Paycom Software, Inc. (PAYC)

Price$231.67Cached quoteAs of 2026-09-05 01:31 UTC

AI: Fair-priced

Price checkThe valuation looks reasonable only if strong cash margins and steady growth continue.

Paycom's equity value is roughly $10.5 billion against about $575 million of trailing free cash flow, meaning cash left after operating and capital spending. That is about 18 times free cash flow, or a 5.5% cash yield. Management now expects 2026 revenue growth of 7% to 8% and an adjusted operating cash-profit margin near 46%. Those figures support a quality premium, but leave limited bargain protection. The current valuation therefore looks fair rather than clearly cheap or expensive.

Big pictureGrowth has slowed, but recurring revenue and cash generation remain unusually steady.

Revenue rose from $841 million in 2020 to $2.05 billion in 2025, although annual growth has slowed sharply from above 20% to high single digits. Second-quarter 2026 revenue still increased 9.8%, with recurring and other revenue representing 95.1% of sales. First-half free cash flow reached $372.7 million versus $205.6 million a year earlier. Some cyclicality remains: payroll activity is seasonally stronger in certain quarters, while roughly $105 million of expected client-fund interest revenue can move with interest rates.

Business strengthHigh margins, strong retention, and aggressive buybacks are boosting value per remaining share.

Paycom reported 91% annual revenue retention for 2025 and has converted a growing portion of sales into cash. Capital allocation has also materially reduced dilution: shares outstanding fell from about 54.8 million at year-end 2025 to 44.3 million by June. During the first half, Paycom repurchased about 10.95 million shares at an average cost near $128 while stock compensation totaled only $31.6 million. The trade-off is leverage: debt rose from zero to $900 million, leaving approximately $702 million of net debt.

What could change the storyFaster client growth would create upside, while debt-funded buybacks or margin slippage would hurt.

The strongest bull case is sustained automation-led growth: second-quarter recurring revenue rose 11%, and management increased 2026 adjusted cash-profit guidance from $950-$970 million after the first quarter to $1.007-$1.022 billion. Sustained recurring growth above roughly 10% with free cash flow margins above 30% would make today's valuation more attractive. The bear case is slower growth combined with leverage. Revenue below the 7% guidance range, weaker cash conversion, or substantial additional borrowing for repurchases would reduce the valuation cushion.

AI: News

Second-quarter beat and raiseStronger second-quarter results and higher full-year guidance sharply improved investor expectations.

On August 5, Paycom reported second-quarter revenue of $531.2 million, up 9.8%, while adjusted cash profit reached $235 million. Management raised full-year revenue guidance to $2.197-$2.212 billion and adjusted cash-profit guidance to $1.007-$1.022 billion. The shares rose about 23.6% in the following trading session. That reaction is consistent with investors rewarding both the earnings beat and the unexpectedly large margin outlook increase, although price movement cannot be attributed to one factor with certainty.

First-quarter earnings surpriseFirst-quarter profits beat expectations and showed that cost efficiency was improving faster than sales.

On May 6, Paycom reported first-quarter revenue of $571.9 million, up 7.8%, and adjusted cash profit of $275 million, equal to about 48% of revenue. Adjusted earnings also exceeded market expectations. The shares gained about 9.6% in the next session, making the report a plausible driver of the move. More importantly for valuation, the quarter established that Paycom could expand profitability substantially even while revenue growth remained below its historical double-digit pace.

Large buyback authorizationPaycom expanded its buyback capacity, increasing per-share upside while adding meaningful balance-sheet risk.

On May 4, the board approved a new share-repurchase authorization of up to $2.0 billion with no expiration date. Subsequent filings showed the company acted aggressively: about 10.95 million shares were repurchased during the first half, while $900 million was borrowed under its revolving credit facility to help fund purchases. The immediate May 4 stock reaction was small, so market-price causation is unclear. The lasting effect is larger: fewer shares boost per-share results, but debt now absorbs part of future cash generation.

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Financial statements

	2025	2024	2023	2022	2021	2020	2019	2018	2017	2016	2015	2014	2013	2012
Revenue	$2.05B	$1.88B	$1.69B	$1.38B	$1.06B	$841.4M	$737.7M	$566.3M	$433.0M	$329.1M	$224.7M	$150.9M	$107.6M	$76.8M
Gross profit	$1.71B	$1.55B	$1.42B	$1.16B	$893.6M	$717.9M	$627.9M	$475.6M	$361.0M	$275.1M	$189.2M	$123.6M	$86.7M	$60.5M
Gross margin	83.17%	82.23%	83.69%	84.53%	84.66%	85.32%	85.12%	83.97%	83.37%	83.57%	84.21%	81.90%	80.58%	78.74%
Research & development	$283.4M	$242.6M	$199.0M	$148.3M	$118.4M	$90.2M	$73.1M	$46.2M	$30.4M	$21.0M	$8.6M	$4.3M	$2.1M	$1.6M
Operating expenses	$1.48B	$1.25B	$1.24B	$996.5M	$802.0M	$655.3M	$511.4M	$392.6M	$303.3M	$227.4M	$190.2M	$135.2M	$98.1M	$70.7M
Operating income	$567.2M	$634.3M	$451.3M	$378.7M	$253.6M	$186.1M	$226.2M	$173.7M	$129.7M	$101.7M	$34.4M	$15.7M	$9.5M	—
Operating margin	27.65%	33.68%	26.65%	27.54%	24.02%	22.12%	30.67%	30.67%	29.95%	30.91%	15.33%	10.40%	8.80%	—
EBITDA	$743.5M	$780.2M	$565.2M	$471.4M	$320.8M	$239.5M	$268.4M	$203.4M	$149.1M	$115.4M	$43.9M	$22.9M	$15.0M	—
EBITDA margin	36.24%	41.43%	33.37%	34.28%	30.39%	28.46%	36.39%	35.91%	34.43%	35.05%	19.52%	15.15%	13.90%	—
Net income	$453.4M	$502.0M	$340.8M	$281.4M	$196.0M	$143.5M	$180.6M	$137.1M	$123.5M	$70.4M	$20.9M	$5.7M	$601,000	−$403,000
Net profit margin	22.10%	26.66%	20.12%	20.46%	18.57%	17.05%	24.48%	24.20%	28.52%	21.40%	9.32%	3.75%	0.56%	−0.52%
Basic EPSper basic share	$8.13	$8.93	$5.91	$4.86	$3.39	$2.49	$3.14	$2.37	$2.13	$1.21	$0.37	$0.11	$0.01	-$0.01
Diluted EPSper diluted share	$8.08	$8.92	$5.88	$4.84	$3.37	$2.46	$3.09	$2.34	$2.10	$1.19	$0.36	$0.11	$0.01	-$0.01

Review official source filings ↗

Owners

Reported shareholders

Reference date Jun 30, 2026

≈13.54%of listed shares

Richison Chad R.6M shares · Jun 15, 2026

View holders

Top 20 reported holders of PAYC
Holder	% owned
Richison Chad R.	≈13.54%6M shares
BlackRock, Inc.	11.36%5.03M shares
HARRIS ASSOCIATES L P	7.67%3.4M shares
VANGUARD PORTFOLIO MANAGEMENT LLC	4.67%2.07M shares
VANGUARD CAPITAL MANAGEMENT LLC	4.16%1.84M shares
TWO SIGMA INVESTMENTS, LP	3.16%1.4M shares
STATE STREET CORP	3.12%1.38M shares
REINHART PARTNERS, LLC.	2.75%1.22M shares
GEODE CAPITAL MANAGEMENT, LLC	2.74%1.21M shares
BAILLIE GIFFORD & CO	2.20%975.4K shares
FIRST TRUST ADVISORS LP	2.20%974.16K shares
BNP PARIBAS ASSET MANAGEMENT Holding S.A.	1.99%879.46K shares
LORING WOLCOTT & COOLIDGE FIDUCIARY ADVISORS LLP/MA	1.64%726.25K shares
FMR LLC	1.57%695.91K shares
Universal- Beteiligungs- und Servicegesellschaft mbH	1.52%675.25K shares
GOLDMAN SACHS GROUP INC	1.48%654.87K shares
FEDERATED HERMES, INC.	1.42%628.56K shares
MORGAN STANLEY	1.39%616.92K shares
Quantinno Capital Management LP	1.31%581.55K shares
River Road Asset Management, LLC	1.18%522.12K shares

Percentages use 44.3M shares of this listed class outstanding on Jun 30, 2026. ≈ compares the latest reported holding with a share total from a different date; it is not a confirmed current stake.

Gray completes the 100% scale. Reported positions may overlap; holders have different reporting dates.

Source: SEC Form 4 ↗Updated Sep 29, 2026 · Quarterly data

Insider buys & sells

Jul 1, 2024–Jun 30, 2026

Buys0$0.00 disclosed value

Sells (SEC code S)910$121.78M disclosed value

Transaction	Insider	Type	Shares	Price	Value	Owned after
May 18, 2026Form 4	Peck RandallChief Operating Officer	SellCommon Stock	2.5K	$140.50	$351.3K	55.4K
Dec 10, 2025Form 4	Foster Robert D.Chief Financial Officer	SellCommon Stock	1.3K	$162.66	$211.5K	14.7K
Dec 5, 2025Form 4	Peck RandallChief Operating Officer	SellCommon Stock	744	$166.52	$123.9K	47.2K
Dec 5, 2025Form 4	Peck RandallChief Operating Officer	SellCommon Stock	6	$166.50	$999.00	47.9K
Dec 5, 2025Form 4	Peck RandallChief Operating Officer	SellCommon Stock	1.4K	$165.50	$238.7K	48.0K

Review ownership filings at SEC.gov ↗

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Paycom Software, Inc. (PAYC)

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