Will Paycom Be Acquired?

Keeping in line with the self-service focus, Paycom recently also released Ask Here, which gives employees a direct line of communication to ask work-related questions of their company representatives and receive timely answers. The solution will help ensure that common issues are addressed, actions taken, and employees don’t have to search for the right person to reach out to.

Paycom’s Financials

Paycom’s initial funding details are not known. But the company went public in 2014 when it raised $100 million by selling stock at $15 apiece at a valuation of $762.2 million. The stock has seen significant growth ever since.

Paycom recently announced its second-quarter results that were impressive as well. Revenues for the quarter grew 31% over the year to $169.3 million, ahead of the Street’s forecast of $164 million. By segment, recurring revenues grew 31% to $166 million and implementation revenues grew 51% to $3.3 million. Net income grew 37% to $48.8 million. On an adjusted basis, it reported an EPS of $0.75, which was also better than the market’s estimated $0.71.

Paycom expects to end the third quarter with revenues of $170-$172 million, which were also better than the analyst estimates of $168.2 million. It expects to end the year with revenues of $720-$728 million, compared with the Street’s estimate of $719.9 million.

Paycom is one of the fastest-growing companies within the HCM space. For the second consecutive year, it was ranked among the top five of the fastest-growing company on Fortune magazine’s 2018 100 Fastest-Growing Companies. The company is still fairly small compared with other HCM players such as ADP and Workday. For comparison, ADP had ended last year with revenues of $14.2 billion and a net income of $2.3 billion. SaaS player, Workday recently reported its quarterly results that saw revenues come in at $825 million but a net loss of $116 million. Workday is looking to end the current year with revenues of more than $3 billion. But given Paycom’s success, I won’t be surprised if companies like ServiceNow or Oracle look at it as a potential acquisition target. Adding Paycom to their portfolio will significantly add to their cloud-based HCM presence.

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