Paycom’s Mobile Initiatives Drive Growth

According to a BlueWeaveConsulting report, the global payroll and HR solutions and services market is expected to grow at 9.5% CAGR to $43 billion by 2026 driven by the continued adoption of cloud-based technologies in enterprises. Paycom (NYSE:PAYC) recently announced its fourth quarter results that surpassed market expectations.

Paycom’s Financials
For the fourth quarter, Paycom’s revenues grew 29% over the year to $193 million, ahead of the Street’s forecast of $191 million. Net Income was $45.4 million, up from $31.4 million a year ago. Adjusted EPS of $0.86 was also significantly ahead of the market’s forecast of $0.77.

Recurring revenues grew 29% to $190.2 million and accounted for 98% of total revenues. Its annual revenue retention rate improved to 93% from 92% a year ago.

Paycom ended the year with revenues growing 30% to $737.7 million with net income growing to $180.6 million from $137.1 million a year ago. Adjusted EPS was $3.50 compared with $2.67 in 2018.

Paycom expects to end the first quarter with revenues of $240-$242 million. The forecast was lower than analyst estimates of $247.4 million. It expects to end 2020 with revenues of $911-$913 million, compared with the Street’s estimate of $905.4 million.

Paycom’s Product Innovation

Paycom continues to improve its product portfolio to drive market expansion. Earlier this week, it announced the official launch of Manager on-the-Go, an enhancement that has been built into its mobile app to empower leaders with 24/7 accessibility to essential manager side functionality of its solution. The functionality distributes the approval responsibilities more broadly and helps accelerate data flow. Similar to its employee self-service feature, the Manager-on-the-Go functionality will change the way decision makers interact with its solutions. They will be able to perform tasks such as approving time-off requests and expense reimbursements – anytime, anywhere.

According to an Ernst & Young HR study, a single HR task or data entry point without self-service costs an organization an average of $4.51 to complete compared with $4.39 previously. Paycom is successfully selling its self-service tools across the enterprise to bring these costs down. One of the recent features that it added to its employee focused self-service tool was the release of Ask Here. Built as a central repository of employee questions and dashboards, Ask Here allows employees to get the answers they need through one online resource, thus reducing the need for emails, phone calls, and direct conversations. It promotes increased engagement by ensuring all inquiries are addressed, any required actions are taken, and no follow-ups are required by the employee.

The market is pleased with Paycom. Earlier this year, Paycom joined the S&P 500 index. Its stock is trading at $239.48 with a market capitalization of $13 billion. It touched a 52-week high of $342 earlier this year. It hit a 52-week low of $174.02 in March last year. Like other stocks, Paycom too has been impacted by the Covid virus resulting in the more recent tumble.

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