Record Annualized New Recurring Revenue and New Office Launches
-
Record quarterly revenue of $37.0 million, up 34.1% year-over-year
-
Record First Quarter Annualized New Recurring Revenue of $12.6
million
-
Opened a record five new sales offices in Q1
OKLAHOMA CITY--(BUSINESS WIRE)--
Paycom Software, Inc. (“Paycom”) (NYSE: PAYC), a leading provider of a
comprehensive cloud-based human capital management software solution,
today announced its financial results for the quarter ended March 31,
2014.
“We are pleased to report strong financial results in our initial
quarterly release as a public company,” said Chad Richison, President
and Chief Executive Officer of Paycom. “Our first quarter results were
highlighted by a 34.1% increase in total revenue, with adjusted EBITDA
for the first quarter comprising 17.7% of total revenues. We invested
heavily for future growth by launching a major new application and
several application enhancements. We also opened a record five new sales
offices in the first quarter, representing more than we added in any
single previous year.”
Financial Highlights for the First Quarter of
2014
Total Revenues of $37.0 million increased 34.1% compared to $27.6
million in the same period last year. Recurring revenue of $36.5
million also increased 34.0% from the comparable prior year period, and
was 98.6% of total revenues.
Adjusted EBITDA1 was $6.6 million, compared to
$8.2 million in the same period last year.
Net Income was $1.1 million, or $0.02 per diluted share, compared
to $2.6 million, or $0.05 per diluted share in the same period last
year. Non-GAAP net income1 was $1.6 million, or $0.03
per diluted share, compared to $2.4 million, or $0.05 per diluted share,
in the same period last year.
Annualized New Recurring Revenue (“ANRR”) of $12.6 million, up
from $9.6 million for the same period last year.
Cash and Cash Equivalents were $13.1 million as of March 31, 2014.
Total Debt was $86.3 million as of March 31, 2014. Paycom used
net proceeds from its IPO and existing cash in April to retire $65.0
million of outstanding debt.
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 Measures" and the reconciliations at the end of this
release.
Business Highlights for the First Quarter of 2014
Total Sales Teams and Offices expanded to 31 sales teams with
five new sales offices in Baltimore, Indianapolis, Philadelphia,
Portland and Silicon Valley. Paycom currently has a sales office in 25
of the 50 largest Metropolitan Statistical Areas (MSAs) in the United
States.
Application Launches included Paycom Survey, a tool that
allows employers to quickly create, distribute and analyze online
employee surveys. Employers are able to increase retention and reduce
turnover by measuring employee satisfaction.
Initial Public Offering – On April 21, 2014, Paycom
successfully completed an initial public offering of 6,645,000 shares,
including 4,606,882 primary shares that generated net proceeds of $64.3
million to Paycom. In concurrence with the IPO, the Company retired
$65.0 million of outstanding debt.
“Our recent IPO was a significant milestone for Paycom and served to
further increase our market and brand awareness, while also providing us
with capital flexibility to execute our strategic growth initiatives,”
continued Mr. Richison. “While we are very proud of the success that we
have built thus far with Paycom, we are even more excited by our growth
trajectory as we enter this next stage in our life cycle. We will
continue to invest in deepening our technology solutions across the HCM
suite, and expand our national sales footprint into the significant
‘whitespace’ opportunity that remains untapped. I believe we are
well-positioned to sustain and build upon the positive business momentum
we have well into the future.”
Financial Outlook
Paycom provides the following expected financial guidance for the
quarter ending June 30, 2014, and year ending December 31, 2014:
Second Quarter 2014
-
Total Revenues in the range of $31.0 million to $32.0 million.
-
Adjusted EBITDA in the range of $4.0 million to $5.0 million.
Fiscal Year 2014
-
Total Revenues in the range of $139.0 million to $142.0 million.
-
Adjusted EBITDA in the range of $19.0 million to $22.0 million.
We have not reconciled the Adjusted EBITDA range for the quarter ending
June 30, 2014 or the year ending December 31, 2014 to net income because
applicable information for future periods, on which this reconciliation
is based, is not readily available because of uncertainty regarding, and
the potential variability of, depreciation and amortization, interest
expense and taxes. Accordingly, a reconciliation of these Adjusted
EBITDA ranges to net income are not available at this time without
unreasonable effort.
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 consider and have included certain non-GAAP financial measures in
this press release, including EBITDA, Adjusted EBITDA and non-GAAP net
income. We use earnings before interest, taxes, depreciation and
amortization (“EBITDA”), Adjusted EBITDA and non-GAAP net income, as
supplemental measures to review and assess our performance and planning
purposes. We define: (i) EBITDA as net income, plus interest expense,
taxes and depreciation and amortization, (ii) Adjusted EBITDA as net
income, plus interest expense, taxes, depreciation and amortization,
stock-based compensation expense and certain transaction expenses that
are not core to our operations and (iii) non-GAAP net income as pro
forma net income plus tax adjusted stock-based compensation expense and
certain tax adjusted transaction expenses that are not core to our
operations. EBITDA, Adjusted EBITDA and non-GAAP net income are metrics
that we believe are useful to investors in evaluating our performance
and facilitating comparison with other peer companies, many of which use
similar non-GAAP financial measures to supplement results under GAAP.
EBITDA, Adjusted EBITDA and non-GAAP net income are not measures of
financial performance under GAAP, and should not be considered a
substitute for net income or pro forma net income, as applicable, which
we consider to be the most directly comparable GAAP measures. EBITDA,
Adjusted EBITDA and non-GAAP net income have limitations as analytical
tools, and when assessing our operating performance, you should not
consider EBITDA, Adjusted EBITDA and non-GAAP net income in isolation,
or as a substitute for “Net income,” “Pro forma net income” or other
Condensed Consolidated Statements of Income Data prepared in accordance
with GAAP. EBITDA, Adjusted EBITDA and non-GAAP net income may not be
comparable to similar 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, May 15, 2014 at 5:00 p.m. Eastern Time to discuss the
company's financial results. To access this call, dial (888) 317-6016
(domestic) or (412) 317-6016 (international) with conference ID
10045238. A live webcast, as well as the replay of the conference call
will be available on the Investor Relations page of the company's
website at http://investors.paycom.com.
A replay of this conference call can also be accessed by dialing (877)
344-7529 (domestic) or (412) 317-0088 (international) until May 30, 2014.
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 serves 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 teleconference call may be, forward-looking statements within the
meaning provided under the Private Securities Litigation Reform Act of
1995. Such forward-looking statements are made only as of the date
hereof. These statements involve known and unknown risks and
uncertainties that may cause Paycom’s actual results to differ
materially from those stated or implied by such forward-looking
statements, as a result of various risks and uncertainties including:
changes in the demand for our solution, pricing changes and the impact
of competition; changes in technology; our ability to attract, hire and
retain skilled employees; our ability to attract and retain clients and
increase the number of applications utilized by our clients; our ability
to develop and market new applications, improve our existing
applications and increase the value of our solution; our ability to
maintain our revenue and revenue growth rate; the sufficiency of our
cash and cash equivalents and cash generated from operations to meet our
working capital and capital expenditure requirements; changes in laws
regulating payroll taxes and employee benefits; the possibility of a
security breach that disrupts operations or exposes client confidential
data; and potentially unfavorable outcomes related to pending legal
matters.
Other factors that may cause such differences include, but are not
limited to, those discussed in our periodic filings with the Securities
and Exchange Commission, including those discussed in the prospectus
filed with the Securities and Exchange Commission on April 15, 2014, and
in particular the section entitled “Risk Factors” of the prospectus.
Paycom undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events, or otherwise, except as required by applicable securities
laws.
|
Paycom Software, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share amounts)
(unaudited)
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
|
|
2014
|
|
2013
|
|
Assets
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
13,125
|
|
$
|
13,362
|
|
|
Restricted cash
|
|
|
369
|
|
|
369
|
|
|
Accounts receivable
|
|
|
737
|
|
|
1,705
|
|
|
Prepaid expenses
|
|
|
3,769
|
|
|
2,133
|
|
|
Inventory
|
|
|
452
|
|
|
578
|
|
|
Income tax receivable
|
|
|
-
|
|
|
150
|
|
|
Deferred tax assets
|
|
|
3,281
|
|
|
3,672
|
|
|
Current assets before funds held for clients
|
|
|
21,733
|
|
|
21,969
|
|
|
Funds held for clients
|
|
|
409,218
|
|
|
455,779
|
|
|
Total current assets
|
|
|
430,951
|
|
|
477,748
|
|
|
Property, plant and equipment, net of accumulated depreciation of
$12.9 million and $11.5 million, respectively
|
|
|
42,514
|
|
|
38,671
|
|
|
Deposits and other assets
|
|
|
571
|
|
|
461
|
|
|
Goodwill
|
|
|
51,889
|
|
|
51,889
|
|
|
Intangible assets, net of accumulated amortization of $10.9
million and $10.5 million, respectively
|
|
|
6,306
|
|
|
6,709
|
|
|
Total assets
|
|
$
|
532,231
|
|
$
|
575,478
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
|
$
|
3,310
|
|
$
|
5,020
|
|
|
Income tax payable
|
|
|
239
|
|
|
-
|
|
|
Accrued commissions and bonuses
|
|
|
985
|
|
|
3,598
|
|
|
Accrued payroll and vacation
|
|
|
2,176
|
|
|
3,087
|
|
|
Deferred revenue
|
|
|
1,967
|
|
|
1,582
|
|
|
Current portion of long-term debt
|
|
|
13,941
|
|
|
9,545
|
|
|
Accrued expenses and other current liabilities
|
|
|
6,433
|
|
|
4,372
|
|
|
Current liabilities before client funds obligation
|
|
|
29,051
|
|
|
27,204
|
|
|
Client funds obligation
|
|
|
409,218
|
|
|
455,779
|
|
|
Total current liabilities
|
|
|
438,269
|
|
|
482,983
|
|
|
Deferred tax liabilities
|
|
|
3,081
|
|
|
2,895
|
|
|
Long-term deferred revenue
|
|
|
11,979
|
|
|
10,990
|
|
|
Long-term debt, less current portion
|
|
|
11,435
|
|
|
11,545
|
|
|
Long-term debt to related parties
|
|
|
60,941
|
|
|
60,875
|
|
|
Derivative liability
|
|
|
472
|
|
|
1,107
|
|
|
Total long-term liabilities
|
|
|
87,908
|
|
|
87,412
|
|
|
Commitments and contingencies
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
Common stock, $0.01 par value (100,000,000 authorized, 45,726,857
and 44,560,048 issued and outstanding at March 31, 2014 and
December 31, 2013, respectively)
|
|
|
457
|
|
|
446
|
|
|
Additional paid in capital
|
|
|
4,537
|
|
|
33,989
|
|
|
Retained earnings (accumulated deficit)
|
|
|
1,060
|
|
|
(29,349
|
)
|
|
Total parent's stockholders' equity
|
|
|
6,054
|
|
|
5,086
|
|
|
Noncontrolling interest
|
|
|
-
|
|
|
(3
|
)
|
|
Total stockholders' equity
|
|
|
6,054
|
|
|
5,083
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
532,231
|
|
$
|
575,478
|
|
|
|
|
|
|
|
|
|
|
|
Paycom Software, Inc.
Condensed Consolidated Statements of Income
(in thousands, except share amounts)
(unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
Recurring
|
|
$
|
36,454
|
|
|
$
|
27,204
|
|
|
Implementation and other
|
|
|
531
|
|
|
|
373
|
|
|
Total revenues
|
|
|
36,985
|
|
|
|
27,577
|
|
|
Cost of revenues
|
|
|
|
|
|
Operating expenses
|
|
|
6,292
|
|
|
|
4,434
|
|
|
Depreciation
|
|
|
630
|
|
|
|
411
|
|
|
Total cost of revenues
|
|
|
6,922
|
|
|
|
4,845
|
|
|
Administrative expenses
|
|
|
|
|
|
Sales and marketing
|
|
|
15,681
|
|
|
|
9,858
|
|
|
Research and development
|
|
|
882
|
|
|
|
455
|
|
|
General and administrative
|
|
|
9,268
|
|
|
|
5,996
|
|
|
Depreciation and amortization
|
|
|
1,091
|
|
|
|
884
|
|
|
Total administrative expenses
|
|
|
26,922
|
|
|
|
17,193
|
|
|
Total operating expenses
|
|
|
33,844
|
|
|
|
22,038
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
3,141
|
|
|
|
5,539
|
|
|
Interest expense
|
|
|
(2,067
|
)
|
|
|
(2,274
|
)
|
|
Other income, net
|
|
|
769
|
|
|
|
611
|
|
|
Income before income taxes
|
|
|
1,843
|
|
|
|
3,876
|
|
|
Provision for income taxes
|
|
|
783
|
|
|
|
1,241
|
|
|
Net income
|
|
|
1,060
|
|
|
|
2,635
|
|
|
Net income attributable to the noncontrolling interest
|
|
|
-
|
|
|
|
19
|
|
|
Net income attributable to the Company
|
|
$
|
1,060
|
|
|
$
|
2,616
|
|
|
|
|
|
|
|
|
Pro forma income before income taxes
|
|
$
|
1,843
|
|
|
$
|
3,876
|
|
|
Pro forma income tax expense
|
|
|
783
|
|
|
|
1,818
|
|
|
Pro forma net income
|
|
$
|
1,060
|
|
|
$
|
2,058
|
|
|
|
|
|
|
|
|
Net income per share, basic
|
|
$
|
0.02
|
|
|
$
|
0.06
|
|
|
Net income per share, diluted
|
|
$
|
0.02
|
|
|
$
|
0.05
|
|
|
|
|
|
|
|
|
Pro forma net income per share, basic
|
|
$
|
0.02
|
|
|
$
|
0.05
|
|
|
Pro forma net income per share, diluted
|
|
$
|
0.02
|
|
|
$
|
0.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
Basic
|
|
|
45,721,584
|
|
|
|
44,857,788
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
48,371,169
|
|
|
|
47,918,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma weighted average shares outstanding:
|
|
|
|
|
|
Basic
|
|
|
45,721,584
|
|
|
|
44,857,788
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
48,371,169
|
|
|
|
47,918,011
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation included in the above line items.
|
Paycom Software, Inc.
|
|
Breakout of Stock-based Compensation Expense
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2014
|
|
2013
|
|
Stock-based compensation expense:
|
|
|
|
|
|
Operating expenses
|
|
$
|
4
|
|
$
|
204
|
|
Sales and marketing
|
|
|
3
|
|
|
23
|
|
Research and development
|
|
|
2
|
|
|
323
|
|
General and administrative
|
|
|
84
|
|
|
172
|
|
|
|
$
|
93
|
|
$
|
722
|
|
|
|
|
|
|
|
Paycom Software, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands, except share amounts)
(unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
Operating activities
|
|
|
|
|
|
Net income
|
|
$
|
1,060
|
|
|
$
|
2,635
|
|
|
Adjustments to reconcile net income to net cash
|
|
|
|
|
|
provided by operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
|
1,721
|
|
|
|
1,295
|
|
|
Amortization of debt discount
|
|
|
64
|
|
|
|
57
|
|
|
Amortization of debt issuance costs
|
|
|
6
|
|
|
|
-
|
|
|
Stock-based compensation
|
|
|
93
|
|
|
|
722
|
|
|
Change in fair value of derivative liability
|
|
|
(635
|
)
|
|
|
(346
|
)
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
Accounts receivable
|
|
|
968
|
|
|
|
147
|
|
|
Prepaid expenses
|
|
|
(725
|
)
|
|
|
(691
|
)
|
|
Inventory
|
|
|
126
|
|
|
|
(30
|
)
|
|
Deposits and other assets
|
|
|
(110
|
)
|
|
|
(16
|
)
|
|
Income tax receivable
|
|
|
150
|
|
|
|
-
|
|
|
Deferred tax assets
|
|
|
391
|
|
|
|
1,241
|
|
|
Deferred tax liabilities
|
|
|
186
|
|
|
|
-
|
|
|
Income tax payable
|
|
|
239
|
|
|
|
-
|
|
|
Accounts payable
|
|
|
(1,710
|
)
|
|
|
(411
|
)
|
|
Accrued commissions and bonuses
|
|
|
(2,613
|
)
|
|
|
(1,401
|
)
|
|
Accrued payroll and vacation
|
|
|
(911
|
)
|
|
|
(678
|
)
|
|
Deferred revenue
|
|
|
1,370
|
|
|
|
650
|
|
|
Accrued expenses and other liabilities
|
|
|
2,061
|
|
|
|
1,350
|
|
|
Net cash provided by operating activities
|
|
|
1,731
|
|
|
|
4,524
|
|
|
Investing activities
|
|
|
|
|
|
Decrease (increase) in funds held for clients
|
|
|
46,561
|
|
|
|
(26,030
|
)
|
|
Additions to property, plant and equipment
|
|
|
(5,160
|
)
|
|
|
(1,227
|
)
|
|
Net cash provided by (used in) investing activities
|
|
|
41,401
|
|
|
|
(27,257
|
)
|
|
Financing activities
|
|
|
|
|
|
Proceeds from issuance of long-term debt
|
|
|
4,391
|
|
|
|
-
|
|
|
Payments on long-term debt
|
|
|
(105
|
)
|
|
|
(100
|
)
|
|
(Decrease) increase in client funds obligation
|
|
|
(46,561
|
)
|
|
|
26,030
|
|
|
Incentive stock redeemed
|
|
|
-
|
|
|
|
(1,008
|
)
|
|
Payments of deferred offering costs
|
|
|
(911
|
)
|
|
|
-
|
|
|
Capital impact of reorganization
|
|
|
(183
|
)
|
|
|
-
|
|
|
Distributions paid to members
|
|
|
-
|
|
|
|
1,603
|
|
|
Net cash (used in) provided by financing activities
|
|
|
(43,369
|
)
|
|
|
26,525
|
|
|
Change in cash and cash equivalents
|
|
|
(237
|
)
|
|
|
3,792
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
Beginning of period
|
|
|
13,362
|
|
|
|
13,435
|
|
|
End of period
|
|
$
|
13,125
|
|
|
$
|
17,227
|
|
|
|
|
|
|
|
|
|
|
|
|
Paycom Software, Inc.
|
|
Reconciliation of Net income to EBITDA and Adjusted EBITDA
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2014
|
|
2013
|
|
Consolidated statements of income data:
|
|
|
|
|
|
Net income
|
|
$
|
1,060
|
|
$
|
2,635
|
|
Interest expense
|
|
|
2,067
|
|
|
2,274
|
|
Taxes
|
|
|
783
|
|
|
1,241
|
|
Depreciation and amortization
|
|
|
1,721
|
|
|
1,295
|
|
EBITDA
|
|
|
5,631
|
|
|
7,445
|
|
Stock-based compensation expense
|
|
|
93
|
|
|
722
|
|
Transaction expenses
|
|
|
840
|
|
|
-
|
|
Adjusted EBITDA
|
|
$
|
6,564
|
|
$
|
8,167
|
|
|
|
|
|
|
|
Paycom Software, Inc.
|
|
Reconciliation of Pro forma net income to Non-GAAP net income
|
|
(in thousands, expect per share amounts)
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2014
|
|
2013
|
|
Consolidated statements of income data:
|
|
|
|
|
|
Pro forma net income
|
|
|
1,060
|
|
|
2,058
|
|
Tax adjusted stock-based compensation expense
|
|
|
53
|
|
|
383
|
|
Tax adjusted transaction expenses
|
|
|
483
|
|
|
-
|
|
Non-GAAP net income
|
|
$
|
1,596
|
|
$
|
2,441
|
|
|
|
|
|
|
|
Non-GAAP net income per share, basic
|
|
$
|
0.03
|
|
$
|
0.05
|
|
Non-GAAP net income per share, diluted
|
|
$
|
0.03
|
|
$
|
0.05
|
|
|
|
|
|
|
|
Pro Forma weighted average shares outstanding:
|
|
|
|
|
|
Basic
|
|
|
45,721,584
|
|
|
44,857,788
|
|
Diluted
|
|
|
48,371,169
|
|
|
47,918,011
|
Paycom Software, Inc.
Media Contact:
Kathy Oden-Hall,
800-580-4505
CMO
Kathy.Oden-Hall@paycom.com
or
Investor
Relations Contact:
855-603-1620
investors@paycom.com
Source: Paycom Software, Inc.