Paycom grows as companies embrace technologyPublished: Thursday, August 2, 2018 By: Brian Brus Source: The Journal Record
The digital transformation of daily life has already happened at the consumer level; Paycom is becoming a juggernaut in the tech sector by helping companies catch up, Chief Executive Chad Richison said.
“People use their technology in the morning, skipping the line at the coffee shop by using an app,” he said. “They’re interacting directly with the database. Then they order something at Amazon.com. … You’ve already seen people buy and use technology differently.
That trend is now shifting into the human capital management software industry, he said.
“We’re the company that has the products,” Richison said.
The publicly traded payroll and personnel software company exceeded analysts’ expectations this week with its quarterly results for the period ending June 30. Net income for the second quarter was $35.7 million, or 61 cents per diluted share, up from $20 million, or 34 cents per diluted share, for the second quarter a year earlier. Revenue totaled $128.8 million, up 31 percent from 2017.
Those numbers are not unusual, either. In the previous quarter ended March 31, Paycom reported revenue up 29 percent over the previous year and net income of $41.2 million, or 70 cents per diluted share.
Analysts looked beyond the balance sheet during Paycom’s earnings conference call Richison led Tuesday, asking about the company’s updated user interfaces and mobile apps. Stifel Nicolaus analyst Brad Reback, for example, said mobilization of data access is an increasingly meaningful point of differentiation in the market. And afterward, Zacks Investment Research posted an assessment that Paycom’s mobile app positions it well for continued growth.
However, while Richison acknowledged how important continuing tech advancements will be to Paycom, he remained mum on the details.
“I don’t want to give away too much on what we are doing on our marketing,” he told analysts. “I mean, it’s a competitive situation. We are in a very competitive industry. … There is a new digital transformation here for our industry. And it’s time that everybody – us included and clients and prospects and competitors – embrace that.”
The secret to success isn’t really much of a secret, Richison said. It’s a matter of making the company vital to its clients, and the way to do that is to provide the best return on investment possible. Every dollar spent on Paycom’s product and service line must provide benefit. Corporate clients are trying to give their own employees the same access to private data those individuals expect in their daily lives, a task that Paycom excels at.
Paycom’s physical presence is growing as well. The company recently purchased three parcels of land near N. Rockwell Avenue and Memorial Road, about a half-mile east of corporate headquarters, 7501 W. Memorial, near the John Kilpatrick Turnpike.
The market responded well to Paycom’s results Wednesday. The PAYC stock on the New York Stock Exchange closed at $125.94, up 18.5 percent for the day.