Paycom shares fall 9.9% after hours despite Q3 profit beat

Paycom Software (PAYC) said on Nov. 4 that third-quarter adjusted earnings were $3.37 per diluted share, topping the $2.86 consensus estimate, and it raised its full-year outlook.

Shares fell 9.9% in after-hours trading as of 5:35 p.m. ET, from a regular-session close of $268.07.

Paycom is a cloud-based human capital management software provider serving organizations of all sizes across the U.S. and internationally.

Revenue of $543.8 million was in line with the $545.99 million consensus estimate. It rose 10.2% from $493.3 million a year earlier.

Here's how the company did:

• Adjusted EPS: $3.37 vs. $2.86 expected
• GAAP EPS: $2.99 per diluted share vs. $1.96 a year earlier
• Revenue: $543.8 million vs. $493.3 million a year earlier, in line with $545.99 million expected
• Adjusted EBITDA: $268.1 million vs. $194.3 million a year earlier

GAAP net income was $133.2 million, up from $110.7 million a year earlier.

Non-GAAP net income was $150.0 million, against $109.6 million a year earlier.

Recurring and other revenue rose 11.3% to $519.3 million, or 95.5% of total revenues.

Interest on funds held for clients was $24.5 million, down from $26.8 million.

Full-year outlook

Paycom expects 2026 total revenue of $2.21 billion to $2.22 billion, growth of approximately 8%.

The company also expects recurring and other revenue growth of approximately 9% and interest on funds held for clients of approximately $107.0 million.

Adjusted EBITDA is expected to be between $1.07 billion and $1.08 billion, with a margin of 48.5% at the midpoint.

“Our strong third-quarter results reflect the tremendous ROI clients are realizing from the automated decisioning logic built into our platform,” said Paycom founder and CEO Chad Richison. “Thanks to our strong performance, we are once again raising our full-year outlook.”

Costs, cash and debt

Sales and marketing expenses were $108.0 million, down from $125.7 million a year earlier.

Research and development expenses were $38.5 million, down from $74.1 million.

Cash and cash equivalents were $193.9 million at Sept. 30, compared with $370.0 million at Dec. 31, 2025.

Long-term debt was $750.0 million at the end of the quarter.

Paycom paid $16.7 million in cash dividends during the quarter.

Free cash flow was $536.5 million, up from $285.4 million a year earlier.

Adjusted EBITDA margin was 49.3%, up from 39.4%.