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Paycom Software Inc PAYC

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New Customer Demand Drives Growth for Paycom In Spite of COVID-19 Headwinds; Raising FVE to $343

Nupur Balain Equity Analyst

Analyst Note

| Nupur Balain |

Narrow-moat Paycom Software reported decent first-quarter results which largely matched our expectations on a top-line basis as pandemic-related employment trends continue to impact Paycom's results, though results surpassed expectations from a bottom-line perspective. We are raising our fair value estimate to $343 from $338 on the back of a stronger outlook for fiscal 2021 as the economy recovers, and we see shares as fairly valued at the moment. With a strong vaccine distribution effort in the U.S. and signs of recovery in the labor market, we expect Paycom to see faster growth in coming quarters since the firm charges customers on a per-employee-per-year basis. In spite of pandemic headwinds, Paycom still exhibited healthy growth, which is reflective of the strength of its payroll offering. With its focus on companies with 50 to 5,000 employees and increasing upstream penetration as the firm rolls out new modules, we expect Paycom to expand client count (particularly with larger firms) and see healthy future growth.

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Company Profile

Business Description

Paycom Software is a fast-growing provider of cloud-based human capital management applications, serving over 26,500 small to midsize customers. The company's full suite is delivered via the web and includes features such as talent acquisition, time and labor management, payroll, talent management, and HR management.

7501 W. Memorial Road
Oklahoma City, OK, 73142
T +1 405 722-6900
Sector Technology
Industry Software - Application
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2020
Stock Type Speculative Growth
Employees 4,218

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