Exhibit 99.1
Paycom Software, Inc. Reports Second Quarter 2015 Financial Results
Record Second Quarter Revenue of $49.0 Million, up 47% year-over-year
Second Quarter GAAP Earnings Per Diluted Share of $0.10
Second Quarter Non-GAAP Earnings Per Diluted Share of $0.10
Paycom Software, Inc. (“Paycom”) (NYSE: PAYC), a leading provider of comprehensive, cloud-based human capital management software delivered as Software-as-a-Service, today announced its financial results for the quarter ended June 30, 2015.
“Paycom continues to lead the industry with the rapid development and introduction of innovative and effective cloud-based solutions,” said Chad Richison, Paycom founder and CEO. “In the second quarter, we extended our commitment to provide best-in-class solutions to the mid-market with the introduction of our Enhanced ACA and GL Concierge applications. Our technology and strong sales model propelled our ability to add to our growing client base. We remain committed to providing the highest quality payroll and human capital management solution, which continues to drive our success and strong financial results.”
Financial Highlights for the Second Quarter of 2015
Total Revenues of $49.0 million represented a 47% increase compared to total revenues of $33.3 million in the same period last year. Recurring revenues of $47.8 million represented an increase of 46.4% from the comparable prior year period, and comprised 97.6% of total revenues.
GAAP Net Incomewas $5.9 million, or $0.10 per diluted share, compared to a GAAP net loss of $0.6 million, or ($0.01) per diluted share in the same period last year.
Adjusted EBITDA1 was $13.1 million, compared to $6.1 million in the same period last year.
Non-GAAP Net Income1 was $6.0 million, or $0.10 per diluted share, compared to $2.1 million, or $0.04 per diluted share, in the same period last year.
Annualized New Recurring Revenue (“ANRR”) was $16.5 million, up from $11.5 million for the same period last year, representing 43% growth from the comparable prior year period.
Cash and Cash Equivalents was $42.7 million as of June 30, 2015.
Total Debt was $26.3 million as of June 30, 2015. This debt consisted solely of debt on the corporate headquarters.
| 1 | Adjusted EBITDA and non-GAAP net income are non-GAAP financial measures. Please see the discussion below under the heading “Use of Non-GAAP Financial Information” and the reconciliations at the end of this release for additional information concerning these non-GAAP financial measures. |
Financial Outlook
Paycom provides the following expected financial guidance for the quarter ending September 30, 2015, and year ending December 31, 2015:
Third Quarter 2015
Total Revenues in the range of $51 million to $52 million.
Adjusted EBITDA in the range of $9 million to $10 million.
Fiscal Year 2015
Total Revenues in the range of $210 million to $212 million.
Adjusted EBITDA in the range of $44 million to $46 million.
We have not reconciled the Adjusted EBITDA range for the quarter ending September 30, 2015 or the year ending December 31, 2015 to net income because applicable information for future periods, on which this reconciliation would be based, is not readily available due to uncertainty regarding, and the potential variability of, depreciation and amortization, interest expense, taxes, stock-based compensation expense and other items. Accordingly, a reconciliation of these Adjusted EBITDA ranges to net income is not available at this time without unreasonable effort.
Use of Non-GAAP Financial Information
To supplement our financial information presented in accordance with generally accepted accounting principles in the United States (“GAAP”), we consider and have included certain non-GAAP financial measures in this press release, including Adjusted EBITDA and non-GAAP net income. We use Adjusted EBITDA and non-GAAP net income as supplemental measures to review and assess our performance and for planning purposes. We define: (i) Adjusted EBITDA as net income plus interest expense, taxes, depreciation and amortization, stock-based compensation expense, certain transaction expenses that are not core to our operations and net loss on early repayment of debt and (ii) non-GAAP net income as net income plus tax adjusted stock-based compensation expense, certain tax adjusted transaction expenses that are not core to our operations and tax adjusted net loss on early repayment of debt. Adjusted EBITDA and non-GAAP net income are metrics that we believe are useful to investors in evaluating our performance and facilitating comparison with other peer companies, many of which use similar non-GAAP financial measures to supplement results under GAAP.
Adjusted EBITDA and non-GAAP net income are not measures of financial performance under GAAP, and should not be considered a substitute for net income, which we consider to be the most directly comparable GAAP measure. Adjusted EBITDA and non-GAAP net income have limitations as analytical tools, and when assessing our operating performance, you should not consider Adjusted EBITDA and non-GAAP net income in isolation, or as a substitute for Net income or other Condensed Consolidated Statements of Income data prepared in accordance with GAAP. Adjusted EBITDA and non-GAAP net income may not be comparable to similar titled measures of other companies and other companies may not calculate such measures in the same manner as we do.
Conference Call Details:
In conjunction with this announcement, Paycom will host a conference call today, August 4, 2015 at 5:00 p.m. Eastern time to discuss the company’s financial results. To access this call, dial (888) 317-6003 (domestic) or (412) 317-6061 (international) with conference ID 0099158. A live webcast as well as the replay of the conference call will be available on the Investor Relations page of the company’s website atinvestors.paycom.com. A replay of this conference call can also be accessed by dialing (877) 344-7529 (domestic) or (412) 317-0088 (international) until August 19, 2015. The replay passcode is 10069012.
About Paycom
As a leader in payroll and HR technology, Oklahoma City-based Paycom redefines the human capital management industry by allowing companies to effectively navigate a rapidly changing business environment. Its cloud-based software solution is based on a core system of record maintained in a single database for all human capital management functions, providing the functionality that businesses need to manage the complete employment lifecycle, from recruitment to retirement. Paycom serves businesses of all sizes and in every industry. As one of the leading human capital management providers, Paycom serves clients in all 50 states from offices across the country.
Forward-Looking Statements
Certain statements in this press release are, and certain statements on the teleconference call may be, forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are made only as of the date hereof. These statements involve known and unknown risks and uncertainties that may cause Paycom’s actual results to differ materially from those stated or implied by such forward-looking statements, including: that our growth will generally mirror improvements in the labor market, that our capital expenditures and investment activity will continue to increase, that we will continue with our plan and ability to open additional sales offices in the future, that our existing cash and cash equivalents will be sufficient to meet our working capital and capital expenditure needs over the next twelve months, our ability to create additional jobs at our corporate headquarters, our ability to expand our corporate headquarters within an expected timeframe and our expectation of increasing our capital expenditures and investment activity as our business grows. Other factors that may cause such differences include, but are not limited to, those discussed in our periodic filings with the Securities and Exchange Commission, including those discussed in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 26, 2015 (the “Form 10-K”), and in particular the section entitled “Item 1A. Risk Factors” of the Form 10-K. Paycom undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable securities laws.
Paycom Software, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share amounts)
(unaudited)
| | | | | | | | |
| | | June 30, | | | December 31, | |
| | | 2015 | | | 2014 | |
Assets | | | | | | | | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 42,667 | | | $ | 25,144 | |
Restricted cash | | | — | | | | 371 | |
Accounts receivable | | | 2,562 | | | | 2,794 | |
Prepaid expenses | | | 3,212 | | | | 1,952 | |
Inventory | | | 326 | | | | 195 | |
Income tax receivable | | | — | | | | 935 | |
Deferred tax assets, net | | | 373 | | | | 1,445 | |
| | | | | | | | |
Current assets before funds held for clients | | | 49,140 | | | | 32,836 | |
Funds held for clients | | | 542,807 | | | | 660,557 | |
| | | | | | | | |
Total current assets | | | 591,947 | | | | 693,393 | |
Property and equipment, net | | | 50,115 | | | | 47,919 | |
Deposits and other assets | | | 941 | | | | 645 | |
Goodwill | | | 51,889 | | | | 51,889 | |
Intangible assets, net | | | 4,290 | | | | 5,096 | |
| | | | | | | | |
Total assets | | $ | 699,182 | | | $ | 798,942 | |
| | | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | | |
Current liabilities: | | | | | | | | |
Accounts payable | | $ | 2,968 | | | $ | 3,042 | |
Income tax payable | | | 1,931 | | | | — | |
Accrued commissions and bonuses | | | 2,539 | | | | 5,080 | |
Accrued payroll and vacation | | | 4,964 | | | | 1,582 | |
Deferred revenue | | | 2,958 | | | | 2,535 | |
Current portion of long-term debt | | | 861 | | | | 855 | |
Accrued expenses and other current liabilities | | | 6,467 | | | | 5,121 | |
| | | | | | | | |
Current liabilities before client funds obligation | | | 22,688 | | | | 18,215 | |
Client funds obligation | | | 542,807 | | | | 660,557 | |
| | | | | | | | |
Total current liabilities | | | 565,495 | | | | 678,772 | |
| | | | | | | | |
Deferred tax liabilities, net | | | 1,805 | | | | 3,107 | |
Long-term deferred revenue | | | 20,077 | | | | 16,802 | |
Long-term debt, less current portion | | | 25,435 | | | | 26,123 | |
| | | | | | | | |
Total long-term liabilities | | | 47,317 | | | | 46,032 | |
| | | | | | | | |
Commitments and contingencies | | | | | | | | |
Stockholders’ equity: | | | | | | | | |
Common stock, $0.01 par value (100,000,000 shares authorized, 57,050,684 and 53,832,782 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively) | | | 571 | | | | 538 | |
Additional paid in capital | | | 68,195 | | | | 67,937 | |
Retained earnings | | | 17,604 | | | | 5,663 | |
| | | | | | | | |
Total stockholders’ equity | | | 86,370 | | | | 74,138 | |
| | | | | | | | |
Total liabilities and stockholders’ equity | | $ | 699,182 | | | $ | 798,942 | |
| | | | | | | | |
Paycom Software, Inc.
Condensed Consolidated Statements of Income
(in thousands, except share and per share amounts)
(unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| | | 2015 | | | 2014 | | | 2015 | | | 2014 | |
Revenues | | | | | | | | | | | | | | | | |
Recurring | | $ | 47,820 | | | $ | 32,666 | | | $ | 102,171 | | | $ | 69,120 | |
Implementation and other | | | 1,153 | | | | 640 | | | | 2,024 | | | | 1,171 | |
| | | | | | | | | | | | | | | | |
Total revenues | | | 48,973 | | | | 33,306 | | | | 104,195 | | | | 70,291 | |
| | | | | | | | | | | | | | | | |
Cost of revenues | | | | | | | | | | | | | | | | |
Operating expenses | | | 7,134 | | | | 5,757 | | | | 14,605 | | | | 12,049 | |
Depreciation and amortization | | | 887 | | | | 608 | | | | 1,697 | | | | 1,238 | |
| | | | | | | | | | | | | | | | |
Total cost of revenues | | | 8,021 | | | | 6,365 | | | | 16,302 | | | | 13,287 | |
| | | | | | | | | | | | | | | | |
Administrative expenses | | | | | | | | | | | | | | | | |
Sales and marketing | | | 16,741 | | | | 13,700 | | | | 37,970 | | | | 29,381 | |
Research and development | | | 1,907 | | | | 937 | | | | 3,774 | | | | 1,819 | |
General and administrative | | | 10,096 | | | | 8,138 | | | | 22,080 | | | | 17,406 | |
Depreciation and amortization | | | 1,400 | | | | 1,072 | | | | 2,723 | | | | 2,163 | |
| | | | | | | | | | | | | | | | |
Total administrative expenses | | | 30,144 | | | | 23,847 | | | | 66,547 | | | | 50,769 | |
| | | | | | | | | | | | | | | | |
Total operating expenses | | | 38,165 | | | | 30,212 | | | | 82,849 | | | | 64,056 | |
| | | | | | | | | | | | | | | | |
Operating income | | | 10,808 | | | | 3,094 | | | | 21,346 | | | | 6,235 | |
Interest expense | | | (392 | ) | | | (674 | ) | | | (724 | ) | | | (2,741 | ) |
Loss on early repayment of debt | | | — | | | | (4,044 | ) | | | — | | | | (4,044 | ) |
Other income, net | | | 19 | | | | 587 | | | | 52 | | | | 1,356 | |
| | | | | | | | | | | | | | | | |
Income (loss) before income taxes | | | 10,435 | | | | (1,037 | ) | | | 20,674 | | | | 806 | |
Provision (benefit) for income taxes | | | 4,489 | | | | (444 | ) | | | 8,733 | | | | 339 | |
| | | | | | | | | | | | | | | | |
Net income (loss) | | $ | 5,946 | | | $ | (593 | ) | | $ | 11,941 | | | $ | 467 | |
| | | | | | | | | | | | | | | | |
Net income (loss) per share, basic | | $ | 0.10 | | | $ | (0.01 | ) | | $ | 0.21 | | | $ | 0.01 | |
Net income (loss) per share, diluted | | $ | 0.10 | | | $ | (0.01 | ) | | $ | 0.21 | | | $ | 0.01 | |
Weighted average shares outstanding: | | | | | | | | | | | | | | | | |
Basic | | | 57,038,021 | | | | 50,284,362 | | | | 55,900,306 | | | | 48,015,577 | |
| | | | | | | | | | | | | | | | |
Diluted | | | 58,369,083 | | | | 50,284,362 | | | | 57,469,918 | | | | 50,331,002 | |
| | | | | | | | | | | | | | | | |
Paycom Software, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
| | | | | | | | |
| | | Six Months Ended June 30, | |
| | | 2015 | | | 2014 | |
Cash flows from operating activities | | | | | | | | |
Net income | | $ | 11,941 | | | $ | 467 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
Depreciation and amortization | | | 4,420 | | | | 3,401 | |
Amortization of debt issuance costs | | | 85 | | | | — | |
Amortization of debt discount | | | — | | | | 74 | |
Write off of debt issuance costs | | | — | | | | 4,051 | |
Net loss on disposition of property and equipment | | | 15 | | | | — | |
Non-cash stock-based compensation | | | 289 | | | | 274 | |
Net change of derivative liability | | | — | | | | (1,107 | ) |
Deferred taxes, net | | | (230 | ) | | | 388 | |
Changes in operating assets and liabilities: | | | | | | | | |
Accounts receivable | | | 242 | | | | 799 | |
Prepaid expenses | | | (1,260 | ) | | | (132 | ) |
Inventory | | | (131 | ) | | | 59 | |
Deposits and other assets | | | (373 | ) | | | (93 | ) |
Accounts payable | | | (970 | ) | | | (2,400 | ) |
Income taxes, net | | | 2,866 | | | | 135 | |
Accrued commissions and bonuses | | | (2,541 | ) | | | (2,019 | ) |
Accrued payroll and vacation | | | 3,382 | | | | 405 | |
Deferred revenue | | | 3,698 | | | | 2,719 | |
Accrued expenses and other current liabilities | | | 1,346 | | | | (1,128 | ) |
| | | | | | | | |
Net cash provided by operating activities | | | 22,779 | | | | 5,893 | |
| | | | | | | | |
Cash flows from investing activities | | | | | | | | |
Decrease in funds held for clients | | | 117,750 | | | | 140,150 | |
Decrease in restricted cash | | | 371 | | | | 1 | |
Purchases of property and equipment | | | (4,922 | ) | | | (9,278 | ) |
| | | | | | | | |
Net cash provided by investing activities | | | 113,199 | | | | 130,873 | |
| | | | | | | | |
Cash flows from financing activities | | | | | | | | |
Proceeds from issuance of long-term debt | | | — | | | | 6,539 | |
Principal payments on long-term debt | | | (682 | ) | | | (65,207 | ) |
Decrease in client funds obligation | | | (117,750 | ) | | | (140,150 | ) |
Proceeds from initial public offering, net of offering costs | | | — | | | | 62,196 | |
Payments of deferred offering costs | | | — | | | | 645 | |
Payment of debt issuance costs | | | (23 | ) | | | — | |
Capital impact of reorganization | | | — | | | | (183 | ) |
| | | | | | | | |
Net cash used in financing activities | | | (118,455 | ) | | | (136,160 | ) |
| | | | | | | | |
Change in cash and cash equivalents | | | 17,523 | | | | 606 | |
Cash and cash equivalents | | | | | | | | |
Beginning of period | | | 25,144 | | | | 13,362 | |
| | | | | | | | |
End of period | | $ | 42,667 | | | $ | 13,968 | |
| | | | | | | | |
Paycom Software, Inc.
Breakout of Stock-Based Compensation Expense
(in thousands)
(unaudited)
| | | | | | | | | | | | | | | | |
| | | Three months ended June 30, | | | Six months ended June 30, | |
| | | 2015 | | | 2014 | | | 2015 | | | 2014 | |
Stock-based compensation expense: | | | | | | | | | | | | | | | | |
Operating expenses | | $ | 1 | | | $ | 11 | | | $ | 8 | | | $ | 15 | |
Sales and marketing | | | 1 | | | | 154 | | | | 6 | | | | 157 | |
Research and development | | | 1 | | | | 4 | | | | 6 | | | | 6 | |
General and administrative | | | 32 | | | | 12 | | | | 269 | | | | 96 | |
| | | | | | | | | | | | | | | | |
Total stock-based compensation expense | | $ | 35 | | | $ | 181 | | | $ | 289 | | | $ | 274 | |
| | | | | | | | | | | | | | | | |
Paycom Software, Inc.
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
(in thousands)
(unaudited)
| | | | | | | | | | | | | | | | |
| | | Three months ended June 30, | | | Six months ended June 30, | |
| | | 2015 | | | 2014 | | | 2015 | | | 2014 | |
Consolidated statements of income data: | | | | | | | | | | | | | | | | |
Net income (loss) | | $ | 5,946 | | | $ | (593 | ) | | $ | 11,941 | | | $ | 467 | |
Interest expense | | | 392 | | | | 674 | | | | 724 | | | | 2,741 | |
Provision (benefit) for income taxes | | | 4,489 | | | | (444 | ) | | | 8,733 | | | | 339 | |
Depreciation and amortization | | | 2,287 | | | | 1,680 | | | | 4,420 | | | | 3,401 | |
| | | | | | | | | | | | | | | | |
EBITDA | | | 13,114 | | | | 1,317 | | | | 25,818 | | | | 6,948 | |
Stock-based compensation expense | | | 35 | | | | 181 | | | | 289 | | | | 274 | |
Transaction expenses | | | — | | | | 523 | | | | 685 | | | | 1,363 | |
Net loss on early repayment of debt | | | — | | | | 4,044 | | | | — | | | | 4,044 | |
| | | | | | | | | | | | | | | | |
Adjusted EBITDA | | $ | 13,149 | | | $ | 6,065 | | | $ | 26,792 | | | $ | 12,629 | |
| | | | | | | | | | | | | | | | |
Paycom Software, Inc.
Reconciliation of Net Income to Non-GAAP Net Income
(in thousands, except per share amounts)
(unaudited)
| | | | | | | | | | | | | | | | |
| | | Three months ended June 30, | | | Six months ended June 30, | |
| | | 2015 | | | 2014 | | | 2015 | | | 2014 | |
Consolidated statements of income data: | | | | | | | | | | | | | | | | |
Net income (loss) | | $ | 5,946 | | | $ | (593 | ) | | $ | 11,941 | | | $ | 467 | |
Tax adjusted stock-based compensation expense(1) | | | 17 | | | | 104 | | | | 167 | | | | 159 | |
Tax adjusted transaction expenses(1) | | | 84 | | | | 299 | | | | 591 | | | | 790 | |
Tax adjusted net loss on early repayment of debt(1) | | | — | | | | 2,313 | | | | — | | | | 2,343 | |
| | | | | | | | | | | | | | | | |
Non-GAAP net income | | $ | 6,047 | | | $ | 2,123 | | | $ | 12,699 | | | $ | 3,759 | |
| | | | | | | | | | | | | | | | |
Non-GAAP net income per share, basic | | $ | 0.11 | | | $ | 0.04 | | | $ | 0.23 | | | $ | 0.08 | |
Non-GAAP net income per share, diluted | | $ | 0.10 | | | $ | 0.04 | | | $ | 0.22 | | | $ | 0.07 | |
Weighted average shares outstanding: | | | | | | | | | | | | | | | | |
Basic | | | 57,038,021 | | | | 50,284,362 | | | | 55,900,306 | | | | 48,015,577 | |
Diluted | | | 58,369,083 | | | | 52,269,300 | | | | 57,469,918 | | | | 50,331,002 | |
| (1) | Beginning in 2015, we use an individual non-GAAP tax rate for each tax adjusted non-GAAP item to determine the amount of non-GAAP net income. Prior to 2015, we used an overall effective tax rate for each tax adjusted non-GAAP item to determine the amount of non-GAAP net income. |
Contacts
Paycom Software, Inc.
Media Contact:
Kathy Oden-Hall, 800-580-4505
CMO
Kathy.Oden-Hall@paycom.com
or
Investor Relations Contact:
855-603-1620
investors@paycom.com Source:
Paycom Software, Inc.
