Paycom (NYSE:PAYC) Software, in its third quarter 2023 earnings call, reported strong profitability with revenue of $406.3 million, GAAP net income of $75.2 million, and adjusted EBITDA of $165.6 million. The company highlighted the success of its Do-It-Yourself (DIY) payroll feature, Beti, which is currently used by nearly two-thirds of its clients. Paycom also announced the expansion of its global payroll product to include Mexico.
Key takeaways from the call:
- Paycom reported solid results for Q3 2023, with strong profitability and a significant adoption of its DIY payroll feature, Beti.
- The company announced the expansion of its global payroll product to include Mexico.
- Paycom expects Q4 2023 revenues in the range of $420 million to $425 million, representing a growth rate of approximately 14% compared to the prior year period.
- For the fiscal year 2023, revenues are expected to range from $1.679 billion to $1.684 billion, with adjusted EBITDA in the range of $712 million to $717 million.
- Paycom anticipates year-over-year revenue growth of 10% to 12% in 2024.
Paycom CEO Chad Richison addressed concerns about the company's transition to the new platform, Beti, and stated that new business sales and cross-selling within the existing customer base have remained strong. He also emphasized that the company is not experiencing any issues with onboarding new clients or making changes to its go-to-market strategy.
Richison further explained that the impact of Beti on different client segments depends on factors like the client's setup and their own payroll processes. He also highlighted that the strategic decisions being made are focused on maximizing value for existing clients and not on acquiring new clients.
The company reported strong demand in the SMB and mid-market sectors and highlighted its dedication to providing value to clients. They do not anticipate any incremental bookings headwinds for next year. However, the company expects a decrease in services revenue for Q4 and into 2024 due to the strategic shift towards Beti.
In conclusion, Paycom Software has reported a successful Q3, with strong profitability and significant adoption of its DIY payroll feature, Beti. The company remains confident in its ability to drive shareholder value in the long term, despite some anticipated macro headwinds related to pre-employment services.
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