RADNOR, Pa., Jan. 4, 2024 /PRNewswire/ -- The law firm of Kessler Topaz Meltzer & Check, LLP (www.ktmc.com) informs investors that a securities class action lawsuit has been filed in the United States District Court for the Western District of Oklahoma against Paycom Software, Inc. ("Paycom") (NYSE: PAYC). The action charges Paycom with violations of the federal securities laws, including omissions and fraudulent misrepresentations relating to the company's business, operations, and prospects. As a result of Paycom's materially misleading statements and omissions to the public, Paycom's investors have suffered significant losses.
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LEAD PLAINTIFF DEADLINE:JANUARY 9, 2024
CLASS PERIOD: FEBRUARY 9, 2022 THROUGH NOVEMBER 1, 2023
CONTACT AN ATTORNEY TO DISCUSS YOUR RIGHTS:
Jonathan Naji, Esq. at (484) 270-1453 or via email at info@ktmc.com
Kessler Topaz is one of the world's foremost advocates in protecting the public against corporate fraud and other wrongdoing. Our securities fraud litigators are regularly recognized as leaders in the field individually and our firm is both feared and respected among the defense bar and the insurance bar. We are proud to have recovered billions of dollars for our clients and the classes of shareholders we represent.
PAYCOM'S ALLEGED MISCONDUCT
In July 2021, prior to the beginning of the Class Period, Paycom officially rolled out a new application called "Beti," which stands for Better Employee Transaction Interface, as an enhancement to the company's then existing payroll offerings. According to Paycom at that time, Beti "further automates and streamlines the payroll process by empowering employees to do their own payroll, increasing efficiencies and reducing errors," adding that "[e]mployees already manage all other components of their paychecks, including timecards, expenses, PTO requests and benefits; now they have the convenience within Paycom to process their own payroll, too." Also, according to Paycom at that time, "Beti puts the payroll responsibility into the hands of employees, eliminating what used to be a multistep, imperfect and time-consuming process for HR and payroll staff members." What Paycom did not disclose at the time was that its revenue stream then relied heavily upon those very inefficiencies, especially charging fees for making additional payroll runs when mistakes were made in payroll departments. Thus, as the company continued its rollout of Beti, more and more of the fees the company had previously been deriving for fixing one-off payroll errors would be eliminated, causing its own revenues and profit margins to decline.
The complaints allege that, throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the company's business and operations. Specifically, Defendants misrepresented and/or failed to disclose that: (1) Paycom had been relying upon a significant, but undisclosed, amount of one-off payroll correction fees to fuel its past outsized revenue growth; (2) increased adoption of Beti by Paycom's payroll customers was cannibalizing the fees the company had previously been charging to correct common payroll mistakes and to provide related services; (3) the increased Beti adoption was decreasing Paycom's gross profit margins; and (4) as a result of the foregoing, Defendants' statements about Paycom's business, operations, and prospects were materially false and misleading and/or lacked a reasonable basis at all relevant times.
On October 31, 2023, Paycom shocked the market when it reported its Q3 2023 financial results. In its results, Paycom disclosed disappointing Q3 revenues, revenues guidance for Q4 2023, and an initial 2024 outlook for 10% to 12% revenue growth. Paycom's reported financial results fell significantly below consensus estimates. On an earnings call held that same day discussing the results, Paycom's CEO and CFO disclosed that the company's Beti product was cannibalizing a portion of Paycom's services and revenues, which led the company to miss its expected revenues for the Q3 2023. Likewise, the cannibalization of services and revenues caused Paycom to lower its projected fiscal 2023 revenues.
Following this news, the price of Paycom shares declined by $94.28, or approximately 38.49%, from $244.97 per share to $150.69 on November 1, 2023.
WHAT CAN I DO?
Paycom investors may, no later than January 9, 2024, move the Court to serve as lead plaintiff for the class, through Kessler Topaz Meltzer & Check, LLP or other counsel, or may choose to do nothing and remain an absent class member. Kessler Topaz Meltzer & Check, LLP encourages Paycom who have suffered significant losses to contact the firm directly to acquire more information. The class action complaint filed against Paycom in the United States District Court for the Western District of Oklahoma is captioned Ventrillo Jr. v. Paycom Software, Inc., et al., Case No. 23-cv-01019; the class action complaint filed against Paycom in the United States District Court for the Southern District of New York is captioned Caloto v. Paycom Software, Inc., et al., Case No. 23-cv-11086.
CLICK HERE TO SIGN UP FOR THE CASE
WHO CAN BE A LEAD PLAINTIFF?
A lead plaintiff is a representative party who acts on behalf of all class members in directing the litigation. The lead plaintiff is usually the investor or small group of investors who have the largest financial interest and who are also adequate and typical of the proposed class of investors. The lead plaintiff selects counsel to represent the lead plaintiff and the class and these attorneys, if approved by the court, are lead or class counsel. Your ability to share in any recovery is not affected by the decision of whether or not to serve as a lead plaintiff.
ABOUT KESSLER TOPAZ MELTZER & CHECK, LLP
Kessler Topaz Meltzer & Check, LLP prosecutes class actions in state and federal courts throughout the country and around the world. The firm has developed a global reputation for excellence and has recovered billions of dollars for victims of fraud and other corporate misconduct. All of our work is driven by a common goal: to protect investors, consumers, employees and others from fraud, abuse, misconduct and negligence by businesses and fiduciaries. The complaint in this action was not filed by Kessler Topaz Meltzer & Check, LLP. For more information about Kessler Topaz Meltzer & Check, LLP please visit www.ktmc.com.
CONTACT:
Kessler Topaz Meltzer & Check, LLP
Jonathan Naji, Esq.
280 King of Prussia Road
Radnor, PA 19087
(484) 270-1453
info@ktmc.com
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SOURCE Kessler Topaz Meltzer & Check, LLP
