Record First Quarter Revenue of $55.2 Million, up 49.3% year-over-year
First Quarter GAAP Earnings Per Share of $0.11
First Quarter Non-GAAP Earnings Per Share of $0.12
OKLAHOMA CITY--(BUSINESS WIRE)--
Paycom Software, Inc. (“Paycom”) (NYSE: PAYC), a leading provider of
comprehensive, cloud-based human capital management software delivered
as Software-as-a-Service, today announced its financial results for the
quarter ended March 31, 2015.
“In the first quarter we continued to see all-time highs in the demand
for our single database technology, which drove our best-ever quarterly
results as a public company,” said Chad Richison, Paycom founder and
CEO. “Primarily our mature sales offices, together with our new sales
offices, continue to build momentum by adding new clients. That, coupled
with strong demand for our software from businesses and growth in the
size of our new business deals, drove revenue growth of nearly 50
percent for the first quarter of 2015. Due to our unique value
proposition and people, we believe Paycom is well-positioned for the
remainder of 2015 and years to come.”
Financial Highlights for the First Quarter of
2015
Total Revenue of $55.2 million represented a 49.3% increase
compared to total revenue of $37.0 million in the same period last year.
Revenue growth was driven primarily by the addition of clients in mature
sales offices. Revenue also benefited from an increase in the number of
tax form filings on behalf of clients. Recurring revenues of $54.4
million increased 49.1% from the comparable prior year period, and
comprised 98.4% of total revenues.
GAAP Net Income was $6.0 million, or $0.11 per diluted share,
compared to GAAP net income of $1.1 million, or $0.02 per diluted share
in the same period last year.
Adjusted EBITDA1 was $13.6 million, compared to
$6.6 million in the same period last year.
Non-GAAP Net Income1 was $6.7 million,
or $0.12 per diluted share, compared to $1.6 million, or $0.03 per
diluted share, in the same period last year.
Annualized New Recurring Revenue (“ANRR”) was $20.2
million, up from $12.6 million for the same period last year,
representing 60.5% growth from the comparable prior year period.
Cash and Cash Equivalents were $35.7 million as of March 31, 2015.
Total Debt was $26.5 million as of March 31, 2015. This debt
consisted solely of debt on the corporate headquarters.
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 non-GAAP
financial measures.
Financial Outlook
Paycom provides the following expected financial guidance for the
quarter ending June 30, 2015, and year ending December 31, 2015:
Second Quarter 2015
Total Revenues in the range of $45 million to $46 million.
Adjusted EBITDA in the range of $7.5 million to $8.5 million.
Fiscal Year 2015
Total Revenues in the range of $203 million to $205 million.
Adjusted EBITDA in the range of $35 million to $37 million.
We have not reconciled the Adjusted EBITDA range for the quarter ending
June 30, 2015 or the year ending December 31, 2015 to net income because
applicable information for future periods, on which this reconciliation
is based, is not readily available due to uncertainty regarding, and the
potential variability of, depreciation and amortization, interest
expense, taxes, stock-based compensation expense and other items.
Accordingly, a reconciliation of these Adjusted EBITDA ranges to net
income is 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 Adjusted EBITDA and non-GAAP net income.
We use Adjusted EBITDA and non-GAAP net income as supplemental measures
to review and assess our performance and for planning purposes. We
define: (i) 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
(ii) non-GAAP net income as net income plus tax adjusted stock-based
compensation expense and certain tax adjusted transaction expenses that
are not core to our operations. 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.
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, which we consider to be the most directly comparable GAAP
measure. Adjusted EBITDA and non-GAAP net income have limitations as
analytical tools, and when assessing our operating performance, you
should not consider Adjusted EBITDA and non-GAAP net income in
isolation, or as a substitute for “Net income” or other Condensed
Consolidated Statements of Income data prepared in accordance with GAAP.
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 6, 2015 at 5:00 p.m. Eastern Time to discuss the
company's financial results. To access this call, dial (888) 317-6003
(domestic) or (412) 317-6061 (international) with conference ID 3679827.
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 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 21,
2015. The replay passcode is 10063690.
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 or increase our revenues and revenue growth rate; our ability
to successfully launch, sustain and drive revenue from new sales
offices; the sufficiency of our cash and cash equivalents to meet our
working capital and capital expenditure needs over at least the next 12
months; 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 our Annual Report on Form 10-K filed with the Securities and Exchange
Commission on February 26, 2015 (the “Form 10-K”), and in particular the
section entitled “Item 1A. Risk Factors” of the Form 10-K. 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.
|
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|
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|
|
|
|
|
|
|
|
Paycom Software, Inc.
|
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Condensed Consolidated Balance Sheets
|
|
(thousands, except share amounts)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
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December 31,
|
|
|
|
|
2015
|
|
2014
|
|
Assets
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
35,673
|
|
$
|
25,144
|
|
Restricted cash
|
|
|
|
-
|
|
|
371
|
|
Accounts receivable
|
|
|
|
1,684
|
|
|
2,794
|
|
Prepaid expenses
|
|
|
|
3,044
|
|
|
1,952
|
|
Inventory
|
|
|
|
718
|
|
|
195
|
|
Income tax receivable
|
|
|
|
-
|
|
|
935
|
|
Deferred tax assets, net
|
|
|
|
869
|
|
|
1,445
|
|
Current assets before funds held for clients
|
|
|
|
41,988
|
|
|
32,836
|
|
Funds held for clients
|
|
|
|
591,563
|
|
|
660,557
|
|
Total current assets
|
|
|
|
633,551
|
|
|
693,393
|
|
Property and equipment, net
|
|
|
|
48,692
|
|
|
47,919
|
|
Deposits and other assets
|
|
|
|
764
|
|
|
645
|
|
Goodwill
|
|
|
|
51,889
|
|
|
51,889
|
|
Intangible assets, net
|
|
|
|
4,693
|
|
|
5,096
|
|
Total assets
|
|
|
$
|
739,589
|
|
$
|
798,942
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
2,527
|
|
$
|
3,042
|
|
Income tax payable
|
|
|
|
3,353
|
|
|
-
|
|
Accrued commissions and bonuses
|
|
|
|
1,568
|
|
|
5,080
|
|
Accrued payroll and vacation
|
|
|
|
3,160
|
|
|
1,582
|
|
Deferred revenue
|
|
|
|
2,662
|
|
|
2,535
|
|
Current portion of long-term debt
|
|
|
|
862
|
|
|
855
|
|
Accrued expenses and other current liabilities
|
|
|
|
7,309
|
|
|
5,121
|
|
Current liabilities before client funds obligation
|
|
|
|
21,441
|
|
|
18,215
|
|
Client funds obligation
|
|
|
|
591,563
|
|
|
660,557
|
|
Total current liabilities
|
|
|
|
613,004
|
|
|
678,772
|
|
Deferred tax liabilities, net
|
|
|
|
2,430
|
|
|
3,107
|
|
Long-term deferred revenue
|
|
|
|
18,114
|
|
|
16,802
|
|
Long-term debt, less current portion
|
|
|
|
25,652
|
|
|
26,123
|
|
Total long-term liabilities
|
|
|
|
46,196
|
|
|
46,032
|
|
Commitments and contingencies
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
Common stock, $0.01 par value (100,000,000 shares authorized,
56,563,541 and 53,832,782
shares issued and outstanding at March 31, 2015 and December 31,
2014, respectively)
|
|
|
|
566
|
|
|
538
|
|
Additional paid in capital
|
|
|
|
68,165
|
|
|
67,937
|
|
Retained earnings
|
|
|
|
11,658
|
|
|
5,663
|
|
Total stockholders' equity
|
|
|
|
80,389
|
|
|
74,138
|
|
Total liabilities and stockholders' equity
|
|
|
$
|
739,589
|
|
$
|
798,942
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paycom Software, Inc.
|
|
Condensed Consolidated Statements of Income
|
|
(thousands, except share amounts)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
2015
|
|
2014
|
|
Revenues
|
|
|
|
|
|
|
Recurring
|
|
|
$
|
54,351
|
|
|
$
|
36,454
|
|
|
Implementation and other
|
|
|
|
871
|
|
|
|
531
|
|
|
Total revenues
|
|
|
|
55,222
|
|
|
|
36,985
|
|
|
Cost of revenues
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
7,471
|
|
|
|
6,292
|
|
|
Depreciation
|
|
|
|
810
|
|
|
|
630
|
|
|
Total cost of revenues
|
|
|
|
8,281
|
|
|
|
6,922
|
|
|
Administrative expenses
|
|
|
|
|
|
|
Sales and marketing
|
|
|
|
21,229
|
|
|
|
15,681
|
|
|
Research and development
|
|
|
|
1,867
|
|
|
|
882
|
|
|
General and administrative
|
|
|
|
11,984
|
|
|
|
9,268
|
|
|
Depreciation and amortization
|
|
|
|
1,323
|
|
|
|
1,091
|
|
|
Total administrative expenses
|
|
|
|
36,403
|
|
|
|
26,922
|
|
|
Total operating expenses
|
|
|
|
44,684
|
|
|
|
33,844
|
|
|
Operating income
|
|
|
|
10,538
|
|
|
|
3,141
|
|
|
Interest expense
|
|
|
|
(332
|
)
|
|
|
(2,067
|
)
|
|
Other income, net
|
|
|
|
33
|
|
|
|
769
|
|
|
Income before income taxes
|
|
|
|
10,239
|
|
|
|
1,843
|
|
|
Provision for income taxes
|
|
|
|
4,244
|
|
|
|
783
|
|
|
Net income
|
|
|
$
|
5,995
|
|
|
$
|
1,060
|
|
|
Net income per share, basic
|
|
|
$
|
0.11
|
|
|
$
|
0.02
|
|
|
Net income per share, diluted
|
|
|
$
|
0.11
|
|
|
$
|
0.02
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
Basic
|
|
|
|
54,749,951
|
|
|
|
45,721,584
|
|
|
Diluted
|
|
|
|
56,562,661
|
|
|
|
48,371,169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paycom Software, Inc.
|
|
Condensed Consolidated Statements of Cash Flows
|
|
(in thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2015
|
|
2014
|
|
Cash flows from operating activities
|
|
|
|
|
|
Net income
|
|
$
|
5,995
|
|
|
$
|
1,060
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
|
2,133
|
|
|
|
1,721
|
|
|
Amortization of debt discount
|
|
|
-
|
|
|
|
64
|
|
|
Amortization of debt issuance costs
|
|
|
13
|
|
|
|
6
|
|
|
Non-cash stock-based compensation
|
|
|
254
|
|
|
|
93
|
|
|
Net change of derivative liability
|
|
|
-
|
|
|
|
(635
|
)
|
|
Deferred taxes, net
|
|
|
(101
|
)
|
|
|
577
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
Accounts receivable
|
|
|
1,110
|
|
|
|
968
|
|
|
Prepaid expenses
|
|
|
(1,092
|
)
|
|
|
(725
|
)
|
|
Inventory
|
|
|
(523
|
)
|
|
|
126
|
|
|
Deposits and other assets
|
|
|
(119
|
)
|
|
|
(110
|
)
|
|
Accounts payable
|
|
|
(515
|
)
|
|
|
(1,710
|
)
|
|
Income taxes, net
|
|
|
4,288
|
|
|
|
389
|
|
|
Accrued commissions and bonuses
|
|
|
(3,512
|
)
|
|
|
(2,613
|
)
|
|
Accrued payroll and vacation
|
|
|
1,578
|
|
|
|
(911
|
)
|
|
Deferred revenue
|
|
|
1,439
|
|
|
|
994
|
|
|
Accrued expenses and other current liabilities
|
|
|
2,188
|
|
|
|
2,437
|
|
|
Net cash provided by operating activities
|
|
|
13,136
|
|
|
|
1,731
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
Decrease in funds held for clients
|
|
|
68,994
|
|
|
|
46,561
|
|
|
Decrease in restricted cash
|
|
|
371
|
|
|
|
-
|
|
|
Purchases of property and equipment
|
|
|
(2,502
|
)
|
|
|
(5,160
|
)
|
|
Net cash provided by investing activities
|
|
|
66,863
|
|
|
|
41,401
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
Proceeds from issuance of long-term debt
|
|
|
-
|
|
|
|
4,391
|
|
|
Principal payments on long-term debt
|
|
|
(464
|
)
|
|
|
(105
|
)
|
|
Decrease in client funds obligation
|
|
|
(68,994
|
)
|
|
|
(46,561
|
)
|
|
Payments of deferred offering costs
|
|
|
-
|
|
|
|
(911
|
)
|
|
Capital impact of reorganization
|
|
|
-
|
|
|
|
(183
|
)
|
|
Payment of debt issuance costs
|
|
|
(12
|
)
|
|
|
-
|
|
|
Net cash used in financing activities
|
|
|
(69,470
|
)
|
|
|
(43,369
|
)
|
|
Change in cash and cash equivalents
|
|
|
10,529
|
|
|
|
(237
|
)
|
|
Cash and cash equivalents
|
|
|
|
|
|
Beginning of period
|
|
|
25,144
|
|
|
|
13,362
|
|
|
End of period
|
|
$
|
35,673
|
|
|
$
|
13,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paycom Software, Inc.
|
|
Breakout of Stock-Based Compensation Expense
|
|
(in thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|
|
|
|
2015
|
|
2014
|
|
Stock-based compensation expense:
|
|
|
|
|
|
|
Operating expenses
|
|
|
$
|
7
|
|
$
|
4
|
|
Sales and marketing
|
|
|
|
5
|
|
|
3
|
|
Research and development
|
|
|
|
5
|
|
|
2
|
|
General and administrative
|
|
|
|
237
|
|
|
84
|
|
Total stock-based compensation expense
|
|
|
$
|
254
|
|
$
|
93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paycom Software, Inc.
|
|
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
|
|
(in thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|
|
|
|
2015
|
|
2014
|
|
Consolidated statements of income data:
|
|
|
|
|
|
|
Net income
|
|
|
$
|
5,995
|
|
$
|
1,060
|
|
Interest expense
|
|
|
|
332
|
|
|
2,067
|
|
Provision for income taxes
|
|
|
|
4,244
|
|
|
783
|
|
Depreciation and amortization
|
|
|
|
2,133
|
|
|
1,721
|
|
EBITDA
|
|
|
|
12,704
|
|
|
5,631
|
|
Stock-based compensation expense
|
|
|
|
254
|
|
|
93
|
|
Transaction expenses
|
|
|
|
685
|
|
|
840
|
|
Adjusted EBITDA
|
|
|
$
|
13,643
|
|
$
|
6,564
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paycom Software, Inc.
|
|
Reconciliation of Net Income to Non-GAAP Net Income
|
|
(in thousands, expect per share amounts)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|
|
|
|
2015
|
|
2014
|
|
Consolidated statements of income data:
|
|
|
|
|
|
|
Net income
|
|
|
$
|
5,995
|
|
$
|
1,060
|
|
Tax adjusted stock-based compensation expense(1)
|
|
|
|
150
|
|
|
53
|
|
Tax adjusted transaction expenses(1)
|
|
|
|
507
|
|
|
483
|
|
Non-GAAP net income
|
|
|
$
|
6,652
|
|
$
|
1,596
|
|
|
|
|
|
|
|
|
Non-GAAP net income per share, basic
|
|
|
$
|
0.12
|
|
$
|
0.03
|
|
Non-GAAP net income per share, diluted
|
|
|
$
|
0.12
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
Basic
|
|
|
|
54,749,951
|
|
|
45,721,584
|
|
Diluted
|
|
|
|
56,562,661
|
|
|
48,371,169
|
|
|
|
|
|
|
|
|
|
(1) Beginning in 2015, the Company uses an individual non-GAAP tax rate
for each tax adjusted non-GAAP item to determine the amount of non-GAAP
net income. Prior to 2015, the Company used an overall effective tax
rate for each tax adjusted non-GAAP item to determine the amount of
non-GAAP net income.
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.