Paycom Software-Paycom Set to Report Q3 Earnings: What's in Store for the Stock?

Core Viewpoint - Paycom Software (PAYC) is expected to report third-quarter 2024 results with anticipated revenues between $444 million and$ 449 million, reflecting a year-over-year growth of approximately 10% from $406.3 million in the same quarter last year [1][2] Financial Performance Expectations - The Zacks Consensus Estimate for PAYC's revenues is$ 446.9 million, while the consensus for earnings per share (EPS) is $1.62, indicating a decline of 8.5% year-over-year [1] - Adjusted EBITDA is projected to be in the range of$ 155 million to $159 million, suggesting an adjusted EBITDA margin of around 35% at the midpoint [1] - PAYC has consistently beaten the Zacks Consensus Estimate in the past four quarters, with an average surprise of 6.7% [1] Growth Drivers - The anticipated performance is likely supported by an expanding client base due to product innovations and a high-margin recurring revenue model, with recurring revenues estimated at$ 437.3 million, indicating a year-over-year growth of 9.7% [2] - Investments in artificial intelligence (AI), automation, and international expansion are expected to enhance sales growth [2][3] Challenges - The company's performance may be negatively impacted by headcount reductions among its clients due to macroeconomic uncertainties, leading to lower transaction volumes and reduced spending on payroll and human capital management services [3] - The uncertain macroeconomic environment and geopolitical issues are contributing to these challenges [3] Earnings ESP and Zacks Rank - Currently, PAYC has an Earnings ESP of -0.35% and a Zacks Rank of 4 (Sell), indicating lower odds of an earnings beat compared to other stocks [4]