Paycom software (NYSE: PAYC) Share prices are rising in Thursday trading following the company’s recently released third-quarter results. The company’s stock price was up 24.7% as of 2:15 PM ET.
Paycom released its third-quarter results after the market closed yesterday, and revenue and profit for the period exceeded Wall Street targets. In addition to the third quarter numbers, the company also provided strong guidance for the current quarter.
Paycom exceeds both top and bottom line expectations in the third quarter
Paycom posted non-GAAP (adjusted) earnings per share of $1.67 on revenue of $451.9 million in the third quarter. Revenue rose about 11.2% year-on-year in the period, while earnings per share fell about 5.2%. The results beat average analyst expectations for adjusted earnings per share of $1.61 on revenue of $447.2 million.
Paycom’s guidance turned out much better than expected
For the fourth quarter, Paycom expects revenue between $477 million and $484 million. Reaching the midpoint of that range would mean year-over-year growth of 10.6% and sequential quarterly revenue growth of 6.3%. Expectations were significantly higher than the average analyst estimate, which had expected revenue of $462.4 million in the period. Meanwhile, management expects adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to be between $184.5 million and $191.5 million.
For the full-year period, management is targeting revenue between $1.866 billion and $1.873 billion – indicating growth of 10.4% at the midpoint. Adjusted EBITDA is expected to be between $745 million and $752 million, indicating annual growth of 4.1% at the midpoint of the guidance range.
Paycom’s business has had uneven performance over the past year, but it appears growth is starting to accelerate again. Adverse macroeconomic shifts remain a risk factor for the company and its shares, but it appears the company will overcome some of the headwinds from product cannibalization.
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Keith Noonan has no positions in the stocks mentioned. The Motley Fool holds and recommends positions in Paycom Software. The Motley Fool has a disclosure policy.
