Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2016 | Feb. 06, 2017 | Jun. 30, 2016 | |
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2016 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | PAYC | ||
Entity Registrant Name | Paycom Software, Inc. | ||
Entity Central Index Key | 1,590,955 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 59,491,770 | ||
Entity Public Float | $ 2.1 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 60,158 | $ 50,714 |
Accounts receivable | 1,339 | 2,354 |
Prepaid expenses | 4,475 | 3,531 |
Inventory | 675 | 1,093 |
Income tax receivable | 692 | 6,743 |
Current assets before funds held for clients | 67,339 | 64,435 |
Funds held for clients | 858,244 | 696,703 |
Total current assets | 925,583 | 761,138 |
Property and equipment, net | 96,848 | 58,858 |
Deposits and other assets | 1,215 | 1,286 |
Goodwill | 51,889 | 51,889 |
Intangible assets, net | 1,871 | 3,484 |
Deferred income tax assets, net | 1,207 | |
Total assets | 1,078,613 | 876,655 |
Current liabilities: | ||
Accounts payable | 3,737 | 4,899 |
Accrued commissions and bonuses | 8,003 | 8,687 |
Accrued payroll and vacation | 4,769 | 2,898 |
Deferred revenue | 5,230 | 3,726 |
Current portion of long-term debt | 1,113 | 886 |
Accrued expenses and other current liabilities | 17,798 | 9,735 |
Current liabilities before client funds obligation | 40,650 | 30,831 |
Client funds obligation | 858,244 | 696,703 |
Total current liabilities | 898,894 | 727,534 |
Deferred income tax liabilities, net | 641 | |
Long-term deferred revenue | 34,481 | 25,310 |
Net long-term debt, less current portion | 28,711 | 24,856 |
Total long-term liabilities | 63,192 | 50,807 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock, $0.01 par value (100,000,000 shares authorized, 58,453,283 and 57,119,873 shares issued at December 31, 2016 and 2015, respectively; 57,331,022 and 57,119,873 shares outstanding at December 31, 2016 and 2015, respectively) | 585 | 571 |
Additional paid in capital | 95,452 | 71,135 |
Retained earnings | 70,448 | 26,608 |
Treasury stock, at cost (1,122,261 and 0 shares at December 31, 2016 and 2015, respectively) | (49,958) | |
Total stockholders' equity | 116,527 | 98,314 |
Total liabilities and stockholders' equity | $ 1,078,613 | $ 876,655 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2016 | Dec. 31, 2015 |
Statement Of Financial Position [Abstract] | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 58,453,283 | 57,119,873 |
Common stock, shares outstanding | 57,331,022 | 57,119,873 |
Treasury stock, shares | 1,122,261 | 0 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Revenues | |||
Recurring | $ 323,548 | $ 219,987 | $ 148,207 |
Implementation and other | 5,593 | 4,666 | 2,722 |
Total revenues | 329,141 | 224,653 | 150,929 |
Cost of revenues | |||
Operating expenses | 48,268 | 31,790 | 24,694 |
Depreciation and amortization | 5,798 | 3,683 | 2,624 |
Total cost of revenues | 54,066 | 35,473 | 27,318 |
Administrative expenses | |||
Sales and marketing | 119,258 | 92,554 | 63,547 |
Research and development | 20,966 | 8,627 | 4,325 |
General and administrative | 69,046 | 47,826 | 35,501 |
Depreciation and amortization | 7,834 | 5,738 | 4,538 |
Total administrative expenses | 217,104 | 154,745 | 107,911 |
Total operating expenses | 271,170 | 190,218 | 135,229 |
Operating income | 57,971 | 34,435 | 15,700 |
Interest expense | (1,036) | (1,427) | (3,421) |
Net loss on early repayment of debt | (4,044) | ||
Other income, net | 308 | 517 | 1,421 |
Income before income taxes | 57,243 | 33,525 | 9,656 |
Provision for income taxes | 13,403 | 12,580 | 3,993 |
Net income | $ 43,840 | $ 20,945 | $ 5,663 |
Earnings per share, basic | $ 0.76 | $ 0.37 | $ 0.11 |
Earnings per share, diluted | $ 0.74 | $ 0.36 | $ 0.11 |
Weighted average shares outstanding: | |||
Basic | 57,550,204 | 56,495,170 | 49,784,154 |
Diluted | 58,968,099 | 57,919,700 | 51,857,309 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands | Total | IPO [Member] | Common Stock [Member] | Common Stock [Member]IPO [Member] | Additional Paid in Capital [Member] | Additional Paid in Capital [Member]IPO [Member] | (Accumulated Deficit) Retained Earnings [Member] | Non-controlling Interest [Member] | Treasury Stock [Member] |
Beginning balance, value at Dec. 31, 2013 | $ 5,083 | $ 457 | $ 33,978 | $ (29,349) | $ (3) | ||||
Beginning balance, shares at Dec. 31, 2013 | 45,708,573 | ||||||||
Acquisition of CP IV Blocker under the 2014 Reorganization | 3 | $ 3 | |||||||
Reclassification of accumulated deficit to additional paid in capital under the 2014 Reorganization | (29,349) | 29,349 | |||||||
Incentive units converted to common and restricted stock | $ 35 | (35) | |||||||
Incentive units converted to common and restricted stock, shares | 3,517,327 | ||||||||
Issuance of common stock | $ 62,856 | $ 46 | $ 62,810 | ||||||
Issuance of common stock, shares | 4,606,882 | ||||||||
Stock-based compensation | 716 | 716 | |||||||
Capital impact of the 2014 Reorganization | (183) | (183) | |||||||
Net income | 5,663 | 5,663 | |||||||
Ending balance, value at Dec. 31, 2014 | 74,138 | $ 538 | 67,937 | 5,663 | |||||
Ending balance, shares at Dec. 31, 2014 | 53,832,782 | ||||||||
Vesting of restricted stock | $ 33 | (33) | |||||||
Vesting of restricted stock, shares | 3,287,091 | ||||||||
Stock-based compensation | 3,231 | 3,231 | |||||||
Net income | 20,945 | 20,945 | |||||||
Ending balance, value at Dec. 31, 2015 | 98,314 | $ 571 | 71,135 | 26,608 | |||||
Ending balance, shares at Dec. 31, 2015 | 57,119,873 | ||||||||
Vesting of restricted stock | $ 14 | (14) | |||||||
Vesting of restricted stock, shares | 1,333,410 | ||||||||
Stock-based compensation | 24,331 | 24,331 | |||||||
Repurchases of common stock | (49,958) | $ (49,958) | |||||||
Repurchases of common stock, shares | 1,122,261 | ||||||||
Net income | 43,840 | 43,840 | |||||||
Ending balance, value at Dec. 31, 2016 | $ 116,527 | $ 585 | $ 95,452 | $ 70,448 | $ (49,958) | ||||
Ending balance, shares at Dec. 31, 2016 | 58,453,283 | 1,122,261 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | |||
Net income | $ 43,840 | $ 20,945 | $ 5,663 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 13,632 | 9,421 | 7,162 |
(Gain)/loss on disposition of property and equipment | (64) | 15 | |
Amortization of debt discount and debt issuance costs | 124 | 157 | 133 |
Write off of debt discount, net | 4,051 | ||
Stock-based compensation expense | 22,471 | 3,219 | 712 |
Net change in derivative liability | (1,107) | ||
Deferred income taxes, net | (1,848) | (1,021) | 2,259 |
Changes in operating assets and liabilities: | |||
Accounts receivable | 1,015 | 440 | (1,089) |
Prepaid expenses | (944) | (1,579) | (465) |
Inventory | 418 | (224) | 267 |
Deposits and other assets | 71 | (810) | (232) |
Accounts payable | (1,571) | (431) | (2,386) |
Income taxes, net | 6,051 | (5,808) | (122) |
Accrued commissions and bonuses | (684) | 3,607 | 1,482 |
Accrued payroll and vacation | 1,871 | 1,316 | (1,505) |
Deferred revenue | 10,675 | 9,699 | 6,765 |
Accrued expenses and other current liabilities | 3,896 | 4,026 | 749 |
Net cash provided by operating activities | 98,953 | 42,972 | 22,337 |
Cash flows from investing activities: | |||
Increase in funds held for clients | (161,541) | (36,146) | (204,778) |
Decrease (increase) in restricted cash | 371 | (2) | |
Purchases of property and equipment | (43,805) | (16,549) | (14,270) |
Proceeds from sale of property and equipment | 295 | ||
Net cash used in investing activities | (205,051) | (52,324) | (219,050) |
Cash flows from financing activities: | |||
Proceeds from issuance of long-term debt | 5,000 | 6,538 | |
Repurchases of common stock | (35,561) | ||
Withholding taxes paid related to net share settlements | (14,396) | ||
Principal payments on long-term debt | (964) | (1,118) | (65,650) |
Increase in client funds obligation | 161,541 | 36,146 | 204,778 |
Proceeds from initial public offering, net of offering costs | 62,840 | ||
Payment of debt issuance costs | (78) | (106) | (11) |
Net cash provided by financing activities | 115,542 | 34,922 | 208,495 |
Net increase in cash and cash equivalents | 9,444 | 25,570 | 11,782 |
Cash and cash equivalents | |||
Beginning of year | 50,714 | 25,144 | 13,362 |
End of year | 60,158 | 50,714 | 25,144 |
Supplemental disclosures of cash flow information: | |||
Cash paid for interest, net of amounts capitalized | 938 | 1,271 | 3,482 |
Cash paid for income taxes | 9,323 | 19,205 | 2,013 |
Noncash investing and financing activities: | |||
Purchases of property and equipment, accrued but not paid | 4,651 | 1,613 | 408 |
Stock-based compensation for capitalized software | $ 1,784 | $ 220 | $ 4 |
Organization and Description of
Organization and Description of Business | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Organization and Description of Business | 1. ORGANIZATION AND DESCRIPTION OF BUSINESS Description of Business Paycom Software, Inc. (“Software”) and its wholly owned subsidiaries (collectively, the “Company”) is a leading provider of comprehensive, cloud-based human capital management (“HCM”) software delivered as Software-as-a-Service. Unless we state otherwise or the context otherwise requires, the terms “we”, “our”, “us” and the “Company” refer to Software and its consolidated subsidiaries. We provide functionality and data analytics that businesses need to manage the complete employment life cycle from recruitment to retirement. Our solution requires virtually no customization and is based on a core system of record maintained in a single database for all HCM functions, including talent acquisition, time and labor management, payroll, talent management and human resources (“HR”) management applications. The Reorganization Software and its wholly owned subsidiary, Payroll Software Merger Sub, LLC (“Merger Sub”) were formed as Delaware entities on October 31, 2013 and December 23, 2013, respectively, in anticipation of an initial public offering (“IPO”) and were wholly owned subsidiaries of Paycom Payroll Holdings, LLC (“Holdings”) prior to December 31, 2013. On January 1, 2014, we consummated a reorganization pursuant to which (i) affiliates of Welsh, Carson, Anderson & Stowe, L.P. contributed WCAS Paycom Holdings, Inc. (“WCAS Holdings”) and WCAS CP IV Blocker, Inc. (“CP IV Blocker”), which together owned all of the Series A Preferred Units of Holdings, to Software in exchange for shares of common stock of Software, and (ii) the owners of outstanding Series B Preferred Units of Holdings contributed their Series B Preferred Units of Holdings to Software in exchange for shares of common stock of Software. Immediately after these contributions, Merger Sub merged with and into Holdings with Holdings surviving the merger. Upon consummation of the merger, the remaining holders of outstanding common and incentive units of Holdings received shares of common and restricted stock of Software for their common and incentive units by operation of Delaware law, and Holdings’ ownership interest in Software was cancelled. Outstanding common units, Series B Preferred Units and WCAS Holdings and CP IV Blocker were contributed to Software in exchange for, or converted into, an aggregate of 45,708,573 shares of common stock and 8,121,101 shares of restricted stock of Software. Prior to the reorganization, WCAS Holdings held Series C Preferred Units of Holdings in the amount of $46.2 million and WCAS Holdings had a 14% note due April 3, 2017 in the amount of $46.2 million (the “2017 Note”), which was payable to Welsh, Carson, Anderson & Stowe X, L.P. (“WCAS X”). Following the exchange of the Series A Preferred Units and Series B Preferred Units for shares of common stock of Software, all outstanding Series C Preferred Units of Holdings were eliminated in an intercompany transaction between Holdings and WCAS Holdings, we assumed the 2017 Note and Software became a holding company with its principal assets being the Series B Preferred Units of Holdings and the outstanding capital stock of WCAS Holdings and CP IV Blocker. The foregoing transactions are referred to collectively as the “2014 Reorganization”. Software’s acquisition of WCAS Holdings and Holdings in the 2014 Reorganization represented transactions under common control and were required to be retrospectively applied to the financial statements for all prior periods when the financial statements were issued for a period that included the date the transactions occurred. This includes a retrospective presentation for all equity related disclosures, including share, per share, and restricted stock disclosures, which have been revised to reflect the effects of the 2014 Reorganization. Therefore, our consolidated financial statements are presented as if WCAS Holdings and Holdings were Software’s wholly owned subsidiaries in periods prior to the 2014 Reorganization. The acquisition of CP IV Blocker was not deemed to be a reorganization under common control and therefore our historical consolidated financial statements include the ownership of a minority equity interest in CP IV Blocker, which was eliminated upon the acquisition of CP IV Blocker in the 2014 Reorganization on January 1, 2014. Initial Public Offering On April 21, 2014, we completed our initial public offering (“IPO”) whereby an aggregate of 7,641,750 shares of our common stock were sold to the public (consisting of 4,606,882 shares of common stock issued and sold by us and 3,034,868 shares of common stock sold by certain selling stockholders) at a public offering price of $15.00 per share. We did not receive any proceeds from the sale of shares by the selling stockholders. The total gross proceeds we received from the offering were $69.1 million. After deducting underwriting discounts and commissions and offering expenses payable by us, the aggregate net proceeds we received totaled approximately $62.8 million. We used all of the net proceeds from the IPO, together with approximately $3.3 million from existing cash, for the repayment in full of the 2017 Note and the 10% Senior Note due 2022 payable to WCAS Capital Partners IV, L.P. (“WCAS Capital IV”). Follow-On Public Offering On January 21, 2015, we closed our follow-on public offering, whereby 6,422,750 shares of our common stock were sold to the public by certain selling stockholders at a public offering price of $22.50 per share. We did not receive any proceeds from the sale of these shares. Registered Block Trade Transactions On May 20, 2015, we closed an underwritten secondary offering of 8,000,000 shares of our common stock by WCAS X, WCAS Capital IV, each of our executive officers and certain other selling stockholders at a public offering price of $36.25 per share. We did not receive any proceeds from the sale of these shares. On September 15, 2015, we closed an underwritten secondary offering of 4,500,000 shares of our common stock by WCAS X, WCAS Capital IV, each of our executive officers and certain other selling stockholders at a public offering price of $37.95 per share. On September 23, 2015, the underwriter exercised its option to purchase an additional 675,000 shares from WCAS X and WCAS Capital IV. We did not receive any proceeds from the sales of these shares. On November 18, 2015, we closed an underwritten secondary offering of 4,500,000 shares of our common stock by WCAS X, WCAS Capital IV, each of our executive officers and certain other selling stockholders at a public offering price of $42.15 per share. On November 19, 2015, the underwriter exercised its overallotment option and subsequently purchased an additional 585,697 shares from WCAS X and WCAS Capital IV. We did not receive any proceeds from the sales of these shares. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Basis of Presentation and Principles of Consolidation Our consolidated financial statements include the financial results of Software and its wholly owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, the accompanying consolidated financial statements include all adjustments necessary for the fair presentation for the periods presented. Such adjustments are of a normal recurring nature. In addition to the normal adjustments, on the consolidated statement of cash flows for the year ended December 31, 2015, we combined the accounts of “stock-based compensation expense” and “employee stock purchase plan compensation expense” in order to conform to the current period presentation. Adoption of New Pronouncements In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-09, “Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”), which simplified the accounting related to certain aspects of share-based payments to employees. The new guidance requires excess tax benefits and tax deficiencies to be recognized within the income statement when share-based payment awards vest or are settled. In addition, cash flows related to excess tax benefits are not separately classified as a financing activity apart from other income tax cash flows in the statement of cash flows. This guidance also allows us to repurchase more of an employee’s vesting shares for tax withholding purposes without triggering liability accounting, clarifies that all cash payments made to taxing authorities on an employee’s behalf for withheld shares be presented as a financing activity in the statement of cash flows, and provides an accounting policy election to account for award forfeitures as they occur or continue to estimate forfeitures. We elected to early adopt the new guidance in the third quarter of 2016. As such, we are required to present any adjustments as of January 1, 2016, the beginning of the annual period that includes the interim period of adoption, although there were no such adjustments necessary in our consolidated financial statements until the quarter ended September 30, 2016. The primary impact of our adoption of ASU 2016-09 was the recognition of excess tax benefits in our provision for income taxes of $7.0 million for the year ended December 31, 2016, which otherwise would have been recognized as paid in capital. Early adoption had no impact on retained earnings as of January 1, 2016, or on the comparability of the prior period financial statements as there were no excess tax benefits recognized during 2015. We elected to continue to estimate expected forfeitures to determine the amount of stock compensation cost to be recognized in each period. The presentation requirements for cash flows related to excess benefits and for cash flows related to employee taxes paid for withheld shares had no impact on any of the periods previously presented in our consolidated statements of cash flows. We adopted on a retrospective basis the recently issued guidance by the FASB Accounting Standards Update No. 2015-03, “Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”). ASU 2015-03 requires companies with debt issuance costs related to a recognized debt liability to present such issuance costs in the consolidated balance sheets as a direct deduction from the carrying amount of the debt liability. Our adoption of ASU 2015-03 resulted in a reclassification that decreased deposits and other assets by $0.1 million and decreased net long-term debt, less current portion by $0.1 million on our consolidated balance sheet as of December 31, 2015. The adoption of ASU 2015-03 had no impact on our stockholders’ equity or the results of our operations. Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates include income taxes, loss contingencies, the useful life for long-lived and intangible assets, the life of our client relationships, the fair market value of our equity incentive awards and the fair value of our financial instruments. These estimates are based on historical experience where applicable and other assumptions that management believes are reasonable under circumstances. As such, actual results could materially differ from these estimates. Segment Information We operate in a single operating segment and a single reporting segment. Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker, who is also the chief executive officer in deciding how to allocate resources and assessing performance. Our chief executive officer allocates resources and assesses performance based upon financial information at the consolidated level. As we operate in one operating segment, all required financial segment information is presented in the consolidated financial statements. Cash Equivalents We consider all highly liquid instruments purchased with a maturity of three months or less and money market funds to be cash equivalents. We maintain cash and cash equivalents in demand deposit accounts, money market funds, and certificates of deposit, which may not be federally insured. The fair value of our cash and cash equivalents approximates carrying value. We have not experienced any losses in such accounts and do not believe there is exposure to any significant credit risk on such accounts. Accounts Receivable We generally collect revenues from our clients through an automatic deduction from the clients’ bank accounts at the time payroll processing occurs. Accounts receivable on our consolidated balance sheets consists primarily of revenue fees related to the last day of the year, which are collected on the following business day. As accounts receivable are collected via automatic deduction on the following business day, the Company has not recorded an allowance for doubtful accounts. Inventory Our inventory consists of two types of time clocks, and related clock attachments, sold to clients as part of our time and attendance services and are stated at the lower of cost or market. Cost is determined using the first-in first-out (FIFO) cost method. Time clocks are purchased as finished goods from a third party and as such we do not have any inventory classified as raw materials or work in process inventory. Rental clocks are issued to clients under month-to-month operating leases and are classified as property and equipment. We retain inventory in certain lines primarily as replacements for those clients who use the various clocks and have determined that no write-down for obsolete items was required based on inventory turnover and our historical experience during the years ended December 31, 2016, 2015 and 2014. Property and Equipment Property and equipment is stated at cost, net of accumulated depreciation and amortization. Depreciation is computed using the straight line method over the estimated useful lives of the assets as follows: Furniture, fixtures and equipment 5 years Computer equipment 3 years Software and capitalized software 3 years Buildings 30 years Leasehold improvements 3 - 5 years Rental clocks 5 years Vehicles 3 years Our leasehold improvements are amortized over the shorter of their estimated useful lives or the related lease terms. Costs incurred during construction of long-lived assets are recorded as construction in progress and are not depreciated until the asset is placed in service. We capitalize interest costs incurred related to construction in progress. For the years ended December 31, 2016, 2015 and 2014, we incurred interest costs of $1.3 million, $1.3 million and $3.7 million, respectively. For the years ended December 31, 2016, 2015 and 2014, interest expense of $0.4 million, less than $0.1 million and $0.4 million, respectively, was capitalized. Internal Use Software Expenditures for software purchases and software developed or obtained for internal use are capitalized and amortized over a three-year period on a straight-line basis. Capitalized costs include external direct costs of materials and services associated with developing or obtaining internal use computer software and The total capitalized payroll costs related to internal use computer software projects was $8.8 million and $4.3 million as of December 31, 2016 and 2015, respectively, which have been included in property and equipment. Amortization expense related to capitalized software costs of $3.6 million, $1.8 million and $0.9 million was charged to expense for the years ended December 31, 2016, 2015 and 2014, respectively. Goodwill and Other Intangible Assets Goodwill is not amortized, but is instead tested for impairment annually, or earlier if, at the reporting unit level, an indicator of impairment arises. The estimates and assumptions about future results of operations and cash flows made in connection with the impairment testing could differ from future actual results of operations and cash flows. If impairment exists, a write-down to fair value is recorded. Our business is largely homogeneous and, as a result, goodwill is associated with one reporting unit. We have selected June 30 as our annual goodwill impairment testing date and determined there was no impairment as of June 30, 2016. For the years ended December 31, 2016, 2015 and 2014, there were no indicators of impairment. Intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives. Impairment of Long-Lived Assets Long-lived assets, including intangible assets with finite lives, are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the estimated fair value of the asset. We have determined that there was no impairment of long-lived assets including intangible assets with finite lives, for the years ended December 31, 2016, 2015 and 2014. Funds Held for Clients and Client Funds Obligation As part of our payroll and tax filing application, we (i) collect client funds to satisfy their respective federal, state and local employment tax obligations, (ii) remit such funds to the appropriate taxing authorities and accounts designated by our clients, and (iii) manage client tax filings and any related correspondence with taxing authorities. Amounts collected by us from clients for their federal, state and local employment taxes are invested and earn interest during the interval between receipt and disbursement. These investments are shown in the consolidated balance sheets as funds held for clients, and the offsetting liability for the tax filings is shown as client funds obligation. The liability is recorded in the accompanying balance sheets at the time we obtain the funds from clients. The client funds obligation represents liabilities that will be repaid within one year of the balance sheet date. As of April 1, 2016, the interest income earned on funds held for clients is recorded in recurring revenues. Prior to April 1, 2016, the interest income earned on these funds was recorded in other income, net in the consolidated statements of income. As of December 31, 2016, the funds held for clients were invested in money market funds, demand deposit accounts, commercial paper and certificates of deposit and classified as a current asset in the accompanying balance sheets, as these funds are held solely to satisfy the client funds obligation. As of December 31, 2015 and 2014, the funds held for clients were invested in the same investments, other than commercial paper. Stock Repurchase Plan On May 26, 2016, we announced that our Board of Directors approved a stock repurchase plan under which we were authorized to purchase (in the aggregate) up to $50.0 million of our issued and outstanding common stock, par value $0.01 per share, over a 24-month period. On February 8, 2017, we announced that our Board of Directors amended and extended this stock repurchase plan, such that we are authorized to purchase (in the aggregate) up to an additional $50.0 million of common stock through January 2019. Shares may be repurchased from time-to-time in open market transactions at prevailing market prices, in privately negotiated transactions or by other means in accordance with federal securities laws, including Rule 10b5-1 programs, and the repurchase plan may be suspended or discontinued at any time. The actual timing, number and value of shares repurchased depends on a number of factors, including the market price of our common stock, general market and economic conditions and other corporate considerations. During the year ended December 31, 2016, we repurchased an aggregate of 1,122,261 shares of our common stock at an average cost of $44.52 per share, including 302,424 shares withheld to satisfy tax withholding obligations for certain employees upon the vesting of restricted common stock. Revenue Recognition Our total revenue is comprised of recurring revenues and implementation and other revenues. We recognize revenues in accordance with accounting standards for software and service companies when all of the following criteria have been met: • There is persuasive evidence of an arrangement; • The service has been or is being provided to the client; • Collection of the fees is reasonably assured; and • The amount of fees to be paid by the client is fixed or determinable. Recurring Recurring revenues are derived primarily from our talent acquisition, time and labor management, payroll, talent management and HR management applications as well as fees charged for delivery of client payroll checks and reports. Talent acquisition includes applicant tracking, candidate tracker, background checks, on-boarding, e-verify and tax credit services. Time and labor management includes time and attendance, scheduling/schedule exchange, time-off requests, labor allocation, labor management reports/push reporting and geofencing/geotracking. Payroll includes payroll and tax management, Paycom pay, expense management, garnishment management and GL Concierge. Talent management includes employee self-service, compensation budgeting, performance management, executive dashboard and Paycom learning. HR management includes document and task management, government and compliance, benefits administration, COBRA administration, personnel action forms, surveys and Enhanced ACA. The services related to recurring revenues are rendered during each client’s payroll period, with the agreed-upon fee being charged and collected as part of our processing of the client’s payroll. Recurring revenues are recognized at the conclusion of processing of each client’s payroll-period, when each respective payroll client is billed. Collectability is reasonably assured as the fees are collected through an Automated Clearing House (“ACH”) as part of the client’s payroll cycle or through direct wire transfer, which minimizes the default risk. Implementation and other Implementation and other revenues represent non-refundable conversion fees which are charged to new clients to offset the expense of new client set-up and revenues from the sale of time clocks as part of our employee time and attendance services. Because these conversion fees and sale of time clocks relate to our recurring revenues, we have evaluated such arrangements under the accounting guidance that governs multiple element arrangements. For arrangements with multiple elements, we evaluate whether each element represents a separate unit of accounting. In order to treat deliverables in a multiple element arrangement as separate units of accounting, the deliverables must have standalone value upon delivery. If the deliverables have stand-alone value upon delivery, we account for each deliverable separately and revenue is recognized for the respective deliverables as they are delivered. If one or more of the deliverables does not have stand-alone value upon delivery, the deliverables that do not have stand-alone value are generally combined with the final deliverable within the arrangement and treated as a single unit of accounting. When multiple deliverables included in an arrangement are separable into different units of accounting, the arrangement consideration is allocated to the identified separate units of accounting based on their relative selling price. Multiple deliverable arrangements accounting guidance provides a hierarchy to use when determining the relative selling price for each unit of accounting. Vendor-specific objective evidence (“VSOE”) of selling price, based on the price at which the item is regularly sold by the vendor on a stand-alone basis, should be used if it exists. If VSOE of selling price is not available, third-party evidence (“TPE”) of selling price is used to establish the selling price if it exists, and if not it would be based on our best estimate of selling price. For the years ended December 31, 2016, 2015 and 2014, we have determined that there is no stand-alone value associated with the upfront conversion fees as they do not have value to our clients on a stand-alone basis nor are they offered as an individual service; therefore, the conversion fees are deferred and recognized ratably over the estimated life of our clients, which we have estimated to be ten years. For the years ended December 31, 2016, 2015, and 2014, we have determined that the revenues from the employee time and attendance services, and the revenues from the sale of time clocks as part of our time and attendance services, have VSOE of selling price as they are sold on a stand-alone basis. Revenue is therefore recognized for the respective deliverables as they are delivered. Cost of Revenues Our costs and expenses applicable to total revenues represent total operating expenses and systems support and technology costs, including labor and related expenses, bank fees, shipping fees and costs of paper stock, envelopes, etc. In addition, costs included to derive gross margins are comprised of support labor and related expenses, related hardware costs and applicable depreciation and amortization costs. Advertising Costs Advertising costs are expensed the first time that advertising takes place. Advertising costs for the years ended December 31, 2016, 2015 and 2014 were $4.9 million, $3.6 million and $4.2 million, respectively. Sales Taxes We collect and remit sales tax on sales of time and attendance clocks and on payroll services in certain states. These taxes are shown on a net basis, and as such, excluded from revenues. For the years ended December 31, 2016, 2015 and 2014, sales taxes collected and remitted were $4.3 million, $3.7 million and $3.0 million, respectively. Employee Stock-Based Compensation Time-based stock compensation awards to employees are recognized pro rata over the applicable vesting period as compensation costs in the consolidated statements of income based on their fair values measured as of the date of grant. Market-based stock compensation awards to employees are recognized pro rata over the applicable estimated vesting period as compensation costs in the consolidated statements of income based on their fair value as of the date of the grant unless vesting occurs sooner at which time the remaining respective unrecognized compensation cost would be recognized. Employee Stock Purchase Plan An award issued under the Paycom Software, Inc., Employee Stock Purchase Plan (the “ESPP”) is classified as a share-based liability and recorded at the fair value of the award. Expense is recognized, net of estimated forfeitures, on a straight-line basis over the requisite service period. Income Taxes Our consolidated financial statements include a provision for income taxes incurred for the anticipated tax consequences of the reported results of operations using the asset and liability method. Under this method, we recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, as well as for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled. We record a valuation allowance to reduce our deferred tax assets to the net amount that we believe is more likely than not to be realized. We file income tax returns in the United States and various state jurisdictions. We evaluate tax positions taken or expected to be taken in the course of preparing our tax returns and disallow the recognition of tax positions not deemed to meet a “more-likely-than-not” threshold of being sustained by the applicable tax authority. We do not believe there are any tax positions taken within the consolidated financial statements that would not meet this threshold. Our policy is to record interest and penalties, if any, related to uncertain tax positions as a component of general and administrative expenses. We are not aware of any open income tax examinations as of December 31, 2016. However, the tax years 2007 through 2016 remain open to examination for federal income tax purposes and by other major taxing jurisdictions. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 “Revenue from Contracts with Customers (Topic 606).” This authoritative guidance includes a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. The FASB has since issued several additional amendments to this guidance. In April 2015, the FASB proposed a one year deferral of the effective date of the new revenue recognition standard for public and non-public entities reporting under U.S. GAAP and on July 9, 2015, the FASB approved the one year deferral. The effective date of the amended standard will begin in periods beginning after December 15, 2017 and early adoption is permitted but no earlier than for reporting periods beginning after December 31, 2016. The Company has an ongoing project to assess the impact of the standard that has been conducted with the assistance of an international accounting firm. The Company has not fully determined the impact of the new revenue recognition standard on its systems, processes and consolidated financial statements; however, we expect the new standard will have a material impact on the manner in which we account for certain costs to acquire new contracts ( i.e i.e In July 2015, the FASB issued ASU No. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory.” Under the new guidance, an entity should measure inventory (as defined within the scope of the guidance) at the lower of cost or net realizable value. The new guidance applies to all inventory except inventory measured using last-in, first-out (LIFO) or the retail inventory method. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predicable costs of completion, disposal and transportation. The new guidance is effective for public companies for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Accordingly, the standard is effective for us on January 1, 2017. We do not anticipate that the adoption of this standard will have a material impact on our consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” The amendments in this guidance require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under equity method of accounting or those that result in consolidation of the investee). The amendments in this guidance also require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. In addition the amendments in this guidance eliminate the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet for public business entities. The new guidance is effective for us for fiscal years, and interim periods within those years, beginning after December 15, 2017 and early adoption is permitted. We are currently evaluating the impact that the standard will have on our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02 “Leases (Topic 842).” The purpose of the guidance is to increase the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet as well as providing additional disclosure requirements related to leasing arrangements. The new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, though early adoption is permitted. Full retrospective application is prohibited. We anticipate that the adoption of this accounting standard will materially affect our consolidated balance sheets and may require changes to the system and processes that we use to account for leases. We have not yet made any decision on the timing of adoption or method of adoption with respect to the optional practical expedients. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2016 | |
Property Plant And Equipment [Abstract] | |
Property and Equipment | 3. Property and equipment and accumulated depreciation and amortization were as follows (dollars in thousands): Year Ended December 31, 2016 2015 Property and equipment Buildings $ 48,250 $ 28,154 Software and capitalized software costs 23,879 13,959 Computer equipment 18,987 11,346 Rental clocks 10,669 8,750 Furniture, fixtures and equipment 6,695 5,464 Leasehold improvements 680 358 Vehicles — 421 109,160 68,452 Less: accumulated depreciation and amortization (35,833 ) (24,894 ) 73,327 43,558 Land 8,993 8,993 Construction in progress 14,528 6,307 Property and equipment, net $ 96,848 $ 58,858 Included in the construction in progress balance at December 31, 2016 and 2015 is $1.1 and $0.4 million in retainage, respectively. Rental clocks included in property and equipment, net represent time clocks issued to clients under month-to-month operating leases. As such, these items are transferred from inventory to property and equipment and depreciated over their useful estimated lives. Depreciation and amortization expense for property and equipment, net was $12.0 million, $7.8 million and $5.5 million for the years ended December 31, 2016, 2015 and 2014, respectively. |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets, Net | 4. We had goodwill of $51.9 million as of December 31, 2016 and 2015. We performed the required impairment tests of goodwill as of June 30 for the years ended December 31, 2016, 2015 and 2014 including an assessment of whether or not indicators of impairment were present and determined there was no impairment for each of those years then ended. All of the intangible assets other than goodwill are considered to have finite lives and, as such, are subject to amortization. The components of intangible assets are as follows (dollars in thousands): December 31, 2016 Weighted Average Remaining Accumulated Useful Life Gross Amortization Net (Years) Intangibles: Customer relationships 0.5 $ 13,997 $ (13,297 ) $ 700 Trade name 5.5 3,194 (2,023 ) 1,171 Total $ 17,191 $ (15,320 ) $ 1,871 December 31, 2015 Weighted Average Remaining Accumulated Useful Life Gross Amortization Net (Years) Intangibles: Customer relationships 1.5 $ 13,997 $ (11,897 ) $ 2,100 Trade name 6.5 3,194 (1,810 ) 1,384 Total $ 17,191 $ (13,707 ) $ 3,484 The weighted average remaining useful life of the intangible assets was 3.6 years as of December 31, 2016. Amortization of intangible assets for each of the years ended December 31, 2016, 2015 and 2014 was $1.6 million. Estimated amortization expense for our existing intangible assets for the next five years and thereafter is as follows (dollars in thousands): Year Ending December 31, Amortization 2017 $ 913 2018 213 2019 213 2020 213 2021 213 Thereafter 106 Total $ 1,871 |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | 5. Our long-term debt consisted of the following (dollars in thousands): Year Ended December 31, 2016 2015 Term note to bank due May 30, 2021 $ 24,950 $ 25,742 Term note to bank due August 31, 2023 4,874 — Total long-term debt (including current portion) 29,824 25,742 Less: Current portion (1,113 ) (886 ) Total long-term debt, net $ 28,711 $ 24,856 As of December 31, 2016, our indebtedness consisted of (i) a term note under the 2021 Consolidated Loan due to Kirkpatrick Bank (the “2021 Consolidated Loan”), (ii) an 84-month term loan from Kirkpatrick Bank (the “2023 Term Loan”), which we obtained by converting the $5.0 million outstanding principal balance of a construction loan that was used to partially finance the construction of our third headquarters building (the “2015 Construction Loan”), and (iii) a new construction loan from Kirkpatrick Bank, which is available to finance the ongoing construction of a fourth headquarters building and new parking garage (the “2016 Construction Loan”). The 2021 Consolidated Loan matures on May 30, 2021. Under the 2021 Consolidated Loan, interest is payable monthly and accrues at a fixed rate of 4.75% per annum. The 2021 Consolidated Loan is secured by a mortgage covering our headquarters and certain personal property relating to our headquarters. The 2021 Consolidated Loan includes certain financial covenants, including maintaining a fixed charge coverage ratio of EBITDA to fixed charges (defined as current maturities of long-term debt, interest expense, rent expense and distributions) of greater than 1.2 to 1.0, which is measured on a quarterly basis. We were in compliance with all of these covenants as of December 31, 2016. We entered into the 2015 Construction Loan with Kirkpatrick Bank on May 3, 2015 and converted the outstanding principal balance into the 2023 Term Loan on August 1, 2016. The 2015 Construction Loan allowed us to borrow a maximum aggregate principal amount equal to the lesser of (i) $11.0 million or (ii) 80% of the appraised value of the constructed property. The 2023 Term Loan matures on August 31, 2023 and is secured by a mortgage covering our headquarters and certain personal property relating to our headquarters. Interest on the 2023 Term Loan is payable monthly and accrues at a fixed rate of 3.4% per annum. The 2023 Term Loan includes the same covenants as those disclosed above with respect to the 2021 Consolidated Loan. We were in compliance with all of these covenants as of December 31, 2016. We entered into the 2016 Construction Loan with Kirkpatrick Bank on August 2, 2016. As of December 31, 2016, there were no outstanding borrowings under the 2016 Construction Loan. The 2016 Construction Loan allows us to borrow a maximum aggregate principal amount equal to the lesser of (i) $28.6 million or (ii) 80% of the appraised value of the constructed properties. The 2016 Construction Loan matures on the earlier of the completion of construction or February 2, 2019, with interest accruing at the greater of (i) the prime rate, plus 50 basis points or (ii) 4.0%. At maturity, the outstanding principal balance of the 2016 Construction Loan, if any, will be automatically converted into an 84-month term loan that will accrue fixed interest at the prevailing 7/20 London Interbank Offered Rate swap interest rate in effect as of the commencement date, plus 225 basis points. As of December 31, 2016 and December 31, 2015, the carrying value of our total long-term debt, including current portion, was $29.8 million and $25.7 million, respectively, which approximated its fair value as of both dates. The fair value of our long-term debt is estimated based on the borrowing rates currently available to us for bank loans with similar terms and maturities. Aggregate future maturities of long-term debt for the next five years and thereafter (including current portion) as of December 31, 2016 are as follows (dollars in thousands): Year Ending December 31, 2017 $ 1,113 2018 1,144 2019 1,198 2020 1,253 2021 21,155 Thereafter 3,961 Total $ 29,824 |
Employee Savings Plan
Employee Savings Plan | 12 Months Ended |
Dec. 31, 2016 | |
Compensation Related Costs [Abstract] | |
Employee Savings Plan and Employee Stock Purchase Plan | 6. Our employees that are over the age of 21 and have completed ninety (90) days of service are eligible to participate in our 401(k) plan. We have made a Qualified Automatic Contribution Arrangement (“QACA”) election, whereby we make a matching contribution for our employees equal to 100% of the first 1% of salary deferrals and 50% of salary deferrals between 2% and 6%, up to a maximum matching contribution of 3.5% of an employee’s salary each plan year. We are allowed to make additional discretionary matching contributions and discretionary profit sharing contributions. Employees are 100% vested in amounts attributable to salary deferrals and rollover contributions. The QACA matching contributions as well as the discretionary matching and profit sharing contributions vest 100% after two years of employment from the date of hire. Matching contributions amounted to $3.5 million, $2.4 and $1.7 million for the years ended December 31, 2016, 2015 and 2014, respectively. The ESPP has overlapping offering periods, with each offering period lasting approximately 24 months. At the beginning of each offering period, eligible employees may elect to contribute, through payroll deductions, up to 10% of their compensation, subject to an annual per employee maximum. Eligible employees purchase shares of the Company’s common stock at a price equal to 85% of the fair market value of the shares on the exercise date. The maximum number of shares that may be purchased by a participant during each offering period is 2,000 shares, subject to IRS limits. The shares reserved for purposes of the ESPP are shares we purchase in the open market. The maximum aggregate number of shares of the Company’s common stock that may be purchased by all participants under the ESPP is 2,000,000 shares. During the year ended December 31, 2016, eligible employees purchased 110,658 shares of the Company’s common stock under the ESPP. Compensation expense related to the ESPP is recognized on a straight-line basis over the requisite service period. Our compensation expense related to the ESPP was $0.6 million and $0.4 million for the years ended December 31, 2016 and 2015, respectively. There was no compensation expense related to the ESPP for the year ended December 31, 2014. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | 7. Our financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, funds held for clients, client funds obligation and long-term debt. The carrying amount of cash and cash equivalents, accounts receivable, accounts payable, funds held for clients and client fund obligation approximates fair value because of the short-term nature of the instruments. We did not have any financial instruments that are measured on a recurring basis for the years ended December 31, 2016, 2015 or 2014. The following table summarizes the change in fair value of our Level 3 financial instruments for the years ended December 31, 2016, 2015 and 2014 (dollars in thousands). 2016 2015 2014 Balance, beginning of year $ — $ — $ 1,107 Issuances — — — Change in fair value of derivative liability — — (635 ) Gain on the extinguishment of derivative liability — — (472 ) Balance, end of year $ — $ — $ — Total change of the derivative liability recognized as other income, net in the consolidated statements of income was $1.1 million for the year ended December 31, 2014. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | 8. Basic earnings per share (“EPS”) is based on the weighted average number of shares of common stock outstanding for the period. Diluted EPS is computed in a similar manner to basic EPS after assuming the issuance of shares of common stock for all potentially dilutive shares of restricted stock whether or not they are vested. In accordance with ASC Topic 260 “Earnings Per Share”, the two-class method determines earnings for each class of common stock and participating securities according to an earnings allocation formula that adjusts the income available to common stockholders for dividends or dividend equivalents and participation rights in undistributed earnings. Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents are participating securities and, therefore, are included in computing earnings per share pursuant to the two-class method. The outstanding restricted shares of stock that were issued on July 8, 2015, are considered participating securities. Under the 2014 Reorganization, all the outstanding common units, Series B Preferred Units and incentive units of Holdings were exchanged for, or converted into, an aggregate of 45,708,573 shares of our common stock and 8,121,101 shares of our restricted stock as of January 1, 2014. The following is a reconciliation of net income and the shares of common stock used in the computation of basic and diluted net earnings per share (dollars in thousands, except share amounts): Year Ended December 31, 2016 2015 2014 Numerator: Net income $ 43,840 $ 20,945 $ 5,663 Less: income allocable to participating securities (333 ) (270 ) — Income allocable to common shares $ 43,507 $ 20,675 $ 5,663 Add back: undistributed earnings allocable to participating securities 333 270 — Less: undistributed earnings reallocated to participating securities (333 ) (264 ) — Numerator for diluted earnings per share $ 43,507 $ 20,681 $ 5,663 Denominator: Weighted average common shares outstanding 50,315,455 50,315,455 49,002,809 Weighted average common shares repurchased (286,699 ) — — Adjustment for vested restricted stock 7,521,448 6,179,715 781,345 Shares for calculating basic earnings per share 57,550,204 56,495,170 49,784,154 Dilutive effect of unvested restricted stock 1,417,895 1,424,530 2,073,155 Shares for calculating diluted earnings per share 58,968,099 57,919,700 51,857,309 Earnings per share: Basic $ 0.76 $ 0.37 $ 0.11 Diluted $ 0.74 $ 0.36 $ 0.11 |
Stockholders' Equity and Stock-
Stockholders' Equity and Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stockholders' Equity and Stock-Based Compensation | 9. On January 1, 2014, we issued restricted shares of common stock (“2014 Restricted Stock”) under the Paycom Software, Inc. 2014 Long-Term Incentive Plan (the “LTIP”) that were subject to either time-based vesting conditions or market-based vesting conditions. Shares of 2014 Restricted Stock with time-based vesting conditions vest based on various schedules through 2018. The market-based vesting conditions were based on our total enterprise value exceeding certain specified thresholds. Compensation expense related to the issuance of 2014 Restricted Stock with time-based vesting conditions was measured based on the fair value of the award on the grant date and is recognized over the requisite service period on a straight-line basis. Compensation expense relating to the issuance of 2014 Restricted Stock with market-based vesting conditions was measured based on the fair value of the award on the grant date and recognized on a straight-line basis over the vesting period based on the probability that the vesting conditions would be met. For 2014 Restricted Stock with market-based vesting conditions, 50% of the shares vested upon reaching a Total Enterprise Value (as defined in the applicable restricted stock award agreement, “TEV”) of $1.4 billion on December 1, 2014 and the remaining 50% of the shares vested upon reaching a TEV of $1.8 billion on March 2, 2015. Our total compensation expense related to 2014 Restricted Stock for the years ended December 31, 2016, 2015 and 2014 was $0.2 million, $0.4 million and $0.7 million, respectively. There was $0.1 million of total unrecognized compensation cost, net of estimated forfeitures, related to unvested shares of 2014 Restricted Stock with time-based vesting conditions outstanding as of December 31, 2016. The unrecognized compensation cost is expected to be recognized over a weighted average period of 1.2 years as of December 31, 2016. On July 8, 2015, we issued an aggregate of 741,931 restricted shares of common stock under the LTIP (“2015 Restricted Stock”) to each of our executive officers and certain non-executive employees. On April 15, 2016, we issued an aggregate of 847,928 restricted shares of common stock under the LTIP (“April 2016 Restricted Stock”) to each of our executive officers and certain non-executive employees. On October 4, 2016, we issued an aggregate of 721,100 restricted shares of common stock under the LTIP (“October 2016 Restricted Stock”) to each of our executive officers and certain non-executive employees. On May 2, 2016 and November 10, 2016, we issued an aggregate of 5,132 and 1,269 restricted shares of common stock, respectively, under the LTIP to certain members of our Board of Directors (“2016 Director Restricted Stock” and, collectively with all shares of 2015 Restricted Stock, April 2016 Restricted Stock and October 2016 Restricted Stock, the “Post-IPO Restricted Stock”). Certain shares of Post-IPO Restricted Stock are subject to market-based vesting conditions and certain shares of Post-IPO Restricted Stock (including all shares of 2016 Director Restricted Stock) are subject to time-based vesting conditions. Shares of Post-IPO Restricted Stock subject to time-based vesting conditions will vest over periods ranging from approximately one to six years. Shares subject to market-based vesting conditions have vested when, or will vest if, the Company’s TEV equals or exceeds certain predetermined thresholds. All shares of April 2016 Restricted Stock with market-based vesting conditions vested on July 28, 2016, when the Company’s TEV reached $2.65 billion. With respect to shares of 2015 Restricted Stock with market-based vesting conditions, 50% of the shares vested on August 1, 2016, when the Company’s TEV reached $2.65 billion, and the remaining 50% of the shares will vest if the Company’s TEV equals or exceeds $3.5 billion. There was a two-trading-day gap between the vesting of April 2016 Restricted Stock and the applicable portion of the 2015 Restricted Stock when the Company’s TEV reached $2.65 billion due to differences in the number of shares outstanding at the respective grant dates, which affected the TEV calculations. With respect to shares of October 2016 Restricted Stock subject to market-based vesting conditions, 50% of the shares will vest if the Company’s TEV equals or exceeds $3.9 billion and 50% of the shares will vest if the Company’s TEV equals or exceeds $4.2 billion. Shares of October 2016 Restricted Stock subject to market-based vesting conditions will be forfeited if they do not vest within six years of the date of grant while the remaining shares of 2015 Restricted Stock subject to market-based vesting conditions are eligible for vesting indefinitely. The following table presents a summary of the grant-date fair values of Post-IPO Restricted Stock granted during the years ended December 31, 2016 and 2015 and the related assumptions: Years Ended December 31, 2016 2015 Grant-date fair value of restricted stock $23.15 - $49.34 $21.76 - $33.33 Risk-free interest rates (based on U.S. Treasury Securities from 5 to 10 years maturity) 1.28% - 1.36% 2.2% Estimated volatility 21.0% - 23.0% 26.0% Expected life (in years) 2.7 3.6 Dividend yield 0% 0% Compensation expense for the shares of Post-IPO Restricted Stock with time-based vesting conditions was measured based on the fair value of the underlying shares on the grant date (which was equal to the closing price of our common stock on such grant date) and will be recognized over the requisite service periods on a straight-line basis. Compensation expense for shares of Post-IPO Restricted Stock with market-based vesting conditions was measured based on the fair value of the underlying shares on the grant date, which ranged from $21.76 to $33.62. The fair value of each share of Post-IPO Restricted Stock with market-based vesting conditions was estimated on the grant date using a Monte Carlo simulation model. This model considers a range of assumptions related to volatility, risk-free interest rate, expected life and expected dividend yield. Expected volatilities used in the model are based on historical volatilities of comparable guideline companies until a sufficient trading history in our common stock exists. We are required to estimate forfeitures and only record compensation costs for those awards that are expected to vest. The Company recognized $9.9 million of compensation cost in connection with the vesting of 490,700 shares of April 2016 Restricted Stock on July 28, 2016 and $3.8 million of compensation cost in connection with the vesting of 234,350 shares of 2015 Restricted Stock on August 1, 2016. To satisfy tax withholding obligations with respect to the delivery of vested shares to certain employees, the Company withheld 199,128 shares of April 2016 Restricted Stock that vested on July 28, 2016 and 90,703 shares of 2015 Restricted Stock that vested on August 1, 2016, as well as 12,593 of the 37,047 shares of 2015 Restricted Stock with time-based vesting conditions that vested on July 8, 2016. All shares withheld to satisfy tax withholding obligations are held as treasury stock. Our total compensation expense related to Post-IPO Restricted Stock was $22.4 million and $2.6 million for the years ended December 31, 2016 and 2015, respectively. There was $39.6 million of unrecognized compensation cost, net of estimated forfeitures, related to unvested shares of Post-IPO Restricted Stock outstanding as of December 31, 2016. The unrecognized compensation cost is expected to be recognized over a weighted average period of 2.1 years as of December 31, 2016. We capitalized stock-based compensation costs related to software developed for internal use of $1.8 million, $0.2 million and $4 thousand for the years ended December 31, 2016, 2015 and 2014, respectively. The following table presents non-cash stock-based compensation expense resulting from employee restricted common stock agreements and is presented in the following line items in the accompanying consolidated statements of income for the years ended December 31, 2016, 2015 and 2014 (dollars in thousands): Years Ended December 31, 2016 2015 2014 Operating expense $ 2,217 $ 235 $ 32 Sales and marketing 3,656 559 166 Research and development 836 104 16 General and administrative 15,837 2,112 498 Total non-cash stock-based compensation expense $ 22,546 $ 3,010 $ 712 The following table presents a summary of the activity related to restricted stock for the years ended December 31, 2016 and 2015: Year ended December 31, 2015 Number of shares Weighted average grant- date fair value (in dollars) Unvested shares of restricted stock outstanding at January 1, 2015 4,540,020 $ 0.24 2015 Restricted Stock granted 741,931 27.65 2014 Restricted Stock vested (3,287,091 ) 0.20 2015 Restricted Stock forfeited (7,805 ) 30.95 2014 Restricted Stock forfeited (7,215 ) 0.48 Unvested shares of restricted stock outstanding at December 31, 2015 1,979,840 10.45 2016 Restricted Stock granted 1,575,429 32.14 2016 Restricted Stock vested (490,700 ) 23.15 2015 Restricted Stock vested (271,397 ) 28.07 2014 Restricted Stock vested (571,313 ) 0.31 2016 Restricted Stock forfeited (25,317 ) 36.11 2015 Restricted Stock forfeited (22,449 ) 29.43 2014 Restricted Stock forfeited (6,154 ) 0.54 Unvested shares of restricted stock outstanding at December 31, 2016 2,167,939 $ 23.33 |
Related-Party Transactions
Related-Party Transactions | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | 10. We paid rent on our Dallas office space in the amounts of $0.4 million, $0.4 million and $0.3 million for the years ended December 31, 2016, 2015 and 2014, respectively. The Dallas office building is owned by 417 Oakbend, LP, a Texas limited partnership. Our Chief Sales Officer owned a .01% general partnership interest and a 10.49% limited partnership interest in 417 Oakbend, LP but sold his interest in 2016. In accordance with the terms of the Registration Rights Agreement dated as of December 30, 2013, we paid $1.4 million of registration expenses and related legal fees on behalf of certain related parties in connection with the underwritten secondary offerings in May, September and November 2015. The Company’s Audit Committee approved the payment of such expenses and fees with respect to related parties. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2016 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 11. Employment Agreements We have employment agreements with certain of our executive officers. The agreements allow for annual compensation, participation in executive benefit plans, and performance-based cash bonuses. Incentive Plan On May 2, 2016, our stockholders approved the Paycom Software, Inc. Annual Incentive Plan (the “Incentive Plan”). The Incentive Plan provides for payment of incentive compensation that is not subject to certain federal income tax deduction limitations. Participation in the Incentive Plan is limited to certain of our employees designated by the Compensation Committee of the Board of Directors. Operating Leases and Deferred Rent We lease office space under several noncancellable operating leases with contractual terms expiring from 2017 to 2023. Minimum rent expenses are recognized over the lease term. The lease term is defined as the fixed noncancellable term of the lease plus all periods, if any, for which failure to renew the lease imposes a penalty on us in an amount that a renewal appears, at the inception of the lease, to be reasonably assured. When a lease contains a predetermined fixed escalation of the minimum rent, we recognize the related rent expense on a straight-line basis and record the difference between the recognized rent expense and the amount payable under the lease as a liability. As of December 31, 2016 and 2015, we had $1.1 million and $0.8 million, respectively, recorded as a liability for deferred rent. Future annual minimum lease payments under noncancellable operating leases with initial or remaining terms of one year or more as of December 31, 2016 were as follows (dollars in thousands): Year Ending December 31, 2017 $ 5,953 2018 5,675 2019 4,826 2020 2,565 2021 1,101 Thereafter 1,109 Total minimum lease payments $ 21,229 Rent expense under operating leases for the years ended December 31, 2016, 2015 and 2014 was $5.6 million, $4.4 million and $3.4 million, respectively. Legal Proceedings We are involved in various legal proceedings in the ordinary course of business. Although we cannot predict the outcome of these proceedings, legal matters are subject to inherent uncertainties and there exists the possibility that the ultimate resolution of these matters could have a material adverse effect on our business, financial condition, results of operations and cash flows. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 12. The items comprising income tax expense are as follows (dollars in thousands): Year Ended December 31, 2016 2015 2014 Provision for current income taxes Federal $ 12,207 $ 11,308 $ 1,330 State 3,044 2,292 388 Total provision for current income taxes 15,251 13,600 1,718 Provision (benefit) for deferred income taxes, net Federal (1,476 ) (1,109 ) 2,114 State (372 ) 89 161 Total provision (benefit) for deferred income taxes, net (1,848 ) (1,020 ) 2,275 Total provision for income taxes $ 13,403 $ 12,580 $ 3,993 The following schedule reconciles the statutory Federal tax rate to the effective income tax rate: Year Ended December 31, 2016 2015 2014 Federal statutory tax rate 35 % 35 % 34 % Increase(decrease) resulting from: State income taxes, net of Federal income tax benefit 4 % 4 % 4 % Nondeductible expenses 1 % 3 % 4 % Research credit, Federal benefit (2 %) (1 %) 0 % Section 199 - Qualified production activities (2 %) (3 %) 0 % Stock-based compensation (12 %) 0 % 0 % Other (1 %) 0 % (1 %) Effective income tax rate 23 % 38 % 41 % Our effective income tax rate was 23% and 38% for the years ended December 31, 2016 and 2015, respectively. The lower effective income tax rate for the year ended December 31, 2016 primarily resulted from the recognition of excess tax benefits from share-based payment awards due to the Company’s adoption of ASU 2016-09. See Note 2 under Adoption of New Pronouncements Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of our deferred tax assets and liabilities were as follows (dollars in thousands): Year Ended December 31, 2016 2015 Deferred income tax assets (liabilities): Stock-based compensation $ 2,658 $ 1,035 Investment in Paycom Payroll Holdings, LLC (1,487 ) (1,676 ) Net operating losses 36 — Noncurrent deferred income tax assets (liabilities), net $ 1,207 $ (641 ) In November 2015, the FASB issued ASU 2015-17 which we elected to early adopt on a retrospective basis. Previous to the issuance of ASU 2015-17, U.S. GAAP required an entity to separate deferred income tax assets and liabilities into current and noncurrent amounts. To simplify the presentation of deferred income taxes, this guidance requires that deferred tax assets and liabilities be classified as noncurrent. At December 31, 2016, we had net operating loss carryforwards for state income tax purposes of approximately $36 thousand which are available to offset future state taxable income that begin expiring in 2030. At December 31, 2016 and 2015, we had no material unrecognized tax benefits related to uncertain tax positions. We file income tax returns with the United States federal government and various state jurisdictions. Our 2007 through 2016 U.S. federal and state income tax returns remain open to examination by tax authorities, due to the usage of net operating loss carryovers. |
Selected Quarterly Financial Da
Selected Quarterly Financial Data (unaudited) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
Selected Quarterly Financial Data (unaudited) | 13. The following tables set forth selected quarterly statements of income data for the periods indicated (dollars in thousands, except share and per share amounts): Quarter Ended December 31, 2016 September 30, 2016 June 30, 2016 March 31, 2016 Revenues $ 87,810 $ 77,325 $ 73,880 $ 90,126 Operating income 12,681 582 16,004 28,704 Net income 8,633 6,198 10,421 18,588 Earnings per share, basic $ 0.15 $ 0.11 $ 0.18 $ 0.32 Earnings per share, diluted $ 0.15 $ 0.10 $ 0.18 $ 0.31 Weighted average shares outstanding: Basic 57,652,531 57,819,734 57,591,556 57,132,909 Diluted 58,882,966 58,907,281 58,697,229 58,362,040 Quarter Ended December September 30, 2015 June 30, 2015 March 31, 2015 Revenues $ 65,118 $ 55,340 $ 48,973 $ 55,222 Operating income 6,234 6,855 10,808 10,538 Net income 5,157 3,847 5,946 5,995 Earnings per share, basic $ 0.09 $ 0.07 $ 0.10 $ 0.11 Earnings per share, diluted $ 0.09 $ 0.07 $ 0.10 $ 0.11 Weighted average shares outstanding: Basic 57,109,987 57,050,684 57,038,021 54,749,951 Diluted 58,365,587 58,367,830 58,369,083 56,562,661 |
Organization and Description 20
Organization and Description of Business (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Description of Business | Description of Business Paycom Software, Inc. (“Software”) and its wholly owned subsidiaries (collectively, the “Company”) is a leading provider of comprehensive, cloud-based human capital management (“HCM”) software delivered as Software-as-a-Service. Unless we state otherwise or the context otherwise requires, the terms “we”, “our”, “us” and the “Company” refer to Software and its consolidated subsidiaries. We provide functionality and data analytics that businesses need to manage the complete employment life cycle from recruitment to retirement. Our solution requires virtually no customization and is based on a core system of record maintained in a single database for all HCM functions, including talent acquisition, time and labor management, payroll, talent management and human resources (“HR”) management applications. |
The Reorganization | The Reorganization Software and its wholly owned subsidiary, Payroll Software Merger Sub, LLC (“Merger Sub”) were formed as Delaware entities on October 31, 2013 and December 23, 2013, respectively, in anticipation of an initial public offering (“IPO”) and were wholly owned subsidiaries of Paycom Payroll Holdings, LLC (“Holdings”) prior to December 31, 2013. On January 1, 2014, we consummated a reorganization pursuant to which (i) affiliates of Welsh, Carson, Anderson & Stowe, L.P. contributed WCAS Paycom Holdings, Inc. (“WCAS Holdings”) and WCAS CP IV Blocker, Inc. (“CP IV Blocker”), which together owned all of the Series A Preferred Units of Holdings, to Software in exchange for shares of common stock of Software, and (ii) the owners of outstanding Series B Preferred Units of Holdings contributed their Series B Preferred Units of Holdings to Software in exchange for shares of common stock of Software. Immediately after these contributions, Merger Sub merged with and into Holdings with Holdings surviving the merger. Upon consummation of the merger, the remaining holders of outstanding common and incentive units of Holdings received shares of common and restricted stock of Software for their common and incentive units by operation of Delaware law, and Holdings’ ownership interest in Software was cancelled. Outstanding common units, Series B Preferred Units and WCAS Holdings and CP IV Blocker were contributed to Software in exchange for, or converted into, an aggregate of 45,708,573 shares of common stock and 8,121,101 shares of restricted stock of Software. Prior to the reorganization, WCAS Holdings held Series C Preferred Units of Holdings in the amount of $46.2 million and WCAS Holdings had a 14% note due April 3, 2017 in the amount of $46.2 million (the “2017 Note”), which was payable to Welsh, Carson, Anderson & Stowe X, L.P. (“WCAS X”). Following the exchange of the Series A Preferred Units and Series B Preferred Units for shares of common stock of Software, all outstanding Series C Preferred Units of Holdings were eliminated in an intercompany transaction between Holdings and WCAS Holdings, we assumed the 2017 Note and Software became a holding company with its principal assets being the Series B Preferred Units of Holdings and the outstanding capital stock of WCAS Holdings and CP IV Blocker. The foregoing transactions are referred to collectively as the “2014 Reorganization”. Software’s acquisition of WCAS Holdings and Holdings in the 2014 Reorganization represented transactions under common control and were required to be retrospectively applied to the financial statements for all prior periods when the financial statements were issued for a period that included the date the transactions occurred. This includes a retrospective presentation for all equity related disclosures, including share, per share, and restricted stock disclosures, which have been revised to reflect the effects of the 2014 Reorganization. Therefore, our consolidated financial statements are presented as if WCAS Holdings and Holdings were Software’s wholly owned subsidiaries in periods prior to the 2014 Reorganization. The acquisition of CP IV Blocker was not deemed to be a reorganization under common control and therefore our historical consolidated financial statements include the ownership of a minority equity interest in CP IV Blocker, which was eliminated upon the acquisition of CP IV Blocker in the 2014 Reorganization on January 1, 2014. |
Initial Public Offering | Initial Public Offering On April 21, 2014, we completed our initial public offering (“IPO”) whereby an aggregate of 7,641,750 shares of our common stock were sold to the public (consisting of 4,606,882 shares of common stock issued and sold by us and 3,034,868 shares of common stock sold by certain selling stockholders) at a public offering price of $15.00 per share. We did not receive any proceeds from the sale of shares by the selling stockholders. The total gross proceeds we received from the offering were $69.1 million. After deducting underwriting discounts and commissions and offering expenses payable by us, the aggregate net proceeds we received totaled approximately $62.8 million. We used all of the net proceeds from the IPO, together with approximately $3.3 million from existing cash, for the repayment in full of the 2017 Note and the 10% Senior Note due 2022 payable to WCAS Capital Partners IV, L.P. (“WCAS Capital IV”). |
Follow-On Public Offering | Follow-On Public Offering On January 21, 2015, we closed our follow-on public offering, whereby 6,422,750 shares of our common stock were sold to the public by certain selling stockholders at a public offering price of $22.50 per share. We did not receive any proceeds from the sale of these shares. |
Registered Block Trade Transactions | Registered Block Trade Transactions On May 20, 2015, we closed an underwritten secondary offering of 8,000,000 shares of our common stock by WCAS X, WCAS Capital IV, each of our executive officers and certain other selling stockholders at a public offering price of $36.25 per share. We did not receive any proceeds from the sale of these shares. On September 15, 2015, we closed an underwritten secondary offering of 4,500,000 shares of our common stock by WCAS X, WCAS Capital IV, each of our executive officers and certain other selling stockholders at a public offering price of $37.95 per share. On September 23, 2015, the underwriter exercised its option to purchase an additional 675,000 shares from WCAS X and WCAS Capital IV. We did not receive any proceeds from the sales of these shares. On November 18, 2015, we closed an underwritten secondary offering of 4,500,000 shares of our common stock by WCAS X, WCAS Capital IV, each of our executive officers and certain other selling stockholders at a public offering price of $42.15 per share. On November 19, 2015, the underwriter exercised its overallotment option and subsequently purchased an additional 585,697 shares from WCAS X and WCAS Capital IV. We did not receive any proceeds from the sales of these shares. |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation Our consolidated financial statements include the financial results of Software and its wholly owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, the accompanying consolidated financial statements include all adjustments necessary for the fair presentation for the periods presented. Such adjustments are of a normal recurring nature. In addition to the normal adjustments, on the consolidated statement of cash flows for the year ended December 31, 2015, we combined the accounts of “stock-based compensation expense” and “employee stock purchase plan compensation expense” in order to conform to the current period presentation. |
Adoption of New Pronouncements | Adoption of New Pronouncements In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-09, “Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”), which simplified the accounting related to certain aspects of share-based payments to employees. The new guidance requires excess tax benefits and tax deficiencies to be recognized within the income statement when share-based payment awards vest or are settled. In addition, cash flows related to excess tax benefits are not separately classified as a financing activity apart from other income tax cash flows in the statement of cash flows. This guidance also allows us to repurchase more of an employee’s vesting shares for tax withholding purposes without triggering liability accounting, clarifies that all cash payments made to taxing authorities on an employee’s behalf for withheld shares be presented as a financing activity in the statement of cash flows, and provides an accounting policy election to account for award forfeitures as they occur or continue to estimate forfeitures. We elected to early adopt the new guidance in the third quarter of 2016. As such, we are required to present any adjustments as of January 1, 2016, the beginning of the annual period that includes the interim period of adoption, although there were no such adjustments necessary in our consolidated financial statements until the quarter ended September 30, 2016. The primary impact of our adoption of ASU 2016-09 was the recognition of excess tax benefits in our provision for income taxes of $7.0 million for the year ended December 31, 2016, which otherwise would have been recognized as paid in capital. Early adoption had no impact on retained earnings as of January 1, 2016, or on the comparability of the prior period financial statements as there were no excess tax benefits recognized during 2015. We elected to continue to estimate expected forfeitures to determine the amount of stock compensation cost to be recognized in each period. The presentation requirements for cash flows related to excess benefits and for cash flows related to employee taxes paid for withheld shares had no impact on any of the periods previously presented in our consolidated statements of cash flows. We adopted on a retrospective basis the recently issued guidance by the FASB Accounting Standards Update No. 2015-03, “Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”). ASU 2015-03 requires companies with debt issuance costs related to a recognized debt liability to present such issuance costs in the consolidated balance sheets as a direct deduction from the carrying amount of the debt liability. Our adoption of ASU 2015-03 resulted in a reclassification that decreased deposits and other assets by $0.1 million and decreased net long-term debt, less current portion by $0.1 million on our consolidated balance sheet as of December 31, 2015. The adoption of ASU 2015-03 had no impact on our stockholders’ equity or the results of our operations. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates include income taxes, loss contingencies, the useful life for long-lived and intangible assets, the life of our client relationships, the fair market value of our equity incentive awards and the fair value of our financial instruments. These estimates are based on historical experience where applicable and other assumptions that management believes are reasonable under circumstances. As such, actual results could materially differ from these estimates. |
Segment Information | Segment Information We operate in a single operating segment and a single reporting segment. Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker, who is also the chief executive officer in deciding how to allocate resources and assessing performance. Our chief executive officer allocates resources and assesses performance based upon financial information at the consolidated level. As we operate in one operating segment, all required financial segment information is presented in the consolidated financial statements. |
Cash Equivalents | Cash Equivalents We consider all highly liquid instruments purchased with a maturity of three months or less and money market funds to be cash equivalents. We maintain cash and cash equivalents in demand deposit accounts, money market funds, and certificates of deposit, which may not be federally insured. The fair value of our cash and cash equivalents approximates carrying value. We have not experienced any losses in such accounts and do not believe there is exposure to any significant credit risk on such accounts. |
Accounts Receivable | Accounts Receivable We generally collect revenues from our clients through an automatic deduction from the clients’ bank accounts at the time payroll processing occurs. Accounts receivable on our consolidated balance sheets consists primarily of revenue fees related to the last day of the year, which are collected on the following business day. As accounts receivable are collected via automatic deduction on the following business day, the Company has not recorded an allowance for doubtful accounts. |
Inventory | Inventory Our inventory consists of two types of time clocks, and related clock attachments, sold to clients as part of our time and attendance services and are stated at the lower of cost or market. Cost is determined using the first-in first-out (FIFO) cost method. Time clocks are purchased as finished goods from a third party and as such we do not have any inventory classified as raw materials or work in process inventory. Rental clocks are issued to clients under month-to-month operating leases and are classified as property and equipment. We retain inventory in certain lines primarily as replacements for those clients who use the various clocks and have determined that no write-down for obsolete items was required based on inventory turnover and our historical experience during the years ended December 31, 2016, 2015 and 2014. |
Property and Equipment | Property and Equipment Property and equipment is stated at cost, net of accumulated depreciation and amortization. Depreciation is computed using the straight line method over the estimated useful lives of the assets as follows: Furniture, fixtures and equipment 5 years Computer equipment 3 years Software and capitalized software 3 years Buildings 30 years Leasehold improvements 3 - 5 years Rental clocks 5 years Vehicles 3 years Our leasehold improvements are amortized over the shorter of their estimated useful lives or the related lease terms. Costs incurred during construction of long-lived assets are recorded as construction in progress and are not depreciated until the asset is placed in service. We capitalize interest costs incurred related to construction in progress. For the years ended December 31, 2016, 2015 and 2014, we incurred interest costs of $1.3 million, $1.3 million and $3.7 million, respectively. For the years ended December 31, 2016, 2015 and 2014, interest expense of $0.4 million, less than $0.1 million and $0.4 million, respectively, was capitalized. |
Internal Use Software | Internal Use Software Expenditures for software purchases and software developed or obtained for internal use are capitalized and amortized over a three-year period on a straight-line basis. Capitalized costs include external direct costs of materials and services associated with developing or obtaining internal use computer software and The total capitalized payroll costs related to internal use computer software projects was $8.8 million and $4.3 million as of December 31, 2016 and 2015, respectively, which have been included in property and equipment. Amortization expense related to capitalized software costs of $3.6 million, $1.8 million and $0.9 million was charged to expense for the years ended December 31, 2016, 2015 and 2014, respectively. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill is not amortized, but is instead tested for impairment annually, or earlier if, at the reporting unit level, an indicator of impairment arises. The estimates and assumptions about future results of operations and cash flows made in connection with the impairment testing could differ from future actual results of operations and cash flows. If impairment exists, a write-down to fair value is recorded. Our business is largely homogeneous and, as a result, goodwill is associated with one reporting unit. We have selected June 30 as our annual goodwill impairment testing date and determined there was no impairment as of June 30, 2016. For the years ended December 31, 2016, 2015 and 2014, there were no indicators of impairment. Intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Long-lived assets, including intangible assets with finite lives, are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the estimated fair value of the asset. We have determined that there was no impairment of long-lived assets including intangible assets with finite lives, for the years ended December 31, 2016, 2015 and 2014. |
Funds Held for Clients and Client Funds Obligation | Funds Held for Clients and Client Funds Obligation As part of our payroll and tax filing application, we (i) collect client funds to satisfy their respective federal, state and local employment tax obligations, (ii) remit such funds to the appropriate taxing authorities and accounts designated by our clients, and (iii) manage client tax filings and any related correspondence with taxing authorities. Amounts collected by us from clients for their federal, state and local employment taxes are invested and earn interest during the interval between receipt and disbursement. These investments are shown in the consolidated balance sheets as funds held for clients, and the offsetting liability for the tax filings is shown as client funds obligation. The liability is recorded in the accompanying balance sheets at the time we obtain the funds from clients. The client funds obligation represents liabilities that will be repaid within one year of the balance sheet date. As of April 1, 2016, the interest income earned on funds held for clients is recorded in recurring revenues. Prior to April 1, 2016, the interest income earned on these funds was recorded in other income, net in the consolidated statements of income. As of December 31, 2016, the funds held for clients were invested in money market funds, demand deposit accounts, commercial paper and certificates of deposit and classified as a current asset in the accompanying balance sheets, as these funds are held solely to satisfy the client funds obligation. As of December 31, 2015 and 2014, the funds held for clients were invested in the same investments, other than commercial paper. |
Stock Repurchase Plan | Stock Repurchase Plan On May 26, 2016, we announced that our Board of Directors approved a stock repurchase plan under which we were authorized to purchase (in the aggregate) up to $50.0 million of our issued and outstanding common stock, par value $0.01 per share, over a 24-month period. On February 8, 2017, we announced that our Board of Directors amended and extended this stock repurchase plan, such that we are authorized to purchase (in the aggregate) up to an additional $50.0 million of common stock through January 2019. Shares may be repurchased from time-to-time in open market transactions at prevailing market prices, in privately negotiated transactions or by other means in accordance with federal securities laws, including Rule 10b5-1 programs, and the repurchase plan may be suspended or discontinued at any time. The actual timing, number and value of shares repurchased depends on a number of factors, including the market price of our common stock, general market and economic conditions and other corporate considerations. During the year ended December 31, 2016, we repurchased an aggregate of 1,122,261 shares of our common stock at an average cost of $44.52 per share, including 302,424 shares withheld to satisfy tax withholding obligations for certain employees upon the vesting of restricted common stock. |
Revenue Recognition | Revenue Recognition Our total revenue is comprised of recurring revenues and implementation and other revenues. We recognize revenues in accordance with accounting standards for software and service companies when all of the following criteria have been met: • There is persuasive evidence of an arrangement; • The service has been or is being provided to the client; • Collection of the fees is reasonably assured; and • The amount of fees to be paid by the client is fixed or determinable. Recurring Recurring revenues are derived primarily from our talent acquisition, time and labor management, payroll, talent management and HR management applications as well as fees charged for delivery of client payroll checks and reports. Talent acquisition includes applicant tracking, candidate tracker, background checks, on-boarding, e-verify and tax credit services. Time and labor management includes time and attendance, scheduling/schedule exchange, time-off requests, labor allocation, labor management reports/push reporting and geofencing/geotracking. Payroll includes payroll and tax management, Paycom pay, expense management, garnishment management and GL Concierge. Talent management includes employee self-service, compensation budgeting, performance management, executive dashboard and Paycom learning. HR management includes document and task management, government and compliance, benefits administration, COBRA administration, personnel action forms, surveys and Enhanced ACA. The services related to recurring revenues are rendered during each client’s payroll period, with the agreed-upon fee being charged and collected as part of our processing of the client’s payroll. Recurring revenues are recognized at the conclusion of processing of each client’s payroll-period, when each respective payroll client is billed. Collectability is reasonably assured as the fees are collected through an Automated Clearing House (“ACH”) as part of the client’s payroll cycle or through direct wire transfer, which minimizes the default risk. Implementation and other Implementation and other revenues represent non-refundable conversion fees which are charged to new clients to offset the expense of new client set-up and revenues from the sale of time clocks as part of our employee time and attendance services. Because these conversion fees and sale of time clocks relate to our recurring revenues, we have evaluated such arrangements under the accounting guidance that governs multiple element arrangements. For arrangements with multiple elements, we evaluate whether each element represents a separate unit of accounting. In order to treat deliverables in a multiple element arrangement as separate units of accounting, the deliverables must have standalone value upon delivery. If the deliverables have stand-alone value upon delivery, we account for each deliverable separately and revenue is recognized for the respective deliverables as they are delivered. If one or more of the deliverables does not have stand-alone value upon delivery, the deliverables that do not have stand-alone value are generally combined with the final deliverable within the arrangement and treated as a single unit of accounting. When multiple deliverables included in an arrangement are separable into different units of accounting, the arrangement consideration is allocated to the identified separate units of accounting based on their relative selling price. Multiple deliverable arrangements accounting guidance provides a hierarchy to use when determining the relative selling price for each unit of accounting. Vendor-specific objective evidence (“VSOE”) of selling price, based on the price at which the item is regularly sold by the vendor on a stand-alone basis, should be used if it exists. If VSOE of selling price is not available, third-party evidence (“TPE”) of selling price is used to establish the selling price if it exists, and if not it would be based on our best estimate of selling price. For the years ended December 31, 2016, 2015 and 2014, we have determined that there is no stand-alone value associated with the upfront conversion fees as they do not have value to our clients on a stand-alone basis nor are they offered as an individual service; therefore, the conversion fees are deferred and recognized ratably over the estimated life of our clients, which we have estimated to be ten years. For the years ended December 31, 2016, 2015, and 2014, we have determined that the revenues from the employee time and attendance services, and the revenues from the sale of time clocks as part of our time and attendance services, have VSOE of selling price as they are sold on a stand-alone basis. Revenue is therefore recognized for the respective deliverables as they are delivered. |
Cost of Revenues | Cost of Revenues Our costs and expenses applicable to total revenues represent total operating expenses and systems support and technology costs, including labor and related expenses, bank fees, shipping fees and costs of paper stock, envelopes, etc. In addition, costs included to derive gross margins are comprised of support labor and related expenses, related hardware costs and applicable depreciation and amortization costs. |
Advertising Costs | Advertising Costs Advertising costs are expensed the first time that advertising takes place. Advertising costs for the years ended December 31, 2016, 2015 and 2014 were $4.9 million, $3.6 million and $4.2 million, respectively. |
Sales Taxes | Sales Taxes We collect and remit sales tax on sales of time and attendance clocks and on payroll services in certain states. These taxes are shown on a net basis, and as such, excluded from revenues. For the years ended December 31, 2016, 2015 and 2014, sales taxes collected and remitted were $4.3 million, $3.7 million and $3.0 million, respectively. |
Employee Stock-Based Compensation | Employee Stock-Based Compensation Time-based stock compensation awards to employees are recognized pro rata over the applicable vesting period as compensation costs in the consolidated statements of income based on their fair values measured as of the date of grant. Market-based stock compensation awards to employees are recognized pro rata over the applicable estimated vesting period as compensation costs in the consolidated statements of income based on their fair value as of the date of the grant unless vesting occurs sooner at which time the remaining respective unrecognized compensation cost would be recognized. |
Employee Stock Purchase Plan | Employee Stock Purchase Plan An award issued under the Paycom Software, Inc., Employee Stock Purchase Plan (the “ESPP”) is classified as a share-based liability and recorded at the fair value of the award. Expense is recognized, net of estimated forfeitures, on a straight-line basis over the requisite service period. |
Income Taxes | Income Taxes Our consolidated financial statements include a provision for income taxes incurred for the anticipated tax consequences of the reported results of operations using the asset and liability method. Under this method, we recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, as well as for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled. We record a valuation allowance to reduce our deferred tax assets to the net amount that we believe is more likely than not to be realized. We file income tax returns in the United States and various state jurisdictions. We evaluate tax positions taken or expected to be taken in the course of preparing our tax returns and disallow the recognition of tax positions not deemed to meet a “more-likely-than-not” threshold of being sustained by the applicable tax authority. We do not believe there are any tax positions taken within the consolidated financial statements that would not meet this threshold. Our policy is to record interest and penalties, if any, related to uncertain tax positions as a component of general and administrative expenses. We are not aware of any open income tax examinations as of December 31, 2016. However, the tax years 2007 through 2016 remain open to examination for federal income tax purposes and by other major taxing jurisdictions. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 “Revenue from Contracts with Customers (Topic 606).” This authoritative guidance includes a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. The FASB has since issued several additional amendments to this guidance. In April 2015, the FASB proposed a one year deferral of the effective date of the new revenue recognition standard for public and non-public entities reporting under U.S. GAAP and on July 9, 2015, the FASB approved the one year deferral. The effective date of the amended standard will begin in periods beginning after December 15, 2017 and early adoption is permitted but no earlier than for reporting periods beginning after December 31, 2016. The Company has an ongoing project to assess the impact of the standard that has been conducted with the assistance of an international accounting firm. The Company has not fully determined the impact of the new revenue recognition standard on its systems, processes and consolidated financial statements; however, we expect the new standard will have a material impact on the manner in which we account for certain costs to acquire new contracts ( i.e i.e In July 2015, the FASB issued ASU No. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory.” Under the new guidance, an entity should measure inventory (as defined within the scope of the guidance) at the lower of cost or net realizable value. The new guidance applies to all inventory except inventory measured using last-in, first-out (LIFO) or the retail inventory method. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predicable costs of completion, disposal and transportation. The new guidance is effective for public companies for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Accordingly, the standard is effective for us on January 1, 2017. We do not anticipate that the adoption of this standard will have a material impact on our consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” The amendments in this guidance require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under equity method of accounting or those that result in consolidation of the investee). The amendments in this guidance also require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. In addition the amendments in this guidance eliminate the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet for public business entities. The new guidance is effective for us for fiscal years, and interim periods within those years, beginning after December 15, 2017 and early adoption is permitted. We are currently evaluating the impact that the standard will have on our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02 “Leases (Topic 842).” The purpose of the guidance is to increase the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet as well as providing additional disclosure requirements related to leasing arrangements. The new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, though early adoption is permitted. Full retrospective application is prohibited. We anticipate that the adoption of this accounting standard will materially affect our consolidated balance sheets and may require changes to the system and processes that we use to account for leases. We have not yet made any decision on the timing of adoption or method of adoption with respect to the optional practical expedients. |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Estimated Useful Lives | Depreciation is computed using the straight line method over the estimated useful lives of the assets as follows: Furniture, fixtures and equipment 5 years Computer equipment 3 years Software and capitalized software 3 years Buildings 30 years Leasehold improvements 3 - 5 years Rental clocks 5 years Vehicles 3 years |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property Plant And Equipment [Abstract] | |
Schedule of Property and Equipment and Associated Accumulated Depreciation and Amortization | Property and equipment and accumulated depreciation and amortization were as follows (dollars in thousands): Year Ended December 31, 2016 2015 Property and equipment Buildings $ 48,250 $ 28,154 Software and capitalized software costs 23,879 13,959 Computer equipment 18,987 11,346 Rental clocks 10,669 8,750 Furniture, fixtures and equipment 6,695 5,464 Leasehold improvements 680 358 Vehicles — 421 109,160 68,452 Less: accumulated depreciation and amortization (35,833 ) (24,894 ) 73,327 43,558 Land 8,993 8,993 Construction in progress 14,528 6,307 Property and equipment, net $ 96,848 $ 58,858 |
Goodwill and Intangible Asset23
Goodwill and Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Components of Intangible Assets | All of the intangible assets other than goodwill are considered to have finite lives and, as such, are subject to amortization. The components of intangible assets are as follows (dollars in thousands): December 31, 2016 Weighted Average Remaining Accumulated Useful Life Gross Amortization Net (Years) Intangibles: Customer relationships 0.5 $ 13,997 $ (13,297 ) $ 700 Trade name 5.5 3,194 (2,023 ) 1,171 Total $ 17,191 $ (15,320 ) $ 1,871 December 31, 2015 Weighted Average Remaining Accumulated Useful Life Gross Amortization Net (Years) Intangibles: Customer relationships 1.5 $ 13,997 $ (11,897 ) $ 2,100 Trade name 6.5 3,194 (1,810 ) 1,384 Total $ 17,191 $ (13,707 ) $ 3,484 |
Schedule of Estimated Amortization Expense of Intangible Assets | Estimated amortization expense for our existing intangible assets for the next five years and thereafter is as follows (dollars in thousands): Year Ending December 31, Amortization 2017 $ 913 2018 213 2019 213 2020 213 2021 213 Thereafter 106 Total $ 1,871 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt | Our long-term debt consisted of the following (dollars in thousands): Year Ended December 31, 2016 2015 Term note to bank due May 30, 2021 $ 24,950 $ 25,742 Term note to bank due August 31, 2023 4,874 — Total long-term debt (including current portion) 29,824 25,742 Less: Current portion (1,113 ) (886 ) Total long-term debt, net $ 28,711 $ 24,856 |
Aggregate Future Maturities of Long-Term Debt | Aggregate future maturities of long-term debt for the next five years and thereafter (including current portion) as of December 31, 2016 are as follows (dollars in thousands): Year Ending December 31, 2017 $ 1,113 2018 1,144 2019 1,198 2020 1,253 2021 21,155 Thereafter 3,961 Total $ 29,824 |
Fair Value of Financial Instr25
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Summary of Change in Fair Value of Level 3 Financial Instruments | The following table summarizes the change in fair value of our Level 3 financial instruments for the years ended December 31, 2016, 2015 and 2014 (dollars in thousands). 2016 2015 2014 Balance, beginning of year $ — $ — $ 1,107 Issuances — — — Change in fair value of derivative liability — — (635 ) Gain on the extinguishment of derivative liability — — (472 ) Balance, end of year $ — $ — $ — |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Net Earnings Per Share | The following is a reconciliation of net income and the shares of common stock used in the computation of basic and diluted net earnings per share (dollars in thousands, except share amounts): Year Ended December 31, 2016 2015 2014 Numerator: Net income $ 43,840 $ 20,945 $ 5,663 Less: income allocable to participating securities (333 ) (270 ) — Income allocable to common shares $ 43,507 $ 20,675 $ 5,663 Add back: undistributed earnings allocable to participating securities 333 270 — Less: undistributed earnings reallocated to participating securities (333 ) (264 ) — Numerator for diluted earnings per share $ 43,507 $ 20,681 $ 5,663 Denominator: Weighted average common shares outstanding 50,315,455 50,315,455 49,002,809 Weighted average common shares repurchased (286,699 ) — — Adjustment for vested restricted stock 7,521,448 6,179,715 781,345 Shares for calculating basic earnings per share 57,550,204 56,495,170 49,784,154 Dilutive effect of unvested restricted stock 1,417,895 1,424,530 2,073,155 Shares for calculating diluted earnings per share 58,968,099 57,919,700 51,857,309 Earnings per share: Basic $ 0.76 $ 0.37 $ 0.11 Diluted $ 0.74 $ 0.36 $ 0.11 |
Stockholders' Equity and Stoc27
Stockholders' Equity and Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Non-cash Stock-Based Compensation Resulting from Employee Restricted Common Stock Agreements | The following table presents non-cash stock-based compensation expense resulting from employee restricted common stock agreements and is presented in the following line items in the accompanying consolidated statements of income for the years ended December 31, 2016, 2015 and 2014 (dollars in thousands): Years Ended December 31, 2016 2015 2014 Operating expense $ 2,217 $ 235 $ 32 Sales and marketing 3,656 559 166 Research and development 836 104 16 General and administrative 15,837 2,112 498 Total non-cash stock-based compensation expense $ 22,546 $ 3,010 $ 712 |
Nonvested Restricted Stock Unit Awards | The following table presents a summary of the activity related to restricted stock for the years ended December 31, 2016 and 2015: Year ended December 31, 2015 Number of shares Weighted average grant- date fair value (in dollars) Unvested shares of restricted stock outstanding at January 1, 2015 4,540,020 $ 0.24 2015 Restricted Stock granted 741,931 27.65 2014 Restricted Stock vested (3,287,091 ) 0.20 2015 Restricted Stock forfeited (7,805 ) 30.95 2014 Restricted Stock forfeited (7,215 ) 0.48 Unvested shares of restricted stock outstanding at December 31, 2015 1,979,840 10.45 2016 Restricted Stock granted 1,575,429 32.14 2016 Restricted Stock vested (490,700 ) 23.15 2015 Restricted Stock vested (271,397 ) 28.07 2014 Restricted Stock vested (571,313 ) 0.31 2016 Restricted Stock forfeited (25,317 ) 36.11 2015 Restricted Stock forfeited (22,449 ) 29.43 2014 Restricted Stock forfeited (6,154 ) 0.54 Unvested shares of restricted stock outstanding at December 31, 2016 2,167,939 $ 23.33 |
Post-IPO Restricted Stock [Member] | |
Summary of Grant-Date Fair Values of Post-IPO Restricted Stock Granted and Related Assumptions | The following table presents a summary of the grant-date fair values of Post-IPO Restricted Stock granted during the years ended December 31, 2016 and 2015 and the related assumptions: Years Ended December 31, 2016 2015 Grant-date fair value of restricted stock $23.15 - $49.34 $21.76 - $33.33 Risk-free interest rates (based on U.S. Treasury Securities from 5 to 10 years maturity) 1.28% - 1.36% 2.2% Estimated volatility 21.0% - 23.0% 26.0% Expected life (in years) 2.7 3.6 Dividend yield 0% 0% |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments And Contingencies Disclosure [Abstract] | |
Schedule of Future Annual Minimum Lease Payments | Future annual minimum lease payments under noncancellable operating leases with initial or remaining terms of one year or more as of December 31, 2016 were as follows (dollars in thousands): Year Ending December 31, 2017 $ 5,953 2018 5,675 2019 4,826 2020 2,565 2021 1,101 Thereafter 1,109 Total minimum lease payments $ 21,229 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Tax Expense | The items comprising income tax expense are as follows (dollars in thousands): Year Ended December 31, 2016 2015 2014 Provision for current income taxes Federal $ 12,207 $ 11,308 $ 1,330 State 3,044 2,292 388 Total provision for current income taxes 15,251 13,600 1,718 Provision (benefit) for deferred income taxes, net Federal (1,476 ) (1,109 ) 2,114 State (372 ) 89 161 Total provision (benefit) for deferred income taxes, net (1,848 ) (1,020 ) 2,275 Total provision for income taxes $ 13,403 $ 12,580 $ 3,993 |
Reconciles Statutory Federal Tax Rate to Effective Income Tax Rate | The following schedule reconciles the statutory Federal tax rate to the effective income tax rate: Year Ended December 31, 2016 2015 2014 Federal statutory tax rate 35 % 35 % 34 % Increase(decrease) resulting from: State income taxes, net of Federal income tax benefit 4 % 4 % 4 % Nondeductible expenses 1 % 3 % 4 % Research credit, Federal benefit (2 %) (1 %) 0 % Section 199 - Qualified production activities (2 %) (3 %) 0 % Stock-based compensation (12 %) 0 % 0 % Other (1 %) 0 % (1 %) Effective income tax rate 23 % 38 % 41 % |
Net Deferred Tax Assets and Liabilities | The significant components of our deferred tax assets and liabilities were as follows (dollars in thousands): Year Ended December 31, 2016 2015 Deferred income tax assets (liabilities): Stock-based compensation $ 2,658 $ 1,035 Investment in Paycom Payroll Holdings, LLC (1,487 ) (1,676 ) Net operating losses 36 — Noncurrent deferred income tax assets (liabilities), net $ 1,207 $ (641 ) |
Selected Quarterly Financial 30
Selected Quarterly Financial Data (unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Selected Quarterly Statements of Income Data | The following tables set forth selected quarterly statements of income data for the periods indicated (dollars in thousands, except share and per share amounts): Quarter Ended December 31, 2016 September 30, 2016 June 30, 2016 March 31, 2016 Revenues $ 87,810 $ 77,325 $ 73,880 $ 90,126 Operating income 12,681 582 16,004 28,704 Net income 8,633 6,198 10,421 18,588 Earnings per share, basic $ 0.15 $ 0.11 $ 0.18 $ 0.32 Earnings per share, diluted $ 0.15 $ 0.10 $ 0.18 $ 0.31 Weighted average shares outstanding: Basic 57,652,531 57,819,734 57,591,556 57,132,909 Diluted 58,882,966 58,907,281 58,697,229 58,362,040 The following tables set forth selected quarterly statements of income data for the periods indicated (dollars in thousands, except share and per share amounts): Quarter Ended December September 30, 2015 June 30, 2015 March 31, 2015 Revenues $ 65,118 $ 55,340 $ 48,973 $ 55,222 Operating income 6,234 6,855 10,808 10,538 Net income 5,157 3,847 5,946 5,995 Earnings per share, basic $ 0.09 $ 0.07 $ 0.10 $ 0.11 Earnings per share, diluted $ 0.09 $ 0.07 $ 0.10 $ 0.11 Weighted average shares outstanding: Basic 57,109,987 57,050,684 57,038,021 54,749,951 Diluted 58,365,587 58,367,830 58,369,083 56,562,661 |
Organization and Description 31
Organization and Description of Business - Additional Information (Detail) - USD ($) | Nov. 19, 2015 | Nov. 18, 2015 | Sep. 23, 2015 | Sep. 15, 2015 | May 20, 2015 | Jan. 21, 2015 | Apr. 21, 2014 | Dec. 31, 2013 | Dec. 31, 2016 | Dec. 31, 2014 | Dec. 31, 2013 |
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||||||||||
Proceeds from initial public offering, net of offering costs | $ 62,840,000 | ||||||||||
IPO [Member] | |||||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||||||||||
Common stock issued, shares | 7,641,750 | ||||||||||
Offering price per share | $ 15 | ||||||||||
Proceeds from sale of shares received from selling stockholders | $ 0 | ||||||||||
Gross proceeds received from public offering | 69,100,000 | ||||||||||
Proceeds from initial public offering, net of offering costs | $ 62,800,000 | ||||||||||
Public Offering [Member] | |||||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||||||||||
Common stock issued, shares | 6,422,750 | ||||||||||
Offering price per share | $ 22.50 | ||||||||||
Proceeds from sale of common stock under public offering | $ 0 | ||||||||||
Secondary Offering [Member] | |||||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||||||||||
Common stock issued, shares | 4,500,000 | 4,500,000 | 8,000,000 | ||||||||
Offering price per share | $ 42.15 | $ 37.95 | $ 36.25 | ||||||||
Proceeds from sale of common stock under public offering | $ 0 | $ 0 | $ 0 | ||||||||
Additional purchase of common shares | 585,697 | 675,000 | |||||||||
Executive Officers And Other Selling Shareholders [Member] | IPO [Member] | |||||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||||||||||
Common stock sold by selling stockholders | 3,034,868 | ||||||||||
Paycom Software, Inc. [Member] | IPO [Member] | |||||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||||||||||
Common stock issued, shares | 4,606,882 | ||||||||||
Restricted Stock [Member] | |||||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||||||||||
Conversion of units to shares | 8,121,101 | 8,121,101 | |||||||||
Common Stock [Member] | |||||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||||||||||
Conversion of units to shares | 45,708,573 | 45,708,573 | |||||||||
Common Stock [Member] | IPO [Member] | |||||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||||||||||
Common stock issued, shares | 4,606,882 | ||||||||||
Series C Preferred Units [Member] | WCAS Capital Partners IV, L.P., [Member] | |||||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||||||||||
Preferred units held, amount | $ 46,200,000 | $ 46,200,000 | |||||||||
14% Note due 2017 [Member] | WCAS Capital Partners IV, L.P., [Member] | |||||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||||||||||
Notes payable, due date | Apr. 3, 2017 | ||||||||||
Notes payable, amount | $ 46,200,000 | $ 46,200,000 | |||||||||
Debt instrument, interest rate | 14.00% | 14.00% | |||||||||
10% Senior Note due 2022 [Member] | WCAS Capital Partners IV, L.P., [Member] | IPO [Member] | |||||||||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||||||||||
Debt instrument, interest rate | 10.00% | ||||||||||
Repayment for senior notes | $ 3,300,000 |
Summary of Significant Accoun32
Summary of Significant Accounting Policies - Additional Information (Detail) | Jun. 30, 2016USD ($) | May 26, 2016USD ($)$ / shares | Dec. 31, 2016USD ($)Segment$ / sharesshares | Dec. 31, 2015USD ($)$ / shares | Dec. 31, 2014USD ($) |
Summary Of Significant Accounting Policy [Line Items] | |||||
Excess tax benefits related to share based payments in provision for income taxes | $ 7,000,000 | $ 0 | |||
Number of operating segments | Segment | 1 | ||||
Interest costs incurred | $ 1,300,000 | 1,300,000 | $ 3,700,000 | ||
Interest costs capitalized | $ 400,000 | 400,000 | |||
Capitalized and amortized period | 3 years 7 months 6 days | ||||
Total capitalized payroll costs related to internal use software projects | $ 8,800,000 | 4,300,000 | |||
Amortization expense related to capitalized software costs | 3,600,000 | 1,800,000 | 900,000 | ||
Goodwill impairment amount | $ 0 | 0 | 0 | 0 | |
Impairment of intangible assets with finite lives | 0 | 0 | 0 | ||
Impairment of long-lived assets | $ 0 | $ 0 | 0 | ||
Common stock, par value | $ / shares | $ 0.01 | $ 0.01 | |||
Conversion fees, deferred revenue recognition period | 10 years | ||||
Advertising costs | $ 4,900,000 | $ 3,600,000 | 4,200,000 | ||
Sales taxes | $ 4,300,000 | 3,700,000 | $ 3,000,000 | ||
Expected life of client relationships | 10 years | ||||
Stock Repurchase Plan [Member] | |||||
Summary Of Significant Accounting Policy [Line Items] | |||||
Common stock, par value | $ / shares | $ 0.01 | ||||
Stock repurchase plan period | 24 months | ||||
Number of common stocks repurchased during the period | shares | 1,122,261 | ||||
Stock repurchased, average costs per share | $ / shares | $ 44.52 | ||||
Stock Repurchase Plan [Member] | Restricted Stock [Member] | |||||
Summary Of Significant Accounting Policy [Line Items] | |||||
Shares withheld to satisfy tax withholding obligations | shares | 302,424 | ||||
Internal use Software [Member] | |||||
Summary Of Significant Accounting Policy [Line Items] | |||||
Capitalized and amortized period | 3 years | ||||
Maximum [Member] | |||||
Summary Of Significant Accounting Policy [Line Items] | |||||
Interest costs capitalized | 100,000 | ||||
Maximum [Member] | Stock Repurchase Plan [Member] | |||||
Summary Of Significant Accounting Policy [Line Items] | |||||
Stock repurchase plan, authorization amount | $ 50,000,000 | ||||
Net Long-Term Debt, Less Current Portion [Member] | |||||
Summary Of Significant Accounting Policy [Line Items] | |||||
Change in adoption of recent accounting pronouncements on other assets and long term debt | (100,000) | ||||
Deposits and Other Assets [Member] | |||||
Summary Of Significant Accounting Policy [Line Items] | |||||
Change in adoption of recent accounting pronouncements on other assets and long term debt | $ (100,000) |
Summary of Significant Accoun33
Summary of Significant Accounting Policies - Estimated Useful Lives (Detail) | 12 Months Ended |
Dec. 31, 2016 | |
Furniture, Fixtures and Equipment [Member] | |
Property and Equipment [Line Items] | |
Property and equipment useful life | 5 years |
Computer Equipment [Member] | |
Property and Equipment [Line Items] | |
Property and equipment useful life | 3 years |
Software and Capitalized Software Costs [Member] | |
Property and Equipment [Line Items] | |
Property and equipment useful life | 3 years |
Buildings [Member] | |
Property and Equipment [Line Items] | |
Property and equipment useful life | 30 years |
Leasehold Improvements [Member] | Minimum [Member] | |
Property and Equipment [Line Items] | |
Property and equipment useful life | 3 years |
Leasehold Improvements [Member] | Maximum [Member] | |
Property and Equipment [Line Items] | |
Property and equipment useful life | 5 years |
Rental Clocks [Member] | |
Property and Equipment [Line Items] | |
Property and equipment useful life | 5 years |
Vehicles [Member] | |
Property and Equipment [Line Items] | |
Property and equipment useful life | 3 years |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment and Associated Accumulated Depreciation and Amortization (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Property and Equipment [Line Items] | ||
Property and equipment, gross | $ 109,160 | $ 68,452 |
Less: accumulated depreciation and amortization | (35,833) | (24,894) |
Property and equipment, net | 96,848 | 58,858 |
Buildings [Member] | ||
Property and Equipment [Line Items] | ||
Property and equipment, gross | 48,250 | 28,154 |
Software and Capitalized Software Costs [Member] | ||
Property and Equipment [Line Items] | ||
Property and equipment, gross | 23,879 | 13,959 |
Computer Equipment [Member] | ||
Property and Equipment [Line Items] | ||
Property and equipment, gross | 18,987 | 11,346 |
Rental Clocks [Member] | ||
Property and Equipment [Line Items] | ||
Property and equipment, gross | 10,669 | 8,750 |
Furniture, Fixtures and Equipment [Member] | ||
Property and Equipment [Line Items] | ||
Property and equipment, gross | 6,695 | 5,464 |
Leasehold Improvements [Member] | ||
Property and Equipment [Line Items] | ||
Property and equipment, gross | 680 | 358 |
Vehicles [Member] | ||
Property and Equipment [Line Items] | ||
Property and equipment, gross | 421 | |
Excluded Land and Construction in Process [Member] | ||
Property and Equipment [Line Items] | ||
Property and equipment, net | 73,327 | 43,558 |
Land [Member] | ||
Property and Equipment [Line Items] | ||
Property and equipment, net | 8,993 | 8,993 |
Construction in Progress [Member] | ||
Property and Equipment [Line Items] | ||
Property and equipment, net | $ 14,528 | $ 6,307 |
Property and Equipment - Additi
Property and Equipment - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Property and Equipment [Line Items] | |||
Retainage amount included in construction in progress | $ 1,100 | $ 400 | |
Depreciation and amortization | 7,834 | 5,738 | $ 4,538 |
Property and Equipment [Member] | |||
Property and Equipment [Line Items] | |||
Depreciation and amortization | $ 12,000 | $ 7,800 | $ 5,500 |
Goodwill and Intangible Asset36
Goodwill and Intangible Assets, Net - Additional Information (Detail) - USD ($) | Jun. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Goodwill And Intangible Assets Disclosure [Abstract] | ||||
Goodwill | $ 51,889,000 | $ 51,889,000 | ||
Goodwill impairment amount | $ 0 | $ 0 | 0 | $ 0 |
Weighted average remaining useful life | 3 years 7 months 6 days | |||
Amortization of intangible assets | $ 1,600,000 | $ 1,600,000 | $ 1,600,000 |
Goodwill and Intangible Asset37
Goodwill and Intangible Assets, Net - Components of Intangible Assets (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Finite Lived Intangible Assets [Line Items] | ||
Weighted average remaining useful life | 3 years 7 months 6 days | |
Gross | $ 17,191 | $ 17,191 |
Accumulated Amortization | (15,320) | (13,707) |
Net | $ 1,871 | $ 3,484 |
Customer Relationships [Member] | ||
Finite Lived Intangible Assets [Line Items] | ||
Weighted average remaining useful life | 6 months | 1 year 6 months |
Gross | $ 13,997 | $ 13,997 |
Accumulated Amortization | (13,297) | (11,897) |
Net | $ 700 | $ 2,100 |
Trade Name [Member] | ||
Finite Lived Intangible Assets [Line Items] | ||
Weighted average remaining useful life | 5 years 6 months | 6 years 6 months |
Gross | $ 3,194 | $ 3,194 |
Accumulated Amortization | (2,023) | (1,810) |
Net | $ 1,171 | $ 1,384 |
Goodwill and Intangible Asset38
Goodwill and Intangible Assets, Net - Schedule of Estimated Amortization Expense of Intangible Assets (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Goodwill And Intangible Assets Disclosure [Abstract] | ||
2,017 | $ 913 | |
2,018 | 213 | |
2,019 | 213 | |
2,020 | 213 | |
2,021 | 213 | |
Thereafter | 106 | |
Net | $ 1,871 | $ 3,484 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long-Term Debt (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Schedule Of Capitalization Longterm Debt [Line Items] | ||
Total long-term debt (including current portion) | $ 29,824 | $ 25,742 |
Less: Current portion | (1,113) | (886) |
Total long-term debt, net | 28,711 | 24,856 |
2021 Consolidated Loan [Member] | ||
Schedule Of Capitalization Longterm Debt [Line Items] | ||
Term note to bank | 24,950 | $ 25,742 |
2023 Term Loan [Member] | ||
Schedule Of Capitalization Longterm Debt [Line Items] | ||
Term note to bank | $ 4,874 |
Long-Term Debt - Additional Inf
Long-Term Debt - Additional Information (Detail) - USD ($) | Aug. 02, 2016 | Aug. 01, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | May 03, 2015 |
Debt Instrument [Line Items] | |||||
Total long-term debt, including current portion | $ 29,824,000 | $ 25,742,000 | |||
2021 Consolidated Loan [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt instrument maturity date | May 30, 2021 | ||||
Debt instrument, interest rate | 4.75% | ||||
Debt instrument, restrictive covenants | Maintaining a fixed charge coverage ratio of EBITDA to fixed charges (defined as current maturities of long-term debt, interest expense, rent expense and distributions) of greater than 1.2 to 1.0 | ||||
2021 Consolidated Loan [Member] | Minimum [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt coverage ratio of indebtedness | 120.00% | ||||
2015 Construction Loan [Member] | |||||
Debt Instrument [Line Items] | |||||
Maturity period of term loan | 84 months | ||||
Converted outstanding principal balance | $ 5,000,000 | ||||
Loan, principal amount | $ 11,000,000 | ||||
Construction loan, percentage of appraised value of constructed property | 80.00% | ||||
2023 Term Loan [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt instrument maturity date | Aug. 31, 2023 | ||||
Debt instrument, interest rate | 3.40% | ||||
2016 Construction Loan [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, interest rate | 4.00% | ||||
Loan, principal amount | $ 28,600,000 | ||||
Construction loan, percentage of appraised value of constructed property | 80.00% | ||||
Construction loan, outstanding borrowings | $ 0 | ||||
Construction loan, maturity date description | The 2016 Construction Loan matures on the earlier of the completion of construction or February 2, 2019, with interest accruing at the greater of (i) the prime rate, plus 50 basis points or (ii) 4.0%. | ||||
2016 Construction Loan [Member] | Prime Rate [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt instrument basis spread on variable rate | 0.50% | ||||
2016 Construction Loan [Member] | Term Loan [Member] | |||||
Debt Instrument [Line Items] | |||||
Maturity period of term loan | 84 months | ||||
Construction loan, maturity date description | At maturity, the outstanding principal balance of the 2016 Construction Loan, if any, will be automatically converted into an 84-month term loan | ||||
2016 Construction Loan [Member] | Term Loan [Member] | London Interbank Offered Rate LIBOR [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt instrument basis spread on variable rate | 2.25% |
Long-Term Debt - Aggregate Futu
Long-Term Debt - Aggregate Future Maturities of Long-Term Debt (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Debt Disclosure [Abstract] | ||
2,017 | $ 1,113 | |
2,018 | 1,144 | |
2,019 | 1,198 | |
2,020 | 1,253 | |
2,021 | 21,155 | |
Thereafter | 3,961 | |
Total long-term debt (including current portion) | $ 29,824 | $ 25,742 |
Employee Savings Plan and Emplo
Employee Savings Plan and Employee Stock Purchase Plan - Additional Information (Detail) - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Defined Contribution Plan Disclosure [Line Items] | |||
401(k) eligibility minimum service period | 90 days | ||
401(k) description of plan contributions | Contribution for our employees equal to 100% of the first 1% of salary deferrals and 50% of salary deferrals between 2% and 6%, up to a maximum matching contribution of 3.5% of an employee’s salary each plan year. | ||
Employee vested percentage in salary deferrals and roll over contributions | 100.00% | ||
Minimum period for vesting 100% contributions | 2 years | ||
Minimum period for vesting of discretionary contributions | 2 years | ||
Matching contribution amount | $ 3,500,000 | $ 2,400,000 | $ 1,700,000 |
Employee stock purchase plan overlapping offering period | 24 months | ||
Employee Stock Purchase Plan [Member] | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Employees Company's common stock shares purchase limit percentage | 10.00% | ||
Maximum number of shares that may be purchased by a participant | 2,000 | ||
Share of common stock purchase maximum | 2,000,000 | ||
Purchase of shares of common stock | 110,658 | ||
Compensation expense related to ESPP | $ 600,000 | $ 400,000 | $ 0 |
After Two Years Of Employment [Member] | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Matching contributions, vesting percentage | 100.00% | ||
One Hundred Percent Match For Percent Of Participants Contribution [Member] | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Employer contribution percentage | 100.00% | ||
Percentage of salary deferrals | 1.00% | ||
50% Matching Contribution [Member] | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Employer contribution percentage | 50.00% | ||
Minimum [Member] | |||
Defined Contribution Plan Disclosure [Line Items] | |||
401(k) eligible age of employee | 21 years | ||
Minimum [Member] | 50% Matching Contribution [Member] | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Percentage of salary deferrals | 2.00% | ||
Maximum [Member] | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Percentage of salary deferrals | 3.50% | ||
Maximum [Member] | Employee Stock Purchase Plan [Member] | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Purchase price of common stock expressed as a percentage of its fair market value | 85.00% | ||
Maximum [Member] | 50% Matching Contribution [Member] | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Percentage of salary deferrals | 6.00% |
Fair Value of Financial Instr43
Fair Value of Financial Instruments - Summary of Change in Fair Value of Level 3 Financial Instruments (Detail) $ in Thousands | 12 Months Ended |
Dec. 31, 2014USD ($) | |
Fair Value Disclosures [Abstract] | |
Balance, beginning of year | $ 1,107 |
Change in fair value of derivative liability | (635) |
Gain on the extinguishment of derivative liability | $ (472) |
Fair Value of Financial Instr44
Fair Value of Financial Instruments - Additional Information (Detail) $ in Millions | 12 Months Ended |
Dec. 31, 2014USD ($) | |
Fair Value Disclosures [Abstract] | |
Change in fair value of derivative liability recognized as other income (expenses), net | $ 1.1 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Detail) - shares | Dec. 31, 2013 | Dec. 31, 2013 |
Common Stock [Member] | ||
Earnings Per Share [Line Items] | ||
Conversion of units to shares | 45,708,573 | 45,708,573 |
Restricted Stock [Member] | ||
Earnings Per Share [Line Items] | ||
Conversion of units to shares | 8,121,101 | 8,121,101 |
Earnings Per Share - Computatio
Earnings Per Share - Computation of Basic and Diluted Net Earnings Per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Numerator: | |||||||||||
Net income | $ 43,840 | $ 20,945 | $ 5,663 | ||||||||
Less: income allocable to participating securities | (333) | (270) | |||||||||
Income allocable to common shares | 43,507 | 20,675 | 5,663 | ||||||||
Add back: undistributed earnings allocable to participating securities | 333 | 270 | |||||||||
Less: undistributed earnings reallocated to participating securities | (333) | (264) | |||||||||
Numerator for diluted earnings per share | $ 43,507 | $ 20,681 | $ 5,663 | ||||||||
Denominator: | |||||||||||
Weighted average common shares outstanding | 50,315,455 | 50,315,455 | 49,002,809 | ||||||||
Weighted average common shares repurchased | (286,699) | ||||||||||
Adjustment for vested restricted stock | 7,521,448 | 6,179,715 | 781,345 | ||||||||
Shares for calculating basic earnings per share | 57,652,531 | 57,819,734 | 57,591,556 | 57,132,909 | 57,109,987 | 57,050,684 | 57,038,021 | 54,749,951 | 57,550,204 | 56,495,170 | 49,784,154 |
Dilutive effect of unvested restricted stock | 1,417,895 | 1,424,530 | 2,073,155 | ||||||||
Shares for calculating diluted earnings per share | 58,882,966 | 58,907,281 | 58,697,229 | 58,362,040 | 58,365,587 | 58,367,830 | 58,369,083 | 56,562,661 | 58,968,099 | 57,919,700 | 51,857,309 |
Earnings per share: | |||||||||||
Basic | $ 0.15 | $ 0.11 | $ 0.18 | $ 0.32 | $ 0.09 | $ 0.07 | $ 0.10 | $ 0.11 | $ 0.76 | $ 0.37 | $ 0.11 |
Diluted | $ 0.15 | $ 0.10 | $ 0.18 | $ 0.31 | $ 0.09 | $ 0.07 | $ 0.10 | $ 0.11 | $ 0.74 | $ 0.36 | $ 0.11 |
Stockholders' Equity and Stoc47
Stockholders' Equity and Stock-Based Compensation - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands | Nov. 10, 2016 | Oct. 04, 2016 | Aug. 01, 2016 | Jul. 28, 2016 | Jul. 08, 2016 | May 02, 2016 | Apr. 15, 2016 | Jul. 08, 2015 | Mar. 02, 2015 | Dec. 01, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Non-cash stock-based compensation expense | $ 22,471 | $ 3,219 | $ 712 | ||||||||||
Shares vesting | 2,167,939 | 1,979,840 | 4,540,020 | ||||||||||
Software and Capitalized Software Costs [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Capitalized compensation cost | $ 1,800 | $ 200 | $ 4 | ||||||||||
Vest 50% upon reaching a Total Enterprise Value of $1.4 billion [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Market-based vesting percentage, restricted shares | 50.00% | ||||||||||||
Total enterprise value | $ 1,400,000 | ||||||||||||
Vest 50% upon reaching a TEV of $1.8 billion [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Market-based vesting percentage, restricted shares | 50.00% | ||||||||||||
Total enterprise value | $ 1,800,000 | ||||||||||||
Vest 50% when Company reaches a TEV of $2.65 billion [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Market-based vesting percentage, restricted shares | 50.00% | ||||||||||||
Total enterprise value | $ 2,650,000 | ||||||||||||
2014 Restricted Stock [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Compensation expense recognized | 200 | $ 400 | $ 700 | ||||||||||
Total unrecognized compensation cost related to unvested restricted stock | $ 100 | ||||||||||||
Unrecognized compensation expected to be recognized | 1 year 2 months 12 days | ||||||||||||
Shares vested | 571,313 | 3,287,091 | |||||||||||
2015 Restricted Stock [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Restricted shares of common stock issued | 741,931 | ||||||||||||
Restricted stock awards grant date fair value | $ 27.65 | ||||||||||||
Non-cash stock-based compensation expense | $ 3,800 | ||||||||||||
Shares vested | 271,397 | ||||||||||||
Shares vesting | 234,350 | ||||||||||||
Shares withheld to satisfy tax withholding obligations | 90,703 | ||||||||||||
2015 Restricted Stock [Member] | LTIP [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Restricted shares of common stock issued | 741,931 | ||||||||||||
2015 Restricted Stock [Member] | Time-based Vesting Conditions [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Shares vested | 37,047 | ||||||||||||
Shares withheld to satisfy tax withholding obligations | 12,593 | ||||||||||||
2015 Restricted Stock [Member] | Time-based Vesting Conditions [Member] | Minimum [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Share-based compensation award vesting period | 1 year | ||||||||||||
2015 Restricted Stock [Member] | Time-based Vesting Conditions [Member] | Maximum [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Share-based compensation award vesting period | 6 years | ||||||||||||
2015 Restricted Stock [Member] | Vest 50% when Company reaches a TEV of $3.5 billion [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Market-based vesting percentage, restricted shares | 50.00% | ||||||||||||
Total enterprise value | $ 3,500,000 | ||||||||||||
April 2016 Restricted Stock [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Non-cash stock-based compensation expense | $ 9,900 | ||||||||||||
Shares vested | 490,700 | ||||||||||||
Shares withheld to satisfy tax withholding obligations | 199,128 | ||||||||||||
April 2016 Restricted Stock [Member] | LTIP [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Restricted shares of common stock issued | 847,928 | ||||||||||||
Post-IPO Restricted Stock [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Compensation expense recognized | 22,400 | $ 2,600 | |||||||||||
Total unrecognized compensation cost related to unvested restricted stock | $ 39,600 | ||||||||||||
Unrecognized compensation expected to be recognized | 2 years 1 month 6 days | ||||||||||||
Post-IPO Restricted Stock [Member] | Minimum [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Restricted stock awards grant date fair value | $ 21.76 | ||||||||||||
Post-IPO Restricted Stock [Member] | Maximum [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Restricted stock awards grant date fair value | $ 33.62 | ||||||||||||
Post-IPO Restricted Stock [Member] | LTIP [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Restricted shares of common stock issued | 1,269 | 5,132 | |||||||||||
October 2016 Restricted Stock [Member] | LTIP [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Restricted shares of common stock issued | 721,100 | ||||||||||||
October 2016 Restricted Stock [Member] | Market-based Vesting Conditions [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Total enterprise value | $ 3,900,000 | ||||||||||||
Restricted common stock, expiration period | 6 years | ||||||||||||
October 2016 Restricted Stock [Member] | Vest 50% when Company reaches a TEV of $3.9 billion [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Market-based vesting percentage, restricted shares | 50.00% | ||||||||||||
Total enterprise value | $ 3,900,000 | ||||||||||||
October 2016 Restricted Stock [Member] | Vest 50% when Company reaches a TEV of $4.2 billion [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Market-based vesting percentage, restricted shares | 50.00% | ||||||||||||
Total enterprise value | $ 4,200,000 | ||||||||||||
2016 Restricted Stock [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Restricted shares of common stock issued | 1,575,429 | ||||||||||||
Restricted stock awards grant date fair value | $ 32.14 | ||||||||||||
Shares vested | 490,700 | ||||||||||||
2016 Restricted Stock [Member] | Market-based Vesting Conditions [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Total enterprise value | $ 2,650,000 |
Stockholders' Equity and Stoc48
Stockholders' Equity and Stock-Based Compensation - Summary of Grant-Date Fair Values of Post-IPO Restricted Stock Granted and Related Assumptions (Detail) - Post-IPO Restricted Stock [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk-free interest rates | 2.20% | |
Risk-free interest rates, Minimum | 1.28% | |
Risk-free interest rates, Maximum | 1.36% | |
Estimated volatility | 26.00% | |
Estimated volatility, Minimum | 21.00% | |
Estimated volatility, Maximum | 23.00% | |
Expected life (in years) | 2 years 8 months 12 days | 3 years 7 months 6 days |
Dividend yield | 0.00% | 0.00% |
Minimum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Grant-date fair value of restricted stock | $ 23.15 | $ 21.76 |
Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Grant-date fair value of restricted stock | $ 49.34 | $ 33.33 |
Stockholders' Equity and Stoc49
Stockholders' Equity and Stock-Based Compensation - Summary of Grant-Date Fair Values of Post-IPO Restricted Stock Granted and Related Assumptions (Parenthetical) (Detail) - U.S. Treasury Securities [Member] | 12 Months Ended |
Dec. 31, 2016 | |
Minimum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Maturity period of term loan | 5 years |
Maximum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Maturity period of term loan | 10 years |
Stockholders' Equity and Stoc50
Stockholders' Equity and Stock-Based Compensation - Non-cash Stock-Based Compensation Resulting from Employee Restricted Common Stock Agreements (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Non-cash stock-based compensation expense | $ 22,471 | $ 3,219 | $ 712 |
Operating Expense [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Non-cash stock-based compensation expense | 2,217 | 235 | 32 |
Sales and Marketing Expense [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Non-cash stock-based compensation expense | 3,656 | 559 | 166 |
Research and Development Expense [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Non-cash stock-based compensation expense | 836 | 104 | 16 |
General and Administrative Expense [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Non-cash stock-based compensation expense | $ 15,837 | $ 2,112 | $ 498 |
Stockholders' Equity and Stoc51
Stockholders' Equity and Stock-Based Compensation - Nonvested Restricted Stock Unit Awards (Detail) - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unvested at beginning of period, Shares | 1,979,840 | 4,540,020 |
Unvested at end of period, Shares | 2,167,939 | 1,979,840 |
Unvested at beginning of period, Weighted-Average Grant Date Fair Value | $ 10.45 | $ 0.24 |
Unvested at end of period, Weighted-Average Grant Date Fair Value | $ 23.33 | $ 10.45 |
2015 Restricted Stock [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock granted | 741,931 | |
Restricted stock vested | (271,397) | |
Restricted stock forfeited | (22,449) | (7,805) |
Granted, Weighted-Average Grant Date Fair Value | $ 27.65 | |
Vested, Weighted-Average Grant Date Fair Value | $ 28.07 | |
Forfeited, Weighted-Average Grant Date Fair Value | $ 29.43 | $ 30.95 |
2014 Restricted Stock [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock vested | (571,313) | (3,287,091) |
Restricted stock forfeited | (6,154) | (7,215) |
Vested, Weighted-Average Grant Date Fair Value | $ 0.31 | $ 0.20 |
Forfeited, Weighted-Average Grant Date Fair Value | $ 0.54 | $ 0.48 |
2016 Restricted Stock [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock granted | 1,575,429 | |
Restricted stock vested | (490,700) | |
Restricted stock forfeited | (25,317) | |
Granted, Weighted-Average Grant Date Fair Value | $ 32.14 | |
Vested, Weighted-Average Grant Date Fair Value | 23.15 | |
Forfeited, Weighted-Average Grant Date Fair Value | $ 36.11 |
Related-Party Transactions - Ad
Related-Party Transactions - Additional Information (Detail) - 417 Oakbend, LP [Member] - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | ||||
Nov. 30, 2015 | Sep. 30, 2015 | May 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Related Party Transaction [Line Items] | ||||||
Payments for rent | $ 0.4 | $ 0.4 | $ 0.3 | |||
Registration and legal fees expenses | $ 1.4 | $ 1.4 | $ 1.4 | |||
Registration rights agreement date | Dec. 30, 2013 | |||||
Chief Sales Officer [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
General partnership ownership interest in related party, percentage | 0.01% | |||||
Limited partnership interest in related party, percentage | 10.49% |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Other Commitments [Line Items] | |||
Liability for deferred rent | $ 1.1 | $ 0.8 | |
Operating lease rent expense | $ 5.6 | $ 4.4 | $ 3.4 |
Minimum [Member] | |||
Other Commitments [Line Items] | |||
Operating lease expiration year | 2,017 | ||
Maximum [Member] | |||
Other Commitments [Line Items] | |||
Operating lease expiration year | 2,023 |
Commitments and Contingencies54
Commitments and Contingencies - Schedule of Future Annual Minimum Lease Payments (Detail) $ in Thousands | Dec. 31, 2016USD ($) |
Leases [Abstract] | |
2,017 | $ 5,953 |
2,018 | 5,675 |
2,019 | 4,826 |
2,020 | 2,565 |
2,021 | 1,101 |
Thereafter | 1,109 |
Total minimum lease payments | $ 21,229 |
Income Taxes - Income Tax Expen
Income Taxes - Income Tax Expense (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Provision for current income taxes | |||
Federal | $ 12,207 | $ 11,308 | $ 1,330 |
State | 3,044 | 2,292 | 388 |
Total provision for current income taxes | 15,251 | 13,600 | 1,718 |
Provision (benefit) for deferred income taxes, net | |||
Federal | (1,476) | (1,109) | 2,114 |
State | (372) | 89 | 161 |
Total provision (benefit) for deferred income taxes, net | (1,848) | (1,020) | 2,275 |
Total provision for income taxes | $ 13,403 | $ 12,580 | $ 3,993 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Statutory Federal Tax Rate to Effective Income Tax Rate (Detail) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | |||
Federal statutory tax rate | 35.00% | 35.00% | 34.00% |
State income taxes, net of Federal income tax benefit | 4.00% | 4.00% | 4.00% |
Nondeductible expenses | 1.00% | 3.00% | 4.00% |
Research credit, Federal benefit | (2.00%) | (1.00%) | (0.00%) |
Section 199 - Qualified production activities | (2.00%) | (3.00%) | (0.00%) |
Stock-based compensation | (12.00%) | (0.00%) | (0.00%) |
Other | (1.00%) | 0.00% | (1.00%) |
Effective income tax rate | 23.00% | 38.00% | 41.00% |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax [Line Items] | |||
Effective income tax rate | 23.00% | 38.00% | 41.00% |
Unrecognized tax benefits | $ 0 | $ 0 | |
Earliest Tax Year [Member] | |||
Income Tax [Line Items] | |||
Year of income tax returns open to examination | 2,007 | ||
Latest Tax Year [Member] | |||
Income Tax [Line Items] | |||
Year of income tax returns open to examination | 2,016 | ||
State Income Tax [Member] | |||
Income Tax [Line Items] | |||
Net operating loss carryforwards for state income tax | $ 36,000 |
Income Taxes - Net Deferred Tax
Income Taxes - Net Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred income tax assets (liabilities): | ||
Stock-based compensation | $ 2,658 | $ 1,035 |
Investment in Paycom Payroll Holdings, LLC | (1,487) | (1,676) |
Net operating losses | 36 | |
Noncurrent deferred income tax assets (liabilities), net | $ 1,207 | |
Noncurrent deferred income tax assets (liabilities), net | $ (641) |
Selected Quarterly Financial 59
Selected Quarterly Financial Data (unaudited) - Schedule of Selected Quarterly Statements of Income Data (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Revenues | $ 87,810 | $ 77,325 | $ 73,880 | $ 90,126 | $ 65,118 | $ 55,340 | $ 48,973 | $ 55,222 | $ 329,141 | $ 224,653 | $ 150,929 |
Operating income | 12,681 | 582 | 16,004 | 28,704 | 6,234 | 6,855 | 10,808 | 10,538 | $ 57,971 | $ 34,435 | $ 15,700 |
Net income | $ 8,633 | $ 6,198 | $ 10,421 | $ 18,588 | $ 5,157 | $ 3,847 | $ 5,946 | $ 5,995 | |||
Earnings per share, basic | $ 0.15 | $ 0.11 | $ 0.18 | $ 0.32 | $ 0.09 | $ 0.07 | $ 0.10 | $ 0.11 | $ 0.76 | $ 0.37 | $ 0.11 |
Earnings per share, diluted | $ 0.15 | $ 0.10 | $ 0.18 | $ 0.31 | $ 0.09 | $ 0.07 | $ 0.10 | $ 0.11 | $ 0.74 | $ 0.36 | $ 0.11 |
Weighted average shares outstanding: | |||||||||||
Basic | 57,652,531 | 57,819,734 | 57,591,556 | 57,132,909 | 57,109,987 | 57,050,684 | 57,038,021 | 54,749,951 | 57,550,204 | 56,495,170 | 49,784,154 |
Diluted | 58,882,966 | 58,907,281 | 58,697,229 | 58,362,040 | 58,365,587 | 58,367,830 | 58,369,083 | 56,562,661 | 58,968,099 | 57,919,700 | 51,857,309 |