most directly comparable GAAP measure. Adjusted EBITDA and non-GAAP net
income have limitations as analytical tools, and when assessing our operating performance, you should not consider Adjusted EBITDA
or non-GAAP net income in isolation, nor as a substitute for net income or other consolidated statements of income data prepared in
accordance with GAAP. Adjusted EBITDA and non-GAAP net income 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, October 30, 2018, at 5:00 p.m. Eastern time to
discuss its financial results. To access this call, dial (866) 362-4443 (domestic) or (412) 317-5229 (international) and announce
Paycom as the conference name to the operator. A live webcast as well as the replay of the conference call will be available on the
Investor Relations page of Paycom’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 November 6, 2018. The replay passcode is 10124536.
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 has the ability to serve
businesses of all sizes and in every industry. As one of the leading human capital management providers, Paycom serves clients in
all 50 states from offices across the country.
Forward-Looking Statements
Certain statements in this press release are, and certain statements on the related teleconference call may be, forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are any
statements that refer to our estimated or anticipated results, other non-historical facts or future events and include, but are not
limited to, statements regarding our business strategy; anticipated future operating results and operating expenses, cash flows,
capital resources, dividends and liquidity; trends, opportunities and risks affecting our business, industry and financial results;
future expansion or growth plans and potential for future growth; our ability to attract new clients to purchase our solution; our
ability to retain clients and induce them to purchase additional applications; our ability to accurately forecast future revenues
and appropriately plan our expenses; market acceptance of our solution and applications; our expectations regarding future revenues
generated by certain applications; our ability to attract and retain qualified personnel; the impact of future regulatory,
judicial, or legislative changes; how certain factors affecting our performance correlate to improvement or deterioration in the
labor market; our plan to open additional sales offices and our ability to effectively execute such plan; the sufficiency of our
existing cash and cash equivalents to meet our working capital and capital expenditure needs over the next 12 months; our ability
to relocate our Texas operations to a new facility within an expected timeframe; our plans regarding our capital expenditures and
investment activity as our business grows, including with respect to our new Texas operations facility; the expected impact of the
Tax Cuts and Jobs Act of 2017 and our expected income tax rate for future periods; our plans to purchase shares of our common stock
through a stock repurchase plan; and the impact on our consolidated financial statements of new accounting pronouncements. In
addition, forward-looking statements also consist of statements involving trend analyses and statements including such words as
“anticipate,” “believe,” “become,” “continue,” “could,” “expect,” “intend,” “may,” “plan,” “potential,” “should,” “would,” “will”
and similar expressions or the negative of such terms or other comparable terminology. These forward-looking statements speak only
as of the date hereof and are subject to business and economic risks. As such, our actual results could differ materially from
those set forth in the forward-looking statements as a result of the factors discussed in our filings with the Securities and
Exchange Commission, including but not limited to those discussed in our Annual Report on Form 10-K for the year ended December 31,
2017. We do not undertake any obligation to update or revise the forward-looking statements to reflect events or circumstances that
exist after the date on which such statements were made, except to the extent required by law.
|
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| Paycom Software, Inc. |
| Consolidated Balance Sheets |
| (in thousands, except share amounts) |
| (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, 2017
|
|
|
|
2018 |
|
|
*As Adjusted |
| Assets |
|
|
|
|
|
|
| Current assets: |
|
|
|
|
|
|
| Cash and cash equivalents |
|
|
$ |
85,048 |
|
|
|
$ |
46,077 |
|
| Accounts receivable |
|
|
|
2,213 |
|
|
|
|
1,576 |
|
| Prepaid expenses |
|
|
|
7,934 |
|
|
|
|
4,982 |
|
| Inventory |
|
|
|
574 |
|
|
|
|
979 |
|
| Income tax receivable |
|
|
|
6,456 |
|
|
|
|
7,047 |
|
| Derivative asset |
|
|
|
97 |
|
|
|
|
— |
|
| Deferred contract costs |
|
|
|
32,465 |
|
|
|
|
26,403 |
|
| Current assets before funds held for clients |
|
|
|
134,787 |
|
|
|
|
87,064 |
|
| Funds held for clients |
|
|
|
902,747 |
|
|
|
|
1,089,201 |
|
| Total current assets |
|
|
|
1,037,534 |
|
|
|
|
1,176,265 |
|
| Property and equipment, net |
|
|
|
168,397 |
|
|
|
|
147,705 |
|
| Deposits and other assets |
|
|
|
1,567 |
|
|
|
|
1,456 |
|
| Goodwill |
|
|
|
51,889 |
|
|
|
|
51,889 |
|
| Intangible assets, net |
|
|
|
798 |
|
|
|
|
958 |
|
| Long-term derivative asset |
|
|
|
679 |
|
|
|
|
— |
|
| Long-term deferred contract costs |
|
|
|
207,322 |
|
|
|
|
171,865 |
|
| Total assets |
|
|
$ |
1,468,186 |
|
|
|
$ |
1,550,138 |
|
| Liabilities and Stockholders' Equity |
|
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|
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|
| Current liabilities: |
|
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|
|
|
|
| Accounts payable |
|
|
$ |
6,173 |
|
|
|
$ |
6,490 |
|
| Accrued commissions and bonuses |
|
|
|
6,454 |
|
|
|
|
9,585 |
|
| Accrued payroll and vacation |
|
|
|
12,937 |
|
|
|
|
7,015 |
|
| Deferred revenue |
|
|
|
8,409 |
|
|
|
|
6,982 |
|
| Current portion of long-term debt |
|
|
|
1,775 |
|
|
|
|
888 |
|
| Accrued expenses and other current liabilities |
|
|
|
19,654 |
|
|
|
|
19,991 |
|
| Current liabilities before client funds obligation |
|
|
|
55,402 |
|
|
|
|
50,951 |
|
| Client funds obligation |
|
|
|
902,747 |
|
|
|
|
1,089,201 |
|
| Total current liabilities |
|
|
|
958,149 |
|
|
|
|
1,140,152 |
|
| Deferred income tax liabilities, net |
|
|
|
64,206 |
|
|
|
|
49,129 |
|
| Long-term derivative liability |
|
|
|
— |
|
|
|
|
554 |
|
| Long-term deferred revenue |
|
|
|
52,405 |
|
|
|
|
44,642 |
|
| Net long-term debt, less current portion |
|
|
|
33,049 |
|
|
|
|
34,414 |
|
| Total long-term liabilities |
|
|
|
149,660 |
|
|
|
|
128,739 |
|
| Commitments and contingencies (Note 12) |
|
|
|
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| Stockholders' equity: |
|
|
|
|
|
|
|
Common stock, $0.01 par value (100,000,000 shares authorized, 60,698,352 and 60,149,411 shares
issued at September 30, 2018 and December 31, 2017, respectively; 57,730,356 and 57,788,573 shares outstanding at September
30, 2018 and December 31, 2017, respectively)
|
|
|
|
606 |
|
|
|
|
601 |
|
| Additional paid-in capital |
|
|
|
198,255 |
|
|
|
|
161,809 |
|
| Retained earnings |
|
|
|
364,176 |
|
|
|
|
258,525 |
|
|
Treasury stock, at cost (2,967,996 and 2,360,838 shares at September 30, 2018 and December 31, 2017,
respectively)
|
|
|
|
(202,660 |
) |
|
|
|
(139,688 |
) |
| Total stockholders' equity |
|
|
|
360,377 |
|
|
|
|
281,247 |
|
| Total liabilities and stockholders' equity |
|
|
$ |
1,468,186 |
|
|
|
$ |
1,550,138 |
|
* Prior year amounts have been recast to reflect the adoption of ASU 2014-09.
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| Paycom Software, Inc. |
| Consolidated Statements of Income |
| (in thousands, except per share and share amounts) |
| (unaudited) |
|
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|
|
Three Months Ended
|
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|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
|
September 30,
|
|
|
|
|
|
|
2017 |
|
|
|
|
|
|
2017 |
|
|
|
2018 |
|
|
*As Adjusted |
|
|
|
2018 |
|
|
*As Adjusted |
| Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Recurring |
|
|
$ |
130,830 |
|
|
|
$ |
99,498 |
|
|
|
|
$ |
409,324 |
|
|
|
$ |
313,763 |
|
| Implementation and other |
|
|
|
2,458 |
|
|
|
|
1,789 |
|
|
|
|
|
6,680 |
|
|
|
|
5,259 |
|
| Total revenues |
|
|
|
133,288 |
|
|
|
|
101,287 |
|
|
|
|
|
416,004 |
|
|
|
|
319,022 |
|
| Cost of revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses |
|
|
|
18,158 |
|
|
|
|
15,324 |
|
|
|
|
|
56,403 |
|
|
|
|
46,019 |
|
| Depreciation and amortization |
|
|
|
3,967 |
|
|
|
|
2,502 |
|
|
|
|
|
10,258 |
|
|
|
|
6,829 |
|
| Total cost of revenues |
|
|
|
22,125 |
|
|
|
|
17,826 |
|
|
|
|
|
66,661 |
|
|
|
|
52,848 |
|
| Administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Sales and marketing |
|
|
|
37,183 |
|
|
|
|
27,732 |
|
|
|
|
|
101,182 |
|
|
|
|
80,741 |
|
| Research and development |
|
|
|
11,526 |
|
|
|
|
8,112 |
|
|
|
|
|
33,507 |
|
|
|
|
23,004 |
|
| General and administrative |
|
|
|
22,048 |
|
|
|
|
23,207 |
|
|
|
|
|
73,700 |
|
|
|
|
62,051 |
|
| Depreciation and amortization |
|
|
|
4,161 |
|
|
|
|
2,403 |
|
|
|
|
|
10,652 |
|
|
|
|
7,069 |
|
| Total administrative expenses |
|
|
|
74,918 |
|
|
|
|
61,454 |
|
|
|
|
|
219,041 |
|
|
|
|
172,865 |
|
| Total operating expenses |
|
|
|
97,043 |
|
|
|
|
79,280 |
|
|
|
|
|
285,702 |
|
|
|
|
225,713 |
|
| Operating income |
|
|
|
36,245 |
|
|
|
|
22,007 |
|
|
|
|
|
130,302 |
|
|
|
|
93,309 |
|
| Interest expense |
|
|
|
(384 |
) |
|
|
|
(220 |
) |
|
|
|
|
(418 |
) |
|
|
|
(758 |
) |
| Other income, net |
|
|
|
583 |
|
|
|
|
118 |
|
|
|
|
|
2,128 |
|
|
|
|
362 |
|
| Income before income taxes |
|
|
|
36,444 |
|
|
|
|
21,905 |
|
|
|
|
|
132,012 |
|
|
|
|
92,913 |
|
| Provision for income taxes |
|
|
|
7,675 |
|
|
|
|
995 |
|
|
|
|
|
26,361 |
|
|
|
|
18,293 |
|
| Net income |
|
|
$ |
28,769 |
|
|
|
$ |
20,910 |
|
|
|
|
$ |
105,651 |
|
|
|
$ |
74,620 |
|
| Earnings per share, basic |
|
|
$ |
0.50 |
|
|
|
$ |
0.36 |
|
|
|
|
$ |
1.83 |
|
|
|
$ |
1.29 |
|
| Earnings per share, diluted |
|
|
$ |
0.49 |
|
|
|
$ |
0.35 |
|
|
|
|
$ |
1.80 |
|
|
|
$ |
1.26 |
|
| Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic |
|
|
|
57,726,790 |
|
|
|
|
58,003,222 |
|
|
|
|
|
57,785,466 |
|
|
|
|
57,751,204 |
|
| Diluted |
|
|
|
58,545,061 |
|
|
|
|
58,873,502 |
|
|
|
|
|
58,724,228 |
|
|
|
|
58,839,771 |
|
* Prior year amounts have been recast to reflect the adoption of ASU 2014-09.
|
|
|
|
|
|
|
|
| Paycom Software, Inc. |
| Consolidated Statements of Cash Flows |
| (in thousands) |
| (unaudited) |
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
|
|
|
|
2017 |
|
|
|
2018 |
|
|
*As Adjusted |
| Cash flows from operating activities |
|
|
|
|
|
|
| Net income |
|
|
$ |
105,651 |
|
|
|
$ |
74,620 |
|
| Adjustments to reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
|
| Depreciation and amortization |
|
|
|
20,910 |
|
|
|
|
13,898 |
|
| Accretion of discount on available-for-sale securities |
|
|
|
(860 |
) |
|
|
|
(371 |
) |
| Loss on disposition of property and equipment |
|
|
|
— |
|
|
|
|
21 |
|
| Amortization of debt issuance costs |
|
|
|
24 |
|
|
|
|
92 |
|
| Stock-based compensation expense |
|
|
|
31,508 |
|
|
|
|
29,663 |
|
| Cash paid for derivative settlement |
|
|
|
(168 |
) |
|
|
|
— |
|
| Gain on derivative |
|
|
|
(1,259 |
) |
|
|
|
— |
|
| Deferred income taxes, net |
|
|
|
15,077 |
|
|
|
|
9,167 |
|
| Changes in operating assets and liabilities: |
|
|
|
|
|
|
| Accounts receivable |
|
|
|
(637 |
) |
|
|
|
(105 |
) |
| Prepaid expenses |
|
|
|
(2,952 |
) |
|
|
|
(1,230 |
) |
| Inventory |
|
|
|
(56 |
) |
|
|
|
(75 |
) |
| Deposits and other assets |
|
|
|
(111 |
) |
|
|
|
(126 |
) |
| Deferred contract costs |
|
|
|
(39,881 |
) |
|
|
|
(32,024 |
) |
| Accounts payable |
|
|
|
1,789 |
|
|
|
|
(1,463 |
) |
| Income taxes, net |
|
|
|
591 |
|
|
|
|
(8,555 |
) |
| Accrued commissions and bonuses |
|
|
|
(3,131 |
) |
|
|
|
(1,221 |
) |
| Accrued payroll and vacation |
|
|
|
5,922 |
|
|
|
|
4,327 |
|
| Deferred revenue |
|
|
|
9,190 |
|
|
|
|
8,656 |
|
| Accrued expenses and other current liabilities |
|
|
|
4,242 |
|
|
|
|
(3,225 |
) |
| Net cash provided by operating activities |
|
|
|
145,849 |
|
|
|
|
92,049 |
|
| Cash flows from investing activities |
|
|
|
|
|
|
| Purchase of short-term investments from funds held for clients |
|
|
|
(137,561 |
) |
|
|
|
(49,325 |
) |
| Proceeds from maturities of short-term investments from funds held for clients |
|
|
|
95,500 |
|
|
|
|
111,705 |
|
| Net change in funds held for clients' cash and cash equivalents |
|
|
|
229,375 |
|
|
|
|
3,501 |
|
| Purchases of property and equipment |
|
|
|
(44,264 |
) |
|
|
|
(42,926 |
) |
| Net cash provided by investing activities |
|
|
|
143,050 |
|
|
|
|
22,955 |
|
| Cash flows from financing activities |
|
|
|
|
|
|
| Proceeds from issuance of long-term debt |
|
|
|
— |
|
|
|
|
5,440 |
|
| Repurchases of common stock |
|
|
|
(42,857 |
) |
|
|
|
(19,391 |
) |
| Withholding taxes paid related to net share settlement |
|
|
|
(20,115 |
) |
|
|
|
(28,105 |
) |
| Principal payments on long-term debt |
|
|
|
(444 |
) |
|
|
|
(843 |
) |
| Net change in client funds obligation |
|
|
|
(186,454 |
) |
|
|
|
(65,510 |
) |
| Payment of debt issuance costs |
|
|
|
(58 |
) |
|
|
|
(143 |
) |
| Net cash used in financing activities |
|
|
|
(249,928 |
) |
|
|
|
(108,552 |
) |
| Increase in cash and cash equivalents |
|
|
|
38,971 |
|
|
|
|
6,452 |
|
| Cash and cash equivalents |
|
|
|
|
|
|
| Beginning of period |
|
|
|
46,077 |
|
|
|
|
60,158 |
|
| End of period |
|
|
$ |
85,048 |
|
|
|
$ |
66,610 |
|
* Prior year amounts have been recast to reflect the adoption of ASU 2014-09.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Paycom Software, Inc. |
| Reconciliations of GAAP to non-GAAP Financial Measures |
| (in thousands, except share and per share amounts) |
| (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
|
September 30,
|
|
|
|
|
|
|
2017 |
|
|
|
|
|
|
2017 |
|
|
|
2018 |
|
|
*As Adjusted |
|
|
|
2018 |
|
|
*As Adjusted |
| Net income to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income |
|
|
$ |
28,769 |
|
|
|
$ |
20,910 |
|
|
|
$ |
105,651 |
|
|
|
$ |
74,620 |
| Interest expense |
|
|
|
384 |
|
|
|
|
220 |
|
|
|
|
418 |
|
|
|
|
758 |
| Provision for income taxes |
|
|
|
7,675 |
|
|
|
|
995 |
|
|
|
|
26,361 |
|
|
|
|
18,293 |
| Depreciation and amortization |
|
|
|
8,128 |
|
|
|
|
4,905 |
|
|
|
|
20,910 |
|
|
|
|
13,898 |
| EBITDA |
|
|
|
44,956 |
|
|
|
|
27,030 |
|
|
|
|
153,340 |
|
|
|
|
107,569 |
| Non-cash stock-based compensation expense |
|
|
|
4,509 |
|
|
|
|
13,351 |
|
|
|
|
31,485 |
|
|
|
|
29,660 |
| Change in fair value of interest rate swap |
|
|
|
(285 |
) |
|
|
|
— |
|
|
|
|
(1,427 |
) |
|
|
|
— |
| Adjusted EBITDA |
|
|
$ |
49,180 |
|
|
|
$ |
40,381 |
|
|
|
$ |
183,398 |
|
|
|
$ |
137,229 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
|
September 30,
|
|
|
|
|
|
|
2017 |
|
|
|
|
|
|
2017 |
|
|
|
2018 |
|
|
*As Adjusted |
|
|
|
2018 |
|
|
*As Adjusted |
| Net income to non-GAAP net income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income |
|
|
$ |
28,769 |
|
|
|
$ |
20,910 |
|
|
|
|
$ |
105,651 |
|
|
|
$ |
74,620 |
|
| Non-cash stock-based compensation expense |
|
|
|
4,509 |
|
|
|
|
13,351 |
|
|
|
|
|
31,485 |
|
|
|
|
29,660 |
|
| Change in fair value of interest rate swap |
|
|
|
(285 |
) |
|
|
|
— |
|
|
|
|
|
(1,427 |
) |
|
|
|
— |
|
| Income tax effect on non-GAAP adjustment |
|
|
|
(2,374 |
) |
|
|
|
(11,081 |
) |
|
|
|
|
(14,512 |
) |
|
|
|
(25,140 |
) |
| Non-GAAP net income |
|
|
$ |
30,619 |
|
|
|
$ |
23,180 |
|
|
|
|
$ |
121,197 |
|
|
|
$ |
79,140 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic |
|
|
|
57,726,790 |
|
|
|
|
58,003,222 |
|
|
|
|
|
57,785,466 |
|
|
|
|
57,751,204 |
|
| Diluted |
|
|
|
58,545,061 |
|
|
|
|
58,873,502 |
|
|
|
|
|
58,724,228 |
|
|
|
|
58,839,771 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Earnings per share basic |
|
|
$ |
0.50 |
|
|
|
$ |
0.36 |
|
|
|
|
$ |
1.83 |
|
|
|
$ |
1.29 |
|
| Earnings per share diluted |
|
|
$ |
0.49 |
|
|
|
$ |
0.35 |
|
|
|
|
$ |
1.80 |
|
|
|
$ |
1.26 |
|
| Non-GAAP net income per share, basic |
|
|
$ |
0.53 |
|
|
|
$ |
0.40 |
|
|
|
|
$ |
2.10 |
|
|
|
$ |
1.37 |
|
| Non-GAAP net income per share, diluted |
|
|
$ |
0.52 |
|
|
|
$ |
0.39 |
|
|
|
|
$ |
2.06 |
|
|
|
$ |
1.35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
|
September 30,
|
|
|
|
|
|
|
2017 |
|
|
|
|
|
|
2017 |
|
|
|
2018 |
|
|
*As Adjusted |
|
|
|
2018 |
|
|
*As Adjusted |
| Earnings per share to non-GAAP net income per share, basic: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Earnings per share, basic |
|
|
$ |
0.50 |
|
|
|
$ |
0.36 |
|
|
|
|
$ |
1.83 |
|
|
|
$ |
1.29 |
|
| Non-cash stock-based compensation expense |
|
|
|
0.08 |
|
|
|
|
0.23 |
|
|
|
|
|
0.54 |
|
|
|
|
0.51 |
|
| Change in fair value of interest rate swap |
|
|
|
(0.01 |
) |
|
|
|
— |
|
|
|
|
|
(0.02 |
) |
|
|
|
— |
|
| Income tax effect on non-GAAP adjustment |
|
|
|
(0.04 |
) |
|
|
|
(0.19 |
) |
|
|
|
|
(0.25 |
) |
|
|
|
(0.43 |
) |
| Non-GAAP net income per share, basic |
|
|
$ |
0.53 |
|
|
|
$ |
0.40 |
|
|
|
|
$ |
2.10 |
|
|
|
$ |
1.37 |
|
* Prior year amounts have been recast to reflect the adoption of ASU 2014-09.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
|
September 30, |
|
|
|
|
|
|
2017 |
|
|
|
|
|
|
2017 |
|
|
|
2018 |
|
|
*As Adjusted |
|
|
|
2018 |
|
|
*As Adjusted |
| Earnings per share to non-GAAP net income per share, diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Earnings per share, diluted |
|
|
$ |
0.49 |
|
|
|
$ |
0.35 |
|
|
|
|
$ |
1.80 |
|
|
|
$ |
1.26 |
|
| Non-cash stock-based compensation expense |
|
|
|
0.08 |
|
|
|
|
0.23 |
|
|
|
|
|
0.54 |
|
|
|
|
0.50 |
|
| Change in fair value of interest rate swap |
|
|
|
(0.01 |
) |
|
|
|
— |
|
|
|
|
|
(0.03 |
) |
|
|
|
— |
|
| Income tax effect on non-GAAP adjustment |
|
|
|
(0.04 |
) |
|
|
|
(0.19 |
) |
|
|
|
|
(0.25 |
) |
|
|
|
(0.41 |
) |
| Non-GAAP net income per share, diluted |
|
|
$ |
0.52 |
|
|
|
$ |
0.39 |
|
|
|
|
$ |
2.06 |
|
|
|
$ |
1.35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
|
September 30, |
|
|
|
2018 |
|
|
2017 |
|
|
|
2018 |
|
|
2017 |
| Adjusted gross profit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total revenues |
|
|
$ |
133,288 |
|
|
|
$ |
101,287 |
|
|
|
|
$ |
416,004 |
|
|
|
$ |
319,022 |
|
| Less: Total cost of revenues |
|
|
|
(22,125 |
) |
|
|
|
(17,826 |
) |
|
|
|
|
(66,661 |
) |
|
|
|
(52,848 |
) |
| Total gross profit |
|
|
|
111,163 |
|
|
|
|
83,461 |
|
|
|
|
|
349,343 |
|
|
|
|
266,174 |
|
| Plus: Non-cash stock-based compensation expense |
|
|
|
332 |
|
|
|
|
1,488 |
|
|
|
|
|
3,591 |
|
|
|
|
3,199 |
|
| Total adjusted gross profit |
|
|
$ |
111,495 |
|
|
|
$ |
84,949 |
|
|
|
|
$ |
352,934 |
|
|
|
$ |
269,373 |
|
| Total gross profit % |
|
|
|
83.4 |
% |
|
|
|
82.4 |
% |
|
|
|
|
84.0 |
% |
|
|
|
83.4 |
% |
| Total adjusted gross profit % |
|
|
|
83.6 |
% |
|
|
|
83.9 |
% |
|
|
|
|
84.8 |
% |
|
|
|
84.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
|
September 30, |
|
|
|
|
|
|
2017 |
|
|
|
|
|
|
2017 |
|
|
|
2018 |
|
|
*As Adjusted |
|
|
|
2018 |
|
|
*As Adjusted |
| Adjusted sales and marketing expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Sales and marketing expenses |
|
|
$ |
37,183 |
|
|
|
$ |
27,732 |
|
|
|
|
$ |
101,182 |
|
|
|
$ |
80,741 |
|
| Less: Non-cash stock-based compensation expense |
|
|
|
(1,976 |
) |
|
|
|
(1,616 |
) |
|
|
|
|
(5,332 |
) |
|
|
|
(3,631 |
) |
| Total adjusted sales and marketing expenses |
|
|
$ |
35,207 |
|
|
|
$ |
26,116 |
|
|
|
|
$ |
95,850 |
|
|
|
$ |
77,110 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total revenues |
|
|
$ |
133,288 |
|
|
|
$ |
101,287 |
|
|
|
|
$ |
416,004 |
|
|
|
$ |
319,022 |
|
| Total adjusted sales and marketing expenses as a % of revenues |
|
|
|
26.4 |
% |
|
|
|
25.8 |
% |
|
|
|
|
23.0 |
% |
|
|
|
24.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
|
September 30, |
|
|
|
|
|
|
2017 |
|
|
|
|
|
|
2017 |
|
|
|
2018 |
|
|
*As Adjusted |
|
|
|
2018 |
|
|
*As Adjusted |
| Adjusted administrative expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Administrative expenses |
|
|
$ |
74,918 |
|
|
|
$ |
61,454 |
|
|
|
|
$ |
219,041 |
|
|
|
$ |
172,865 |
|
| Less: Non-cash stock-based compensation expense |
|
|
|
(4,177 |
) |
|
|
|
(11,863 |
) |
|
|
|
|
(27,894 |
) |
|
|
|
(26,461 |
) |
| Total adjusted administrative expenses |
|
|
$ |
70,741 |
|
|
|
$ |
49,591 |
|
|
|
|
$ |
191,147 |
|
|
|
$ |
146,404 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total revenues |
|
|
$ |
133,288 |
|
|
|
$ |
101,287 |
|
|
|
|
$ |
416,004 |
|
|
|
$ |
319,022 |
|
| Total adjusted administrative expenses as a % of revenues |
|
|
|
53.1 |
% |
|
|
|
49.0 |
% |
|
|
|
|
45.9 |
% |
|
|
|
45.9 |
% |
* Prior year amounts have been recast to reflect the adoption of ASU 2014-09.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
|
September 30, |
|
|
|
2018 |
|
|
2017 |
|
|
|
2018 |
|
|
2017 |
| Adjusted research and development expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Research and development expenses |
|
|
$ |
11,526 |
|
|
|
$ |
8,112 |
|
|
|
|
$ |
33,507 |
|
|
|
$ |
23,004 |
|
| Less: Non-cash stock-based compensation expense |
|
|
|
(248 |
) |
|
|
|
(734 |
) |
|
|
|
|
(2,762 |
) |
|
|
|
(1,514 |
) |
| Total adjusted research and development expenses |
|
|
$ |
11,278 |
|
|
|
$ |
7,378 |
|
|
|
|
$ |
30,745 |
|
|
|
$ |
21,490 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total revenues |
|
|
$ |
133,288 |
|
|
|
$ |
101,287 |
|
|
|
|
$ |
416,004 |
|
|
|
$ |
319,022 |
|
| Total adjusted research and development expenses as a % of revenues |
|
|
|
8.5 |
% |
|
|
|
7.3 |
% |
|
|
|
|
7.4 |
% |
|
|
|
6.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
|
September 30, |
|
|
|
2018 |
|
|
2017 |
|
|
|
2018 |
|
|
2017 |
| Total research and development costs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Capitalized research and development costs |
|
|
$ |
5,211 |
|
|
|
$ |
4,665 |
|
|
|
|
$ |
16,419 |
|
|
|
$ |
11,048 |
|
| Research and development expenses |
|
|
|
11,526 |
|
|
|
|
8,112 |
|
|
|
|
|
33,507 |
|
|
|
|
23,004 |
|
| Total research and development costs |
|
|
$ |
16,737 |
|
|
|
$ |
12,777 |
|
|
|
|
$ |
49,926 |
|
|
|
$ |
34,052 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total revenues |
|
|
$ |
133,288 |
|
|
|
$ |
101,287 |
|
|
|
|
$ |
416,004 |
|
|
|
$ |
319,022 |
|
| Total research and development costs as a % of revenues |
|
|
|
12.6 |
% |
|
|
|
12.6 |
% |
|
|
|
|
12.0 |
% |
|
|
|
10.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total adjusted research and development costs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total research and development costs |
|
|
$ |
16,737 |
|
|
|
$ |
12,777 |
|
|
|
|
$ |
49,926 |
|
|
|
$ |
34,052 |
|
| Less: Capitalized non-cash stock-based compensation |
|
|
|
(384 |
) |
|
|
|
(1,262 |
) |
|
|
|
|
(3,329 |
) |
|
|
|
(2,579 |
) |
| Less: Non-cash stock-based compensation expense |
|
|
|
(248 |
) |
|
|
|
(734 |
) |
|
|
|
|
(2,762 |
) |
|
|
|
(1,514 |
) |
| Total adjusted research and development costs |
|
|
$ |
16,105 |
|
|
|
$ |
10,781 |
|
|
|
|
$ |
43,835 |
|
|
|
$ |
29,959 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total revenues |
|
|
$ |
133,288 |
|
|
|
$ |
101,287 |
|
|
|
|
$ |
416,004 |
|
|
|
$ |
319,022 |
|
| Total adjusted research and development costs as a % of revenues |
|
|
|
12.1 |
% |
|
|
|
10.6 |
% |
|
|
|
|
10.5 |
% |
|
|
|
9.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Paycom Software, Inc. |
| Breakout of Non-Cash Stock-Based Compensation Expense |
| (in thousands) |
| (unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Nine Months Ended |
|
|
September 30, |
|
|
|
September 30, |
|
|
|
|
|
2017 |
|
|
|
|
|
|
2017 |
|
|
2018 |
|
|
*As Adjusted |
|
|
|
2018 |
|
|
*As Adjusted |
| Non-cash stock-based compensation expense: |
|
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses |
|
$ |
332 |
|
|
$ |
1,488 |
|
|
|
$ |
3,591 |
|
|
$ |
3,199 |
| Sales and marketing |
|
|
1,976 |
|
|
|
1,616 |
|
|
|
|
5,332 |
|
|
|
3,631 |
| Research and development |
|
|
248 |
|
|
|
734 |
|
|
|
|
2,762 |
|
|
|
1,514 |
| General and administrative |
|
|
1,953 |
|
|
|
9,513 |
|
|
|
|
19,800 |
|
|
|
21,316 |
| Total non-cash stock-based compensation expense |
|
$ |
4,509 |
|
|
$ |
13,351 |
|
|
|
$ |
31,485 |
|
|
$ |
29,660 |
* Prior year amounts have been recast to reflect the adoption of ASU 2014-09.
Paycom Software, Inc.
Media:
Kathy Oden-Hall, 800-580-4505
EVP and CMO
media@paycom.com
or
Investor Relations:
David Niederman, 855-603-1620
investors@paycom.com
View source version on businesswire.com: https://www.businesswire.com/news/home/20181030006014/en/