Company Reports

Paycom provides payroll and human capital management, or HCM, solutions. Although the firm targets customers with 50-10,000 employees, an average customer size of approximately 360 employees on a parent-company-group basis suggests a primarily midmarket presence.

Paycom reported second-quarter earnings, with sales up 10% year over year to $531 million and an adjusted EBITDA margin of 44%, up 330 basis points year over year. Management raised full-year guidance, now expecting revenue of $2.21 billion and adjusted EBITDA margin of 46% at the midpoint.

We are transferring coverage of payroll and human capital management, or HCM, providers ADP, Paychex, and Paycom, and relaunching coverage of Paylocity. Their solutions span payroll, talent management, and workforce analytics, with ADP and Paychex also offering outsourcing and retirement services.

Paycom provides payroll and human capital management, or HCM, solutions. Although the firm targets customers with 50-10,000 employees, an average customer size of approximately 360 employees on a parent-company-group basis suggests a primarily midmarket presence.

Paycom reported first-quarter revenue growth of 8%, with recurring revenue growth of 9% exceeding our expectations. The company reaffirmed its 2026 revenue growth outlook of 6%-7%.

We conducted a comprehensive review of Morningstar Economic Moat Ratings across our global technology and technology-adjacent coverage universe of more than 130 companies. In doing so, we updated our moat ratings and fair value estimates for our payroll sector coverage.

Paycom is a provider of human capital management, or HCM, software offering customers a unified record system containing payroll and human resources information in one consolidated database. Paycom’s solutions fit into the following categories: payroll, talent acquisition, talent management, HR management, and time and labor.

Paycom is a provider of human capital management, or HCM, software offering customers a unified record system containing payroll and human resources information in one consolidated database. Paycom’s solutions fit into the following categories: payroll, talent acquisition, talent management, HR management, and time and labor.

Paycom is a provider of human capital management, or HCM, software offering customers a unified record system containing both payroll and human resources information in one consolidated database. Paycom’s solutions fit into the following categories: payroll, talent acquisition, talent management, HR management, as well as time and labor. The firm’s target client size is organizations with 50 to 10,000 employees.

Paycom reported fourth-quarter revenue growth of 10%, with adjusted earnings per share up 2%. The 2026 revenue growth outlook was for 6%-7% growth.

Paycom is a provider of human capital management, or HCM, software offering customers a unified record system containing both payroll and human resources information in one consolidated database. Paycom’s solutions fit into the following categories: payroll, talent acquisition, talent management, HR management, as well as time and labor. The firm’s target client size is organizations with 50 to 10,000 employees.

Paycom reported third-quarter results, with revenue increasing slightly above 9% year over year and adjusted EBITDA margin increasing 150 basis points compared with the same period one year ago. Capital expenditures doubled to $100 million year over year while free cash flow improved.

Paycom is a provider of human capital management, or HCM, software offering customers a unified record system containing both payroll and human resources information in one consolidated database. Paycom’s solutions fit into the following categories: payroll, talent acquisition, talent management, HR management, as well as time and labor. The firm’s target client size is organizations with 50 to 10,000 employees.

Paycom reported second quarter results characterized by accelerating year-over-year software growth, as recurring revenue grew 12% compared to 7% growth achieved in the first quarter. Growth was achieved in an efficient manner as adjusted EBITDA margins improved 450 basis points year over year.

Narrow-moat Paycom reported solid first-quarter results, in which revenue grew 7.8% year over year, in line with consensus estimates, and adjusted EBITDA margins expanded 270 basis points, well above analyst expectations. Additionally, management reaffirmed full-year revenue guidance with annual growth expectations of 8% and increased full-year adjusted EBITDA guidance from 41% to 42%. In conjunction with earnings, we also reinitiate and transfer the coverage of Paycom to a new analyst. We think Paycom is in a unique situation where its offerings are likely too high-end for small businesses while perhaps not comprehensive enough for larger enterprises. After reviewing the business, we reduce our fair value estimate to $203 per share from $211, as we now forecast a faster deceleration in revenue than previously expected. Accordingly, we see shares as overvalued.

Paycom is a provider of human capital management, or HCM, software offering customers a unified record system containing both payroll and human resources information in one consolidated database. Paycom’s solutions fit into the following categories: payroll, talent acquisition, talent management, HR management, as well as time and labor. The firm’s target client size is organizations with 50 to 10,000 employees.

Narrow-moat Paycom delivered strong fiscal 2024 results, however, the 2025 revenue outlook fell short of our previous expectations. We have adjusted our growth assumptions to factor in the new guidance, along with increased competition in the industry, and we are reducing our fair value estimate to $211 from $220. Fourth-quarter results surpassed the high end of both our estimates and management’s guidance, as Paycom focused on organic sales growth and operational efficiency gains through internal artificial intelligence automations. We continue to believe the business benefits from high customer switching costs and is well placed to take a further share of the expansive payroll human capital management market, even as competition increases throughout the industry. We view shares as fairly valued at Feb. 13’s price.

Paycom's unified platform appeals to midsize and enterprise clients that prefer an all-in-one payroll and human capital management, or HCM, solution. The company's platform is supported by a single database, which provides a single source of truth and allows efficient software development and maintenance. Unlike competitors, Paycom discourages data integrations to third-party providers but instead incentivizes clients to contain their HCM solutions within its unified platform by offering add-on modules, including time and attendance and benefits administration. In practice, new clients may consolidate their payroll and HCM solutions from multiple providers to an all-in-one solution by Paycom. The company is focused on driving greater automation and employee self-service, supported by complementary analytics tools for clients and the rollout of its Beti self-service payroll module.

Paycom's unified platform appeals to midsize and enterprise clients that prefer an all-in-one payroll and human capital management solution. The company's platform is supported by a single database, which provides a single source of truth and allows efficient software development and maintenance. Unlike competitors, Paycom discourages data integrations to third-party providers but instead incentivizes clients to contain their HCM solutions within its unified platform by offering add-on modules, including time and attendance and benefits administration. In practice, new clients may consolidate their payroll and HCM solutions from multiple providers to an all-in-one solution by Paycom. The company is focused on driving greater automation and employee self-service, supported by complementary analytics tools for clients and the rollout of its Beti self-service payroll module.

We maintain our $220 fair value estimate for narrow-moat Paycom following solid top-line and bottom-line results that exceeded both the guided range and our estimates. Paycom's result was supported by new client wins, an expanding suite of automated modules, and margin improvements. Following the result, we made minor adjustments to our near-term forecasts to align with updated guidance while reiterating our longer-term outlook. Shares traded up 7% after hours toward our unchanged valuation yet remain attractive.