Paycom Software PAYC recently reported mixed results for second-quarter 2020, wherein earnings came in line with the Zacks Consensus Estimate but revenues missed the same.
The company generated revenues of $181.6 million, which increased 7% from the year-earlier period but fell short of the consensus mark of $182.3 million. Paycom Software’s quarterly non-GAAP earnings per share of 62 cents came in line with the Zacks Consensus Estimate. However, the bottom-line figure dropped 17.3% year on year.
The company’s overall performance was mainly impacted by payment deferrals by clients, headcount reductions at client offices and elevated operating expenses.
Adjusted gross profit increased 6.5% from the year-ago period to $153.8 million. However, adjusted gross margin contracted 60 basis points (bps) on a year-over-year basis to 84.7%.
Paycom Software’s adjusted EBITDA fell 11.8% year over year to $61.2 million. Moreover, adjusted EBITDA margin shrunk 730 bps to 33.7%.
Balance Sheet & Cash Flow
Paycom Software exited the June-end quarter with cash and cash equivalents of $113.5 million compared with the $181.8 million recorded in the prior quarter.
The company’s balance sheet comprises long-term debt of $31.8 million compared with the previous quarter’s $32.2 million.
Cash from operations was $107.5 million in the first half of 2020 and the company repurchased approximately $52 million worth of its common stock.
For the third quarter, Paycom Software estimates revenues between $191 million and $193 million. The Zacks Consensus Estimate is pegged at $188.6 million.
Management projects adjusted EBITDA in the range of $56 million to $58 million.
Zacks Rank and Key Picks
Currently, Paycom carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader technology sector include Benefitfocus BNFT, Cogent Communications Holdings CCOI and Synaptics SYNA, all carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term earnings growth rate for Benefitfocus, Cogent and Synaptics is currently pegged at 30%, 10.6%, and 10%, respectively.
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