Paycom Software, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenues for the quarter ended September 30, 2026, were $543.8 million, a 10.2% increase from $493.3 million in the same period last year.
• Recurring and other revenues were $519.3 million, up 11.3% year-over-year, constituting 95.5% of total revenues.
• GAAP net income was $133.2 million ($2.99 per diluted share), compared to $110.7 million ($1.96 per diluted share) in the prior year period.
• Non-GAAP net income was $150.0 million ($3.37 per diluted share), compared to $109.6 million ($1.94 per diluted share) in the prior year period.
• Adjusted EBITDA was $268.1 million, representing a 49.3% margin, compared to $194.3 million (39.4% margin) in the prior year period.
• Cash and cash equivalents were $193.9 million as of September 30, 2026, down from $370.0 million as of December 31, 2025.
• Long-term debt was $750.0 million as of September 30, 2026, compared to $0 as of December 31, 2025.
• Deferred revenue (current and long-term combined) was $153.9 million as of September 30, 2026, compared to $150.2 million as of December 31, 2025.
• Net cash provided by operating activities for the nine months ended September 30, 2026, was $613.9 million, compared to $482.8 million in the prior year period.
• Free cash flow for the nine months ended September 30, 2026, was $536.5 million, compared to $285.4 million in the prior year period.
• Gross margin was 84.0% for the quarter, compared to 82.7% in the prior year period.

Guidance and Future Outlook:

• Full-year 2026 total revenue guidance is raised to a range of $2.213 billion to $2.218 billion, representing approximately 8% year-over-year growth.
• Full-year 2026 recurring and other revenue growth is expected to be approximately 9% year-over-year.
• Full-year 2026 interest on funds held for clients is expected to be approximately $107.0 million.
• Full-year 2026 Adjusted EBITDA is guided to a range of $1.069 billion to $1.079 billion, representing a 48.5% margin at the midpoint.

Business Segments and Product Lines:

• The company highlighted the ROI clients realize from automated decisioning logic built into its platform.
• The company utilizes its industry-first AI engine, IWant, to provide instant access to accurate employee data.
• The company's technology allows for the development, release, hosting, distribution, and servicing of technology that delivers value to clients.

Management Commentary and Tone:

• CEO Chad Richison stated that strong results reflect the tremendous ROI clients are realizing from the platform's automated decisioning logic.
• Management expressed confidence in the company's advantage across its large and expanding Total Addressable Market (TAM) due to its software and infrastructure capabilities.
• Management noted that strong performance led to the decision to raise the full-year outlook.

Other Key Points:

• Paycom paid $16.7 million in cash dividends during the quarter ended September 30, 2026.
• For the nine months ended September 30, 2026, the company repurchased $1,390.9 million of common stock.
• The company borrowed $900.0 million under its credit facility and repaid $150.0 million of long-term debt during the nine months ended September 30, 2026.
• Non-cash stock-based compensation expense decreased to $20.3 million for the quarter ended September 30, 2026, from $31.1 million in the prior year period.
• A gain of $9.0 million was recognized on the modification of a naming rights agreement during the nine months ended September 30, 2026.
• Funds held for clients decreased to $3,891.3 million as of September 30, 2026, from $5,137.0 million as of December 31, 2025.