Paycom Software Inc., a leading provider of payroll and human-resources software, is expected to face a significant decrease in its stock value following disappointing quarterly projections. After the market closed on Tuesday, the company reported a lower-than-expected outlook.
Fourth Quarter Revenue Expectations
Paycom forecasts revenue in the range of $420-425 million for the fourth quarter, which falls short of analysts’ projections of $452 million. Additionally, the company anticipates adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to be between $169-174 million for the period. However, analysts were previously predicting earnings of $189 million.
Strong Performance in Q3
In the third quarter, Paycom exceeded expectations with net income of $75.2 million, or $1.30 per share, compared to $52 million, or 90 cents per share in the same period last year. Adjusted earnings per share reached $1.77, surpassing analysts’ estimates of $1.61.
The company’s third-quarter revenue was recorded at $406.3 million, a substantial increase from $334.2 million in the previous year. However, this figure fell slightly below the FactSet consensus of $411.2 million.
CEO Chad Richison’s Response
Commenting on the company’s performance, Chief Executive Chad Richison expressed confidence in Paycom’s growth, stating, “Our third-quarter fundamentals were strong with solid revenue and earnings growth.”
Industry Impact
Other payroll-related software stocks also experienced declines in after-hours trading. Ceridian HCM Holding Inc. saw a 2% decrease, and Automatic Data Processing Inc. dropped by 0.7%.
Overall, Paycom’s disappointing quarterly outlook raises concerns about its future performance and places its shares at risk of significant devaluation in the market.