EPS Forecast
Revenue Forecast
Exhibit 99.1
Paycom Software, Inc. Reports Fourth Quarter and Year-End 2021 Results
Full Year Revenues of $1,055.5 million, up 25.4% year-over-year
Full Year Annual Revenue Retention Rate increased to 94%
Full Year GAAP Net Income of $196.0 million, representing 18.6% of total revenues, or $3.37 per diluted share
Full Year Adjusted EBITDA of $419.3 million, representing 39.7% of total revenues
Fourth Quarter Revenues of $285.0 million, up 29.0% year-over-year
OKLAHOMA CITY – (BUSINESS WIRE) – Paycom Software, Inc. (“Paycom,” “we” and “our”) (NYSE: PAYC), a leading provider of comprehensive, cloud-based human capital management software, today announced its financial results for the quarter and year ended December 31, 2021.
“We delivered very strong results in 2021, reflecting outstanding execution and robust demand for Paycom’s differentiated solution,” said Paycom’s founder and CEO, Chad Richison. “Our employee usage strategy, where employees are now able to do their own payroll with Beti™, helped deliver record annual revenue retention. Combining this with the momentum we are seeing and the sales and marketing investments we've made, we believe we are set up to deliver strong, high-margin revenue growth for years to come.”
Financial Highlights for the Fourth Quarter of 2021
Total Revenues of $285.0 million represented a 29.0% increase compared to total revenues of $220.9 million in the same period last year. Recurring revenues of $280.0 million increased 29.2% from the comparable prior year period, and constituted 98.3% of total revenues.
GAAP Net Income was $48.7 million, or $0.84 per diluted share, compared to GAAP net income of $24.4 million, or $0.42 per diluted share, in the same period last year.
Non-GAAP Net Income1 was $64.4 million, or $1.11 per diluted share, compared to $49.1 million, or $0.84 per diluted share, in the same period last year.
Adjusted EBITDA1 was $109.6 million, compared to $84.2 million in the same period last year.
Cash and Cash Equivalents were $278.0 million as of December 31, 2021, compared to $151.7 million as of December 31, 2020.
Total Debt, Net was $29.2 million as of December 31, 2021, compared to $30.9 million as of December 31, 2020.
Financial Highlights for the Full Year 2021
Total Revenues of $1,055.5 million represented a 25.4% increase compared to total revenues of $841.4 million last year. Recurring revenues of $1,036.7 million increased 25.5% from last year, and constituted 98.2% of total revenues.
GAAP Net Income was $196.0 million, or $3.37 per diluted share, compared to GAAP net income of $143.5 million, or $2.46 per diluted share, last year.
Non-GAAP Net Income1 was $260.4 million, or $4.48 per diluted share, compared to $203.5 million, or $3.49 per diluted share, last year.
Adjusted EBITDA1 was $419.3 million, compared to $330.8 million last year.
1 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 and other non-GAAP financial measures.
Business Highlights
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Paycom increased its annual revenue retention rate to a record 94% in 2021, up from 93% in the prior year. |
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Beti was awarded a Top HR Product of the year honor. |
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Paycom earned its second Top 20 ranking in Top Workplaces USA and a top five ranking in Oklahoma, its ninth-consecutive year on the list. Paycom was also named a Best Company for Women. |
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Full year total client count expanded to 33,875 as of December 31, 2021, up 9% from the prior year-end. On a parent company grouping basis, client count as of December 31, 2021, expanded to 17,703, up 10% from the prior year-end. |
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Opened five new outside sales offices between September 2021 and January 2022, located in Manhattan, Jacksonville, Las Vegas, New England and South Jersey. |
Financial Outlook
Paycom provides the following expected financial guidance for the quarter ending March 31, 2022 and the year ending December 31, 2022:
Quarter Ending March 31, 2022:
Total Revenues in the range of $342 million to $344 million.
Adjusted EBITDA in the range of $161 million to $163 million.
Year Ending December 31, 2022:
Total Revenues in the range of $1.314 billion to $1.316 billion.
Adjusted EBITDA in the range of $524 million to $526 million.
We have not reconciled the forward-looking adjusted EBITDA ranges presented above and discussed on the teleconference call to net income, nor the forward-looking adjusted EBITDA margins and forward-looking non-GAAP effective income tax rate discussed on the teleconference call to comparable GAAP measures, because applicable information for future periods, on which these reconciliations would be based, are 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. Further, we have not reconciled the forward-looking adjusted gross margin range discussed on the teleconference call to GAAP gross margin 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, cost of revenues, including non-cash stock-based compensation expense. Accordingly, reconciliations of the forward-looking adjusted EBITDA ranges to net income, the forward-looking adjusted EBITDA margins to net income margin, the forward-looking adjusted gross margin range to gross margin and the forward-looking non-GAAP effective income tax rate to the GAAP effective income tax rate are not available at this time without unreasonable effort. During the teleconference call, we also refer to a forward-looking estimate of our implied revenue growth plus adjusted EBITDA margin, or the “Rule of 65.” Because we are unable to reconcile forward-looking adjusted EBITDA margin to net income margin without unreasonable effort, we are unable to reconcile the “Rule of 65” to a comparable GAAP measure without unreasonable effort.
Impact of the COVID-19 Pandemic
During the fourth quarter of 2021, the majority of our employees returned to our offices. We may take further actions that alter our business operations as may be required by federal, state or local authorities or that we determine are in the best interests of our employees and clients. Business continuity and safety has and will continue to guide our workplace arrangements. Although we currently have some insight with respect to the effects of the COVID-19 pandemic to date, it is not possible at this time to estimate the full impact that the pandemic could continue to have on our business and results of operations.
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The COVID-19 pandemic has resulted in, and may continue to result in, headcount fluctuations across our client base. Because we charge our clients on a per-employee basis for certain services we provide, headcount fluctuations at our clients impacts our recurring revenue. The negative effects on our client revenue of lower headcount resulting from the pandemic were more than offset by headcount additions from new clients added since the beginning of the pandemic and modestly improved headcount levels among our pre-pandemic client base beginning in the second quarter of 2021. We expect that our recurring revenue in future periods will continue to be impacted by such headcount fluctuations. |
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Despite growth in the number of clients in our base and growth in our average funds held for clients balance, significantly lower average interest rates during 2021 as compared to 2020 had a negative effect on interest earned on funds held for clients and, consequently, recurring revenue growth in the three and twelve months ended December 31, 2021. |
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Our solution allows clients to seamlessly manage and communicate with their remote workforces. In a work-from-home environment, our clients have recognized the benefits of our focus on employee usage, as well as the strengths and advantages of our single database solution. |
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While our sales force continues to conduct meetings with current and prospective clients virtually, as prospective clients begin to take meetings in-person, we expect our sales process to include a combination of virtual and in-person meetings. |
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 present certain non-GAAP financial measures in this press release and on the related teleconference call, including adjusted EBITDA, non-GAAP net income, adjusted gross profit, adjusted gross margin, adjusted sales and marketing expenses, adjusted total administrative expenses, adjusted research and development expenses, adjusted total research and development costs, adjusted EBITDA margin and “Rule of 65”. Management uses these non-GAAP financial measures 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, (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, (iii) adjusted gross profit as gross profit plus applicable non-cash stock-based compensation expense, (iv) adjusted gross margin as gross profit plus applicable non-cash stock-based compensation expense, divided by total revenues, (v) each adjusted expense item as the GAAP expense amount less applicable non-cash stock-based compensation expense, (vi) adjusted total research and development costs as total research and development costs (including the capitalized portion) less applicable non-cash stock-based compensation (including the capitalized portion), (vii) adjusted EBITDA margin as adjusted EBITDA (calculated as described in clause (i)) divided by total revenues, (viii) “Rule of 65” as revenue growth (expressed as a percentage) plus adjusted EBITDA margin (calculated as described in clause (vii)) and (ix) non-GAAP effective income tax rate as the provision for income taxes plus the income tax effect on non-GAAP adjustments divided by non-GAAP net income (calculated as described in clause (ii)) plus the provision for income taxes and the income tax effect on non-GAAP adjustments. The non-GAAP financial measures presented in this press release and discussed on the related teleconference call 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 and discussed on the related teleconference call, 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.
The non-GAAP financial measures presented in this press release and discussed on the related teleconference call are not measures of financial performance under GAAP and should not be considered a substitute for net income, gross profit, gross margin, research and development expenses, sales and marketing expenses, administrative expenses and total research and development costs. Non-GAAP financial measures have limitations as analytical tools, and when assessing our operating performance, you should not consider these non-GAAP financial measures in isolation, or as a substitute for the consolidated statements of income data prepared in accordance with GAAP. The non-GAAP financial measures that we present may not be comparable to similarly 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, February 8, 2022, at 5:00 p.m. Eastern time to discuss its financial results. To access this call, dial (844) 200-6205 (domestic) or (929) 526-1599 (international) and provide 302991 as the access code. 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 (866) 813-9403 (domestic) or +44 (204) 525-0658 (international) until February 15, 2022. The replay passcode is 172314.
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 Paycom’s 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 employees and key personnel; future regulatory, judicial and 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 plans regarding our capital expenditures and investment activity as our business grows, including with respect to research and development and the expansion of our corporate headquarters and other facilities; the expected impact on our consolidated financial statements of new accounting pronouncements; our plans to repurchase shares of our common stock through a stock repurchase plan; our expected income tax rate for future periods; and the impact of the novel coronavirus (COVID-19) pandemic on our business, results of operations, cash flows, financial condition and liquidity. In addition, forward-looking statements also consist of statements involving trend analyses and statements including such words as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “should,” “will,” “would,” 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 most recent Annual Report on Form 10-K. 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. |
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Consolidated Balance Sheets |
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(in thousands, except per share amounts) |
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(unaudited) |
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December 31, |
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2021 |
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2020 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
277,978 |
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$ |
151,710 |
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Accounts receivable |
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|
9,490 |
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|
9,130 |
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|
Prepaid expenses |
|
|
23,729 |
|
|
|
17,854 |
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|
Inventory |
|
|
1,131 |
|
|
|
1,151 |
|
|
Income tax receivable |
|
|
16,413 |
|
|
|
10,447 |
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|
Deferred contract costs |
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|
76,724 |
|
|
|
60,819 |
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|
Current assets before funds held for clients |
|
|
405,465 |
|
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|
251,111 |
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Funds held for clients |
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1,846,573 |
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1,613,494 |
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Total current assets |
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2,252,038 |
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1,864,605 |
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Property and equipment, net |
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348,953 |
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285,218 |
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Intangible assets, net |
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58,028 |
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|
319 |
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Goodwill |
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51,889 |
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51,889 |
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Long-term deferred contract costs |
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461,852 |
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371,357 |
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Other assets |
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42,385 |
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|
34,524 |
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Total assets |
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$ |
3,215,145 |
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$ |
2,607,912 |
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Liabilities and Stockholders' Equity |
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Current liabilities: |
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Accounts payable |
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$ |
5,772 |
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$ |
6,787 |
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Accrued commissions and bonuses |
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|
22,357 |
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|
13,703 |
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Accrued payroll and vacation |
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|
34,259 |
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|
24,529 |
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Deferred revenue |
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|
16,277 |
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|
13,567 |
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Current portion of long-term debt |
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|
1,775 |
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|
1,775 |
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Accrued expenses and other current liabilities |
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|
63,397 |
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|
44,175 |
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Current liabilities before client funds obligation |
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143,837 |
|
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|
104,536 |
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Client funds obligation |
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1,846,573 |
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1,613,494 |
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Total current liabilities |
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1,990,410 |
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1,718,030 |
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Deferred income tax liabilities, net |
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145,504 |
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|
112,598 |
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Long-term deferred revenue |
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85,149 |
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|
73,259 |
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Net long-term debt, less current portion |
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27,380 |
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29,119 |
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Other long-term liabilities |
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72,988 |
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19,263 |
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Total long-term liabilities |
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331,021 |
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|
234,239 |
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Total liabilities |
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2,321,431 |
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1,952,269 |
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Commitments and contingencies |
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Stockholders' equity: |
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Common stock, $0.01 par value (100,000 shares authorized, 62,298 and 61,861 shares issued at December 31, 2021 and December 31, 2020, respectively; 58,012 and 57,739 shares outstanding at December 31, 2021 and December 31, 2020, respectively) |
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623 |
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618 |
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Additional paid-in capital |
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465,594 |
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|
357,908 |
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Retained earnings |
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|
915,579 |
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719,619 |
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Treasury stock, at cost (4,286 and 4,122 shares at December 31, 2021 and December 31, 2020, respectively) |
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(488,082 |
) |
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(422,502 |
) |
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Total stockholders' equity |
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893,714 |
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|
655,643 |
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Total liabilities and stockholders' equity |
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$ |
3,215,145 |
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$ |
2,607,912 |
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Paycom Software, Inc. |
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Consolidated Statements of Income |
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(in thousands, except per share amounts) |
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(unaudited) |
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Three Months Ended December 31, |
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Year Ended December 31, |
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2021 |
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2020 |
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2021 |
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2020 |
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Revenues |
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Recurring |
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$ |
280,026 |
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$ |
216,747 |
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$ |
1,036,691 |
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$ |
825,856 |
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Implementation and other |
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4,960 |
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|
|
4,200 |
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|
18,833 |
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15,578 |
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Total revenues |
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|
284,986 |
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|
220,947 |
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|
1,055,524 |
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|
841,434 |
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Cost of revenues |
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Operating expenses |
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37,863 |
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|
26,127 |
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|
130,475 |
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|
97,778 |
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Depreciation and amortization |
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|
8,660 |
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|
6,903 |
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31,411 |
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|
25,768 |
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Total cost of revenues |
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|
46,523 |
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|
33,030 |
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|
161,886 |
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123,546 |
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Administrative expenses |
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Sales and marketing |
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75,509 |
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|
62,488 |
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|
275,994 |
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|
235,716 |
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Research and development |
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|
34,414 |
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|
25,073 |
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|
118,426 |
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|
90,244 |
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General and administrative |
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|
49,606 |
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|
56,713 |
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|
209,840 |
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|
178,200 |
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Depreciation and amortization |
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10,308 |
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|
7,396 |
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|
35,811 |
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|
27,605 |
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Total administrative expenses |
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169,837 |
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|
151,670 |
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|
640,071 |
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|
531,765 |
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Total operating expenses |
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|
216,360 |
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|
184,700 |
|
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|
801,957 |
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|
655,311 |
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Operating income |
|
|
68,626 |
|
|
|
36,247 |
|
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|
253,567 |
|
|
|
186,123 |
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Interest expense |
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|
— |
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|
|
— |
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|
— |
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|
(19 |
) |
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Other income (expense), net |
|
|
1,376 |
|
|
|
354 |
|
|
|
2,395 |
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|
(168 |
) |
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Income before income taxes |
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|
70,002 |
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|
|
36,601 |
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|
|
255,962 |
|
|
|
185,936 |
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Provision for income taxes |
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|
21,315 |
|
|
|
12,234 |
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|
60,002 |
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|
42,483 |
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Net income |
|
$ |
48,687 |
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$ |
24,367 |
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$ |
195,960 |
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$ |
143,453 |
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Earnings per share, basic |
|
$ |
0.84 |
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$ |
0.42 |
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$ |
3.39 |
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$ |
2.49 |
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Earnings per share, diluted |
|
$ |
0.84 |
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|
$ |
0.42 |
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$ |
3.37 |
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$ |
2.46 |
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Weighted average shares outstanding: |
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Basic |
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|
58,007 |
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|
57,653 |
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|
57,885 |
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|
|
57,620 |
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Diluted |
|
|
58,238 |
|
|
|
58,214 |
|
|
|
58,191 |
|
|
|
58,285 |
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|
Paycom Software, Inc. |
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Consolidated Statements of Cash Flows |
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(in thousands) |
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(unaudited) |
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Year Ended December 31, |
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2021 |
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2020 |
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Cash flows from operating activities |
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Net income |
|
$ |
195,960 |
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|
$ |
143,453 |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
|
|
67,222 |
|
|
|
53,373 |
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Accretion of discount on available-for-sale securities |
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|
(452 |
) |
|
|
(1,563 |
) |
|
Non-cash marketing expense |
|
|
1,051 |
|
|
|
— |
|
|
Loss on disposition of property and equipment |
|
|
146 |
|
|
|
— |
|
|
Amortization of debt issuance costs |
|
|
36 |
|
|
|
36 |
|
|
Stock-based compensation expense |
|
|
97,506 |
|
|
|
90,108 |
|
|
Cash paid for derivative settlement |
|
|
(741 |
) |
|
|
(613 |
) |
|
(Gain)/loss on derivative |
|
|
(662 |
) |
|
|
1,993 |
|
|
Deferred income taxes, net |
|
|
32,906 |
|
|
|
21,381 |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(360 |
) |
|
|
168 |
|
|
Prepaid expenses |
|
|
(5,875 |
) |
|
|
(4,293 |
) |
|
Inventory |
|
|
481 |
|
|
|
(41 |
) |
|
Other assets |
|
|
(7,862 |
) |
|
|
(1,720 |
) |
|
Deferred contract costs |
|
|
(103,356 |
) |
|
|
(89,776 |
) |
|
Accounts payable |
|
|
(660 |
) |
|
|
1,529 |
|
|
Income taxes, net |
|
|
(5,966 |
) |
|
|
(6,427 |
) |
|
Accrued commissions and bonuses |
|
|
8,654 |
|
|
|
1,360 |
|
|
Accrued payroll and vacation |
|
|
9,730 |
|
|
|
9,659 |
|
|
Deferred revenue |
|
|
14,600 |
|
|
|
10,582 |
|
|
Accrued expenses and other current liabilities |
|
|
17,004 |
|
|
|
(2,002 |
) |
|
Net cash provided by operating activities |
|
|
319,362 |
|
|
|
227,207 |
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
Purchases of short-term investments from funds held for clients |
|
|
(398,819 |
) |
|
|
(332,756 |
) |
|
Proceeds from maturities of short-term investments from funds held for clients |
|
|
267,341 |
|
|
|
308,981 |
|
|
Purchases of intangible assets |
|
|
(5,500 |
) |
|
|
— |
|
|
Purchases of property and equipment |
|
|
(120,692 |
) |
|
|
(94,102 |
) |
|
Net cash used in investing activities |
|
|
(257,670 |
) |
|
|
(117,877 |
) |
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
Repurchases of common stock |
|
|
— |
|
|
|
(52,040 |
) |
|
Withholding taxes paid related to net share settlements |
|
|
(65,580 |
) |
|
|
(62,811 |
) |
|
Payments on long-term debt |
|
|
(1,775 |
) |
|
|
(1,775 |
) |
|
Net change in client funds obligation |
|
|
233,079 |
|
|
|
(49,283 |
) |
|
Net cash provided by (used in) financing activities |
|
|
165,724 |
|
|
|
(165,909 |
) |
|
Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents |
|
|
227,416 |
|
|
|
(56,579 |
) |
|
Cash, cash equivalents, restricted cash and restricted cash equivalents |
|
|
|
|
|
|
|
|
|
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period |
|
|
1,585,275 |
|
|
|
1,641,854 |
|
|
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period |
|
$ |
1,812,691 |
|
|
$ |
1,585,275 |
|
|
Paycom Software, Inc. |
|
|||||||
|
Consolidated Statements of Cash Flows |
|
|||||||
|
(in thousands) |
|
|||||||
|
(unaudited) |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|||||
|
|
|
2021 |
|
|
2020 |
|
||
|
Reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
277,978 |
|
|
$ |
151,710 |
|
|
Restricted cash included in funds held for clients |
|
|
1,534,713 |
|
|
|
1,433,565 |
|
|
Total cash, cash equivalents, restricted cash and restricted cash equivalents, end of period |
|
$ |
1,812,691 |
|
|
$ |
1,585,275 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
|
|
|
Cash paid for interest, net of amounts capitalized |
|
$ |
2 |
|
|
$ |
— |
|
|
Cash paid for income taxes |
|
$ |
33,068 |
|
|
$ |
27,530 |
|
|
Non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
|
Purchases of property and equipment, accrued but not paid |
|
$ |
7,581 |
|
|
$ |
837 |
|
|
Stock-based compensation for capitalized software |
|
$ |
7,141 |
|
|
$ |
6,655 |
|
|
Right of use assets obtained in exchange for operating lease liabilities |
|
$ |
14,141 |
|
|
$ |
9,693 |
|
Paycom Software, Inc.
Unaudited Reconciliations of GAAP to Non-GAAP Financial Measures
(in thousands, except per share amounts)
|
|
|
Three Months Ended December 31, |
|
|
Year Ended December 31, |
|
||||||||||
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
|
Net income to adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
48,687 |
|
|
$ |
24,367 |
|
|
$ |
195,960 |
|
|
$ |
143,453 |
|
|
Interest expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
19 |
|
|
Provision for income taxes |
|
|
21,315 |
|
|
|
12,234 |
|
|
|
60,002 |
|
|
|
42,483 |
|
|
Depreciation and amortization |
|
|
18,968 |
|
|
|
14,299 |
|
|
|
67,222 |
|
|
|
53,373 |
|
|
EBITDA |
|
|
88,970 |
|
|
|
50,900 |
|
|
|
323,184 |
|
|
|
239,328 |
|
|
Non-cash stock-based compensation expense |
|
|
21,142 |
|
|
|
33,577 |
|
|
|
97,506 |
|
|
|
90,108 |
|
|
Change in fair value of interest rate swap |
|
|
(540 |
) |
|
|
(238 |
) |
|
|
(1,403 |
) |
|
|
1,380 |
|
|
Adjusted EBITDA |
|
$ |
109,572 |
|
|
$ |
84,239 |
|
|
$ |
419,287 |
|
|
$ |
330,816 |
|
|
Net income margin |
|
|
17.1 |
% |
|
|
11.0 |
% |
|
|
18.6 |
% |
|
|
17.0 |
% |
|
Adjusted EBITDA margin |
|
|
38.4 |
% |
|
|
38.1 |
% |
|
|
39.7 |
% |
|
|
39.3 |
% |
|
|
|
Three Months Ended December 31, |
|
|
Year Ended December 31, |
|
||||||||||
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
|
Net income to non-GAAP net income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
48,687 |
|
|
$ |
24,367 |
|
|
$ |
195,960 |
|
|
$ |
143,453 |
|
|
Non-cash stock-based compensation expense |
|
|
21,142 |
|
|
|
33,577 |
|
|
|
97,506 |
|
|
|
90,108 |
|
|
Change in fair value of interest rate swap |
|
|
(540 |
) |
|
|
(238 |
) |
|
|
(1,403 |
) |
|
|
1,380 |
|
|
Income tax effect on non-GAAP adjustments |
|
|
(4,854 |
) |
|
|
(8,613 |
) |
|
|
(31,652 |
) |
|
|
(31,415 |
) |
|
Non-GAAP net income |
|
$ |
64,435 |
|
|
$ |
49,093 |
|
|
$ |
260,411 |
|
|
$ |
203,526 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
58,007 |
|
|
|
57,653 |
|
|
|
57,885 |
|
|
|
57,620 |
|
|
Diluted |
|
|
58,238 |
|
|
|
58,214 |
|
|
|
58,191 |
|
|
|
58,285 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share, basic |
|
$ |
0.84 |
|
|
$ |
0.42 |
|
|
$ |
3.39 |
|
|
$ |
2.49 |
|
|
Earnings per share, diluted |
|
$ |
0.84 |
|
|
$ |
0.42 |
|
|
$ |
3.37 |
|
|
$ |
2.46 |
|
|
Non-GAAP net income per share, basic |
|
$ |
1.11 |
|
|
$ |
0.85 |
|
|
$ |
4.50 |
|
|
$ |
3.53 |
|
|
Non-GAAP net income per share, diluted |
|
$ |
1.11 |
|
|
$ |
0.84 |
|
|
$ |
4.48 |
|
|
$ |
3.49 |
|
|
|
|
Three Months Ended December 31, |
|
|
Year Ended December 31, |
|
||||||||||
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
|
Earnings per share to non-GAAP net income per share, basic: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share, basic |
|
$ |
0.84 |
|
|
$ |
0.42 |
|
|
$ |
3.39 |
|
|
$ |
2.49 |
|
|
Non-cash stock-based compensation expense |
|
|
0.36 |
|
|
|
0.58 |
|
|
|
1.68 |
|
|
|
1.56 |
|
|
Change in fair value of interest rate swap |
|
|
(0.01 |
) |
|
|
— |
|
|
|
(0.02 |
) |
|
|
0.02 |
|
|
Income tax effect on non-GAAP adjustments |
|
|
(0.08 |
) |
|
|
(0.15 |
) |
|
|
(0.55 |
) |
|
|
(0.54 |
) |
|
Non-GAAP net income per share, basic |
|
$ |
1.11 |
|
|
$ |
0.85 |
|
|
$ |
4.50 |
|
|
$ |
3.53 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
|
Year Ended December 31, |
|
||||||||||
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
|
Earnings per share to non-GAAP net income per share, diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share, diluted |
|
$ |
0.84 |
|
|
$ |
0.42 |
|
|
$ |
3.37 |
|
|
$ |
2.46 |
|
|
Non-cash stock-based compensation expense |
|
|
0.36 |
|
|
|
0.58 |
|
|
|
1.68 |
|
|
|
1.55 |
|
|
Change in fair value of interest rate swap |
|
|
(0.01 |
) |
|
|
— |
|
|
|
(0.02 |
) |
|
|
0.02 |
|
|
Income tax effect on non-GAAP adjustments |
|
|
(0.08 |
) |
|
|
(0.16 |
) |
|
|
(0.55 |
) |
|
|
(0.54 |
) |
|
Non-GAAP net income per share, diluted |
|
$ |
1.11 |
|
|
$ |
0.84 |
|
|
$ |
4.48 |
|
|
$ |
3.49 |
|
|
|
|
Three Months Ended December 31, |
|
|
Year Ended December 31, |
|
||||||||||
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
|
Adjusted gross profit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
$ |
284,986 |
|
|
$ |
220,947 |
|
|
$ |
1,055,524 |
|
|
$ |
841,434 |
|
|
Less: Total cost of revenues |
|
|
(46,523 |
) |
|
|
(33,030 |
) |
|
|
(161,886 |
) |
|
|
(123,546 |
) |
|
Total gross profit |
|
|
238,463 |
|
|
|
187,917 |
|
|
|
893,638 |
|
|
|
717,888 |
|
|
Plus: Non-cash stock-based compensation expense |
|
|
1,189 |
|
|
|
1,027 |
|
|
|
4,570 |
|
|
|
5,185 |
|
|
Total adjusted gross profit |
|
$ |
239,652 |
|
|
$ |
188,944 |
|
|
$ |
898,208 |
|
|
$ |
723,073 |
|
|
Gross margin |
|
|
83.7 |
% |
|
|
85.1 |
% |
|
|
84.7 |
% |
|
|
85.3 |
% |
|
Adjusted gross margin |
|
|
84.1 |
% |
|
|
85.5 |
% |
|
|
85.1 |
% |
|
|
85.9 |
% |
|
|
|
Three Months Ended December 31, |
|
|
Year Ended December 31, |
|
||||||||||
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
|
Adjusted sales and marketing expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing expenses |
|
$ |
75,509 |
|
|
$ |
62,488 |
|
|
$ |
275,994 |
|
|
$ |
235,716 |
|
|
Less: Non-cash stock-based compensation expense |
|
|
(3,234 |
) |
|
|
(3,581 |
) |
|
|
(13,801 |
) |
|
|
(14,376 |
) |
|
Adjusted sales and marketing expenses |
|
$ |
72,275 |
|
|
$ |
58,907 |
|
|
$ |
262,193 |
|
|
$ |
221,340 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
$ |
284,986 |
|
|
$ |
220,947 |
|
|
$ |
1,055,524 |
|
|
$ |
841,434 |
|
|
Sales and marketing expenses as a % of revenues |
|
|
26.5 |
% |
|
|
28.3 |
% |
|
|
26.1 |
% |
|
|
28.0 |
% |
|
Adjusted sales and marketing expenses as a % of revenues |
|
|
25.4 |
% |
|
|
26.7 |
% |
|
|
24.8 |
% |
|
|
26.3 |
% |
|
|
|
Three Months Ended December 31, |
|
|
Year Ended December 31, |
|
||||||||||
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
|
Adjusted total administrative expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total administrative expenses |
|
$ |
169,837 |
|
|
$ |
151,670 |
|
|
$ |
640,071 |
|
|
$ |
531,765 |
|
|
Less: Non-cash stock-based compensation expense |
|
|
(19,953 |
) |
|
|
(32,550 |
) |
|
|
(92,936 |
) |
|
|
(84,923 |
) |
|
Adjusted total administrative expenses |
|
$ |
149,884 |
|
|
$ |
119,120 |
|
|
$ |
547,135 |
|
|
$ |
446,842 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
$ |
284,986 |
|
|
$ |
220,947 |
|
|
$ |
1,055,524 |
|
|
$ |
841,434 |
|
|
Total administrative expenses as a % of revenues |
|
|
59.6 |
% |
|
|
68.6 |
% |
|
|
60.6 |
% |
|
|
63.2 |
% |
|
Adjusted total administrative expenses as a % of revenues |
|
|
52.6 |
% |
|
|
53.9 |
% |
|
|
51.8 |
% |
|
|
53.1 |
% |
|
|
|
Three Months Ended December 31, |
|
|
Year Ended December 31, |
|
||||||||||
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
|
Adjusted research and development expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expenses |
|
$ |
34,414 |
|
|
$ |
25,073 |
|
|
$ |
118,426 |
|
|
$ |
90,244 |
|
|
Less: Non-cash stock-based compensation expense |
|
|
(2,133 |
) |
|
|
(1,837 |
) |
|
|
(7,527 |
) |
|
|
(9,107 |
) |
|
Adjusted research and development expenses |
|
$ |
32,281 |
|
|
$ |
23,236 |
|
|
$ |
110,899 |
|
|
$ |
81,137 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
$ |
284,986 |
|
|
$ |
220,947 |
|
|
$ |
1,055,524 |
|
|
$ |
841,434 |
|
|
Research and development expenses as a % of revenues |
|
|
12.1 |
% |
|
|
11.3 |
% |
|
|
11.2 |
% |
|
|
10.7 |
% |
|
Adjusted research and development expenses as a % of revenues |
|
|
11.3 |
% |
|
|
10.5 |
% |
|
|
10.5 |
% |
|
|
9.6 |
% |
|
|
|
Three Months Ended December 31, |
|
|
Year Ended December 31, |
|
||||||||||
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
|
Total research and development costs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalized research and development costs |
|
$ |
13,716 |
|
|
$ |
11,341 |
|
|
$ |
52,876 |
|
|
$ |
43,789 |
|
|
Research and development expenses |
|
|
34,414 |
|
|
|
25,073 |
|
|
|
118,426 |
|
|
|
90,244 |
|
|
Total research and development costs |
|
$ |
48,130 |
|
|
$ |
36,414 |
|
|
$ |
171,302 |
|
|
$ |
134,033 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
$ |
284,986 |
|
|
$ |
220,947 |
|
|
$ |
1,055,524 |
|
|
$ |
841,434 |
|
|
Total research and development costs as a % of revenues |
|
|
16.9 |
% |
|
|
16.5 |
% |
|
|
16.2 |
% |
|
|
15.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted total research and development costs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total research and development costs |
|
$ |
48,130 |
|
|
$ |
36,414 |
|
|
$ |
171,302 |
|
|
$ |
134,033 |
|
|
Less: Capitalized non-cash stock-based compensation |
|
|
(2,033 |
) |
|
|
(1,371 |
) |
|
|
(7,141 |
) |
|
|
(6,655 |
) |
|
Less: Non-cash stock-based compensation expense |
|
|
(2,133 |
) |
|
|
(1,837 |
) |
|
|
(7,527 |
) |
|
|
(9,107 |
) |
|
Adjusted total research and development costs |
|
$ |
43,964 |
|
|
$ |
33,206 |
|
|
$ |
156,634 |
|
|
$ |
118,271 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
$ |
284,986 |
|
|
$ |
220,947 |
|
|
$ |
1,055,524 |
|
|
$ |
841,434 |
|
|
Adjusted total research and development costs as a % of revenues |
|
|
15.4 |
% |
|
|
15.0 |
% |
|
|
14.8 |
% |
|
|
14.1 |
% |
Paycom Software, Inc.
Unaudited Components of Non-Cash Stock-Based Compensation Expense
(in thousands)
|
|
|
Three Months Ended December 31, |
|
|
Year Ended December 31, |
|
||||||||||
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
|
Non-cash stock-based compensation expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
$ |
1,189 |
|
|
$ |
1,027 |
|
|
$ |
4,570 |
|
|
$ |
5,185 |
|
|
Sales and marketing |
|
|
3,234 |
|
|
|
3,581 |
|
|
|
13,801 |
|
|
|
14,376 |
|
|
Research and development |
|
|
2,133 |
|
|
|
1,837 |
|
|
|
7,527 |
|
|
|
9,107 |
|
|
General and administrative |
|
|
14,586 |
|
|
|
27,132 |
|
|
|
71,608 |
|
|
|
61,440 |
|
|
Total non-cash stock-based compensation expense |
|
$ |
21,142 |
|
|
$ |
33,577 |
|
|
$ |
97,506 |
|
|
$ |
90,108 |
|
Contact
Paycom Software, Inc.
Investor Relations Contact:
James Samford, 800-580-4505 investors@paycom.com
Source: Paycom Software, Inc.