Attached files
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| 8-K - 8-K - Paycom Software, Inc. | d17642d8k.htm |
Exhibit 99.1
Paycom Software, Inc. Reports Record Financial Results for Third Quarter 2015
Record Third Quarter Revenue of $55.3 Million, up 51% year-over-year
Record Third Quarter ANRR of $31.8 Million, up 113% year-over-year
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 September 30, 2015.
“Paycom experienced continued strong demand in the third quarter,” said Chad Richison, Paycom founder and CEO. “Our robust, cloud-based payroll and human capital management solution is helping businesses across the country drive efficiencies and better serve their employees. Our solution continued to gain traction in the marketplace in the third quarter, and drove record revenue growth of 51 percent from the comparable prior year period, our strongest ever as a public company.”
Financial Highlights for the Third Quarter of 2015
Total Revenue of $55.3 million represented a 51% increase compared to total revenue of $36.6 million in the same period last year. Recurring revenues of $54.2 million increased 51% from the comparable prior year period, and constituted 98% of total revenues.
GAAP Net Income was $3.8 million, or $0.07 per diluted share, compared to GAAP net income of $2.7 million, or $0.05 per diluted share, in the same period last year.
Adjusted EBITDA1 was $10.8 million, compared to $6.6 million in the same period last year.
Non-GAAP Net Income1 was $4.7 million, or $0.08 per diluted share, compared to $2.7 million, or $0.05 per diluted share, in the same period last year.
Annualized New Recurring Revenue (“ANRR”) was $31.8 million, up from $14.9 million for the same period last year, representing 113% growth.
Cash and Cash Equivalents were $48.5 million as of September 30, 2015.
Total Debt was $26.1 million as of September 30, 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 December 31, 2015 and year ending December 31, 2015:
Fourth Quarter 2015
Total Revenues in the range of $59.5 million to $61.5 million.
Adjusted EBITDA in the range of $9 million to $11 million.
Fiscal Year 2015
Total Revenues in the range of $219 million to $221 million.
Adjusted EBITDA in the range of $46.5 million to $48.5 million.
We have not reconciled the Adjusted EBITDA range for the quarter or the year ending December 31, 2015 to net income because applicable information for future periods, on which this reconciliation would be 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, certain transaction expenses that are not core to our operations and net loss on early repayment of debt and (ii) non-GAAP net income as net income plus tax adjusted stock-based compensation expense, certain tax adjusted transaction expenses that are not core to our operations and tax adjusted net loss on early repayment of debt. 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, November 3, 2015 at 5:00 p.m. Eastern time to discuss its financial results. To access this call, dial (888) 317-6003 (domestic) or (412) 317-6061 (international) and enter conference ID 7761867. A live webcast as well as the replay of the conference call will be available on the Investor Relations page of Paycom’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 November 17, 2015. The replay passcode is 10073996.
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 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 has the ability to serve 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 of 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, including: that Paycom’s growth will generally mirror improvements in the labor market, that Paycom will continue with its plan and ability to open additional sales offices in the future, that Paycom’s existing cash and cash equivalents will be sufficient to meet its working capital and capital expenditure needs over the next 12 months, Paycom’s ability to create additional jobs at its corporate headquarters, Paycom’s ability to expand its corporate headquarters within an expected timeframe and Paycom’s expectation of increasing its capital and investment activity as its business grows. 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 Paycom’s 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.
Paycom Software, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share amounts)
(unaudited)
| September 30, | December 31, | |||||||
| 2015 | 2014 | |||||||
| Assets |
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| Current assets: |
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| Cash and cash equivalents |
$ | 48,547 | $ | 25,144 | ||||
| Restricted cash |
— | 371 | ||||||
| Accounts receivable |
3,397 | 2,794 | ||||||
| Prepaid expenses |
2,426 | 1,952 | ||||||
| Inventory |
639 | 195 | ||||||
| Income tax receivable |
— | 935 | ||||||
| Deferred tax assets, net |
316 | 1,445 | ||||||
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| Current assets before funds held for clients |
55,325 | 32,836 | ||||||
| Funds held for clients |
615,895 | 660,557 | ||||||
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| Total current assets |
671,220 | 693,393 | ||||||
| Property and equipment, net |
53,674 | 47,919 | ||||||
| Deposits and other assets |
913 | 645 | ||||||
| Goodwill |
51,889 | 51,889 | ||||||
| Intangible assets, net |
3,886 | 5,096 | ||||||
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| Total assets |
$ | 781,582 | $ | 798,942 | ||||
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| Liabilities and Stockholders’ Equity |
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| Current liabilities: |
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| Accounts payable |
$ | 3,853 | $ | 3,042 | ||||
| Income tax payable |
1,608 | — | ||||||
| Accrued commissions and bonuses |
4,509 | 5,080 | ||||||
| Accrued payroll and vacation |
4,106 | 1,582 | ||||||
| Deferred revenue |
3,329 | 2,535 | ||||||
| Current portion of long-term debt |
875 | 855 | ||||||
| Accrued expenses and other current liabilities |
7,401 | 5,121 | ||||||
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| Current liabilities before client funds obligation |
25,681 | 18,215 | ||||||
| Client funds obligation |
615,895 | 660,557 | ||||||
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| Total current liabilities |
641,576 | 678,772 | ||||||
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| Deferred tax liabilities, net |
464 | 3,107 | ||||||
| Long-term deferred revenue |
22,657 | 16,802 | ||||||
| Long-term debt, less current portion |
25,206 | 26,123 | ||||||
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| Total long-term liabilities |
48,327 | 46,032 | ||||||
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| Commitments and contingencies |
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| Stockholders’ equity: |
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| Common stock, $0.01 par value (100,000,000 shares authorized, 57,050,684 and 53,832,782 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively) |
571 | 538 | ||||||
| Additional paid in capital |
69,657 | 67,937 | ||||||
| Retained earnings |
21,451 | 5,663 | ||||||
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| Total stockholders’ equity |
91,679 | 74,138 | ||||||
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| Total liabilities and stockholders’ equity |
$ | 781,582 | $ | 798,942 | ||||
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Paycom Software, Inc.
Condensed Consolidated Statements of Income
(in thousands, except share and per share amounts)
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Revenues |
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| Recurring |
$ | 54,233 | $ | 35,910 | $ | 156,404 | $ | 105,030 | ||||||||
| Implementation and other |
1,107 | 688 | 3,131 | 1,859 | ||||||||||||
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| Total revenues |
55,340 | 36,598 | 159,535 | 106,889 | ||||||||||||
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| Cost of revenues |
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| Operating expenses |
7,964 | 5,798 | 22,569 | 17,847 | ||||||||||||
| Depreciation and amortization |
945 | 638 | 2,642 | 1,876 | ||||||||||||
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| Total cost of revenues |
8,909 | 6,436 | 25,211 | 19,723 | ||||||||||||
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| Administrative expenses |
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| Sales and marketing |
23,774 | 14,856 | 61,744 | 44,237 | ||||||||||||
| Research and development |
2,349 | 1,059 | 6,123 | 2,878 | ||||||||||||
| General and administrative |
11,996 | 8,410 | 34,076 | 25,816 | ||||||||||||
| Depreciation and amortization |
1,457 | 1,159 | 4,180 | 3,322 | ||||||||||||
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| Total administrative expenses |
39,576 | 25,484 | 106,123 | 76,253 | ||||||||||||
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| Total operating expenses |
48,485 | 31,920 | 131,334 | 95,976 | ||||||||||||
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| Operating income |
6,855 | 4,678 | 28,201 | 10,913 | ||||||||||||
| Interest expense |
(343 | ) | (338 | ) | (1,067 | ) | (3,079 | ) | ||||||||
| Loss on early repayment of debt |
— | — | — | (4,044 | ) | |||||||||||
| Other income, net |
98 | 39 | 150 | 1,395 | ||||||||||||
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| Income before income taxes |
6,610 | 4,379 | 27,284 | 5,185 | ||||||||||||
| Provision for income taxes |
2,763 | 1,689 | 11,496 | 2,028 | ||||||||||||
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| Net income |
$ | 3,847 | $ | 2,690 | $ | 15,788 | $ | 3,157 | ||||||||
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| Net income per share, basic |
$ | 0.07 | $ | 0.05 | $ | 0.28 | $ | 0.06 | ||||||||
| Net income per share, diluted |
$ | 0.07 | $ | 0.05 | $ | 0.27 | $ | 0.06 | ||||||||
| Weighted average shares outstanding: |
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| Basic |
57,050,684 | 51,056,462 | 56,287,979 | 49,040,344 | ||||||||||||
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| Diluted |
58,367,830 | 52,978,051 | 57,771,680 | 51,223,048 | ||||||||||||
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Paycom Software, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
| Nine Months Ended September 30, | ||||||||
| 2015 | 2014 | |||||||
| Cash flows from operating activities |
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| Net income |
$ | 15,788 | $ | 3,157 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
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| Depreciation and amortization |
6,822 | 5,198 | ||||||
| Amortization of debt issuance costs |
108 | — | ||||||
| Amortization of debt discount |
— | 67 | ||||||
| Write off of debt issuance costs |
— | 4,051 | ||||||
| Net loss on disposition of property and equipment |
15 | — | ||||||
| Stock-based compensation expense |
1,721 | 362 | ||||||
| Employee stock purchase plan compensation expense |
86 | — | ||||||
| Net change in derivative liability |
— | (1,107 | ) | |||||
| Deferred taxes, net |
(1,514 | ) | 1,414 | |||||
| Changes in operating assets and liabilities: |
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| Accounts receivable |
(592 | ) | 237 | |||||
| Prepaid expenses |
(474 | ) | (94 | ) | ||||
| Inventory |
245 | 195 | ||||||
| Deposits and other assets |
(336 | ) | (145 | ) | ||||
| Accounts payable |
(850 | ) | (3,044 | ) | ||||
| Income taxes, net |
2,543 | 298 | ||||||
| Accrued commissions and bonuses |
(571 | ) | (1,030 | ) | ||||
| Accrued payroll and vacation |
2,524 | (422 | ) | |||||
| Deferred revenue |
6,649 | 4,662 | ||||||
| Accrued expenses and other current liabilities |
1,965 | (498 | ) | |||||
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| Net cash provided by operating activities |
34,129 | 13,301 | ||||||
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| Cash flows from investing activities |
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| Decrease in funds held for clients |
44,662 | 62,146 | ||||||
| Decrease in restricted cash |
371 | 1 | ||||||
| Purchases of property and equipment |
(10,150 | ) | (11,948 | ) | ||||
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| Net cash provided by investing activities |
34,883 | 50,199 | ||||||
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| Cash flows from financing activities |
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| Proceeds from issuance of long-term debt |
— | 6,539 | ||||||
| Principal payments on long-term debt |
(897 | ) | (65,442 | ) | ||||
| Decrease in client funds obligation |
(44,662 | ) | (62,146 | ) | ||||
| Proceeds from initial public offering, net of offering costs |
— | 62,843 | ||||||
| Payment of debt issuance costs |
(50 | ) | — | |||||
| Capital impact of reorganization |
— | (183 | ) | |||||
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| Net cash used in financing activities |
(45,609 | ) | (58,389 | ) | ||||
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| Change in cash and cash equivalents |
23,403 | 5,111 | ||||||
| Cash and cash equivalents |
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| Beginning of period |
25,144 | 13,362 | ||||||
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| End of period |
$ | 48,547 | $ | 18,473 | ||||
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Paycom Software, Inc.
Breakout of Stock-Based Compensation Expense
(in thousands)
(unaudited)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Stock-based compensation expense: |
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| Operating expenses |
$ | 112 | $ | 4 | $ | 120 | $ | 19 | ||||||||
| Sales and marketing |
276 | 3 | 282 | 159 | ||||||||||||
| Research and development |
129 | 2 | 135 | 7 | ||||||||||||
| General and administrative |
915 | 79 | 1,184 | 177 | ||||||||||||
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| Total stock-based compensation expense |
$ | 1,432 | $ | 88 | $ | 1,721 | $ | 362 | ||||||||
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Paycom Software, Inc.
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
(in thousands)
(unaudited)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Consolidated statements of income data: |
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| Net income |
$ | 3,847 | $ | 2,690 | $ | 15,788 | $ | 3,157 | ||||||||
| Interest expense |
343 | 338 | 1,067 | 3,079 | ||||||||||||
| Provision for income taxes |
2,763 | 1,689 | 11,496 | 2,028 | ||||||||||||
| Depreciation and amortization |
2,402 | 1,797 | 6,822 | 5,198 | ||||||||||||
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| EBITDA |
9,355 | 6,514 | 35,173 | 13,462 | ||||||||||||
| Stock-based compensation expense |
1,432 | 88 | 1,721 | 362 | ||||||||||||
| Transaction expenses |
— | — | 685 | 1,363 | ||||||||||||
| Net loss on early repayment of debt |
— | — | — | 4,044 | ||||||||||||
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| Adjusted EBITDA |
$ | 10,787 | $ | 6,602 | $ | 37,579 | $ | 19,231 | ||||||||
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Paycom Software, Inc.
Reconciliation of Net Income to Non-GAAP Net Income
(in thousands, expect per share amounts)
(unaudited)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Consolidated statements of income data: |
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| Net income |
$ | 3,847 | $ | 2,690 | $ | 15,788 | $ | 3,157 | ||||||||
| Tax adjusted stock-based compensation expense(1) |
830 | 51 | 997 | 211 | ||||||||||||
| Tax adjusted transaction expenses(1) |
39 | — | 630 | 795 | ||||||||||||
| Tax adjusted net loss on early repayment of debt(1) |
— | — | — | 2,358 | ||||||||||||
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| Non-GAAP net income |
$ | 4,716 | $ | 2,741 | $ | 17,415 | $ | 6,521 | ||||||||
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| Non-GAAP net income per share, basic |
$ | 0.08 | $ | 0.05 | $ | 0.31 | $ | 0.13 | ||||||||
| Non-GAAP net income per share, diluted |
$ | 0.08 | $ | 0.05 | $ | 0.30 | $ | 0.13 | ||||||||
| Weighted average shares outstanding: |
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| Basic |
57,050,684 | 51,056,462 | 56,287,979 | 49,040,344 | ||||||||||||
| Diluted |
58,367,830 | 52,978,051 | 57,771,680 | 51,223,048 | ||||||||||||
| (1) | Beginning in 2015, we use 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, we used an overall effective tax rate for each tax adjusted non-GAAP item to determine the amount of non-GAAP net income. |
Contacts
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.